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Workers' Compensation Daily News for Sep 01, 2015

Santa Barbara Physician - The "Candyman" - Convicted on 79 Counts
Tue, 1 Sep 2015 10:24:27 - Pacific Time
A Santa Barbara-area physician who wrote numerous prescriptions for powerful painkillers, such as OxyContin, for "patients" - many of whom were drug addicts, and some of whom died from drug overdoses - was convicted after a jury trial on 79 drug trafficking charges. Julio Gabriel Diaz, 67, a Goleta resident who operated the Family Medical Clinic in Santa Barbara, was found guilty following a 2½-week trial in United States District Court. As a result of these verdicts, Diaz will face a maximum possible sentence of 1,360 years in federal prison. Diaz is scheduled to be sentenced on December 14.

Diaz, who was known to some "patients" as the "Candyman," was a prolific writer of prescriptions for highly addictive and dangerous drugs. In 2011, for example, Diaz wrote prescriptions for more than 1.7 million doses of painkillers. His "patients" typically paid cash, waited hours for a 10-minute visit with Diaz, and received prescriptions for powerful drugs that included opioids, anti-anxiety medications and muscle relaxants. Several doctors and pharmacists who testified during the trial said that they had never seen any doctor prescribe the combination and quantity of drugs prescribed by Diaz.

Diaz was found guilty of 79 counts of distribution of a controlled substance. Twenty-six of the charges relate to oxycodone (a drug often sold under the brand name OxyContin), 10 of the charges relate to methadone, seven of the counts relate to hydromorphone (a drug commonly sold under the brand name Dilaudid), 10 of the charges relate to fentanyl, 11 of the charges relate to hydrocodone (a drug often sold under the brand names Vicodin and Norco), 10 of the charges relate to alprazolam (a drug often sold under brand name Xanax), and five of the charges related to the distribution of various controlled substances to a minor. In relation to all 79 counts, the jury found that Diaz distributed the drugs outside of the usual course of professional practice and without a legitimate medical purpose.

According to the evidence presented at trial, doctors, nurses and other personnel with Santa Barbara Cottage Hospital wrote to the Medical Board of California and gave statements to investigators to complain about Diaz. Cottage Hospital doctors believed that Diaz posed such a threat that they prepared a spreadsheet documenting emergency room visits by patients who had been prescribed narcotics by Diaz.

Diaz was arrested in this case in January 2012. After his arrest, the state of California revoked his license after finding that he provided incompetent and grossly negligent care. Read More...

Orange County Corrections Officer Convicted of Comp Fraud
Tue, 1 Sep 2015 10:24:23 - Pacific Time
An Orange County employee was convicted and sentenced for committing insurance fraud by making false statements and concealing information related to his Workers’ Compensation claim. William Parker, 43, Corona, pleaded guilty to one felony count of making a fraudulent statement, five felony counts of insurance fraud. Parker was sentenced to six months in jail and paid over $41,000 in restitution.

On June 4, 2005, Parker was hired by the Orange County Probation Department (OCPD) as a Deputy Juvenile Corrections Officer. On Oct. 5, 2007, Parker was involved in a non-work related motor vehicle accident which caused injuries to his back and resulted in loss of time from work. Parker filed an insurance claim as a result of that automobile accident and received a settlement. Parker failed to disclose his back injury to the OCPD.

On Sept. 28, 2010, Parker suffered a back injury while working for the OCPD. Parker filed a Workers’ Compensation claim and was taken off work by his treating doctors after the county accepted the claim. The county was not aware of the previous back injury that Parker suffered in 2007.

On Jan. 31, 2012, Parker saw a medical examiner and told the doctor he still has daily pain. The doctor determined Parker had reached maximum medical improvement but would have to have permanent work restrictions. The defendant settled his Workers’ Compensation case and continued to see his primary doctor in the Worker’s Compensation claim from 2012 to 2014.

On Feb. 14, 2012, Parker was involved in a car accident where he was rear ended by another driver. The California Highway Patrol was called to the scene and reported minor property damage only.

On Feb. 23, 2012, Parker visited his primary doctor in the Workers’ Compensation case where he completed an updated medical questionnaire and intentionally omitted to tell the doctor about the motor vehicle accident he was involved in nine days earlier. Parker did not return to work until late February 2013, when he returned to a different position as an office specialist due to his claimed injuries.

On March 27, 2013, Parker filed a civil lawsuit for his personal injuries sustained in the car accident in 2012. The defendant was interrogated under oath and his deposition was taken. In the civil lawsuit, he made misrepresentations stating that he had completely recovered from the injuries in the Workers’ Compensation case and that he had returned to work as a correctional officer in order to collect a financial settlement from injuries the defendant claimed he sustained in the car accident. He stated that he was released in March 2012 but did not return to work until March 2013 because the county did not have a position for him. Read More...

Probation Officer Arrested For Fraud - While on Probation!
Mon, 31 Aug 2015 08:41:01 - Pacific Time
A former Los Angeles County probation officer, Robyn Palmer, 29, of Long Beach, was arrested on six felony counts of insurance fraud for allegedly forging documents to illegally collect disability insurance benefits while serving probation for another insurance fraud conviction.

Palmer was arrested while serving five years' probation following her conviction on 14 felony counts of insurance fraud, forgery, wire fraud, and grand theft in May 2014 for illegally collecting disability benefits from Allstate Insurance. Palmer was sentenced to five years' probation and ordered to pay restitution in the amount of $31,122.

"Palmer's nerve in allegedly collecting disability benefits fraudulently while serving probation for doing the same thing to another insurer is egregious," said Insurance Commissioner Dave Jones. "Crimes like these are costly to business, consumers and California's economy."

Department of Insurance detectives were contacted by American Family Life Insurance Company (AFLAC) after the insurer identified suspected fraud by Palmer. The investigation revealed that Palmer was allegedly collecting disability benefits totaling $24,000 from AFLAC while being prosecuted for the first crime against Allstate and continued to do so after her conviction and while on probation.

Palmer is being held at the Century Regional Detention Center in Lynwood, CA in lieu of $150,000 bail. This case is being prosecuted by the Los Angeles District Attorney's Office. If convicted, Palmer could be sentenced to five years in state prison. Read More...

Pacific Gas and Electric Again Under Safety Investigation
Mon, 31 Aug 2015 08:40:56 - Pacific Time
The state Public Utilities Commission unanimously approved a $2 million utility-financed wide-ranging investigation to gauge Pacific Gas and Electric Co.’s emphasis on safety in the aftermath of the San Bruno gas explosion. The panel previously imposed a historic $1.6 billion penalty for the Sept. 9, 2010, blast that killed eight people. Now the company’s string of post-San Bruno regulatory troubles suggested that utility was simply too big to regulate and might need to be broken up.

The investigation will amount to a deeper review of the companies organizational culture, governance, and operations, and the systemic issues identified by the National Transportation Safety Board. The safety board blames the 2010 explosion largely on PG & E’s "organizational failure" and lax safety leading up to the event. The safety arm of the commission will now work with an outside consultant to draft a report that will be reviewed by an administrative law judge in charge of the proceeding.

Meanwhile, the Los Angeles Times reports that the Public Utilities Commission itself -- beset by criticism that its officials have a too-cozy relationship with the utilities they regulate -- failed to respond to a search warrant for records related the California attorney general’s investigation of agency operations. A court document filed Aug. 7 states that "after multiple requests, and two months after the search warrant was served on CPUC, no records have been produced." Special Agent Reye Diaz of the attorney general’s office added: "No extension has been requested and no indication has been given as to when the records will be produced."

The attorney general is investigating secret talks between the commission and Southern California Edison, the state’s second largest investor-owned utility, that led to decisions that are costing utility customers billions of dollars. Read More...

WCAB Indicates Intention to Suspend Lien Claimant
Fri, 28 Aug 2015 08:39:33 - Pacific Time
On August 14, 2013, the WCJ in the case of Trinh v Tzeng Long USA Inc. issued an Order For Costs And Sanctions against Professional Lien Services, Inc., (PLS), ordering it to pay defendant’s costs and attorney’s fees in the amount of $2,355 along with a separate court sanction of $1,000. The sanctions were imposed for PLS’s bad faith and frivolous conduct in pursuing a trial on the issues of penalty and interest when it did not offer evidence at the trial adequate to meet its initial burden of proof.

Neither PLS nor its representative, Mike Traw petitioned for reconsideration or otherwise appealed the August 14, 2013 Sanction Order and it is now final and binding for all purposes.

Deputy Commissioner Rick Dietrich, Secretary of the Appeals Board, notified PLS in October 2013 that payment of the $1,000 court sanction was expected within ten days and further advised that failure to pay the sanction was grounds for suspending the privilege of appearing before the WCAB pursuant to section 4907. PLS replied that it was petitioning for reconsideration, but that was not the case.

Defendant also made unsuccessful efforts to recover the costs and attorney’s fees that PLS is obligated to pay as part of the Sanction Order. Thus the En Banc panel concluded "None of the efforts by the Appeals Board and the defendant have resulted in voluntary compliance with the August 14, 2013 Sanction Order by PLS and Mr. Traw, and it appears they are willfully disobeying the August 14, 2013 Sanction Order."

Section 4907(a)(2) provides for suspension of the privilege of appearing before the WCAB for, "failure to pay final order of sanctions, attorney’s fees, or costs, issued under Section 5813." The failure to comply with an order or regulation of the WCAB, including an order to pay a sanction, is an interference with the judicial process that provides good cause for suspending or removing the privilege of appearing before the WCAB.

For this reason it was ordered that "that the Appeals Board intends to suspend the privilege of Professional Lien Services, Inc., and Mike Traw of appearing before the Workers’ Compensation Appeals Board pursuant to Labor Code section 4907 for ninety (90) days unless good cause is shown why the suspensions should not be imposed." Read More...

Court of Appeal Affirms Termination of Injured LAPD Officer
Fri, 28 Aug 2015 08:39:28 - Pacific Time
On October 5 or 6, 2011 Richard Gurrola, a Police Officer II with the City of Los Angeles, suffered a back spasm, which was a flare-up of a prior work-related injury. He scheduled an appointment with Dr. Simon Lavi, who had treated the initial injury, but could not get an appointment earlier than October 11, 2011. Dr. Lavi’s office, which had previously backdated medical notes for Gurrola, assured him he would receive injured on duty (IOD) pay notwithstanding the delay in seeing the doctor.

What followed was numerous communications between Gurrola and the LAPD about his status, and the documentation that was needed from his doctors. Finally Gurrola was served with a personnel complaint and notice of relief from duty and proposed removal, suspension or demotion issued by Chief of Police Charlie Beck, charging him with one count of being absent from work without leave and one count of providing false statements during the investigation into his absence.

There was conflicting testimony from seven witnesses on the board of rights hearing on several points. The board of rights found Gurrola guilty of count 1 and not guilty of count 2 and he was terminated. He appealed his termination and the Court of Appeal affirmed in the unpublished case of Gurrola v City of Los Angeles.

In a mandamus proceeding to review an administrative order, the determination of the penalty by the administrative body will not be disturbed unless there has been an abuse of its discretion. In considering whether an agency abused its discretion, "the overriding consideration in these cases is the extent to which the employee’s conduct resulted in, or if repeated is likely to result in, ‘[harm] to the public service.’ [Citations.] Other relevant factors include the circumstances surrounding the misconduct and the likelihood of its recurrence."

Using this standard the Court of Appeal concluded "Although the penalty of termination is harsh, these facts do not present the exceptional case in which reasonable minds cannot differ: The board properly found that public service was compromised by Gurrola’s two-month absence from work without leave, requiring other personnel to cover his shifts. In addition, the evidence supports a finding Gurrola’s actions were consistent with a pattern of improperly taking extended absences from work." Read More...

Benefits of Spinal Epidural Injections Remain Controversial
Wed, 26 Aug 2015 08:48:56 - Pacific Time
A new study published in the Annals of Internal Medicine and summarized by Reuters Health says that spinal epidural injections of steroids may relieve low back pain from a ruptured disc, but only briefly. And the injections offer no significant relief for pain related to narrowing of the spaces around the spinal cord, the researchers say. Some earlier studies have reached similar conclusions, but others have shown some benefit. Meanwhile, the use of epidural steroid injections has been increasing in the face of contradictory guidelines for physicians.

To clarify this confusing situation, Dr. Roger Chou from Oregon Health and Science University in Portland and colleagues sorted through the evidence from 63 published reports about the use of epidural steroid injections for treating low back pain from ruptured discs or spinal narrowing. "I think the important thing is for patients and clinicians to be able to make informed decisions," Chou told Reuters Health by email. "Epidural corticosteroid injections are perceived as being more effective than they are."

Spinal steroid injections brought immediate relief of pain and improvement in function in patients with ruptured discs, but not in patients with spinal narrowing, or stenosis, the researchers reported in Annals of Internal Medicine. Injections also seemed to reduce the need for disc surgery in the short term. But in the long term, the effects of injecting steroids epidurally were no better than the effects of a placebo, the researchers say, and there was no reduction in the need for surgery. It didn’t seem to matter what specific injection technique or which particular steroid was used.

The new analysis seems unlikely to settle any controversies, however. Dr. Zack McCormick, who specializes in physical medicine and rehabilitation at Northwestern University Feinberg School of Medicine in Chicago, told Reuters Health by email that because the studies available for analysis by Chou’s team were of low quality, the conclusions "cannot be applied to the realistic day-to-day practice of spine medicine. The goal of epidural steroid injection is not for long term ‘cure,’ but rather to (improve) symptoms in order to allow restoration of sleep, quality of life, and tolerance of physical therapy," McCormick said.

Dr. Laxmaiah Manchikanti from the University of Louisville, Kentucky, who is CEO and Chairman of the Board of American Society of Interventional Pain Physicians, was also skeptical, and he told Reuters Health by email that patients with lower back pain from a ruptured disk or spinal stenosis should talk to their physician rather than trust the new conclusions. "Over a million people receive epidural injections either with steroids or with local anesthetic alone per year and at least 60% of them receive significant relief," he said.

Dr. Steven P. Cohen, a pain specialist at Johns Hopkins School of Medicine in Baltimore, Maryland told Reuters Health by email, "I do not think we should categorically discontinue epidural steroid injections for either of these conditions, but we need to limit their use to those people who are most likely to benefit, and to only repeat them if patients obtain clearly defined improvements in function and quality of life. Otherwise, the costs and risks may outweigh the benefits." Read More...

CWCI Report Confirms Decade of Relentless Cost Increases
Wed, 26 Aug 2015 08:12:47 - Pacific Time
A new CWCI update report takes an look at California workers’ compensation medical and indemnity loss trends,comparing paid losses on claims from 2002 through 2014.

The data shows that between 2002 and 2013, the average amount paid on indemnity claims at 12 months post injury for medical benefits, excluding medical management/medical cost containment (MCC), increased by 30.3 percent (from $5,859 to $7,631). In 2011, the average medical payments on indemnity claims at the 12-month valuation registered a brief decline, falling 4.1 percent to $6,988, before climbing back up again over the next two years,

Given the timing of the implementation of the various SB 863 reforms and the reductions in average medical payments at the 3- and 6-month benchmarks between 2013 and 2014, the recent results suggest that key provisions of the SB 863 medical reforms (i.e., the phase-in of the RBRVS fee schedule beginning in January 2014; the reinstatement of lien filing fees, the reductions in ambulatory surgery center fees, and the adoption of the IMR dispute resolution process) did have an immediate effect on the cost of medical services rendered during the initial period following the injury. The ultimate impact of the 2012 reforms on longer term treatment costs remains to be seen.

However the medical management/medical cost containment (MCC) expenses triggered by reforms skyrocketed over this same time period. Measured at 24-months post injury, average MCC payments rose from $685 in 2002 to $1,003 in 2005 (+46.5 percent), then increased over the next 7 years to a record $2,333 in 2012 -- a net increase of 240.7 percent from 2002.

There was an immediate decline in average TD payments that coincided with the implementation of the 104-week cap in April 2004. By 2005, however, average TD payments at 24 months had already started trending up again, and by 2006 average first-year payments were also up sharply. It was not until 2008 that the 24-month TD benefits surpassed the pre-reform 2004 level, and it was not until 2009 that average first-year payments exceeded the pre-SB 899 amount.

There was a net increase of 152 percent in the average amount paid for first-year med-legal reports between 2002 and 2013. Read More...

Implant Fraud Strikes Again!
Tue, 25 Aug 2015 10:27:50 - Pacific Time
The allegations in the Pacific Hospital of Long Beach criminal and civil litigation claims that fake hardware has been implanted in the spines of hundreds of victims. These allegations raise questions about surgeries in general. For example, it is now common to have hip or knee implants, or stents placed in an artery. Yet does anyone know who manufactured the surgical part, why that part was selected over any other part, what was the manufacturers warranty or if that was the best choice at the time it was made? Or, was it chosen because of kickbacks or other reasons? Consumers spend hours choosing the latest flat panel TV, but essentially zero time learning about a costly surgical part before it is implanted. Yet recent news continues to provoke questions about how surgeons select surgical products.

For example, the United States Attorney announced that Dr. Paul S. Singh, 55, of Tehachapi, pleaded guilty to mail fraud for a scheme to defraud his patients and their insurers by implanting and billing for unapproved intrauterine devices (IUDs). Singh had an office in Tehachapi. He provided obstetric and gynecological services to women. One form of birth control he provided were IUDs, which the Food and Drug Administration (FDA) regulates. The FDA has approved only one IUD that uses copper as its active ingredient, the ParaGard T-380A, which was sold only by its manufacturer and not available on third-party websites. The insertion of a non-FDA-approved copper IUD risks a patient’s safety. It can result in an increased risk of pelvic inflammatory disease, ectopic pregnancy, hysterectomy, and other serious complications.

According to court documents, Singh bought unapproved IUDs on the Internet but fraudulently billed his patients and their insurers as if he had inserted FDA-approved IUDs, all without the permission or consent of his patients, Singh was sent multiple bulletins and newsletters warning against the use of unapproved IUDs. He was also warned that products sold by online pharmacies were not identical to the ParaGard T-380A and had not been approved as safe and effective by the FDA. In spite of the warnings, Singh purchased unapproved IUDs from online retailers and implanted them in numerous patients without their consent.

In August 2010, agents from the FDA confronted Singh about his history of implanting unapproved IUDs. During the meeting, Singh agreed to stop implanting them in his patients. Agents later conducted a search warrant of Singh’s office in 2012 and learned that he had continued to implant unapproved IUDs in his patients.

Singh failed to advise his patients of the risks of unapproved IUDs or of the fact that one had been implanted in them. According to the plea agreement, many of Singh’s patients later complained to him and other doctors about medical complications they associated with Singh’s insertion of the IUD. In multiple instances, Singh responded to such complaints by re-inserting the IUD rather than removing it. Some patients ultimately had to switch doctors in order to have the IUD removed. Singh profited from the implanting unapproved IUDs by billing his patients and their insurers for the higher cost of approved IUDs, which was false and fraudulent.

Singh is scheduled to be sentenced by United States District Judge Anthony W. Ishii on November 23, 2015. Singh faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. Read More...

Insurer to Pay $6 Million Fine
Tue, 25 Aug 2015 10:27:45 - Pacific Time
Geico, a large multi-line insurer licensed in California, has agreed to pay $6 million dollars and implement several changes to their business practices, as part of a settlement with the California Department of Insurance. The settlement stems from a petition in which Consumer Federation of California alleged Geico's online premium quoting system was discriminatory and misleading to consumers.

Based on information obtained through extensive testing of the Geico website, Consumer Federation of California discovered the insurer misrepresented a $100,000/$300,000 limit quote as being a lowest-limits quote, when in fact, it was not. Consumer Federation of California alleged in their petition that these higher policy limits were only quoted to certain consumers, based on their education level, occupation and gender.

Though insurers may also offer and sell policies with higher limits, California law requires insurers to offer a minimum limits policy of $15,000/$30,000. Geico's online premium quoting system was inaccurately describing quotes for higher limits as the lowest limits.

Insurance Commissioner Dave Jones issued an order approving the settlement agreement and requiring Geico to discontinue using consumers' education level or occupation to quote coverage limits, and to offer a quote for a $15,000/$30,000 policy to certain consumers for the next three years. The insurer has also agreed to submit to twice-yearly audits of their website for the next three years, to ensure they are complying with the law. Read More...

Past Week News Archive


Owner of Three LA Clinics Pleads Guilty in Fraud Case: Mon, 24 Aug 2015 08:02:52 - Pacific Time: Read More...


Quoting and Binding Comp Online Grows in Popularity: Mon, 24 Aug 2015 08:02:46 - Pacific Time: Read More...


More Major Publishers Admit to Fraudulent Journal Articles: Fri, 21 Aug 2015 09:40:42 - Pacific Time: Read More...


Jury Convicts Operators of Gardena Ambulance Company: Fri, 21 Aug 2015 09:40:35 - Pacific Time: Read More...


Uber Sued Over Lack of Workers' Compensation Insurance: Thu, 20 Aug 2015 12:07:36 - Pacific Time: Read More...


One Week Left Before Medical and Provider Fraud Symposium: Thu, 20 Aug 2015 12:07:28 - Pacific Time: Read More...


DWC Advice for Panel Requests Between Sept 3 and October 1.: Wed, 19 Aug 2015 09:09:48 - Pacific Time: Read More...


New Law Adds Insurance Industry Oversight: Wed, 19 Aug 2015 09:09:42 - Pacific Time: Read More...


More Than Half of Comp Costs Are Now Medical Benefits: Tue, 18 Aug 2015 08:36:13 - Pacific Time: Read More...


DWC Sets Drug Formulary Meeting for September 14: Tue, 18 Aug 2015 08:36:06 - Pacific Time: Read More...