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Tag: 2022 News

RAND Reports on COVID Effects on Worker’s Comp Industry

RAND Corporation recently released a new Perspectives Report that examines policymakers’ initial efforts and reasoning around enabling access to workers’ compensation benefits for employees who are required to work outside their homes during the COVID-19 pandemic.

They briefly assess the potential impacts of continuing to expand such access on workers, employers, and insurers. And finally, they pose further questions that policymakers and others may want to consider when evaluating past policies and crafting new ones to meet future public health emergencies.

The coronavirus disease 2019 (COVID-19) pandemic has posed incredible challenges to the U.S. workforce. Although many businesses have transitioned employees from on-site work to telework, frontline employees in certain sectors deemed “essential” (e.g., hospitals and other health care facilities, public safety agencies such as police and fire departments, critical infrastructure such as electric and water utilities, or the food supply chain) must continue to work on-site.

Depending on the specific public health restrictions in place, many “nonessential” businesses have also operated in a manner that requires employees to work on-site and, in some instances, to have extensive contact with customers, vendors, and suppliers.

As of July 31, 2021, 36 states, the District of Columbia, and Puerto Rico have either implemented or are considering changes to make it easier for some classes of workers who contract COVID-19 while working outside the home to obtain benefits.

In a majority of states that have expanded workers’ compensation presumptions, the presumption takes effect upon either a positive COVID-19 test result or physician’s diagnosis. In Mississippi, North Dakota, and Washington, the presumption takes effect once a worker is ordered to quarantine by an employer because of suspected COVID-19 exposure.

Workers’ compensation actuaries in a majority of states have adopted regulations excluding COVID-19 from experience rating. NCCI proposed a rule change omitting COVID-19 claims from experience rating calculations. To date, 34 out of the 36 states (excepting Alaska and Nebraska) within NCCI have approved the rule change. Additionally, all states not covered by NCCI have approved similar rule changes.

The COVID-19 pandemic has, so far, not had dramatic impacts on the profitability of the workers’ compensation insurance market. Far from the dire predictions at the start of the public health emergency, many employees who have contracted COVID-19 have recovered relatively quickly, without the need for long-term, costly medical care or time off from work. And although numerous laws and regulations have been enacted across many states, many of the COVID-19 claims have not ultimately met the requirements for compensability.

Additionally, some observers have noted that overall claims frequency in 2020 declined in many states. A study by the Workers’ Compensation Research Institute found that in the second quarter of 2020, “the volume of non–COVID-19 WC [workers’ compensation] claims . . . [dropped] by at least 30 percent in the vast majority of the states and by as much as 50 percent in Massachusetts” (Fomenko and Ruser, 2021, p. 8).

The biggest risk that insurers now face is the unknown long-term health implications for people who have recovered from a serious COVID-19 infection. Patients admitted to intensive care units are generally at greater risk of long-term adverse health outcomes. Some experts also anticipate that “in addition to claims for occupational exposure to COVID-19, an influx of posttraumatic stress and mental health claims could also be on the way” (Marsh, 2020, p. 5).

It will take decades to fully understand what, if any, serious long-term side effects patients who have recovered from COVID-19 will face. Insurers face uncertain risk around tail costs, which include the potential for latent claims filed for lifetime medical, permanent disability, or death benefits.

The RAND Researchers conclude by saying “The effects of the COVID-19 pandemic on the U.S. business and labor market will last far beyond an official declaration that the pandemic has ended.

New “Stealth Omicron” Variant BA.2 Found in at Least 40 Countries

The Omicron BA.2 sub-variant, also dubbed “stealth Omicron,” has been detected in at least 40 countries worldwide.

Labs in countries including Denmark and Norway have reported that the sub-variant has been gaining ground, accounting for nearly half of all COVID cases in the former as of January 20, marking a sharp increase in recent weeks.

In a press release issued last Friday, the U.K.’s Health Security Agency (HSA) said that the Omicron variant sub-lineage known as BA.2 has been designated a variant under investigation by the Agency.

The Agency went on to report that In total, 40 countries have uploaded 8,040 BA.2 sequences to GISAID since 17 November 2021. At this point it is not possible to determine where the sublineage may have originated.

The first sequences were submitted from the Philippines, and most samples have been uploaded from Denmark (6,411). Other countries that have uploaded more than 100 samples are India (530), Sweden (181), and Singapore (127).

Dr Meera Chand, COVID-19 Incident Director at UKHSA, said “It is the nature of viruses to evolve and mutate, so it’s to be expected that we will continue to see new variants emerge as the pandemic goes on. Our continued genomic surveillance allows us to detect them and assess whether they are significant.”

A press release from Denmark’s Statens Serum Institut (SSI) infectious disease research institution last week stated that the subvariant BA.2 accounted for 20% of all covid-19-cases in Denmark in December. And other countries also experience an increase in BA.2 cases: E.g. Great Britain, Norway and Sweden

One notable aspect of BA.2 is that it lacks a genetic characteristic that scientists had used to identify Omicron cases previously -giving credence to its “stealth Omicron” monicker.

However, Cornelius Roemer, a computational biologist at the University of Basel in Switzerland, posted to Twitter that BA.2 is still detectable on PCR tests and branded news reports to the contrary as “totally wrong.”
“Depending on the PCR test used it may not look like BA.1 (the other Omicron). But it will still give a positive result,” he added.

Follow up on 2019 CDI/Applied Underwriters Pay-to-Play Scandal

Insurance Commissioner Ricardo Lara has been under fire since 2019, when news media reported questionable campaign contributions from associates of Applied Underwriters, while Applied was under investigation by the CDI, and seeking approval of the sale of the company..

At that time, Lara reported $31,000 in contributions from Stephen Acunto and his wife, Carole. Acunto is president of CINN Group, a New York publishing and financial services firm. Acunto, who also has served as a spokesman for Applied Underwriters. The donations came on April 30 2019, one month before Applied Underwriters alerted the California Department of Insurance that the company was in the process of being sold.

Although news media discontinued following the story, Consumer Watchdog pursued the investigation with Freedom of Information Act requests. And the lawsuit provided evidence this month that Lara and top lieutenant Bryant Henley communicated with two former lawmakers representing a workers’ compensation insurer at the heart of a pay-to-play scandal.

A new declaration from former legislator-turned-lobbyist Rusty Areias confirms that Commissioner Lara and Special Counsel Bryant Henley were in contact with Mr. Areias and former Assembly Speaker Fabian Nunez, Lara’s friend and political mentor. Nunez and Areias have emerged as central figures in the scandal following a lawsuit filed by Fabian Nunez’s former lobbying firm to collect a $2 million “success fee” from Applied Underwriters related to the sale of the company. The payment was to be made in exchange for Nunez and Areias’s successful efforts to protect a $60 million deposit.

The declaration of Mr. Areias was filed in Los Angeles Superior Court with a motion seeking to compel the Department to produce 200 internal communications regarding Consumer Watchdog’s public records requests. This Motion is scheduled for April 27, 2022 at 9:30 a.m. Department 86 of the Los Angeles Superior Court.

Followup on 2019 CDI/Applied Underwriters Pay-to-Play Scandal

Insurance Commissioner Ricardo Lara has been under fire since 2019, when news media reported questionable campaign contributions from associates of Applied Underwriters, while Applied was under investigation by the CDI, and seeking approval of the sale of the company..

Lara reported accepting more than $50,000 in donations from insurance company executives and their apparent spouses, according to a 2019 San Diego Union-Tribune analysis of campaign funding data.

At that time, Lara reported $31,000 in contributions from Stephen Acunto and his wife, Carole. Acunto is president of CINN Group, a New York publishing and financial services firm. Acunto, who also has served as a spokesman for Applied Underwriters.

The donations from the Acuntos to Lara came on April 30 2019, one month before Applied Underwriters alerted the California Department of Insurance that the company was in the process of being sold.

Although most news media discontinued following the story, Consumer Watchdog pursued the investigation with Freedom of Information Act requests. The requests were follow up by a Public Records Act lawsuit, brought by attorneys for Consumer Watchdog was filed in early 2020. Consumer Watchdog is a non-profit public interest organization.

And the lawsuit provided evidence this month that Lara and top lieutenant Bryant Henley communicated with two former lawmakers representing a workers’ compensation insurer at the heart of a pay-to-play scandal. The communications occurred while a high-profile merger and other regulatory matters involving the insurer were pending before the California Department of Insurance.

A new declaration from former legislator-turned-lobbyist Rusty Areias confirms that Commissioner Lara and Special Counsel Bryant Henley were in contact with Mr. Areias and former Assembly Speaker Fabian Nunez, Lara’s friend and political mentor. The declaration states that Areias and Nunez identified themselves as representing Applied Underwriters, the workers’ compensation insurer that directed tens of thousands of dollars in campaign donations to Lara’s 2022 re-election campaign.

The communications occurred around the time Henley intervened in at least four proceedings on Commissioner Lara’s behalf to benefit Applied Underwriters. When the scandal became public in mid-2019, Lara returned the campaign contributions, stating “I believe in transparency….. I believe effective public service demands constant adherence to the highest ethical standards.”

Despite Commissioner Lara’s pledge of “transparency,” Consumer Watchdog says the the Department of Insurance failed to search for, let alone produce, records of meetings and communications with individuals “representing” the workers’ compensation insurer, including Nunez and Areias.

According to Mr. Areias’s declaration, submitted under penalty of perjury, Nunez and Areias began communicating with Commissioner Lara and Bryant Henley as early as February 2019. Yet, not a single record of meetings or phone calls between Nunez and Areias and Lara and Henley or other Department staff has been disclosed – no phone records, no calendar entries, no emails or text messages.

Nunez and Areias have emerged as central figures in the scandal following a lawsuit filed by Fabian Nunez’s former lobbying firm to collect a $2 million “success fee” from Applied Underwriters related to the sale of the company. The payment was to be made in exchange for Nunez and Areias’s successful efforts to protect a $60 million deposit.

The declaration of Mr. Areias was filed in Los Angeles Superior Court with a motion seeking to compel the Department to produce 200 internal communications regarding Consumer Watchdog’s public records requests. Consumer Watchdog expects that “these communications likely reflect the Department’s decision to withhold key information from the public.” This Motion is scheduled for April 27, 2022 at 9:30 a.m. Department 86 of the Los Angeles Superior Court.

Simi Valley Roofing Contractor Guilty of $1.6M Premium Fraud

Judy Hein (DOB 07/04/49), of Rhinelander, Wisconsin, pled guilty to two counts of felony workers’ compensation insurance fraud.

Cal Roofing Inc was founded in 2007. From 2013 through 2017, Hein was a co-owner of Cal Roofing Inc. located in Simi Valley.

During that time, Hein underreported the true amount of company payroll by over $3 million to her workers’ compensation insurance company, State Fund. Hein’s fraud caused State Fund to lose $1.6 million in premium payments. At the time of her guilty plea, Hein paid $600,000 in partial restitution to State Fund.

Hein is scheduled to be sentenced on February 23, 2022, at 9:00 a.m. in courtroom 23 of the Ventura County Superior Court.

This case was investigated the California Department of Insurance Fraud Division and prosecuted by the District Attorney’s Office Workers’ Compensation Insurance Fraud Unit.

Study Shows WCMSA Funds “Robust Tracking System”

In a first-of-its kind study, Ametros found that over 34,000 claims per year were denied to Medicare beneficiaries’ post-settlement because Workers’ Compensation Medicare Set Aside (WCMSA) funds were responsible for the payments.

Following settlement resolution of a workers’ compensation claim, the MSA may only be used to “…pay for medical treatment or prescription drugs related to [the underlying] claim, and only if the expense is for a treatment or prescription Medicare would cover. This is true even if you are not yet a Medicare beneficiary… ” See Self-Administration Toolkit for WCMSAs, v1.3, Sec. 4 & WCMSA Reference Guide, Sec. 17.3

An MSA administrator is responsible for accurate record keeping of payments made from the account. On an annual basis, within 30 days from the anniversary of the settlement, the administrator reports attestation information to CMS. This attestation is a “statement that payments from the WCMSA account were made for Medicare-covered medical expenses and Medicare- covered prescription drug expenses related to the work- related injury, illness, or disease.” (WCMSA Reference Guide, v3.5, Sec. 17.5). An attestation is also reported in instances where an annuitized MSA has been temporarily depleted prior to annual re-funding of the account as well as when an account is permanently exhausted. Id.

The Centers for Medicare and Medicaid Services (CMS) has long warned that it requires WCMSA funds to be used appropriately before Medicare benefits will pay for injury-related treatment. CMS’s WCMSA Reference Guide states in Section 17.3 “Medicare will deny all [workers’ compensation] injury-related claims until the WCMSA administrator can demonstrate appropriate use equal to the full amount of the WCMSA.”

Despite this, many in the industry have questioned whether Medicare ever denies claims. Ametros decided to find out.

Collaborating with ResDac researchers, Ametros analyzed Medicare Part B claim data from 2018-2020 and has published “A Study of CMS Policy on Treatment Denials for Injured Workers with a Medicare Set Aside.

Examining a random sample of five percent of the Medicare beneficiary population over a three-year period, researchers estimated Medicare denied 35,980 WCMSA claims in 2018, 36,060 in 2019, and 30,720 in 2020 because the individual’s WCMSA account should have paid the claims.

The report provides a state-by-state chart of denial breakdowns along with definitions and explanations of the Medicare Secondary Payer and MSA terms, how CMS tracks MSAs, and MSA post-settlement administration and compliance obligations.

Almost a third of all denials were in California, which has a robust workers’ compensation claim volume. Less populated states like Indiana, Colorado, and Maryland also had a substantial amount of denied claims.

The data shows a robust tracking system is in place for Medicare to identify and deny payment when an individual with an MSA submits a claim and they have properly attested to exhausting their funds.

The report concludes by saying “it’s evident that individuals who choose to self-administer risk being denied future treatments and services by Medicare because they have not properly complied with Medicare’s guidelines. This includes setting up their account incorrectly or not using their MSA settlement funds appropriately.”

Ametros will present the study’s findings in a February 15 webinar hosted by John Kane, Shawn Deane, and Jayson Gallant starting at 1 p.m. EST. Register here.

S.D. Pharmacy Resolves “Red Flags” Opioid Case for $105K

San Diego’s Balboa Pharmacy has paid $105,000 to resolve allegations that it illegally dispensed opioids and other dangerous drugs to its patients, according to a settlement agreement signed by Balboa Pharmacy and the United States.

The Controlled Substances Act states that pharmacists have a responsibility to only fill prescriptions that are written for a legitimate medical purpose while acting in the usual course of professional practice.

The United States alleged that Balboa Pharmacy failed to meet its responsibility when it filled opioid prescriptions without resolving, or often even attempting to resolve “red flags” that the prescriptions raised. “Red flags” are indications that a prescription may be invalid.

According to the settlement agreement, Balboa Pharmacy filled prescriptions without resolving the following commonly known red flags:

– – large quantities of opioids well above guidelines for treating patients, which sometimes exceeded a daily Morphine Milligram Equivalent of 100;
– – dangerous combinations of drugs, including duplicative therapy; opioids and benzodiazepines (e.g., Valium, Xanax); and opioids, benzodiazepines, and muscle relaxants (e.g., Soma), a combination that is colloquially referred to by drug abusers as the “trinity” because of the rapid euphoric effects of this combination of drugs;
– – patients who received prescriptions from multiple prescribers, which sometimes were for the same types of controlled substances or for dangerous combinations of drugs; and
– – filling prescriptions for patients early, which includes filling a patient’s prescription before the patient’s earlier prescription for the same drug ran out.

In addition to the settlement agreement, the DEA and Balboa Pharmacy entered into a Memorandum of Agreement in October 2021 in which Balboa Pharmacy agreed to, among other things, develop policies and procedures and training that address the identification and resolution of “red flags.”

The investigation exemplifies the Department of Justice’s willingness to investigate pharmacies that may be filling dangerous prescriptions without first confirming the legitimacy of each prescription.

“This investigation is a reminder that all pharmacies have a responsibility to ensure that prescriptions are issued for a legitimate medical purpose,” said DEA Special Agent in Charge Shelly S. Howe. “Failure to do so allows prescriptions to become subject to abuse and diversion, fueling the ongoing opioid epidemic. DEA will continue to hold pharmacies, such as Balboa Pharmacy, accountable.”

DWC Posts Emergency Med-Legal Evaluation Telehealth Regs

The Division of Workers’ Compensation announces its emergency regulation for Medical-Legal Evaluations became effective on January 18, 2022 and will expire on July 19, 2022.

There are two possible 90 day extensions (in accordance with Government Code section 11346.1(h)).

The emergency regulations can be found on the DWC website.

The regulation allows a QME or AME to complete a medical-legal evaluation through telehealth when a hands on physical examination is not necessary and all of the following conditions are met:

– – There is a medical issue in dispute which involves whether or not the injury is AOE/COE (Arising Out of Employment / Course of Employment), or the physician is asked to address the termination of an injured worker’s indemnity benefit payments or address a dispute regarding work restrictions; and
– – There is agreement in writing to the telehealth evaluation by the injured worker, the carrier or employer, and the QME. Agreement to the telehealth evaluation cannot be unreasonably denied. If a party to the action believes that agreement to the telehealth evaluation has been unreasonably denied under this section, they may file an objection with the Worker’s Compensation Appeals Board, along with a Declaration of Readiness to Proceed to set the matter for a hearing;
– – The telehealth evaluation conducted by means of a virtual meeting is consistent with appropriate and ethical medical practices, as determined by the QME and the relevant medical licensing board; and
– – The QME attests in writing that the evaluation does not require an in person physical exam.

During the time this regulation is in effect, section 34(b) of title 8 of the California Code of Regulations is suspended, and for purposes of QME telehealth evaluations conducted under this regulation, the medical office listed on the panel selection form for the QME shall be deemed the site of the telehealth evaluation.

For all other telehealth evaluations conducted under this regulation, the medical office of the physician that is within a reasonable geographic distance from the injured worker’s residence shall be deemed the site of the telehealth evaluation.

California Omicron Wave Shows Signs of Slowing

And there might be some good news for California, and California claims administrators.

While California continues to see disturbing rises in COVID-19 hospitalizations and deaths, The Los Angeles Times reports that there are some early signs the unprecedented Omicron wave is slowing.

The shift is uneven across the state, but the numbers suggest California could be reaching a crest in the latest surge. States on the East Coast that were hit earlier by the Omicron wave have already started to see a sustained decline in infections.

California has recorded more than 7 million coronavirus cases as of this week. The tally, recorded in the state’s databases late Monday, comes one week after it recorded its 6 millionth coronavirus case. There have never been as many Californians simultaneously infected in the history of the 2-year-old pandemic.

According to data released Wednesday that reflect numbers through Tuesday, California was averaging 103,000 cases a day for the most recent seven-day period, slightly below the prior week’s rate of 107,000; the week before, the state was reporting 60,000 cases a day. California’s case rate fluctuated between 114,000 and 115,000 in the last few days – the highest rates of the pandemic.

Some of the state’s most populous regions may be starting to see a leveling in case rates. Southern California recorded 69,000 new cases a day over the most recent seven-day period, a slight reduction from the 75,000 recorded from a week earlier. The week before, the region tallied 43,000 cases a day.

Los Angeles County posted a record number of coronavirus cases last week, nearly 42,000 a day. But based on numbers released through Wednesday afternoon, the county is now averaging about 37,000 cases a day.

The greater San Francisco Bay Area is now averaging about 18,000 coronavirus cases a day, a rate that has fluctuated between 18,000 and 22,000 for roughly a week and a half.

In Santa Clara County, coronavirus levels in wastewater started declining about 1 1/2 weeks ago. Officials expect the dip will presage a sustained decline in coronavirus cases.

The Greater Sacramento area recorded about 5,400 cases a day for the most recent weekly period. The capital region has been fluctuating between 5,000 and 6,000 cases a day for the last week and a half.

In the Greater San Joaquin Valley, a region that generally lags behind trends in Southern California and the Bay Area, cases are still going up. The area tallied 9,300 cases a day over the last week, higher than the 7,100 cases a day for the prior week; the week before that, the region recorded 3,200 cases a day.

In rural Northern California, about 720 cases a day were reported in the last week, nearly even with 710 reported the week before, but more than double the roughly 350 cases a day the sparsely populated region reported the prior week.

The rate at which California’s coronavirus tests are coming back positive has also started to decline. For the seven-day period that ended Jan. 10, California hit a record positive test rate of 23.1%. Since then, the rate fell to 21.1% for the seven-day period that ended Sunday. The rate is still very high; by comparison, in early December, it was around 2%.

Swamped San Diego Hospitals Close Doors to New Patients

A continuing crush of patients in the South Bay became so severe Tuesday that the San Diego region’s two main medical facilities declared internal disasters, a term used to indicate that conditions have worsened to the point where patient care may be affected.

According to the report in the San Diego Union Tribune, Chris Van Gorder, chief executive officer of Scripps Health, said that the emergency department at Scripps Mercy Hospital Chula Vista had 73 patients mid-afternoon filling its 24 emergency beds and 23 more inside tents in the parking lot. Twenty more were in beds set up in emergency room hallways with additional spaces taken in areas traditionally used for recovery from surgical procedures or medical imaging.

He added in an email just after 9 p.m. that Scripps was able “to move some patients” and exit disaster status “for now.”

While such a cascade did not appear to be underway, a second facility – Sharp Chula Vista Medical Center – experienced similar levels of stress Tuesday, declaring the same internal disaster status.

The largest hospital serving the South Bay, Sharp Chula Vista had 30 of its 48 emergency beds occupied by patients waiting to be admitted to the main hospital, which was already full. As of 7 p.m., 116 of the medical center’s 349 total beds were filled with patients fighting COVID-19.

Statewide, California continues to struggle with large numbers of its residents testing positive. According to the Los Angeles Times, California recently hit the 7 million case mark, just one week after hitting 6 million, a record pandemic pace.

When the number of emergency patients exceeds an individual hospital’s resources, facilities traditionally turn to diversion, a system that allows them to significantly reduce ambulance deliveries, providing a few hours for harried staff to catch up.

But that option was taken off the table last week when the county’s emergency medical services director temporarily suspended self-directed diversion for all hospitals through Jan. 27. The move came as a way of coping with the fact that high patient volume was regularly forcing a large percentage of the region’s hospitals to simultaneously go on bypass.

Declaring an internal disaster is, in some significant sense, hospitals telling the region’s emergency medical services system that despite a ban on bypass, they can’t handle the volume and are closing their doors to additional ambulance patients.

Dr. Eric McDonald, the county’s chief medical officer, said Tuesday afternoon that duty officers who run the local emergency medical services system were working to help alleviate the disaster conditions at the two South Bay locations. The situation countywide, he added, did not appear to be as impacted as it was Tuesday in the South Bay.

Scripps said Tuesday afternoon that it has shifted some patients out of Chula Vista to other hospitals it operates across San Diego County. Transfers as far north at Tri-City Medical Center in Oceanside, Van Gorder said, were occurring. Tri-City confirmed in a short statement Tuesday evening that it recently requested and received “some staffing support to address the challenging environment caused by elevated demand for services and workforce limitations during the current surge.”

Tri-City did not provide the total number of supplemental staff that the state sent to supplement its Oceanside workforce. McDonald said the number was about 50.