Tuesday, October 21, 2014

No On 46

A hotly contested ballot initiative in California would raise the limit of non-economic damages to victims of medical malpractice and impose randomized drug testing on physicians.

Proposition 46, if passed, would increase non-economic damages from $250,000, a level that has been stagnant for nearly 40 years, to over $1 million.

The recent spate of cases about spinal hardware counterfeiting in workers' compensation cases could be the dream poster for the measure.

Complaints filed Friday in the Los Angeles Superior Court bring to 32 the number of individual cases filed by patients who allege their surgeons accepted kickbacks to use counterfeit medical devices as part of a widespread conspiracy to exploit the spinal hardware passthrough regulation.

But don't trust ballot measures.
The plaintiff's lawyers say there are hundreds more in the wings.

Billing the full cost allowed for FDA approved spinal hardware, but using counterfeit hardware, the perpetrators were able to make excessive profits while putting patients at huge medical and health risk.

The lawsuits name individual surgeons, hospitals, manufacturers and their owners, and others that were allegedly involved in a complex conspiracy of kickbacks, billing and medical fraud.

Labor Code Section 5318, repealed completely at the start of 2014, required employers and insurers to pay 100% of a hospital's documented cost for hardware, plus $250. Attempts to close that loophole in the past through legislation met with a strong and well funded (if not outright bribery) lobby from those involved.

According to complaints, the defendant hospitals, Tri-City in Hawaiian Gardens and Pacific Hospital of Long Beach and others, used "sham" distributor companies to "fraudulently" inflate their reported actual costs for purchasing hardware and passed these invoices along to carriers. At the same time, doctors accepted kickbacks from hospitals where they scheduled fusions, according to complaints, and the hospitals turned a blind eye towards the counterfeit hardware because surgical revenue was so good.

These complaints are outfall from earlier criminal actions against Michael Drobot and others, which resulted in Drobot's plea agreement with prosecutors to be a witness against others, including the bribed politicians.

Because these complaints allege fraud, an intentional tort, punitive damages may be available outside the medical malpractice cap against the physicians, hospitals and others in the supply chain.

But intention is difficult to prove, and according to plaintiff's lawyer in one of the cases, one of the physicians started noting in charts that he informed patients that the hardware was "experimental" and not FDA approved - this creates a spitting match between patient and physician where credibility to a jury is going to determine whether "intent" was proven.

Bringing this back to Proposition 46 - the simple fact is that the cap on non-economic damages is not inflation adjusted, and in my opinion has become inadequate as a deterrent to bad medicine.

But at the same time, the measure's imposition of random drug testing of physicians does nothing but increase the cost of medicine, and won't do much if anything towards patient safety.

And indeed, there is nothing that would prevent criminals from perpetrating wide spread conspiracies to further their financial gain at the expense of unwitting patients, as alleged in the counterfeit spinal hardware suits.

So while I believe that the cap on non-economic damages in medical malpractice should be examined and elevated, I'm voting "no" on Proposition 46.

Monday, October 20, 2014

No Chief's Disease Here

The California Highway Patrol, criticized in the past for exploitative "Chief's Disease," has a program in place that demonstrates that workers' compensation can accomplish amazing things when all of the right motivations are in all of the right places and everyone does their job.

Last week, CBS Sacramento ran a story about CHP officer Mike Mitchell and the CHP's program.

Mitchell lost his leg in 2011 in an automobile crash when he was responding to a call in Amador County. His car hit a tree so violently that he doesn't remember the crash at all, and his injuries were so severe his right leg had to be amputated.

His employer offered him a chance to return to the force, but he had to prove himself physically (and mentally) capable by going through the academy again, this time with a computerized prosthetic that is the stuff of imagination 40 years ago (think "Six Million Dollar Man" with actor Lee Majors as the star).

The prosthetic didn't cost millions - the article says it cost about $100,000.

“I have kids at home and I can’t let them see me quit,” he tells his interviewer.

“Officer-safety wise I still have to able to be able to fight, I still have to be able to shoot and drive. Do everything I’m suppose to do,” he goes on.

After going through retraining and passing the physical assessment tests he regained his uniform and is back on the job patrolling in a CHP cruiser.

“I love doing it,” he said, reflecting the attitude that is necessary for an injured worker to overcome huge obstacles. “I love being out in the public.”

According to the story, there are four other full time officers who are amputees.

I'm sure there are also many failure stories where benefits were not provided timely, or there is a dispute about treatment or indemnity, or where an officer attempts to take advantage of the generous disability compensation system in place for California peace officers.

Those negative situations get a lot of attention. It's easy to focus on the bad, to criticize, and blame.

It's much harder to be successful, to overcome huge obstacles, to achieve cooperation between the many people that need to contribute for a successful outcome - that requires communication, vision, and a huge helping of positive attitude.

The CHP says on its website that, "When injuries occur, our obligation is to ensure all appropriate benefits are accessed and received by those injured employees."

I have to believe that statement when I see a story such as Mitchell's.

We at WorkCompCentral believe that success should be celebrated. So much of workers' compensation is draped in negativity - after all, going through a life altering event such as a work injury is steeped in uncertainty, stress and disappointment.

Comp Laude award recipients 2013.
But there are success stories, many of them. We don't hear about those, and some people have been critical of the Comp Laude Awards for injured workers stating that we are making a mockery of the system.

Nothing could be further from the truth, and the fact is that we have had many, many injured workers nominated, and many other injured workers praising our efforts to recognize people who have overcome the odds. 

And this happens with the help of the teams of people, the employers, claims adjusters, doctors, attorneys, doing their jobs the best they can.

Stay in this industry long enough and cynicism can dominate your thoughts.

Workers' compensation does good things. We just don't hear about them very often.

When you go to work this morning, do good things - make a case work properly, get an injured worker back on the job, celebrate positive outcomes!

And join us Saturday, December 6, to recognize people and companies that make a difference.

Friday, October 17, 2014

The Long Arm of Failure

How far do failed New York self-insurance trust issues go?

Answer: All the way across the nation to the West Coast.

In a lawsuit recently filed, California-based Waste Connections Inc. says it was duped because New York based Hudson Valley Waste Holding Inc. failed to disclose nearly $5 million in assessments by New York regulators for liabilities stemming from the Team Transportation Workers' Comp Trust, that failed in 2010.

Waste paid $300 million for Hudson Valley in 2011.

In 2005, the New York Workers' Compensation Board calculated that the trust equity ratio was 78.6% and deemed it to be underfunded as of Dec. 31, 2004. While the group's equity ratio improved to the point that the board stopped classifying it as underfunded as of Dec. 31, 2007, by July 29, 2010, it was once again declared underfunded.

In October 2010, the trustees held a meeting in which they voted to close the trust effective Jan. 1, 2011.

An audit was conducted by the board after it took control of the trust in 2012 and the analysis found the trust had a deficit of $32.5 million, plus interest.

The amount owed by the Hudson Valley companies consequently became $4.9 million. As of July 1, 2014, interest totaling $49,000 had accrued, and continues to accrue until the deficit is fully paid, according to Waste's complaint.

A Workers' Compensation Board report sent to lawmakers in June says the Team Trust has 120 open claims. The trust had 193 open claims when the board took it over in 2012.

Hudson Valley has not filed a response to the complaint, but an attorney for the company in a 2012 letter to Waste Collections filed as an exhibit to Waste's complaint denies any wrongdoing or intentional misrepresentation/concealment.

Waste Collections filed its lawsuit about one week after the New York Workers' Compensation Board extended the deadline for members of the Team Trust to sign a memorandum of understanding agreeing to pay just 75% of their assessment and to do so over an 18-month period.

The transportation industry group was one of the many New York trusts that failed starting in the mid-2000s. Of the 62 trusts that were operating at the end of 2005, only three remained operational by the end of 2012, leaving an estimated 10,000 employers responsible for nearly $1 billion in claims.

The untold story is the many injured workers who got the brunt of this irresponsible financial management.

Thursday, October 16, 2014

Ebola and Work Comp

As the Ebola scare was developing there was speculation about the applicability of workers' compensation to such cases.

Now that 2 nurses have contracted the disease from occupational exposure the debate is not about AOE/COE, but how far this is going to go.

The first nurse, identified several days ago by friends and family as Nina Pham, was in “clinically stable” condition, and in isolation at Dallas’ Texas Health Presbyterian Hospital, where she helped treat another Ebola patient, Thomas Eric Duncan.

We now have two nurses who have Ebola.

The second health care worker also cared for Duncan and was immediately isolated at Texas Health Presbyterian Hospital, the Texas Department of State Health Services said in a statement.

“Health officials have interviewed the latest patient to quickly identify any contacts or potential exposures, and those people will be monitored,” the department said.

This second nurse case apparently traveled back and forth from Cleveland, Ohio before showing symptoms, which officials say indicates she likely was not contagious at that time, but nevertheless precautions are being taken to reduce the risk of transmission to others, such as taking one of the planes out of service and contacting all passengers and crew members.

A total of 78 healthcare providers at the hospital treated Duncan. Up to 48 other persons were exposed to Duncan.

I read a commentary a couple of days back that basically concluded that there was no workers' compensation risk from Ebola because a disease, to be compensable, must be a unique exposure for a worker - the author comparing Ebola to the flu.

Ebola, is far, far different than the flu because it is basically fatal; the flu might be fatal but more often than not one just feels lousy. The fatality rate in the current Ebola outbreak, however, is about 70 percent according to reports.

Health care workers, medical waste workers, indeed, any person involved in the business of medical care is uniquely exposed.

“It’s really concerning that health workers wearing full personal protective equipment have developed Ebola,” said Raina MacIntyre, a professor of infectious diseases epidemiology at the University of New South Wales in Sydney in a Reuter's report yesterday.

But is the workers' compensation system ready to deal with Ebola? And I don't mean from a claim severity or frequency standpoint.

I mean from the point of providing quality medical care in such a specialized situation - because there aren't too many medical professionals, or facilities (as demonstrated by infectious disease handling failures at Texas Health Presbyterian Hospital) that are trained, have adequate protocol (indeed even the Centers for Disease Control has been rapidly changing guidelines as this situation unfolds), or have the equipment to deal with this disease; ergo, this is a disease for which there likely is no fee schedule, likely no good treatment guidelines, likely nothing to give claim departments any guidance whatsoever.

Workers' compensation medical treatment has devolved into fights about utilization and other reviews which ultimately delays (though it's not supposed to) the delivery of care, if not outright denial of care; but dealing with Ebola requires immediate action. There is no time for utilization review or independent medical review. Protocol is lacking, and risk of spreading the disease increases exponentially with every single contact.

And forget about workers' compensation - the entire medical delivery system is proving incapable of dealing with the disease, from the CDC on down.

We will likely see more Ebola cases from among the other healthcare providers who treated Duncan.

I worry about the spouses and children of the healthcare providers.

I also worry about Ebola spreading to schools in the event one or more of the children on the hospital staff contract the disease.

More than 8,900 people have been infected with Ebola in the three countries, with more than 4,400 deaths, the World Health Organization said. The number of new Ebola cases in three West African nations may jump to between 5,000 and 10,000 a week by Dec. 1 as the deadly viral infection spreads, the WHO said.

There’s no cure for Ebola, which jumps to humans from animals such as fruit bats and chimpanzees. The virus spreads from contact with bodily fluids such as blood, vomit and feces.

If ever there was a situation where there should be no distinction between workers' compensation medical treatment and general health, the current Ebola situation is it. Delivery of medical care in workers' compensation is just fine for broken bones, even for something like black lung disease.

The way medical care in workers' compensation is delivered creates a real, and significant, national health problem when confronted with a potential pandemic like Ebola.

Work comp is woefully, in fact dangerously, inadequate for something as radical as Ebola.

Wednesday, October 15, 2014

It's Not That Hard

A lot of employers try to lower their workers' compensation costs by fudging the numbers on their payroll reports, or paying workers "under the table," or misclassifying their jobs.

Some employees take advantage of the no-fault design of the system to make claims that didn't occur, or inflate the severity of the claim.

And there are some people on the claims side that try to "meet the numbers" by denying, delaying and otherwise obfuscating claim realities and legal obligations.

But the penalties meted are different depending upon your place in the system and don't necessarily reflect the crime.

For instance, WorkCompCentral did an analysis of California Department of Insurance fraud statistics.

Between Jan. 1, 2013, and July 10, 150 individuals were convicted of defrauding workers' compensation carriers out of $8 million; $6.7 million, or 83.75%, came from 30 of the 77 convictions for premium fraud, such as misreporting payroll, classifying workers as independent contractors or operating without mandatory workers' compensation insurance.

The CDI data does not have an estimated loss for the remaining 47 of those convictions, but if extrapolated against the "known" losses, then the total for that time period is $17.5 million of losses attributable to employers.

$1.3 million out of that "known" $8 million is attributed to false claims filed by 67 of 73 individuals. Losses for the remaining six of those false claim cases were not included in the Insurance Department data, but again, if extrapolated then the total is only $1.4 million.

Yet 50 of 73 workers convicted of filing a false claim since 2013 were sentenced to at least one day in jail. By contrast, only 35 of the 77 individuals convicted of premium fraud or failing to provide coverage were sentenced to jail.
"Hmm, smells good..."
CDI data does not include information about claim payer fraud - that is the jurisdiction of the Department of Industrial Relations, Division of Workers' Compensation, through their audit department.

But in July, DWC fined five claims shops a total of $218,769 after 2012 audits found the offices had not paid at least $124,654.71 in benefits due to injured workers, as well as other violations. Overall, the division said its review of 64 claims shops in 2012 found unpaid indemnity benefits in 13.32% of the claims it reviewed, including $229,107 in unpaid temporary disability or salary-continuation benefits and $202,744 in unpaid permanent disability benefits.

Remember though that not every claim shop, indeed very few claims overall, get audited; and for the most part audits are not meted out evenly. Also, overall the the number of claims where unpaid benefits is likely less than 13.32%.

But if total claims (including medical only and indemnity) are one million per year, then there are some 132,000 cases where benefits are either not timely or not paid at all. Extrapolate the audit numbers and now the money gets significant.

And don't forget that the audit statistics don't include violations that are "forgiven" for one reason or another.

All of this "fraud talk" masks the issues.

In the ‘Real World’ it is injured workers having their bodies and their lives damaged. It is the employers paying for that and not understanding what is going on. It is the carriers and all the vendors ‘eating from the trough’ and not understanding what workers' compensation is really about.

It's not a give-away, but it's not supposed to be a difficult process either.

And when one really peels the skin from the onion we find that it isn’t that complicated or complex.

Pick up the phone and call the doctor, ‘What is the treatment plan?’ Call the adjuster and discuss what is ‘fair and reasonable’. Talk to the injured worker and discuss the options.

Talking to people doesn’t make it perfect – but it makes it a lot better. And ‘a lot better’ eases the pain for injured workers, helps employers understand, and cuts costs (a lot), and minimizes opportunities for fraud globally.

Work comp in California is predicted to be a $16 billion premium market next year (nearly 30% of the entire national market!), and by some measures is the most expensive workers' compensation state in the nation though middling in the delivery of benefits.

If system participants just communicate, more benefits would get to injured workers and cost employers a lot less.

And fraud on all sides of the equation would be reduced.

I know this is an ideal, dream world, pie-in-the-sky, utopian thought with all of our busy work schedules, demands, and "meet the numbers" requirements. But one step at a time, one claim at a time, and the detritus starts going away because scrutiny is the bane of the transgressor.

Tuesday, October 14, 2014

Sierra versus Salas

In June the California Supreme Court ruled that Sierra Chemical Co.'s argument that Vicente Salas was not legally eligible to hold a job in the United States was not a complete defense to the worker's claims under the state's Fair Employment and Housing Act.

The company has now asked the United States Supreme Court to review that decision, arguing that Federal immigration law and policy override California's FEHA laws.

Salas started working for Sierra Chemical in 2003. He signed an employment eligibility verification form, where he wrote a Social Security number and provided a resident alien card that attested to his eligibility to work in the United States. Salas also signed a W-4 income tax statement, using the same Social Security number.

He later hurt his back and filed a claim for workers' compensation benefits. He was able to return to work, subject to medical restrictions, but was laid off that December as part of Sierra's seasonal reduction of production line staff.

Sierra sells swimming pool chemicals so when the weather cools, demand decreases and the company lays off many of its production line employees, recalling them when consumer demand rises with the temperatures in the spring.

Sierra offered to rehire Salas in the summer of 2007 if he obtained a release from his doctor authorizing him to return to full-duty status. Salas' doctor, however, would not clear him to work without restrictions.

So Salas sued Sierra, alleging that he was disabled and that Sierra had failed to provide reasonable accommodations under California FEHA law among other causes of action.

During discovery, Sierra learned that the Social Security number it had on file for Salas was being used by a North Carolina man, Kelley R. Tenney. Tenney averred, under oath, that the number was assigned to him, and that he had not given Salas permission to use his Social Security number to obtain work.

Sierra then raised defenses that Salas' FEHA claims should be barred under the equitable doctrines of after-acquired evidence and unclean hands.

The after-acquired evidence doctrine is a defense against discrimination or refusal-to-hire suits, where the employer discovers wrongdoing that otherwise would have resulted in termination or refusal to hire. The unclean hands doctrine says that it is unfair to grant relief to a person accusing someone else of wrongdoing if he engaged in a wrongdoing himself.

The Superior Court ruled that Salas could not bring a FEHA claim against his employer, as a matter of law, since he was "not lawfully qualified" to take the position that he allegedly was denied after he suffered his industrial injury.

The 3rd District Court of Appeal upheld her decision, but a majority of the California Supreme Court reversed, concluding that undocumented employees are entitled to pursue claims for retaliation and discrimination against their employers.

Justice Joyce Kennard, retired but sitting on the bench by special appointment, wrote for the majority that it would "frustrate rather than advance the policies underlying federal immigration law to leave unauthorized alien workers so bereft of state labor law protections that employers have a strong incentive to 'look the other way' and exploit a black market for illegal labor."

Justice Marvin Baxter dissented, stating that the question of whether Salas was ineligible under federal immigration law to be employed in the United States was an issue that had yet to be decided.

If Salas was in fact unable to legally hold employment, Baxter said he thought federal immigration laws ought to foreclose Salas from any recovery of post-termination lost wages under California law.

The California Supreme Court opinion is here.

The U.S. Supreme Court case is Sierra Chemical v. Salas, No. 14-369.

Monday, October 13, 2014

The Evidence is Consensual

Medicine has evolved substantially in the 100 years or so that workers' compensation has been around. For the most part now, the practice of medicine is based on science. Principles from rigorously reviewed studies of methodologies, pharmaceuticals, and other treatment protocol have refined the practice of medicine so that, for the most part, given any particular diagnosis we know what to expect, when to expect it, and what the after affects might be.

There are still new treatments proposed that are deemed "experimental" until they go through this process of peer review and critique, and there are plenty that fall within the stereotype of "snake oil" medicine, but for the most part we know the most effective way to treat an ailment with the technology available today.

Which is why treatment guidelines exist - guidelines represent a high level of agreement on the best way to deal with an injury or illness.

Of course there is always going to be debate about one set of protocol versus another because no two patients are the same, no two injuries are the same, no two doctors are the same.

But given any set of circumstances or diagnostic fact patterns that are generally in alignment, we can follow the guidelines and achieve an expected result.

General health insurance has done this for years. It helps those insurance companies to control costs, and theoretically such cost control is passed onto the consumers of insurance.

There are basically two types of guidelines: "evidence based" and "consensus based."

The alleged difference is that evidence based guidelines have some accountable scientific backing - generally peer reviewed studies that have gone through rigorous testing to validate the findings. Consensus based guidelines involve exactly what the name implies - consensus among people as to the best way to get the job done.
Tina doesn't know about guidelines...
Curiously though, consensus based medicine generally involves some evidence based fundamentals, because, unless there is some fraud or undue influence, people want to ensure that what they are agreeing on has some basis in fact; that it has been tested and proven to be effective.

Likewise, evidence based medicine generally involves some consensus based convention because the evidence itself is subject to review and critique, and must be agreed upon by a sufficient number of experts to achieve a level of medical acceptance.

What really seems to be the difference between the two is whether one is more politically manipulated over the other.

In general when one looks to evidence based medicine guidelines being deployed in workers' compensation there really are only a couple that are published.

When one looks to consensus based medicine in the work comp arena there are many more - consensus based medicine in workers' compensation tends to mean state specific: there is a state medical director who gathers up a bunch of experts and they all agree, for the most part, on what is going to guide treatment within a particular jurisdiction.

Much of the time the agreement is based on some evidence, sometimes it is based only on good, hard lobbying...

There is, regardless, a trend in workers' compensation to adopt some sort of medical treatment guidelines. The "big" states already have some guidelines in place - for instance California started with the American College of Occupational and Environmental Medicine Practice Guidelines, an evidence based standard, as the basis for its consensus based standard, the Medical Treatment Utilization Schedule. Colorado followed the same general pattern. Texas adopted the Work-Loss Data Institute’s Official Disability Guidelines without morphing into a consensus system.

States that don't have guidelines but are moving towards adopting them include Arkansas, Arizona, North Carolina, and Tennessee, all of them debating evidence based guides versus consensus based guides.

Guidelines have the effect of not only dictating the treatment regimen, but also what will be paid for and at what price. And this is where the sharp differences lie between workers' compensation and general health - the patient in general health knows that if the doctor wants to perform some treatment that is not approved or within the insurance company's guidelines then he or she is going to have to pay for it.

Most general health carriers have some sort of appeal process where the patient can contest a decision as to whether or not some proposed treatment is going to be covered - a sort of Independent Medical Review process. It is very difficult to overcome an IMR decision in general health once dictated because the relationship is contractual (within the confines of both state and federal law).

When workers' compensation won't permit some treatment, though, the flavor and expectations are different because the relationship between provider, carrier and patient is based on law and not contract, so often the dispute goes to some adjudication process - judicial review.

California sought to adopt some general health principles into the work comp process with an IMR system of review, and this caused a bit of consternation.

When the law changes there is huge disruption because we had been trained to behave in certain ways based on past experience. So it takes quite a bit of time to change expectations, and change behavior. Whether this is good or bad is a huge subject of debate, but a new reality gets created that may include some unanticipated consequences.

And it takes time for those consequences to be ferreted and dealt with - in the meantime we have uncertainty, and it's uncertainty that generates litigation. And, by the way, it's litigation that is responsible for a hugely disproportionate share of costs.

While the adoption of medical guidelines seems to be a good idea for most jurisdictions, they carry certain baggage that must also be dealt with. Changing expectations takes time. Processes get tested and evolve in response.

In the meantime, whether a guideline is evidence based or consensus based isn't really that big of an issue. The issue is the adaptation by the affected population to a guideline and how much that population will resist. Bigger changes incur greater resistance, but eventually there is acceptance and adaptation.