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 WCIS@dir.ca.gov 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.

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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.

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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.

California To Quarantine People At Risk of Ebola

Responding to the ongoing threat posed by the West African Ebola outbreak, the California Department of Public Health (CDPH) is establishing statewide protocols for quarantining suspected cases and those at highest risk of contracting and/or spreading the disease. The outbreak has already sickened health care workers in the United States and prompted Australia to completely close its borders to travelers from the hardest hit countries.
CDPH issued guidelines today outlining standard protocols counties to use when addressing suspected cases. The guidelines carry a mandatory quarantine order “for those at highest risk of contracting and spreading Ebola,” CDPH director Dr. Ron Chapman said in a news release announcing the order and guidelines. The quarantine order applies to anyone traveling to California who has traveled from an Ebola affected area and has had contact with someone who has a confirmed case of Ebola. Those travelers will be quarantined for 21 days, which is the typical incubation period for the disease.
The quarantine orders and the level of quarantine will be supervised and issued by local County health officers on a case-by-case basis. Local County health officers already have the legal authority to quarantine individuals who may have an infectious disease that threatens public safety.
CDPH spokeswoman Anita Gore says that federal Customs and Border Protection (CBP) and the CDC’s Division of Global Migration and Quarantine (DGMQ) are screening travelers coming into California from the three West African countries at US ports-of-entry. “Through this process, all returning travelers are queried on possible risk exposures and recent history of signs and symptoms of Ebola, and are also checked for fever with a no-touch thermometer.”
The travelers are either released after secondary screening with a kit that has a digital thermometer and fever and symptom log or referred to CDC for additional screening with medical staff.
“The California Department of Public Health receives daily lists from the CDC with contact information for all travelers who were screened through this process and whose final destination is California,” Gore says, noting that CDPH then sends this information “the same day” to the local health department responsible for the traveler’s final destination.
The local health departments are then supposed to actively monitor the individual twice a day for symptoms of Ebola. “Only those that are determined to be high risk due to contact with Ebola cases are issued a quarantine order,” she says.
Gore says CDPH continues to monitor the evolving CDC guidelines to relay the latest information to local health departments and health care providers via its website and direct distribution. “CDPH remains available 24 hours a day to health care providers with questions about potential Ebola patients,” she adds.
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Medical Billers Transitioning to Mammoth ICD-10 Classification System

American medical coders are continuing to familiarize themselves with the medical code compendium ICD-10, the 1,100-page most recent version of the International Statistical Classification of Diseases and Related Health Problems, according to Sarah Kliff in the Washington Post’s Wonkblog.

Published by the World Health Organization, the ICD is used worldwide as an exhaustive listing of diseases, symptoms, medical procedures, mortality statistics, and external causes of injury, illness and death. Organized by anatomy, the ICD’s codes are used by insurers to identify specific ailments, injuries, and causes of death in order to determine how much to reimburse hospitals for care. The codes also determine how Medicare and most private health insurers assess a value for each patient visit.

This tenth edition system has 68,000 codes—more than four times as many as its predecessor, ICD-9—and more specifically identifies diseases, death and their causes. According to Kliff, two key factors are behind the expansion: the ICD-10 differentiates between left and right sides of the body, which can help identify fraud; and, the new codes categorize whether a trip to the hospital was for initial or subsequent treatment, which is important for reimbursement purposes because first visits to the doctor tend to require more resources.

Transitioning to ICD-10’s expanded classification system has been controversial. Supporters maintain that adding specificity to medical diagnoses will make it easier for insurers to root out fraudulent claims and allow public health researchers to catch warning signs of a pandemic. Hospitals and insurers, on the other hand, contend that it has already cost them billions of dollars in upgrading technology and training medical coders on the revisions. They call it a massive and costly regulatory burden that won’t improve patient care but will make it more difficult and time-consuming, at least initially, for many medical billers to find the correct code for a specific ailment or cause of death when codes are broken down in such granular detail.

The AMA in a letter earlier this month to Health and Human Services Secretary Kathleen Sebelius stated, “Adopting ICD-10, while it may provide benefits to others in the health-care system, is unlikely to improve the care physicians provide their patients and takes valuable resources away from implementing delivery reforms and health information technology.” Wonkblog cites a study funded by the American Medical Association estimated that it could cost doctors’ offices $56,000 to $8 million to transition to ICD-10, depending on the size of the practice.

Although adoption of the new code has been delayed twice since its initial target date of 2008, the federal government has a go-live date of Oct. 1, 2014 for ICD-10. Stay tuned.

DWC Announces Appointments to Workers' Compensation Ethics Advisory Committee

The Division of Workers’ Compensation Acting Administrative Director Destie Overpeck has appointed Presiding Workers’ Compensation Administrative Law Judge Paige Levy and the Hon. Joyce Cram to serve as members of the Workers’ Compensation Ethics Advisory Committee.

The committee reviews all ethics complaints from the public against workers’ compensation administrative law judges. After its review of complaints, the committee makes recommendations to the administrative director.

Judge Levy, currently the Presiding Workers’ Compensation Administrative Law Judge at the Marina Del Rey District Office, will fill the position designated to be held by a presiding judge, effective March 1, 2014. Judge Cram, a retired judge of the Superior Court of Contra Costa County, will fill the position of a member of the public outside the workers’ compensation community. Her appointment is effective January 1, 2014.

Workers' Comp Fraud Charges Filed Against CHP Officer, Wife

Following an 18-month investigation, the Sacramento County District Attorney’s Insurance Fraud Unit is prosecuting a California Highway Patrol officer and his wife, a CHP dispatcher, for workers’ compensation fraud. Prosecutors say Daniel Cory Clapp faked the extent of his injuries that resulted from a work-related accident and malingered while collecting workers’ comp. His wife, Jolea Marie Clapp, allegedly corroborated his story.

Daniel Clapp filed a workers’ comp claim in late 2011 stating that he was injured while arresting an intoxicated person. The couple allegedly maintained to the husband’s doctors and his supervisors that he was in too much pain to return to work, even in a modified position. Investigators, however, reported that they observed him driving for extended periods, carrying heavy objects, and bending, stooping and kneeling without obvious discomfort. Their report also notes that his wife would often drive for him while they were in the jurisdiction of his CHP unit, but would switch once they were outside the jurisdiction.

The charges also note that Daniel Clapp collected Labor Code §4800.5 benefits, which are available to sworn members of the CHP. It provides disabled officers with up to one year of tax-free benefits at their full salary in lieu of standard temporary disability payments.

The couple faces five felony counts, including conspiracy. Fraud charges are in excess of $50,000. There is currently no trial date set; the couple face up to five years in prison if convicted on all counts.

Appeals Board Issues Significant Panel Decision in Kim v. B.C.D. Tofu House, Inc.; Cypress Insurance Company

In the significant panel decision in Eun Jae Kim v. B.C.D. Tofu House, Inc.; Cypress Insurance Company, et.al. (ADJ9086333) dated Feb. 7, 2014, the Appeals Board held that without regard to Court Administrator Rule 10252, which limits expedited hearings to specific issues in accepted claims, an expedited hearing may be requested and conducted under Labor Code §5502(b)(2) and Administrative Director Rule 9767.6(c) to determine whether the employee must treat in the employer’s medical provider network during the 90-day delay period, under Labor Code §5402(b), that the employer has to investigate and determine whether to accept or reject the claim.

The WCJ in this case is Peter H. Hink of the Los Angeles District Office.