“What is here?
Gold? Yellow, glittering, precious gold?”
— Timon of Athens by William Shakespeare
Suppose you’re a doctor in California with a patient who complains that his back hurts a lot. Suppose further that Michael Drobot, the owner of California’s Pacific Health Corporation, will give you $15,000 if you refer your patient to his Pacific Hospital of Long Beach for lumbar fusion surgery, which may or may not be warranted. And what if Drobot’s Pacific Hospital were hundreds of miles away and that other qualified hospitals that wouldn’t pay you a kickback were much closer. What would you do?
It is illegal under both California and Federal law to pay doctors for referring patients to hospitals. Yet, according to Andre Birotte, Jr., U.S. Attorney for the Central District of California, this is precisely what Drobot was doing on a massive scale in California from 2003 through 2008. The kickbacks amounted to between $20 million and $50 million. That was chump change compared to what Drobot netted from the surgeries. On Friday, Birotte announced that Drobot had pleaded guilty to paying the kickbacks in what amounted to a $500 million dollar fraud conspiracy and now faces up to 10 years in prison.
Drobot began building his health care empire in the mid-1990s. He bought a number of hospitals, but Pacific Hospital was his jewel in the crown. It was his “spine center,” and, according to U.S. Attorney Birotte, it is where doctors, who apparently think the Hippocratic Oath a mere suggestion, would refer patients for questionable lumbar fusion surgery at $15,000 per surgery. That is, unless the referral was for a cervical fusion, in which case the kickback was only $10,000. Needless to say, there were more lumbar fusions.
Workers compensation paid for all of this. More than 150 insurance companies were “ripped off,” according to Eric Weirich, Deputy Commissioner of the California Insurance Department’s Enforcement Branch.
The Los Angeles Times has been covering the Michael Drobot saga for the last 6 years. Drobot’s Pacific Health Corp. got itself out of big trouble in 2012 when it agreed to pay $16.5 million dollars to the government to avoid criminal conspiracy charges. From 2003 to 2008 it recruited homeless people, drove them to one of Pacific Health Corp’s hospitals and then charged Medicare and Medicaid for services never performed. The whole thing makes “ambulance chasing” look like a PBS donor acknowledgement.
But that little traipse into the dark side pales in comparison to the spinal fusion scheme.
In 2012, California SB 863 threatened to put more than a little crimp in Michael Drobot’s hose of money. Up until SB 863, Pacific Health Corp was paid highly inflated prices for both the surgeries and the surgical hardware, because it could charge duplicate invoices for the surgical implant hardware. The provisions of SB 863 would have severely limited duplicate payments beginning 1 January 2013. If Dobrot couldn’t collect the duplicate payments he wouldn’t be able to pay the kickbacks to get the patients he needed to keep the scheme going. He desperately wanted those provisions to be mitigated to some degree. To do that, he needed help.
He got it from friends in high places – the California Legislature. It’s a little murky as to method, but prior to final passage, SB 863 was changed to allow half the duplicate payments to continue, status quo, for all of 2013. The authorities have been looking into this, and U.S. Attorney Birotte has begun to reel in the fish.
The day before he indicted Michael Drobot, Birotte indicted state Senator Ron Calderon and his brother, former Assemblyman Tom Calderon, on 24 charges, including bribery and money laundering. Ron Calderon is alleged to have been paid more than $100,000 in bribes by Michael Drobot and in an FBI sting operation that Calderon thought was a film studio. If convicted, he faces up to 400 years in prison. And that’s the blood in the water that California’s media sharks now circle. Here’s an LA Times infographic of the Calderon family’s tree of connections and alleged corruption.
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However, as that great TV salesman, Ron Popeil, used to say, “But wait! There’s more!”
An FBI affidavit leaked to, of all places, Al Jazeera America, is making life uncomfortable for at least four other legislators, including Senate President Pro Tem Darrell Steinberg. Look deeply enough at this and one begins to think that Teapot Dome was nothing more than a benign business deal gone bad. (See the full associated Al Jazeera story: State Compensation Insurance Fund’s lawsuit against Michael Drobot)
Notwithstanding all of this, I keep coming back in my mind to those doctors, those chiropractors, those medical professionals who sold their souls and endangered their patients for all that “yellow, glittering, precious gold.” I ask, “Where is the outrage?” At some point, one hopes that U.S. Attorney Birotte turns his eyes to them.
Posts Tagged ‘medical care’
Honor Sold, Trust Betrayed: Unbridled Greed in California
Wednesday, February 26th, 2014Compensable Meningitis?
Tuesday, October 9th, 2012The alarming crisis precipitated by contaminated steroids has implications for the workers comp system. In Framingham, MA, two towns over from where I write, the New England Compounding Center has been shut down, but not before it shipped over 17,000 vials of methylprednisolone acetate, each potentially contaminated by fungal meningitis. Across 23 states, eight people have died and over 100 others have been sickened. As Denise Gray writes in the New York Times, the incubation period appears to be between a few days and a month; the last doses of the tainted medications were administered on September 17, so there are literally thousands of people at risk for a potentially fatal illness.
Because the steroid is used for the treatment of back pain, this crisis intersects with the workers comp system. Lower back injuries are among the most prevalent in workers comp; across the country, injured workers are receiving all forms of treatment, ranging from physical therapy to surgery to injections. An unknown portion of those sickened by the tainted drugs will have been treated for work-related injuries. These unlucky few will require lengthy and costly treatment, along with extensive hospitalization. They will be eligible for long-term indemnity payments, including support for any qualified dependents. These claims will total hundreds of thousands of dollars. Should an injured worker suffer a stroke – one of the many side effects of the disease – the claim is likely to become a permanent total disability.
[NOTE to comp attorneys: New England Compounding is out of business. The prospects for subrogation are remote.]
Exposure: Limited But Deadly
The good news, if indeed there is any, is that the source of the contamination is highly specific: it involves only drugs shipped by New England Compounding. Thus any injured workers receiving lumbar injections over the past few months can know for sure whether they are at risk. But that – and the fact that most people exposed to the drug will not become ill – is the extent of the good news.
Anyone exposed to the fungus is advised to seek medical help immediately if they experience any of the following symptoms: severe headache, fever, stiff neck, dizziness, weakness, sensitivity to light or loss of balance. For those who have received tainted injections, just reading that list would probably give rise to real or imagined symptoms.
Early treatment is essential and might save a patient’s life. The untreated fungus can cause strokes. So logic might indicate that everyone exposed should receive preventive treatment. Unfortunately, the life-saving treatment itself carries risk: antifungal drugs must be administered for months and they can have serious side effects, including kidney damage. Thus those anxiously awaiting the first signs of illness can only watch the days tick by until they are beyond the incubation period. (Even if they do not become ill, individuals exposed to the risk might be tempted to pursue claims for PTSD, given the magnitude of the stress they are experiencing.)
Manufacture Versus Assembly
The Wall Street Journal points out that a 2002 Supreme Court ruling placed limits on any federal role in the oversight of drug compounding:
[The FDA] has been stymied by, among other factors, a 2002 Supreme Court decision. In the majority opinion, written by Justice Sandra Day O’Connor, the court struck down as unconstitutional the portion of a 1997 law setting out how the FDA would decide which compounding pharmacies it would regulate
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The compounding – as opposed to manufacturing – of drugs is considered a pharmaceutical procedure, so the only oversight comes from the states. And given limited resources, states are not in a position to do the job thoroughly or consistently. As Representative Ed Markey (D-MA) put it, “compounding pharmacies currently fall into a regulatory black hole.”
Most of the people receiving the tainted medication will soon be able to resume their normal lives. For the relatively small number who become ill, or even die, the promise of relief from back pain has been transformed by a scandalously unregulated industry into a broken promise of life-altering proportions. For those wondering what role, if any, government should play in free markets, this surely is an example of a place where government belongs.
California Fraud Bill: The Solution is a Problem
Wednesday, August 19th, 2009California has a California-sized fraud problem, with much of action in the medical arena. Unscrupulous providers are billing for services that are never provided, often under the names of people who have never been injured. It’s identity theft targeted at businesses, not individuals. In California’s $7 billion comp system (down from $21 billion just a few years ago), fraud is a significant cost driver.
Here is just one example of medical billing fraud, involving the Los Angeles Unified School District. In August of 2006 the district received a bill for lab services involving a principal injured in a fall the previous May. Unfortunately for the perpetrator, one James Wilson, the principal had died prior to the date of the lab test. (Comp is rarely interested in post-mortems.) Wilson was a financial rep at Cedars-Sinai Medical center – a highly reputable institution – and had access to patient medical records. He was convicted on five felony counts and sentenced to 4+ years in prison.
As we read in the LA Times, a task force of private and public employers, including the Walt Disney Co., came up with an intriguing solution: require insurers to send notices to injured workers to check whether they actually received all the medical services billed. To eliminate the suspense, I will tell you now that the bill died in committee, at the request of the insurance industry. As much as the Insider detests fraud, we’re with the carriers on this one.
Junk Mail?
The fraud problem is very real, but this particular solution is flawed. Too many assumptions are embedded in the approach. The bill assumes that:
– the carrier has a valid address for the individual
– the individual will read and understand the mailing, which is likely to contain technical information on treatments provided. (The claimant may be non-English speaking and/or illiterate.)
– the individual will take the time to fill out the form and respond, even though there is no direct incentive to do so
– the individual is not a willing participant in the fraud (having received a few bucks for the effort)
The fundamental flaw is that injured workers have no direct financial stake in fraud: they are held harmless in the comp system, with no co-pays, no deductibles and no premiums. The stake holders are the employer, who either pays for insurance or is self-insured, and the carrier/TPA, who under this bill is confronted with the significant cost of mailings (perhaps multiple mailings to individual claimants) and the arduous task of logging responses, which would be random: most would indicate no problems, while those pointing to fraud might well come from folks who simply did not understand the questions. This solution is equivalent to using a shotgun to eliminate a bunch of (very pesky and rather deadly) mosquitoes.
There may be a quick fix to make this approach somewhat more effective: send the confirmation of services to the employer. That way a vested stake-holder would be given useful information and would have an incentive to follow up on it. The employer could sit down with the individual and verify the treatments. Any problems could be relayed to the carrier. In this approach, the scale of the effort becomes more manageable, as the burden falls on hundreds of thousands of employers, as opposed to a few hundred carrier/TPAs.
A cost-benefit analysis would probably place this fraud buster where it currently resides, in the circular file. It’s always tempting to legislate solutions to intractable problems, but alas, mandated solutions often become a new set of problems. Administrators, employers and carriers need a variety of tools to tackle fraud. This aborted bill is not exactly what the prudent doctor would have ordered.
Taking the cookie-cutter to workers’ comp medical networks – Why that doesn’t work
Thursday, August 28th, 2008Yesterday, at Managed Care Matters, our good friend Joe Paduda published an excellent “how-to primer” for starting a workers’ compensation medical network. Essentially, Joe’s advice for would-be network creators is:
- Bring the right physicians into the network – board-certified occupational health specialists, for example, as well as primary care and specialist physicians who understand workers’ compensation;
- Exclude physicians who don’t know anything about the subject;
- Pay the physicians a reasonable rate; and,
- Support the network physicians by sending them patients.
If the network is formed in that way it should be of gold standard caliber. But that’s easier said than done.
We’re all familiar with the super-large networks that include anyone with a medical degree – as long as “anyone” agrees to see network patients for a discounted fee, which the network can then tout as “savings” for employers regardless of the quality of care. Most of these networks and the doctors in them came from the group health arena where modified duty, transitional duty, early return to work, the buzzwords of workers’ compensation professionals, are foreign concepts. And why should that be surprising? After all, workers’ compensation is only one, tiny room in the American health care house that Jack built.
What workers’ compensation professionals sometimes forget is that most doctors, whether in or out of these networks, went to medical school because they wanted to devote their lives to healing the sick, not to becoming some company’s external medical personnel director. Many, perhaps most, physicians in networks that have physician directories the size of New York City’s phone book understand “injuries,” but not workers’ compensation, and that is not their fault. It is ours. We have not educated them sufficiently regarding workers’ compensation, nor have we cohesively partnered with them to help injured workers transition at the right pace back to full duty, which, in my 25-year Lynch Ryan experience, is where injured workers really want to be.
Consider this. Most doctors have small practices that turn them into small business owners. I’ve never met one who liked that, the business end of medicine. Most are not technologically facile, and workers’ compensation injuries comprise a minor share of their “business.” Their responsibility focuses totally on their patients and what’s wrong with them. They don’t see a real need to be overly interested in the workplace; in fact, they most often don’t even know what or where that is. On the assembly line that has become American health care, where insurers force physicians to cycle through patients in fifteen minute intervals, who has time to probe deeply about the workplace and what goes on there? When some claims adjuster or nurse case manager wants to pin them down about physical restrictions or a date when their patient can return to work, they err on the side of humongous caution in order, in their minds, to “do no harm.” This leaves workers’ compensation professionals and employers befuddled, scratching their heads and wondering what is wrong with the doctor. They think, “Why can’t the doctor see what’s really going on here?” They don’t understand the doctors and the doctors don’t understand them.
That’s the scenario in which workers’ compensation professionals very often find themselves. At Lynch Ryan, the only way we have ever found to deal with it successfully is one doctor at a time, sitting face to face and finding common ground. Occupational health specialist or not, an educated physician is a powerful weapon for good in the little world of workers’ compensation.
In my next post I’ll describe the step-by-step process my colleagues and I went through to build the first workers’ compensation medical network in Massachusetts once upon a time. Here’s a teaser: It was a thing of beauty, profoundly successful for everyone involved, and would not be legal today.