Our New Reality: Work Comp is No Longer Exclusive

At the National Workers' Compensation and Disability Conference and Expo in Las Vegas yesterday I was part of a panel of bloggers asked to comment on what's wrong with the industry and how to fix it.

One of the things that we collectively noted was that in the over 100 years that workers' compensation has been in existence everything has changed: the economy has changed, culture and society has changed, there are now much different laws in place that provide new liabilities, responsibilities and remedies for both employers and employees, and as a consequence the risks are much different.

But workers' compensation hasn't changed.

We on the panel (and perhaps in the audience) were all were thinking in terms of the employer-employee relationship.

But a Louisiana case that was published on Wednesday demonstrates that risks have changed for the payer community in a dramatic fashion as well, and that the exclusive remedy isn't so exclusive any longer.

The Louisiana Court of Appeals 3rd Circuit ruled in Williams v. SIF Consultants of Louisiana, No. 12-419, that a group of medical vendors, institutions and facilities that have provided services to workers' compensation patients can collectively sue as a class action the insurance carriers for the CorVel Corp., based on alleged violations of Louisiana's laws governing notice for the application of preferred provider organization discounts.

The conditional certification of the class will allow these health care providers, who allegedly had their workers' compensation medical bills discounted through a "silent PPO" arrangement, to continue with the suit.

Thomas A. Filo of Cox, Cox, Filo, Camel & Wilson, one of the attorneys representing the class, on Thursday estimated more than 1,000 members comprise the class.

The lead plaintiff in the case originally filed claims against Med-Comp USA, Risk Management Services and SIF Consultants of Louisiana, in addition to CorVel and CorVel's insurance carriers – the Executive Risk Specialty Insurance Co. and the Homeland Insurance Company of New York.

Med-Comp, a PPO provider, had contracts to pay health care providers at discounted rates. Risk Management Services and SIF Consultants applied the Med-Comp discounts when administering workers' compensation claims for Louisiana employers. CorVel's claims administrators also used the Med-Comp PPO discounts, as well as its own CorCare PPO network discounts, on the bills submitted by plaintiffs.

Under Louisiana law, a PPO's discounted rates of payment cannot be enforced upon a provider unless the name of the organization is clearly identified on a benefit card issued by the group purchaser or other entity accessing a group purchaser's contractual agreement and presented to the participating provider when medical care is provided.

Last year, CorVel agreed to settle a class action against it based on its alleged non-compliance with this notice provision for $9 million. The terms of that settlement, however, allowed the plaintiffs in that case to proceed against CorVel's insurers.

The plaintiffs in that proceeding also reached settlements with Risk Management Services and SIF Consultants of Louisiana, but not with Med-Comp.

Filo said that he and his fellow claimant attorneys then sought to certify a new class of plaintiffs to sue CorVel's insurers – Homeland and Executive Risk – and Med-Comp.

While Filo told WorkCompCentral that this is likely close to the last of PPO discount class actions that had been going on since 2004, the import of this decision can't escape those in other states where similar situations may exist.

Yes, workers' compensation is a state by state issue and the applicability of Louisiana law to similarly situated claimants and providers may not be applicable.

But what I see as the bigger issue is that the dispute between the medical providers and the payers is all about workers' compensation, which to me means exclusive remedy and that disputes should all be resolved within the workers' compensation adjudication process, not in the civil court arena.

Louisiana has an administrative adjudication system like many states. A case as big as this is likely well beyond the capacity of the state's administrative system to handle and manage. I get that.

All I'm pointing out though, is that workers' compensation, and all of its ancillary sub-systems like bill and/or utilization review, has evolved to the point where one large component of the "grand compromise," removal of the risk of civil suit, has grown to become a big risk again.

I'm not opining on whether or not this class action is in the proper jurisdiction or venue, or that the payers or providers are right or wrong. I'm only saying that this is a very real example of the erosion of workers' compensation's original promise - alleviation of the risk of civil suit.

Back to the premise of our panel at the conference - what's wrong with workers' compensation. Quite simply, we haven't evolved.

Workers' compensation is no longer exclusive. I'm not sure that this is anything we can fix, or maybe something that we want to fix. But we certainly must keep this reality in mind as we go about our daily work, and planning for the future of our industry.