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Tag: 2021 News

Worker’s Comp Legislative Conflict “Heating up Again”

A commentary which was published in the VC Star anticipates a “once a decade” war over changes to the California workers’ compensation system.

According to the commentary, work comp “is so immense that it supports a permanent cadre of interest groups and their lobbyists who joust constantly over operational rules.”

Over the last half-century, a predictable cycle has emerged. Once a decade – or once a governorship – the five contending factions go to war, three of the five cut a deal to grab bigger slices of the financial pie, and push it through the Legislature. It takes a few years for the changes to impact the system and a few more for a new tripartite alliance to form for another battle.

It last happened a decade ago when Jerry Brown resumed the governorship 28 years after his first stint expired.

Employers and labor unions struck a deal, with the implicit blessing of work comp insurers, to curtail medical costs and use the savings to increase cash benefits for disabled workers and decrease employers’ insurance premiums.

The two factions left out of the deal – lawyers who specialize in work comp cases and providers of medical care, therapy and rehabilitation – howled. But with Brown’s blessing and the unions’ political clout, it was enacted.

It worked as planned, in fact too well in the eyes of the two left-out factions and labor unions, which complained that employers benefited more than their injured employees.

Insurance costs as a percentage of payroll have dropped by more than two-thirds from their peak in 2003, thanks to both the changes signed by Brown and those muscled through the Legislature a decade earlier by predecessor Arnold Schwarzenegger. That said, California employers are still paying the nation’s fourth highest work comp costs, according to Oregon’s annual state-by-state compilation.

So what now?

Last year, in response to the COVID-19 pandemic, the Legislature and Gov. Gavin Newsom decreed that some medical workers would have a presumption that certain illnesses would qualify them for work comp benefits without having to prove connections to their jobs.

This year, several bills would expand presumptions to other workers and other maladies. One, for example, would expand the presumption that San Diego’s lifeguards now have for skin cancer to include nine other illnesses. Another would expand the lifeguards’ skin cancer presumption to include game wardens and state park rangers. Still another would create an extensive slate of presumptions for nurses.

Medical care providers, who were on the short end of the last big work comp deal, want legislation to provide automatic inflation increases in their fees. Another bill would create a state-operated network of medical care providers for work comp treatment that would bypass employers’ provider networks.

These and other measures would directly or indirectly increase costs and/or re-slice the pie. The most important of the five factions is labor and if it forges an alliance with the medical and legal groups, chances of a major work comp overhaul are strong – right on the decennial schedule.

DWC Updates COVID MTUS Guideline

The The Division of Workers’ Compensation has issued a notice of conference call public hearing, for a proposed evidence-based update to the Medical Treatment Utilization Schedule, which can be found at California Code of Regulations, title 8, section 9792.24.7.

The conference call public hearing is scheduled for Friday, May 14, at 10 a.m. and members of the public may attend by calling 866-390-1828 and using access code 5497535#. Members of the public may review and comment on the proposed updates no later than May 14.

The proposed evidence-based update to the MTUS incorporates by reference the latest published guideline from American College of Occupational and Environmental Medicine (ACOEM) for the Coronavirus (COVID-19) Guideline (ACOEM March 29, 2021).

The March 29, 2021 update includes the following major changes:

– – New guidance on rehabilitation (pulmonary, cardiac, cognitive, musculoskeletal, debility) for severe and/or chronic COVID-19 cases
– – Vaccination information, including travel advice for vaccinated individuals, success against common virus variants, and adverse effects
– – New recommendation on the Johnson & Johnson COVID-19 vaccine
– – Upgraded recommendation for baricitinib from insufficient evidence (I) to evidence (B)
– – Upgraded recommendation for bamlanivimab from insufficient evidence (I) to evidence (C)
– – Upgraded recommendation for interferon beta-1b from insufficient evidence (I) to evidence (B)
– – Upgraded recommendation for low-molecular-weight heparin from insufficient evidence (I) to evidence (C)
– – Downgraded recommendation for convalescent antibodies to No Recommendation (I)
– – Review of evidence for ivermectin (insufficient evidence, with no recommendation)
– – Review of masking efficacy
– – Updates from the CDC on physical distance in K-12 classrooms

The proposed evidence-based update to the MTUS regulations are exempt from Labor Code sections 5307.3 and 5307.4 and the rulemaking provisions of the Administrative Procedure Act. However, DWC is required under Labor Code section 5307.27 to have a 30-day public comment period, hold a public hearing, respond to all the comments received during the public comment period and publish the order adopting the update online.

Employers/Carriers Recover Fraud Investigative Costs

Daniel Cory Clapp was a CHP officer at the Chester area substation of the Susanville office, when he was injured on the job. He claimed injuries to his shoulder, head, and knees.

In April 2012, based on a tip, the worker’s compensation fraud unit of the CHP began investigating officer Clapp. The unit conducted surveillance, including on travel, doctor’s visits, shopping, and camping, which included boating, swimming, and chopping wood.

In October 2013, CHP investigators showed the surveillance videos to defendant’s doctor. Based on the videos, the doctor agreed if she had been aware of defendant’s activities, she would have released him to work in April 2012. She also agreed that Clapp’s complaints had been a “gross misrepresentation.”

Clapp pleaded no contest to concealing the true extent of his physical activities and abilities from his employer, the Department of the California Highway Patrol (CHP), and the State Compensation Insurance Fund (SCIF).

Consistent with the resolution negotiated by the parties, the trial court granted defendant three years’ probation, and as a condition of probation, ordered him to pay restitution. Following a restitution hearing, defendant was ordered to pay $30,095.68 to SCIF for temporary disability benefits and $81,768.01 to CHP for benefits wrongfully obtained.

He was also ordered to pay $1,350 and $70,159 to SCIF and CHP respectively for investigative costs.

CHP officers logged 1,761 hours investigating defendant and his activities on disability leave. Based on a median wage of $41.27 per hour, CHP sought reimbursement for $70,159 in salary costs to investigate the case. CHP did not seek restitution for gas and vehicle maintenance, lodging and meals for investigators while on assignment, overtime pay for investigators, medical treatment and exams for defendant, or video production.

SCIF investigators spent 59 hours investigating defendant’s claims. At an average salary of $30 per hour, the agency spent approximately $1,770 on wages to investigate this case.

Defendant appeals the restitution award as to investigation costs contending that, as public investigative agencies, neither SCIF nor CHP is entitled to reimbursement for the costs of investigating his claim.

The Court of Appeal agreed with the trial court, and concluded that “as direct victims of defendant’s fraud, both CHP and SCIF are entitled to restitution for investigative costs incurred in an effort to justify discontinuance of payments and recoup money defendant fraudulently obtained” in the published case of People v Clapp.

The Court concluded that a victim’s restitution right is to be broadly and liberally construed.(Nichols, supra, 8 Cal.App.5th at p. 342.) Section 1202.4, subdivision (f) requires victims receive restitution for “for every determined economic loss incurred as the result of the defendant’s criminal conduct” and the term “economic loss” is entitled to broad and expansive interpretation. (Keichler, supra, 129 Cal.App.4th at p. 1046; Johnny M., supra, 100 Cal.App.4th 1128, 1133.)

The “including but not limited” statutory language as it relates to section 1202.4, subdivision (f), allows for restitution for wages beyond those expended in “assisting the police or prosecution” as specified in subdivision (f)(E).

” We believe it is consistent with the restitution statute’s purpose, to fully reimburse direct victims and deter future criminality, to allow government agencies that are direct victims of fraud to receive restitution for their investigative costs, where those costs were incurred in an effort to justify ending payments and recoup wrongfully obtained funds, as well as assist in any prosecution.”

Firefigher -Iron Man Triathlete – Owes $198K Fraud Reimbursement

Former fire fighter, and former Iron Man triathlete, 34 year old Perry Adam Lieber, who lives Santa Barbara, was ordered to pay $198,025 in victim restitution and $30,000 in criminal fines. Victim agencies, the County of Ventura and the Ventura County Fire Department, sustained extensive losses as a result of workers’ compensation fraud committed by Lieber.

In March 2020, Lieber resigned from his position with the Ventura County Fire Department after working at the agency for more than three years.

On December 7, 2020, Lieber pled guilty to making false material statements to obtain disability benefits he was not entitled to during a workers’ compensation claim while employed with the Ventura County Fire Department.

Additionally, the court ruled that multiple financial accounts controlled by Lieber, that were previously frozen by the court, are to be liquidated to satisfy the order in full.

Over $228,000 of his financial assets will be liquidated as a result of this order.

Lieber will also serve 90 days in jail and complete 24 months of felony probation as a condition of his guilty plea.

A hearing relating to the final payment of restitution and fines is scheduled for April 29, 2021, at 9:00 a.m. in courtroom 26 of the Ventura County Superior Court.

According to a March 2021 press release, he is currently a health and fitness expert and entrepreneur in Santa Barbara, California.

He graduated from the University of California, where he earned a Bachelor’s in English and a minor in Sports Science and Nutrition. He also participated in his first Ironman competition, an endurance multisport event that involves swimming, cycling, and running over various distances.

Lieber opened his very own elite training facility called The Workplace, where he provides one-on-one training to a range of clients, including celebrities, professional athletes, and top executives.

His website provides substantial information about his current level of fitness.

CWCI Reports IMR Request Volume at All-Time Low

A new California Workers’ Compensation Institute study on the Independent Medical Review process used to resolve California workers’ comp medical disputes shows that after climbing to a record high in 2018, the number of IMR decision letters declined in both 2019 and 2020, falling to an all-time low last year.

The CWCI study is based on a review of more than 1.1 million IMR decision letters issued from 2014 through 2020.

The study notes that the number of IMR determination letters increased from 143,983 in 2014 to a record 184,735 in 2018, but then declined by 26% over the next two years, falling to 163,899 letters in 2019 and 136,746 letters in 2020.

That decline coincided with the implementation of the Prescription Drug Formulary, which as of 2018, established categories of drugs that were Exempt from prospective UR, Non-Exempt (or subject to prospective UR), or Not Listed, as well as subcategories of Non-Exempt drugs (Special Fill and Perioperative drugs) to allow for special circumstances or pre- and post-operative situations in which physicians can prescribe limited amounts of certain drugs that would otherwise be subject to prospective UR and IMR.

At that point, prescription drug disputes accounted for 46.4% of all IMRs, but within a year, that percentage was down to 41.1%, and in 2020 it fell to 39.1%.

Since 2018, opioids’ share of the pharmaceutical IMRs have declined from 32.2% to 28.3%, while over the same two-year span the biggest increase has been in dermatologicals, which have jumped from 10.9% to 14.8% of the pharmaceutical IMRs. With prescription drugs accounting for a declining share of the IMR disputes since 2018, the study noted a shift in the mix of services submitted for IMR, with physical therapy; injections; and durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) all seeing their share of the IMRs increase by 1.5 to 2.0 percentage points over the past two years.

The study notes that last year’s decline in IMR volume was also spurred on by the pandemic, as the number of job injury claims declined as California’s unemployment rate spiked from 5.5% in March to 16.4% in April and millions of Californians began to work from home.

The impact on IMR volume was immediate, as a comparison of monthly IMR determinations from 2019 and 2020 shows a similar number of IMRs in March of each year, but in April 2020 there were 1,762 fewer IMRs than in April 2019, while the differential was 5,387 fewer IMRs in May; 3,666 fewer IMRs in June; 2,841 fewer IMRs in July; and 3,848 fewer IMRs in August. IMR volume was down across all regions of the state last year, with the biggest decline occurring in Los Angeles County, which had about 9,400 fewer IMR determination letters in 2020 than in 2019.

As in prior studies, the latest results show that a small number of physicians continue to drive much of the IMR activity, with the top 1% of requesting physicians (89 doctors) accounting for 39.8% of the disputed service requests that underwent IMR in 2020. The top 10 individual physicians alone accounting for 10.2% of the disputed requests, and the study found that seven of the top 10 physicians in 2020 were also on the top 10 list for 2019.

IMR outcomes were fairly stable as IMR physicians upheld the UR doctors’ modification or denial of services 89.4% of the time last year, compared to 88.2% of the time in 2019. Uphold rates broken out by the type of medical service request ranged from 80.7% for evaluation/management services to 91.3% for DMEPOS and injections.

CWCI has released its latest IMR analysis as a Research Update Report, “Independent Medical Review Decisions: January 2014 Through December 2020.”

Ojai Gardner Admits $30.5 K Comp Premium Fraud

51 year old Jose Velasquez, who lives in Ojai California, pled guilty to two counts of felony insurance fraud on March 30, 2021. At the time of his pleas, Velasquez paid full victim restitution to Wesco Insurance Company, an AmTrust Company, in the amount of $30,483.

From March 1, 2015, through March 1, 2020, Velasquez owned and operated Velasquez Gardening located on 82 Crown St. in Ojai.

During that time, Velasquez systematically misrepresented the number of his employees and the total amount of his payroll to his workers’ compensation insurance company, Wesco Insurance. This fraud resulted in an underpayment of insurance premiums totaling $30,483.

Prosecutors say that Velasquez’s fraudulent actions resulted in inflated costs to his workers’ compensation insurance company, which are ultimately passed on to local consumers. Further, Velasquez’s fraud provided an unfair advantage by allowing him to underbid competitors by not paying his fair share of workers’ compensation insurance premiums. Workers’ compensation insurance fraud is not a victimless crime and will be prosecuted to the fullest extent of the law.

This case was investigated by the Ventura County District Attorney’s Office Workers’ Compensation Fraud Unit.

Sentencing is set for April 28, 2021, at 9:00 a.m. in courtroom 23 of the Ventura County Superior Court. Velasquez faces a maximum sentence of six years in felony jail.

COVID Cases Surge in Silicon Valley

Reuters reports that a California community that has been a bellwether of the coronavirus pandemic’s rampage across the United States warned on Thursday that the number of cases of more contagious COVID-19 variants is increasing to worrisome levels.

“The region’s progress in curbing the pandemic remains precarious,” the health department in Santa Clara County, home to California’s Silicon Valley, said.

“County residents are therefore urged to avoid travel, quarantine if travelling, and consistently use face coverings.”

The situation in Santa Clara, which was home to an early surge of coronavirus in California last year and the nation’s first death from COVID-19, offers a window into the pandemic’s progress across the wider United States.

Several states, including Florida and Michigan, are struggling to contain a resurgence of the virus linked to new highly contagious variants.

The 7-day daily average of cases across the United States has been increasing continuously since March 19, Reuters analysis shows. Over the past 13 days, the average daily number of new cases of COVID-19 has increased by about 17%, from 5,5591 on March 19 to 6,4814 on March 31. Total cases stand at 30,562,884, including 552,932 deaths.

“We’re already seeing surges in other parts of the country, likely driven by variants,” Santa Clara Health Officer Sara Cody said in a statement. “Combined with the data we are seeing locally, these are important warning signs that we must continue to minimize the spread.”

The rise in cases comes despite unprecedented efforts to vaccinate people worldwide and across the United States, where nearly 30% of the population had received at least one vaccine dose by Thursday, according to data from the U.S. Centers for Disease Control and Prevention (CDC).

Many U.S. states are moving to ease pandemic public health restrictions, and people who have been vaccinated are starting to venture out from a year of staying mostly at home.

But with the vast majority of the population still unvaccinated, experts warn that could be a recipe for a deadly fourth wave of the disease.

In California, the most populous U.S. state with 40 million residents, about 5.6 million people, or 17.3% percent of the population, had received one vaccine dose, the CDC said.

As cases have leveled off in recent weeks, state officials have reopened activities like restaurant dining and are making plans to send children back to school.

However, California Governor Gavin Newsom warned that with at least seven variants of the virus in circulation, the state is not close to achieving so-called herd immunity, which would require the vast majority of people to be inoculated.

“Now is not the time to spike the ball,” said Newsom, who received his own vaccination on Thursday in Los Angeles. “Now is not the time to announce, mission accomplished.”

In neighbouring Canada, officials in the province of Ontario declared a limited lockdown beginning on Saturday, while French president Emmanuel Macron on Wednesday ordered his country into its third national lockdown.

South Coast Gymnastics Cited for $1.3M Wage Theft Violations

The California Labor Commissioner’s Office has cited Perfect Point Corp. dba South Coast Gymnastics in Irvine $1.3 million for failing to pay 28 employees properly. An investigation found that employees were not paid for all hours worked, with some employees making less than $5 an hour.

“California law requires that workers be paid for all hours worked. Anything less is wage theft,” said Labor Commissioner Lilia García-Brower. “My office is committed to ending wage theft and recovering stolen wages.”

South Coast Gymnastics is a USA Gymnastics member club where gymnasts train to compete in national tournaments. The Labor Commissioner’s investigators visited on November 16, 2020 as part of a COVID-19 compliance inspection. After investigators found that the coaches and administration staff were underpaid, an audit identified the 28 workers who were underpaid during the violation period.

The Labor Commissioner’s Office on March 8, issued citations totaling $1,320,450 in wages and penalties against Perfect Point Corp. and owner Xiaoping Li, who is jointly and severally liable. The citations include $590,689 in minimum wages, meal periods, rest periods, contract wages and waiting time penalties, and $342,765 in interest due to employees. The citations also include $386,996 in civil penalties for minimum wage, meal break, rest break, pay period, and paystub violations.

When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid minimum wages plus interest. Waiting time penalties are imposed when the employer intentionally fails to pay all wages due to the employee at the time of separation. This penalty is calculated by taking the employee’s daily rate of pay and multiplying it by the number of days the employee was not paid, up to a maximum of 30 days.

Enforcement investigations typically include a payroll audit of the previous three years to determine minimum wage, overtime and other labor law violations, and to calculate payments owed and penalties due. Civil penalties collected are transferred to the State’s General Fund as required by law.

The Department of Industrial Relations’ Division of Labor Standards Enforcement, or the California Labor Commissioner’s Office, combats wage theft and unfair competition by investigating allegations of illegal and unfair business practices.

The Labor Commissioner’s Office in 2020 launched an interdisciplinary outreach campaign, “Reaching Every Californian.” The campaign amplifies basic protections and builds pathways to impacted populations so that workers and employers understand legal protections and obligations, and the Labor Commissioner’s enforcement procedures. Californians can follow the Labor Commissioner on Facebook and Twitter.

Experts Say Long Term COVID Health Effects Difficult to Predict

Business Insurance Magazine published a report on a recent Out Front Ideas webinar, entitled “COVID Claims Development: Workers’ Compensation & Beyond,” Experts in the workers’ comp line of business came together to discuss the long-term medical complications that are arising from the virus and what they’ve seen so far in terms of COVID-19 claims.

Coronavirus long-haulers have been in the news for some time now, with symptoms from the virus stalking them for months after they’ve contracted it. This in turn has had implications for workers’ comp claims, but what’s coming down the pike for such claims is yet to be determined.

Pointing to a National Institute for Health Research study that followed more than 4,000 people in the United States, “What they found is that 50% of the people were unable to work full-time six months after they tested positive for COVID, and only 8% of those people actually were hospitalized so they weren’t the most severe cases,” said Teresa Bartlett, senior medical officer at Sedgwick. She added that “88% of people said that they were coping with some form of cognitive dysfunction – and that is such a difficult thing to deal with [on the claims side].”

Studies on ‘long’ COVID-19 are still only in their infancy, but there’s clearly some cause for concern. Respondents have highlighted issues related to hair loss, cardiomyopathies, and blood clots in the legs, among many other symptoms. Healthcare workers, who have been on the frontlines for the entirety of the pandemic, are likewise being watched closely for signs of Post-Traumatic Stress Disorder. “It’s something that we have to be very mindful of in our industry, and we have to be prepared for how we will deal with it,” noted Bartlett.

As for workers’ comp claims that have arisen out of COVID-19 already, there are challenges here as well, particularly in identifying trends and predicting future impacts. That’s partly because there’s no single source for workers’ compensation information in the US, with data split across the NCCI, multiple independent bureaus, and monopolistic states.

Another factor that poses a challenge to workers’ compensation data analysis is the existence of self-insured employers, who, for the most part, do not report their data to any of the bureaus. Several top industries by employment in the US are mostly self-insured and collectively represent over 30% of the jobs across the top 20 industries. Additionally, a significant portion of the healthcare industry is also self-insured – and all of this data is missing from the bureaus’ analyses, noted Walls.

One of the places that does provide access to a robust set of workers’ compensation data is the California Workers’ Compensation Institute (CWCI). A deep dive into the institute’s figures reveals key trends in workers’ comp claims tied to COVID-19 so far.

California as a whole had about 13% of the infections and about 10% of the deaths [in the US],” said Alex Swedlow, president of CWCI, but he also noted, “Only about 4.7% of the California working age infections had a corresponding workers’ compensation claim, and about 5.6% of California’s working aged fatalities had an accompanying workers’ compensation claim.”

As of March 22, 2021, there had been almost 140,000 COVID-19 claims reported in California, with healthcare taking the lion’s share at 31.9%, followed by the public sector at 16.9% and retail at 10.3%, according to the CWCI. COVID-19 is also taking the heat off of other causes of workers’ compensation claims.

The characteristics of COVID-19 claims have also evolved since early reporting days. The healthcare industry’s share of claims has slowly dropped over time, though transportation has surged due to the partial opening up of the California economy. When it comes to regional analysis, Swedlow pointed out that regional infections have been relatively stable, with Los Angeles unsurprisingly being a constant and key center of infections.

Despite having some data to look at, a lot of what’s to come in the workers’ compensation space with regards to COVID-19 is still up in the air; some experts compare making predictions about future trends to trying to look into a crystal ball.

Orange County Recovery Center “Body Broker” Arrested

An Orange County man was arrested on charges of soliciting and receiving illegal kickbacks from corrupt sober living homes in exchange for finding them new patients in a process known as “body brokering.”

27 year old Darius Jarell Moore, who lives in Santa Ana, is charged with one count of solicitation and receipt of payment in return for referring a patient to a recovery home or clinical treatment facility. Moore is scheduled to make his initial appearance tin United States District Court in Santa Ana.

An affidavit filed with the complaint alleges Moore received hundreds of thousands of dollars in kickbacks from four Orange County facilities with two separate ownership groups via a shell company – Moore Recovery Solutions LLC, a Santa Ana-based business. The kickbacks allegedly were covered up by bogus contracts for “marketing” services.

According to the affidavit, Patient brokering has created a situation where substance abusers with no desire to stop using drugs are able to gain income from their insurance benefits by periodically participating in treatment programs. The facilities generally know patient brokers pay patients and give patients drugs, but they maintain deniability by discharging patients who admit they were paid and stopping work with particular patient brokers as soon as such actions become overtly known.

The complaint specifically alleges that Moore in October 2020 accepted a $16,000 kickback wired to a bank account held in the name of Moore Recovery Solutions from a checking account of a corrupt sober living home. The affidavit further details more than $350,000 in illegal kickbacks that the sober living homes allegedly paid to Moore in exchange for recruiting new patients. The sober living homes then submitted claims to health insurers.

The affidavit also details a recorded conversation between Moore and a sober living home employee discussing the clients Moore had placed into the facility and the cash value of the clients.

In December 2020, investigators executing search warrants at Moore’s residence found marketing agreements between Moore Recovery Solutions and two sober living homes that agreed to pay him $70,000 per month and $10,000 per month, respectively, but no other evidence that Moore’s company was a legitimate marketing service, according to the affidavit.

Investigators also found text messages from patients to Moore asking for money and asking to be placed in treatment. In response, Moore told the patients he would only talk to them through Signal, an encrypted communication application.

If convicted, Moore would face a statutory maximum sentence of 10 years in federal prison.

This matter was investigated by the FBI, the United States Office of Personnel Management – Office of Inspector General, and the California Department of Insurance.