The Dog Will Bite

There is one element of human behavior that is not very well appreciated by most people - for the most part, socialized humans follow the law.

However, people in completely rational behavior, will also take advantage of the law in order to achieve whatever their mission is. They will not break the law, but nearly all of us will push the boundaries if it suits us in order to accomplish our  missions.

We do this every day driving our cars. We exceed the speed limit all over the place - maybe not by much, and as we know most police officers are rather tolerant of someone going 5 miles per hour over the limit, and much less tolerant of someone going ten over.

Part of this behavior stems from the fact that, with very little exception, laws, rules and regulations are restrictive in nature - they tell us what we CAN'T do, but don't tell us what we can do. For the most part this is because it is really very hard to determine what will be allowed - it's much easier to describe what won't be allowed.

So when we combine good law abiding people who want to get their job done along with restrictive laws we end up with what is commonly known as "loopholes."

Loopholes in the law exist because someone who needs to get something accomplished found a way to do so regardless of some proscription against it.

Take for instance California's Independent Medical Review process. IMR was conceived for the purpose of expediting medical decisions outside of the legal context. Whether this in fact occurs, and whether or not this mission is accomplished, is the subject of much debate - and is not the subject of this post.

Rather, IMR has produced an unintended consequence that arises from people doing their jobs, and doing the job well, within the constricts of the law.

There is a faction of the workers' compensation industry whose job it is to minimize ultimate claims costs. These are good, law abiding, citizens. They follow the law ... carefully and considerately. And they have a job to do, within the bounds of the law.

What they have discovered is that an IMR denial of treatment is a final determination on that procedure.

As a consequence, when it comes time to deal with Medicare, a final denial of treatment within the workers' compensation context means that item can be removed from a Workers' Compensation Medicare Set-Aside trust.

In other words, something that a workers' compensation payer WOULD have been liable for prior to IMR means that there is no ongoing liability to either the injured worker, or to the federal government.

This also means that the cost of that care is shifted to Medicare.

While this may be perfectly legal, and certainly even prudent from the workers' compensation payor's view point, my bet is that this was not intended by the authors of SB 863, nor any other medical treatment limitation law in any other state.

I recently opined that time limitations on temporary disability indemnity unfairly burdened the Social Security system - to the tune of about $12 billion per year (based on my calculations - and remember I'm a dopey lawyer with no right brain skills, which means my math is highly suspect).

Several years ago a c-suite insurance executive described to me her strategy for taking advantage of the Affordable Care Act's leave-no-person-without-health-insurance mandate by drafting settlement documents that would provide a claimant with sufficient health insurance for several years in order to close out the workers' compensation claim.

Certainly legal, and certainly she was doing her job - minimizing the impact of claims expense against her company's ledger.

And we could argue day and night about whether this is right, ethical, or even reasonable - to me there's nothing wrong with this strategy because it is legal.

But the unintended consequence challenges the future of workers' compensation.

The purpose of workers' compensation, as we have said time and time again, is to make it affordable for an employer to take care of injured workers.

We all get that.

But I think we forget a fundamental concept: it's the employer's obligation.

We don't fulfill this mission when we make it the responsibility of someone else, such as the federal government via Medicare or Social Security.

Doing so, regardless of legality, invites scrutiny. And when there's enough scrutiny there's inquisition. And when there's enough inquisition, there's interference.

We're on the cusp of that now. The public image of workers' compensation couldn't be lower. There are many talking about skimpy benefits, of wrongfully denied medical treatment, of passing the buck and otherwise shirking responsibility.

These are acts that are, for the most part, the product of people working within the law to accomplish their missions and jobs without regard or even an idea of negative consequences.

This is now playing out with California IMR.

California IMR has been under attack since inception. The California Third District Court of Appeals, in Ramirez v. WCAB (SCIF), No. C078440, has granted review to test its constitutionality.

Ramirez joins a case already pending at the 1st DCA, Stevens v. WCAB (Outspoken Entertainment), No. A143043, which also seeks to have IMR declared invalid.

The basis of these cases is that fundamental rights of due process are violated because there is no legal review process and the determinations by the IMR physician are to be deemed final.

California's Constitution, in relevant part, states:

"The Legislature is hereby expressly vested with plenary power, unlimited by any provision of this Constitution, to create,and enforce a complete system of workers' compensation, by appropriate legislation, and in that behalf to create and enforce a liability on the part of any or all persons to compensate any or all of their workers for injury or disability, and their dependents for death incurred or sustained by the said workers in the course of their employment, irrespective of the fault of any party. A complete system of workers' compensation includes ... full provision for such medical, surgical, hospital and other remedial treatment as is requisite to cure and relieve from the effects of such injury.

"The Legislature is vested with plenary powers, to provide for the settlement of any disputes arising under such legislation by arbitration, or by an industrial accident commission, by the courts, or by either, any, or all of these agencies, either separately or in combination, and may fix and control the method and manner of trial of any such dispute, the rules of evidence and the manner of review of decisions rendered by the tribunal or tribunals designated by it; provided, that all decisions of any such tribunal shall be subject to review by the appellate courts of this State."

Perhaps those challenging IMR have an argument.

Even more so, though, it occurs to me that the courts of California may not let the burden of providing medical treatment "as is requisite to cure and relieve from the effects of" injury leave the jurisdiction of California. Foisting the burden onto the federal government jeopardizes state independence ultimately.

Just because someone is acting within the bounds of the law doesn't make that action right, correct or good policy.

When OSHA released its recapitulation of prior research on the adequacy of workers' compensation it was seen by many as overreaching based on faulty research.

Maybe, but this industry should be fearful, because OSHA's report is, in reality, the dog barking because someone is intruding on its property and territory. It may not be trespassing, and there may be invitation, but the dog doesn't know that and doesn't care.

Eventually, the dog will bite. The states won't like that at all.