Exclusive remedy is alive and well on both coasts of the United States.
In New York, the state's Appellate Division, 2nd Department, ruled that an employer that violated federal immigration law by hiring two undocumented aliens did not lose its exclusive remedy protection from claims filed by those workers after they were injured at work.
In New York Hospital Medical Center of Queens v. Microtech Contracting Corp., 2011-8990, 09/26/2012, the Hospital Medical Center of Queens hired Microtech Contracting to perform work on its property. Two of Microtech's employees, who were undocumented aliens, were injured on the job. Their employer provided workers' compensation benefits. The workers sued the hospital however for damages over and above the workers' compensation benefits.
The hospital filed suit against Microtech seeking contribution and indemnification. Microtech moved to dismiss the complaint on the ground that the suit was barred by Workers' Compensation Law Section 11. Microtech's motion was granted at the trial level.
On appeal the court noted that while New York courts have held that illegal aliens are entitled to workers' compensation benefits, there has been no ruling on the question of whether an employer that hires illegal aliens loses exclusive remedy protection.
But it found that the Immigration Reform and Control Act (IRCA) did not preempt state and local laws other than a prohibition against states and localities from imposing civil or criminal sanctions against employers that employ or recruit illegal aliens.
"While depriving the defendant of the protections of the Workers' Compensation Law may ultimately further the policies behind the IRCA, where, as here, no federal preemption exists, the proper course of action is not to create such a rule through a judicial determination, but, rather, to allow the New York Legislature to enact an appropriate rule based upon its policy preferences with respect to the welfare of state workers," the court said.
Thus, Workers' Compensation Law Section 11 barred the hospital's suit against Microtech.
In California, a hospital housekeeper was barred from suing her former employer in tort for allegedly terminating her in retaliation for her pursuit of benefits for an industrial injury.
In Dutra v. Mercy Medical Center Mt. Shasta, No. C067169, 09/26/2012, Michelle Dutra worked for Mercy Medical Center Mt. Shasta as a housekeeper. She injured her back while pulling a linen barrel across a snow-covered alley on Jan. 31, 2008, and filed a workers' compensation claim that same day.
Mercy terminated her that March. It told her this was because she continued to gossip while on duty after having been counseled about this behavior, she had altered a check which had been issued to her from a discretionary fund provided by a religious order affiliated with the hospital and for having falsified her time card.
Dutra sued Mercy, asserting her termination was in retaliation for her having filed a workers' compensation claim, in violation of Labor Code Section 132a. She also alleged a claim for defamation, contending her employer committed libel per se by communicating the grounds for her employment to others.
At trial summary judgment was granted in favor of Mercy on the defamation claim on the grounds that it was a privileged communication under the Civil Code, and dismissed the wrongful termination claim on the grounds that it belonged before the Workers' Compensation Appeals Board (WCAB).
On appeal, the 3rd District Court of Appeal noted that Labor Code Section 132a grants to the WCAB jurisdiction to remedy violations of it.
"The statute establishes a specific procedure and forum for addressing a violation," the court said. "It also limits the remedies that are available once a violation is established."
Friday, September 28, 2012
Thursday, September 27, 2012
Do I Look Stupid To You? Do I?
Tom Rowe, president and chief executive officer of the State Compensation Insurance Fund, said yesterday that by recommending no change in advisory pure premium rates for 2013 the Governing Committee of the California Workers' Compensation Insurance Rating Bureau (WCIRB) can "seize on the spirit and substance of this reform" [SB 863] and "profoundly improve" the California workers' comp system.
Bruce Wick, a public member of the Governing Committee, seconded that sentiment by saying that a recommendation of no increase would send a "great message" to the comp community, and that it would improve the likelihood that the Division of Workers' Compensation (DWC) will draft regulations to successfully implement savings provisions.
All four public members of the Governing Committee voted in favor of no increase in rates.
The remaining five carrier representatives voted against the no increase recommendation (in addition to Rowe, Steve Meyer, a vice president for Ace Property & Casualty, also voted for no increase).
I think the five carrier representatives have it right - making a no increase recommendation on the basis of amorphous and ever changing estimates is irresponsible, and hoping that the comp community would "seize on the spirit and substance" of SB 863 is not being realistic.
The latest estimate from the WCIRB is that SB 863 will generate net savings of $1.2 billion in 2013 and $610 million in 2014, when the full benefit increase of SB 863 takes effect. Those savings are offset by a 2% increase in costs observed in data from the second quarter of 2012.
But WCIRB actuaries have not projected savings associated with independent bill review, an Official Medical Fee Schedule using the Resource-Based Relative Value Scale (RBRVS) and interpreter, copy service and home health care fee schedules because those are specifically tied to what regulations come out of DWC - without seeing the actual regulations any number pushing is just fanciful thinking and pure speculation.
The WCIRB works with numbers - sometimes fuzzy numbers - but at least something that can in fact be added and subtracted.
The provisions of SB 863 concerning bill review, RVRBS and fee schedules have no numbers attached to them and can not be quantified - not until DWC says that X service is worth Y dollars.
And thinking that the comp community will embrace the spirit of reform is idealistically simplistic.
Why is reform necessary in the first place? Because some people in the comp community don't play well in the sand box and make their own rules to capitalize on the system.
These are called in the statistical world, "outliers."
By definition outliers don't play by the same rules that everyone else does, and outliers disproportionately affect statistics unless they are discounted.
But in the world of workers' compensation outliers can not be discounted because they are real and affect overall system costs - and yes they affect those costs disproportionately. That is why there is regulation - to keep outliers in check.
Are outliers going to embrace the "spirit" of reform?
I'll answer that with a very short vignette. My sister-in-law startled a young street vendor trying to sell her overpriced trinkets in Cabo San Lucas during a port visit on a family cruise by exclaiming, "Look at me ... do I look stupid to you? Do I?"
Do I?
Bruce Wick, a public member of the Governing Committee, seconded that sentiment by saying that a recommendation of no increase would send a "great message" to the comp community, and that it would improve the likelihood that the Division of Workers' Compensation (DWC) will draft regulations to successfully implement savings provisions.
All four public members of the Governing Committee voted in favor of no increase in rates.
The remaining five carrier representatives voted against the no increase recommendation (in addition to Rowe, Steve Meyer, a vice president for Ace Property & Casualty, also voted for no increase).
I think the five carrier representatives have it right - making a no increase recommendation on the basis of amorphous and ever changing estimates is irresponsible, and hoping that the comp community would "seize on the spirit and substance" of SB 863 is not being realistic.
The latest estimate from the WCIRB is that SB 863 will generate net savings of $1.2 billion in 2013 and $610 million in 2014, when the full benefit increase of SB 863 takes effect. Those savings are offset by a 2% increase in costs observed in data from the second quarter of 2012.
But WCIRB actuaries have not projected savings associated with independent bill review, an Official Medical Fee Schedule using the Resource-Based Relative Value Scale (RBRVS) and interpreter, copy service and home health care fee schedules because those are specifically tied to what regulations come out of DWC - without seeing the actual regulations any number pushing is just fanciful thinking and pure speculation.
The WCIRB works with numbers - sometimes fuzzy numbers - but at least something that can in fact be added and subtracted.
The provisions of SB 863 concerning bill review, RVRBS and fee schedules have no numbers attached to them and can not be quantified - not until DWC says that X service is worth Y dollars.
And thinking that the comp community will embrace the spirit of reform is idealistically simplistic.
Why is reform necessary in the first place? Because some people in the comp community don't play well in the sand box and make their own rules to capitalize on the system.
These are called in the statistical world, "outliers."
By definition outliers don't play by the same rules that everyone else does, and outliers disproportionately affect statistics unless they are discounted.
But in the world of workers' compensation outliers can not be discounted because they are real and affect overall system costs - and yes they affect those costs disproportionately. That is why there is regulation - to keep outliers in check.
Are outliers going to embrace the "spirit" of reform?
I'll answer that with a very short vignette. My sister-in-law startled a young street vendor trying to sell her overpriced trinkets in Cabo San Lucas during a port visit on a family cruise by exclaiming, "Look at me ... do I look stupid to you? Do I?"
Do I?
Wednesday, September 26, 2012
SB 863 Ups Ante for Specialists' Needs
There is one immutable fact about California's reform bill also known as SB 863 - a lot of people are going to need a whole lot of education, and not just about how the provisions of SB 863 affect their particular niche in the industry, but a whole new cadre of workers' compensation professionals will require training.
As a particular example, SB 863 introduces the concept of an Independent Bill Review (IBR) process.
In the "old" days, issues concerning medical bills went to a bill review company, which cut the bills according to some system or codes (often influenced by the contractual terms the bill review company had with the carrier or third party administrator), and then the vendor would usually be paid per the bill review recommendation. The vendor would dispute the amount and then file a lien, which after resolution of the case in chief, would "ripen" to allow the vendor to proceed to trial on the disputed amounts.
At some point the vendor would proceed to a District Office of the Workers' Compensation Appeals Board to enforce its lien rights and try to collect more money from the carrier/TPA. Workers' compensation judges (WCJ), trained in matters of evidence generally relating to injuries, disability and treatment, lack expertise in the complex world of medical billing.
Most of the time such matters end up settling, and quite often WCJs may just defer the matter several times until the issue does settle rather than delve into the quagmire of coding, mountains of paper, and confusing testimony inherent in medical bill disputes.
The consequence of frictional costs in this scenario can not be overstated.
SB 863's IBR process, on the other hand, keeps issues of medical billing out of the district offices and out of WCJ's courtrooms.
Bill review is still the primary adjustment of a vendor's bill under amended Labor Code section 4603.2. If an invoice is not paid in full on or after Jan. 1, 2013 after the first bill review, the vendor must resubmit it.
If after the second request for payment and review, and a dispute remains, the vendor would have to pay an administrative fee, which will be established through regulatory action, to begin the IBR process. The vendor can recover the administrative fee if the bill reviewer determines that the payer owes more money.
Labor Code 4603.6 requires the administrative director to assign bill review requests within 30 days. The IBR must make a written determination of any additional amounts to be paid to the provider within 60 days.
IBR decisions are presumed correct and can be set aside only with clear and convincing evidence that the decision was procured by fraud, influenced by an error of fact or was the result of bias.
If an IBR decision is set aside, the dispute is remanded to the administrative director to be submitted to a second review organization or to a different reviewer with the original organization.
If IBR determines that additional payments are due, the payer must conform to payment requirements in Labor Code Sections 4603.2 and 4603.4 and make payments within 45 days for normal requests for payment and 15 days for electronic receipt of an itemized billing and presumably the penalty provisions in those sections - a 15% increase plus interest at the civil judgment rate retroactive to the date of receipt of the bill.
Not only will carriers and TPAs need to have more medical billing experts on staff to avoid such penalty provisions, vendors also will want to have these experts on staff. The basic reason is money - both in terms of time to payment as well as avoiding filing fees and/or penalty provisions.
A vendor will either want to have a medical billing specialist on staff, or contract with a billing expert company, to avoid as much as possible having to a) pay for an IBR and then b) a lien filing/activation fee.
A carrier/TPA will also need to bulk up the staffing of medical billing specialists to ensure compliance with LC 4603.2 to avoid unnecessary increases in medical bill payments.
The complex set of rules of engagement and technical subtleties involved in medical billing is too much for a generalist - specialized training will be necessary for individuals within affected organizations to efficiently process billing without incurring unnecessary administrative fees or penalties. And specialized training for medical bill review is mandated through the California Insurance Code and Title 10, section 2592.04 of the Code of Regulations.
So while the general workers' compensation population is affected by the broad changes wrought via SB 863, there are classes of very specific job classifications that are particularly subject to specialization and those job classifications are going to be in greater demand as SB 863 matures through the regulatory process and the making of case law.
Conflict of Interest Disclosure: WorkCompCentral is an education provider.
As a particular example, SB 863 introduces the concept of an Independent Bill Review (IBR) process.
In the "old" days, issues concerning medical bills went to a bill review company, which cut the bills according to some system or codes (often influenced by the contractual terms the bill review company had with the carrier or third party administrator), and then the vendor would usually be paid per the bill review recommendation. The vendor would dispute the amount and then file a lien, which after resolution of the case in chief, would "ripen" to allow the vendor to proceed to trial on the disputed amounts.
At some point the vendor would proceed to a District Office of the Workers' Compensation Appeals Board to enforce its lien rights and try to collect more money from the carrier/TPA. Workers' compensation judges (WCJ), trained in matters of evidence generally relating to injuries, disability and treatment, lack expertise in the complex world of medical billing.
Most of the time such matters end up settling, and quite often WCJs may just defer the matter several times until the issue does settle rather than delve into the quagmire of coding, mountains of paper, and confusing testimony inherent in medical bill disputes.
The consequence of frictional costs in this scenario can not be overstated.
SB 863's IBR process, on the other hand, keeps issues of medical billing out of the district offices and out of WCJ's courtrooms.
Bill review is still the primary adjustment of a vendor's bill under amended Labor Code section 4603.2. If an invoice is not paid in full on or after Jan. 1, 2013 after the first bill review, the vendor must resubmit it.
If after the second request for payment and review, and a dispute remains, the vendor would have to pay an administrative fee, which will be established through regulatory action, to begin the IBR process. The vendor can recover the administrative fee if the bill reviewer determines that the payer owes more money.
Labor Code 4603.6 requires the administrative director to assign bill review requests within 30 days. The IBR must make a written determination of any additional amounts to be paid to the provider within 60 days.
IBR decisions are presumed correct and can be set aside only with clear and convincing evidence that the decision was procured by fraud, influenced by an error of fact or was the result of bias.
If an IBR decision is set aside, the dispute is remanded to the administrative director to be submitted to a second review organization or to a different reviewer with the original organization.
If IBR determines that additional payments are due, the payer must conform to payment requirements in Labor Code Sections 4603.2 and 4603.4 and make payments within 45 days for normal requests for payment and 15 days for electronic receipt of an itemized billing and presumably the penalty provisions in those sections - a 15% increase plus interest at the civil judgment rate retroactive to the date of receipt of the bill.
Not only will carriers and TPAs need to have more medical billing experts on staff to avoid such penalty provisions, vendors also will want to have these experts on staff. The basic reason is money - both in terms of time to payment as well as avoiding filing fees and/or penalty provisions.
A vendor will either want to have a medical billing specialist on staff, or contract with a billing expert company, to avoid as much as possible having to a) pay for an IBR and then b) a lien filing/activation fee.
A carrier/TPA will also need to bulk up the staffing of medical billing specialists to ensure compliance with LC 4603.2 to avoid unnecessary increases in medical bill payments.
The complex set of rules of engagement and technical subtleties involved in medical billing is too much for a generalist - specialized training will be necessary for individuals within affected organizations to efficiently process billing without incurring unnecessary administrative fees or penalties. And specialized training for medical bill review is mandated through the California Insurance Code and Title 10, section 2592.04 of the Code of Regulations.
So while the general workers' compensation population is affected by the broad changes wrought via SB 863, there are classes of very specific job classifications that are particularly subject to specialization and those job classifications are going to be in greater demand as SB 863 matures through the regulatory process and the making of case law.
Conflict of Interest Disclosure: WorkCompCentral is an education provider.
Tuesday, September 25, 2012
One Example of How SB 863 Promotes Litigation
One of the big issues in the California reform bill SB 863 is the Independent Medical Review process and whether or not these provisions pass muster under the California Constitution, but there are other, more practical issues involved.
SB 863 adds new Section 4610.5 to the Labor Code, which orders the administrative director (AD) of the Division of Workers' Compensation (DWC) to designate organizations to resolve disputes over any utilization review decision modifying, delaying or denying a worker's request for treatment.
Section 4610.5 will apply to any injury on or after Jan. 1, 2013; or any utilization review decision that is communicated on or after July 1.
IMR organizations under the new law must give preference to a California licensed physician as the reviewer and maintain the confidentiality of that doctor's identity.
The reviewer must "promptly review all pertinent medical records of the employee, provider reports, and any other information submitted to the organization or requested from any of the parties to the dispute," and then has 30 days to render a decision on whether the disputed health care service was medically necessary to cure or relieve the injured employee of the effects of his or her injury. There are other various time lines for the provision of records, notices, etc. by both the employee and the employer, and of course the reviewer.
The reviewer must rely on one of the five enumerated standards in the order listed in 4610.5, allowing reliance on a lower ranked standard only if every higher ranked standard is "inapplicable to the employee's medical condition."
Those standards, in order, are: administrative guidelines under Labor Code 5307.27 (i.e. medical treatment utilization schedule or MTUS), peer-reviewed scientific and medical evidence, nationally recognized professional standards, expert opinion, the generally accepted standards of medical practice, and treatments that are likely to provide a benefit to a patient for conditions for which other treatments are not clinically efficacious.
New Labor Code section 4610.6 provides that the determination of the independent medical reviewer shall be deemed to be the determination of the administrative director and is binding on all parties; that it is presumptively correct and can only be set aside upon proof by clear and convincing evidence that the decision exceeds the administrative director's powers, was procured by fraud, was the result of impermissible discriminatory bias, was affected by a material conflict of interest on the part of the reviewer or contained a plainly erroneous finding of fact.
The concern of critics of this new system is the anonymity of the reviewer, that there is no physical examination, and the lack of any meaningful appeal process.
Those issues do raise some concern from a legal analytical standpoint, but in my opinion are not where the practical application issues arise.
The problem with the new IMR sections and the process introduced by this law is that the enforcement of the various time lines (both 4610.5 and 4610.6 set forth various time limitations by which actions are to be accomplished by the employer and the reviewer) which are there to expedite the delivery of care lack meaningful enforcement.
The only enforcement mechanism is found in 4610.5(i):
SB 863 adds new Section 4610.5 to the Labor Code, which orders the administrative director (AD) of the Division of Workers' Compensation (DWC) to designate organizations to resolve disputes over any utilization review decision modifying, delaying or denying a worker's request for treatment.
Section 4610.5 will apply to any injury on or after Jan. 1, 2013; or any utilization review decision that is communicated on or after July 1.
IMR organizations under the new law must give preference to a California licensed physician as the reviewer and maintain the confidentiality of that doctor's identity.
The reviewer must "promptly review all pertinent medical records of the employee, provider reports, and any other information submitted to the organization or requested from any of the parties to the dispute," and then has 30 days to render a decision on whether the disputed health care service was medically necessary to cure or relieve the injured employee of the effects of his or her injury. There are other various time lines for the provision of records, notices, etc. by both the employee and the employer, and of course the reviewer.
The reviewer must rely on one of the five enumerated standards in the order listed in 4610.5, allowing reliance on a lower ranked standard only if every higher ranked standard is "inapplicable to the employee's medical condition."
Those standards, in order, are: administrative guidelines under Labor Code 5307.27 (i.e. medical treatment utilization schedule or MTUS), peer-reviewed scientific and medical evidence, nationally recognized professional standards, expert opinion, the generally accepted standards of medical practice, and treatments that are likely to provide a benefit to a patient for conditions for which other treatments are not clinically efficacious.
New Labor Code section 4610.6 provides that the determination of the independent medical reviewer shall be deemed to be the determination of the administrative director and is binding on all parties; that it is presumptively correct and can only be set aside upon proof by clear and convincing evidence that the decision exceeds the administrative director's powers, was procured by fraud, was the result of impermissible discriminatory bias, was affected by a material conflict of interest on the part of the reviewer or contained a plainly erroneous finding of fact.
The concern of critics of this new system is the anonymity of the reviewer, that there is no physical examination, and the lack of any meaningful appeal process.
Those issues do raise some concern from a legal analytical standpoint, but in my opinion are not where the practical application issues arise.
The problem with the new IMR sections and the process introduced by this law is that the enforcement of the various time lines (both 4610.5 and 4610.6 set forth various time limitations by which actions are to be accomplished by the employer and the reviewer) which are there to expedite the delivery of care lack meaningful enforcement.
The only enforcement mechanism is found in 4610.5(i):
"An employer shall not engage in any conduct that has the effect of delaying the independent review process. Engaging in that conduct or failure of the plan to promptly comply with this section is a violation of this section and, in addition to any other fines, penalties, and other remedies available to the administrative director, the employer shall be subject to an administrative penalty in an amount determined pursuant to regulations to be adopted by the administrative director, not to exceed five thousand dollars ($5,000) for each day that proper notification to the employee is delayed. The administrative penalties shall be paid to the Workers’ Compensation Administration Revolving Fund."
The key words in subsection (i) are "that proper notification to the employee is delayed."
Note that this subsection doesn't say that the review itself is delayed - it is the "proper notification" that is the triggering event for the $5,000/day penalty.
I'm assuming that the drafters of this provision mean than "proper notification" is whether or not the employee is given notice in the form prescribed by the AD of the reviewer's decision. But doesn't the penalty apply if the decision itself is delayed? What if the decision is timely and what if "proper notification" failed due to an issue with the US Mail or whatever other communication protocol is used to notify the employee? What if there is untimely action on the part of the employer that does not delay "proper notification" (i.e. engaging in some other games that are not within the spirit of proper IMR)?
The preamble to SB 863 states that "The bill would prohibit an employer from engaging in any conduct that delays the medical review process, and would authorize the administrative director to levy certain administrative penalties in connection with this prohibition, to be deposited in the Workers’ Compensation Administration Revolving Fund."
But that's NOT what the actual law says.
The reviewer has certain time lines by which to issue the decision. But the employer's obligation seems to have been confused in the legislative drafting process.
4610.5(h)(3) states, "If the employer fails to comply with subdivision (e) at the time of notification of its utilization review decision, the time limitations for the employee to submit a request for independent medical review shall not begin to run until the employer provides the required notice to the employee."
But 4610.5(e) has nothing to do with notice - subsection (e) provides that a utilization review (UR) decision can only be appealed to the IMR and that there is no liability for treatment provided without authorization of the employer unless the UR decision is changed by the IMR.
California is derided as highly litigious. But when legislation comes down the pipeline that sloppily changes all the rules, there is nothing but litigation left.
This is what happens when the legislative process is artificially expedited.
"Most people don't plan to fail; they fail to plan." John L. Beckley
Let the litigation flourish...
The key words in subsection (i) are "that proper notification to the employee is delayed."
Note that this subsection doesn't say that the review itself is delayed - it is the "proper notification" that is the triggering event for the $5,000/day penalty.
I'm assuming that the drafters of this provision mean than "proper notification" is whether or not the employee is given notice in the form prescribed by the AD of the reviewer's decision. But doesn't the penalty apply if the decision itself is delayed? What if the decision is timely and what if "proper notification" failed due to an issue with the US Mail or whatever other communication protocol is used to notify the employee? What if there is untimely action on the part of the employer that does not delay "proper notification" (i.e. engaging in some other games that are not within the spirit of proper IMR)?
The preamble to SB 863 states that "The bill would prohibit an employer from engaging in any conduct that delays the medical review process, and would authorize the administrative director to levy certain administrative penalties in connection with this prohibition, to be deposited in the Workers’ Compensation Administration Revolving Fund."
But that's NOT what the actual law says.
The reviewer has certain time lines by which to issue the decision. But the employer's obligation seems to have been confused in the legislative drafting process.
4610.5(h)(3) states, "If the employer fails to comply with subdivision (e) at the time of notification of its utilization review decision, the time limitations for the employee to submit a request for independent medical review shall not begin to run until the employer provides the required notice to the employee."
But 4610.5(e) has nothing to do with notice - subsection (e) provides that a utilization review (UR) decision can only be appealed to the IMR and that there is no liability for treatment provided without authorization of the employer unless the UR decision is changed by the IMR.
California is derided as highly litigious. But when legislation comes down the pipeline that sloppily changes all the rules, there is nothing but litigation left.
This is what happens when the legislative process is artificially expedited.
"Most people don't plan to fail; they fail to plan." John L. Beckley
Let the litigation flourish...
Monday, September 24, 2012
Best Interests At Heart - the Fluid Nature of 863
The proponents of SB 863, the massive California reform effort, had projected that benefits to injured workers would increase by $700 million and generate net savings of $770 million in 2013 and $330 million annually thereafter.
In its latest review of the bill as enacted and signed by Gov. Brown, the Workers' Compensation Insurance Rating Bureau (WCIRB) projects that benefits will increase by $310 million in 2013 and by $530 million in 2014, while still producing a net savings to employers of $872 million in 2013 and $292 million in 2014.
Okay, so proponents were off on their estimate of benefit increases by a couple hundred million dollars but let's face it - the bill moved so fast that no one was able to generate any good estimate numbers.
Nevertheless, even the latest WCIRB projections are still fluid and subject to proper implementation via the regulatory process.
One of the holdouts in supporting the legislation was the California Chamber of Commerce, whose support Republicans felt was necessary before buying into the plan. The Chamber needed a promise that the administration would quickly and effectively implement fee schedules for interpreters and copy services.
The original, early, WCIRB evaluation did not include any projection on savings from those items, but in its latest estimate the WCIRB performed a survey of 10,000 permanent disability claims primarily from accident year 2007. The survey of 30 insurer groups found at least one lien was filed in 63% of all permanent disability claims in Southern California and in 44% of cases in Northern California.
The WCIRB found that 69% of liens were related to medical procedures, while 15% were filed by interpreters and 5% were filed by copy services.
According to WCIRB's survey, the average lien demand for medical treatment was $6,695, but the average settlement rate was $1,906, or 28 cents on the dollar. Interpreter liens settled for 42 cents on the dollar, with an average resolved value of $829 and average demands for $1,952. Copy service liens were, on average, for $1,053 and settled for $545, or about 52 cents on the dollar. These numbers can be interpreted all sorts of different ways, but it demonstrates that nothing in workers' compensation can be counted accurately until actual dollars change hands.
The WCIRB savings estimate associated with liens in SB 863 increased from the original $450 million to about $482 million based on the assumption that administrative and legal savings associated with each lien eliminated will be higher than originally projected.
The Independent Medical Review (IMR) process produces savings from scaling back temporary disability (TD) indemnity. Workers experienced prolonged period on TD waiting for medical reports from either Qualified Medical Examiners or Agreed Medical Examiners concerning medical treatment requests. These reports often would take up to 6 months.
The IMR process promises a 30 day turn around, so the WCIRB projects additional savings in TD indemnity as a consequence.
Still there is skepticism that WCIRB's projections are optimistic.
Some say that the WCIRB is underestimating the anticipated increase in utilization that is typically experienced when there is an increase in permanent disability (PD) benefits, while others say that such an uptick is not likely to be dramatic because PD is paid late in the claim.
And there is the provision that if the employer offers a job at 85% or more of per injury pay or the injured worker is employed at 100% pay that PD benefit do not need to begin until there is an award. The assumption is that this will eliminate some frictional costs associated with PD advancements which need to be re-calibrated at settlement or Award time. This will be very interesting to see how this actually plays out though - I'm sure there are some unintended consequences lying in there somewhere.
The old 15% up/down adjustment to PD was thought to be a motivator when it was originally implemented, for example, but actually just turned out to be more of an administrative burden than anything else.
And we still haven't come to understand the impact on overall costs introduced by all of the changes to the self-insurance system with its decreases in reserve guarantees and changes in paperwork - surely those must drop down to the bottom line as well.
There's a lot of moving parts in SB 863 and getting any clear estimate of increases and decreases is a mind numbingly complex task that I think will change from quarter to quarter as the game plays out.
Sen. Mark Leno, D-San Francisco, said during the Senate Committee on Labor and Industrial Relations meeting, “We would love certainty, but it isn’t always possible,” adding that he can’t vote against the bill, because “not to support this is to conclude that those people who testified in support of this don’t have the best interests (of the system) at heart.”
SB 863 is the law now. We'll see who has the best interests of the system at heart sooner than later.
In its latest review of the bill as enacted and signed by Gov. Brown, the Workers' Compensation Insurance Rating Bureau (WCIRB) projects that benefits will increase by $310 million in 2013 and by $530 million in 2014, while still producing a net savings to employers of $872 million in 2013 and $292 million in 2014.
Okay, so proponents were off on their estimate of benefit increases by a couple hundred million dollars but let's face it - the bill moved so fast that no one was able to generate any good estimate numbers.
Nevertheless, even the latest WCIRB projections are still fluid and subject to proper implementation via the regulatory process.
One of the holdouts in supporting the legislation was the California Chamber of Commerce, whose support Republicans felt was necessary before buying into the plan. The Chamber needed a promise that the administration would quickly and effectively implement fee schedules for interpreters and copy services.
The original, early, WCIRB evaluation did not include any projection on savings from those items, but in its latest estimate the WCIRB performed a survey of 10,000 permanent disability claims primarily from accident year 2007. The survey of 30 insurer groups found at least one lien was filed in 63% of all permanent disability claims in Southern California and in 44% of cases in Northern California.
The WCIRB found that 69% of liens were related to medical procedures, while 15% were filed by interpreters and 5% were filed by copy services.
According to WCIRB's survey, the average lien demand for medical treatment was $6,695, but the average settlement rate was $1,906, or 28 cents on the dollar. Interpreter liens settled for 42 cents on the dollar, with an average resolved value of $829 and average demands for $1,952. Copy service liens were, on average, for $1,053 and settled for $545, or about 52 cents on the dollar. These numbers can be interpreted all sorts of different ways, but it demonstrates that nothing in workers' compensation can be counted accurately until actual dollars change hands.
The WCIRB savings estimate associated with liens in SB 863 increased from the original $450 million to about $482 million based on the assumption that administrative and legal savings associated with each lien eliminated will be higher than originally projected.
The Independent Medical Review (IMR) process produces savings from scaling back temporary disability (TD) indemnity. Workers experienced prolonged period on TD waiting for medical reports from either Qualified Medical Examiners or Agreed Medical Examiners concerning medical treatment requests. These reports often would take up to 6 months.
The IMR process promises a 30 day turn around, so the WCIRB projects additional savings in TD indemnity as a consequence.
Still there is skepticism that WCIRB's projections are optimistic.
Some say that the WCIRB is underestimating the anticipated increase in utilization that is typically experienced when there is an increase in permanent disability (PD) benefits, while others say that such an uptick is not likely to be dramatic because PD is paid late in the claim.
And there is the provision that if the employer offers a job at 85% or more of per injury pay or the injured worker is employed at 100% pay that PD benefit do not need to begin until there is an award. The assumption is that this will eliminate some frictional costs associated with PD advancements which need to be re-calibrated at settlement or Award time. This will be very interesting to see how this actually plays out though - I'm sure there are some unintended consequences lying in there somewhere.
The old 15% up/down adjustment to PD was thought to be a motivator when it was originally implemented, for example, but actually just turned out to be more of an administrative burden than anything else.
And we still haven't come to understand the impact on overall costs introduced by all of the changes to the self-insurance system with its decreases in reserve guarantees and changes in paperwork - surely those must drop down to the bottom line as well.
There's a lot of moving parts in SB 863 and getting any clear estimate of increases and decreases is a mind numbingly complex task that I think will change from quarter to quarter as the game plays out.
Sen. Mark Leno, D-San Francisco, said during the Senate Committee on Labor and Industrial Relations meeting, “We would love certainty, but it isn’t always possible,” adding that he can’t vote against the bill, because “not to support this is to conclude that those people who testified in support of this don’t have the best interests (of the system) at heart.”
SB 863 is the law now. We'll see who has the best interests of the system at heart sooner than later.
Friday, September 21, 2012
NJ Balance Billing & NV Telemedicine - Modernization Towards Value
The New Jersey legislature took one further step towards modernizing the state's workers' compensation system when the Senate Labor Committee unanimously approved legislation yesterday that would ban medical providers from trying to collect the unpaid balances of disputed medical bills from injured workers, a practice known as balance billing.
The bill further provides that all medical disputes are the "exclusive jurisdiction" of the New Jersey Division of Workers' Compensation (DWC).
The bill, Senate 2022, is expected to win final approval by the New Jersey Senate next month and head to the desk of Gov. Chris Christie.
Supporters included a diverse group, , including the New Jersey State Bar Association, the New Jersey Business & Industry Association, the New Jersey Self-Insurer's Association, the New Jersey Advisory Council on Safety and Health and New Jersey Manufacturers Insurance Co., the state's largest workers' compensation carrier.
Missing from the bill is any language authorizing the creation and enforcement of a medical fee schedule, something that I consider necessary for the state's system to decrease incremental friction and increase efficiency.
Arthur Kravitz, past chairman of the Workers' Compensation Section of the New Jersey State Bar, told committee members at Thursday's hearing that DWC already has developed a separate system for resolving medical disputes.
The Senate, which adjourned this summer without addressing the balance billing issue, is scheduled to go back into session on Oct. 4.
Speaking of modernization, Nevada is leading the way for reimbursement schedules concerning "telemedicine."
Telemedicine is the remote provision of medical services which leverage high-speed, high-definition Internet capability. The promise is expanded and expedited care for injured employees in rural or remote areas.
Providing for telemedicine is a growing practice in the general health care industry but is still relatively rare in workers' compensation systems.
Charles J. Verre, chief administrative officer for the Nevada Workers' Compensation Section, told WorkCompCentral that his office is proposing the rule because of the population distribution of the state, with most people clustered in the metro area of Reno and Las Vegas and the rest scattered throughout a vast desert.
State officials expect telemedicine to add some costs, but those increases may be offset for the reduced need for injured workers to travel long distances for medical appointments.
The American Telemedicine Association, based in Washington, D.C., identifies 16 states that "have adopted mandates for the coverage of telemedicine," including four states that enacted such laws in 2012.
In an analysis of the impact of the proposal, the Nevada Division of Industrial Relations states that "creating reimbursement for telemedicine services may have an adverse effect on small businesses."
"A separate and substantial reimbursable item added to the medical fee schedule will likely increase costs to insurers that would most likely be passed along to employers," according to the analysis.
"The net cost increase is difficult to determine due to some degree of cost offset from anticipated decreased per diem costs."
The analysis notes, however, that injured employees would benefit from access to medical evaluation along with a distant treatment for a remote location.
While the change in the fee schedule to address reimbursement for telemedicine services "may have possible adverse effects on many small businesses in the short-term as insurers raise rates to pay for this new reimbursement," the analysis states, "...it may also generate long-term beneficial economic effects on small businesses due to increased longevity and productivity of injured workers who are able to return to work faster and spend less time off work traveling long distances for treatment."
While California dominated the news these past couple of months with massive changes to its workers' compensation system, New Jersey and Nevada are examples that more often than not modernization of workers' compensation moves along in a more gradual evolution towards finding the right balance and value proposition.
The bill further provides that all medical disputes are the "exclusive jurisdiction" of the New Jersey Division of Workers' Compensation (DWC).
The bill, Senate 2022, is expected to win final approval by the New Jersey Senate next month and head to the desk of Gov. Chris Christie.
Supporters included a diverse group, , including the New Jersey State Bar Association, the New Jersey Business & Industry Association, the New Jersey Self-Insurer's Association, the New Jersey Advisory Council on Safety and Health and New Jersey Manufacturers Insurance Co., the state's largest workers' compensation carrier.
Missing from the bill is any language authorizing the creation and enforcement of a medical fee schedule, something that I consider necessary for the state's system to decrease incremental friction and increase efficiency.
Arthur Kravitz, past chairman of the Workers' Compensation Section of the New Jersey State Bar, told committee members at Thursday's hearing that DWC already has developed a separate system for resolving medical disputes.
The Senate, which adjourned this summer without addressing the balance billing issue, is scheduled to go back into session on Oct. 4.
Speaking of modernization, Nevada is leading the way for reimbursement schedules concerning "telemedicine."
Telemedicine is the remote provision of medical services which leverage high-speed, high-definition Internet capability. The promise is expanded and expedited care for injured employees in rural or remote areas.
Providing for telemedicine is a growing practice in the general health care industry but is still relatively rare in workers' compensation systems.
Charles J. Verre, chief administrative officer for the Nevada Workers' Compensation Section, told WorkCompCentral that his office is proposing the rule because of the population distribution of the state, with most people clustered in the metro area of Reno and Las Vegas and the rest scattered throughout a vast desert.
State officials expect telemedicine to add some costs, but those increases may be offset for the reduced need for injured workers to travel long distances for medical appointments.
The American Telemedicine Association, based in Washington, D.C., identifies 16 states that "have adopted mandates for the coverage of telemedicine," including four states that enacted such laws in 2012.
In an analysis of the impact of the proposal, the Nevada Division of Industrial Relations states that "creating reimbursement for telemedicine services may have an adverse effect on small businesses."
"A separate and substantial reimbursable item added to the medical fee schedule will likely increase costs to insurers that would most likely be passed along to employers," according to the analysis.
"The net cost increase is difficult to determine due to some degree of cost offset from anticipated decreased per diem costs."
The analysis notes, however, that injured employees would benefit from access to medical evaluation along with a distant treatment for a remote location.
While the change in the fee schedule to address reimbursement for telemedicine services "may have possible adverse effects on many small businesses in the short-term as insurers raise rates to pay for this new reimbursement," the analysis states, "...it may also generate long-term beneficial economic effects on small businesses due to increased longevity and productivity of injured workers who are able to return to work faster and spend less time off work traveling long distances for treatment."
While California dominated the news these past couple of months with massive changes to its workers' compensation system, New Jersey and Nevada are examples that more often than not modernization of workers' compensation moves along in a more gradual evolution towards finding the right balance and value proposition.
Thursday, September 20, 2012
Reform = Questions, Anticipation, Speculation
The California Workers' Compensation and Risk Conference, which started yesterday, could not have been more fortuitously scheduled with the opening presentation occurring just 19 days after the Legislature shut its doors for the season and the Governor's signing of Senate Bill 863 just the day before.
As one might expect, most of the buzz at the conference is about SB 863 and my public sentiment thermometer gauged that most everyone believes that there are good provisions, bad provisions, and elements that could go either way depending upon how the regulations implementing the changes are drafted ... and how the courts interpret both the new law and regulations.
My "on the ground" observation is that nearly everyone was happy to see the permanent disability 15% up/down provision eliminated. Ronnie Caplane, chairwoman of the Workers' Compensation Appeals Board, described that provision as "a well-intentioned statute, but in practice it went completely awry."
Nearly everyone also seems happy with the new Independent Medical Treatment/Bill Review processes - albeit most of the attendees at the conference represent business and employers. Nevertheless, most see these provisions as eliminating a lot of unnecessary friction in system administration, though there are questions about implementation that are raising some concern.
Another favorite of attendees is the change to the timing of permanent disability indemnity payments. Under current law, permanent disability benefits must begin within 14 days of the last temporary disability payment based on its estimate of the worker's degree of disability. This causes friction because of disagreements in estimated PD, overpayments and claims of credit, etc.
SB 863 provides that for injuries on or after Jan. 1, 2013, an employer doesn't have to pay permanent disability benefits until an award is issued, provided the employer has offered the injured worker a position at 85% of his pre-injury wages, or the injured worker was hired by another company at 100% of his pre-injury wages. The thought is that this will expedite claim resolution because there will be fewer disputes about what is actually owed, and if the injured worker is employed the need for the PD indemnity money is not so great.
Concerns about the IMR process center on the provision that makes the reviewer anonymous. An IMR decision can be overturned only for fraud, conflict of interest or a material mistake of fact. But if the identity of the reviewer remains anonymous there is virtually no way to prove these contingencies.
As one might expect, most of the buzz at the conference is about SB 863 and my public sentiment thermometer gauged that most everyone believes that there are good provisions, bad provisions, and elements that could go either way depending upon how the regulations implementing the changes are drafted ... and how the courts interpret both the new law and regulations.
My "on the ground" observation is that nearly everyone was happy to see the permanent disability 15% up/down provision eliminated. Ronnie Caplane, chairwoman of the Workers' Compensation Appeals Board, described that provision as "a well-intentioned statute, but in practice it went completely awry."
Nearly everyone also seems happy with the new Independent Medical Treatment/Bill Review processes - albeit most of the attendees at the conference represent business and employers. Nevertheless, most see these provisions as eliminating a lot of unnecessary friction in system administration, though there are questions about implementation that are raising some concern.
Another favorite of attendees is the change to the timing of permanent disability indemnity payments. Under current law, permanent disability benefits must begin within 14 days of the last temporary disability payment based on its estimate of the worker's degree of disability. This causes friction because of disagreements in estimated PD, overpayments and claims of credit, etc.
SB 863 provides that for injuries on or after Jan. 1, 2013, an employer doesn't have to pay permanent disability benefits until an award is issued, provided the employer has offered the injured worker a position at 85% of his pre-injury wages, or the injured worker was hired by another company at 100% of his pre-injury wages. The thought is that this will expedite claim resolution because there will be fewer disputes about what is actually owed, and if the injured worker is employed the need for the PD indemnity money is not so great.
Concerns about the IMR process center on the provision that makes the reviewer anonymous. An IMR decision can be overturned only for fraud, conflict of interest or a material mistake of fact. But if the identity of the reviewer remains anonymous there is virtually no way to prove these contingencies.
Still, SB 863 contains a provision relative to the IMR process that if any element of that statute is struck for any reason then the remaining provisions will stay in force. I'm quite certain we will see sooner than later a case go up where an injured worker didn't like the IMR decision, attempts to prove fraud, conflict of interest or a material mistake of fact, but can't without being able to interrogate the reviewer.
Another big question mark is the late addition to SB 863 of the $120 million fund that is intended to compensate injured workers for a "disproportionate" loss of earnings following a "catastrophic injury." None of the key terms are defined in the new law so its implementation is completely reliant on what the DIR comes up with.
Lacking in the general discussions though has been any careful analysis of the changes to self-insured administration. SB 863 has many, many pages devoted to changing the funding requirements, the reserve settings, the qualifications and reporting of self-insured employers. I have yet to see any quantification of system impact due to these changes. I have no doubt that self-insured employers are going to see relief, and I believe it will be quite a bit of relief.
But self-insurance remains a small subset of the overall workers' compensation picture in California, and may have a disproportionately large impact on overall system costs. Cost estimates have been all over the board, but I haven't seen any that deal with the self-insurance provisions. And if self-insurance proves to be much more efficient and cost effective than traditional plans will we see more large employers migrating to self-insurance? And if so, how will that impact system costs?
So many questions. So much speculation. With a bill this big, this sweeping, it will take years for the full impact of SB863 to be known, and for all of the consequences, intended and unintended, to materialize.
The architects of SB 863 gave us the plans. The contractor, DIR/DWC, will build the framework. Its up to the industry to apply the finishing touches.
Another big question mark is the late addition to SB 863 of the $120 million fund that is intended to compensate injured workers for a "disproportionate" loss of earnings following a "catastrophic injury." None of the key terms are defined in the new law so its implementation is completely reliant on what the DIR comes up with.
Lacking in the general discussions though has been any careful analysis of the changes to self-insured administration. SB 863 has many, many pages devoted to changing the funding requirements, the reserve settings, the qualifications and reporting of self-insured employers. I have yet to see any quantification of system impact due to these changes. I have no doubt that self-insured employers are going to see relief, and I believe it will be quite a bit of relief.
But self-insurance remains a small subset of the overall workers' compensation picture in California, and may have a disproportionately large impact on overall system costs. Cost estimates have been all over the board, but I haven't seen any that deal with the self-insurance provisions. And if self-insurance proves to be much more efficient and cost effective than traditional plans will we see more large employers migrating to self-insurance? And if so, how will that impact system costs?
So many questions. So much speculation. With a bill this big, this sweeping, it will take years for the full impact of SB863 to be known, and for all of the consequences, intended and unintended, to materialize.
The architects of SB 863 gave us the plans. The contractor, DIR/DWC, will build the framework. Its up to the industry to apply the finishing touches.
Wednesday, September 19, 2012
Illinois & Iowa Interesting, but No Match for CA
“What you have to realize is that just nine years ago, in 2003, there were more than 65,000 new claims…What you’re seeing is workers’ compensation attorneys business drying up.”
That's what Chicago, IL, defense lawyer Gene Keefe told WorkCompCentral yesterday after the National Council on Compensation Insurance (NCCI) released its recommendations for voluntary market rate changes in the state.
Keefe told WorkCompCentral that as of Aug. 1, there were approximately 26,000 new claims filed for the year, “pointing to an all-time low” of 45,000 for 2012.
NCCI proposed a 3.8% decrease in rates and Keefe thinks a reduction in the number of litigated claims is a key factor.
According to Keefe there are a number of reasons for the drop in claims including economic factors, increased safety awareness and better claims management.
In addition the implementation of medical networks (called preferred provider programs or PPPs) in the state should contribute to the decline, Keefe said.
NCCI reported Illinois saw a decline in medical severity which offset an increase in frequency, and improved indemnity loss ratios “driven by a decrease in average indemnity severity.”
Jay Shattuck, executive director of the Illinois Employment Law Council, told WorkCompCentral that the reductions don't appear to be "specific to the reforms", but reflect improved experience in several areas and data from previous years, when there were high numbers of claims, “dropping out of the formula.”
In the meantime, NCCI proposed a rate increase of 7.9% for low cost neighbor Iowa.
Driving that increase is a rise in claim frequency in 2010 of 3.2% and ongoing rise in medical costs, up another 2.5%.
Still, Iowa in the last Oregon Department of Consumer and Business Services cost survey ranked Iowa 36th at $1.82 per $100 of payroll. In 2010 the median cost was $2.04 per $100 of payroll.
Illinois was ranked third most costly with a 2010 cost of $3.05 per $100 of payroll.
Keefe's analysis seems to have some validity if compared to Iowa. According to the Iowa Workforce Development, Iowa's total inventory of litigated claims is only about 4,500 and has remained relatively stable at that number for several years.
Taken as a percent of total population both Illinois and Iowa have relatively low litigation rates.
Illinois' total population is 12,830,632 according to the US Census Bureau. Iowa's population totals 3,046,355.
This means that Illinois' workers' compensation litigation experience rate compared to total population is 0.35%, or 3.5 litigated claims for every 1,000 people; Iowa's is 0.15% or 1.5 litigated claims for every 1,000 people.
Compare to California, with a population of 37,253,956 and new litigated filings last year of about 350,000, and the rate is 0.94%, or 9.4 litigated claims for every 1,000 people.
That's what Chicago, IL, defense lawyer Gene Keefe told WorkCompCentral yesterday after the National Council on Compensation Insurance (NCCI) released its recommendations for voluntary market rate changes in the state.
Keefe told WorkCompCentral that as of Aug. 1, there were approximately 26,000 new claims filed for the year, “pointing to an all-time low” of 45,000 for 2012.
NCCI proposed a 3.8% decrease in rates and Keefe thinks a reduction in the number of litigated claims is a key factor.
According to Keefe there are a number of reasons for the drop in claims including economic factors, increased safety awareness and better claims management.
In addition the implementation of medical networks (called preferred provider programs or PPPs) in the state should contribute to the decline, Keefe said.
NCCI reported Illinois saw a decline in medical severity which offset an increase in frequency, and improved indemnity loss ratios “driven by a decrease in average indemnity severity.”
Jay Shattuck, executive director of the Illinois Employment Law Council, told WorkCompCentral that the reductions don't appear to be "specific to the reforms", but reflect improved experience in several areas and data from previous years, when there were high numbers of claims, “dropping out of the formula.”
In the meantime, NCCI proposed a rate increase of 7.9% for low cost neighbor Iowa.
Driving that increase is a rise in claim frequency in 2010 of 3.2% and ongoing rise in medical costs, up another 2.5%.
Still, Iowa in the last Oregon Department of Consumer and Business Services cost survey ranked Iowa 36th at $1.82 per $100 of payroll. In 2010 the median cost was $2.04 per $100 of payroll.
Illinois was ranked third most costly with a 2010 cost of $3.05 per $100 of payroll.
Keefe's analysis seems to have some validity if compared to Iowa. According to the Iowa Workforce Development, Iowa's total inventory of litigated claims is only about 4,500 and has remained relatively stable at that number for several years.
Taken as a percent of total population both Illinois and Iowa have relatively low litigation rates.
Illinois' total population is 12,830,632 according to the US Census Bureau. Iowa's population totals 3,046,355.
This means that Illinois' workers' compensation litigation experience rate compared to total population is 0.35%, or 3.5 litigated claims for every 1,000 people; Iowa's is 0.15% or 1.5 litigated claims for every 1,000 people.
Compare to California, with a population of 37,253,956 and new litigated filings last year of about 350,000, and the rate is 0.94%, or 9.4 litigated claims for every 1,000 people.
Despite the heavy litigation rate, California's cost per $100 of payroll was $2.68 in the last Oregon study ranking the state 5th most costly.
I'm not sure whether this is good news, or bad news. While there is less litigation in Illinois, the cost to the system based on payroll is disproportionately high.
Or California litigation is unusually efficient...
Tuesday, September 18, 2012
New Jersey, Balance Billing and Fee Schedules
New Jersey is finally getting around to addressing the problems inherent in "balance billing."
To the uninitiated, balance billing is the practice where the medical vendor goes after the injured worker for any balance deemed not satisfactorily resolved by the workers' compensation insurance carrier or employer.
I could be wrong, but I believe that most states prohibit balance billing and absolve the injured worker of any liability for industrially related medical treatment. Some states make balance billing a criminal act.
There are three bills pending in the Garden State that work together to accomplish the goals of a) prohibiting medical vendors from going after injured workers and, b) consolidating the adjudication of medical bills.
Some jurisdictional issues need to be resolved in the New Jersey legislature.
Presently there seems to be dual jurisdiction with some medical bills being adjudicated in the workers' compensation system and some in the civil court system.
Senate Bill 2022, filed by Senate Labor Committee Chairman Fred Madden Jr., D-Turnersville, leaves the resolution of medical disputes up to DWC but provides no new system for dispute resolution.
Assembly 2652, filed by Tim Eustace, D-Maywood, was amended by the Assembly last spring to remove a requirement that all medical disputes go to binding arbitration.
And S 1936, filed by Sen. Linda Greenstein, D-Monroe also prohibits balance billing but requires that DWC develop procedures, "including a system of binding arbitration," to resolve medical disputes.
A key issue is ensuring that medical billing disputes do not slow down the provision of benefits to injured workers, and the state's claimant lawyers seem to be in favor of some binding arbitration system.
Part of the problem may be that the state lacks a medical fee schedule, thus any amount in dispute is fair game.
The New Jersey Division of Workers' Compensation's (DWC) Task Force on Medical Provider Claims reported in November 2010 that disputes over medical bills were clogging the workers' compensation system and delaying the resolution of claims. The task force noted that New Jersey law requires carriers and employers to pay bills according to "usual and customary" charges.
New Jersey could take a lesson from other, bigger, states that have already dealt with this issue. Texas long ago adopted not only a medical fee schedule, but an out of court, nearly binding medical bill dispute resolution process separate and apart from the claimant's case in chief.
California took a lesson from Texas' playbook and recently passed a law requiring an independent medical bill dispute resolution process that is binding on the parties.
And California long ago outlawed balance billing. Both Texas and California have had fee schedules for quite some time.
New Jersey is a bit behind in workers' compensation management. These proposed laws will go a long ways towards making that state's system more efficient for everyone. If the state would also adopt a fee schedule the amount of medical billing litigation would drop dramatically.
To the uninitiated, balance billing is the practice where the medical vendor goes after the injured worker for any balance deemed not satisfactorily resolved by the workers' compensation insurance carrier or employer.
I could be wrong, but I believe that most states prohibit balance billing and absolve the injured worker of any liability for industrially related medical treatment. Some states make balance billing a criminal act.
There are three bills pending in the Garden State that work together to accomplish the goals of a) prohibiting medical vendors from going after injured workers and, b) consolidating the adjudication of medical bills.
Some jurisdictional issues need to be resolved in the New Jersey legislature.
Presently there seems to be dual jurisdiction with some medical bills being adjudicated in the workers' compensation system and some in the civil court system.
Senate Bill 2022, filed by Senate Labor Committee Chairman Fred Madden Jr., D-Turnersville, leaves the resolution of medical disputes up to DWC but provides no new system for dispute resolution.
Assembly 2652, filed by Tim Eustace, D-Maywood, was amended by the Assembly last spring to remove a requirement that all medical disputes go to binding arbitration.
And S 1936, filed by Sen. Linda Greenstein, D-Monroe also prohibits balance billing but requires that DWC develop procedures, "including a system of binding arbitration," to resolve medical disputes.
A key issue is ensuring that medical billing disputes do not slow down the provision of benefits to injured workers, and the state's claimant lawyers seem to be in favor of some binding arbitration system.
Part of the problem may be that the state lacks a medical fee schedule, thus any amount in dispute is fair game.
The New Jersey Division of Workers' Compensation's (DWC) Task Force on Medical Provider Claims reported in November 2010 that disputes over medical bills were clogging the workers' compensation system and delaying the resolution of claims. The task force noted that New Jersey law requires carriers and employers to pay bills according to "usual and customary" charges.
New Jersey could take a lesson from other, bigger, states that have already dealt with this issue. Texas long ago adopted not only a medical fee schedule, but an out of court, nearly binding medical bill dispute resolution process separate and apart from the claimant's case in chief.
California took a lesson from Texas' playbook and recently passed a law requiring an independent medical bill dispute resolution process that is binding on the parties.
And California long ago outlawed balance billing. Both Texas and California have had fee schedules for quite some time.
New Jersey is a bit behind in workers' compensation management. These proposed laws will go a long ways towards making that state's system more efficient for everyone. If the state would also adopt a fee schedule the amount of medical billing litigation would drop dramatically.
Monday, September 17, 2012
Nausau County Seeking Salvation
An interesting report issued out of Nausau County, NY, last week.
Comptroller George Maragos released a workers' compensation study that concludes a high rate of work-related injuries has cost the county more than $13 million since 2010. Maragos projected workers' compensation costs for the county's self-insured program will exceed $25 million in 2012.
The report shows a 200% increase in claims in a single year from 2003 to 2004. Claims increased by 43% again in 2005 and that rate was sustained in each subsequent year to 2011 (which is a projected number).
Alarmingly, the comptroller reports, "we were unable to find any further explanation or acknowledgement for the rapid rise in claims" other than a correlation between hiring a new TPA and the increase in claims.
The comptroller states that the county's workers' compensation claim rate has grown from one in every 41 full time employees (FTE) in 2002 to nearly one in every eight FTEs in 2011.
What perhaps is even more alarming in the report, aside from the unexplained increase in claims, is that the cost breakdown is not clear to the comptroller.
He states, "Although years 2000 and 2003 show an anomalous increase in annual costs, an analysis of a 3-year moving average from 2000 to 2012 shows a steady increase from approximately $17.5 million to over $25 million per year since 2004. The abnormal increases in 2000 and 2003 were due primarily to the inclusion of litigation costs which were excluded in all other years. We were unable to separate litigation costs from workers’ compensation costs in those years. We were also unable to find any acknowledgement from Triad or OMB for the rise in claims and costs in the data provided."
Triad is the county's third party administrator (TPA). OMB is the County’s Office of Management & Budget.
The report is highly critical of the county's TPA. Whether that is a fair criticism or not, I'm not here to render judgment, but the report does note a correlation between the beginning of the TPA's management of the county's claims and its experience with increased claims and costs.
The comptroller notes:
"Even as headcount has declined by 18.27% (Full-Time) since 2004, the County’s ratio of workers’ compensation cost to payroll has increased from 2.15% to over 3.09% projected by 2012 (a 44% increase).
"If we assume that the appropriate workers’ compensation cost as a percent of payroll is 2.5% (the average of 2008 and 2009 percentages), then the County may have overpaid a total of up to $12.7 million from 2010 to 2012 (projected)."
New York has some serious problems with workers' compensation as I have previously expressed. I said before that the state doesn't need reform - it needs salvation.
I think this report from Nausau County Comptroller is evidence of that sentiment.
Friday, September 14, 2012
A Chupah IS A Structure
A chupah is a "structure" for purposes of an injured worker's New York Labor Law claim.
The state has some interesting legacy laws that date back to the early development of Manhattan and New York City - many of these laws deal with the peculiar risk of working at heights, related to construction of tall buildings, understandably.
Fast forward to the 20th century and many of these laws are still on the books, and are still subject to interpretation, including what is a "structure".
Samuel McCoy worked as a truck driver for Atlas Florists. In August 2008, he fell from a ladder while disassembling a wedding chupah owned by his employer.
A chupah is a canopy under which brides and grooms stand during weddings conducted in the Jewish religious tradition. The one involved in McCoy's accident stood 10-feet tall, and was made up of pipe, wood and fabric.
McCoy later sued Abigail Kirsch, the owner of the premises where the chupah had been erected, and others to recover damages for violation of Labor Law Section 240(1). 240(1) is also known more commonly as the Scaffold Law. Its primary intent is to protect workers by instituting liability for failure to ensure safety working at heights, and primarily while working on scaffolding.
This statute imposes upon owners and general contractors a nondelegable duty to provide safety devices necessary to protect workers from risks inherent in elevated worksites. The statute's provisions are expressly applied "in the erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure."
The defendants moved to dismiss McCoy's claim, arguing that the chupah was not a "structure" within the meaning of Section 240(1).
At the trial level the complaint was dismissed, the judge ruling that a chupah was not a "structure".
On appeal the court pointed out case law that qualified "structures" as "constructs that are less substantial and perhaps more transitory than buildings," such as a utility pole with attached hardware and cables; a ticket booth at a convention center; a free-standing Shell gasoline sign; a crane used for construction; a crane used for construction; a power screen being assembled at a gravel pit; a pumping station; and a window exhibit at a home improvement show.
Things that aren't structures, under case law, include temporary decorations to a building used as a set for a television film; a sign hung from a ceiling; commercial dishwasher machines; and a decorative wooden disc suspended from a ceiling for use as a ceremonial wedding canopy.
The 2nd Appellate Division said a court should take into consideration the item's size, purpose, design, composition and degree of complexity; the ease or difficulty of its assembly and disassembly; the tools required to create it and dismantle it; the manner and degree of its interconnecting parts, and the amount of time the item is to exist. No one factor is controlling.
The chupah was "more akin to the things and devices which the courts of this state have recognized as structures than to the things and devices that have not been recognized as structures."
The case is McCoy v. Abigail Kirsch at Tappan Hill Inc., No. 2011-06907, 09/12/2012, and is a published decision.
The state has some interesting legacy laws that date back to the early development of Manhattan and New York City - many of these laws deal with the peculiar risk of working at heights, related to construction of tall buildings, understandably.
Fast forward to the 20th century and many of these laws are still on the books, and are still subject to interpretation, including what is a "structure".
Samuel McCoy worked as a truck driver for Atlas Florists. In August 2008, he fell from a ladder while disassembling a wedding chupah owned by his employer.
A chupah is a canopy under which brides and grooms stand during weddings conducted in the Jewish religious tradition. The one involved in McCoy's accident stood 10-feet tall, and was made up of pipe, wood and fabric.
McCoy later sued Abigail Kirsch, the owner of the premises where the chupah had been erected, and others to recover damages for violation of Labor Law Section 240(1). 240(1) is also known more commonly as the Scaffold Law. Its primary intent is to protect workers by instituting liability for failure to ensure safety working at heights, and primarily while working on scaffolding.
This statute imposes upon owners and general contractors a nondelegable duty to provide safety devices necessary to protect workers from risks inherent in elevated worksites. The statute's provisions are expressly applied "in the erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure."
The defendants moved to dismiss McCoy's claim, arguing that the chupah was not a "structure" within the meaning of Section 240(1).
At the trial level the complaint was dismissed, the judge ruling that a chupah was not a "structure".
On appeal the court pointed out case law that qualified "structures" as "constructs that are less substantial and perhaps more transitory than buildings," such as a utility pole with attached hardware and cables; a ticket booth at a convention center; a free-standing Shell gasoline sign; a crane used for construction; a crane used for construction; a power screen being assembled at a gravel pit; a pumping station; and a window exhibit at a home improvement show.
Things that aren't structures, under case law, include temporary decorations to a building used as a set for a television film; a sign hung from a ceiling; commercial dishwasher machines; and a decorative wooden disc suspended from a ceiling for use as a ceremonial wedding canopy.
The 2nd Appellate Division said a court should take into consideration the item's size, purpose, design, composition and degree of complexity; the ease or difficulty of its assembly and disassembly; the tools required to create it and dismantle it; the manner and degree of its interconnecting parts, and the amount of time the item is to exist. No one factor is controlling.
The chupah was "more akin to the things and devices which the courts of this state have recognized as structures than to the things and devices that have not been recognized as structures."
The case is McCoy v. Abigail Kirsch at Tappan Hill Inc., No. 2011-06907, 09/12/2012, and is a published decision.
Thursday, September 13, 2012
Pakistan Factory Fires Reminiscent of NY, 1911
Yesterday I wrote about what I thought was despicable behavior by a Tennessee employer. Then later that morning I read about a factory disaster in Pakistan that put the Tennessee case into perspective, and was eerily similar to a disaster over 100 years ago in New York.
It was March 25, 1911 when the Triangle Shirtwaist Factory went up in flames, the deadliest industrial disaster in the history of the city of New York and the fourth highest loss of life from an industrial accident in U.S. history. It was also the second deadliest disaster in New York City – after the burning of the General Slocum on June 15, 1904 – until the World Trade Center attack 90 years later.
146 garment workers died from burning, smoke inhalation, or falling.
Because the managers had locked the doors to the stairwells and exits – a common practice at the time to prevent pilferage and unauthorized breaks – many of the workers who could not escape the burning building jumped from the eighth, ninth, and tenth floors to the streets below.
Because the managers had locked the doors to the stairwells and exits – a common practice at the time to prevent pilferage and unauthorized breaks – many of the workers who could not escape the burning building jumped from the eighth, ninth, and tenth floors to the streets below.
The fire led to new laws on factory safety, unionization of workers, and sparked the need for workers' compensation and industrial safety laws in New York and throughout the nation.
Fast forward to September 11, 2012 and nearly the exact same disaster is repeated in Pakistan where fires swept through two clothing factories in Pakistan, killing 283 workers, many trapped behind locked doors and barred windows.
The twin blazes broke out Tuesday night at a garment factory in the southern port city of Karachi and a shoe manufacturer in the eastern city of Lahore. At least 258 people died in the fire in Karachi according to news reports. An additional 25 died in Lahore.
The workers in Karachi had only one way out since the factory's owner had locked all the other exit doors in response to a recent theft, according to media reports. Many of the victims died of asphyxiation in the smoke-filled basement because they could not escape. Others jumped from up to five stories to escape the flames. There were between 300 and 400 workers in the building when the fire erupted.
Pakistan has workers' compensation and worker safety laws, and news reports say that it is a crime to lock emergency exits.
Fast forward to September 11, 2012 and nearly the exact same disaster is repeated in Pakistan where fires swept through two clothing factories in Pakistan, killing 283 workers, many trapped behind locked doors and barred windows.
The twin blazes broke out Tuesday night at a garment factory in the southern port city of Karachi and a shoe manufacturer in the eastern city of Lahore. At least 258 people died in the fire in Karachi according to news reports. An additional 25 died in Lahore.
The workers in Karachi had only one way out since the factory's owner had locked all the other exit doors in response to a recent theft, according to media reports. Many of the victims died of asphyxiation in the smoke-filled basement because they could not escape. Others jumped from up to five stories to escape the flames. There were between 300 and 400 workers in the building when the fire erupted.
Pakistan has workers' compensation and worker safety laws, and news reports say that it is a crime to lock emergency exits.
There is no independent legislation on occupational safety and health issues in Pakistan. The main law, which governs these issues, is the Chapter 3 of Factories Act, 1934. All the provinces, under this act, have devised Factories Rules. The Hazardous Occupations Rules, 1963 under the authority of Factories Act not only specify some hazardous occupations but also authorize the Chief Inspector of Factories to declare any other process as hazardous.
But according to the Wall Street Journal report on the fires, Pakistan workers still face atrocious conditions with workplaces that often lack basic safety equipment and owners who bribe officials to ignore the violations.
Under Pakistan's Workers Compensation Act, 1923 an employer has to compensate his employees for injuries by accident. If death or permanent and total disablement of a worker results from the injury, the employer has to pay the dependents of that employee 200,000 Pakistani Rupees, which at current exchange rates is equivalent to 2114.21 US dollars.
According to the Wall Street Journal, on Wednesday a provincial minister ordered an inspection of all factories and plants in the Sindh province within 48 hours.
According to the Wall Street Journal, on Wednesday a provincial minister ordered an inspection of all factories and plants in the Sindh province within 48 hours.
"Things like this used to happen in the US all the time before all that 'Red Tape' that everyone whines about came along,"someone commented to the Journal story.
I think that says it all.
Wednesday, September 12, 2012
I Won't Eat At This Restaurant
Sometimes its almost impossible to believe some reports of abusive employer conduct. Perhaps in some other country a tale like this would not be surprising, but in modern United States one would not expect this kind of story.
A recent Tennessee case demonstrates the extent of callousness and inhumane treatment some employers can display, even in the second millenium where society is presumably more advanced than in the Industrial Age.
Lance Erickson was employed as a co-manager of the Sonic Drive In restaurant in Oak Ridge, Tenn., owned by SDI of Oak Ridge Turnpike, LLC. On Nov. 14, the general manager of the restaurant asked him to repair a heating element used to keep food warm until it was served.
As Erickson attempted to repair the heating element, an unknown person plugged the device into an electrical socket, sending a 220-volt current through Erickson's hands and body. The shock rendered him unconscious for five minutes. Employees told him later that he fell and hit his head on the floor or a safe, but he had to call his fiance to take him to the hospital because workers at the restaurant were too busy, according to the court record.
Erickson was treated at the Methodist Medical Center but suffered chest pains, memory loss and sensitivity to light after the accident. He asked his district manager, Wade Bell, and Bell's successor Phillip Wheatley to pay his medical expenses. They told him they would "take care of it," but the bills remained unpaid.
On Nov. 3, 2008, 51 weeks after the injury, Erickson filed a workers' compensation claim fearing the statue of limitations would preclude him from reimbursement of his medical expenses.
A few days after filing his claim, Wheatley vulgarly expressed his anger, asking him, "What the ... do you think you are doing? I told you this was taken care of."
Erickson had worked at the Sonic Drive In for six years and had never received a reprimand the entire duration of employment.
But within weeks of filing his workers' compensation claim Erickson received two reprimands.
On the first occasion, he received a reprimand for giving a customer a $2.97 refund four minutes after the restaurant had closed and not properly reporting the refund so that it would not be logged onto daily sales records. On Dec. 20, 2008, he was reprimanded and later fired for leaving the store during his shift without another manager on site.
SDI placed Erickson on three days' suspension after the second reprimand, extended the suspension for three more days and then told him he was being terminated.
Remarkably, yet in an all too commonplace situation, SDI denied that Erickson's injuries were work related and alleged that he had been fired for misconduct.
At trial, co-workers testified that other store managers had routinely left the premises without other managers on site and that Erickson had used the usual process for reporting refunds.
Medical and vocational evidence was presented and the trial court found that Erickson suffered a 10% permanent partial disability and was entitled to a vocational disability benefit equal to six times the impairment rating − an award of $107,702.40 − because his employer had not offered him a meaningful return to work. The court also ordered the employer to pay continuing medical benefits for his injury.
SDI appealed and lost.
In addition the Tennessee Department of Labor fined the employer for failing to report the accident. The amount was not noted by the court opinion and as far as I'm concerned it wasn't enough.
My only solace in this case is that in all likelihood SDI's insurance didn't cover the judgment because the employer didn't follow its insurance claims reporting policy and likely the carrier denied both coverage and cost of defense.
I know the fast food industry is the bottom of the totem pole when it comes to working conditions, but employers like those in this case are all too common, and should frankly be put out of business. If a business can't treat the people who flip your burgers with any regard, how do you think they view their customers? I'm not taking the chance...
A recent Tennessee case demonstrates the extent of callousness and inhumane treatment some employers can display, even in the second millenium where society is presumably more advanced than in the Industrial Age.
Lance Erickson was employed as a co-manager of the Sonic Drive In restaurant in Oak Ridge, Tenn., owned by SDI of Oak Ridge Turnpike, LLC. On Nov. 14, the general manager of the restaurant asked him to repair a heating element used to keep food warm until it was served.
As Erickson attempted to repair the heating element, an unknown person plugged the device into an electrical socket, sending a 220-volt current through Erickson's hands and body. The shock rendered him unconscious for five minutes. Employees told him later that he fell and hit his head on the floor or a safe, but he had to call his fiance to take him to the hospital because workers at the restaurant were too busy, according to the court record.
Erickson was treated at the Methodist Medical Center but suffered chest pains, memory loss and sensitivity to light after the accident. He asked his district manager, Wade Bell, and Bell's successor Phillip Wheatley to pay his medical expenses. They told him they would "take care of it," but the bills remained unpaid.
On Nov. 3, 2008, 51 weeks after the injury, Erickson filed a workers' compensation claim fearing the statue of limitations would preclude him from reimbursement of his medical expenses.
A few days after filing his claim, Wheatley vulgarly expressed his anger, asking him, "What the ... do you think you are doing? I told you this was taken care of."
Erickson had worked at the Sonic Drive In for six years and had never received a reprimand the entire duration of employment.
But within weeks of filing his workers' compensation claim Erickson received two reprimands.
On the first occasion, he received a reprimand for giving a customer a $2.97 refund four minutes after the restaurant had closed and not properly reporting the refund so that it would not be logged onto daily sales records. On Dec. 20, 2008, he was reprimanded and later fired for leaving the store during his shift without another manager on site.
SDI placed Erickson on three days' suspension after the second reprimand, extended the suspension for three more days and then told him he was being terminated.
Remarkably, yet in an all too commonplace situation, SDI denied that Erickson's injuries were work related and alleged that he had been fired for misconduct.
At trial, co-workers testified that other store managers had routinely left the premises without other managers on site and that Erickson had used the usual process for reporting refunds.
Medical and vocational evidence was presented and the trial court found that Erickson suffered a 10% permanent partial disability and was entitled to a vocational disability benefit equal to six times the impairment rating − an award of $107,702.40 − because his employer had not offered him a meaningful return to work. The court also ordered the employer to pay continuing medical benefits for his injury.
SDI appealed and lost.
In addition the Tennessee Department of Labor fined the employer for failing to report the accident. The amount was not noted by the court opinion and as far as I'm concerned it wasn't enough.
My only solace in this case is that in all likelihood SDI's insurance didn't cover the judgment because the employer didn't follow its insurance claims reporting policy and likely the carrier denied both coverage and cost of defense.
I know the fast food industry is the bottom of the totem pole when it comes to working conditions, but employers like those in this case are all too common, and should frankly be put out of business. If a business can't treat the people who flip your burgers with any regard, how do you think they view their customers? I'm not taking the chance...
And in all honesty, knowing that appellate cases get published for the whole world to see and then taking an appeal with these facts is evidence that these business owners have zero interest in public perception of their brand. That can only translate to the quality of their products.
The case is Erickson v. SDI of Oak Ridge Turnpike LLC, E2011-02427-WC-R3-WC, 09/04/2012.
The case is Erickson v. SDI of Oak Ridge Turnpike LLC, E2011-02427-WC-R3-WC, 09/04/2012.
Tuesday, September 11, 2012
New York May Want Strategy From CA's Playbook
While the Left Coast may be going through a bit of drama and turmoil in the wake of an historic reformation of the California workers' compensation system, at least the people of The Golden State can claim that they DO SOMETHING about their workers' compensation system to get things under control.
Not so for those of The Empire State.
The New York Workers' Compensation Policy Institute reported yesterday that assessments on New York workers' compensation premiums are nearly five times the national average and remain the highest in the nation.
New York has always carried the stigma of being one of the highest taxing states in the nation. But even Governor Andrew Cuomo's order that policy assessments be reduced from 20.2% of premium to 18.8% of premium effective on Oct. 1, 2012 is more than twice the next highest state, Minnesota, which charged 8.3%.
By contrast, California's premium assessment for 2012 was 2.285%.
According to the Institute's report:
An example of the system's insularity, Brian Keegan, SWCB's former director of public information, stopped responding to questions from WorkCompCentral in December 2010.
Keegan threatened to cease all communications with WorkCompCentral at that time if the news service continued to publish columns written by Michael T. Berns, a former member of the SWCB appointed by former Republican Gov. George Pataki, highly critical of the SWCB and its failure to respond to the needs of the state's workers and employers.
Keegan described Berns as "disgruntled"" and made good on his threats after an editor for WorkCompCentral refused to bar Berns' columns.
Keegan resigned his $92,936-a-year job last month to work for the Pew Center on the States in Washington, D.C.
I can only assume that Keegan's silence since 12/2010 was on order from higher up the food chain since post resignation he did talk to WorkCompCentral, but only to say "no comment" (which is more than any prior statement since 12/2010).
New York's failure to deal with its administrative burdens has thwarted the promise of any salvation with reform.
While rates were cut by 18.4% in 2007 and another 6.5% in 2008, the state has approved loss-cost increases of 4.5% in 2009, 7.7% in 2010 and 9.9% in 2011.
And the NYCIRB, New York's rate-maker, called for an average 11.5% increase in loss costs, effective Oct. 1, 2012. The rating board, in part, blamed delays by SWCB and task forces assembled by Spitzer in implementing the reforms needed to put the Permanent Partial Disability caps in place.
There are huge issues within the SWCB that remain thorns in the state's workers' compensation system, and while current SWCB Chairman Robert Beloten has made great efforts at dealing with these issues on a regulatory basis the forces that perpetuate status quo are too great for a single soldier to combat.
Thwarted on attorney fees, court reporting, and other anachronistic implements of a system long ago parlayed into special interest group's profit centers, it seems that New York could learn a lessor or two from California.
I never thought I'd say this after being so critical of the manner in which California's SB 863 was put together, but secret negotiations by a limited set of interest groups most directly affected by workers' compensation - employers and workers - is probably the only way that the Empire State will ever get any control over its workers' compensation costs, and in particular the cost of system administration.
It's not pretty. It's not socially acceptable behavior. It's not democratic. But if that is what's necessary to save a system that chokes on its own bile, and the people of New York feel that workers' compensation provides some value if properly administered, then a surgical team needs to be called in to do what is necessary.
New York needs more than reform. It needs salvation.
Not so for those of The Empire State.
The New York Workers' Compensation Policy Institute reported yesterday that assessments on New York workers' compensation premiums are nearly five times the national average and remain the highest in the nation.
New York has always carried the stigma of being one of the highest taxing states in the nation. But even Governor Andrew Cuomo's order that policy assessments be reduced from 20.2% of premium to 18.8% of premium effective on Oct. 1, 2012 is more than twice the next highest state, Minnesota, which charged 8.3%.
By contrast, California's premium assessment for 2012 was 2.285%.
According to the Institute's report:
- More than half – 51% – will go to pay claims from the Special Disability Fund, which serves as New York's Second Injury Fund. Lawmakers closed the fund to new claims in 2007. The New York Special Funds Conservation Committee, which supervises the fund, paid out $570 million to retire legacy claims last year.
- Another 26% of the assessment went to pay off claims from New York's unique Reopened Case Fund, which pays costs for claims that are at least seven years old and for which no lost wages have been paid for the past three years.
- About 16% of the assessments will pay the administrative costs of SWCB, which has one of the largest budgets of any state workers' compensation regulator in the nation.
- Assessments have grown by slightly more than 74% since 2008 – from $13.40 per $100 in premium to $23.24 today.
- Florida, Michigan, Pennsylvania and Texas all are charging less than 3% of premium this year.
An example of the system's insularity, Brian Keegan, SWCB's former director of public information, stopped responding to questions from WorkCompCentral in December 2010.
Keegan threatened to cease all communications with WorkCompCentral at that time if the news service continued to publish columns written by Michael T. Berns, a former member of the SWCB appointed by former Republican Gov. George Pataki, highly critical of the SWCB and its failure to respond to the needs of the state's workers and employers.
Keegan described Berns as "disgruntled"" and made good on his threats after an editor for WorkCompCentral refused to bar Berns' columns.
Keegan resigned his $92,936-a-year job last month to work for the Pew Center on the States in Washington, D.C.
I can only assume that Keegan's silence since 12/2010 was on order from higher up the food chain since post resignation he did talk to WorkCompCentral, but only to say "no comment" (which is more than any prior statement since 12/2010).
New York's failure to deal with its administrative burdens has thwarted the promise of any salvation with reform.
While rates were cut by 18.4% in 2007 and another 6.5% in 2008, the state has approved loss-cost increases of 4.5% in 2009, 7.7% in 2010 and 9.9% in 2011.
And the NYCIRB, New York's rate-maker, called for an average 11.5% increase in loss costs, effective Oct. 1, 2012. The rating board, in part, blamed delays by SWCB and task forces assembled by Spitzer in implementing the reforms needed to put the Permanent Partial Disability caps in place.
There are huge issues within the SWCB that remain thorns in the state's workers' compensation system, and while current SWCB Chairman Robert Beloten has made great efforts at dealing with these issues on a regulatory basis the forces that perpetuate status quo are too great for a single soldier to combat.
Thwarted on attorney fees, court reporting, and other anachronistic implements of a system long ago parlayed into special interest group's profit centers, it seems that New York could learn a lessor or two from California.
I never thought I'd say this after being so critical of the manner in which California's SB 863 was put together, but secret negotiations by a limited set of interest groups most directly affected by workers' compensation - employers and workers - is probably the only way that the Empire State will ever get any control over its workers' compensation costs, and in particular the cost of system administration.
It's not pretty. It's not socially acceptable behavior. It's not democratic. But if that is what's necessary to save a system that chokes on its own bile, and the people of New York feel that workers' compensation provides some value if properly administered, then a surgical team needs to be called in to do what is necessary.
New York needs more than reform. It needs salvation.
Monday, September 10, 2012
Drugs In Work Comp Better Controlled
An interesting thing happened on the way to the drug store the other day - it turns out that, according to one research group, workers' compensation claimants are least likely to engage in the consumption of illicit drugs compared to other medical sample groups while recovering from an injury.
And this is in contrast to concerns in the industry, as reflected in those expressed at the Insurance Council of Texas workers’ compensation conference last week, where panel members opined that it would be beneficial to upgrade the state’s prescription drug monitoring program to help curb problems with controlled medications in workers’ comp.
The Texas Legislature created the drug monitoring program in 1982 to monitor Schedule II controlled substance prescriptions. The Legislature expanded the program, effective Sept. 1, 2008, to include the monitoring of Schedule III through Schedule V controlled substance prescriptions.
The Texas Department of Public Safety (DPS) operates and maintains the program.
In August, DPS opened a revised program to allow nearly 90,000 health care practitioners quicker access to information on controlled drugs dispensed to patients.
The revised program allows authorized users to obtain information online. Previously, users had to submit a written request and a hard copy was delivered to them by DPS. The new program will allow users to get the information within minutes rather than days.
Prescription drug monitoring programs are expanding around the nation.
In Oklahoma’s system, anyone who dispenses a controlled narcotic must report that information to the monitoring program within five minutes of the drug being delivered to the customer. That information is then available online to other doctors, pharmacists and some regulatory and law enforcement officers.
New York’s new I-STOP (Internet System for Tracking Over-Prescribing Act) program requires pharmacies to update the state's drug database immediately after filling prescriptions for controlled substances. Doctors must register with the database and check it before prescribing a wide range of drugs on the U.S. Drug Enforcement Administration schedules of controlled substances.
In the meantime, an unnamed Texas insurance company requested that national drug-testing laboratory Ameritox screen urine samples from injured workers to determine the rate of illicit drug use. The surprising result is that workers' compensation patients were actually the least likely of various groups to test positive for recreational drugs, such as cocaine, heroin, PCP, amphetamines or marijuana.
Ameritox compared samples from prescription opioid users whose medical bills are paid by Medicaid, Medicare, private health insurance, workers' compensation or out of the patient's own pocket.
Ameritox analyzed results from 2 million urine samples gathered nationally involving approximately 1.5 million patients from July 2010 through June of this year, all of them pain patients who were prescribed medication, and compared results by the type of payer. The company found that Medicaid patients showed that positive results for illicit drugs were highest when the payer was Medicaid (17.1%), followed by "self-pay" patients (14.8%), commercial insurance (9.7%), Medicare (8.9%) and workers' compensation (8.6%).
Ameritox also tested to ensure that the patients were taking the drugs that were prescribed to them and found that the rate of non-usage didn't vary much, ranging from 31% to 34%.
In the meantime, the Texas Division of Workers' Compensation has adopted a closed formulary which went into effect Sept. 1, 2011.
In June, the DWC reported on a study comparing prescriptions for injuries that occurred between September and November 2011 with injuries that occurred during the same months in 2010 and found that under the formulary, prescription drug costs specifically attributed to not-recommended ("N") drugs for 2011 claims were reduced by 75% (approximately $841,000) when compared to 2010.
At least as far as workers' compensation claims go, the issue with both prescription and illicit drugs seems to have a bright place.
And this is in contrast to concerns in the industry, as reflected in those expressed at the Insurance Council of Texas workers’ compensation conference last week, where panel members opined that it would be beneficial to upgrade the state’s prescription drug monitoring program to help curb problems with controlled medications in workers’ comp.
The Texas Legislature created the drug monitoring program in 1982 to monitor Schedule II controlled substance prescriptions. The Legislature expanded the program, effective Sept. 1, 2008, to include the monitoring of Schedule III through Schedule V controlled substance prescriptions.
The Texas Department of Public Safety (DPS) operates and maintains the program.
In August, DPS opened a revised program to allow nearly 90,000 health care practitioners quicker access to information on controlled drugs dispensed to patients.
The revised program allows authorized users to obtain information online. Previously, users had to submit a written request and a hard copy was delivered to them by DPS. The new program will allow users to get the information within minutes rather than days.
Prescription drug monitoring programs are expanding around the nation.
In Oklahoma’s system, anyone who dispenses a controlled narcotic must report that information to the monitoring program within five minutes of the drug being delivered to the customer. That information is then available online to other doctors, pharmacists and some regulatory and law enforcement officers.
New York’s new I-STOP (Internet System for Tracking Over-Prescribing Act) program requires pharmacies to update the state's drug database immediately after filling prescriptions for controlled substances. Doctors must register with the database and check it before prescribing a wide range of drugs on the U.S. Drug Enforcement Administration schedules of controlled substances.
In the meantime, an unnamed Texas insurance company requested that national drug-testing laboratory Ameritox screen urine samples from injured workers to determine the rate of illicit drug use. The surprising result is that workers' compensation patients were actually the least likely of various groups to test positive for recreational drugs, such as cocaine, heroin, PCP, amphetamines or marijuana.
Ameritox compared samples from prescription opioid users whose medical bills are paid by Medicaid, Medicare, private health insurance, workers' compensation or out of the patient's own pocket.
Ameritox analyzed results from 2 million urine samples gathered nationally involving approximately 1.5 million patients from July 2010 through June of this year, all of them pain patients who were prescribed medication, and compared results by the type of payer. The company found that Medicaid patients showed that positive results for illicit drugs were highest when the payer was Medicaid (17.1%), followed by "self-pay" patients (14.8%), commercial insurance (9.7%), Medicare (8.9%) and workers' compensation (8.6%).
Ameritox also tested to ensure that the patients were taking the drugs that were prescribed to them and found that the rate of non-usage didn't vary much, ranging from 31% to 34%.
In the meantime, the Texas Division of Workers' Compensation has adopted a closed formulary which went into effect Sept. 1, 2011.
In June, the DWC reported on a study comparing prescriptions for injuries that occurred between September and November 2011 with injuries that occurred during the same months in 2010 and found that under the formulary, prescription drug costs specifically attributed to not-recommended ("N") drugs for 2011 claims were reduced by 75% (approximately $841,000) when compared to 2010.
At least as far as workers' compensation claims go, the issue with both prescription and illicit drugs seems to have a bright place.
Friday, September 7, 2012
Reform, Resignation, Revelation
The drama in the California workers' compensation reform novella heated up yesterday when the news that Division of Workers' Compensation Administrative Director, Rosa Moran, resigned was widely and rapidly circulated.
Rumors and speculation about her resignation abound - from dissatisfaction with the back room dealings nature of reform negotiations to uneasiness with potential Constitutional issues. Neither Moran, the DWC nor the Brown Administration would provide comment to WorkCompCentral.
Moran has her reasons and whether she desires to let the work comp community know is certainly up to her - but the difficult job of implementing the massive regulatory schemes necessary to make SB 863 operative, in my opinion, just got much, much more difficult.
The AD job is a very difficult one in good times. The AD must be a strong leader, able to deal with a broad range of different classes of employees and personalities all knowledgeable and passionate about work comp, fend off special interests in the rule making process, deal with challenging media reporters, orchestrate new resolutions to ongoing problems, manage a budget that at times is near the brink of chaos - and all of this while trying to perform the ultimate function: protecting the rights of injured workers while ensuring that the costs of doing so remain politically acceptable.
But these aren't good times for the DWC. While some provisions of SB 863 do not have to be implemented for another 16 months, most provisions need immediate attention, and immediate work.
And the appointment of a replacement AD now requires immediate attention.
I have no doubt that the Director of the Department of Industrial Relations, Christine Baker, can deal with the sudden departure of Moran - Baker has proven extremely resilient in the face of adversity, a strong leader and adept at navigating a difficult course.
She is going to need unbridled support from her boss, Governor Jerry Brown, to get a replacement AD in place on an emergency basis.
The bigger question is whether Baker can actually find someone willing to step into the SB 863 caldron of controversy and labor, for SB 863 is going to require an extraordinary effort and an AD taking on this chore will see very little in return - certainly the pay scale is way below what a public corporation executive with similar responsibilities would get, and the risk of failure could be a career destroyer.
Look at all the AD must now accomplish:
But, this is California. We have a lot of talented, intelligent, dedicated people in this state.
Earthquakes, wild fires, floods, economic turmoil and workers' compensation dysfunction. It's just a part of living in the Golden State. We'll get through it.
Rumors and speculation about her resignation abound - from dissatisfaction with the back room dealings nature of reform negotiations to uneasiness with potential Constitutional issues. Neither Moran, the DWC nor the Brown Administration would provide comment to WorkCompCentral.
Moran has her reasons and whether she desires to let the work comp community know is certainly up to her - but the difficult job of implementing the massive regulatory schemes necessary to make SB 863 operative, in my opinion, just got much, much more difficult.
The AD job is a very difficult one in good times. The AD must be a strong leader, able to deal with a broad range of different classes of employees and personalities all knowledgeable and passionate about work comp, fend off special interests in the rule making process, deal with challenging media reporters, orchestrate new resolutions to ongoing problems, manage a budget that at times is near the brink of chaos - and all of this while trying to perform the ultimate function: protecting the rights of injured workers while ensuring that the costs of doing so remain politically acceptable.
But these aren't good times for the DWC. While some provisions of SB 863 do not have to be implemented for another 16 months, most provisions need immediate attention, and immediate work.
And the appointment of a replacement AD now requires immediate attention.
I have no doubt that the Director of the Department of Industrial Relations, Christine Baker, can deal with the sudden departure of Moran - Baker has proven extremely resilient in the face of adversity, a strong leader and adept at navigating a difficult course.
She is going to need unbridled support from her boss, Governor Jerry Brown, to get a replacement AD in place on an emergency basis.
The bigger question is whether Baker can actually find someone willing to step into the SB 863 caldron of controversy and labor, for SB 863 is going to require an extraordinary effort and an AD taking on this chore will see very little in return - certainly the pay scale is way below what a public corporation executive with similar responsibilities would get, and the risk of failure could be a career destroyer.
Look at all the AD must now accomplish:
- contract with independent medical review organizations to settle disputes over medical treatment and establish a fee system to pay for the service and administrative costs.
- enable independent medical review to take effect for injuries occurring on or after Jan. 1, 2013, albeit the administrative director can use an interagency agreement to establish contracts with independent review organizations currently under contract with the Department of Managed Health Care - this still takes time to review and implement.
- prescribe the information that an employer must provide when refusing to pay part or all of a medical bill.
- implement a system to conduct random review of medical provider networks.
- promulgate regulations by July 1, 2013, to implement a provision requiring networks to have assistants who can help injured workers schedule appointments.
- adopt regulations to implement a new system of administering job retraining vouchers that applies to all injuries occurring on or after Jan. 1, 2013.
- develop rules and implement an electronic system to collect a $150 lien filing fee and a $100 lien activation fee that take effect Jan. 1.
- implement rules and a process for certifying interpreters ready for Jan. 1, 2013.
- adopt a new medical fee schedule.
- adopt a new interpreter fee schedule.
- adopt a fee schedule for home health care services by July 1, 2013, and a copy service fee schedule by Dec. 31, 2013.
- adopt a new permanent disability rating schedule.
- figure out a system and adopt regulations for the distribution of $120 million in supplement income benefits to the most severely disabled.
But, this is California. We have a lot of talented, intelligent, dedicated people in this state.
Earthquakes, wild fires, floods, economic turmoil and workers' compensation dysfunction. It's just a part of living in the Golden State. We'll get through it.
Thursday, September 6, 2012
Bad Faith, Cost Shifting, Reform - Dissatisfaction or Lack of Relevancy?
Is it more than coincidence that yet another state's appellate court has rejected a worker's civil complaint for bad faith and fraud on the grounds that workers' compensation is the exclusive remedy?
Or that a study finds that an alarming amount of occupational injuries are not handled through workers' compensation?
Or that a really big state once again makes radical changes to its work comp system?
This year high courts in Texas and New Jersey both ruled that injured workers have no common law right to sue an insurance carrier for harm allegedly caused by its administration of a claim. Those cases were Texas Mutual Insurance Co. v. Ruttiger, handed down in June, and Stancil v. Ace USA, handed down in August.
A Connecticut case this week reinforced the concept in Desmond v. Yale-New Haven Hospital Inc. et al., No. AC 33072.
Desmond slipped and fell while working for the Yale-New Haven Hospital in December 2004. After her fall, she said her doctors diagnosed her with bilateral, acute post-traumatic carpal tunnel injuries that would render her permanently unable to use her hands if she did not receive medical treatment.
Her employer accepted her claim for workers' compensation benefits, but in May 2010, Desmond filed a 10-count complaint against the hospital accusing it of having made various filings with the state workers' compensation commission in a bad faith and fraudulent attempt to delay treatment, which resulted in a worsening of her condition.
This year high courts in Texas and New Jersey both ruled that injured workers have no common law right to sue an insurance carrier for harm allegedly caused by its administration of a claim. Those cases were Texas Mutual Insurance Co. v. Ruttiger, handed down in June, and Stancil v. Ace USA, handed down in August.
A Connecticut case this week reinforced the concept in Desmond v. Yale-New Haven Hospital Inc. et al., No. AC 33072.
Desmond slipped and fell while working for the Yale-New Haven Hospital in December 2004. After her fall, she said her doctors diagnosed her with bilateral, acute post-traumatic carpal tunnel injuries that would render her permanently unable to use her hands if she did not receive medical treatment.
Her employer accepted her claim for workers' compensation benefits, but in May 2010, Desmond filed a 10-count complaint against the hospital accusing it of having made various filings with the state workers' compensation commission in a bad faith and fraudulent attempt to delay treatment, which resulted in a worsening of her condition.
The case was dismissed at the trial level.
Desmond appealed using a novel state specific argument which the appellate court decided did not apply.
That attempts are still being made to skirt the exclusive remedy of workers' compensation after so much case law does not make a trend.
But the creativity of claimants and their lawyers (Desmond was represented in the case by her attorney-husband) in trying to get around workers' compensation control might be reflective of something more disturbing - cost shifting.
There have been several studies and reports over the past few years indicating that less and less occupational injuries or illnesses are actually be paid for by workers' compensation systems.
Now the New Hampshire Department of Health and Human Services says that only about half of all occupational injuries end up going through the workers' compensation system.
In the Department's telephone survey of 6,892 adults in New Hampshire, 3,735 respondents reported working at some time during the previous 12 months, 4.9% and said they had been injured at work seriously enough to receive medical advice or treatment.
Of that total, 54% said all or part of their treatment was paid for through the workers' compensation system. About 25% reported their care was paid for by private or government insurance and another 21% said they paid for medical care through some other means.
"While respondents employed for wages are likely to be covered by the New Hampshire workers’ compensation system, our study estimated that only about half of those employed for wages and injured seriously enough to require medical treatment had some or all of their medical treatment paid for by workers’ compensation," the study concluded. "This represents a substantial financial burden falling on private and public insurers, as well as on individual families paying for costs out of pocket."
And as we are well aware, California's massive "reform" just 8 years after an earlier massive "reform" is certainly evidence of much gone awry.
I've opined before about whether or not workers' compensation in its present form is relevant to today's economy and society. Attempts to get around work comp exclusivity in the face of long standing legal precedence, studies indicating failure of workers' compensation to do its job, massive re-writing of laws; all should make us pause to wonder why - why is there such dissatisfaction with workers' compensation?
The reasons are probably as numerous as the way folks get injured on the job.
Desmond appealed using a novel state specific argument which the appellate court decided did not apply.
That attempts are still being made to skirt the exclusive remedy of workers' compensation after so much case law does not make a trend.
But the creativity of claimants and their lawyers (Desmond was represented in the case by her attorney-husband) in trying to get around workers' compensation control might be reflective of something more disturbing - cost shifting.
There have been several studies and reports over the past few years indicating that less and less occupational injuries or illnesses are actually be paid for by workers' compensation systems.
Now the New Hampshire Department of Health and Human Services says that only about half of all occupational injuries end up going through the workers' compensation system.
In the Department's telephone survey of 6,892 adults in New Hampshire, 3,735 respondents reported working at some time during the previous 12 months, 4.9% and said they had been injured at work seriously enough to receive medical advice or treatment.
Of that total, 54% said all or part of their treatment was paid for through the workers' compensation system. About 25% reported their care was paid for by private or government insurance and another 21% said they paid for medical care through some other means.
"While respondents employed for wages are likely to be covered by the New Hampshire workers’ compensation system, our study estimated that only about half of those employed for wages and injured seriously enough to require medical treatment had some or all of their medical treatment paid for by workers’ compensation," the study concluded. "This represents a substantial financial burden falling on private and public insurers, as well as on individual families paying for costs out of pocket."
And as we are well aware, California's massive "reform" just 8 years after an earlier massive "reform" is certainly evidence of much gone awry.
I've opined before about whether or not workers' compensation in its present form is relevant to today's economy and society. Attempts to get around work comp exclusivity in the face of long standing legal precedence, studies indicating failure of workers' compensation to do its job, massive re-writing of laws; all should make us pause to wonder why - why is there such dissatisfaction with workers' compensation?
The reasons are probably as numerous as the way folks get injured on the job.
Wednesday, September 5, 2012
Intended Consequences and Plagiarizing Regulations
I'm off to Austin, Texas this morning to give a presentation at the annual Insurance Council of Texas (ICT) Workers' Compensation Conference.
My presentation, ''A National Perspective on Workers' Compensation: How Texas Compares,'' ironically follows a presentation by well known Texas work comp consultant Julie Shank, 'Unintended Consequences in Workers' Compensation.''
I say "ironically" because California just passed an enormous reform bill which is now awaiting Governor Brown's signature, and the unintended consequences of that massive law change are just now starting to be exposed as legal scholars and other workers' compensation industry experts review the bill in detail.
While the politicians have promised the miracle of increased benefits and reduced costs, the insurance industry is taking a less optimistic view, waiting to see how things shake out before making any prognostications as to whether the numbers add up.
And that is because the carriers know all too well about unintended consequences (UC).
For example: some time ago, when I was a young defense lawyer, the legislature in its infinite wisdom decided that the physician that is actually treating the injured worker was in the best position to determine the extent of the workers' permanent disability, if any. So a presumption in favor of the treating physician's determination of permanent disability was created.
It didn't take long for injured workers to take control of the medical process for the purpose of inflating permanent disability awards.
This led to the elimination of the presumption several years later and institution of the Qualified Medical Examiner process - a Byzantine system of medical opinion elimination that put stresses on the resources of the Division of Workers' Compensation (DWC) resulting in late or lost QME referrals, medical reports that didn't meet evidentiary standards, disqualified QMEs, etc.
That is just one example of many that could be cited regarding UC.
The UCs that may arise our of SB 863 I'm sure are numerous - there just wasn't enough time to vet the bill because the political need to expedite its passage was greater than ensuring its accuracy. It is the hope of legislators that "clean up" legislation will follow next session as deficiencies in SB 863 become known.
To the extent that UCs can be predicted, though, is to look at other states where similar provisions may already be law and examining the experience of those states. As you likely know, SB 863 has instituted a new practice for California to resolve both medical treatment disputes and medical billing disputes.
In this regard, my trip to Texas should prove fruitful, for the Texas system for years has had an Independent Medical/Bill Review system in place, and in fact new rules and regulations have been adopted that further refine that system.
Texas calls their independent bill review process a Medical Fee Dispute Resolution (MFDR) system; the Texas system for independent medical treatment review is called Medical Necessity Dispute Resolution (MNDR). Providers in this process are referred to as "sub-claimants."
In Texas, such disputes go to a Benefit Review Conference (BFR) first. A BRC is an informal mediation session. If a requestor does not request a BRC within 20 days, the Division’s fee reimbursement decision on the fee dispute is final. A BRC request shall include a copy of MFDR decision.
If parties are not successful mediating their dispute, they now have a choice: binding arbitration or a Contested Case Hearing (CCH) at the State Office of Administrative Hearings (SOAH). The state keeps a list of arbitrators and the process for selecting an arbitrator is similar to that used by the American Arbitration Association. There are detailed rules governing the conduct of the arbitration.
If the parties go to a SOAH hearing, the non-prevailing party pays the costs of a SOAH hearing, unless the injured worker is the non-prevailing party. The requestor, other than the injured worker, shall also reimburse DWC for SOAH costs in the event of a dismissal. The carrier pays for all costs if the injured worker dismisses the case or is the non-prevailing party.
An MNDR is to resolve questions concerning reasonableness and the necessity of medical treatment regardless of the amount in dispute (i.e. medical fee dispute resolution) or the compensability, liability, or extent of the injury (i.e. income dispute resolution). Medical necessity disputes can involve prospective determinations (preauthorization and concurrent review) and retrospective review.
MNDRs are determined by an Independent Review Organization doctor (IRO) who must hold the appropriate credentials and comply with the personnel and credentialing requirements set forth by the DWC. There are rules prohibit conflicts of interest and give the DWC powers that include audits, investigations and discipline should an IRO fall outside the boundaries of acceptable review behavior.
A party may appeal the IRO’s decision within 20 days by requesting a contested case hearing. Previously, the forum for a retrospective review dispute was based on the amount in controversy. New medical necessity disputes are appealable to a contested case hearing conducted by DWC.
In my discussions with some Texas attorneys earlier this year after the IMR process was divulged by SB 863 negotiators, I learned that in fact the Texas MNDR system is rarely used now. Treatment decisions no longer appear to be a source of conflict in the Texas system - but that wasn't always the case.
Note that the Texas MNDR system provides for an appeals process (unlike the California version which has limited rights of appeal) - this has not proven to be a source of consternation to workers' compensation practitioners it seems: strict adherence to treatment guidelines, rejection of questionable treatments, and respect for medical network care leaves disputes about treatment out of the system.
While the California IMR process does not leave much room for appellate review, if the constitutionality of such restriction is not upheld there may not be much impact anyhow, if the Texas experience is realized.
I get invited to speak at events such as ICT's annual conference to bring some California perspective to other states. Most often folks in other jurisdictions like to see what is going on in California to get some flavor as to what might happen in their states.
But this time we can look to Texas to see what has happened in that state regarding IMR and IBR - the effect was a pronounced declination in the number of disputes concerning treatment and billing.
That may not be a UC - in fact the consequence was entirely intended. If this is the intention of the California reform bill drafters, then the California DWC can take a queue from the Texas DWC and plagiarize a good amount of their regulations, and hopefully avoid dreaded UC.
Many thanks to Texas attorney Stuart Colburn with the Downs Stanford, P.C. law firm, who prepared a rules update from which much of my information on MBDR and MNDR is taken.
My presentation, ''A National Perspective on Workers' Compensation: How Texas Compares,'' ironically follows a presentation by well known Texas work comp consultant Julie Shank, 'Unintended Consequences in Workers' Compensation.''
I say "ironically" because California just passed an enormous reform bill which is now awaiting Governor Brown's signature, and the unintended consequences of that massive law change are just now starting to be exposed as legal scholars and other workers' compensation industry experts review the bill in detail.
While the politicians have promised the miracle of increased benefits and reduced costs, the insurance industry is taking a less optimistic view, waiting to see how things shake out before making any prognostications as to whether the numbers add up.
And that is because the carriers know all too well about unintended consequences (UC).
For example: some time ago, when I was a young defense lawyer, the legislature in its infinite wisdom decided that the physician that is actually treating the injured worker was in the best position to determine the extent of the workers' permanent disability, if any. So a presumption in favor of the treating physician's determination of permanent disability was created.
It didn't take long for injured workers to take control of the medical process for the purpose of inflating permanent disability awards.
This led to the elimination of the presumption several years later and institution of the Qualified Medical Examiner process - a Byzantine system of medical opinion elimination that put stresses on the resources of the Division of Workers' Compensation (DWC) resulting in late or lost QME referrals, medical reports that didn't meet evidentiary standards, disqualified QMEs, etc.
That is just one example of many that could be cited regarding UC.
The UCs that may arise our of SB 863 I'm sure are numerous - there just wasn't enough time to vet the bill because the political need to expedite its passage was greater than ensuring its accuracy. It is the hope of legislators that "clean up" legislation will follow next session as deficiencies in SB 863 become known.
To the extent that UCs can be predicted, though, is to look at other states where similar provisions may already be law and examining the experience of those states. As you likely know, SB 863 has instituted a new practice for California to resolve both medical treatment disputes and medical billing disputes.
In this regard, my trip to Texas should prove fruitful, for the Texas system for years has had an Independent Medical/Bill Review system in place, and in fact new rules and regulations have been adopted that further refine that system.
Texas calls their independent bill review process a Medical Fee Dispute Resolution (MFDR) system; the Texas system for independent medical treatment review is called Medical Necessity Dispute Resolution (MNDR). Providers in this process are referred to as "sub-claimants."
In Texas, such disputes go to a Benefit Review Conference (BFR) first. A BRC is an informal mediation session. If a requestor does not request a BRC within 20 days, the Division’s fee reimbursement decision on the fee dispute is final. A BRC request shall include a copy of MFDR decision.
If parties are not successful mediating their dispute, they now have a choice: binding arbitration or a Contested Case Hearing (CCH) at the State Office of Administrative Hearings (SOAH). The state keeps a list of arbitrators and the process for selecting an arbitrator is similar to that used by the American Arbitration Association. There are detailed rules governing the conduct of the arbitration.
If the parties go to a SOAH hearing, the non-prevailing party pays the costs of a SOAH hearing, unless the injured worker is the non-prevailing party. The requestor, other than the injured worker, shall also reimburse DWC for SOAH costs in the event of a dismissal. The carrier pays for all costs if the injured worker dismisses the case or is the non-prevailing party.
An MNDR is to resolve questions concerning reasonableness and the necessity of medical treatment regardless of the amount in dispute (i.e. medical fee dispute resolution) or the compensability, liability, or extent of the injury (i.e. income dispute resolution). Medical necessity disputes can involve prospective determinations (preauthorization and concurrent review) and retrospective review.
MNDRs are determined by an Independent Review Organization doctor (IRO) who must hold the appropriate credentials and comply with the personnel and credentialing requirements set forth by the DWC. There are rules prohibit conflicts of interest and give the DWC powers that include audits, investigations and discipline should an IRO fall outside the boundaries of acceptable review behavior.
A party may appeal the IRO’s decision within 20 days by requesting a contested case hearing. Previously, the forum for a retrospective review dispute was based on the amount in controversy. New medical necessity disputes are appealable to a contested case hearing conducted by DWC.
In my discussions with some Texas attorneys earlier this year after the IMR process was divulged by SB 863 negotiators, I learned that in fact the Texas MNDR system is rarely used now. Treatment decisions no longer appear to be a source of conflict in the Texas system - but that wasn't always the case.
Note that the Texas MNDR system provides for an appeals process (unlike the California version which has limited rights of appeal) - this has not proven to be a source of consternation to workers' compensation practitioners it seems: strict adherence to treatment guidelines, rejection of questionable treatments, and respect for medical network care leaves disputes about treatment out of the system.
While the California IMR process does not leave much room for appellate review, if the constitutionality of such restriction is not upheld there may not be much impact anyhow, if the Texas experience is realized.
I get invited to speak at events such as ICT's annual conference to bring some California perspective to other states. Most often folks in other jurisdictions like to see what is going on in California to get some flavor as to what might happen in their states.
But this time we can look to Texas to see what has happened in that state regarding IMR and IBR - the effect was a pronounced declination in the number of disputes concerning treatment and billing.
That may not be a UC - in fact the consequence was entirely intended. If this is the intention of the California reform bill drafters, then the California DWC can take a queue from the Texas DWC and plagiarize a good amount of their regulations, and hopefully avoid dreaded UC.
Many thanks to Texas attorney Stuart Colburn with the Downs Stanford, P.C. law firm, who prepared a rules update from which much of my information on MBDR and MNDR is taken.
Tuesday, September 4, 2012
With 863 Comes New Administrative Burdens, Expense
I woke up Saturday morning with several text messages and voice mail on my cell phone - everyone's excited about the passage of SB 863.
Maybe "excited" is the wrong word - there was some concern in some of the messages, there was some hope in some of the messages; clearly, though, SB 863 is a game changer for many in the industry, and of course injured workers and employers.
And for the Division of Workers' Compensation (DWC) itself - for SB 863's true import to the overall system won't really be known until the DWC compiles its list of work to do for the implementation of SB 863, and puts into place the various systems to accomplish some of the more difficult tasks. The operational chores facing the DWC are tremendous.
For instance, DWC has past experience with lien filing fees, and it was not a good experience. The administration and collection of fees cost more than the fee itself which led DWC to eventually request a moratorium on the practice.
That practice is back now, but with even more complexity as there are now two levels of fees and a distinction between services for which a lien can be filed and those for which a lien can not be filed.
Section 63 of SB 863 adds Labor Code section 4903.05. This is the lien filing fee section. It applies only to liens for services that are covered by subdivision (b) of section 4903 and "claims of costs."
Maybe "excited" is the wrong word - there was some concern in some of the messages, there was some hope in some of the messages; clearly, though, SB 863 is a game changer for many in the industry, and of course injured workers and employers.
And for the Division of Workers' Compensation (DWC) itself - for SB 863's true import to the overall system won't really be known until the DWC compiles its list of work to do for the implementation of SB 863, and puts into place the various systems to accomplish some of the more difficult tasks. The operational chores facing the DWC are tremendous.
For instance, DWC has past experience with lien filing fees, and it was not a good experience. The administration and collection of fees cost more than the fee itself which led DWC to eventually request a moratorium on the practice.
That practice is back now, but with even more complexity as there are now two levels of fees and a distinction between services for which a lien can be filed and those for which a lien can not be filed.
Section 63 of SB 863 adds Labor Code section 4903.05. This is the lien filing fee section. It applies only to liens for services that are covered by subdivision (b) of section 4903 and "claims of costs."
Subdivision (b) of 4903 deals with, "The reasonable expense incurred by or on behalf of the injured employee, as provided by Article 2 (commencing with Section 4600) and, to the extent the employee is entitled to reimbursement under Section 4621, medical-legal expenses as provided by Article 2.5 (commencing with Section 4620) of Chapter 2 of Part 2."
Section 4600 is concerned with, "Medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatuses, including orthotic and prosthetic devices and services, that is reasonably required to cure or relieve the injured worker from the effects of his or her injury shall be provided by the employer. In the case of his or her neglect or refusal reasonably to do so, the employer is liable for the reasonable expense incurred by or on behalf of the employee in providing treatment."
4600 also deals with interpreters, transportation to and from a medical appointment, right to seek treatment from a private physician not part of a medical network, and a couple of other details.
Sections 4620 and 4621 are about medical-legal expenses.
On and after January 1, 2013 liens for the provision of the services covered by the above code sections (i.e. the majority of lien claims) are subject to a filing fee of $150 AND "proof that the filing fee has been paid." The fee shall be collected electronically. How the proof of payment is to be administered is not provided. And other than the statement that the fee shall be collected electronically, that topic is not dealt with.
In addition, any lien filed prior to January 1, 2013 is essentially now invalid unless an "activation fee" of $100 is paid under new Labor Code section 4903.06 - which operates much the same as 4903.05.
Presumably then, EAMS will have to be modified to include a "shopping cart" system applicable to liens, and this will affect both of EAMS inputting systems: e-filing and Jet filing. The Division has 4 months to get this done - not a lot of time when dealing with government procurement contracts involving, in particular, computer system modification. While the DWC can interpose necessary regulations on an emergency basis, getting the operational system to perform the necessary function on an emergency basis is going to be an expensive challenge.
This is just one small example, because in addition to collecting filing fees DWC must also begin promulgating new fee schedules for copy services, a new medical fee schedule, new interpreter regulations, new return to work regulations, permanent disability regulations and rating system, new EAMS regulations, etc.
In 2004, SB 899 brought upon the DWC huge new obligations, mandates and requirements. DWC at that time had a difficult time meeting those obligations timely, and some weren't met as required, albeit DWC was also short of staff at that time, and allocated staff budgeting kept shrinking after 899's enactment. But DWC at that time had nearly double the amount of time to prepare since SB 899 was passed in April of 2004. While some of SB 899 was passed as an emergency measure, most of it was deferred to January 1, 2005 for implementation.
DWC doesn't have the luxury of 8 months under SB 863 and in my estimation, SB 863 doubles the amount of new work required of DWC. It's a huge commitment and I can only hope that the Brown Administration and the Legislature see to it that DWC has enough money, personnel and resources to get the job done in time.
Section 4600 is concerned with, "Medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatuses, including orthotic and prosthetic devices and services, that is reasonably required to cure or relieve the injured worker from the effects of his or her injury shall be provided by the employer. In the case of his or her neglect or refusal reasonably to do so, the employer is liable for the reasonable expense incurred by or on behalf of the employee in providing treatment."
4600 also deals with interpreters, transportation to and from a medical appointment, right to seek treatment from a private physician not part of a medical network, and a couple of other details.
Sections 4620 and 4621 are about medical-legal expenses.
On and after January 1, 2013 liens for the provision of the services covered by the above code sections (i.e. the majority of lien claims) are subject to a filing fee of $150 AND "proof that the filing fee has been paid." The fee shall be collected electronically. How the proof of payment is to be administered is not provided. And other than the statement that the fee shall be collected electronically, that topic is not dealt with.
In addition, any lien filed prior to January 1, 2013 is essentially now invalid unless an "activation fee" of $100 is paid under new Labor Code section 4903.06 - which operates much the same as 4903.05.
Presumably then, EAMS will have to be modified to include a "shopping cart" system applicable to liens, and this will affect both of EAMS inputting systems: e-filing and Jet filing. The Division has 4 months to get this done - not a lot of time when dealing with government procurement contracts involving, in particular, computer system modification. While the DWC can interpose necessary regulations on an emergency basis, getting the operational system to perform the necessary function on an emergency basis is going to be an expensive challenge.
This is just one small example, because in addition to collecting filing fees DWC must also begin promulgating new fee schedules for copy services, a new medical fee schedule, new interpreter regulations, new return to work regulations, permanent disability regulations and rating system, new EAMS regulations, etc.
In 2004, SB 899 brought upon the DWC huge new obligations, mandates and requirements. DWC at that time had a difficult time meeting those obligations timely, and some weren't met as required, albeit DWC was also short of staff at that time, and allocated staff budgeting kept shrinking after 899's enactment. But DWC at that time had nearly double the amount of time to prepare since SB 899 was passed in April of 2004. While some of SB 899 was passed as an emergency measure, most of it was deferred to January 1, 2005 for implementation.
DWC doesn't have the luxury of 8 months under SB 863 and in my estimation, SB 863 doubles the amount of new work required of DWC. It's a huge commitment and I can only hope that the Brown Administration and the Legislature see to it that DWC has enough money, personnel and resources to get the job done in time.
While DWC is "user funded" it still goes through the budgetary process, and during the height of the last recession was ham-strung by the Schwarzenegger Administration's dictate that no agency could have all of its money because that would look bad to the rest of government.
At least DWC has been hiring judges and support personnel - we have to assume that the agency's financial ability to meet its charges under SB 863 will likewise see adequate funding.
SB 863 is seen by critics as a return to 899 politics. Let's hope that it's not a return to 899 administrative constraints.
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