The Workers' Compensation Daily News for Dec 08, 2013
Fresno Farm Labor Contractor to Pay Comp Carriers $4.2 Million Restitution
Fri, 6 Dec 2013 11:51:12 - Pacific Time
On December 4, 2013 Richard Lopez Escamilla Jr. 47, was sentenced in Kings County Superior Court to one felony count of insurance fraud and was ordered to pay restitution of nearly $4.2 million to SCIF, SeaBright Insurance and the Employment Development Department. Escamilla was also sentenced to serve six years in prison for defrauding two insurance companies by underreporting employee payroll and unemployment insurance tax evasion.
He operated businesses under several names including ROC Harvesting, EC Labor, EC Labor Inc., and ES Labor. He often changed the names of his businesses to pretend to be a new business in order to lower his premiums.
The department of Insurance said that he was accused of illegally reducing his workers comp premiums by underreporting employee payrolls for his farm labor contracting company, as well as misrepresenting previous comp claims for the firm.
"This is a win for California consumers, insurers and taxpayers," said Insurance Commissioner Dave Jones. "This case isn't just about one crook who stole from two insurance companies, business owners across the state end up paying the real price for workers' compensation fraud through higher premiums and those costs are passed to consumers."
The conviction was the result of a joint investigation with the The San Joaquin Valley Premium Task Force, the King's County district attorney's office and the Employment Development Department. Read More...
Two Monterey County Contractors Convicted of Comp Fraud
Fri, 6 Dec 2013 11:51:06 - Pacific Time
Monterey County District Attorney Dean Flippo announced that a Soledad contractor pleaded guilty Thursday to several charges stemming from conducting businesses without proper licenses or paying required fees.
Lavaki Fale, 45, pleaded guilty to one felony count of fraudulent use of a contractor's license, one misdemeanor count of failing to secure workers' compensation insurance and one misdemeanor count of contracting without a license.
Fale, who was conducting business as Vei Construction and S and JR Construction, will be sentenced Jan. 29. He faces up to three years in prison and thousands of dollars in fines.
In an unrelated case, a Felton-based contractor pleaded guilty Wednesday to two charges related to his roofing business in Monterey County, according to the District Attorney's Office.
Matthew Cunningham, 61, pleaded guilty to one misdemeanor count of failing to obtain workers' compensation insurance and one misdemeanor count of contracting without a license.
He had placed his license into inactive status but continued to advertise his services online.
Cunningham later reactivated his license, purchased the appropriate insurance and became compliant with legal requirements.
He was placed on probation for three years and ordered to pay fines. Read More...
Researchers Measure Cost of Zero Dollar Comp Claims
Thu, 5 Dec 2013 08:22:26 - Pacific Time
Many workers' compensation (WC) claims result in no payment from the WC system, but do lead to increased costs for employee group insurance plans, reports a study in the December Journal of Occupational and Environmental Medicine, official publication of the American College of Occupational and Environmental Medicine (ACOEM).
Nationwide, so-called zero-cost WC claims could cost group health insurance plans more than $200 million per year, according to the study by Abay Asfaw, PhD, and colleagues of the National Institute for Occupational Safety and Health.
The researchers analyzed data on more than 12,000 injured workers who filed for WC insurance from 2002 through 2005. Sixteen percent of the claims were "zero-cost" claims - that is, they resulted in no WC payments. Use of and payments from the employees' group health insurance increased after WC claims. That was so for zero-cost claims as well as claims resulting in payments. But the zero-cost claims were associated with significantly greater increases in costs to group health insurance, after adjustment for other factors. The increase was largest for outpatient care, with an estimated increase of approximately $400 per claim.
"Our national estimated showed that zero-cost WC claims added $212 million in medical bills to group health insurance per year," the researchers write. Because their data may miss some occupational injuries, they suspect the true economic impact is even higher.
The study adds to previous evidence suggesting that non-WC insurance - including not only employee health plans but also public insurance - cover at least part of the costs of work-related injury and illnesses. "If WC provides inadequate coverage - workers will seek treatment using other insurance," Dr Asfaw and coauthors conclude. "Our key finding is that zero-cost WC medical claims have repercussions for other insurance systems and society, and their economic implications are substantial."
This study quantifies and illustrates an employers quagmire. A zero dollar comp claim is not really zero dollars. It is in actuality cost shifting, not necessarily cost saving. Large employers pay the costs of all forms of employee benefits including group health care. For those employers aggressive defense of an AOE-COE issue in the comp forum may produce illusory savings if that cost is simply shifted to another employer funded program. The bigger picture may be a view that an injured worker is a costly problem no matter which of the employer's pockets pays the cost. Thus aggressively rapidly solving the medical issues may be less costly in the long run than a strategy that simply pushes the cost from one employer program to another. Read More...
2014 WCIRB Manuals and Plans Now Available
Thu, 5 Dec 2013 08:22:19 - Pacific Time
In a Decision dated October 17, 2013, the California Insurance Commissioner approved a number of changes to the California Workers’ Compensation Uniform Statistical Reporting Plan-1995 (USRP), the California Workers’ Compensation Experience Rating Plan-1995 (ERP), and the Miscellaneous Regulations for the Recording and Reporting of Data - 1995 (Misc Regs) effective January 1, 2014. Revised versions of these publications reflecting the Insurance Commissioner’s Decision are now available on the WCIRB website.
In addition, the WCIRB has published updated advisory plan information including updated California Hazard Group Assignments and Loss Elimination Ratios, and updated versions of the California Small Deductible Plan, California Insolvent Insurer Rating Adjustment Plan, and California Basic Underwriting Manual. These advisory plans and supplemental tables are published as a convenience for WCIRB members and do not bear the official approval of the Insurance Commissioner.
Advisory Plans
California Insolvent Insurer Rating Adjustment Plan Effective January 1, 2014
California Small Deductible Plan Effective January 1, 2014
California Large Risk Deductible Plan Effective January 1, 2013
California Retrospective Rating Plan Effective January 1, 2013
California Basic Underwriting Manual Effective January 1, 2014
Related Information
WCIRB Quick Reference Guide 2014
Commissioner Issues Decision on 2014 Rate Filing
Commissioner Issues Decision on Regulatory Filing Read More...
Court of Appeal Limits WCAB Subject Matter Jurisdiction Over Professional Sports Injuries
Wed, 4 Dec 2013 13:49:37 - Pacific Time
Adrienne Johnson was a professional basketball player who was not employed by a California team, has never resided in California, has played one professional game in California out of 34 games played during the 2003 season, and has suffered no specific injury in California. Upon graduation from Ohio State University, she was drafted by the Cleveland Rockers, a professional basketball team in the Women’s National Basketball Association (WNBA), and played for them for two years. Johnson next played for the Orlando Miracle, which became the Connecticut Sun in 2003. In December 2003, an MRI revealed she had a knee injury, for which she had surgery in 2004. Although Johnson did not play during the 2004 season she signed with the Seattle Storm and practiced with that team in Seattle in 2005. She did not play for that team during the 2005 regular season and has not played in any professional games since the end of the 2003 season.
While playing for the Orlando Miracle, Johnson lived in Orlando, Florida. When her team moved to Connecticut, Johnson moved from Orlando to Hackensack, New Jersey, and she continued to play for that team. At the time of her September 2010 deposition in the workers’ compensation proceeding in California, Johnson resided in Louisville, Kentucky and had been living there for two years.
Johnson sustained an injury to her right knee while playing for the Orlando Miracle in 1999. She had surgery for this injury in Orlando, Florida in 2000. In May 2001, while in training camp in Orlando, Johnson tore her Achilles tendon. She was treated again in Orlando and missed the entire 2001 season. She re-injured her right knee in 2003. Johnson signed a two-year contract with the Connecticut Sun on May 2, 2003. She signed this contract in Hackensack, New Jersey. Her agent was based in Ohio.
Johnson filed a workers’ compensation claim in Connecticut in August 2003 for the injury to her right knee. It was resolved by a settlement resulting in a $30,000 payment to Johnson. Johnson played 34 games in the 2003 season, which was the full season. During that season, she played one game in Los Angeles, California on July 20, 2003.
Johnson filed an application for adjudication of the claim in California against the Connecticut Sun and its workers’ compensation insurer Federal Insurance Company, which is part of the Chubb Group of insurance companies. The Workers’ Compensation Judge (WCJ) awarded disability indemnity., After a petition for reconsideration, the Board rescinded the award and returned the matter to the WCJ for further proceedings to apportion the compensation between the present injury and past injuries for which she already received workers’ compensation benefits in Connecticut. The defendants petitioned for a writ of review, contending that the Board does not have jurisdiction over Johnson’s claim. The Court of Appeal agreed that there was no subject matter jurisdiction in the published opinion of Federal Insurance Company vs WCAB, Adrienne Johnson.
The court reasoned that the issue of personal jurisdiction must be decided before the conflicts of law question. The WCJ’s determination that "[p]laying in even one professional basketball game in California is sufficient to establish jurisdiction" mischaracterizes the issue, which is not one of personal jurisdiction but rather one of whether one or more state compensation laws apply and whether in this case California may provide a forum for the claim. Thus the issue in this case is which state’s workers’ compensation law applies, not which state has personal jurisdiction. The issue may be characterized as a conflicts of law issue, which arises when there are contacts in multiple states.
Whether California’s workers’ compensation law governs depends on the application of the due process clause of the United States Constitution. If an employer or the insurer are subject to workers’ compensation law of a state that does not have a sufficient connection to the matter they are deprived of due process. Also, the determination may depend on the application of the full faith and credit clause of the United States Constitution. That is, if the workers’ compensation law of another state exclusively should apply and California does not have a sufficient contact with the matter, California must, under the full faith and credit clause, accede to the other state to provide a forum. California courts have long focused on the contacts of the employment relationship with California in determining which state’s workers’ compensation law applies. Despite a lack of California authority, it is widely accepted that rights created by the compensation act of one state cannot ordinarily be enforced in another state or in a federal court. Such a principle is justified because workers’ compensation laws involve administrative machinery that will differ from state to state. In some states there is an exception to this rule.
The Court was not, therefore, faced with an issue of which law to apply, but only with whether California’s workers’ compensation law applies in this case. That issue has been framed as one of due process under the 14th amendment of the United States Constitution. If this state lacks a sufficient relationship with Johnson’s injuries, to require the employer to defend the case here would be a denial of due process such that the courts of this state do not have authority to act. This might be referred to as a lack of subject matter jurisdiction.
The court concluded that a single basketball game played by a professional player does not create a legitimate interest in injuries that cannot be traced factually to one game. The effect of the California game on the injury is at best de minimis. Accordingly, California does not have a sufficient relationship with Johnson’s injuries to make the application of California’s workers’ compensation law reasonable. And California law has no obligation to apply the workers’ compensation law of any other state. Thus, as a matter of due process, California does not have the power to entertain Johnson’s claim. Read More...
DWC Schedules Another IMR Webinar
Wed, 4 Dec 2013 13:49:30 - Pacific Time
The California Division of Workers’ Compensation (DWC) and Maximus Federal Services invite injured workers and their designees and advocates to attend a one-hour web training on the Independent Medical Review (IMR) process. This webinar will address the roles of injured workers and their designees in the IMR process, including the planned IMR electronic submission feature.
Pre-registration is required to attend this free webinar meeting, and space is limited to 500 participants. The recorded webinar will be made available afterward for those unable to attend the live presentation.
Please submit questions prior to the webinar by sending an email to IMRhelp@maximus.com by Friday, December 13. Read More...
FBI Says Mob Figures Now Involved in Health Care Crime
Tue, 3 Dec 2013 08:34:57 - Pacific Time
It's a crime so profitable that even dead people are in on the act. A story in Reuters Health says that a U.S. Senate committee revealed last year that public health insurer Medicare had paid as much as $92 million from 2000 to 2007 for medical services or equipment ordered or prescribed by doctors who were dead at the time. Many had died more than five years before the date when they supposedly ordered or authorized the service.
Healthcare fraud said to cost U.S. taxpayers hundreds of billions of dollars a year has garnered increased attention amid the congressional debate about overhauling the U.S. healthcare system -- especially since President Barack Obama wants to cover some of the cost of reforms by fighting abuse. Yet interviews with several law enforcement and healthcare experts indicate the president may be disappointed. Some fear the focus on fraud may come as too little, too late after years of government complacency and inaction.
Experts like the FBI's John Gillies say the problem has been getting worse all the time, as mob figures and violent criminals are lured by fabulously easy money and relatively light prison sentences into fraud targeting Medicare, the federal health insurer for more than 43 million elderly and disabled Americans. "There are so many schemes involved. Take any aspect of the healthcare industry and there's a fraud going on in there right now," Gillies, special agent in charge of the FBI Miami Division, told Reuters in a recent interview.
Florida has long been known for its unsavory association with cocaine cartels, political shenanigans and swampland real estate deals. Gillies says the state is also now "ground zero for healthcare fraud" since so many elderly Americans have retired to end their days in its famous sunshine. Hardly a week goes by without authorities in Florida reporting another arrest, indictment or conviction for Medicare fraud, which has replaced the drug trade as the crime of choice among many criminals.
The cases often involve multimillion-dollar schemes featuring bogus suppliers of wheelchairs, or other so-called durable medical equipment devices, and sham infusion therapies for the treatment of HIV and AIDs patients. One case filed recently in South Florida included the indictment of 11 members of New York's Bonanno crime family, and prosecutors say the crimes are becoming more elaborate, involving kickbacks, stolen identities and manipulative billing practices. "When we shut down one scheme they just move onto the next scheme," said Gillies, referring to fraudsters perpetrating one of the most lucrative financial crimes in America today. "I do not see it slowing down any time soon," he said.
The FBI estimates that fraud accounts for 3 percent to 10 percent of U.S. healthcare expenditure per year, and Gillies said it could easily cost about $200 billion annually. That is broadly in line with a Thomson Reuters report released on October 26. The report said that in 2007, when the United States spent nearly $2.3 trillion on healthcare and both public and private insurers processed more than 4 billion health insurance claims, fraud was estimated to reach as much as 10 percent of annual healthcare spending. At that rate, due largely to fraudulent Medicare claims, kickbacks for referrals for unnecessary services and other scams, the losses in 2007 would have been more than $220 billion.
The National Healthcare Anti-Fraud Association, an organization of about 100 private insurers and public agencies, estimates that some $60 billion, or about 3 percent of total annual healthcare spending, is lost to fraud. But the Thomson Reuters report said that figure is considered conservative. Read More...
Researchers Say New Spinal Cord Treatment Improves Walking
Tue, 3 Dec 2013 08:17:39 - Pacific Time
Scientists may have found a new treatment that can help people with spinal cord injuries walk better. The research is published in the November 27, 2013, online issue of Neurology®, the medical journal of the American Academy of Neurology.
"About 59 percent of all spinal injuries are incomplete, leaving pathways that could allow the spinal cord to change in a way that allows people to walk again. Unfortunately, usually a person affected by this type of spinal injury seldom recovers the ability to walk normally," said study author Randy D. Trumbower, PT, PhD, with Emory University in Atlanta. "Our research proposes a promising new way for the spinal cord to make the connections needed to walk better."
The research involved 19 people with spine injuries between levels C2 and T12, no joint shortening, some controlled ankle, knee, and hip movements, and the ability to walk at least one step without human assistance. Research team members were based at Emory University, Georgia Institute of Technology and Shepherd Center in Atlanta, the Rehabilitation Institute of Chicago and the University of Wisconsin, Madison.
The participants were exposed to short periods of breathing low oxygen levels, which is called hypoxia. The participants breathed through a mask for about 40 minutes a day for five days, receiving 90-second periods of low oxygen levels followed by 60 seconds of normal oxygen levels. The participants’ walking speed and endurance was tested before the study started, on the first and fifth days of treatment, and again one and two weeks after the treatment ended. The participants were divided into two groups. In one, nine people received either the treatment or a sham treatment where they received only normal oxygen levels. Then two weeks later they received the other treatment. In the other group, the participants received the treatment or sham treatment and then were asked to walk as fast as they could for 30 minutes within one hour of the treatment, then received the other treatment two weeks later.
Those who received just the hypoxia treatment increased their walking speed on a test of walking 10 meters, walking an average of 3.8 seconds faster than when they did not receive the treatment. Those who had the treatment plus walking increased their endurance on a test of how far they could walk in six minutes by an average of 100 meters, which was more than a 250-percent increase compared to those who had the sham treatment plus walking. All participants improved their ability to walk. More than 30 percent of all participants increased their walking speed by at least a tenth of a meter per second and more than 70 percent increased their endurance by at least 50 meters.
"One question this research brings to light is how a treatment that requires people to take in low levels of oxygen can help movement, let alone in those with compromised lung function and motor abilities," said Michael G. Fehlings, MD, PhD, with the University of Toronto in Canada, who wrote a corresponding editorial on the study. "A possible answer is that spinal serotonin, a neurotransmitter, sets off a cascade of changes in proteins that help restore connections in the spine." Trumbower cautions that chronic or sustained hypoxia in untrained hands may cause serious injury and should not be attempted outside the scope of a supervised medical treatment.
The study was supported by the U.S. Department of Defense Spinal Cord Injury Research Program. Read More...
DIR Lien Revenue Reduces Costs of WC Revolving Fund
Mon, 2 Dec 2013 09:52:53 - Pacific Time
The Department of Industrial Relations (DIR) announced an aggregate decrease of approximately $9.587 million (2.19 percent) for the Workers’ Compensation Administration Revolving Fund and other funds for fiscal year 2013/14. The costs required to implement the workers’ compensation reforms of Senate Bill (SB) 863 were partially offset by lien revenue. Slight increases in appropriations for the Division of Occupational Safety and Health and the Division of Labor Standards Enforcement were mitigated by increased reserves in the Subsequent Injuries Benefits Trust Fund and the Uninsured Employers Benefits Trust Fund, as well as one-time balance transfers from the Targeted Inspection Consultation and the Construction Industry Enforcement funds.
Due to the relative sizes in the aggregate insured premium and self-insured paid indemnity pools, the effect of the assessment on insured employers and self-insured employers will differ. The actual increase in fiscal year 2013/14 for self-insured employers is 8.69 percent. Insured employers will receive a reduction in fiscal year 2013/14 of 21.21 percent.
Insurance companies and self-insured employers will receive assessment notices in the mail. The assessments are authorized by Labor Code sections 62.5 and 62.6. In addition to funding the work of the Division of Workers’ Compensation, and partially funding the work of the Divisions of Occupational Safety and Health and Labor Standards Enforcement, assessments also fund anti-fraud efforts by the California Department of Insurance and local district attorneys, pay benefits to injured workers whose employers were illegally uninsured, and provide compensation to injured workers who already had a disability or impairment at the time of injury.
The assessment covers the Workers’ Compensation Administration Revolving Fund, Uninsured Employers Benefits Trust Fund, Subsequent Injuries Benefits Trust Fund, the Workers’ Compensation Fraud Account, Occupational Safety and Health Fund and the Labor Enforcement and Compliance Fund,
Insurers must pay the assessment for policy holders and recover those funds from policy holders through workers’ compensation policy surcharges and assessments. Letters and invoices were mailed to insurers and self-insured employers showing the share of the assessments and surcharges due. Insurers with questions about their letters should call DWC Staff Services Manager Amadeo Urbano at (415) 703-4014 or DWC Analyst Naomi Carter at (415) 557-1020 for more information. Self-insured employers with questions about their letters should call the Office of Self Insurance Plans at (916) 464-7000 and speak with Tina Freese. Read More...
Feds Pass New Law Regulating Drug Compounding
Mon, 2 Dec 2013 09:45:00 - Pacific Time
New federal law was passed last week that gives U.S. health regulators greater oversight of bulk pharmaceutical compounding and strengthens their ability to track drugs through the distribution pipeline. The Drug Quality and Security Act clarifies the authority of the Food and Drug Administration over compounded medications and creates a new class of compounding manufacturer known as an "outsourcing" facility, which will be able to sell to hospitals in bulk.
The law was prompted by quality control problems that led to a deadly outbreak of fungal meningitis in 2012 traced to a tainted pharmaceutical mixed by a Massachusetts compounding pharmacy. The product has been linked with more than 50 deaths. Following the outbreak, the FDA conducted 31 unannounced inspections in 18 states of other compounding pharmacies, finding conditions that could create a contamination risk in all but one.
FDA Chief Margaret Hamburg asked lawmakers at a Nov. 2012 hearing for more power to regulate compounding pharmacies, saying the agency had to defer to Mass. state authorities by law. "The challenge we have today is that there is a patchwork of legal authorities that oversee the action we can take," Hamburg said at the time.
Besides giving more regulatory powers over compounders, the law authorizes the FDA to develop a national track-and-trace system to secure the pharmaceutical supply chain and minimize opportunities for contamination, adulteration, diversion, or counterfeiting, according to the White House. The law also creates a national set of standards to track pharmaceuticals through the distribution chain to help thwart the introduction of fake medications into the drug supply.
Last year, fake vials of Roche Holding AG's cancer drug Avastin appeared in the United States from Britain, where they were purchased from a Turkish wholesaler.
In the United States, dozens of states have some type of regulation designed to track a drug's pedigree, but the rules are inconsistent. This law is designed to apply a uniform standard nationwide. Read More...
Past Week News Archive
Feds Resolve Fraud Case With Orange County Ambulance Company for $3 Million: Tue, 26 Nov 2013 12:31:09 - Pacific Time: Read More...
Panelists Says Early Aggressive Medical Care Lowers Claim Costs: Tue, 26 Nov 2013 12:31:02 - Pacific Time: Read More...
NICB Reports Increase in Medical and Workers' Comp Fraud Claims: Mon, 25 Nov 2013 07:46:04 - Pacific Time: Read More...
Insurance Commissioner Approves 6.7% Rate Increase: Mon, 25 Nov 2013 07:17:23 - Pacific Time: Read More...
Should Reserves Be Increased for Obese Claimants?: Fri, 22 Nov 2013 08:32:13 - Pacific Time: Read More...
A.M. Best Report Shows Comp Industry Financial Improvement: Fri, 22 Nov 2013 08:32:05 - Pacific Time: Read More...
Insurers Protest Proposed CMS SMART Act Rule Extending Time Limits: Thu, 21 Nov 2013 11:54:27 - Pacific Time: Read More...
Headache Doctors Publish Treatment-to-Avoid Guidelines: Thu, 21 Nov 2013 11:54:21 - Pacific Time: Read More...
Senator Calderon Points Fraud Finger at Senator Steinberg.: Wed, 20 Nov 2013 14:48:27 - Pacific Time: Read More...
Intuit Enters Real-Time Workers' Compensation Payroll Business: Wed, 20 Nov 2013 14:48:20 - Pacific Time: Read More...