Tag: 2024 News

Current law establishes the Office of Health Care Affordability (OHCA) in the Department of Health Care Access and Information (HCAI), which is responsible for analyzing the health care market for cost trends and drivers of spending, developing data-informed policies for lowering health care costs for consumers and purchasers, creating a state strategy for controlling the cost of health care and ensuring affordability for consumers and purchasers, and enforcing cost targets.

Current law requires a health care entity to provide OHCA with written notice of agreements or transactions that will occur on or after April 1, 2024, at least 90 days prior to entering into an agreement to do either of the following: sell, transfer, lease, exchange, option, encumber, convey, or otherwise dispose of a material amount of its assets to one or more entities; or,transfer control, responsibility, or governance of a material amount of the assets or operations of the health care entity to one or more entities.

Healthcare groups, unions and hospitals are weighing in on a proposed bill in California, AB-3129, that would strengthen review of private equity deals in healthcare. California Attorney General Rob Bonta and Assembly Speaker Pro Tempore Jim Wood introduced the bill in February. It remains pending in the state Legislature.

According to the author, Private Equity acquisitions in health care have exploded in the past decade. From 2013 to 2016, PE firms acquired 355 physician practices. In the four years that followed, PE acquired 578 additional practices and has poured nearly $1 trillion into nearly 8,000 health care transactions during the past decade.

More than 90% of PE consolidations fall below the $101 million threshold that triggers an antitrust review by the Federal Trade Commission and the U.S. Justice Department. The author states that emerging data shows these acquisitions demand attention and increased regulatory oversight to ensure that these transactions are in the public interest.

These PE firms aim to secure high returns on their investments, as much as 20% in just three to five years, by making them more lucrative, which can conflict with the goal of delivering affordable, accessible, high- value health care.

The authors claim that studies “consistently show that PE ownership in the health care industry has resulted in higher health care costs, poor quality and less access to care. The author concludes that transparency and scrutiny of these deals is needed because without proper oversight and regulation, these practices will continue and patients and consumers are likely to experience anticompetitive effects.

The authors cite a 2020 Journal of American Medicine article, “Private Equity Acquisitions of Physician Medical Groups Across Specialties,” that notes that PE has started to play a role in this consolidation in recent years. These firms typically invest in businesses by taking a majority stake with the goal of increasing the value of the business and potentially selling it at a profit. One study found that PE firms acquired 355 physician practices (1,426 sites and 5,714 physicians) from 2013 to 2016.

If passed, the bill would require private equity groups and hedge funds to notify the attorney general and obtain their written consent before a transaction with a healthcare facility, provider or provider group. It would also reinforce the existing prohibition on private equity groups and hedge funds interfering with the professional judgment of physicians, psychiatrists, or dentists in making healthcare decisions.

The California Hospital Association opposes the bill, saying it would add costs to the state and reduce healthcare access. “Unfortunately, the recently proposed amendments do not resolve CHA’s concerns and create new questions,” the group wrote in an Aug. 9 letter to the Senate Appropriations Committee. The letter states that the amendments do not remove hospitals from the bill and “go beyond private equity groups and hedge funds by imposing a new AG review process on nonprofit hospitals.”

The California Medical Association supports provisions of the bill that maintain the autonomy and integrity of the patient-physician relationship in medical decision-making.

The association wrote to lawmakers in support, stating: “Given the dangerous consequences PE has on cost, quality and access to care for all Californians, CMA respectfully requests that the bill move forward to ensure appropriate review of PE transactions and protect the patient-physician relationship against private equity in the healthcare delivery system.”

Other groups supporting the legislation include the California Academy of Family Physicians, California Dental Association, California Nurses Association, California Physicians Alliance and California Labor Federation. Other groups opposing the legislation include American Investment Council, Association of Dental Support Organizations and the California Chamber of Commerce.

Chronic musculoskeletal (MSK) pain affects one in three individuals worldwide. MSK pain is a leading cause of work-related disability and productivity impairment, broadly impacting all industry sectors. Productivity impairment can occur through presenteeism (i.e. decreased work performance due to pain) and absenteeism (i.e. missing working hours), and can ultimately lead to early retirement, all imposing a strain to the workforce.

MSK pain-related productivity impairment drives tremendous economic impact at the organizational and societal levels. Total costs of MSK pain-related productivity loss represent up to $335 billion annual spent, outweighing the direct impact of healthcare expenditure.

Current guidelines recommend exercise-based physical therapy combined with education and behavioral interventions as a mainstay treatment for chronic MSK pain. However, insufficient healthcare facilities and professionals, the loss of work hours and travel expenses associated with attending in-person physical therapy sessions, leave many patients with suboptimal or no care. Digital interventions have arisen as a solution to increase access, promoting higher engagement, while driving clinically significant outcomes.

Additionally, evidence suggests that MSK digital interventions are more affordable than conventional in-person rehabilitation.Independently of care delivery mode (digital or in-person), most studies focused on cost-effectiveness from a societal perspective.To date, no study has explored the potential economic impact of digital interventions from an employer perspective.

For these reasons researchers decided to investigate the impact of a DCP in promoting savings associated with recovery of productivity impairment in employees with chronic MSK pain. As a secondary objective, to explore potential savings in different industry sectors. The Study – Recovering work productivity in a population with chronic musculoskeletal pain: unveiling the value and cost-savings of a digital care program – was just published in the Journal of Occupational and Environmental Medicine.

The DCP, developed according to current guidelines,consisted of home-based exercise, education, and cognitive behavioral therapy (CBT) over up to 12 weeks. During enrollment, each participant selected the physical therapist (PT) who supervised the intervention. During the onboarding video call, the PT performed a clinical assessment and prescribed a tailored program.

Exercise sessions were performed at the patient’s convenience (recommended 3 times/week) using an FDA-listed class II medical device composed of motion trackers, a dedicated tablet with a mobile app and a cloud-based portal. The tablet displayed guided exercise sessions through videos with real-time audio and visual biofeedback provided by the motion trackers. Motion data were stored in the cloud-based portal accessible by the assigned PT to asynchronously monitor and adjust the program as needed.

Patient education was provided through a smartphone app in the form of short written articles, focusing on the pathophysiology, pain reconceptualization, active coping skills, the role of exercise, and fear-avoidance behaviors.A CBT program based on mindfulness, acceptance, commitment therapy, and empathy-focused therapy was delivered through email in the form of interactive and audio modules. Patient and PT communication was fostered through a built-in secure chat within the smartphone app available on-demand.

From 11,361 patients screened for study eligibility, 5032 employees from 50 U.S. states started the program. Significant improvements in productivity impairment were observed across all industries, yielding median cumulative savings from $151 (95%CI 128;174) to $294 (95%CI 286;303) per participant at treatment-end. Twelve-months projections estimated median savings of $2916 (95%CI 2861;2972). Additionally, significant improvements in non-work-related daily activities were observed.

These savings, estimated from real-world data, disclosed the underlying burden of presenteeism, which was the major responsible for overall productivity loss. The observed results advocate for the use of a DCP to promote productivity recovery, and to improve quality of life in non-work-related activities, consequently supporting employers in maintaining a competitive workforce, while attaining significant savings.

John’s Grill is “a historic, family-owned, landmark restaurant located in the heart of downtown San Francisco.” Its business, like many others, was heavily impacted by the COVID-19 pandemic and related state and local public health orders.

For example, between March 2020 and September 2020, indoor dining – “the lifeblood of John’s Grill’s business” – was prohibited. After September 2020, indoor dining was limited to 25 percent of restaurant capacity. As a result of these restrictions, “John’s Grill suffered substantial financial losses and had to let 54 workers go.”

Moreover, even absent these restrictions, John’s Grill alleges it “would have had to close and suspend its operations due to the worsening pandemic-level presence of the Coronavirus in, on, and around the Insured Premises.”

John’s Grill sought compensation for its losses from its property insurer, Sentinel Insurance Company, Ltd. Sentinel denied coverage on various grounds, including that the loss or damage claimed by John’s Grill did not fall within the insurance policy’s “Limited Fungi, Bacteria or Virus Coverage” endorsement.

The Limited Fungi, Bacteria or Virus Coverage endorsemdent generally excludes coverage for any virus-related loss or damage that the policy would otherwise provide, but it extends coverage for virus-related loss or damage if the virus was the result of certain specified causes of loss, including windstorms, water damage, vandalism, and explosion. The validity of this specified cause of loss limitation is the focus of the parties’ dispute.

John’s Grill acknowledged it cannot meet this limitation, but it contends the limitation is unenforceable because it renders the policy’s promise of virus-related coverage illusory. John’s Grill alleged in is lawsuit that when “physical droplets containing COVID-19 land on or otherwise attach to surfaces, [the virus] renders those surfaces and the immediate surrounding area unusable because there is substantial risk of people getting sick, transmitting infection to others, and possibly dying as a result of touching those surfaces.”

In the trial court, Sentinel successfully demurred to John’s Grill’s operative complaint for damages and other relief.

The Court of Appeal agreed with John’s Grill. It held that the promise of coverage was illusory because John’s Grill had no realistic prospect of benefiting from the virus-related coverage as written. (John’s Grill, Inc. v. The Hartford Financial Services Group, Inc. (2022) 86 Cal.App.5th 1195, 1224.) It therefore invalidated the specified cause of loss limitation and allowed John’s Grill’s claims for virus-related losses or damage to proceed. (Id. at p. 1212.)

The California Supreme Court reversed in it’s John’s Grill, Inc. v. The Hartford Financial Services Group , Inc., Opinion -S278481 (August 2024).

It concluded the Court of Appeal erred by declining to enforce the specified cause of loss limitation under the circumstances here. “The terms of the Limited Fungi, Bacteria or Virus Coverage endorsement are clear and unambiguous. It provides virus-related coverage, but only if the virus results from certain specified causes of loss. In accordance with long-settled principles of contract interpretation, the plain meaning of the policy governs. Because John’s Grill admits that it cannot satisfy the specified cause of loss limitation, it has no claim for coverage under the policy.”

“John’s Grill cannot escape this conclusion by citing the so-called illusory coverage doctrine. This court has never recognized an illusory coverage doctrine as such. The doctrine as articulated by John’s Grill does not appear in our precedents. But even assuming some version of the doctrine may exist under California law, we conclude that an insured must make a foundational showing that it had a reasonable expectation that the policy would cover the insured’s claimed loss or damage. Such a reasonable expectation of coverage is necessary under any assumed version of the doctrine.”

“Here, however, John’s Grill has not shown it had a reasonable expectation of coverage under the policy for its pandemic-related losses. It has therefore failed to establish that the policy created the illusion of coverage that rendered any contrary policy language unenforceable. Moreover, even setting aside this hurdle, and accepting John’s Grill’s articulation of the doctrine, it still cannot demonstrate that the policy’s promised coverage was illusory.”

“Even with the specified cause of loss limitation, the policy offered John’s Grill a realistic prospect for virus-related coverage. Because the Court of Appeal held otherwise, we reverse and remand for further proceedings.”

The First Set of Cases:

After issuing a notice of intent on April 10, 2024, and having received and reviewed the responses of Susan Garrett and Lance Garrett, on May 16, 2024, the Appeals Board issued an en banc order imposing sanctions and costs in eight cases collectively of $20,000.00 against attorney Susan Garrett (CA BAR #195580) in eight (8) instances where she filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

The Appeals Board issued a second order imposing costs and sanctions collectively of $20,000.00 against hearing representative Lance Garrett in eight (8) instances where he filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

Prior to these orders the Garretts were provided with a Notice of Intent and were given an opportunity to present their defense to the charges.

The WCAB characterized the response by writing “Susan Garrett and Lance Garrett’s responses trivialize the act of filing multiple frivolous petitions for reconsideration as an ‘inconvenience.’ However, their conduct here goes far beyond inconvenience. The filing of frivolous petitions for reconsideration significantly hampers the work of the Appeals Board. Each petition costs significant time and resources and delays the issuance of other decisions pending at the Appeals Board. More significantly, it delays a determination of applicant’s benefits in each of the cases at bar.”

And that response may have precipitated in the WCAB to seeking even more than the $40,000 total sanction imposed on May 16. The WCAB then announced two new groups of cases where it intends to impose even more sanctions, and has issued it’s Notice of Intent, En Banc, accordingly.

TheSecond (New) Set of Cases:

On August 7, 2024, the Appeals Board issued an en banc decision after removal, Abel Hidalgo, et al vs. Roman Catholic Archbishop, permissibly self-insured, Case Nos. ADJ13332737, ADJ15218980, ADJ12640295, which imposed costs and sanctions of $7,500.00 collectively against attorney Susan Garrett (CA BAR #195580) in three (3) instances where she filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where such actions were indisputably without merit.

The notice of intent issued on June 17, 2024 and Susan Garrett did not respond.

The Appeals Board issued a second order imposing costs and sanctions of $7,500.00 against hearing representative Lance Garrett in three (3) instances where he filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where such actions were indisputably without merit.

The notice of intent issued on June 17, 2024 and Lance Garrett did not respond.

The Appeals Board found that Susan Garrett and Lance Garrett engaged in sanctionable conduct by filing petitions for reconsideration on or near the day of trial where the petition for reconsideration was from a non-final order setting the matter for trial. The amount of costs was deferred to the parties to adjust with jurisdiction reserved at the trial level in the event of a dispute.

And also on August 7, in a second new case, Guillermo Gonzalez, et al vs. The Bicycle Casino; Arch Indemnity Ins. Co., administered by Gallagher Bassett, et al.Case No. ADJ12226694, ADJ12414651, ADJ12414992, ADJ12414993, two nearly identical Notices of Intent for two instances of alleged sanctionable conduct, and each are subject to an additional $5000.

Similarly, both Susan and Lance Garrett did not respond to the Notice.

In this second case, the Appeals Board also found that Susan Garrett and Lance Garrett engaged in sanctionable conduct by filing petitions for reconsideration on the day of trial where every issue raised on reconsideration was an issue to be decided at trial. The amount of costs was deferred to the parties to adjust with jurisdiction reserved at the trial level in the event of a dispute.

The California Department of Industrial Relations (DIR) contracted with RAND to conduct a comprehensive study of the SIBTF. The goal of the study was to capture as much data as possible to document a wide range of basic facts about the SIBTF program that might provide a foundation for informed deliberation over policy options in response to the SIBTF s recent growth. The study focused on cases that were filed or pending between 2010 and 2022.

RAND built a dataset of SIBTF cases filed and adjudicated between 2010 and 2022. The resulting database offers many important insights into trends in cases filed in SIBTF cases in recent years. The intended audience of this report is primarily DIR officials and other policymakers in the state of California, as well as other interested stakeholders.

According to the 180 page Report which was recently published on the DWC webiste, total annual payments from the SIBTF on the 12 years of cases considered in this report grew from $13.6 million in 2010 to $232 million in 2022. Looking to the future, this analysis estimates $7.9 billion in SIBTF liabilities for cases filed or pending between 2010 and 2022, the midpoint of an estimated range of $6.4 – $10.5 billion.

The recent surge in current and future liabilities can in part be attributed to interpretations of SBITF’s governing statutes, which the Report claims are “vague” on key issues concerning eligibility and compensation, and which are decades old. More recently, the wide parameters of the governing statutes and SIBTF rules have motivated claimants, their representatives, and vendors to make more frequent claims for injuries which in past decades might have yielded smaller benefits or might not have led to any benefits at all.

This report presents data documenting facts and recent trends about the SIBTF program that might provide a foundation for informed deliberation on policy responses to the SIBTF s recent growth. Focusing on cases filed or pending between 2010 and 2022, the authors obtained key findings that support some potential policy responses that might be considered by decisionmakers interested in stabilizing the SIBTF while continuing to promote the broader objectives of the workers compensation system.

The volume of annual applications for SIBTF benefits has nearly tripled since 2015. Roughly steady at about 850 per year from 2010 to 2014, annual volume reached around 2,000 in 2020, and 2,448 in 2022. This trend combines with other factors, including growth in benefit payments, to increase both current and forecasted liabilities for the Fund.

The Report analyzed the effect of Todd v. Subsequent Injuries Benefits Trust Fund (2020) 85 Cal.Comp.Cases 576 (App. Bd. en banc). The Appeals Board issued an en banc decision interpreting Labor Code section 4751, holding as follows: (1) Prior and subsequent permanent disabilities shall be added to the extent they do not overlap in order to determine the “combined permanent disability” specified in section 4751; and (2) SIBTF is liable, under section 4751, for the total amount of the “combined permanent disability,” less the amount due to applicant from the subsequent injury and less credits allowable under section 4753.

According to the Rand Report “This decision made it far more likely that an SIBTF case would reach a combined rating of 100 percent. In the examples above, the combined rating would increase from 75 percent pre-Todd to 100 percent post-Todd.” And that the “sharp changes in case outcomes and PD ratings that immediately followed the Todd decision have implications for benefit payments and SIBTF liabilities.”

And the health characteristics of a portion of claimants who get SIBTF benefits indicate that common, chronic conditions are contributing to the increase in SIBTF liabilities. Permanent partial disabilities that formed the basis for SIBTF benefits frequently included a number of chronic conditions that are rarely seen in the regular workers compensation system and are common attendants to normal aging.

One of the several recommendations was that “the program would benefit from more specific eligibility requirements, and a clear specification of the evidence required to establish that a PPD was actually labor disabling at the time of the SII. Statues could be revised to include only certain types of pre-existing disability, excluding common chronic conditions, and to specify the nature of evidence required to show that a condition was actually labor disabling at the time of the SII.” (Subsequent Industrial Injury)

“Eleven of the 29 states with an active subsequent injury fund (sometimes called second injury fund or multiple injury fund) limit the conditions that may qualify as a PPD to a list specified in the statute, offering precedent for adopting such an approach in California. However, once a list is defined, there will likely be political pressure to expand the list to include additional conditions.”

The Authors warned that in “the absence of policy changes to ensure the SIBTF is implemented in a sustainable and fair way, decisionmakers can reasonably expect that funding demands will exceed the currently available resources and assessments on workers compensation premiums (or on covered payroll for self-insured employers) will have to continue to rise to cover the Fund s growing liabilities.”