San Jose poised to outsource entire workers’ comp unit

San Jose may outsource the rest of its embattled workers’ compensation unit, which has repeatedly come under fire for problems that largely stem from a lack of staffing and already relies on a third-party contractor to handle about half of all claims. The proposal coming before the City Council on Tuesday would allocate $8.5 million for a one-year contract with Intercare Holdings Insurance Services. San Jose Inside

California: Bill would protect bus drivers from being assaulted

Long Beach-area Democratic Rep. Grace Napolitano has introduced a bill that would require transit agencies install protective driver barriers on all buses, draw up plans to ensure bus driver safety and hand over data on operator assaults to the Federal Transit Administration. She says the Los Angeles County Metropolitan Transportation Authority averages about 130 bus operator assaults every year. Each bus driver assault cost the agency more than $49,000 per workers’ compensation claim. Long Beach Press-Telegram

California: Ridgecrest council votes to increase workers’ comp budget

The Ridgecrest City Council recently voted to increase appropriations for the fiscal year 2017-2018 budget for workers’ compensation claims by $390,000, to come from the city’s self-insurance fund. According to a staff report, the city clerk has been working with a third party administrator to close long-time workers’ comp claims. Daily Independent

West Virginia justices find Rhode Island widow eligible for workers’ comp

Overturning a decision by the West Virginia Workers’ Compensation Board of Review, the state’s Supreme Court has ruled that the widow of a Rhode Island man who was killed at a hotel while on the job in West Virginia may collect West Virginia workers’ compensation. The board had ruled that she could not do so because she had previously been awarded benefits in Rhode Island. WV News

Korea: Injuries during lunch breaks to count as workplace accidents

According to the Korea Workers’ Compensation and Welfare Service, employees who get injured while going to and from restaurants during lunch breaks will be able to receive compensation for the accident. The revised regs will provide compensation for workers who get into an accident while moving within a “socially acceptable” distance during lunch hours. Korea Herald

Division’s Latest Amnesty Program Intended to Boost Reporting by Claims Adjusters

The California Division of Workers’ Compensation (DWC) is rolling out its second amnesty program of 2017 intended to persuade claims adjusters to comply with state reporting requirements for workers’ comp data. The goal is to increase the amount of Subsequent Report of Injury (SROI) data that makes it into the Workers’ Compensation Information System (WCIS) database.

The program is a prelude to the DWC’s rollout of a new penalty system targeting non-reporting. “The goal is to maximize SROI reporting compliance prior to the time when a failure to accurately report will be subject to an assessment of penalties,” according to DWC spokesman Peter Melton of the new amnesty program. Melton says the initial WCIS SROI amnesty program that the Division offered earlier this year received wide interest from claims administrators.

The WCIS system is intended to be a private, centralized repository of workers’ comp claim data that can be used for research and to inform policymakers, in addition to an objective source of data to benchmark the effectiveness of workers’ comp reforms. And although around 90 percent of the First Report of Injury reports by insurance carriers, third-party administrators and self-insured employers make it into the WCIS, about half of the expected subsequent reports on these claims—SROI data—are not filed, according to the DWC.

Currently, the Division is drafting the penalty schedule and the associated assessment procedures, in addition to an annual report of claims administrators that are out of compliance with the SROI reporting requirements. A provision in California Senate Bill 1160, which allows for penalties up to $10,000 per year against a claims administrator that fails to report the required SROI data, calls on the Division to “publish an annual report disclosing the compliance rates of claims administrators and post the report and a list of claims administrators who are in violation of the data reporting requirements” on its website.

Administrators interested in participating in the amnesty program should email to contact the Division. The subject line of the e-mail should read “Request to participate in the SROI amnesty program.” The offer to participate is open through March 31, 2018, and requires only reporting of SROI data on open and new claims, not historical data that may be missing from the WCIS.

Company Officials Charged in Electrocution

The Orange County District Attorney has filed criminal charges against the safety coordinator and two other principals of Five Star Plastering, based in Laguna Hills. Its employee was involved in a 2014 electrocution. The employer itself also faces charges.

A two-man crew was erecting a banner at the Mission Viejo High School stadium to support the football team. Daniel Pohl, 23, climbed onto the scaffolding to attach the banner, but while standing on it, he was a mere two feet from overhead electrical lines and was killed instantly by high voltage from a 12,000-volt line. His coworker, Joshua Shetley, also 23, climbed to assist Pohl and also was jolted. Shetley was thrown from the 20-foot high scaffold but survived. He spent two weeks in the hospital with serious injuries. According to Cal/OSHA regulations, the minimum approach distance to the line should have been six feet.

Both men were untrained, according to the Orange County District Attorney.

Those charged include Timothy Scott Gordon, 52, of Lake Elsinore, the safety manager for Five Star; company President Thomas Aaron Blythe, 46, of Rancho Santa Margarita; and crew supervisor John Lawrence Alberts, 57, of Apple Valley. They each face up to three years in prison and $250,000 fines if convicted. Five Star faces fines up to $1.5 million. The charges include willful violations in causing death and injury. The men have just been arraigned.

Blythe was the vice president of the school’s booster club and directed two employees with only three weeks on the job to erect scaffolding and hang the banner on it.

Prosecutors charged Blythe because he ordered the job to be done and was on site when it started. The office charged Gordon for failing to inspect the site for safety hazards before the scaffolding was erected. Alberts is accused of failing to check the clearance between the scaffold and the high-voltage line.

In 2015 Cal/OSHA, in connection with the incident, cited Five Star for six serious violations, including a willful violation, and proposed penalties of almost $165,000. That case in on appeal but is on hold pending the conclusion of the criminal case.

Filed by Kevin Thompson in San Francisco.


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Insurance Department nabs trio for billing fraud

The California Department of Insurance arrested three individuals including a registered qualified medical evaluator (QME) in a scheme to defraud health insurers by artificially inflating bills. The three face charges of conspiracy to submit at least $380,000 in fraudulent bills for laboratory services.

Arrested were Dr. Edward Albert G. Balbas, chiropractor Jon Brunelle, and Alejandra Brunelle. The three jointly own Corona Physical Medicine clinic. Balbas is registered as a QME with the Division of Workers’ Compensation for pain medicine and physical medicine and rehabilitation.
The insurance department says the defendants cooked up a scheme to inflate the cost of its bills for laboratory tests. CDI says the three paid an out-of-state laboratory between $312 and $625 for tests but billed the health insurers $4,256 for the tests. Investigators say the suspects told carriers that they processed and analyzed the blood tests in-house.

Riverside County’s District Attorney’s office is handling the prosecution.

Compline suggests that brokers’ who are reviewing clients’ loss runs may want to determine if charges from this clinic appear as part of the paid medical and take appropriate action which may include directing the carrier to provide information to the DA and to adjust under the fraud provisions its loss reporting for X-Mod purposes.


Applicant attorney suspended, awaits sentencing

State officials suspended a Southern California applicant attorney from practicing law in California, and the attorney is awaiting sentencing for tax fraud. The fraudulent activity stemmed from reputed charitable donations that were actually payments for client referrals.

The California State Bar suspended attorney Ronald Mix’s license indefinitely effective September 26. The move follows Mix’s conviction for tax fraud “a felony that involves moral turpitude,” the state bar noted in its suspension order.

Mix entered a guilty plea earlier this year to cheating on his taxes by disguising payments for client referrals as charitable donations. Mix took the tax deductions on these payments.

A former professional football player and a member of the National Football League’s Hall of Fame, Mix disguised the referral fees as donations to The Sixth Man Foundation and its Project Contact Africa. Kermit Washington, a former professional basketball player, ran both organizations and coordinated the referrals. The client referrals were for former professional athletes looking to file a workers’ comp claim in California.
Washington is currently under indictment for allegedly using the charity to buy gifts and jewelry, pay personal expenses such as rent and to go on vacation.

The plea agreement details a scheme whereby Mix made “donations” of $5,000 to $25,000 per referral. Overall, Mix admitted to making approximately $155,000 in donations for client referrals from 2010 through 2013.

Many of the referrals were for out-of-state professional athletes looking to cash in on a California workers’ comp claim. California endured a flood of claims from former professional athletes with little connection to the Golden State. In 2013 the Legislature enacted AB 1309 by then-Assemblyman Henry Perea (D-Fresno) to crack down on the practice. The measure set tighter standards for out-of-state athletes to qualify for California workers’ comp benefits.

Mix plead guilty to a single tax fraud charge stemming from his 2012 return and a claimed deduction for $40,000 in charitable donations. Mix agreed to reimburse the Internal Revenue Service $49,543. He faces up to three years in prison and $250,000 in fine. Sentencing is still to be scheduled.


DWC Releases Report on 2013 Claims-Handling Practices of Workers Comp Administrators

The California Department of Industrial Relations Division of Workers Compensation (DWC) Audit Unit has released a report to the state legislature on 2013 audits that specifically focuses on the claims-handling practices of workers comp administrators. The report finds that 70 claims businesses representing California workers comp carriers and self-insured employers failed to pay a total of more than $400,000 in compensation to injured workers in 2013.

The average amount owed works out to just over $1,000 per injured worker, according to the report. In some cases the unpaid compensation was several dollars while in others, thousands remained unpaid. Most of the claims audited were selected randomly; however, the report also covers audits launched because of a complaint from an injured worker or his or her representative. The results show that in just six of the complaint cases, the injured workers were owed nearly $81,000, an average of $13,473 each.

The majority of the unpaid compensation, more than $315,000, was for unpaid temporary disability or salary continuation payments. Another approximately $49,000 was owed for permanent disability indemnity benefits, while claims adjusters failed to pay more than $42,000 in self-imposed penalties for late payment.

Overall, auditors from the DWC medical unit found that an injured worker was owed compensation in more than 11 percent of the claims it reviewed, with much of the compensation owed by two claims businesses: Acclamation Insurance Management Services and Berkeley Specialty Underwriting Managers.

The City of Torrance had the best score of any claims shop reviewed. Only one claim with unpaid compensation was found; it amounted to just over $2,200 owed. Applied Risk Services office in Omaha and the Sacramento location of Zenith Insurance Company were the next best-performing adjusting locations.

The worst performing claims administrators, according to the audit, were Acclamation Insurance Management Services in Santa Clarita and Berkeley Specialty Underwriting Managers. DWC says that they were the only two locations to fail the initial profile audit review and then fail a more in-depth review of claims files. Acclamation owed more than $41,000 in compensation to injured workers, while Berkeley adjusters had failed to pay more than $37,000 in compensation, according to DWC.

Acclamation faces fines of more than $252,000 for the violations. Berkeley has been issued over $139,000 in penalties, the majority of which are for failing to pay, or paying compensation to injured workers late. Both companies are disputing the findings, and none of the penalties against either company have been collected as the audit report release in late January.

The report also finds that overall, the amount of penalties cited was down for the fourth year in a row.