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You likely already know that a group of California Uber drivers has succeeded in having a class certified to bring suit on behalf of Uber drivers in the state for tips and expenses.

While Uber has publicly stated that it intends to appeal (wouldn't you like to be an Uber attorney right now!) this ruling is significant because very, very few class action lawsuits actually get to trial. The time and expense of a class action lawsuit brings even the biggest companies to their knees.

Their lawsuit sought class certification on behalf of 160,000 drivers who have worked for the company in California since 2009. This can be a sizable claim...

Uber has been making the same arguments over and over in different courts, and is finding that, with very few exceptions (particularly in a more labor friendly state such as California) it's model of "independent contractor" is erroneous.

Arguing against class certification, Uber tried to demonstrate that the drivers do not share commonality. This failed.

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United States District Judge Edward Chen wrote in O'Connor vs. Uber:

"First, to the extent that Uber’s "no typical Uber driver" contention is focused on legally relevant differences between drivers under the Borello test (e.g., whether or not they operate a distinct transportation business), the argument is really a commonality or predominance argument masquerading as a typicality argument: If legally material differences between class members are so substantial that the predominance or commonality tests cannot be satisfied, then the typicality test likely cannot be satisfied either. As discussed below, however, the Court finds that the predominance test is satisfied with respect to the specific class defined above because there are not significant material legal differences between the claims and defenses of the class members and those of the named Plaintiffs."

Uber also tried to convince the court that its drivers really want to be independent contractors based on its survey of about 400 drivers - but the company failed to follow statistically sound methodology and the court called them out on that:

"[N]ot only are the expressed views of these 400 drivers a statistically insignificant sample of the views of their fellow drivers and class members, there is nothing to suggest (and Uber does not contend) that these 400 drivers were randomly selected and constitute a representative sample of the driver population. Nor is there evidence that the responses of these drivers were free from the taint of biased questions. Nothing suggests, for instance, that they were told that were the Plaintiffs to prevail, they might be entitled to thousands of dollars."

Chen also took the company to task for trying to hoodwink him:

"[O]n one hand Uber argues that it has properly classified every single driver as an independent contractor; on the other, Uber argues that individual issues with respect to each driver’s “unique” relationship with Uber so predominate that this Court (unlike, apparently, Uber itself) cannot make a classwide determination of its drivers’ proper job classification."

Though Chen certified the class, he excluded some drivers and limited it to the drivers' claims for tips, not expenses.

Still, this is a very significant ruling that should alert Uber that its model, at least in California, may have to change.

My prediction is that Uber will be the ultimate sharing economy company, because it's going to have to share a lot of its capital with its drivers...

I also predict that the awesome technology that Uber brought to market will actually be successfully adopted by more traditional transportation companies, that eventually there will be "dependent contractor" status as a legal class, and that Uber will shrink away to insignificance after having blazed the trail for others.

Perhaps the company is already realizing this. In its arguments in the case the company describes itself now as providing “lead generation.”

Yes, the company is leading a generation to the realization that, at least presently, there are only two classifications of workers: employees and independent contractor; and that those legal principles have been in place, and have been tested, for many, many years.

No Free Ride

The question is not "Are you on the premises?," but rather, it's "Are you benefitting your employer?"

Earlier this month a California court used that analysis to grant benefits to Craig Schultz, who was a technical drafter for a military contractor, and who suffered severe injuries when his car crashed into a ditch after he passed through the entrance to Edwards Air Force Base.

California's 2nd District Court of Appeal ruled that the accident was compensable, finding Schultz's commute had ended once he passed through the secured entrance gate for the base because he otherwise would not have been there but for his employment even though the actual building where he would perform his labor was still 5 miles or so from the base entrance.

The Arkansas Court of Appeals made a similar ruling earlier this week finding that an iron worker who slipped and fell on ice while heading to the time clock to punch in for the day was entitled to compensation for his injuries.

Ronnie Nabors was within the course of his employment by the time of his accident since he had already engaged "in employment activity" – by donning his personal protective equipment and swiping an access card to obtain entry to the job site, the court found.

Even though many states recognize the "premises line rule" exception to the "going and coming rule" the litigable point is where that line is; i.e. at what stage is there sufficient employer control over the worker to deem the employee's presence beneficial to the employer.

Arkansas had also recognized the premises exception up until 1993, when the state's comp act was amended to include a requirement that a worker be performing employment services at the time of the injury for the injury to be compensable.

The Arkansas Court of Appeals has construed this statutory change as having eliminated the premises exception to the going-and-coming rule.

But, when the worker engages in actions that are required by his or her employment, where those actions occur is not necessarily dispositive of employment status - essentially reverting back to the premises line rule, albeit without the "line."

Nabors worked for the Continental Construction Co., which was a subcontractor on a project at a power plant near Blytheville, Arkansas.

Zachary and Dynegy Construction was the general contractor on the project, and it had erected a fence surrounding the job site. There was only one gate to provide the way in and out of the site.

Before workers could pass through the gate, Zacahry required that they put on their personal protective equipment and swipe an access card.

What I call a "free ride" - Yahoo!!

Since Nabors had done these things and had to do so in order to clock in and start working, and his work was what allowed Continental to satisfy its obligations to Zachary, the court concluded that Continental was benefitting from his actions at the time he fell and sustained injuries.

A related issue is brewing in California over ride share service providers Uber and Lyft - both companies are being sued by drivers who claim they are employees, not independent contractors.

Uber, Lyft and other “transportation network companies,” as the Public Utilities Commission has dubbed them, offer a free app for smartphones through which users can request a ride from a driver nearby. Like a taxi service, the driver will bring the customer to a destination, the customer will pay and the company will take a percentage of the fare. Drivers typically use their own vehicles, though certain Uber drivers lease cars through a third party, and typically choose when to work.

Both companies classify their drivers as independent contractors and do not provide workers’ compensation coverage for them. Last year the California Public Utilities Commission adopted regulations stipulating that it wouldn’t force the companies to classify its workers as employees or independent contractors. It called for the companies to insure the drivers for liability purposes, but not for workers’ compensation.

Lyft and Uber characterize themselves as mere providers of technology and not real employers of the drivers, labeling them as independent contractors.

“Uber is a software technology company that provides lead generation services for transportation companies and drivers,” the company’s lawyers wrote in answer to a plaintiff’s complaint.

But class action lawsuits filed by drivers claim employee status because both companies ask drivers to display branding, both companies will take user ratings on drivers and sometimes dismiss or “deactivate” them based on those ratings.

Uber tracks the rate at which drivers accept ride requests and may dismiss drivers with low acceptance rates, essentially controlling the driver’s ability to decide whether to turn down passengers. The company has also told its drivers to play jazz or National Public Radio while passengers are in the car, according to the suits.

Plaintiffs argue that what these companies do is nothing new in the transportation industry, which has taken many losses in court fighting employment status lawsuits; FedEx Ground has lost major battles in the U.S. 9th Circuit Court and Kansas Supreme Court this year when judges ruled that thousands of the company’s delivery drivers were employees.

Of course employment status goes beyond workers' compensation as there are taxes, and other labor laws, that affect the labor costs of any business - and likely this is an issue that will continue on regardless of technology and business model because, as we all know, there is no free lunch.

Or in the cases of Uber and Lyft, there is no free ride.

The California cases are Cotter v. Lyft Inc. and O'Connor v. Uber Technologies, both in the U.S. District Court, Northern District of California.

To read the Arkansas Court of Appeals' decision in Nabors, click here.

A Drug Testing Rebuttal

Last Friday I blogged a title, "Urine Is Big Money."

What I opined was that the very public lawsuits and jury verdicts in the cases between Ameritox, Ltd. and Millennium Laboratories, Inc. revealed unsavory marketing tactics that incentivized physicians to do drug testing and that there was a lot of money involved.

I called this "nonsense" because you and I pay for this surreptitiously through higher fees and greater utilization.

Specifically I said, "Drug testing may have its place in certain situations, but the incentives these companies throw at providers of care to initiate services is offensive to me, and should be to you."

Michael Gavin is president of Prium, a medical intervention firm that has particular expertise in providing tools for drug management.

He called me the other day to tell me that he a) enjoyed WorkCompCentral's new adaptive newsletter format (I know, shameless self-promotion) and that b) he had written a blog post rebuttal to Urine is Big Money but decided to run it past me rather than publish it publicly to deter the wrath of a potential counter-point.

Heck - I think dialogue is good! So with Michael's permission, I took the easy way out today and am posting his opinion with just a little editing for format and readability:

_________________________________________

When Ameritox purchased PRIUM, I did my own due diligence on the Ameritox management team.  I believe I'm working for the good guys and we're genuinely trying to do the right thing.

I like David DePaolo.  A lot.  He is a voice of reason in our industry and I've enjoyed his musings, both personal and professional, for years.  

But on the issue of urine drug monitoring, I think he's off the mark.  On the one hand, I'm coming at this from an admittedly self-interested perspective (PRIUM is a wholly owned subsidiary of Ameritox), but on the other hand, the context and conclusions of David's recent post on drug monitoring beg for someone to clear up the confusion.  

What did he miss?  Nowhere in his piece did he mention several key facts.  David knows all of these things, but critical context is missing from his view on Urine Drug Monitoring.  Namely, he didn't mention that: 

• People are dying.  Overdose deaths from prescription opioids now outpace deaths from traffic accidents and have tripled since 1990; 
• The CDC has identified the opioid crisis as an epidemic, a term the CDC does not use lightly; 
• More than 12 million people reported using prescription painkillers nonmedically in 2010; 
• Urine drug monitoring technology is relatively new.  David's quote from the CWCI data that suggests 192X growth in spend on urine drug monitoring in CA doesn't recognize the point at which the health care community sat on the adoption curve for this technology in 2004.  Nor does it recognize that we still didn't realize the enormity of the opioid crisis in 2004.  And don't tell me we knew in 2004 how bad this was going to get.  I came into this industry in 2010 and spent my first two years here at PRIUM trying to convince payers there was an opioid problem in the first place.   
• There's a distinction between point-of-care testing in a doctor's office and reference lab testing. Failing to make this distinction leads the reader to conclude that all inappropriate behavior rests with reference labs and fails to recognize that some physician practices are by themselves driving inappropriate utilization.  Physicians who partner with experienced and capable reference labs that understand payers' perspectives and expectations can help align stakeholders (injured worker, physician, lab, and payer).   
• There are guidelines for the appropriate use of urine drug monitoring and these guidelines are based on risk stratification of the patient.  We follow these guidelines.  We help payers follow these guidelines. Testing beyond the guidelines is as inappropriate as not testing patients that should be tested.  
• Even in light of these guidelines, WCRI data tells us that less than 25% of injured workers on long term opioid therapy are being tested at all.   David states "we know [the guidelines] are specific case recommendations particular to a certain set of medical facts, not to be applied universally."  Agreed.  Perhaps David doesn't realize how many injured workers fit that "certain set of medical facts."  A lot more than he apparently realizes.  
• Not all companies offer direct financial incentives to physicians.  He lumps an entire industry together and does so just a couple of paragraphs after he details that Millennium's practices were found by a jury to be illegal and that all counterclaims against Ameritox were dismissed.  Perhaps David missed the most important take-away: there's at least one company trying to do it right. 

Bottom line: what David blithely dismisses as "nonsense" is, in fact, a critical patient safety tool, a mechanism for effective claims management, and a necessary application of clinical technology that isn't going anywhere. To suggest otherwise in light of the largest man-made epidemic in the history of the world is simply irresponsible.  

Michael

_________________________________________

So I agree that drugs are a public health concern. I agree that drug testing can be an important part of patient care. And that Ameritox was found clean of engaging in questionable marketing tactics is comforting to me.

But Michael misses the theme of my post.

The point I was making was that the Millennium/Ameritox case simply provided insight into how medical supply businesses work, and how much money is involved. 

This occurs inside, and outside, workers' compensation. And not just drug testing companies, but nearly all medical supply businesses have some marketing systems that provide physicians incentives to use and/or promote their products.

Marketing practices that improperly cause physicians to prescribe specific products or services should not be tolerated without full disclosure to the patient and the payer as to the nature of the incentives to the doctor. 

That's the bottom line.

That Gavin's company, Prium, and it's parent Ameritox, don't engage in "direct financial incentives to physicians" is a good start. Next would be disclosure as to what incentives are placed in front of physicians so the people can make informed choices about whether prices and utilization are appropriate for any given case.

Thank you Michael for taking the time to write a rebuttal.

Urine Is Big Money

Not only is there big money in drugs, but there is big money in drug testing, as evidenced by a recent jury verdict against San Diego, CA based Millennium Laboratories Inc.

The jury verdict handed down June 16 resolves three cases dating back to 2011 that were consolidated before the U.S. District Court in Tampa, Florida, and brings to an end all litigation between the rival drug-testing companies Millennium and Ameritox Ltd., based in Baltimore, MD.

The jury ordered Millennium to pay $2,755,000 in compensatory damages and an additional $12 million in punitive damages to Ameritox for violating federal anti-kickback statutes with a program that provided physicians with free point-of-care specimen cups in exchange for referrals.

The 2011 complaint by Ameritox alleged that Millennium marketed a “revenue-based billing model” promoting drug testing as a way to increase income for physician practices. An exhibit attached to the complaint − purportedly Millennium marketing materials − claims a doctor can make $45,021 a year performing a single drug test per day, $225,108 a year performing five tests per day and $900,423 performing 20 tests per day.

The company further claimed that Millennium provided point-of-care testing cups for free or at prices below market rates on the condition that the providers agreed not to bill for the use of the cup, used it only for an initial urine screening and sent the specimen to Millennium for confirmation testing.

The jury determined the cup program, which Millennium says it has discontinued, constitutes remuneration under the federal Stark Law, which took effect in 1992, and prohibits physicians from referring patients to companies with which they have a financial interest.

Bowzer doesn't pee in cups.

The jury further said that the cup agreement constituted remuneration in violation of the federal anti-kickback statutes.

The jury also found that Millennium tortiously interfered with Ameritox's business relationships and engaged in unfair competition in Florida, awarding it $1.625 million in compensatory damages and $7.08 million in punitive damages, interfered with business relationships in Texas and Tennessee, awarding $575,000 in compensatory damages and $2.52 million in punitive damages for Texas, and $555,000 in compensatory damages and $2.4 million in punitive damages for Tennessee.

Inversely, the jury rejected Millennium’s counterclaims that Ameritox interfered with its business in California, Florida, New York, Oregon, Tennessee, Texas and Washington, and rejected Millennium's allegations that Ameritox violated the Stark law.
Millennium failed to prove that Ameritox:

• Assigned specimen collectors to physician offices to perform receptionist and other clerical duties unrelated to drug testing in exchange for referrals;
• Provided below fair market prices for point-of-care test cups for testing that the doctor can bill for in exchange for referrals;
• Entered into lease agreements with doctors that were not at commercial reasonable rates in exchange for referrals;
• or provided non-monetary compensation to physicians such as paying for Christmas parties and giving gift cards in exchange for referrals.

Though Millennium is asking for a new trial on the grounds that Ameritox was improperly allowed to introduce inflammatory evidence to the jury, the fact that this litigation continues demonstrates the huge margins that drug testing must produce, and the cost of such aggressive tactics on health systems, in particular workers' compensation.

The California Workers’ Compensation Institute reported that carriers and self-insureds paid $98 million for drug testing in 2011, 192 times the $509,000 paid in 2004.

Lon Wagner, a spokesman for Ameritox, told WorkCompCentral, “What we were looking for is a level playing field, and we feel this is a first step toward achieving that.”

How about leveling the field for the consumers, the people that pay for this nonsense? Drug testing may have its place in certain situations, but the incentives these companies throw at providers of care to initiate services is offensive to me, and should be to you.

And such tactics are not isolated - my bet is that these are, unfortunately, normal tactics within the medical supply industry across nearly all medical fields.

Physicians in workers' compensation in particular are vulnerable to such marketing and sales tactics because the actual fees paid to doctors have become increasingly restrictive, and the amount of time bills remain unpaid lengthens, creating impetus for revenue enhancement opportunities.

Some docs of course are unscrupulous and would engage in such revenue enhancement programs regardless, but the motivation for doing so increases the more actual fees for services that provide value to workers' compensation claimants are constricted.

Maybe Millennium and Ameritox are a bit more level now, but when it comes to those of us who actually pay the bills at the end of the day, the case is just one more example of end point consumer gouging.

While medical guidelines recommend drug testing for compliance purposes and to help ensure that drugs aren't being diverted to the black market, we know those are specific case recommendations particular to a certain set of medical facts, not to be applied universally.

But the way medical suppliers stimulate sales with physician gifting and revenue enhancement programs tests the ethical and moral qualities of the individuals on the front lines, and physicians should not be placed in those positions, and we should not be placed into positions of having to pay for it.

Sometimes drug testing is warranted. Most of the time it is not.

I'm sick of it. You should be too. Then we can all go to the doctor, get our drugs, and pee in cups (unlike Bowzer) so we're all in this together...

The Misclassification Trend

Misclassification of workers seems to be at the top of news headlines lately.

WorkCompCentral reported this morning that Lowe's Home Centers in California agreed to a $6.5 million settlement of a class action brought by contractors the company hires out to customers to install products it sells.

Another story this morning is about an Arizona contractor that settled a misclassification action with the U.S. Department of Labor, agreeing to pay workers back wages and overtime, and penalties totaling about $600,000.

When I performed a search of the WorkCompCentral database for the word "misclassified" I get nearly 300 news stories returned, and a surprising amount of those stories are quite recent - seemingly every business day in this past year.

While most of these stories involve contractors, quite a few involve other industries.

Law360, a LexisNexis publication, has been replete with misclassification stories of late as well, reporting several class action suits against atypical industries for such activity, such as the banking industry.

What's going on here?

Are all of the businesses really trying to cheat their workers out of employment-based benefits?

Or are the management practices of these employers so flawed that workers get driven into employment relationships?

Or have the plaintiff's lawyers (generically of course) found a new source of revenue?

Misclassification of workers has always been an issue in workers' compensation - most of the time I believe that misclassification happens unintentionally; business just wants to get the job done for the most competitive price possible and whether a worker is called an employee or an independent contractor seems to be an after thought.

For instance, in the Lowe's action, workers in the class action thought they stood to get as much as $33 million in back wages, overtime and other employment related protections had the case gone to trial.

Lowe's disputes that it did anything wrong and says that it did not violate any classification laws or regulations, and to me the settlement of $6.5 million, compared with the plaintiff's estimated jury award, says that it had relatively good defenses.

The lead plaintiff in the Lowe's case was Ronald Shephard. He worked for a Lowe's store in Victorville installing garage doors between 1995 and 2009.

Shepard's complaint alleged that customers paid Lowe’s for the installation work, and the retailer later paid the contractors. Contractors were prohibited from performing any work for a Lowe’s customer that was not arranged and approved by Lowe’s. The store also set the amount of time contractors had to complete a job.

The contractors were also required to wear clothing bearing the Lowe’s logo and identify themselves as employees of Lowe’s, according to the allegations.

Lowe's says that it did not control any of the installers and argued that each installer operated as a separate business, and that the installer companies made all decisions relating to employment matters such that Lowe’s could not be deemed an employer under California law.

The Arizona case involved a drywall contracting firm, Paul Johnson Drywall Inc., which entered into a contract with Arizona Tract in April 2013 that resulted in some 445 employees being as reclassified members or owners.

The Department of Labor said its investigation also revealed that Paul Johnson Drywall, before entering into a contract with Arizona Tract, failed to pay employees who worked more than 40 hours in a week proper overtime at time-and-a-half, and failed to maintain complete and accurate records.

The story does not indicate how much the contractor's workers' compensation insurance companies are going to seek in retroactive premium, but based on the size of the worker population identified in the Department of Labor that amount is going to be quite significant.

Some of these stories appear to be plaintiff lawyer profit driven, others seem to reflect intentional egregious employer activity. There isn't a single state that seems worse than any other and while contractors in general seem to be the biggest offenders the range of industries is broadly represented in the news.

I can't say whether this is all part of an enforcement trend, a legal trend, a business trend, or whatever. And depending on your perspective this is either welcome or despised.

But there's no denying that classifying workers as either employee or contractor has significant implications to both business and workers.

Our New Reality: Work Comp is No Longer Exclusive

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

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

But workers' compensation hasn't changed.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

OR Cases Highlight Complex Fee Relationships

Oregon passed this year, effective January 1, 2012, an interesting law in an attempt to regulate the complex relationship between medical providers and those responsible for paying for workers' compensation medical bills.

The law gives the Workers' Compensation Division authority to fine an individual or firm for attempting to direct care without proper certification. The only option for directing the care of injured workers in Oregon is through managed care organizations certified by the Department of Consumer and Business Services, the parent agency of the Workers' Compensation Division.

There are only five certified organizations operating in Oregon, but they provide about 40% of the treatment to injured workers.

In addition to directing care, managed care organizations can negotiate discounted rates with providers pursuant to ORS 656.248.

The Division implemented rules prohibiting carriers from using PPO rates for workers' comp without a contract signed by the provider and filed with the division. The contract must apply only to workers' compensation treatment, and the discount can't exceed 10%.

Providers were complaining in 2008 that preferred provider organization rates for group health were being applied to workers' compensation payments without their knowledge.

These laws are interesting because according to lawsuits recently filed insurance carriers in Oregon were improperly contracting for reimbursement rates below the state's medical fee schedule.

The suits allege that carriers are reimbursing procedures for treating injured workers at rates negotiated for group health. Providers agree to the discounted rates for group health because insurers are allowed to direct care, according to the attorney who filed these cases in an interview with WorkCompCentral.

But that is not the case in workers' compensation - as noted above, only in managed care organizations can the carrier direct care.

So the key to discounting of medical fees is, according to this logic, who gets to direct care. If the provider gets to direct care then the provider must be paid at fee schedule. If the carrier directs care then the provider gets paid according to the contracted rate.

I'm not sure I understand this logic and I'm sure someone will enlighten me.

I point out this situation as an example of how something perceptibly simple - paying the bill - can get convoluted and complex well beyond the lay person's understanding when the term "workers' compensation" intervenes.

The lawsuits are Lincoln City Physical Therapy LLC v. Travelers Casualty and Surety Co. et al., filed Dec. 2, and Erhardt Physical Therapy and Sports Medicine P.C. v. Liberty Mutual Fire Insurance Co. et al., filed Nov. 29.