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Tag: 2021 News

Pharmaceutical Company Resolves Kickback Charges for $12.6M

A pharmaceutical company headquartered in Delaware has agreed to pay $12.6 million to resolve allegations that it violated the False Claims Act by paying kickbacks.

The settlement resolves allegations that Incyte Corporation purportedly used an independent foundation as a conduit to pay the copays of certain federal beneficiaries taking Incyte’s drug Jakafi, which was approved to treat myleofibrosis in 2011.

Specifically, Incyte was the sole donor to a fund that was opened in November 2011 to assist only myleofibrosis patients. After the fund opened, the government alleges that Incyte used the fund to pay the copays of federal beneficiaries taking Jakafi who were ineligible for assistance from the fund because they did not have myleofibrosis.

Incyte managers pressured the foundation, through phone calls and emails, to provide economic assistance to these ineligible patients, and Incyte’s contractor helped ineligible patients to complete applications submitted to the fund for assistance. The government alleges that through this conduct, Incyte caused false claims for Jakafi to be submitted to Medicare and TRICARE.

When a beneficiary obtains a prescription drug covered by Medicare or TRICARE, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance or a deductible. Congress included copay requirements in these federal programs, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.

Under the Anti-Kickback Statute, a pharmaceutical company is prohibited from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce federal beneficiaries to purchase the company’s drugs. This prohibition extends to the payment of patients’ copay obligations.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Justin Dillon, a former compliance executive at Incyte. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Dillon v. Incyte Corp., No. 2:18 -cv-2642 (E.D. Pa.).

Dillon will receive approximately $3.59 million of the recovery.

3D Printed Pills on Future Pharmaceutical Landscape

The days of waiting some time for a pharmacist to fill a prescription made by your doctor may soon be behind us.

Pharmacies, doctors’ offices and other medical institutions could one day offer individual patients medications that are customized to their needs using 3D printing technology.  

Courthouse News reports that the new technology has been developed in recent years under an expanding field of pharmaceutical research aiming to understand how to shape the effect medication has on patients.

The 3D-printed pill model could spark a wave of personalized pharmacological interventions tailored to meet the unique needs of all patients, according to lead researcher of the study Sheng Qi.

Qi, a professor at the United Kingdom’s University of East Anglia, said in a statement released with the study that the current pharmacological landscape currently takes the opposite approach, manufacturing one form of medication meant to satisfy all patients.

“Personalized medicine uses new manufacturing technology to produce pills that have the accurate dose and drug combinations tailored to individual patients. This would allow the patients to get maximal drug benefit with minimal side effects,” Qi said. “Such treatment approaches can particularly benefit elderly patients who often have to take many different types of medicines per day, and patients with complicated conditions such as cancer, mental illness and inflammatory bowel disease.”

The study’s findings could one day shape an element of personalized medicine that can create a tailored pharmacological regimen at the site where patients are being treated, Qi said.

Most 3D-printed products and objects use a device that heats filament material and places tiny fragments of the filament into a custom pattern.

The personalized pills are created using a newly developed 3D printing method that can shape a pill containing the medication without the use of filaments.

The research team led by Qi has developed the ability to print pills that feature more porous structures allowing for faster or slower release of medicine when taken orally.

The findings show that the speed of medicine dispersing within the body can be regulated by pill structures created using the new technology, according to the study published Monday in the International Journal of Pharmaceutics.

The study said future research is needed to make the technology produce pills that can regulate dosing frequency.

If the technology is improved, people on complex medical regimens requiring multiple medications taken each day could one day be able to take one pill that slowly releases a day’s worth of doses.

Researchers Andy Gleadall and Richard Bibb of England’s Loughborough University also contributed to the study.

Members of the study team did not immediately respond to a request for further comment on the report.

Claimant Caught Working as Bartender While on TTD

Brooke Gomez, 29, of Maxwell, was convicted and sentenced on one misdemeanor count of workers’ compensation insurance fraud after she claimed to be too injured to work in order to collect workers’ compensation benefits while working for another employer.

Gomez pleaded no contest to the misdemeanor charge and was sentenced in Colusa County Superior Court on April 26, 2021. She was placed on 12 months summary probation and ordered to pay $6,000 in restitution and $630 in fines.

On August 14, 2019, while working as a rice grader, Gomez sustained an abdominal injury while lifting bags of rice. Following her injury, a workers’ compensation claim was filed with her employer’s insurance company and Gomez began receiving workers’ compensation payments.

Gomez told her employer she had been offered several part-time jobs, but declined the offers due to her work injury. However, other mill workers reported to their employer that they witnessed Gomez working as a bartender at a local bar.

An investigation by the California Department of Insurance found Gomez misrepresented her symptoms to medical professionals and those handling her claim. Undercover surveillance showed Gomez interacting with customers, serving drinks, completing cash transactions with patrons and wiping down tables – all functions she claimed not to be able to do as a result of her injury.

The surveillance also discovered Gomez discussing her workers’ compensation claim with bar patrons and discussing her hopes of not getting caught working at the bar while receiving workers’ compensation benefits.

Due to Gomez’s misrepresentations, she received $6,893 in undeserved workers’ compensation payments and her employers’ insurance company lost an additional $8,992 in legal and investigation costs.

NCCI Economic Briefing Predicts End of COVID Recession

The current issue of the National Council on Compensation Insurance, Quarterly Economics Briefing – Q1 2021, surveys recent developments related to employment and wages and considers the risk to the emerging economic recovery from a possible fourth COVID surge.

The two-month fall in coronavirus case rates, coincident with the appearance of new vaccines, has kindled optimism. The expectation that new vaccines will bring the coronavirus pandemic under control by year-end, if not sooner, is itself a powerful driver for rapid recovery of spending and jobs in the United States – if that expectation is borne out in coming months.

After stagnating during the nationwide coronavirus (COVID-19) surge last winter, the pace of job recovery picked up in February and March. The rollout of new vaccines and a fall in coronavirus case rates are creating an expectation that the COVID recession may be over by year-end, if not sooner. This is also boosting discretionary consumption and new hiring.

However, an uptick in case rates beginning in late March casts a shadow on the prevailing mood of optimism.

Key Themes and Takeaways

– – Strong employment growth in February and March, plus declining coronavirus case rates and increasing vaccinations, point to an accelerating pace of economic recovery in 2021.
– – The March national employment gap is down to -=5.4%, a shortfall of 7 million jobs relative to seasonally expected employment levels. Lost jobs remain concentrated in service sectors, especially Leisure and Hospitality. Construction and Manufacturing are recovering strongly, but both sectors face material shortages and supply chain bottlenecks.
– – Unadjusted average weekly wages rose by more than 7% in 2020, in large measure because COVID-related job losses are concentrated among low-wage workers. Adjusting for the effect of COVID-related job losses on the wage distribution, average weekly wages rose by 3% in 2020 among workers who remained employed.
– – Economic impact payments from two new federal stimulus programs enacted in December and March were distributed to households during the first quarter. Transfer payments have kept national household disposable income and savings above pre-pandemic 2019 levels. Strong household balance sheets provide wherewithal to drive a rapid rebound in discretionary consumption spending in 2021.
– – About 30% of the United States population received at least one vaccine dose by the end of March, and vaccination rates are currently on the order of 3 million people per day. New coronavirus cases in March were down to about one-third of January’s rate. However, several states reported increases in cases and hospitalizations in late March attributed to a new and more contagious variant of the coronavirus.
– – Job losses from a new COVID surge, if it develops, may be modest – like those during last winter’s surge, but much lower than in two previous virus surges in spring and summer 2020.

Read the full Quarterly Economics Briefing for an in-depth look at the economy and how it is impacting workers compensation.

NSDUH Recommends Routine Screening for Cannabis Use

Cannabis use more than doubled over the past decade among Americans 50 and over, with nearly one in 10 now reporting usage over the past year, an analysis of the National Survey on Drug Use and Health (NSDUH) found.

Of the 8.9% who reported using cannabis in the past year; roughly one in five (18.5%) reported using it for medical purposes such as treatment of chronic pain or depression, or for diseases like arthritis, reported Namkee Choi, PhD, and Diana DiNitto, PhD, both from University of Texas at Austin.

Compared to recreational users, those using cannabis for medical purposes were more likely to discuss drug use with a healthcare professional (adjusted OR 4.18, 95% CI 2.53-6.89), to purchase from a medical cannabis dispensary (aOR 4.38, 95% CI 2.47-7.76), and to report more frequent use (aOR 2.56, 95% CI 1.35-4.86), according to the research in the American Journal of Drug and Alcohol Abuse.

“The findings suggest that some medical users may be self-treating without healthcare professional consultation,” Choi said. “As part of routine care, healthcare professionals should screen for cannabis and other substance use, and for mental health problems, and recommend treatment when necessary.”

For their study, the researchers examined 2018 and 2019 NSDUH data involving 17,685 individuals ages 50 and up, 55% of whom were women. Of self-described medical cannabis users — which by NSDUH definition implies physician-recommended use – less than 40% reported discussing cannabis use with a healthcare provider, which the authors noted suggests that some reported medical use without a doctor’s recommendation, possibly because they believed it to be necessary for relieving their symptoms.

Indeed, Choi and DiNitto cited another large survey performed in the U.S. in 2017 that found the most common medical reasons for marijuana use were anxiety (49%), insomnia (47%), chronic pain (42%), and depression (39%). Among those using marijuana for medical purposes, 21% did not have a doctor. Among those with doctors, 33% did not inform them, 28% reported their doctor was neutral on their use, 32% reported their doctor was supportive, and 8% reported their doctor was not supportive.

In the current study, while medical users reported using cannabis more frequently, with 40% using it roughly 4 to 7 days per week, they were less likely to have alcohol use disorder compared with nonmedical cannabis users (aOR 0.39, 95% CI 0.20-0.76). Otherwise, medical and nonmedical users did not differ on physical and most behavioral health indicators, although cannabis users in general had significantly higher rates of alcohol use disorder, nicotine dependence, other illicit drug use, and mental illness compared with nonusers.

Most were experienced users rather than new to cannabis use; most obtained cannabis from private/informal sources, reportedly with little difficulty. Of self-reported medical users, 71% reported exclusive medical use; the rest reported both medical and nonmedical use.

It is important that patients be made aware of the risks of obtaining cannabis and cannabis products from unregulated sources, the authors noted. “Given the increase in THC [tetrahydrocannabinol] potency, healthcare professionals should educate older cannabis users, especially high-frequency users, on potential safety issues and adverse effects.”

In addition to urging doctors to do more to screen and educate their patients, the study authors say the NSDUH needs updating to “reflect changing cannabis product commercialization,” with cannabidiol, topical solutions, and edibles often available now.

In fact, there has been a push in recent years to help familiarize healthcare providers with the health effects of cannabis: Last year, citing a 2015 survey of healthcare providers, Nora Volkow, MD, director of the National Institute on Drug Abuse, concluded that providers “perceive a knowledge gap related to cannabis dosing, treatment plans, and different areas related to cannabis products, so providers themselves realize the need for research and expertise to be developed in this area.”

In the face of increasing patient requests, new guidelines have been issued on medical cannabis for chronic pain; and last fall, MedPage Today reported on the publication of Medical Marijuana: A Clinical Handbook.

Researchers noted that limitations of their study included the relatively small number of medical users and the fact some respondents may have under-reported their cannabis and other substance use.

DWC Posts Proposed Amendments to the QME Regs for Comment

The Division of Workers’ Compensation has posted proposed amendments to the Qualified Medical Evaluator (QME) regulations to its online forum where members of the public may review and comment on the proposals.

The proposed changes are necessary to bring existing regulations into compliance with amendments to the Labor Code and to clarify the Administrative Director’s authority with respect to the processes related to appointment and reappointment of Qualified Medical Evaluators, which is granted by relevant statutory authority.

The draft regulations include:

– – Clarification of regard to definitions to conform to changes made by Senate Bill 863
– – Provisions prohibiting providing false information on the application or reapplication for appointment
– – Provisions to conform amended regulations with proper gender pronouns
– – Provisions for electronic service of medical-legal reports and use of electronic signatures in the QME program
– – Revision of the number of hours necessary for initial qualification of physicians as QMEs
– – Revision of continuing education requirements including hourly requirements and the addition of anti-bias training for QMEs
– – Provisions that require a QME to comply with all Administrative Director’s regulations in order to be reappointed as a QME.
– – There is also a new regulation that provides a specific implementation of existing discretionary authority of the Administrative Director pursuant to Labor Code § 139.2
– – Clarification of the use of probation as a disciplinary sanction and allowing the Administrative Director to designate hearing officers for adjudication of disputes regarding appointment and reappointment applications
– – Clerical changes to the regulation on QME unavailability
– – Provisions allowing QME reappointment hearings to be heard by other tribunals in addition to the Office of Administrative Hearings
– – Regulations that are consolidated into new subdivisions are repealed.

The forum can be found on the DWC forums webpage under “current forums.” Comments can be submitted to and will be accepted until 5 p.m. on Friday, May 14, 2021.

DIR Publishes Annual IMR Report

The Department of Industrial Relations (DIR) and its Division of Workers’ Compensation (DWC) have posted an annual report on the Department’s Independent Medical Review (IMR) program.

IMR is the medical dispute resolution process for the state’s workers’ compensation system that resolves disputes about the medical treatment of injured workers. The report describes IMR program activity in 2020, the eighth year since the program was implemented.

The Independent Medical Review Organization (IMRO) administering the program, Maximus Federal Services, Inc., received 184,100 IMR applications, and issued 136,740 Final Determination Letters, each addressing one or more medical necessity disputes.

In the first half of 2020, IMR program activity slowed with the emergence of the pandemic, but rebounded in the second half. Throughout the year, the IMRO issued decisions, on average, eight to 12 days after receipt of all medical records.

Some highlights of the report:

– – Nearly 94% of all unique IMR filings were deemed eligible for review, the highest annual percentage since IMR began.
– – Pharmaceutical requests accounted for 34% of all treatment requests sent for IMR, a smaller proportion of total service requests than in previous years.
– – Opioids comprised three out of 10 pharmaceutical requests.
– – Treatment request denials were overturned at a rate of 9.5%. Specialist consultants, office visits and mental health services were overturned most often.
– – Guidelines contained in the Medical Treatment Utilization Schedule continue to serve as the primary resource for the determination of medical necessity.

The progress report is posted on the DIR website.

Federal Appellate Court Orders Trucking Companies to Comply AB-5

The Ninth Circuit Court of Appeals ruled that Assembly Bill 5 was not preempted by federal laws governing the trucking industry, and reversed a lower court ruling, as it ordered freight carriers to begin complying with the California employment law.

Before 2018, the California Supreme Court’s framework for classifying workers as either employees or independent contractors was set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989).

Almost thirty years after Borello, the California Supreme Court revisited the framework for classifying workers as employees or independent contractors for purposes of California’s Industrial Welfare Commission (IWC) Wage Orders.2 See Dynamex Operations W. v. Superior Ct., 4 Cal. 5th 903, 912, 957 (2018). Dynamex adopted a standard commonly referred to as the “ABC” test.

In September 2019, the California legislature enacted AB- 5, which codified the ABC test and expanded its applicability. See Cal. Lab. Code § 2775.

The California Trucking Association, a trade association representing motor carriers that hire independent contractors who own their own trucks, and two independent owner-operators filed suit, seeking to enjoin enforcement of AB-5. It viewed the new rule statutorily classifying a worker as an employee as effectively precluding the business model employed by CTA’s members.

In October 2018, after Dynamex was decided, CTA, along with two independent owner-operators, filed this lawsuit against Xavier Becerra, the Attorney General of California, and others, seeking a declaration that the federal law, the Federal Aviation Administration Authorization Act of 1994 (FAAAA), preempted the ABC test as applied to motor carriers.The district court allowed the International Brotherhood of Teamsters, a labor union that represents owneroperators classified as employees, to intervene.

The federal district court held that CTA was likely to succeed on the merits of its claim. It therefore enjoined the state from enforcing AB-5 against any motor carrier doing business in California. The 9th Circuit Court of Appeals reversed in the published case of California Trucking Association v Bonita.

The Supremacy Clause of the United States Constitution provides that federal law “shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, anything in the Constitution or Laws of any State to the Contrary notwithstanding.”

In Dilts v. Penske Logistics, LLC, 769 F.3d 637, 647 (9th Cir. 2014), the 9th Circuit determined that California’s meal and rest break laws, as applied to motor carriers, are not preempted by the FAAAA. See also Ridgeway, 946 F.3d at 1083-86 (holding that the FAAAA does not preempt a California minimum-wage law that would require Walmart to pay long-haul-truck-drivers minimum wages for layovers in California.

Four years after Dilts, the 9th Circuit concluded that the FAAAA does not preempt the test for classifying California workers as either employees or independent contractors. AB-5 is not significantly related to rates, routes, or services. Therefore, it concluded that the F4A does not preempt AB-5 as applied to motor carriers.

DWC Posts Zoom MLFS Questions and Answers Sessions

The DWC has posted the new Medical-Legal Fee Schedule (MLFS) on its website . The documents include the final text of amendments to the Medical-Legal Fee Schedule regulations, as well as forum comments and the DWC response, and action to the comments.

Some of the changes include:

– – Clarification of the Physician’s obligation when records are received without an attestation.
– – Clarification on billing for records previously reviewed under ML202.
– – Deletion tf the billing code ML206 related to the unreimbursed supplemental report.
– – Addition of the ability of physicians who are certified as Qualified Medical Evaluators in the specialty of Internal Medicine or who are board certified in Internal Medicine to use modifiers 97 & 98 for toxicology and oncology evaluations.

The industry in general reacted with some consternation about the new MLFS, and had questions about implementation of the Schedule.

Apparently in response, the DWC has posted the recordings of the Question and Answer Meetings held by Zoom on April 13 and April 20 regarding the new Medical-Legal Fee Schedule for the workers’ compensation system.

The links to the recorded sessions, which answered questions from stakeholders regarding the implementation of the fee schedule, can be found on the DWC website.

The Medical-Legal Fee Schedule, which became effective on April 1, 2021, is set forth at California Code of Regulations, title 8, sections 9793-9795.

Owner Pleads Guilty for $31M Home Health Care Kickback Scheme

Liana Karapetyan, 41, of El Dorado Hills, pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to pay and receive health care kickbacks.

According to court documents, Karapetyan and another individual owned and controlled home health care and hospice agencies in the greater Sacramento area: ANG Health Care Inc., Excel Home Healthcare Inc., and Excel Hospice Inc.

Karapetyan and another individual paid and directed others to pay kickbacks to multiple individuals for beneficiary referrals, including employees of health care facilities, as well as employees’ spouses.

The kickback recipients included John Eby, a registered nurse who worked for a hospital in Sacramento; Anita Vijay, the director of social services at a skilled nursing and assisted living facility in Sacramento; Jai Vijay, Anita Vijay’s husband; and Mariela Panganiban, the director of social services at a skilled nursing facility in Roseville.

In total, Karapetyan and others caused the agencies to submit over 8,000 claims to Medicare for the cost of home health care and hospice services. Based on those claims, Medicare paid the agencies approximately $31 million. Of that amount, Medicare paid the agencies at least over $2 million for services purportedly provided to beneficiaries referred in exchange for kickbacks paid to, among others, Eby, Anita Vijay, Jai Vijay, and Panganiban.

Because the agencies obtained the beneficiary referrals by paying kickbacks, the agencies should not have received any Medicare reimbursement.

This case is a product of an investigation by the Federal Bureau of Investigation and the Department of Health and Human Services’ Office of Inspector General. Assistant U.S. Attorney Matthew Thuesen is prosecuting the case.

Karapetyan will be sentenced on on Aug. 26. She faces maximum statutory penalties of 10 years in prison for the health care fraud conspiracy charge and five years in prison for the kickback conspiracy charge. She also faces a maximum fine of $250,000 or twice the gross gain or loss for each charge.

In separate cases, Eby, Jai Vijay, Anita Vijay, and Panganiban pleaded guilty for their roles in the kickback scheme. They await sentencing.