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Tag: 2021 News

H.R. 1996 Protects Carriers From Prosecution for Pot Industry Coverage

The American Property Casualty Insurance Association (APCIA) was formed on January 1, 2019, following the merger of the American Insurance Association (AIA) and the Property Casualty Insurers Association of America (PCI). Together these organizations trace their history back to the founding of the National Board of Fire Underwriters in 1866.

APCIA members represent all sizes, structures, and regions – protecting families, communities, and businesses in the U.S. and across the globe.

H.R. 1996, the SAFE Banking Act generally prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate cannabis-related business. Prohibited penalties include terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate cannabis-related business and prohibiting or otherwise discouraging a depository institution from offering financial services to such a business.

The Association released the following statement commending the House of Representatives for passing H.R. 1996, the SAFE Banking Act.

The legislation will prevent federal prosecution of and civil liability for insurance agents, brokers, and carriers, as well as their officers, directors, or employees when engaging in the business of insurance in states that have legalized cannabis in some form.

The following statement may be attributed to Nat Wienecke, APCIA’s senior vice president of federal government relations:

“APCIA commends the House for providing greater certainty surrounding the insurance marketplace for cannabis-related legal businesses and consumers adhering to state laws. This legislation addresses the legal uncertainty created by the dueling state and federal treatment of cannabis. While marijuana is illegal under the federal law, thirty-six states and the District of Columbia have legalized some form of marijuana.”

“We applaud Representatives Perlmutter, Stivers, Velazquez, and Davidson for their steadfast leadership. We encourage the Senate to take up and pass the SAFE Banking Act, as soon as possible.

The Bill passed the House of Representatives with bipartisan support. It now moves to the Senate for its consideration

RIMS LIVE 2012 to Discuss Virtual End-to-End Care

RIMS, the risk management society®, is a global not-for-profit committed to advancing the practice of risk management throughout the world.

David Lupinsky, Vice President of Digital Health and Innovation, CorVel, will be co-presenter of a session exploring the impact of AI and telehealth at RIMS LIVE 2021.

“Disruption: How Big Data, AI and Telehealth Are Transforming Claims Management,” led by Lupinsky and Stacey Caldwell, Corporate Claims Manager, BBSI, will chronicle the journey that is transforming care for injured workers, producing better outcomes at less cost and improving the patient’s experience.

The educational session is scheduled for Monday, April 26 at 4:30PM EDT but will remain available to all attendees for 60 days after the conference.

Although telehealth was already in use for workers’ compensation, the pandemic pushed its evolution forward to quickly and permanently make virtual end-to-end care possible – and even preferable – for rapid, safe recovery.

We started several years ago by connecting with the injured worker via telehealth so we could immediately determine the best course of care, saving time off work and getting the right level of care for the injury,” said Lupinsky.

Now, we can provide remote physician visits, home pharmacy delivery, in-home tele-rehab, instruction for DME equipment operation, and mental health therapy with the case manager, the medical team and the patient all connected digitally. Patients love this approach. They are more engaged, and we’ve found that it costs less and produces superior outcomes.”

Lupinsky will also address the use of digital monitoring in prevention, as well as applying artificial intelligence and machine learning to proactively identify potential or emerging problems for immediate intervention. Caldwell will present case studies showing the effectiveness of virtual end-to-end care.

Rapid Expansion Ahead for SmartPay Pay-As-You-Go Comp

What happens when the enhancement is in more demand than the original product? That was the quandary faced a few years ago by entrepreneurs operating an insurance agency. And, like all good entrepreneurs, they followed the money, right into a whole new business.

Dino Carbone, executive vice president for sales and marketing at SmartPay Solutions LLC, tells the story published by Hartford Business Journal, of the firm’s inception.

He and his partners had set out to make it easier for clients to pay their insurance bills. Their pay-as-you-go software was a hit. Soon, clients wanted to buy the software as well as the insurance. The partners hung a “for sale” sign on the agency and set up shop in the emerging field of insurtech.

In 2013, Connecticut Innovations became an investor. In 2014, a Series A round closed with $1.4 million, including investments from Tennant Capital Partners and Stonehenge Growth Capital. But in 2015, the partners changed course and took the firm private again. Robert Conerly, who had joined the firm as CFO, was named CEO. Dino Carbone

Today, SmartPay has more than 10,000 businesses on its platform. There, payroll information is massaged against the client’s workers’ compensation insurance needs. SmartPay shops more than 30 carriers, including many of the best-known firms, for the best rates and coverage matches.

But the element that sets SmartPay apart from competitors is that its software can make changes in 24 to 48 hours, as staffing levels change.

And during a pandemic, that ability is an asset. Keeping pace with ever-changing workers’ comp rates has been a selling point for SmartPay. But times change. Carbone leaves no doubt the pandemic has been a boon for SmartPay’s business.

Through furloughs and layoffs, Paycheck Protection Program-funded rehiring and false starts at reopening, clients always had their workers’ comp coverage right. No gaps in coverage. No over or under payments.

The underlying software logic makes it applicable to any insurance situation where coverage is based on variables like headcount or pay rate.

And Carbone says major expansion is ahead, as quickly as the staff of 24 can manage it. First up is a new website, to be launched within weeks. Then it’s on to new lines of coverage.

Carbone says SmartPay is on course to double its revenue. He’s cautious about dropping names and numbers but says about $14 billion in payroll data crosses the platform. He also said Liberty Mutual is one of the large firms offering workers’ comp insurance through SmartPay’s platform and his firm has done “a lot” of work with The Hartford.

Carbone says SmartPay works with “thousands” of independent insurance agents.

He sees the firm’s main competitors as large national payroll providers, which are moving into the bill payment space. And that’s part of SmartPay’s pitch to recruit smaller payroll providers to its team.

SmartPay lets payroll providers add workers’ comp pay-as-you-go as a service, improving their competitive position as well as SmartPay’s.

Former EDD Employee Pleads Guilty to $200K EDD Fraud

Former EDD employee, 44 year old Andrea M. Gervais, who lives in Roseville, pleaded guilty to theft of government money in a scheme involving 97 fraudulent Pandemic Unemployment Assistance (PUA) claims in the names of persons other than her own.

The investigation began when federal agents discovered that someone had filed a PUA claim using the identity of Sen. Dianne Feinstein, a sitting U.S. senator, for approximately $21,000. This fraudulent claim was processed for payment, and Gervais received an EDD debit card in the senator’s name.

Agents further discovered that Bank of America ATM cameras captured Gervais on multiple occasions withdrawing cash from at least seven of the EDD debit cards, and at least one captured transaction showed Gervais using the debit card issued to the senator.

According to court documents, at least 10 of 97 fraudulent PUA claims were processed for payment, and nearly $200,000 in unemployment insurance and PUA benefits were paid out to Gervais’s Roseville address in the form of Bank of America debit cards. The potential value of all fraudulent 97 claims associated with the scheme exceeded $2 million.

This case is the product of an investigation by the U.S. Department of Labor – Office of the Inspector General, the Federal Bureau of Investigation, and the California Employment Development Department – Investigation Division. Special Assistant U.S. Attorney Robert J. Artuz is prosecuting the case.

Gervais remains on pretrial release as she awaits sentencing. She is scheduled to be sentenced by U.S. District Judge Kimberly J. Mueller on Aug. 9.

She faces a maximum statutory penalty of 10 years in prison and a $250,000 fine.

Farm Labor Contractors Charged for $1.42M Premium Fraud

Farm labor company owners and siblings Elias Perez, 40, of Greenfield, and Alejandra Perez, 37, of Soledad, were arraigned on over 20 felony counts of insurance and tax fraud after allegedly underreporting payroll by over $17 million resulting in a loss of over $1.42 million to their insurance companies.

The Department of Insurance discovered the alleged fraud after learning that an injured employee was treated out of a garage by an unlicensed professional.

The Perezes are owners of farm labor contracting companies in Greenfield called PFL Contracting Inc., Future Ag Management, Inc. (FAM) and Future Harvesters and Packers, Inc., (FHP), which primarily hire farm labor employees to harvest crops.

An investigation found on June 28, 2016, an employee of one of the Perezes’ businesses, FAM, sustained a work-related injury to their back when they tripped and fell while harvesting crops. The Perezes along with a FAM supervisor allegedly did not provide the injured employee with the required professional medical treatment. For two weeks, the FAM supervisor took the injured worker to seek treatment from an unlicensed professional who operated a business out of their garage.

More than two weeks after the employee’s injury, Elias Perez filed a workers’ compensation claim with their insurance company and stated the employee’s injury occurred on July 7, 2016.

FAM and FHP obtained workers’ compensation policies from two different insurance companies. A comparison of records from the insurance companies and the California Employment Development Department (EDD) showed large discrepancies in the payroll reported by the Perezes. From July 2014 to August 2017, they reported to EDD that FAM and FHP paid $28,521,347 in wages while reporting only $23,246,922 to their insurance companies for the same time period.

Investigators served bank search warrants and conducted a thorough review and audit of the payroll checks, which determined that FAM and FHP from July 2014 to August 2017 actually paid over $41 million in wages. They allegedly underreported over $17 million in wages, which resulted in approximately $1.42 million in premium owed to their insurance companies.

In addition, the Perezes underreported PFL, FAM and FHP’s wages by approximately $12.8 million to EDD resulting in potentially $1.28 million in unpaid taxes.

FAM also maintained a workers’ compensation policy with another insurance company for the Perezes’ farm labor contracting operation in Arizona. Records obtained from that insurance company and the Arizona Department of Economic Security indicated additional discrepancies in their reporting and was included in this audit and investigation.

Elias Perez was charged with five felony counts and Alejandra Perez was charged with 21 felony counts. Both were arraigned in Monterey County Superior Court.

The Monterey County District Attorney’s Office is prosecuting this case.

Sacramento Welder Faces Two Felonies for Fake Head Injury

41 year old Ahmad Zaki Noori, who lives in Sacramento, was arraigned on two felony counts of workers’ compensation insurance fraud, after allegedly misrepresenting symptoms following a work-related injury, in order to receive $21,000 in undeserved benefits.

On July 16, 2019, Noori, while working as a welder, sustained a head injury and contusions on multiple parts of his body.

Following his injury, a workers’ compensation claim was filed with his employer’s insurance company and Noori began receiving workers’ compensation benefits. He presented himself as someone with severe amnesia and as someone who had difficulty performing daily functions of living, like speaking, walking or driving.

An investigation by the California Department of Insurance found Noori misrepresented his symptoms to medical professionals and those handling his claim.

Undercover surveillance showed Noori speaking, walking, and driving – all functions he claimed not to be able to do as a result of the injury. The surveillance also showed him performing duties at an automobile dismantling yard, like loading items onto a flatbed trailer and changing a spare tire.

In addition, two of his former co-workers reported they saw him out and about acting normally. One co-worker reported seeing Noori inside a retail store and that he was walking unassisted, laughing, and speaking on the phone. The second co-worker reported seeing Noori at another retail store and that he drove a vehicle into the parking lot, exited the vehicle and was able to walk with no walking aids.

After watching the video surveillance, his doctor reported the actions Noori was performing in the video were drastically different than the actions he was performing during his office visits. The doctor also reported that Noori showed no evidence of neurocognitive or orthopedic deficits during the entirety of this claim period.

Due to Noori’s misrepresentations, he received $21,000 in undeserved workers’ compensation payments and his employers’ insurance company lost an additional $80,679 in medical, legal and investigation costs.

Noori was arrested at his residence on April 13, 2021. He is scheduled to return to court on May 20, 2021.

This case is being prosecuted by the Sacramento County District Attorney’s Office.

DFEH Publishes Guidance on Employer Mandated Vaccinations

After patiently waiting for COVID-19 vaccine guidance in California, employers now have some clarification from California’s Department of Fair Employment and Housing (DFEH). As somewhat expected, the DFEH’s guidance issued early this month aligns with the EEOC’s Guidance issued in December 2020.

The firm of Fisher Phillips has commented on the top five takeaways for employers about COVID-19 vaccines according to the DFEH’s recent guidance regarding COVID-19 vaccines:

1. An employer may require employees to receive COVID-19 vaccines.

Consistent with the EEOC’s guidance, the DFEH states that, with certain exceptions, employers may require at-will employees to receive vaccines issued under the FDA’s Emergency Use Authorization (EUA) procedures.

2. If an employer requires vaccination against COVID-19 in its workforce, the employer must reasonably accommodate employees with disabilities or with sincerely held religious beliefs or practices.

Even if an employer may mandate vaccines amongst its employees, it does not mean you have free reign to require the vaccine for all workers. In accordance with the guidance from the EEOC, the DFEH states that if an employee objects to vaccination on the basis of disability or sincerely held religious belief or practice, you must engage in the interactive process to identify options for reasonable accommodations that do not cause undue hardship.

3. An employer is not legally required by the FEHA to reasonably accommodate all employees who refuse the vaccine.

The DFEH says that if an employee does not have a reason based on a disability or sincerely held religious belief for not being inoculated with a vaccine issued under the EUA procedures, you are not legally required to reasonably accommodate the employee.

The DFEH goes on to state that you are permitted to enforce reasonable disciplinary policies and practices if you are not retaliating against any employee for engaging in protected activity, such as opposing practices prohibited by FEHA.

4. If an employer administers a COVID-19 vaccination program, an employer may ask employees for medical information relevant to vaccination.

The DFEH indicates that you may ask for medical information, such as whether an employee is experiencing COVID-19 symptoms or a pre-vaccination screening questionnaire, so long as the inquiry is “job-related and consistent with business necessity.”

5. An employer may require its employees to provide proof of vaccination.

The DFEH specifies that simply asking employees or applicants for proof of vaccination is not a disability-related inquiry, or religious creed-related inquiry, or a medical examination.

Despite the wording of this Guidance, the five takaways require caution and guidance before implementation. The DFEH material should be read in its entirety.

Residential Care Facility Owner Indicted for $1M Premium Fraud

Marion Piggee, Jr., 68, of Los Angeles, was arraigned on seven counts of insurance fraud after an investigation by the California Department of Insurance revealed he was allegedly underreporting employee payroll by nearly $6 million in order to fraudulently reduce his business’s workers’ compensation insurance premium by over $1 million.

On November 28, 2016, the State Compensation Insurance Fund (SCIF) filed a suspected fraudulent claim with the Department of Insurance alleging potential insurance fraud. SCIF reported that Piggee, as owner of Center for Behavioral Change, an adult residential care facility, allegedly underreported employee payroll in order to reduce the proper rate of insurance premiums owed to SCIF.

A routine audit for the policy period of November 1, 2014, to November 1, 2015, found that Center for Behavioral Change reported one employee and payroll wages of $8,035. However, the audit revealed wages to be $881,593 for the same policy year. It also showed Piggee’s business had obtained workers’ compensation insurance for one facility, but failed to disclose they had also acquired eight other facilities.

The investigation found that Piggee had allegedly been underreporting company payroll from November 2009 through May 2016. The investigation also revealed Center for Behavioral Change had 60 employees, despite their reporting of only one employee. The business underreported payroll by $5,982,410, which resulted in a premium loss to SCIF of $1,017,937.

Piggee was arraigned at the Los Angeles Superior Court on April 6, 2021.

This case is being prosecuted by the Los Angeles County District Attorney’s Office.

SoCal Chiropractor Sentenced for $6.6M Comp Kickback Scheme

Chiropractor Joserodel Zavala Candelario, an Irvine resident, was sentenced in federal court to 36 months in federal custody for his participation in two huge health care fraud schemes, one involving the California Worker’s Compensation system, and for concealing income he received from those multi-million dollar schemes.

He was the owner of Candelario Chiropractic, a Professional Corporation, and R.I.S.E. Medical Center, a Professional Corporation, dba R.I.S.E. Wellness Center, which operated at multiple locations in the Southern District of California, including at 5030 Bonita Road, Suite B, in Bonita and at 3231 Waring Road, Suite N, in Oceanside.

Candelario pleaded guilty on January 21, 2020 to a three-count superseding information, charging Conspiracy in violation of 18 U.S.C. § 371, Conspiracy to Commit Health Care Fraud in violation of 18 U.S.C. § 1349, and False Statement on Tax Return in violation of 26 U.S.C. § 7206(1).

In addition, between March 2012 and November 2015, Candelario carried on an unlawful cross-referral scheme, in which he would receive new Workers’ Compensation patients for RISE Wellness. In return for new patients, Candelario agreed to meet a quota for the “value” of ancillary services and DME he was expected to prescribe for each patient sent to him by co-conspirators, with a “value” — such as $30-$50 per MRI referral — set by those conspirators.

As part of the scheme, Candelario, who could function as a WC primary care provider, dictated the same treatment plan for all WC patients, regardless of their individual medical needs, so he could fraudulently bill WC insurers.

Candelario admitted that he violated his duty of honest services to his patients. He received approximately 529 new WC patients as a result of the scheme, and he submitted approximately $6,605,364 in bills to insurers for services rendered to those patients. Of those billed amounts, he was paid $771,000 by WC insurers

Separately, he has been charged and has pleaded guilty in San Diego Superior Court case SCD281328 to Concealing an Event Affecting an Insurance Claim, in a violation of California Penal Code 550(b)(3).

Candelario carried out a scheme to defraud Medicare and TRICARE out of millions of dollars by using physical therapy codes to bill for supposed physical therapy services performed on patients by individuals who were not licensed to provide physical therapy, including chiropractors, massage therapists, physical therapy aides, and an acupuncturist.

Candelario and his co-conspirators told patients that RISE Wellness offered an “integrated” approach to wellness, to convince patients to accept physical therapy, acupuncture, chiropractic, and diagnostic services at RISE Wellness, in order to fraudulently bill for non-covered services provided by unauthorized individuals, and collect as much money as possible from health care benefit programs.

Once patients came in the door, the defendant pushed his staff to conduct diagnostic tests on every patient, regardless of medical necessity, to increase billing and payment, and he also demanded that staff meet quotas for the minimum number of diagnostic tests, and recommendations for durable medical equipment, or DME, massages and other services, regardless of whether specific patients needed the items and services.

He also imposed quotas for the minimum number of patients with specific types of insurance coverage at RISE Wellness, e.g., “60 Tricare patients per day,” regardless of whether those patients needed treatments.

For example, on June 6, 2014, Candelario instructed a staff member, “I need you to do 5 axonii [diagnostic tests] a day no matter what for now on.” The following month, on July 7, 2014, Candelario texted, “OK team you are receiving 2 new diagnostic testing devices this month. I need 20 patients to be tested on each one this month no matter What [sic].”

To increase billing and payment, the defendant pushed the schedulers to cram in as many as 50 patients per day for each provider. He complained when staff fell short of this goal, noting, on June 11, 2015, certain “front desk issues” including: “No[one] has called any patients to fill empty slots in provider schedules or grab patients in lobbies to put into provider schedules.”

If a patient failed to show up for an appointment, Candelario directed staff to bill the health care benefit program for the visit, even though no visit had occurred and no service had been provided. For example, on March 9, 2015, Candelario wrote, about late reimbursements, that “the only solution is to start billing the missed appointments like i asked following the system.”

It was part of the scheme that, using the mean and manners described above, and others, the co-conspirators submitted and caused to be submitted at least $7,260,327.20 in false and fraudulent bills to TRICARE and Medicare. Of those fraudulent bills, TRICARE paid a total of $3,450,596.43 and Medicare paid $37,843.04.

Candelario failed to pay his fair share of taxes on the funds he fraudulently took, resulting in $505,000 in tax losses just for tax year 2013.

DWC Moves Eureka Office Permanently Online

The Division of Workers’ Compensation announced its Eureka satellite office will close the physical location at 409 K St. on July 1, 2021 and its operations will remain online.

By most accounts, the virtualization of matters proceeding through the litigation process has been a positive experience for the industry. Additionally, depositions have been successfully taken online. And some medical evaluations have been by telehealth.

The Eureka satellite office has conducted operations virtually since the COVID-19 pandemic began in 2020.

All Eureka matters will continue to be heard either by phone or video even after COVID-19 restrictions ease.

As of July 1, all filings that are sent by U.S. Mail should be directed to the Santa Rosa district office.

It is not known if this is a precursor to the “new normal,” or just the destiny for one of the smaller and remote offices of the statewide system. Over the next few months, the virtual evolution, if there will be one, will likely become more transparent.