Liability and Duties of Third-Parties: Medical Examiners Commit Fraud

Liability and Duties of Third-Parties: Medical Examiners Commit Fraud Spyros Panos Arrested for Fraud and Identity Theft in Relation to Workers’ Compensation Claims

Victoria Hahn | S. Philip Unwin

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Liability and Duties of Third-Parties: Medical Examiners Commit Fraud Spyros Panos Arrested for Fraud and Identity Theft in Relation to Workers’ Compensation Claims Summary: Dr. Spyros Panos, a convicted felon, stole the identity of a licensed physician and performed records reviews in his name in hundreds of Workers’ Compensation cases. Goldberg Segalla can assist you in navigating the fallout from this incident.

In April 2018, Spyros Panos was arrested and charged with numerous crimes, including health care fraud and aggravated identity theft. Panos had previously pled guilty to health care fraud in relation to different allegations, and surrendered his medical license in 2013.1 By surrendering his medical license, Panos was no longer qualified to practice medicine or treat workers’ compensation claimants. His prison term began in April 2014, and on September 16, 2016, Panos was released to a halfway house and then to home confinement. He had been serving the remainder of his sentence under supervised release when he was arrested again in April 2018 on the new charges.2 In or around September 2013, Panos allegedly set up an email account in the name of licensed physician Young Don Ho. Dr. Ho is an orthopedic surgeon employed by a practice in Westchester County. A Department of Justice press release stated that the same credentials were provided to five separate independent medical examination (IME) entities. In December 2013, before his jail sentence began, Panos allegedly created a company called Excel O LLC, registered to a Brooklyn address under the name of a family member of Panos who is not a licensed physician. The same family member then opened a bank account in the name of Excel. Using the false email address and Dr. Ho’s name, social security number, and medical license number, Panos conducted medical/utilization reviews on behalf of insurance carriers in workers’ compensation claims in several states, primarily New York and Connecticut. Dr. Ho had previously worked with Panos, had never submitted credentials to the peer review companies, did not conduct peer reviews for Excel, did not authorize Panos to use his name, and received no compensation for the reviews.3 The fraudulent reviews were almost entirely in workers’ compensation matters. Specifically, most information indicates that the reviews were also limited to medical reviews. Medical reviews are typically relied upon by carriers and employers to comment on a claimant’s need for surgery or for further causally-related treatment. Although the time period is uncertain, Excel did receive payments from workers’ compensation companies between September 2013 and April 2018. There may have been a break while Panos was imprisoned. In total, Panos collected more than $860,000 from insurance carriers for fraudulent reviews.

Typically, cases of fraud on the part of IME/carrier providers in Workers’ Compensation generally center on one of several primary issues: (1) admissibility/preclusion of the IME report following a finding that the doctor is not qualified/board certified to complete IME exams; (2) payment of an IME bill where the IME doctor was not board certified to perform IME exams; and (3) revocation of board certification for performing IME exams.

Recently, the New York State Inspector General’s investigations have uncovered several cases of fraud by medical providers.4 The present case of Spyros Panos presents a new issue. While the more recent cases of fraud involve claimant providers, Spyros Panos was acting on behalf of insurance carriers, and was already unlicensed in New York. This set of circumstances appears to be one of first instances in New York, and it remains difficult to anticipate exactly how widespread the fallout will be. Any investigation of fraud will be conducted by the New York State Inspector General, and is outside of the jurisdiction of the Workers’ Compensation Board.5 While some argue that Panos’s intent was only to defraud insurance carriers,6 his actions raise a number of additional questions chiefly: 1

Press Release, Dep’t of Justice, Previously Convicted Physician Arrested for Fraud and Aggravated Identity Theft (Apr. 10, 2018).

2

Please note that Panos has not pled guilty to the charges from April 2018, nor has he been tried on those charges, and he does remain innocent until proven otherwise.

Bill Heltzel, Ex-orthopedic surgeon Spyros Panos accused of health care fraud again, WESTFAIR COMMUNICATIONS (Apr. 11, 2018), https://westfaironline. com/101365/ex-orthopedic-surgeon-spyros-panos-accused-of-health-care-fraud-again/.

3

See 2017 Annual Report, State of New York Office of the Workers’ Compensation Fraud Inspector General, pp. 4-6. In October 2016, a pain management doctor, Mihir Bhatt, pled guilty to felony insurance fraud and other counts in connection with his involvement in billing scheme to fraudulently bill insurance companies and workers’ compensation carriers. https://www.silive.com/southshore/index.ssf/2016/10/south_shore_doctor_at_top_of_p.html/; On August 15, 2017, orthopedic surgeon, Gregory Shankman, was arrested for fraudulent practices and scheme to defraud, where he certified he oversaw claimant medical examinations when he was actually traveling. https://www.workerscompensation.com/news_read.php?id=28641; Then, on November 8, 2017, Dr. Eugene Gosy was charged a number of crimes including conspiracy to commit health care fraud, and health care fraud for unlawful distribution of narcotics/opioids, which led to the death of six patients. https://www.nbcnews.com/storyline/americas-heroin-epidemic/new-york-doctor-eugene-gosy-accused-six-opioid-deaths-n818456.

4

5

See, Employer: Brake Service, Inc., 2011 N.Y. Work. Comp. Bd. 20700630 (2011).

William Rabb, UR Fraud Probe Spreads; Hundreds of Cases Called in Question, WORK COMP CENTRAL June 14, 2018, https://www.workcompcentral.com/news/ article/id/bbcd421aefc6b3ff40444ef01c002c44d5d9fd16.

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Goldberg Segalla | Liability and Duties of Third-Parties: Medical Examiners Commit Fraud

• What are the implications of Dr. Panos’s fraud: • What actions should carriers/vendors/TPAs take to mitigate their potential liability?

• How far does liability extend to third-parties (carriers, third-party administrators, Independent Medical Examination (IME) vendors, etc.)?

Implications of Fraud: Next Steps to Take for Carriers and TPAs Generally, New York State Workers’ Compensation Law provides that: “[a]n employer or carrier, or any employee, agent, or person acting on behalf of an employer or carrier, who knowingly makes a false statement or representation as to a material fact in the course of reporting, investigation of, or adjusting a claim for any benefit or payment under this chapter for the purpose of avoiding provision of such payment or benefit shall be guilty of a class E felony.”7 Insurance carriers, TPAs, and IME vendors should review any file with which Panos was involved to mitigate damage caused by the doctor’s fraudulent actions. At this point, it is unclear whether Panos conducted full IMEs, or just records reviews.

However, any IME/record review conducted by Panos (or under the name of Young Don Ho) should be disclosed to all parties in the case. It is also recommended that new records reviews be conducted to determine whether there was a significant difference between Panos’s opinion and whether Panos had a prejudicial or detrimental effect on the claimant. Insurers and administrators should consult counsel to determine the effect of this fraud on each file in which the doctor was involved and to decide the best way to move forward.

Assessing Liability to Third-Parties – Carriers, TPAs, IME Vendors, and Attorneys This leaves open the question of additional liability. Will carriers, TPAs, IME vendors, and carrier attorneys be subject to investigation and/or face possible criminal charges by the Workers’ Compensation Board or the inspector general? Will prejudiced or injured claimants be able to bring additional civil/tort claims against carriers, TPAs, IME vendors, or carrier attorneys?

Criminal Liability The specific issue regarding criminal liability is whether criminal liability can extend to insurance carriers or IME entities where the hired doctor who committed fraud was acting as the carrier’s agent or on the carrier’s behalf in performing medical examinations or records reviews. Although there was no specific case law, the issue will likely center on the fact that the employer, carrier, or IME vendor did not knowingly make a false statement or representation as to a material fact.

Exclusive Remedies Under Workers’ Compensation Law In New York, Workers’ Compensation Law is generally intended to be the “exclusive remedy” for work-related injuries.

Essentially, this means that a claimant cannot bring suit against his or her employer for any accidental injury that may be fairly described as “arising out of and in the course of employment.”8 Additionally, for injuries alleged in cases where an insurance carrier is acting on behalf of the employer in processing claims, then the carrier, too, may be protected by the exclusive remedy.

In such instances, the claimant’s recourse is to place a request before the Workers’ Compensation Board for its approval.

In cases such as that of Spyros Panos, the prevailing issue will likely be whether the exclusive remedy provision applies where a request for surgery or treatment was denied by the carrier on the basis of the carrier’s medical examiner report or review. N.Y. Work. Comp. Law § 13-a(5) specifically prohibits an employee from enforcing a claim for a surgical operation “unless [it] shall have been authorized by the employer or by the board, or unless such authorization shall have been unreasonably withheld.” The board has also directed that the employee “request and secure authorization from the employer or insurance carrier or the chair.”9 This is read as making the employer and insurance carrier virtually indistinguishable.10 This creates a “shield” against liability for carriers based on the delay in authorizing surgery, and that such shield protects not only the injured party’s employer, but also the employer’s workers’ compensation carrier.

7

WCL § 114(2).

8

WCL Sect. 10; Shine v. Duncan Petroleum Transp., Inc., 60 N.Y.2d 22, 26-27 (1983).

9

N.Y. Comp. Codes R.& Regs. Tit. 12, § 325-1.4(a)(1).

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Goldberg Segalla | Liability and Duties of Third-Parties: Medical Examiners Commit Fraud

Burlew v. American Mutual Ins. Co. Burlew v. American Mutual Insurance remains the leading case law on whether an intentional tort may be brought against an insurance carrier.11 In this case, the claimant was injured in her employment and was receiving benefits from the employer’s workers’ compensation carrier. The claimant’s physician determined that her injury required surgery, which the carrier did not grant for approximately four to five months. The claimant sued the carrier for compensatory and punitive damages, alleging (1) the carrier was negligent in breaching a special duty to use reasonable care when determining authorization requests, and (2) the carrier’s “willful, malicious, wanton and otherwise grossly negligent” conduct constituted bad faith. Specifically, the claimant indicated that the carrier acted in bad faith when an agent of the carrier came to her home while she was waiting authorization and yelled something along the lines of “[y]ou’re crazy if you think we’re going to support you for the rest of your life,” and when the carrier produced an expert opinion that the claimant’s condition was due to a pre-existing injury.

On the first issue, the court dismissed the cause of action, citing exclusive remedy under Workers’ Compensation Law. However, the court also ruled that intentional injuries are not covered by Workers’ Compensation Law, and an injured employee may thus bring a tort action for wrongs against the offending employer or insurer.12 Employer immunity is not automatically extended to carriers that commit intentional torts or fraudulently breach their duty of good faith and fair dealing.13 Claims for emotional distress, while not barred, may nonetheless be very difficult for claimants to prove.

The court ruled that a claim for intentional infliction of mental distress against a carrier must indicate carrier action that is “so extreme and outrageous as to exceed all bounds of decency or to be utterly intolerable in civilized society.”14 The court found that the claimant’s allegation could not be said to amount to bad faith, and summary judgement was granted for the carrier. Additionally, the court noted that as a matter of policy, actions against Workers’ Compensation carriers should be permitted “only infrequently.”

Hickey v. Travelers In Hickey v. Travelers, the claimant was injured in his employment, and subsequently began receiving workers’ compensation benefits. A physician examined the claimant on the carrier’s behalf and determined that the claimant did not need surgery for his work-related injuries. The claimant sued the physician for malpractice and the carrier for numerous intentional torts, alleging that he suffered additional physical and mental harm as a result of the delay in the surgery.

The Court found that the carrier was acting in its capacity as the workers’ compensation carrier for the claimant’s employer when it assigned the physician to examine the claimant. The carrier acted properly when, based on that physician’s report, it concluded that surgery was not required as treatment for any work-related injury. Particularly, the carrier in this case proved, with reference to the physician’s report, that there was a bona fide basis for its belief that surgery was unnecessary.

Considerations If an examiner is not an authorized IME at the time they perform the examination of the claimant, the carrier is not responsible for the medical bills in accordance with WCL §13-f.15 Thus, insurers may not be liable for bills from Panos’s fraudulent reviews.

10

See NY WCL § 54.

11

Burlew v. American Mutual Ins. Co., 63 N.Y.2d 412 (1984).

12

See also, Jones v. State of New York, 33 N.Y.2d 275 (1973).

13

Larson, N.Y. Workers’ Compensation Law Handbook, § 8.04 (2016); citing DeMarco v. Federal Ins. Co., 99 A.D.2d 114, 117 (3d Dept. 1984).

14

Burlew, at 417; see also, Fischer v. Maloney, 43 N.Y.2d 553 (1978).

15

Employer: New Hyde Park GCP UFSD, 2005 N.Y. Work. Comp. Bd. 20206845 (2005).

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Goldberg Segalla | Liability and Duties of Third-Parties: Medical Examiners Commit Fraud

Goldberg Segalla’s Workers’ Compensation Team Goldberg Segalla’s Workers’ Compensation team, comprising over 100 lawyers, institutes a unique practice model that involves handling each claim from beginning to end to develop case-by-case strategies. The GS team operates across the firm’s national footprint, with members based in 22 offices across 10 states ­— including New York and Connecticut, states where Panos was charged.

Our team can assist you with: • A comprehensive review of any file that used Panos for IMEs or records reviews • Managing and disclosure of the file to all parties • Having the fraudulent report(s) stricken from the record • Determination of risk analysis, on a case-by-case basis, with a specific focus on how the fraudulent IME/records review will affect the case going forward • Strategizing individual litigation plans for affected files, including: □□ Recommendations on how to handle the case going forward □□ Setting up new records reviews to determine whether the fraudulent IME/record review was detrimental to the claimant □□ Analyzing stipulations, settlements, or prior litigation that were resolved in part due to the fraudulent IME/record review, and creating a unique action plan to address the same

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Goldberg Segalla | Liability and Duties of Third-Parties: Medical Examiners Commit Fraud

About the Authors Victoria Hahn 716.844.3438 vhahn@goldbergsegalla.com

Victoria Hanh – an associate in Goldberg Segalla’s Workers’ Compensation Practice Group – assists New York-based employers, insurers, and third-party administrators facing a wide variety of workers’ compensation claims. Tori earned a bachelor’s in History at Buffalo State College and an M.A. in International Trade from the State University of New York at Buffalo Graduate School. Simultaneously attending the State University of New York at Buffalo Law School, Tori earned her J.D. with a concentration in Cross-Border Legal Studies. Before entering private practice, Tori worked as a legal clerk with the Hon. Hugh Scott in the U.S. District Court for the Western District of New York, where she researched Social Security Disability claims, as well as through a legal internship with U.S. Customs and Border Protection, where she conducted research and drafted memoranda on cases involving employment law, immigration law, agency law, international trade law, and ethics.

S. Philip Unwin 585.295.8340 punwin@goldbergsegalla.com

S. Philip Unwin – a Partner in Goldberg Segalla’s Workers’ Compensation and Risk and Litigation Avoidance Strategies Practice Groups – has been defending workers’ compensation claims and Section 120 discrimination claims since 2005. He has handled hundreds of trials at the Workers’ Compensation Board (WCB), including lay witness testimony and medical testimony on the issues of accident, notice and causal relationship, period and extent of disability, entitlement to medical benefits under the board’s Medical Treatment Guidelines, and fraud. Philip earned his bachelor’s at the University of Rochester, and went on to earn his J.D. from the State University of New York at Buffalo Law School.

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