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Tag: 2021 News

NCCI Releases Countrywide Court Case Update

The National Council on Compensation Insurance (NCCI) released its next updated Countrywide Court Case Update. The November 2021 edition provides a look at some of the key cases and decisions NCCI’s Legal Team monitors that may impact workers compensation across the states. This report contains updated information on cases previously introduced and presents new cases and decisions including COVID-19-related rulings.

“The Countrywide Court Case Update is a valuable resource that NCCI provides to insurers, regulators, and other industry stakeholders,” said Bill Donnell, NCCI’s President and CEO. “NCCI produces this robust report to inform on state and federal legal developments that can impact the workers compensation system.”

This report, provides insights on topics such as:

– – COVID-19 court cases
– – Workers compensation exclusive remedy
– – Challenges to state adoption of third-party guides
– – Developments in marijuana-including reimbursement and employment-related questions
– – Air ambulance reimbursement: state vs. federal law
– – Additional federal and state developments listed by geographic zone

In California, The California Second Appellate District will consider in See’s Candies, Inc. et al. v. Superior Court of Los Angeles County, whether WC exclusive remedy bars a lawsuit brought by an employee alleging that the employer’s failure to provide sufficient safeguards against COVID-19 caused the death of the employee’s spouse, who was infected after the employee contracted the virus at work.

And a case headed to the U.S. Supreme Court is significant to California since the state is governed by the 9th Circuit Federal Court of Appeal.

On August 19, 2020, the federal Court of Appeals for the Ninth Circuit, in United States v. Washington 971 F.3d 856 (9th Cir. 2020), as amended on April 15, 2021, affirmed a federal district court decision upholding the constitutionality of a Washington workers compensation statute that creates a presumption of compensability for certain types of diseases contracted by federal contractors working at the Hanford federal nuclear cleanup site.

The court rejected the federal government’s argument that the workers compensation statute violated the federal intergovernmental immunity doctrine, which invalidates state laws that seek to regulate the United States directly or discriminate against the federal government and those with whom it deals.

The court further concluded that the workers compensation statute falls within the scope of a federal law (40 U.S.C. § 3172) that authorizes the states to regulate workers compensation on federal land to the same extent that the states can regulate on nonfederal land.

A petition for Writ of Certiorari in this case was filed with the U.S. Supreme Court in September 2021. The essential question presented is whether a state workers’ compensation law that applies exclusively to federal contract workers who perform services at a specified federal facility is barred by principles of intergovernmental immunity, or is instead authorized by 40 U.S.C. 3172(a), which permits the application of state workers’ compensation laws to federal facilities “in the same way and to the same extent as if the premises were under the exclusive jurisdiction of the State.”

Jury Finds SoCal Doctor Guilty of Sales of Unapproved Drug

A Southern California physician has been found guilty of 26 felony charges for fraudulently distributing an unapproved cancer treatment over a six-year period, charging up to $2,000 per bottle.

Benedict Liao, 81, a.k.a. “Wada Masao,” and “Masao A. Wada,” of Fullerton, was found guilty of seven counts of wire fraud, 11 counts of selling a misbranded drug and eight counts of selling an unapproved new drug.

According to evidence presented at his five-day trial, Liao operated the Oeyama-Moto Cancer Research Foundation, which had offices in Monterey Park and, later, in West Covina.

Using the alias “Masao A. Wada, M.D.” Liao submitted to the United States Food and Drug Administration in 2011 and 2012 an Investigational New Drug (IND) application in which he stated that he planned to engage in clinical trials of a product called Allesgen, which he told FDA and stated in promotional material was intended to treat and cure many types of cancer. FDA received these applications and both times informed Liao that the IND applications for Allesgen had been placed on a full clinical hold due to deficiencies in the submissions.

The FDA required that a drug distributed under an IND application bear a label stating that it was a “New Drug – Limited by Federal law to investigational use” and Liao told FDA that he would place a label on Allesgen with such a statement.

Instead of doing so, Liao manufactured Allesgen in Fullerton and distributed the unapproved drug with a label calling Allesgen a “supplement,” not a drug, and this label stated that it “had not been evaluated by the FDA” and was not intended to treat any disease.

Liao sold and distributed Allesgen at a price generally set at $2,000 per bottle, plus shipping, to customers in various states and in foreign countries. Over the years he received approximately $1,600,,000 in revenue from this enterprise.

The jury found that Liao schemed to defraud buyers of Allesgen by failing to inform them it was not an approved cancer treatment, that FDA had placed it on hold, barring any distribution of it, that he was not allowed to charge anything for it, and that it could have side effects that were unpredictable and could be serious.

Liao remains free, and his sentencing is scheduled for February 2022. According to federal sentencing guidelines, he faces a maximum prison sentence of nearly 200 years. Sentences in wire fraud cases are often connected to the amount of money involved, though Liao is unlikely to do much time at all due to his advanced age and poor health.

FDA Scheduled to Review Merck COVID Pill This Month

Reuters reports that Merck has signed eight deals to sell more than a total of 2 million courses of its experimental COVID-19 pill molnupiravir to governments around the world.

It has applied for approval in the United States and said it can make 10 million courses in 2021. A Food and Drug Administration advisory committee is scheduled to evaluate the safety and efficacy data of the pill on Nov. 30 and decide whether or not to approve it for emergency use authorization in the U.S.

Last week the company reached a deal with the United Nations-backed Medicines Patent Pool that will allow more companies to manufacture generic versions of the pill with a royalty-free license applying to 105 low- and middle-income countries. So far Merck has agreed to license the drug to several India-based generic drugmakers.

Merck CEO Robert Davis told CNBC on Thursday the drugmaker is ready to produce and distribute tens of millions of doses of its Covid antiviral pills if given regulatory approval.

The Merck pill forces the SARS-CoV-2 coronavirus to mutate itself to death. The drug tricks the virus into using the drug for replication, then inserting errors into the virus’ genetic code once replication is underway. When enough copying errors occur, the virus is essentially killed off, unable to replicate any further.

But according to an article in Forbes the drug raises two key concerns. The first is the drug’s potential mutagenicity, and the possibility that its use could lead to birth defects or cancerous tumors. The second is a danger that is far greater and potentially far deadlier: the drug’s potential to supercharge SARS-CoV-2 mutations and unleash a more virulent variant upon the world.

The company claims the antiviral pill it’s developing can cut hospitalizations and deaths among people with COVID-19 by half. The results haven’t yet been peer reviewed. But if the drug candidate is authorized by regulators, it would be the first oral antiviral treatment for COVID-19. By contrast, the other currently authorized drugs must be delivered intravenously or injected.

A pill could make treating patients earlier on in their infection much easier – and more effective. It could also keep hospitals from overflowing, especially in places where vaccination rates are still low.

The other therapies on offer against COVID-19, Gilead Science’s antiviral remdesivir and a monoclonal antibody cocktail from biotech firm Regeneron, must be administered intravenously or by injection. That makes it difficult for people to access the therapies before they are sick enough to land in hospital. And remdesivir is approved only for those who are already hospitalized with COVID-19.

Molnupiravir was so effective in a phase 3 trial involving COVID-19-positive people at risk of severe illness that clinicians halted enrollment early.

Las Vegas Woman Pleads Guilty to $176 K EDD Fraud

A Las Vegas woman pleaded guilty to using at least 40 stolen identities to fraudulently collect approximately $175,622 in unemployment insurance benefits from the California Employment Development Department.

According to court documents and admissions made in court, Danielle Lacharis Buck (aka Danielle Lacharis Lakey), 45, participated in a scheme to defraud the California EDD into paying her approximately $175,622 in unemployment insurance benefits.

As part of the scheme, Buck obtained stolen identities through her job in the medical industry. She used her access to patient and co-worker information to steal personal identifying information – such as names, dates of birth, and social security numbers of unsuspecting individuals – and then electronically filed false unemployment claims using the stolen names and information.

In total, Buck filed more than 50 false unemployment insurance claims using at least 40 different stolen identities. She withdrew cash from an unemployment insurance benefits debit cards at ATMs in the Las Vegas and Los Angeles metropolitan areas.

Buck pleaded guilty to one count of mail fraud and one count of aggravated identity theft. She faces a statutory maximum penalty of 20 years in prison for mail fraud and a mandatory minimum two-year term in prison for aggravated identity theft. U.S. District Judge Kent J. Dawson scheduled sentencing for January 25, 2022.

Assistant U.S. Attorney Christopher Chiou for the District of Nevada and Special Agent in Charge Quentin Heiden of the U.S. Department of Labor Office of Inspector General (DOL-OIG), Los Angeles Region made the announcement.

The case was investigated by the DOL-OIG. Assistant U.S. Attorney Eric Schmale is prosecuting the case.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud.

The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.

Orange County Judge Hands Opiod Makers First Victory in Nation

An Orange County Superior Court Judge ruled late Monday that four drug companies can’t be held liable for that state’s opioid epidemic. Communities had hoped for tens of billions of dollars in compensation to help ease the addiction crisis.

It marked the first trial win for any drug companies in the more than 3,300 lawsuits filed by states and local governments over a drug abuse crisis that the U.S. government says led to nearly 500,000 opioid overdose deaths over two decades.

Attorneys representing four California counties argued the drug companies used false and misleading marketing to push up the sale of prescription opioids. The Sixth Amended Complaint asserted causes of action for False Advertising , Unfair Competition and Public Nuisance against the companies. The companies denied any wrongdoing.

Phase I of this case regarding liability was tried to the Court between April 19, 2021 and July 27, 2021 . No party requested trial by jury on any claim or issue. The entire trial was conducted remotely, via the Zoom platform. All parties rested on July 27, 2021. The Court set a briefing schedule for closing briefs, and closing arguments were heard on September 30, 2021 and October 1, 2021.

In his 41-page ruling, Superior Court Judge Peter J. Wilson said it was unclear the drug industry’s marketing efforts led to directly to a rise in illegal use of prescription opioid painkillers.

He also acknowledged that his Court is aware of the toll being taken on society by what has been variously referred to as the “opioid crisis” or the “opioid epidemic” and that the defendants do not dispute that there is an opioid crisis.

However he noted that “the California Legislature has approved, and continues to approve, the availability of opioid medications, through prescriptions, by passing the laws described” in the opinion.

The ruling went on to say “As the Historical and Statutory Notes to Business & Professions Code section 2241.5 state, “it is the intent of the Legislature to encourage physicians to provide adequate pain management to patients in California consistent with Section 2241.5.” And the California Legislature made clear its intention to expand, rather than restrict, the appropriate prescribing of opioid medications.

“In addition to its relevance to proof of the “unreasonableness” element of a public nuisance claim as discussed above, the absence of evidence concerning medically inappropriate prescriptions also breaks the chain of causation between Defendants’ alleged wrongful conduct and the harms complained of.

The ruling reviewed documents presented during the trial against each defendant in great detail, and concluded that none of the identified statements, within the applicable statute of limitations periods, to be false or misleading. An allegedly false or misleading statement in an internal company document, that was in no way published or disseminated before the public, would not qualify as “false advertising” under the statute or applicable cases.

The ruling concludes that “There will accordingly be judgment for Defendants on all claims.”

The ruling came as J&J and the three largest U.S. drug distributors – McKesson Corp, Cardinal Health Inc and AmersourceBergen — work to finalize a proposed deal to pay up to $26 billion to settle the thousands of cases against them. And a bankruptcy judge in August approved a settlement by OxyContin maker Purdue Pharma and its wealthy Sackler family owners of the claims against them that the company values at more than $10 billion.

In a statement, the lead lawyers overseeing related federal lawsuits against the companies — Jayne Conroy, Paul Farrell and Joe Rice — said they strongly disagreed with the ruling and stressed that it did not impact related cases nationally.

The only other opioid trial to reach a verdict resulted in an Oklahoma judge in 2019 ordering J&J to pay $465 million to the state. J&J is appealing that decision.

Trials are currently underway a New York case against Teva and AbbVie and in Ohio against three pharmacy chain operators. A West Virginia federal judge recently finished hearing evidence in a trial involving the distributors.

Vaccination Mandate Meltdown Increasing Coast to Coast

While the vast majority of employees across most industries and sectors have acquiesced to mandatory vaccine mandates, enough Americans are refusing to get the jab that states and municipalities are losing a dangerous game of chicken with employees who refuse.

On Saturday, the New York Post reported that 26 New York fire companies have been shuttered citywide due to staff shortages caused by the Covid-19 vaccine mandate.

The stunning lockdown came amid a pitched battle between City Hall, which will start enforcing a mandate Monday that all workers have at least one dose of the COVID-19 vaccine – and jab-resisting fire fighters, many reportedly saying they were already sick with the coronavirus and therefore have “natural immunity.”

Across the Rockies, Los Angeles Country Sheriff Alex Villanueva has warned of an “imminent threat to public safety” caused by a “mass exodus” of thousands of deputies and civilian personnel who refuse to take the jab. “I could potentially lose 44% of my workforce in one day,” he wrote in a Thursday open letter to the Board of Supervisors, adding that he can’t enforce “reckless mandates that put public safety at risk.”

The Sheriff’s Department – the largest in the country – employs approximately 18,000 people. About half are sworn deputies.

Meanwhile in Arizona, a Tucson Water employee claims the department is ‘losing staff’ over the mandate. “We are watching employees walk out as I speak in the water quality and operations division,” reports KOLD13.  “We’re pulling people from other areas and other departments to help specifically cover the operations division which is overseeing the water quality and drinking water parameters,” the whistleblower added.

And American Airlines cancellations are disrupting transportation. The company scrubbed more than 1,900 flights over the weekend,  Company officials deny that the problem is related to a protest of the vaccine mandate. However, its phenomena is so similar to the massive cancellation Southwest had just a few months ago, as to raise questions about the cause.

The Chicago Fraternal Order of Police won a small victory in its fight against a city employee Covid-19 vaccine mandate on Monday when a county judge temporarily lifted the mandate’s requirement that all police be fully vaccinated or have a valid exemption by Dec. 31.

Cook County Judge Raymond Mitchell’s order still allows the city to put officers who refuse to report whether they are vaccinated on no-pay status, but it prevents the city from disciplining police who are not fully vaccinated or exempt by the end of the year.

Unlicensed Agent Arraigned for Stealing $1.4 M in Comp Premiums

A former Costa Mesa resident, who was arrested in October on suspicion of collecting over $1.4 million from companies paying for bogus workers’ compensation insurance coverage, made her first court appearance in Orange County last week to face multiple felonies.

Unlicensed insurance agent Karyl Lynn Reed, 57, was arraigned on multiple felony counts of grand theft, forgery, embezzlement, and aggravated white-collar crime after allegedly defrauding three victims. Earlier this month, Reed was arrested in Seabrook, Texas, and extradited to Orange County.

An investigation by the Department of Insurance found that between 2012 and 2019, Reed acted as an insurance agent without a license and collected premiums for workers’ compensation insurance through her businesses, Envoy Business Partners and Allenn Specialty Group. Both companies operated out of facilities located at 16787 Beach Blvd,. Suite 730, Huntington Beach, CA 92647-4848

She would provide her victims with fraudulent Certificates of Insurance, causing her victims to believe they had valid coverage when there was actually none.

The investigation discovered Reed also operated a staffing company without valid workers’ compensation coverage and personally adjusted and administered employee injury claims. She collected workers’ compensation premiums and payroll, employer and employee taxes from victims, and provided them with falsified Certificates of Insurance as well leading them to believe they were covered when they were not.

The Department’s investigation revealed that one victim did not have workers’ compensation coverage for an employee who became injured. Another victim had requested an updated Certificate of Insurance from their insurance company and were told no policy or coverage was in place and found out the policy number Reed had provided them belonged to a policy for another business.

The investigation further revealed another victim who discovered the money they were paying Reed to her staffing service was not being remitted to the insurance company.

The public defender representing Reed could not immediately be reached for comment. Reed is due back in court in December. The case is being prosecuted by the Major Fraud Unit of the Orange County District Attorney’s Office.

Consumers can check the license status of their agent or contact the Department of Insurance at 800-927-4357 if they suspect they are victims of insurance fraud.

WCIRB Updates COVID-19 Impact Report

The Workers’ Compensation Insurance Rating Bureau of California has released its COVID-19 in California Workers’ Compensation report, which details the characteristics of COVID-19 workers’ compensation claims in California and their impact on the state’s workers’ compensation system.

In total, including denied claims, almost 160,000 COVID-19 claims have been reported to the Division of Workers’ Compensation as of early September 2021. About 43% of COVID-19 claims have been reported by self-insured employers. Typically, about one-third of non-COVID-19 claims are self-insured employer claims. With the Delta variant, those numbers are likely to grow.

More than one-half of COVID-19 claims were incurred by workers with ages between 16 and 39, which is somewhat higher than the proportion of all indemnity claims incurred by younger workers.

In a typical year, about 600,000 workers’ compensation claims of all types are filed.

In the early months of the pandemic, the ratio of workers’ compensation claims to infections was high with a statewide stay-at-home order, a relatively broad presumption of compensability and most claims arising from healthcare workers and first responders. The high share of healthcare COVID-19 claims has been relatively consistent throughout the pandemic.

The winter surge was severe in California with about one-half the infections and workers’ compensation claims arising during that period. In December 2020, at the height of the winter surge, more than one-third of all indemnity claims were COVID-19 claims.

Since the rollout of the vaccines in early 2021, the ratio of workers’ compensation claims relative to infections has been relatively low. After dropping sharply in the spring of 2021 following the rollout of the vaccines, the proportion of COVID-19 claims have recently increased somewhat with the Delta variant.

About 22% of the COVID-19 death claims reported in WCIRB transaction data are from the healthcare sector. COVID-19 death claims are often reported relatively late. As a result, totals for 2021 will likely increase. Almost 80% of COVID-19 death claims were incurred by workers aged 50 years or older compared to about one-third of all indemnity claims.

Denial rates on COVID-19 claims have been higher than on non-COVID-19 claims as only about 7% of non-COVID-19 claims are denied. Many COVID-19 claims are denied due to the lack of a positive test result for a COVID-19 infection.

Virtually all COVID-19 indemnity-only claims close quickly as they typically involve only short durations of TD. COVID-19 claims with both medical and indemnity benefits on average close more quickly than the typical indemnity claim as more have relatively small incurred values.

Biden Abandons Plans to Limit Drug Pricing

The framework of a deal on President Biden’s social spending package unveiled on Thursday does not include allowing Medicare to negotiate lower prescription drug prices, leaving out a major Democratic priority.

A senior administration official told reporters there were not enough votes among Democrats to pass the policy.

“[President Biden] has spent countless hours over the last several weeks discussing this topic with members of Congress and trying to secure a deal,” the official said. “But at the end of the day, there are not yet enough votes to get something across the line that will deliver what the American people need and expect on prescription drugs.”

The absence of drug pricing in the package is a major failure for the party on one of its key campaign pledges, and an area where leaders like Biden and Speaker Nancy Pelosi (D-Calif.) had repeatedly vowed to take action.

Sen. Kyrsten Sinema (D-Ariz.), as well as a small handful of House Democrats, were seen as obstacles to passing the policy.

As rumors circulated about drug pricing provisions being dropped or watered down on Wednesday, vulnerable House Democrats urged their party to keep a strong provision in, noting they campaigned on it.

“All of us would love to be able to go back to our districts and say, ‘Hey this is something we campaigned on that we delivered,'” said Rep. Susan Wild (D-Pa.), speaking of other front-line members in competitive districts.

Now, because of objections from a small minority of Democratic lawmakers, the drug pricing provision is being left out.

The proposal is extremely popular with voters. A Kaiser Family Foundation poll this month found that 83 percent of the public support allowing the government to negotiate drug prices.

Lawmakers had expressed hope in recent days that they would be able to find a compromise on a narrowed version of the drug pricing measure. Senate Finance Committee Chairman Ron Wyden (D-Ore.) said in recent days he would not accept a “fig leaf” on drug pricing and would insist on a strong measure.

Sen. Bernie Sanders (I-Vt.) has also made lowering drug prices a top priority for the package.

Reps. Scott Peters (D-Calif.), Kathleen Rice (D-N.Y.) and Kurt Schrader (D-Ore.) voted against a drug pricing proposal in committee last month, warning it would harm innovation from drug companies to develop new treatments. They pushed an alternative, much scaled-down measure.

The absence of drug pricing measures in Biden’s new spending framework is a major victory for the pharmaceutical industry, which fought hard against the proposal with lobbying and a seven-figure ad buy, and has long been a powerful force in Washington.

Drug companies warned that regulation of their prices would harm their ability to do research and bring new treatments to market.

Employers Holdings Announces Record Breaking Performance

Employers Holdings, Inc., a holding company with subsidiaries that are specialty providers of workers’ compensation insurance and services focused on select, small businesses engaged in low-to-medium hazard industries, just reported financial results for its third quarter ended September 30, 2021.

– – Record number of ending policies in-force (109,870), up 6% since year-end;
– – Gross premiums written were $152.3 million, up 16% year-over-year;
– – Net premiums earned of $147.1 million, up 2% year-over-year;
– – Net income of $15.0 million, or $0.53 per diluted share;
– – Adjusted net income of $11.6 million, or $0.41 per diluted share;
– – The Company repurchased 327,402 shares of its common stock at an average price of $40.54 per share;

Chief Executive Officer Katherine Antonello commented: “We closed the quarter with yet another record number of policies in-force and our written premiums, which were up 16% year-over-year, were the highest they have been since the first quarter of 2020. To recognize the positive shift we are experiencing in audits, we increased our final audit accruals by $4.7 million during the quarter. In addition, October premium writings are off to a very strong start, a sign that small businesses are beginning to thrive and are actively shopping for workers’ compensation coverage.

We maintained our current accident year loss and LAE ratio on voluntary business at 63.6%, down from 65.5% a year ago. Indemnity claim frequency continues to be down in recent periods while indemnity claim severity remains moderate. As part of our continued technology and process improvements initiative, we implemented a new comprehensive claims system during the quarter which we believe has enhanced and streamlined our claims handling processes. In connection with this implementation, we undertook several process changes and, as a result, we chose not to recognize any prior year loss reserve development during the quarter.

Our underwriting and administrative expenses of $37.4 million were down 19% from a year ago. The decrease was primarily a result of targeted expense savings, mainly in the areas of compensation and professional fees.”

Ms. Antonello continued, “Our Cerity operating segment, which offers digital workers’ compensation insurance solutions directly to consumers, continues to grow while remaining within our targeted low hazard groups. We believe that Cerity’s technological and intellectual capabilities will support our future growth initiatives and provide direct access to workers’ compensation insurance for businesses seeking an online experience.

To capitalize on emerging labor market improvements, we recently expanded our underwriting appetite at both Employers and Cerity to include additional classes of business within our targeted hazard group mix. We remain committed to maintaining the highest level of underwriting discipline and to aggressively managing our expenses within our Employers and Cerity segments. Our balance sheet and capital position are very strong and are highly supportive of these key initiatives.”