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Workers' Compensation Daily News for Jun 26, 2016

USC Study Finds Wholesale Abandonment of Cyber Security in Hospitals
Fri, 24 Jun 2016 08:34:33 - Pacific Time
Hospitals are pretty hygienic places -- except when it comes to passwords.

That's the conclusion of a recent study by researchers at Dartmouth College, the University of Pennsylvania and USC, which found that efforts to circumvent password protections are "endemic" in healthcare environments and mostly go unnoticed by hospital IT staff.

The researchers interviewed medical personnel in their workplace settings--nurses, doctors, chief medical officers, chief medical information officers, cybersecurity experts, CIOs, IT workers, everyday users, and managers--to obtain their perceptions of computer security rules. They collected reports from medical discussion lists and other literature. In addition, they shadowed many clinicians as they conducted their work.

The report describes what can only be described as wholesale abandonment of security best practices at hospitals and other clinical environments -- with the bad behavior being driven by necessity rather than malice.

And this is certainly not good news for payers of health care services such as workers' compensation claim administrators. Identity theft is a centerpiece of health care fraud schemes. The health/medical sector has accounted for the highest percent (42.5% in 2014) of total hackings of any industry, according to the Identity Theft Resource Center.

"Cyber security efforts in healthcare settings increasingly confront workarounds and evasions by clinicians and employees who are just trying to do their work in the face of often onerous and irrational computer security rules. These are not terrorists or black hat hackers, but rather clinicians trying to use the computer system for conventional healthcare activities. These "evaders" acknowledge that effective security controls are, at some level, important - especially the case of an essential service, such as healthcare. As we observed, earlier, without such tools, the enterprise cannot protect against adversarial cyber action. Unfortunately, all too often, with these tools, clinicians cannot do their job - and the medical mission trumps the security mission."

"In hospital after hospital and clinic after clinic, we find users write down passwords everywhere," the report reads. "Sticky notes form sticky stalagmites on medical devices and in medication preparation rooms. We've observed entire hospital units share a password to a medical device, where the password is taped onto the device."

"We found emergency room supply rooms with locked doors where the lock code was written on the door -- no one wanted to prevent a clinician from obtaining emergency supplies because they didn't remember the code."

"We find, in fact, that workarounds to cyber security are the norm, rather than the exception. They not only go unpunished, they go unnoticed in most settings - and often are taught as correct practice. In rare exceptions, when the workarounds become obvious to leaders - such as a security breach involving a patient’s record - there may be repercussions. These common forms of ignorance, or willful blindness, or incomprehension allow organizations to continue to deploy security that doesn’t work."

Competing priorities of clinical staff and information technology staff bear much of the blame. Specifically: IT staff and management are often focused on regulatory compliance and securing healthcare environments. They are excoriated for lapses in security that result in the theft or loss of data.

Clinical staff, on the other hand, are focused on patient care and ensuring good health outcomes, said Ross Koppel, one of the authors of the report, who told The Security Ledger. Those two competing goals often clash. "IT want to be good guys. They're not out to make life miserable for the clinical staff, but they often do," he said. Read More...

London-based European Medicines Agency (EMA) in Turmoil After Brexit Vote.
Fri, 24 Jun 2016 08:34:25 - Pacific Time
Britain's vote yesterday to leave the European Union spells regulatory uncertainty for drug companies, with the London-based European Medicines Agency (EMA), which approves treatments for all EU countries, expected to have to relocate.

The European Medicines Agency (EMA) is a European Union agency for the evaluation of medicinal products. Prior to 2004, it was known as the European Agency for the Evaluation of Medicinal Products (EMEA).

Roughly parallel to the drug part of the U.S. Food and Drug Administration (FDA), but without centralization, the EMA was set up in 1995 with funding from the European Union and the pharmaceutical industry, as well as indirect subsidy from member states, in an attempt to harmonize (but not replace) the work of existing national medicine regulatory bodies.

The hope was that this plan would not only reduce the €350 million annual cost drug companies incurred by having to win separate approvals from each member state but also that it would eliminate the protectionist tendencies of sovereign states unwilling to approve new drugs that might compete with those already produced by domestic drug companies. The EU is currently the source of about one-third of the new drugs brought onto the world market each year.

According to the report in Reuters Health, the association of Germany's pharmaceuticals industry said that EMA would need to move to a city within the EU, bringing administrative headaches for companies.

Britain's biggest drugmaker, GlaxoSmithKline, said the exit vote "creates uncertainty and potentially complexity for us in the future", though the impact on its global business would be small, while the UK pharma trade association warned of challenges to future investment, research and jobs.

Industry executives fear upheaval at the EMA could snarl the EU's drug approval process and Britain may have to develop its own domestic regulatory system, leading to further confusion.

Although Britain could continue to take part in the EMA system if it remains in the European Economic Area, like Norway, many of those supporting its exit from the EU oppose that option.

As a result, British patients could move to the back of the queue for new medicines as companies prioritize the larger EU market, and some medicines could be left in regulatory limbo.

The EMA, with a full-time staff of more than 600, is the largest EU body in Britain and has overseen pan-European drug approvals since 1995 from its headquarters tucked away among global banks in London's Canary Wharf.

An EMA spokeswoman said it was premature to comment on its future. "It is too early to foresee the implications of this decision and at this stage we are waiting for further guidance from the European Commission," she said.

Drug companies and healthcare officials in Sweden, Denmark, Italy and Germany have all expressed interest in hosting the EMA instead of London, since firms in these countries are keen to be located close to the region's key regulator. Read More...

Court of Appeal Says Late IMR Decision is Still Valid
Thu, 23 Jun 2016 10:14:58 - Pacific Time
The WCAB has issued a number of panel level decisions eroding the jurisdiction of the UR and IMR process for technical mistakes that were claimed to have "invalidated" the process and the UR/IMR finding.  These cases  favored handing the issue of appropriate medical treatment over to the WCJ to decide. As a result UR/IMR seemed to be subjected to a slow death by a thousand such cuts. However, the trend of erosion of UR/IMR jurisdiction may have suffered a setback at the hands of a new Court of Appeal published decision.

Dorothy Margaris suffered a work-related injury to her left foot and lumbar spine while employed by the California Highway Patrol. The State Compensation Insurance Fund is the adjusting agent for this claim.

On October 16, 2014, her treating physician submitted a request for authorization of medical treatment to SCIF proposing to treat applicant with a lumbar epidural injection. On October 21, 2014, SCIF denied the request.

Applicant timely requested independent medical review. On November 26, 2014, SCIF sent the necessary medical records to Maximus Federal Services, Inc. On January 8, 2015, Maximus issued its IMR determination, upholding SCIF’s denial of the proposed medical treatment. The IMR determination became the final determination of the director as a matter of law. (§ 4610.6, subd. (g).)

Margaris appealed the IMR determination to the appeals board (§ 5300), which directed the matter to an administrative law judge for a hearing (§ 5310). She argued argued that the IMR determination was invalid because Maximus failed to issue it within the 30-day time period provided by section 4610.6, subdivision (d), and the applicable regulation (Cal. Code Regs., tit. 8, § 9792.10.6, subd. (g)). The judge agreed the IMR determination was issued 13 days late, but nevertheless found the determination was valid and binding on the parties, concluding that an untimely IMR determination "does not confer jurisdiction on the [workers’ compensation judge] to decide any medical treatment issues."

In response to her petition for reconsideration, a majority of the three-member panel agreed with applicant and went on to find, contrary to the IMR determination, that the proposed treatment was supported by substantial medical evidence and was consistent with the treatment schedule promulgated by the director. One member of the panel dissented, and would have found that the IMR determination, though untimely, was valid and binding on the parties.

The Court of Appeal disagreed with the WCAB and reversed in the published case of California Highway Patrol and SCIF v WCAB (Margaris).

The 30-day time limit in section 4610.6, subdivision (d), is directory and, accordingly, an untimely IMR determination is valid and binding upon the parties as the final determination of the director. The Court of Appeal interpretation of the statute in this manner is consistent with long-standing case law regarding the mandatory-directory dichotomy, and implements the Legislature’s stated policy that decisions regarding the necessity and appropriateness of medical treatment should be made by doctors, not judges.

Generally, time limits applicable to government action are deemed to be directory unless the Legislature clearly expresses a contrary intent. By creating IMR, a system in which "medical professionals ultimately determine the necessity of requested treatment," the Legislature intended to "further[] the social policy of this state in reference to using evidence-based medicine to provide injured workers with the highest quality of medical care." Further, the Legislature observed that the prior system of dispute resolution, i.e., the "process of appointing qualified medical evaluators to examine patients and resolve treatment disputes," was not only costly and time-consuming, but "it prolong[ed] disputes and cause[d] delays in medical treatment for injured workers." (Stats. 2012, ch. 363, § 1(f).)

"The Legislature intended to remove the authority to make decisions about medical necessity of proposed treatment for injured workers from the appeals board and place it in the hands of independent, unbiased medical professionals. Construing section 4610.6, subdivision (d), as directory best furthers the Legislature’s intent in this regard."

Major National Healthcare Fraud Sweep Includes 22 Californians
Thu, 23 Jun 2016 10:14:52 - Pacific Time
Culminating investigations by a host of state and federal law enforcement agencies, federal prosecutors have brought 13 criminal cases that charge a total of 22 California defendants in health care fraud schemes. Several medical professionals were charged as part of the sweep, including five physicians, a psychiatrist, one pharmacist and an occupational therapist. The cases allege various schemes that led to more than $161 million in fraudulent bills being submitted to publicly funded health care programs such as Medicare and TRICARE.

The cases filed in federal court in Los Angeles and Santa Ana are part of a nationwide sweep announced in Washington by Attorney General Loretta Lynch, who said criminal and civil charges have been filed against 301 individuals across the nation who allegedly participated in health care fraud schemes involving approximately $900 million in false billings. The local cases were filed by Assistant United States Attorneys and Trial Attorneys with the Justice Department's Medicare Fraud Strike Force.

The cases filed in the Southland involve actual losses of more than $125 million, with the bulk of those losses associated with five cases related to schemes involving compounding pharmacies. In schemes orchestrated by marketers (sometimes called "cappers"), compounding pharmacies were provided with large numbers of prescriptions, generally for pain medications, that carried huge reimbursements, often more than $15,000 for each prescription. The prescriptions were written by doctors who received kickbacks from marketers or from "telemedicine" websites that had little or no contact with patients. The prescriptions were written for "patients" who, in many cases, did not want the prescriptions, had never met the prescribing doctors or had no idea why they were receiving the medications. In many cases, the beneficiary information was being used without the knowledge of the "patients" until the prescriptions showed up at their homes.

In one case, John Garbino, a marketer who resides in Dana Point, was charged with receiving illegal kickbacks after referring prescriptions to compounding pharmacies that filled the prescriptions. One Palmdale pharmacy allegedly received more than $46 million in only six months. Another pharmacy in Corona received nearly $6 million over the same six-month period. Garbino allegedly received illegal kickbacks of as much as 65 percent for referring prescriptions to the compounding pharmacies. The criminal complaint against Garbino alleges that one of the pharmacies dramatically increased its claims "for filling compounded medications prescriptions that had been specially formulated to achieve the highest possible reimbursement rates rather than the greatest medical efficacy."

In another scheme, the Florida-based operator of a "telemedicine" website was charged with health care fraud for allegedly misusing the identity and medical credentials of a physician to submit prescriptions to a compounding pharmacy. The criminal complaint in this case alleges that two local pharmacies received more than $6.5 million in payments in 2015.

In a third case, the owner of a La Mirada pharmacy, two marketers and a doctor were indicted on charges of paying and receiving illegal kickbacks. Health insurers paid the pharmacy, Valley View Drugs, more than $20 million, and the pharmacy paid nearly half of that to companies associated with the marketers.

In other cases a doctor who had offices in Temecula and Mira Loma allegedly submitted nearly $12 million in fraudulent bills to Medicare for unnecessary "vein ablation" surgery. U.S. Atty. Eileen M. Decker said the physician named in the federal charges was Dr. Donald Woo Lee. The 50-year-old physician is accused of performing unnecessary vein procedures on patients even when they had no signs of varicose veins. Another doctor was charged for helping the owner of a Granada Hills medical clinic, who recruited Medicare patients with promises of free equipment and used their beneficiary information to bill for services that simply were never provided.

The other California doctors charged are David Michael Jensen, 65, of Whittier; Kain Kumar, 52, of Encino; Sang Kim, 67, of Porter Ranch and Samuel Albert, 81, of Laguna Beach.

Dr. David Michael Jensen, owner a La Mirada pharmacy Valley View Drugs Inc., was indicted along with two marketers on charges of paying and receiving illegal kickbacks. Health insurers paid the pharmacy more than $20 million, and the pharmacy paid nearly half of that to companies associated with the marketers, according to the indictment.

Anthony J. Orlando, acting special agent in charge of the Internal Revenue Service’s criminal investigation unit, said in one scheme the proceeds were laundered using a carwash, a plumbing business and an escrow company.

Another case announced today charges three defendants in a scheme to defraud the health benefit plans established for members of the International Longshore and Warehouse Union and Federal Express employees. Participants in the scheme allegedly paid beneficiaries of those plans to undergo unnecessary sleep and nerve conduction velocity studies that were then billed to the plans. The defendants operated facilities in Sherman Oaks and San Pedro, where the testing was conducted as part of the fraud scheme that submitted at least $16 million in bills to the union and FedEx health plans. The defendants in this case also face money laundering charges.

Most of the 22 defendants named in the cases were arrested on Monday and Tuesday. Several defendants self-surrendered after learning of the federal charges. A separate announcement details all 13 cases and the defendants charged in those cases.

The cases announced this week in Los Angeles are the result of investigations conducted by the United States Department of Health and Human Services, Office of Inspector General; the Defense Criminal Investigative Service; the Federal Bureau of Investigation; the Office of Personnel Management, Office of Inspector General; the Veterans Administration, Office of the Inspector General; the Department of Labor, Employee Benefits Security Administration; the California Department of Insurance, Fraud Division; the United States Postal Service, Office of the Inspector General; Amtrak's Office of the Inspector General; the California Board of Pharmacy; IRS Criminal Investigation; and the California Department of Justice. Read More...

CDI Rules Berkshire Hathaway Company Comp Insurance "Scheme" Was Illegal
Wed, 22 Jun 2016 08:49:20 - Pacific Time
The California Department of Insurance announced its decision in a major insurance case pitting a small business against a Berkshire Hathaway owned workers' compensation insurer that it said used a complex insurance scheme to circumvent regulatory review of its rates and policy terms to the disadvantage of small and medium sized businesses.

California Insurance Company, a Berkshire Hathaway company, filed one set of rates and insurance policies with the Department of Insurance, which it then sold to Shasta Linen, a small family owned business, and then followed that by having another Berkshire Hathaway company sell Shasta Linen a second insurance policy with different rates and terms that had never been submitted to the department for review as the law requires. California Insurance Company is the seventh largest workers' compensation insurer in California by premium volume.

The lure for small businesses like Shasta Linen was seemingly attractive lower workers' compensation premiums, but that attractiveness evaporated when the small business owner realized they were on the hook to pay the cost of workers' compensation claims which eclipsed its original premium savings.

"This is a case of if it sounds too good to be true, it probably is," said Insurance Commissioner Dave Jones. "The evidence showed that California Insurance Company filed one set of rates and policies, sold it to a California business, and then had one of its affiliates sell the same business an insurance policy with another set of rates and terms which had not been filed with the department."

The scheme - Shasta Linen originally purchased a guaranteed cost workers' compensation policy from California Insurance Company. Guaranteed cost insurance policies have rates based on the average historical losses of the insured business, modified by their own experience with worker injuries as compared to other businesses hiring workers' of the same type. When a business buys a guaranteed cost policy it knows what its rates will be for the duration of the policy.

The insurance company later had one of its affiliates - another Berkshire Hathaway entity - sell Shasta Linen a second insurance policy called EquityComp, which is not a traditional guaranteed cost workers' compensation insurance policy. This second insurance policy was a retroactive non-linear insurance policy, which adjusted the rates paid based on current loses and provided no experience modification of rates based on the employers' claims experience.

Under the EquityComp insurance program, the risk of claims was essentially shifted back to the small business, which would end up paying additional premiums and fees in the policy term if it suffered from increasing claims. The second insurance policy was written by another Berkshire Hathaway company - Applied Underwriters Captive Risk Assurance ("AUCRA"), which is in the same corporate holding group as California Insurance Company and shares the same board of directors and executives.

This new EquityComp insurance program essentially left Shasta Linen self-insured, and also locked it into potentially making various ongoing payments to the insurance company for seven years, well beyond the three-year period of the policy, as well as the one-year period for the typical guaranteed cost policy.

The commissioner's decision found that in the three years before it introduced EquityComp, California Insurance Company's profits were $47 million and in the four years since introducing EquityComp the company's profits were $220 million. The net loss ratio of California Insurance Company has fallen from 77.7 percent to between 19 and 30 percent, since it started offering EquityComp, compared to an industry annual average net loss ratio of over 80 percent.

The EquityComp insurance policy not only changed the rates to be paid by Shasta Linen, it also added new, expensive cancellation and non-renewal penalties. For example, under the guaranteed cost policy a business paying $300,000 in premium that cancels its policy after 100 days is liable for $114,000, while that same business cancelling under the EquityComp policy would be liable for more than $1.1 million. Under the original guaranteed cost policy there was no non-renewal penalty, but when Shasta Linen did not renew the EquityComp policy it was sent a bill for nearly $250,000.

In addition the new EquityComp insurance policy had an additional term that sought to deprive Shasta Linen of its right to appeal to the insurance commissioner and to have its dispute decided under California law -- instead, the unfiled EquityComp insurance policy required all disputes to be governed by Nebraska law through arbitration in the British Virgin Islands.

When confronted with demands for higher payments under the EquityComp insurance policy, Shasta Linen brought the case before the insurance commissioner. The commissioner found that California Insurance Company and AUCRA failed to file the EquityComp insurance policy or its rates with the Department of Insurance, contrary to California law.

Commissioner Jones' decision also found that California Insurance Company, in applying for a patent for EquityComp, stated that its objective was to circumvent regulatory oversight. Jones concluded that the EquityComp insurance scheme was illegal and void as a matter of law, because it was not filed with the Department of Insurance for review. The Commissioner's order relieved Shasta Linen of having to make the additional payments under the EquityComp insurance policy and ordered California Insurance Company to repay any amounts paid by Shasta Linen in excess of the premium under the guaranteed cost policy.

"California employers should be able to trust that their insurance companies are doing business by the book and not exploiting them in the name of profit," Jones continued. "Unfiled rates and unfiled major policy terms are void as a matter of law."

During the hearing process, the department became aware that other state departments of insurance have also taken action to prohibit the sale of EquityComp and similar insurance programs.

As a result of this decision, Commissioner Jones has also directed the Department of Insurance to determine whether other unfiled insurance policies and rates are being sold by other Berkshire Hathaway companies and other workers' compensation insurers. The outcome of that evaluation will determine what action the commissioner takes next, ranging from market conduct examinations, financial examination, and enforcement actions with potential penalties. Read More...

Timothy Morgan Appointed Assistant Manager of FSK Westlake Village Office
Wed, 22 Jun 2016 08:49:14 - Pacific Time
Floyd Skeren & Kelly is pleased to announce that Timothy Morgan of our has been appointed Assistant Managing Attorney of its Westlake Village Office.

Mr. Morgan obtained his undergraduate degree in Sports Medicine from the University of Nevada-Las Vegas, and then his Juris Doctor from the Ventura College of Law where he received the Witkin Award of Academic Excellence for his coursework in Constitutional Criminal Procedure.

After clerking for then Presiding Judge in Ventura County, the Honorable Vincent J. O’Neill, Mr. Morgan began his career as a civil litigator defending doctors, hospitals and other medical professionals as a medical malpractice defense lawyer.

Mr. Morgan joined the firm in 2013 bringing his civil litigation experience and extensive background in the field of medicine to form a practice that involved the defense of workers' compensation matters of all types.

The Firm’s boutique offices offer personalized services with a large firm professionalism with a statewide presence of 12 offices.

The Partners wish Tim success in his new position where he will continue to grow the Westlake Village Office Read More...

DOJ Publishes Health Care Fraud and Abuse Control Program Annual Report
Tue, 21 Jun 2016 07:50:19 - Pacific Time
The Department of Health and Human Services Office of the Inspector General ("OIG") and the Department of Justice ("DOJ") released the FY 2015 Health Care Fraud and Abuse Control Program Annual Report. The Annual Report details the enforcement actions and the monetary gains from efforts by the OIG and DOJ to fight fraud and abuse throughout the prior fiscal year..

The Annual Report estimated that settlements and judgments resulted in approximately $2.4 billion returned to both the government and private parties in 2015. The Annual Report estimated that from 2013 to 2015, the return on investment for the Program has been $6.10 for every $1.00 expended (down from the previous calculation of $7.70 for every $1.00). Further, the DOJ convicted 613 defendants, and the OIG brought 800 criminal actions against individuals and entities involved in health care fraud and abuse-related crimes. The OIG also excluded 4,112 individuals from participation in federal health care programs in 2015. In Medicare, medical professionals may be banned from seeking money to see patients if they’ve been convicted of defrauding a health care program or fraud-related offenses.

But those banned providers have no problem starting a second career in California’s workers’ compensation system. Recent criticism argues that no such facility vetting occurs on a regular basis for workers' compensation medical treatment. For example, Medicare banned Dr. Thomas Heric in 2006 after he pleaded guilty to charges related to writing reports based on diagnostic tests that turned out to be fraudulent. Heric then found a new line of work in the workers’ compensation medical system. His job was to review data on injured workers’ sleep patterns and issue reports needed to bill insurers. Five years later, prosecutors accused Heric of fraud again. That case is pending in Orange County Superior Court. Heric’s attorney, Robert Moest, said Heric stands by the reports and is fighting the charges.

There have been numerous successful criminal and civil health care fraud investigations in 2015 by the OIG and DOJ. These included: an $800 million settlement in which a company allegedly paid kickbacks to physicians through selling interests in exchange for referrals; a $54 million settlement by drug companies for knowingly underpaying rebates owed under the Medicaid Drug Rebate Program; a 156-month imprisonment and $1.2 million restitution payment for an individual medical supply company owner for submitting false claims to Medicare for hundreds of medical devices; a $47 million settlement by a laboratory for paying physicians kickbacks for patient referrals and billing for medically unnecessary testing; and the largest national health care fraud takedown in history charging 243 individuals, including 46 medical professionals, for alleged participation in Medicare fraud schemes for approximately $712 million in false billings.

The OIG’s audit and evaluation process found some key emerging issues in the Annual Report, including: Medicaid Home Health services; terminated Medicaid providers; access to Medicaid managed care services; payments to delinquent providers; non-emergency medical transportation services; issues in Medicare Part D; and the skilled nursing facility payment system. CMS reported that the national Medicaid improper payment rate for 2015 was 9.8 percent or $29.1 billion (an increase from the 2014 rate of 6.7 percent or $17.5 billion). Also in 2015, CMS awarded a contract for a pilot program to estimate the possible fraud in the Medicare program, specifically in the Home Health benefit. This pilot program includes a review team of health care clinicians, analysts, policy experts and fraud investigators that will review possible fraud and determine whether law enforcement should be involved.

Health care payers should be aware of the concentrations of the Annual Report, as many of these areas will likely remain a focus in 2016. In 2015, the DOJ Civil Division Fraud Section focused on hospitals and physicians. This trend is one that payers should watch for in the future. The DOJ stated in the Annual Report it was concerned with hospitals and physicians treating patients on an inpatient basis when they could have been treated as outpatients. The DOJ also stated that a key area of concern was in violations of the Stark Law for physicians with ownership interest in health care entities. Further, the DOJ civil division recently has been litigating more cases that would have normally been settled in the past. This trend may continue in upcoming years.

Many of the recent settlements from providers have been in regards to excessive physician compensation. Several large settlements have resulted from findings of physician compensation that was in excess of fair market value, not commercially reasonable and based on the volume or value of referrals. Further, the DOJ has emphasized a recent focus on individual accountability and corporate responsibility. It is likely these trends will continue as well. Read More...

70-Year Old Placentia Woman to Serve 8 Years for Second Fraud Conviction
Tue, 21 Jun 2016 07:50:13 - Pacific Time
A 70-year-old Placentia woman was sentenced Monday to eight years in federal prison for running a hospice that submitted millions of dollars in fraudulent bills to Medicare and Medi-Cal for end-of-life care for patients who were, in reality, not dying.

Priscilla Villabroza -- who recently completed a 4 1/2-year term at a federal prison in Victorville for running a separate fraud scheme -- pleaded guilty last December to a felony health care fraud count before U.S. District Judge S. James Otero.

Villabroza's daughter, Sharon Patrow, 45, previously pleaded guilty to the same charge and is expected to be sentenced in August.

The mother-daughter pair, along with four others, were charged in 2014 with 25 health care fraud and money laundering counts, each of which carries a potential multiple-year prison sentence, according to the U.S. Attorney's Office. The case involves the formerly Covina-based California Hospice Care, which Villabroza purchased in late 2007 while under investigation in the earlier case.

After a two-week trial in Los Angeles, last May two doctors involved in the scheme were found guilty of federal health care fraud charges for falsely certifying that Medicare patients were terminally ill, and therefore qualified for hospice care, when the vast majority of them were not actually dying.

Sri Wijegoonaratna, known as Dr. J., 61, of Anaheim, who was found guilty of seven counts of health care fraud; and Boyao Huang, 43, of Pasadena, was found guilty of four counts of health care fraud. The two are scheduled to be sentenced on August 15, at which time each will face a statutory maximum sentence of 10 years in federal prison for each count of health care fraud.

"A number of patients admitted to California Hospice Care testified at trial, showing that they did not require end-of-life care," said United States Attorney Eileen M. Decker. "In fact, only a small percentage of patients later died - notwithstanding the two doctors declaring that they needed hospice care. This scheme is one of many that has victimized public health care programs and, in the end, the taxpayers who fund these important programs. We will continue to investigate these fraudulent schemes, shut down the operations and incarcerate those responsible for stealing from the system."

Four other defendants who were named in a federal grand jury indictment in September 2014 have pleaded guilty.

As part of the CHC fraud scheme, Villabroza and her daughter - who was the nominal owner while Villabroza was in custody - paid patient recruiters known as "marketers" or "cappers" to bring in Medicare and Medi-Cal beneficiaries. CHC nurses performed "assessments" to determine whether the beneficiaries were terminally ill and, regardless of the outcome, Wijegoonaratna and Huang certified that the beneficiaries were terminally ill - even though the vast majority of them were not dying. CHC personnel altered medical records in response to Medicare audits to make the beneficiaries appear sicker.

The investigation into California Hospice was conducted by the United States Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the California Bureau of Medi-Cal Fraud & Elder Abuse; and IRS Criminal Investigation. Read More...

SCIF Proposes to Reduce Rates by 9.5%
Mon, 20 Jun 2016 06:56:51 - Pacific Time
The State Compensation Insurance Fund is seeking to cut its workers’ compensation rates, per a recent filing with the California Department of Insurance.

The rate filing also includes an overall 9.5 percent rate reduction due to improvements in State Fund’s claims costs and goes into effect next year.

"An important part of State Fund’s purpose is to provide fair pricing. We have filed a new pricing structure with the California Department of Insurance (CDI) that will further enhance our pricing accuracy and rate stability for our policyholders," said Gina Simons, communications director for State Fund.

State Fund said in a communication sent out to insurance brokers that it is evolving its pricing structure by introducing additional pricing ranges and risk characteristics "that will further enhance pricing accuracy and make our rates more stable year over year."

Although the rate action will have an overall effect of a decrease, individual policyholders may see their rates increase or decrease depending on their individual loss experience, Simons said.

"Once the filing is accepted by CDI, we anticipate it to be effective Sept. 1, 2016," Simons added.

Last week the SCIF also released its 2015 Annual Report which is now available online. The report profiles financial performance in 2015 highlighted by an increase of $271 million in net income, which is 14 percent more than in 2014. Other important highlights include - 138,000 policies were written in 2015 - net premiums earned were $1.6 billion - policyholders’ surplus grew by $164 million since Dec. 31, 2014, and net investment income was $731 million.

"2015 was a pivotal year for State Fund’s transformation into the agile and efficient workers’ compensation carrier we will become," stated Vernon Steiner, State Fund President and CEO. "Under the oversight of our Board of Directors, we began this transformation with the goals of strengthening our culture and improving our business processes and technology."

Despite this favorable financial achievement, State Fund’s Board of Directors did not declare a dividend on new or renewal policies that incepted during the 2015 calendar year. Instead, during 2015, State Fund designated an additional $750 million dollars as restricted surplus to cover future expenses for pension and other healthcare benefits. It also continues to carry reserves for losses, anticipated future claims, and expenses that are prudent and adequate for our operations.

This proposed rate reduction is atypical good news for the California workers' compensation marketplace. California employers generally tolerate unrelenting premium increases. At least for now, other states are facing the bad news.

For example, Florida businesses could soon be paying almost 20 percent more for workers’ compensation coverage. In response to a recent decision from the Florida Supreme Court, the National Council on Compensation Insurance (NCCI) filed a 17.1 percent rate increase with the Florida Office of Insurance Regulation (OIR) for all new, renewal and additional policies in effect on a "pro-rata" basis. It’s the first rate filing from NCCI, which files on behalf of 260 Florida workers’ comp insurers, since the Florida Supreme Court struck a devastating blow to the state’s workers’ compensation system. Read More...

Dentist Arrested for Billing for Treatment that Never Happened
Mon, 20 Jun 2016 06:56:44 - Pacific Time
Retired dentist Dr. Kenneth Webber, 71, who lives in Claremont, was arrested at his residence by California Department of Insurance detectives on five felony counts of insurance fraud for allegedly submitting fraudulent claims to patients' insurance carriers for services never provided.

In February 2013, Webber sold his practice to another dentist, who began performing dental work on patients and billing insurance providers. The insurer rejected a number of claims because, according to their records, the work had already been performed, billed, and paid under Webber's practice.

Upon receiving information of suspected fraud, the Department of Insurance launched an investigation. Department detectives uncovered evidence that Webber falsified claim forms and treating documents, billing insurers for patient procedures and dental work that had not been performed. Evidence revealed 60 percent of the patient records reviewed had fraudulent billing associated with their files.

Bail is set at $125,000. Webber faces up to 10 years in prison, if convicted on all counts. This case is being prosecuted by the Los Angeles County District Attorney's Office.

"Health insurance fraud is a national criminal epidemic totaling billions of dollars annually," said Insurance Commissioner Dave Jones. "As a trusted healthcare provider, Webber's alleged fraud is deplorable. We all pay for these crimes when insurers pass the losses along through higher premiums."

Past Week News Archive

U.S,. Supreme Court Lowers Standards for Health Care Fraud: Fri, 17 Jun 2016 05:01:55 - Pacific Time: Read More...

NBA Star Kermit Washington Pleads Not Guilty in Ron Mix Kickback Case: Fri, 17 Jun 2016 05:01:46 - Pacific Time: Read More...

Lien Claimants Must Use Uniform Assigned Name: Thu, 16 Jun 2016 07:27:26 - Pacific Time: Read More...

Orange County Doctor and Assistants Face Drug Trafficing Charges: Thu, 16 Jun 2016 07:27:20 - Pacific Time: Read More...

Legislators Fight Drugmaker Anti-Generic Drug Tactics: Wed, 15 Jun 2016 09:33:38 - Pacific Time: Read More...

TTD Rates to Increase Nearly 4% in 2017: Wed, 15 Jun 2016 09:33:31 - Pacific Time: Read More...

Former State Senator Ron Calderon Pleads Guilty in Drobot Bribery Case: Tue, 14 Jun 2016 10:08:42 - Pacific Time: Read More...

DWC Issues Second 30-Day Comment Period for HOPD/ASC Fee Schedule: Tue, 14 Jun 2016 10:08:26 - Pacific Time: Read More...

State Opioid Monitoring Programs Reduce Prescriptions by One-Third: Mon, 13 Jun 2016 11:36:03 - Pacific Time: Read More...

Study Finds "Noticeable Decreases" in Workers' Compensation Opioid Prescriptions: Mon, 13 Jun 2016 11:35:57 - Pacific Time: Read More...