Friday, April 18, 2014

Procedure Can't Replace Trust

Utilization review and independent medical review in California workers' compensation have come under attack by the applicant's bar, and their arguments are being recognized as legally valid by the Workers' Compensation Appeals Board.

There's the recent en banc decision in Dubon v. World Restoration, and a more recent WCAB panel opinion in Weilmann v. United Temporary Service.

Employer/carrier groups and their representatives are crying foul.

Both groups are seeking appellate consideration of the processes.

Applicant attorneys claim that the IMR process introduced with SB 863 lacks state constitutional foundation and thus is invalid.

They also are carefully scrutinizing every UR denial of treatment for defects, pushing form over substance arguments, and winning.

At the heart of this entire legal wrangling are two very important elements that define California workers' compensation, and perhaps explain why the state's experience is so much different than many other states.

First, there is a HUGE mistrust between payers and beneficiary claimants that use attorneys. This mistrust has been growing for more than 20 years and is getting more acute.

Employer lobbyists and representatives see the applicant attorneys as abusing the system, and taking more out of the system than it was designed for.

They point to statistics that reflect that only 18% of all work comp cases (those that have attorney involvement) comprise 78% of all system costs.

Worker interests counter that they are only ensuring that injured workers get EVERYTHING the law entitles them too - and when they work up a case they are going to turn over every stone to be sure there is nothing left untouched. It's a benefit and a right provided by law - they are ensuring all gets accounted for.

Second, medical control is the key to control of the case. Establishing and maintaining the medical relationship means a much greater chance at a "successful" outcome - i.e. either a great increase, or substantial limitation, in indemnity and other expenses, depending on whether one is applicant or defense.

The WCAB's rulings reflect that judicial officers are not willing to overlook form when it comes to liberally interpreting the law favorable to injured workers (the judicial standard in California work comp disputes).

In the Weilmann case the WCAB ruled that UR decisions issued by doctors who had not signed their decisions and who had not seen the reports of the agreed medical evaluator were invalid. 

The applicant attorneys of course love this decision because there are likely many, many technical, procedural flaws in UR decisions.

Employer/carrier representatives are crying foul, saying that such adherence to procedure over substance will undermine the UR and IMR processes.

Of course both sides decry form over substance (and visa versa) when it suits their arguments.

But what really is happening is: 

1) the WCAB is saying don't be so sloppy; if you are going to challenge a medical request then the applicant/worker/patient is entitled to know who did what, when, why etc. The burden is on the payer to ensure that all procedural details are taken care of because the payer has far more resources than the injured worker.

2) the WCAB clearly recognizes that its job is dispute resolution; that mistrust from years of "reform" has risen to such a level that mere administrative processing where potential life altering events are involved require "listening" and adjudicating.

The applicant attorneys have basically vowed to "chip away" at UR and IMR to ensure medical control and, ergo, increase case valuation/expense.

The practice and application of workers' compensation law has always been sloppy. Now that procedure is such a huge part of the process practitioners can no longer pretend to practice law. They need to pay attention to details and this applies whether you are an attorney, a hearing representative or claims examiner.

That means that defense fees will increase, case expenses will increase, and ultimately objection from the employer community that work comp costs too much.

The reaction will be to try and introduce even more procedural blocks and barricades, which of course is the wrong way to deal with things because:

1) doing so will increase the odds that something will go wrong (like failure to strictly adhere to the procedure), and;
2) will increase mistrust even further.

Listen folks - you all did it to yourselves. The more procedure you introduce, the greater the risk that procedure will be used against you.

This of course goes both ways.

A self-administering benefit delivery system can only be so without all of the layers of cost and delivery system controls.

This requires trust, and the related relinquishment of medical control.

SB 863 was introduced as an example of a new era in employer/employee relations - proponents touted it as a shining example of a new trust between labor and management since all of the other noisy signals were excluded from the conversation until after the governor's signature.

That trust was superficial.

Thursday, April 17, 2014

It's There; Give It Away

The Rand Center for Health and Safety in the Workplace issued a report a while back following the passage of California SB 863 about the $120 million slush fund.

If you recall, SB 863 was headed towards defeat until a last minute deal brokered literally in the halls of the legislature pitched an undefined fund of money paid for with an assessment on workers' compensation insurance policies and self insured deposits saved the day.

“We negotiated in the closing days and came to an agreement that there would be set aside annually $120 million to create an expeditious, non-judicial process for making sure those workers who can’t return to work get more of the benefit which they need,” Senate President Pro Tem Darrell Steinberg, D-Sacramento, said at the time.

The issue with this fund was that only the allocation of money, $120 million per year, was defined. All other details were left to the Department of Industrial Relations/Division of Workers' Compensation to define.

The administration then asked Rand what it thought.

Rand recommended a minimum three-year waiting period so injured workers are able to demonstrate a post-injury loss of earnings before being eligible for payments from the fund. During a Commission on Health and Safety and Workers’ Compensation hearing in October, Rand researcher Seth Seabury said they’re no way to get around the waiting period “if you want to base the benefits on actual losses.”

That opinion doesn't sit well with politicians.

Steinberg said he was worried that if the administration drafts regulations to implement the $120 million fund that are based on the methodology recommended by the Rand Center for Health and Safety in the Workplace, workers would face long delays before they received any money.

“Administrative and time-based hurdles” were not what he envisioned when negotiating the special fund, Steinberg said.

So David Lanier, secretary of the Labor and Workforce Development Agency (as yet unconfirmed by the Senate), said during a March 26 confirmation hearing that using the voucher to determine eligibility would avoid long delays in getting money into the hands of workers who have suffered significant earning losses as a result of their injuries.

“An alternative that’s come up is some sort of proxy for (identifying) who are these workers who are most financially impacted by their injury,” Lanier said.

He said the Rand study identified “a high level of correlation” between workers who don’t get a return-to-work offer from their original employer and those who have a disproportional loss of earnings.

Therefore, he said, the administration is seriously considering basing eligibility for the supplemental benefit on whether a worker has been offered employment following his injury. That is the same trigger that determines eligibility for the Supplemental Job Displacement Benefit voucher.

“It has the clear advantage of putting the money in the hands of the injured workers sooner,” he said.

Apparently according to reports this morning that is exactly what the administration intends to do.

The California Applicant Attorneys Association apparently likes the idea.

Jim Butler, president of CAAA, told WorkCompCentral that the several CAAA representatives who attended an April 4 invitation-only stakeholders meeting in Oakland support the division’s proposal.

“CAAA has been consistently urging a simple, expeditious method to appropriate these funds: allow all workers who receive a Supplemental Job Displacement Benefit voucher to apply for these funds and divide the total by the number of claimants in a year, with no one receiving more than $20,000,” he said. “CAAA leaders met with the DWC on April 4 to advocate for this method.”

This idea is going to rankle some folks because it is seen as a pure, simple, give away without much qualification.

But really, should anyone care?

The bottom line is that the administration has been collecting money for this slush fund. For many of us a couple extra thousand dollars doesn't mean a whole lot.

For many others it does.

And workers' compensation is called workers' compensation because it is about paying money to workers.

Let's get over the objection that there needs to be some huge qualifying procedure. The idea is to give away money, so just do it.

Why make the process of giving away money more expensive than it needs to be? This is only wealth re-distribution and if there's a system in place that can be used to make some administrative determinations then that is just fine.

I do commend the administration for taking its time to gather information, listen to arguments, and devise different plans and scenarios.

But when it really comes down to it, the discretion for putting together a system was left up to the administration. This does not have to be a complex process, nor was that intended.

So let's get over it - and if more people than forecast apply and obtain money from the fund, then bully for them. The money is there, and it is a finite, fixed sum. So long as employers aren't asked for even more because of demand then there should be no argument.

Wednesday, April 16, 2014

IMR Challenges Communication

Frances Stevens, 46, sustained an injury Oct. 28, 1997, that required a series of surgeries, including the fusion of her first and second metatarsals. State Compensation Insurance Fund provided her a manual wheelchair, but difficulties moving the chair caused her to develop bilateral shoulder problems, according to her case file.

A combination of severe pain and confinement to a wheelchair caused Stevens to become severely depressed. She was declared permanently and totally disabled on Aug. 16, 2013.

Following the declaration of PTD status, Stevens’ physician recommended and prescribed pain and antidepressant medication as well as home health care.

State Fund denied the recommendation of home health care for eight hours a day, four days a week, as well as pain medications on July 25, 2013, and Oct. 17, 2013. Stevens appealed those decisions on Aug. 14, Sept. 19, Oct. 1, Oct. 15, Dec. 9 and Dec. 10, but Maximus did not issue its determination finding the treatments unnecessary until Feb. 20, 2014, according to the petition.

Now the case is being taken to the appellate court, on the grounds that IMR violates the California Constitution, Article XIV, Section 4, which vests with the Legislature authority to enact workers’ compensation laws “that provide substantial justice, without encumbrance” and that these laws be subject to review by a state appellate court.

The petition filed with the First District Court of Appeals avers that a writ of mandate is the only recourse available to Stevens. While Labor Code Section 4610.6(h) allows an injured worker to appeal an IMR decision based on allegations of fraud, conflict of interest, or bias, because the reviewing doctor is anonymous, “the injured worker is not provided any information upon which to make an appeal on any of those grounds.”

“The issue is that since the process is a secretive one, the injured worker has no basis upon which to ever mount an appeal on the grounds cited above,” Stevens' attorney argues in the brief.

“In essence, Labor Code section 4610.6 has rendered petitioner’s WCAB award of future medical care for her devastating and permanently disabling industrial injury meaningless,” the petition says. “Based on these facts, petitioner has no plain, speedy and adequate remedy at the WCAB to enforce the award or seek a ruling on the constitutionality of Labor Code Section 4610.6, or to compel the administrative director and Maximus to render a transparent decision subject to cross-examination and a fair speedy hearing before a WCJ with full appellate rights.”

Will this terminate IMR in California?

I don't know. But the drafters of SB 863 and the IMR provisions were dutifully warned about potential constitutional issues with failing to provide some avenue of judicial review.

There's an old saying in the legal profession - bad cases make bad case law.

This is a bad case. 100% disabled according to both physician opinion and judicial declaration, need for ongoing medical care, and an attorney who knows what he's doing (Stevens' attorney was successful counsel to Wanda Ogilvie, the applicant whose comp claim gave rise to a line of cases addressing how and when an injured worker to rebut the permanent disability rating schedule by showing it didn't fully account for future lost wages caused by the injury).

If any case is going to be successful in challenging IMR this is the case.

I think IMR can be a good thing if it properly disposes of medical treatment requests that are not reasonably evidence based or whatever standard is deemed applicable.

I also believe that there can be no absolutes.

SB 863 made some absolutes. So it is going to be challenged, and likely those absolutes are going to be stricken.

That doesn't mean the death of IMR however, just that some assumptions are changing.

And of course SB 863 proponents are going to argue that system savings are not going to be realized. But that's the gamble. It's not like there wasn't any debate or warning about whether or not those savings in fact were going to be realized, or that the reformation of the system would withstand challenge.

The Stevens case is going to be an emotional debate.

And maybe this is actually going to be a good thing - maybe the threat of ultimate judicial review will cause the parties go start talking again and settling issues rather than perfunctory reliance on a system devoid of rational communication.

Tuesday, April 15, 2014

PAYG Efficiency

Workers' compensation and innovation are not usually used in the same sentence.

But competition from outside the industry is forcing innovation, and the employer market - the people that actually pay for the insurance - is reaping the benefits.

Some time ago the big payroll service guys, ADP, PayChex, and others, started making partnership deals with insurance companies to provide workers' compensation coverage in conjunction with managing payroll.


The advantages are obvious if done successfully - since work comp is based on payroll, integrating the two should result in greater efficiency with tighter reporting, more accurate accounting and overall better service.

The insurance industry is notoriously slow, however, at adapting to change.

But change happens and in the case of the payroll/insurance hybrid, seems to be catching on quickly.

Carriers are now starting to offer payroll services to compete with the traditional payroll management companies. The fuse has been lit, and competition is heating up.

The big advantage to employers is that they get a pay-as-you-go (PAYG) service. Rather than getting one big insurance bill once a year (or maybe twice a year if the carrier permits bifurcating the bill), through carrier initiated PAYG payroll, the work comp premium is integrated into payroll, so the employer's cash flow is more smooth.

This also produces more smooth income for carriers.

The downside is that it may be more difficult for employers to monitor their premium because in most companies payroll is not static, and neither is workers' compensation - particularly if there's a claim or two.

The trend seems to be driven by demand from brokers and agents, who are losing business to the payroll services. Brokers and agents get their income from commissions, and if their customer buys insurance from another source the brokers and agents are more directly impacted.

Having an option to provide employers who like the idea of integrated payroll and work comp insurance provides brokers and agents a big competitive advantage in being able to retain their customers.

Banks are in on this too.

I recently was lunched by our banker, who represents Wells Fargo. Wells Fargo has an insurance division. I didn't know it also did payroll, but it does, and my banking representative is working hard to get me to switch, promising me savings for WorkCompCentral and better service.

We'll see about that - in the meantime it might make sense for me to look at PayChex' (our payroll service provider) work comp offering.

I think the PAYG model of payroll/work comp integration will continue to grow and bring new competitive advantages to employers.

[The Paychex and ADP images are registered trademarks and copyrighted to their respective owners.]

Monday, April 14, 2014

Long Way Down

Maybe I will, and maybe I won't.

I like the ambivalence of that - and that vagary is only possible when I go to Big Sur.

The last time my wife and I went to Big Sur a couple of years ago was following a big slide at the north portion of coast, about 10 miles below Carmel. That slide cut off all of the normal traffic that would flow from the Monterey Peninsula, so the coast was eerily quiet.

Big Sur makes you forget...

The night prior to our departure from Lucia Lodge we learned there had been a slide south of our position, leaving the only way in and out of Big Sur via a hair raising single lane road with multiple pin point tight turns, and no guard rails, up over the Santa Lucia range and into Fort Hunter Liggett/Camp Roberts to Highway 101 (post script - Nacimiento-Fergusson Rd).

We would have enjoyed staying a few more nights and the complete solitude afforded by the slides and difficulty people would face getting into the area, but work schedules for both of us compelled our departure.

Going up and over the ridge required careful navigation because most of the road was single lane with many blind corners.

And I mentioned the lack of guard rails... a couple thousand feet at the bottom of a canyon was not where I wanted to be!

No guardrails and a LONG way down...
There wasn't a lot of opposing traffic, but enough to keep you alert.

Kind of like the news this morning - enough workers' compensation fraud to keep you alert.

There's the story of a Florida fire inspector who failed to advise state officials that he was working while simultaneously collecting about $143,000 in benefits.

And the Bell Gardens, CA police officer who tried to pin his injury to his job when in fact he got injured during a try out for another police department.

Or the California trucking company owner who misrepresented his in state payroll to avoid some $108,000 in premiums.

Speaking of trucking, an Ohio man was sentenced for working as a truck driver while drawing permanent total disability benefits. 

An insurance agent in Georgia failed to forward some $30,000 in premium payments to carriers, and a U.S. Postal Service employee was prosecuted for doing massages for profit while claiming total disability because of a shoulder injury. 

And in San Bernardino, CA couple pleaded guilty to workers' compensation fraud charges after an investigation revealed that the teacher's aide was exaggerating her injuries with the assistance of her boyfriend, who pushed a wheelchair that she didn't need to use. 

So maybe I will, and maybe I won't - post to this blog during the few days of hiding in the Santa Lucia mountains that is.

In the meantime, I know that there is no shortage of new and interesting ways that people find to get around limitations in the system that are perceived to inhibit personal gain at the expense of everyone else.

The problem, as we see, is that the road is twisty, single lane with no guard rails. It's a long way to the bottom.

Friday, April 11, 2014

Go Forth and Compromise

One of the more controversial elements of California workers' compensation law is the requirement in litigated cases to use Qualified Medical Examiners to resolve disputed medical and disability issues (other than treatment since SB 863 came out).

In the old days the litigants would get their own doctors to say what they wanted them to say.

Often enough there would be multiple doctors opining on different medical issues due to specialization and the number of body parts allegedly injured or diseased during the employment risk.

The applicant would procure reports favorable to his or her position, the defense would do likewise, and then they would go to court and ...

... settle. Usually.

Sometimes, and not very often, cases would not settle and then a judge would determine which report would govern the case.

Remember that the evidentiary rules in workers' compensation are very lax, relying on the "substantial evidence" standard, which means that if the evidence is good enough to support what the conclusion for which it is proffered, then it is "substantial" and can be relied upon by the court.

There were two major objections to this historically revered process: 1) medical legal expenses were at least duplicated because not only did both sides have to get expert opinion that were duplicative, but there often would be repetitive diagnostics; and 2) some were rankled because of the perception that money was being given away needlessly under the veil of compromise.

Of course it didn't help that if one went before a judge to determine which medical evidence would rule the case that more often than not it was the applicant's report because, more often than not, it was substantial and judges follow the overarching rule in workers' compensation that the law is to be liberally construed in favor of the injured worker.

So the QME process was born a dozen years ago. The thought behind this was that if the parties could not agree which medical professional was going to govern the case then the government would decide, thus cutting down on litigation, ergo costs, and resulting in less dispute.

The theory didn't translate into practice and one of the more common complaints I hear as I travel the state is that the QME process a) doesn't work as intended, b) is not timely, c) doesn't have enough physicians who know what they're doing, and d) has not reduced litigation.

The Workers' Compensation Appeals Board in a recent decision known as Navarro v. City of Montebello declared invalid administrative QME Regulation 35.5(e), which says, “In the event a new injury or illness is claimed involving the same type of body part or body system and the parties are the same, or in the event either party objects to any new medical issue within the evaluator's scope of practice and clinical competence, the parties shall utilize to the extent possible the same evaluator who reported previously.”

The Board's legal reasoning was that the regulation over-interpreted the Labor Code section that mandated the QME process, and thus there was not requirement to return to the same QME for subsequent injuries.

Honestly, when I read that regulation section I don't interpret it in the same way the WCAB did - because of the last part of the sentence that qualifies it with "to the extent possible."

In my mind that means that there is no requirement or mandate that the parties go to the same QME - because it may not be "possible" to do so for a variety of reasons.

But the Division of Workers' Compensation, which issued the regulation, interpreted it differently and conservatively, that the section mandated a return to the first QME unless there was some emergency or reason why that QME could not perform - thus we got the Navarro ruling.

The DWC has capitulated by DWC saying that its medical unit will issue new panels for claims made after the initial evaluation has taken place.

I was speaking at an event earlier this week and had engaged in conversation with a defense attorney about the QME process. He opined how ridiculous the entire process has gotten because of the shortage of physicians willing to participate in the process and because of the tight regulatory framework.

He relayed to me a situation where he and the applicant attorney both struck from the QME panel list the same QME! What to do? So he called up the applicant attorney and they settled on one of the other physicians on the list.

In essence they agreed to the same QME - they compromised, and settled.

THAT's how workers' compensation should work - get through the muck of the regulatory process (mandatory requirements be damned) to get a matter resolved.

I think at least in California workers' compensation this attitude has been lost - procedure has overtaken substance and gets in the way of resolving cases.

The Navarro case may or may not be a big deal from a technical perspective, but what the WCAB is really saying is, "get over it." Procedure needs to take a step back so that the substance of a case can get through the system to some resolution.

So, to my litigating brethren out there - compromise. Settle those cases and move on. There's a lot more in the pipeline that need resolution, particularly since the latest statistics from the Workers' Compensation Insurance Rating Bureau indicate that frequency is rising...

Thursday, April 10, 2014

New Bills, Same Dangers

Political machinations create the complexity we know as workers' compensation law.

California is the prime example, with several bills moving around the legislature that bestow special treatment to certain classes of workers.

One bill, Assembly Bill 1035 by House Speaker John A. PĂ©rez, D-Los Angeles, would allow dependents to file claims for deaths caused by cancer, tuberculosis, methicillin-resistant Staphylococcus aureus infections and other bloodborne infectious diseases up to 420 weeks from the date the disease is diagnosed.

Similar bills in the past had made it through the legislature but Gov. Jerry Brown had vetoed them ostensibly because he was waiting for reports from the National Institute for Occupational Safety and Health and the California Commission on Health Safety and Workers' Compensation.

AB 1373, which passed in 2013 and AB 2451, which passed in 2012 differed in that both extended the limitations period to 480 weeks.

And the new bill includes a sunset provision that would allow the governor and Legislature to revisit the appropriateness of the new time frame in five years.

Supporters say AB 1035 is necessary because with advances in medical science, safety officers who develop cancer and other diseases through their employment are living longer.

The emotional appeal is that these brave public servants fight for their lives, only to succumb to the disease after the death benefits limitation period expires so dependents can not collect the benefits.

Of course that same argument could be made for any worker who contracts the same diseases covered in AB 1035 - but they're not of the class of employees with the lobbying power before the legislature.

The NIOSH study published last year found that firefighters are at an increased risk for developing certain types of cancer.

A report submitted to CHSWC in March estimated extending the deadline to 480 weeks (as proposed in the original prior two bills) would cost the state and local governments about $4.75 million.

While the usual arguments are being made about cost increases and necessity for the bill, the real concern in my mind is unintended consequences, particularly if a couple of other bills pass.

The Assembly Insurance Committee voted 8-3 to pass AB 2052 on April 2, which would extend the presumption that heart trouble, cancer, hernias and other conditions are compensable to anyone who meets the statutory definition of “peace officer” under six sections of the Penal Code. The bill would apply to school district and college police, railroad and transit safety officers, park rangers, welfare fraud investigators, utility security officers and coroners.

SB 1234, Sen. Marty Block, D-San Diego, would authorize one year of salary continuation benefits under Labor Code Section 4850 for the same safety workers who would be made eligible for the presumption by AB 2052.

After the Senate Labor and Industrial Relations Committee had unanimously passed SB 1234 by Sen. Marty Block, D-San Diego, on March 26 the bill was placed on the Senate Appropriations Committee suspense file Monday, a holding spot for measures that are expected to cost the state at least $50,000.

And AB 2378 by Fresno Democrat Henry Perea, chairman of the Assembly Insurance Committee, would declare that any benefits paid under Labor Code Section 4850 do not count against the two-year cap for collecting temporary disability benefits.

Unrelated to public safety officers, but nevertheless an example of the political pressure put on workers' compensation, the nurse's presumption of injury is back.

Berkeley Democrat Nancy Skinner has amended Assembly Bill 2616 to propose language that is identical to a measure she introduced in 2012 and also similar to what she proposed in 2011that would create a rebuttable presumption that methicillin-resistant Staphylococcus aureus is an occupational injury for hospital workers who provide direct patient care.

An MRSA infection that develops while a person is working at an acute care hospital or that develops within 60 days following termination would be presumed to arise out of and in the course of employment under the bill. The presumption could be rebutted by other evidence.

I've been critical of the nurse's presumption in the past and I still don't believe it is necessary.

Public safety presumptions have been a part of the law for a very long time, and the extension of the death benefit statute of limitations probably won't have that big of an impact overall on the operational expenses of public safety departments.

But, as I have said in the past, "in the world of litigation, the limits of applying a presumption are restricted only by the imagination and creativity of the lawyers articulating an interpretation that may, or may not, have been considered by the legislature."

THAT's why we end up with unintended consequences!