Tag: 2022 News

Consumers, employers, and just about everyone else interested in health care prices will soon get an unprecedented look at what insurers pay for care, perhaps helping answer a question that has long dogged those who buy insurance: Are we getting the best deal we can?

As of July 1, health insurers and self-insured employers must post on websites just about every price they’ve negotiated with providers for health care services, item by item. About the only thing excluded are the prices paid for prescription drugs, except those administered in hospitals or doctors’ offices.

The federally required data release could affect future prices or even how employers contract for health care. Many will see for the first time how well their insurers are doing compared with others. The requirements stem from the Affordable Care Act and a 2019 executive order by then-President Donald Trump.

And according to Kaiser Health News, the new rules are far broader than those that went into effect last year requiring hospitals to post their negotiated rates for the public to see. Now insurers must post the amounts paid for “every physician in network, every hospital, every surgery center, every nursing facility,” said Jeffrey Leibach, a partner at the consulting firm Guidehouse.

“When you start doing the math, you’re talking trillions of records,” he said. The fines the federal government could impose for noncompliance are also heftier than the penalties that hospitals face.

Federal officials learned from the hospital experience and gave insurers more direction on what was expected, said Leibach. Insurers or self-insured employers could be fined as much as $100 a day for each violation, for each affected enrollee if they fail to provide the data.

Entrepreneurs are expected to quickly translate the information into more user-friendly formats so it can be incorporated into new or existing services that estimate costs for patients. And starting Jan. 1, the rules require insurers to provide online tools that will help people get upfront cost estimates for about 500 so-called “shoppable” services, meaning medical care they can schedule ahead of time.

Everyone will know everyone else’s business: for example, how much insurers Aetna and Humana pay the same surgery center for a knee replacement.

“These plans are supposed to be acting on behalf of employers in negotiating good rates, and the little insight we have on that shows it has not happened,” said Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health, an affiliation of employers who offer job-based health benefits to workers. “I do believe the dynamics are going to change.”

“Maybe at best this will reduce the wide variance of prices out there,” said Zack Cooper, director of health policy at the Yale University Institution for Social and Policy Studies. “But it won’t be unleashing a consumer revolution.”

Still, the biggest value of the July data release may well be to shed light on how successful insurers have been at negotiating prices. It comes on the heels of research that has shown tremendous variation in what is paid for health care. A recent study by the Rand Corp., for example, shows that employers that offer job-based insurance plans paid, on average, 224% more than Medicare for the same services.

Tens of thousands of employers who buy insurance coverage for their workers will get this more-complete pricing picture – and may not like what they see.

“What we’re learning from the hospital data is that insurers are really bad at negotiating,” said Gerard Anderson, a professor in the department of health policy at the Johns Hopkins Bloomberg School of Public Health, citing research that found that negotiated rates for hospital care can be higher than what the facilities accept from patients who are not using insurance and are paying cash.

That could add to the frustration that Mitchell and others say employers have with the current health insurance system. More might try to contract with providers directly, only using insurance companies for claims processing.

Other employers may bring their insurers back to the bargaining table.

“For the first time, an employer will be able to go to an insurance company and say, ‘You have not negotiated a good-enough deal, and we know that because we can see the same provider has negotiated a better deal with another company,’” said James Gelfand, president of the ERISA Industry Committee, a trade group of self-insured employers.

The consolidated cases filed by Javier Espino against Fullerton Foods for 2001 injuries to his back, knees, right shoulder, pysche, sleep, and gastrointestinal system, were resolved by a July 28, 2015 C&R approval. The settlement left open the issues of medical treatment and lien of his daughter, Belinda Espino for the home health care she provided.

The parties proceeded to trial over the issue of the entitlement to home health care, both retroactively and prospectively, as provided by Ms. Espino. The defendant’s contended there was no request for authorization for home health care prior to June 21, 2016.and this was submitted to UR.

The WCJ awarded the disputed home health care. Reconsideration was denied in the panel decision of Espino v Fullerton Foods, ADJ326655-ADJ439309 (June 2022).

In resolving the contentions of the parties, the WCAB panel discussed significant procedural errors. It noted that the June 21 2016 UR determination did not specify that applicant’s attorney’s office was served although it was addressed to applicant at the address for his attorney’s office. And subsequent 2017 UR determinations were not served on his attorney as well.

In Dubon v. World Restoration, Inc. (2014) 79 Cal.Comp.Cases 1298, 1299 (Appeals Board en banc) (Dubon II), the Appeals Board held that if UR is untimely the determination of medical necessity for the treatment requested may be made by the Appeals Board.

An employer has the duty to provide reasonable medical treatment upon learning of the need. (Lab. Code, § 4600). This was made clear by the California Supreme Court in Braewood Convalescent Hospital v. Workers’ Comp. Appeals Bd. (Bolton) (1983) 34 Cal.3d 159, 165 [48 Cal.Comp.Cases 566]. The Supreme Court wrote that “Section 4600 requires more than a passive willingness on the part of the employer to respond to a demand or request for medical aid. – This section requires some degree of active effort to bring to the injured employee the necessary relief” (Citations omitted.)

The WCAB panel noted another procedural error when it said that “It does not appear that defendant investigated applicant’s need for home health care or provided it pursuant to the opinions of the AME and Dr. Sohn despite its duty to expeditiously and actively investigate.”

Although the AME stated that applicant needed home health care for eight weeks in 2002, the record does not reflect that defendant provided it or investigated applicant’s need. Instead, post-surgery care was provided by applicant’s daughter. In his January 22, 2008 report, Dr. Sohn prescribed home health care, eight hours weekly, which was open-ended and did not limit the duration that applicant would need these services.

Because defendant did not take an active role in providing the needed medical treatment, it “becomes liable for the reasonable value of self-procured medical treatment.” (Bolton, supra, at p. 165.)

The WCAB panel noted another procedural error at the beginning of its option when it wrote “our review of the record is complicated by defendant’s failure to comply with WCAB Rule 10945(b), which provides, in relevant part: ‘[e]very petition for reconsideration …. shall support its evidentiary statements by specific references to the record.'”

It went on to write that “Here, defendant has violated Rule 10945(b), has failed to support its arguments with specific citations, and has not cited to the record as required. Defendant cannot evade this responsibility and place the burden on the Appeals Board to discover where the evidence supporting its petition can be found.”

And finally, the panel noted another procedural error when it wrote “Defendant has filed a Response to Applicant’s Answer to Petition for Reconsideration, without our permission and in violation of Workers’ Compensation Appeal Board (WCAB) Rule 10964. Although defendant should have complied with Rule 10964 and requested permission, we accept defendant’s supplemental pleading and include it in our deliberations.”

The takeaway from this case is that the WCAB is clearly urging practitioners – and the parties they represent – to strictly comply with the procedural requirements of the statutes and regulations that apply. In some cases, such as in the Utilization Review process, the failure to comply even with details of the service of documents can be a costly mistake.

The Worker Adjustment and Retraining Notification Act of 1988 (the “WARN Act” –29 U.S.C. §§ 2101 to 2109 ) is a US federal labor law which requires most employers with 100 or more employees to provide 60 calendar-day advance notification of plant closings and mass layoffs of employees, as defined in the Act.

The advance notice is intended to give workers and their families transition time to adjust to the prospective loss of employment, to seek and to obtain other employment, and, if necessary, to enter skill training or retraining programs that will allow these workers to successfully compete in the job market.

In addition to the WARN Act, which is a federal law, several states have enacted similar acts that require advance notice or severance payments to employees facing job loss from a mass layoff or plant closing.

For example, California requires advance notice for plant closings, layoffs, and relocations of 50 or more employees regardless of percentage of workforce, that is, without the federal “one-third” rule for mass layoffs of fewer than 500 employees. Also, the California law applies to employers with 75 or more employees, counting both full-time and part-time employees.

A comparison of the key provisions of the Federal and California requirements can be seen in the Overview published by the Employment Development Department.

Employers who violate § 2102 of the federal WARN act are required to provide aggrieved employees “back pay for each day of violation.” The employer may avoid this liability by proving that it qualifies for the Act’s “faltering company” exemption, or that the closing or layoff resulted from “unforeseen business circumstances” or a “natural disaster.”

And a case of first impression from the Fifth Circuit Court of Appeals determined that the economic impact of COVID-19 did not qualify as a “natural disaster” exemption. Although California is in the 9th Circuit, and the case is not controlling law, it is still illustrative on how courts might view the issue.

In Easom v. US Well Services, Inc., No. 21-20202 (June 15, 2022) a class action complaint was filed by former employees against US Well Services, Inc. for allegedly violating the WARN Act by terminating them without advance notice.

US Well argued that COVID-19 was a natural disaster under the WARN Act, and consequently, that it was exempt. The district court certified two questions for interlocutory appeal: (1) Does COVID-19 qualify as a natural disaster under the WARN Act’s natural-disaster exception?; (2) Does the WARN Act’s natural-disaster exception incorporate but-for or proximate causation?

The Fifth Circuit Court of Appeals held that the COVID-19 pandemic is not a natural disaster under the WARN Act and that the natural-disaster exception incorporates proximate causation.

However the case has yet to determine if the drilling company can avoid liability under WARN’s “unforeseeable business circumstances” exception defense, since that issue was not yet an issue on appeal. The answer to that may or may not be forthcoming as litigation progresses.

This case thus far is controlling law, on the two issues decided, for employers in Louisiana, Mississippi, and Texas (the Fifth Circuit Court of Appeals jurisdiction) however it is only persuasive law in other jurisdictions such as the Ninth Circuit which covers California.

Nonetheless it is important to keep this decision in mind as employers navigate through employment law related business decisions.

Signed into law in September 2018, Assembly Bill 5, has generated outrage from a wide range of Californians, from musicians to therapists to truckers and freelance journalists. The new law codified the more expansive ABC test previously set forth in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 416 P.3d 1 (Cal. 2018), for ascertaining whether workers are classified as employees or independent contractors.

AB5 and its subsequent amendments, now codified in Labor Code 2778 requires businesses to classify more workers as employees entitled to benefits like sick leave and overtime pay. But some workers affected by AB 5 say it’s caused them nothing but grief and anxiety.

Thus, the American Society of Journalists and Authors and the National Press Photographers Association filed a federal lawsuit challenging the new law on First Amendment and Equal Protection grounds, The Society of Journalists and Authors (ASJA)is the nation’s largest professional organization of independent nonfiction writers. Its membership consists of more than 1,100 freelance writers.

The National Press Photographers Association (NPPA) is an American professional association made up of still photographers, television videographers, editors, and students in the journalism field. It was founded in 1946. As of 2017, NPPA had total membership at just over 6,000.

The lawsuit was dismissed by the trial court.. In a 3-0 ruling, the Ninth U.S. Circuit Court of Appeals in San Francisco in October 2021 said the California law regulates economic activity and does not interfere with freedom of speech or the press in the published case of ASJA v Bonta

The panel acknowledged that although the ABC classification may indeed impose greater costs on hiring entities, which in turn could mean fewer overall job opportunities for certain workers, but such an indirect impact on speech does not necessarily rise to the level of a First Amendment violation.

Addressing the Equal Protection challenge, the panel held that the legislature’s occupational distinctions were rationally related to a legitimate state purpose.

The Plaintiffs in that case file a Petition for Writ of Certiorari with the United States Supreme Court on February 22, 2022, hoping to overturn the decision of the 9th Circuit Court of Appeal

The Supreme Court, however, denied review without comment Monday of the appeal by the two organizations. For this reason the dismissal of their base by a federal judge and the approval of that dismissal by an appellate court has no further avenues in the judicial system.

“The court’s decision to not hear our appeal is a loss for the thousands of freelancers who have built thriving careers through the freedom and flexibility that independent contracting provides,” said Jim Manley of the Pacific Legal Foundation, who represented the American Society of Journalists and Authors and the National Press Photographers Association.

Attorney General Rob Bonta’s office, in a filing defending the state law, told the court that AB5 “does not regulate speech or differentiate between speakers based on their message.”

In a separate case, the Supreme Court rejected an appeal last October by trucking companies challenging the classification of truck owner-operators as employees under AB5. An appeal by another trucking group is still pending before the high court.

The ride-hailing companies Uber and Lyft won an exemption from AB5 in November 2020 when state voters approved Proposition 22, allowing them to classify their drivers as contractors, after a campaign in which the companies spent more than $200 million.

But an Alameda County judge struck down Prop. 22 last August, saying the measure interfered with the Legislature’s authority under the state constitution to regulate workers’ compensation and also addressed multiple subjects, violating another constitutional standard. The case is now awaiting review by a state appellate court.

An accountant who enabled the owner of a corrupt Long Beach hospital to pay more than $40 million in illegal kickbacks to doctors in exchange for them referring thousands of spinal surgery patients was sentenced  to 15 months in federal prison for a tax offense related to the scheme.

George William Hammer, 69, of Palm Desert, was sentenced by United States District Judge Josephine L. Staton, who also ordered Hammer to pay an $8,000 fine and forfeit $500,000 in proceeds from the scheme.

Hammer pleaded guilty in August 2018 to one count of filing a false tax return.

Hammer was the financial officer for various companies controlled by Michael D. Drobot, who owned Pacific Hospital in Long Beach.

Drobot conspired with doctors, chiropractors, and marketers to pay kickbacks in return for the referral of thousands of patients to Pacific Hospital for spinal surgeries and other medical services paid for primarily through the California workers’ compensation system.

During its final five years, the scheme resulted in the submission of more than $500 million in bills for kickback tainted surgeries. To date, 22 defendants have been convicted for participating in the kickback scheme.

Beginning in 1997, Hammer supported the kickback scheme by facilitating payments to individuals receiving bribes and kickbacks pursuant to sham contracts that were used to conceal the illicit payments. Hammer falsified tax returns by characterizing the bribes as legitimate business expenses.

“Through his role at the Drobot-controlled entities, [Hammer] ensured that doctors were paid more than $40 million….in kickbacks,” prosecutors argued in a sentencing memorandum. “The scheme was too complex for Drobot to do alone. It could not have been accomplished without complicit executives like [Hammer] who furthered the scheme.”

Hammer was a salaried employee and did not directly profit from the kickbacks and bribes.

In January 2018, Drobot was sentenced to five years in federal prison for his crimes in this matter and awaits a March 2023 sentencing hearing after pleading guilty to three criminal charges for violating a court forfeiture order in the Pacific Hospital case by illegally selling his luxury cars.

The FBI, IRS Criminal Investigation, the California Department of Insurance, and the United States Postal Service Office of Inspector General investigated this matter.

Assistant United States Attorneys Joseph T. McNally and Billy Joe McLain of the Violent and Organized Crime Section and Assistant United States Attorney Victor Rodgers of the Asset Forfeiture Section prosecuted this case.