Tag: 2021 News

A new nonprofit, trade association, the California Staffing Agency Reform Association (Cal-SARA), has been established by staffing industry leaders to clean up the current marketplace, which it claims is inundated with fraudulent and black market workers’ compensation insurance.

“The increasing demand for a contingent or variable workforce, combined with the decreasing supply of employees and workers’ compensation insurers, has allowed a massive black market to grow virtually unchecked. These illegal practices put staffing agencies, injured workers and California taxpayers at risk. Regulators have thus far been unsuccessful in policing these activities causing the situation to get worse,” says Mark Bertler, Executive Director of Cal-SARA.

Cal-SARA says that legitimate staffing agencies are forced to compete with scam agencies that do not operate with legitimate workers’ compensation insurance. Illegal operations drive prices down below the cost of doing business, creating an unfair marketplace. Customers of the California staffing industry have come to accept these illegitimate operations, largely due to the unfilled and accelerating demand for workers. Regulators appear to be playing “whack-a-mole” and cannot seem to shut them down as fast as they pop up.

Cal-SARA will provide education, training and legal support for its members, as well as providing assistance to regulators and insurers. Cal-SARA will also act to protect its members from illegal and unethical activity by aggressively pursuing all parties who enable these illegal arrangements, including brokers and PEOs.

A robust and inclusive committee structure will ensure that Cal-SARA’s mission and goals are advanced. These committees include industry leaders on their education, governance, audit, membership and litigation committees.

“Self-reform is the fastest and most reliable way to clean up our industry,” says Bertler. “Unethical and unscrupulous actors continue to destroy the market by blatantly utilizing illegal business practices without fear of sanction or punishment,” he explains. “The temptation to cross the line and operate in this emerging and dangerous underground marketplace is often too great. Once they stop paying for workers’ compensation insurance, they may also resort to payroll tax fraud as well. Cal-SARA is in the process of generating a war chest of resources and talent to put an end to these crimes,” he adds.

Cal-SARA promotes legal and regulatory compliance in the sale of workers’ compensation insurance and advocates for the common business interests of its members in recognizing and eliminating workers’ compensation fraud in the temporary staffing/staffing/recruiting industries. To learn more and join the fight against staffing industry workers’ compensation fraud, visit https://www.cal-sara.org/.

The Ohio Attorney General’s office says it may have uncovered evidence in a court battle to show that a pharmacy benefit manager knowingly overcharged a state agency.

A report in the Columbus Dispatch says that among hundreds of thousands of emails obtained from PBM OptumRX as part of the litigation was one that appears to acknowledge that the multibillion-dollar corporation was not following the terms of its contract with the Ohio Bureau of Workers’ Compensation.

The PBM administered prescription drugs for workers injured on the job. In all, OptumRX overcharged the bureau on more than 1.3 million claims for generic medications, the lawsuit says. The contract, in effect from mid-2009 until the fall of 2018, called for the PBM to charge the lowest of four potential prices for generic drugs, including a measure from the Centers for Medicare and Medicaid known as the Federal Upper Limit, or FUL for short.

But in a series of May 2015 emails marked as “confidential,” John Spankroy, director of public sector account management for Catamaran, a company purchased by OptumRX, said the Federal Upper Limit was never applied, despite the contract.

He told Susan McCreight, senior director of public sector account management, “Per BWC contract we are supposed to be using pricing logic that includes lower of FUL for generics. None of the BWC price schedules has FUL as a cost source.”

In a separate email, Spankroy told Bryce Owens, the Illinois-based PBM’s manager for pricing and analytics, “We do not see FUL included as a cost source option.”

Spankroy also acknowledged: “BWC is not aware of this (yet).”

“The admission is highly relevant” to the central issue in the legal dispute: “whether OptumRX was required to follow the pricing terms included in the BWC contract,” said Yost’s legal team in a Dec. 16 court filing.

But Andrew Krejci, who is with Optum’s corporate communication office, says the federal FUL requirement was never part of the PBM’s agreement with the state.

“The plain language of the contract demonstrates that the lesser-of reimbursement methodology, which was agreed upon and utilized by the parties over the course of their almost decade-long relationship, incorporated three reimbursement options and CMS FUL was never one of them,” OptumRx said in a court filing.

The bureau dropped OptumRX more than two years ago after a consultant determined the PBM was vastly overcharging the state.

The same consultant later discovered that PBMs – including OptumRX – in Ohio’s Medicaid program, which pays for health care of the poor and disabled, were charging three to six times the standard rate, enabling them to take home nearly $250 million in a single year.

According to the lawsuit, which seeks unspecified damages, OptumRx overcharged the bureau on 57% of 2.3 million prescription claims from injured Ohio workers between January 2014 and September 2018.