Recent Workers' Compensation News for Mar 27, 2015
Auditors Say 45% of LAPD Officers Agreed Their Comp Claims Were "Excessive"
Fri, 27 Mar 2015 11:33:42 - Pacific Time
Los Angeles police and firefighters work in a culture that encourages filing "excessive" workers’ compensation claims, according to a pair of city audits released Thursday and reported by the Los Angeles Times. And taxpayers are doling out up to $28 million a year for what amount to preventable injuries. The majority of injuries claimed by firefighters in recent years occurred while doing things other than responding to emergencies, including maintaining equipment, playing racquetball and preparing food at their fire stations, according to one of the audits by City Controller Ron Galperin.
L.A. police, meanwhile, are paid for on-the-job injuries more often than officers in comparable departments, the other audit found, at least in part because other departments don’t recognize sports injuries as "job-related." Two-thirds of city firefighters and 60% of police officers filed an on-the-job injury claim in the last three years, the auditors found, and nearly half of those employees have filed more than one claim during that time.
The city audits come months after a Los Angeles Times investigation found steep increases in payments to injured police and firefighters, who receive 100% of their salaries, tax-free, for up to a year while off work recovering from seemingly job-related injuries. Only a small percentage of claims in recent years were attributed to injuries suffered fighting fires or confronting combative suspects, The most common cause was cumulative trauma claims that are not linked to a specific on-the-job injury. A disproportionate amount of injury pay was going to employees who filed consecutive claims, reporting a new injury just as a previous leave is about to end.
The city audits found, in all, that workers' compensation costs for sworn employees have increased by 35% over the last five years to $141 million in 2014, including salary payments while the employees were off work, medical bills and other related expenses. Surveys sent to police officers by the auditors showed 45% agreed that there is an "excessive" number of workers’ compensation claims filed at the department, while a third of firefighters believed "questionable" claims had been filed by their colleagues.
The police and fire departments are shielded from the full cost of workers’ compensation claims because they don’t have to pay the medical bills, the auditors found. Those costs, nearly $85 million over the last four years, are covered by a separate city fund. The auditors recommended that the departments be made to pay medical bills out of their own budgets because "management may not be sufficiently aware of, or held accountable for, the impact of rising claims and costs."
The departments suffer in other ways, however. Last year, fire officials told The Times they were spending more than $51,000 per day - or nearly $19 million annually - on overtime to cover shifts left vacant by firefighters out with injuries. At the Police Department, where overtime has been severely restricted, the rising number of injury leaves meant fewer officers on the street, officials said.
California legislators granted 100% pay for injured public safety employees during the Great Depression to ensure that those protecting the public wouldn't hesitate to chase a criminal or run into a burning building for fear of losing their livelihood. But the design of the program invites abuse, city officials across the state told The Times. Because injury pay is exempt from federal and state income taxes, the employees typically take home significantly more money when they're not working. And time spent on leave counts toward pension benefits. That creates a perverse financial incentive to file injury claims for relatively minor ailments and to stay out as long as possible, experts said. Read More...
Employers Urge "Opt Out" Comp Nationwide
Fri, 27 Mar 2015 11:33:49 - Pacific Time
Nearly two dozen major corporations including Walmart, Nordstrom, and Safeway are listed as founding members of the Association for Responsible Alternatives to Workers' Compensation (ARAWC), that has already helped write legislation in Tennessee. Richard Evans, the group's executive director, told an insurance journal in November that the corporations ultimately want to change workers' comp laws in all 50 states.
According to its website the group focuses on ensuring that employees receive the best possible care and employers have the choice to provide what is best for their employees. We call it an "Option." "Option is our term for allowing employers to elect an alternative to traditional workers' compensation insurance. Each state may have different requirements for employers that choose to exercise an Option, but the fundamental principles of any alternative are to improve access to quality health care, increase employee accountability, improve medical and return-to-work outcomes, and reduce claim costs. Allowing an Option creates competition that can reduce rates and drive improvements to the workers’ compensation system."
Employers that opt out would still be compelled to purchase workers' comp plans. But they would be allowed to write their own rules governing when, for how long, and for which reasons an injured employee can access medical benefits and wages. Two states, Texas and Oklahoma, already allow employers to opt out of state-mandated workers' comp. In Texas, the only state that has never required employers to provide workers' comp.
Now Sen. Mark Green, introduced the opt-out bill for Tennessee. Green's proposal, which supporters are calling the Tennessee Option, bears many of the hallmarks of the Texas and Oklahoma system: It allows businesses to place strict spending caps on each injured worker and to pick and choose which medical expenses to cover. "We took the best of both and put it together to make it work for Tennessee businesses," Green reported in an article published in the Insurance Journal. Oklahoma's Legislature took four years to create its opt-out system. ARAWC hopes to achieve the same thing in Tennessee in a single legislative session and then it's on to the next state.
These initiatives have spawned expected heated controversy. Mary Elizabeth Maddox, a Tennessee workers' compensation attorney who represents both employers and employees and opposes Green's bill, recalls a case in which a workplace accident paralyzed a 23-year-old man and confined him to a wheelchair. He sued her client, the employer. "For him, $300,000 is not going to go very far." Gary Moore, president of the Tennessee AFL-CIO Labor Council, claims "This piece of legislation is designed as a cost-saving measure for the employer, Anywhere they save a dollar, it costs the employees a dollar. It's just a shift in costs."
Businesses can save millions of dollars by opting out and writing plans with narrow benefits, putting pressure on their competitors to do the same. "It creates a race to the bottom," says Michael Clingman, a workers' advocate in Oklahoma, which passed an opt-out measure in January 2014.
California has had for years its own "Carve-Out" program which allows some employers to opt out of the Workers' Compensation system. "Carve-out" programs allow employers and unions to create their own alternatives for workers' compensation benefit delivery and dispute resolution under a collective bargaining agreement. Eligibility of parties to participate in a program must be approved by the administrative director of the Division of Workers' Compensation. The requirements to participate and the elements required to be in "carve-out" programs are contained in Labor Code section 3201.5 (for the construction industry) and Labor Code section 3201.7 (for all other industries), as well as California Code of Regulations, title 8, sections 10200-10204.
It remains to be seen if Opt Out programs gain traction nationally. Read More...
U.S. Supreme Court Expands Disability Rights Accommodations
Wed, 25 Mar 2015 13:54:39 - Pacific Time
The U.S. Supreme Court today sided with a former driver for UPS Inc by giving her another chance to argue that the package delivery company discriminated against her when it refused to lighten her work duties while she was pregnant. In a 6-3 decision, the justices revived Peggy Young's discrimination claim against the company by sending the case back to a lower court. A federal district court judge and an appeals court had earlier ruled in favor of UPS, which was backed by business groups in the case. "This is a big win for Peggy Young and other women in the workplace," said Sam Bagenstos, Young's lawyer.
The case focused on whether, under a federal law called the Pregnancy Discrimination Act, employers must provide accommodations for pregnant workers who may have physical limitations on tasks they can perform. Young, who worked at a Maryland facility, became pregnant in 2006. She made her request for an accommodation after a midwife advised that she not be required to lift packages weighing more than 20 pounds (9 kg).
Writing for the majority, liberal Justice Stephen Breyer said the lower court failed to consider the effects of UPS policies that covered non-pregnant workers who might have disabilities, injuries or otherwise might need accommodations. Breyer said there is a "genuine dispute as to whether UPS provided more favorable treatment to at least some employees whose situation cannot reasonably be distinguished from Young's."
Bagenstos said the court "made clear that employers may not refuse to accommodate pregnant workers based on considerations of cost or convenience when they accommodate other workers."
UPS said it was confident it would ultimately win the case. "UPS is pleased that the Supreme Court rejected the argument that UPS’s pregnancy-neutral policy was inherently discriminatory," a company statement said.
Conservative Justice Antonin Scalia, joined by Anthony Kennedy and Clarence Thomas, wrote a dissenting opinion accusing the court majority of coming up with "an interpretation that is as dubious in principle as it is senseless in practice."
UPS said last October that starting this past January it would begin providing accommodations for pregnant women.
The impact of the ruling could be limited in part because a 2008 amendment to the Americans with Disabilities Act could now protect women in Young’s situation. The U.S. Equal Employment Opportunity Commission has said employees must offer accommodations to pregnant women just as they do for other workers with similar physical limitations. The case is Young v. UPS, U.S. Supreme Court, No. 12-1226. Read More...
Claim Administrator's Hostile Work Environment Claim Affirmed
Wed, 25 Mar 2015 13:54:32 - Pacific Time
Beverly Myres was hired by the San Francisco Housing Authority (SFHA) in 2006 as a claims assistant. In 2007 she was promoted to workers’ compensation analyst. Myres was a member of the San Francisco Municipal Executives’ Association, and her employment with SFHA was governed by a union memorandum of understanding (MOU).
In 2009, Myres injured her right knee at work and filed a workers’ compensation claim in June 2009. She continued to work full-time without any restrictions until she had surgery on her right knee, Myres was then released to return to modified work with the following restrictions: "Seated work - stand/walk for personal needs only. No lift over 10 lbs. No drive for work. Must work in location free from tripping hazards." Her employer indicated it would accommodate her restrictions.
Upon returning to work she experienced increased pain in her left knee. It was at first disputed that the left knee was injured as a result of employment. While seeking clarification of the cause of her left knee pain SFHA had advised the entire department that they were being laid off as a result of departmental restructuring. Myres then sued SFHA. Her first three causes of action are each titled "Disability Discrimination." and she filed a fourth and fifth cause of action for hostile work environment harassment and wrongful discharge in violation of public policy premised on her allegations of retaliation for taking workers’ compensation leave.
According to SFHA, Myres and the rest of the department were laid off for a legitimate reason, "to restructure the department for improved efficiency" and due to reduced federal funding and a budget shortfall. Myres, on the other hand, asserted that SFHA retaliated against her for taking workers’ compensation leave. In support of this contention she called SFHA’s former special assistant to the executive director, who testified that "[t]here were a number of people in the department . . . that [her supervisors] were having trouble with. So they decided to deal with the problem by restructuring and laying everybody off." As a result of the layoff, Myres testified that she suffered a loss of her annual salary of approximately $81,000 for almost three years, as well as fringe and retirement benefits.
After trial, the jury returned verdicts in favor of the employer on four of the five causes of action. With respect to hostile work environment harassment, the jury found in Myres’s favor and awarded her $35,000 in noneconomic damages. Post judgment interest was awarded in the amount of 10% and Myers was awarded attorney fees and costs. Both parties appealed. SFHA primarily contends on appeal that that the jury’s harassment verdict is not supported by substantial evidence. Myres also appeals from the judgment, arguing that various evidentiary and instructional errors affected the jury’s verdicts in favor of SFHA on her causes of action for failure to reasonably accommodate her disability. With the exception of post judgment interest in the amount of 10%, the Court of Appeal found no prejudicial errors, and after reducing the interest to 7% affirmed the judgment in the unpublished case of Myres v SFHA.
One of the issues raised by Myres was the collateral source rule. Myres filed a motion in limine to exclude evidence of collateral sources of income. She argued that any such evidence of post injury sources of income was irrelevant, as it could not be used to offset a backpay award on her retaliation and wrongful discharge causes of action. The trial court denied the motion. Over Myres’s "collateral source" objection, SFHA’s expert economist detailed the payments Myres received from retirement, social security disability, and worker’s compensation disability between September 1, 2010, and the date of trial. Ultimately, he opined that there was only a $500 difference between Myres’s expected compensation, had she remained employed by SFHA, versus the compensation she received in retirement and disability benefits after separation.
The Court of Appeal agreed that some of the collateral source income should not have been admitted. However, it was not prejudicial error. "In this case, however, we find it unnecessary to remand for a new trial. Under section 12940, subdivision (h), it is an unlawful employment practice '[f]or any employer . . . to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part.' We agree with SFHA that, as a matter of law, Myres could not recover for FEHA retaliation on the basis that she was terminated for taking workers’ compensation leave. Taking workers’ compensation leave is not protected activity under FEHA." Thus the verdicts against her on the discrimination causes of action were affirmed.
But, the Court of Appeal agreed there was evidence in support of her claim of a hostile work environment. Her employer made comments before her injury such as "that other SFHA employees taking workers’ compensation leave were "malingerers," abused the system, and filed "fraudulent claims." Another comment was "How can the workers’ comp person be out on workers’ comp?" Read More...
Jury Convicts Owner of LA DME Company
Tue, 24 Mar 2015 11:13:02 - Pacific Time
A federal jury in Los Angeles found the owner of a medical supply company guilty of four counts of health care fraud this week in connection with a $3.3 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Region and Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office made the announcement.
Hakop Gambaryan, 55, of East Hollywood, the owner of Colonial Medical Supply, was convicted of four counts of health care fraud. A sentencing hearing will take place before U.S. District Judge Otis D. Wright II of the Central District of California, and will be scheduled at a later date.
According to evidence presented at trial, between March 2006 and December 2012, Gambaryan paid cash kickbacks to medical clinics for fraudulent prescriptions for durable medical equipment, such as expensive power wheelchairs, which the patients did not need. Gambaryan then used these prescriptions to bill Medicare for the unnecessary power wheelchairs and other equipment. The evidence established that Gambaryan personally delivered power wheelchairs to many beneficiaries who were able to walk without assistance. In one instance, Gambaryan carried a power wheelchair up a flight of stairs for a woman who lived in a second floor apartment with no elevator. In another instance, the power wheelchair would not fit inside the beneficiary’s home so Gambaryan put it in the beneficiary’s garage.
The evidence also demonstrated that Gambaryan generated false documentation to support the fraudulent claims, including fake home assessments that made it appear home assessments had occurred when they had not. In addition, Gambaryan photocopied beneficiary signatures hundreds of times to create the appearance that the beneficiaries consented to ongoing durable medical equipment rentals, when in reality, at least two of the beneficiaries had passed away prior to the date they supposedly signed the rental agreements.
The evidence showed that Gambaryan submitted approximately $3.3 million in false and fraudulent claims to Medicare, and received more than $1.7 million on those claims.
The case was investigated by the FBI and HHS-OIG. The case is being prosecuted by Trial Attorneys Fred Medick and Ritesh Srivastava of the Criminal Division’s Fraud Section. Read More...
More Drug Resistant Superbugs Reaching "Crisis" Levels
Tue, 24 Mar 2015 11:12:55 - Pacific Time
Over the next 35 years, multidrug-resistant tuberculosis will kill 75 million people and could cost the global economy a cumulative $16.7 trillion - the equivalent of the European Union’s annual output, a UK parliamentary group said on Tuesday. If left untackled, the spread of drug-resistant TB superbugs threatens to shrink the world economy by 0.63 percent annually, the UK All Party Parliamentary Group on Global Tuberculosis (APPG TB) said, urging governments to do more to improve research and cooperation.
According to the report in Reuters Health, "the rising global burden of multidrug-resistant TB and other drug-resistant infections will come at a human and economic cost which the global community simply cannot afford to ignore", economist Jim O'Neill said in a statement. O'Neill, a former chief at investment bank Goldman Sachs, was appointed last year by British Prime Minister David Cameron to head a review into antimicrobial resistance.
The bacteria that cause TB can develop resistance to drugs used to cure the disease. Multidrug-resistant TB fails to respond to at least isoniazid and rifampicin, the two most powerful anti-TB drugs, according to the World Health Organization (WHO). The UK parliamentary group's cost projections are based on a scenario in which an additional 40 percent of all TB cases are resistant to first-line drugs, leading to a doubling of the infection rate. The WHO said last year multidrug-resistant TB was at "crisis levels", with about 480,000 new cases in 2013. It is a manmade problem caused by regular TB patients given the wrong medicines or doses, or failing to complete their treatment, which is highly toxic and can take up two years.
The group urged governments to set up a research and development fund, target investments into basic research and increase support for bilateral TB programs. "We need better tools to deal with this new threat, but since TB primarily affects the poorest and most vulnerable in society, there is little commercial incentive to develop new drugs," said Nick Herbert, co-chairman of the APPG TB. The fight against TB, the world's second deadliest infectious disease after HIV, is also hampered by a lack of an effective vaccine, the APPG TB said. The only TB vaccine, BCG, protects some children from severe forms of TB - including one that affects the brain - but is unreliable in preventing TB in the lung, which is the most common form of the disease.
TB, which spreads through the coughs and sneezes of an infected person, killed 1.5 million people worldwide in 2013, according to the WHO. Putting that number into perspective can be done by comparing the death rate for Ebola, the infection that has caused recent international media panic. The CDC reports the entire Ebola international death count as of this month to be less than 11,000. The risk of death by TB is magnitudes higher than the risk of death by Ebola infection.
The workers' compensation community is not immune to the cost effects of out-of-control superbugs. Infectious diseases can become a costly problem in worker's compensation claims. Claims can arise as a result of infections on the job, infections during treatment for an industrial injury, or infections to health care workers. Read More...
LA Physician Arrested for Working on Disability
Mon, 23 Mar 2015 10:21:36 - Pacific Time
Detectives from the California Department of Insurance (CDI) arrested Los Angeles Doctor Glenn Neil Ledesma, 63, owner of California Dermatology Center, Inc. CEO Jonathan Ledesma, 49, Glenn Ledesma's adopted son, was also arrested. Both are charged with multiple felony counts of health care disability fraud for presenting false claims. The suspects allegedly collected disability benefits totaling more than $1.8 million while continuing to work and practice medicine.
"The Ledesmas knew it was illegal to file for and collect disability benefits while still working," said Insurance Commissioner Dave Jones. "Their criminal activity is part of the health insurance fraud epidemic that totals billions of dollars annually and results in higher premiums for all consumers."
Dr. Ledesma first submitted a disability claim in 1997 stating he was unable to treat patients due to his medical condition. His insurer told him he could receive disability benefits while running his corporation, but was not allowed to treat patients or practice medicine. In 2008, Dr. Ledesma continued collecting disability payments while resuming his medical practice and treating patients. From 2008 to 2013, he treated more than 2,900 patients while simultaneously collecting $1,605,464 in disability benefits.
In 2008, Jonathan Ledesma filed a disability claim with UNUM Life Insurance Company of America indicating he was also unable to work due to medical reasons. He denied knowing Dr. Glenn Ledesma even though he listed the doctor as his employer and investigators discovered Jonathan Ledesma was in fact the CEO of one of eight of Dr. Ledesma's medical corporations, California Dermatology Center, Inc and his adopted son. From 2010 to 2013, Jonathan Ledesma collected more than $200,000 in disability benefits while performing administrative duties as CEO.
Both suspects have been arrested and booked into the Inmate Reception Center in Los Angeles. Bail is set at $50,000 for each and they may face 20 years in state prison if convicted on all counts. This case is being prosecuted by the Los Angeles County District Attorney's Office. Read More...
Contractor Arrested for Refusing to Report Injury to SCIF
Mon, 23 Mar 2015 10:21:29 - Pacific Time
Harry Minassian, 55, of Granada Hills and owner of Pacific Construction was arrested on four felony counts of workers' compensation insurance fraud after refusing to report an employee's serious injury to the State Compensation Insurance Fund.
A Pacific Construction employee received a puncture wound to his foot while on a jobsite, which became infected. Unfortunately, the seriousness of the infection led to the employee's leg being amputated below the knee. The employee reported the injury to his employer but Minassian refused to report it to the State Compensation Insurance Fund, his workers' compensation carrier and denied workers' compensation coverage for his employee.
"Employers are responsible for ensuring their employees receive the benefits and treatment they are entitled to when they are injured on the job," said Commissioner Dave Jones. "In this case, the employer was negligent and allowed his employee to suffer unnecessarily and end up with a permanent disability."
The employee was awarded permanent disability after he filed a claim with the insurer. The department's investigation began after the State Compensation Insurance Fund reported Minassian and that he had a history of failing to report employee injuries. The investigation revealed Minassian owed nearly $12,000 in workers' compensation insurance premiums and failed to deduct required payroll taxes and social security for all of his employees.
Minassian was booked at the Los Angeles County Jail Twin Towers Inmate Reception Center. His bail has been set at $120,000. If convicted on all counts, Minassian faces a maximum of five years in county jail. This case is being prosecuted by the Los Angeles District Attorney's Office. Read More...
Insurance Information Institute Slams ProPublica/NPR Comp Report
Thu, 19 Mar 2015 10:36:47 - Pacific Time
Early this month, ProPublica/NPR published an article "The Demolition of Workers’ Comp" that asserted that "over the past decade, states have slashed workers’ compensation benefits, denying injured workers help when they need it most and shifting the costs of workplace accidents to taxpayers." The story has triggered heated response from the workers' compensation community.
Robert P. Hartwig, Ph.D., CPCU, president of the Insurance Information Institute responded to the criticism of with a letter he sent to ProPublica/NPR that began by saying "it’s necessary that the record be set straight using facts - verifiable, incontrovertible facts - rather than the unsubstantiated assertions, incorrect interpretations and subsequent erroneous conclusions upon which the basic premise of this series is built."
He goes on to say "The very title ... is at best misleading and at worst erroneous. "The Demolition of Workers Comp" is hyperbole of the highest order. The fact of the matter is that workers compensation insurers today provide some $40 billion in benefits annually to hundreds of thousands of injured workers and to the families of those killed on the job - a basic and important fact that is somehow omitted by the authors. Also omitted from the piece is the indisputable fact that the workplace has become safer - much safer - in no small part due to the relentless loss control efforts of insurers and employers in partnership with state and federal government. The incidence rate of fatal occupational injuries plunged by 36 percent over the past two decades and by 90 percent over the past century - precisely coincident with the dawn of modern workers compensation systems."
He later notes that "Your story asserts that 33 states have "cut" benefits since 2003 through legislation which is characterized as having been passed under the guise of reform. This is far too sweeping of a statement. A system as large as workers compensation, where costs are driven primarily by the same complex factors driving healthcare costs across the United States, is in constant need of monitoring and fine tuning. Many of the changes simply mirror changes in the health care system overall."
After pointing out other arguments he concludes by saying "Workers compensation, a century after its inception, remains as vital as ever to virtually every worker in the America. Benefits can and do vary from state to state but in no state are workers left without the important safety net that workers compensation provides. Though large, the workers comp system continues to adapt to rapid changes in the workforce, the workplace, the economy and the U.S. health care system. Insurers, employers and workers are united in their agreement that that the safety of workers is paramount and that for those who are injured there is a system that works for their benefit, helping them to achieve maximum medical recovery and return to work as quickly as possible."
ProPublica/NPR published his letter in its entirety, and then published its rebuttal.
"ProPublica titled its story 'The Demolition of Workers’ Comp,' to signify how recent reform laws were dismantling some of the fundamental protections workers’ comp historically provided: The guarantee that workers would receive enough of their wages so they wouldn’t fall into poverty, the promise of the medical care they need to return to as normal a life as possible and the expectation that injured workers would have a voice and be treated with dignity."
"ProPublica and NPR do not dispute that the workplace has become safer. But the focus of our story was on how changes in workers’ comp laws have affected people who are injured on the job. Workers’ comp is a vital safety net whose costs give employers an incentive to keep their workplaces safe. This is precisely why we felt it was critical to investigate the rollback of benefits by many states."
"Over the century that workers’ comp has been in effect, workplace injuries have gone both up and down. The decline in fatalities and injuries has multiple causes, including the creation of the Occupational Safety and Health Administration (OSHA), improvements in auto safety and health research, the growth in automation and a changing economy which has reduced jobs in dangerous manufacturing and mining industries and expanded them in the safer service and office sectors."
The finding that workers’ comp rates have fallen was substantiated by multiple data sources. ProPublica and NPR relied on three separate studies to examine the cost that employers pay for workers’ comp insurance premiums. All three are widely respected and used by the workers’ comp industry, and all three come to the same conclusion: Workers’ comp rates are the lowest they’ve been in decades. The sources, which were included in the graphic, are the Oregon Workers’ Compensation Division, the U.S. Bureau of Labor Statistics and the National Academy of Social Insurance. Read More...
Another Medical Cyber Attack Exposes 11 Million Records
Thu, 19 Mar 2015 10:36:42 - Pacific Time
Premera Blue Cross, a health insurer based in the Seattle suburbs, announced Tuesday it was the victim of a cyberattack that may have exposed the personal data of 11 million customers - including medical information. According to the story in the Washington Post, the company said it discovered the attack on Jan. 29 but that hackers initially penetrated their security system May 5, 2014. The attack affected customers of Premera, which operates primarily in Washington, Premera's Alaskan branch as well as its affiliated brands Vivacity and Connexion Insurance Solutions, according to a Web site created by the company for customers. "Members of other Blue Cross Blue Shield plans who have sought treatment in Washington or Alaska may be affected," according to the site.
The company said its investigation has not determined if data was removed from their systems. But the information attackers had access to may have included names, street addresses, e-mail addresses, telephone numbers, dates of birth, Social Security numbers, member identification numbers, medical claims information and bank account information, according to the company's Web site. The company said it does not store credit card information. According to a message on the company's Web site from Premera President and chief executive Jeff Roe, the medical claims data accessible to the attackers included "clinical information."
"This is potentially one of the largest breaches that has ever been reported involving health-care information," said Dave Kennedy, the chief executive of TrustedSEC and an expert on health-care security.
The company is offering two years of free credit monitoring and identity theft protection services to those affected by this incident. Premera is currently working with cybersecurity company Mandiant to investigate the breach, as well as law enforcement.
"The FBI is investigating the Premera cyber intrusion and is working with the victim company in order to determine the nature and scope of this incident," FBI spokesman Joshua Campbell told The Post.
News of the Premera hack comes just two months after Anthem, a fellow Blue Cross Blue Shield associated company and the second largest insurer in the country, announced a cyberattack resulted in the data breach affecting tens of millions of customers. But in that case, hackers are not believed to have obtained medical information, making the breach of Premera particularly concerning for consumers.
Health-care companies have become attractive to hackers because of the premium paid on the black market for insurance credentials. A complete health insurance credentials cost ten to twenty times more than a credit card numbers with security code on underground black markets in 2013, according to Dell SecureWorks. The information can be used for identity theft, but also medical fraud such as purchasing expensive medical equipment or obtaining pricey medical care. This type of fraud often takes longer to detect, security experts have said.
Workers' compensation insurers also store personal medical information on claimants, and it is more likely than not that industry computers are somewhere on the hacker's radar. Read More...
Past Week News Archive
L.A. Pharmacist Convicted of Kicking Back Cash to Patients: Wed, 18 Mar 2015 10:54:58 - Pacific Time: Read More...
DWC Posts Revised RTW Supplement Program Regs: Wed, 18 Mar 2015 10:54:52 - Pacific Time: Read More...
Early Radiological Studies Ineffective for New Back Pain: Tue, 17 Mar 2015 10:16:40 - Pacific Time: Read More...
Will Tablet Use Be the Next CT Neck Claim?: Tue, 17 Mar 2015 10:16:34 - Pacific Time: Read More...
UR and IMR - Death by a Thousand Cuts: Mon, 16 Mar 2015 14:08:14 - Pacific Time: Read More...
Medical Fraud Setting Records in 2015: Mon, 16 Mar 2015 14:08:06 - Pacific Time: Read More...
Is Comp Fraud Grant Funding Model a Solution for Underground Economy Fight?: Fri, 13 Mar 2015 11:43:36 - Pacific Time: Read More...
FDA Modifies Approval Process to Limit Superbug Infection: Fri, 13 Mar 2015 11:43:29 - Pacific Time: Read More...
CWCI - WCIRB Joint Study Confirms SB863 ASC Cost Savings: Thu, 12 Mar 2015 10:23:03 - Pacific Time: Read More...
Orange County Pair Convicted of $71 Million Surgical Center Fraud: Thu, 12 Mar 2015 10:22:53 - Pacific Time: Read More...