Sick On Vacation

While I was on vacation I had a moment or three to think about this whole California reform agenda that was pushed through to the Governor's desk as SB 863 (I know I'm sick - there MUST be something better to think about during vacation).

There is one particular aspect of SB 863 that doesn't add up relative to the stated purpose of the bill ("to accomplish substantial justice in ALL cases expeditiously, inexpensively, and without encumbrance of any character" - Section 1, SB 863) and that is lien filing and activation fees.

Don't get me wrong - frankly I have no issue with any particular litigant paying some fee to underwrite the administrative expenses associated with processing the legal claim. This is routine in civil courts - if you have a beef with someone that you think either caused you damage or cost you money then you can have the courts adjudicate the issue but you have to pay first for that service.

I get that. It makes sense in my mind. It helps keep spurious litigation to a minimum.

And technically that is what the lien filing/activation fee is all about. That part of the analysis I don't argue with - if a peripheral player, the vendor who has a claim for payment over and above what the injured worker gets, wants his claim adjudicated then there should be some cost.

This should help ensure that only legitimate claims for payment make it into the adjudication system.

But the time to collect a fee is when such claim rises to the level of adjudication. Not before then.

As far as an administrative burden on the workers' compensation courts in California, liens only become a problem at the time of a hearing.

Remember in California we have this neat $60 million (and growing) computing system that permits the electronic filing of documents, including lien claims. Before that system (the Electronic Adjudication Management System, or "EAMS") there was the EDEX system for filing liens, also electronic and built specifically in the early 1990s to resolve the paper burden associated with liens.

So the FILING of liens has never been a real administrative burden on the courts - it's been electronic for a long, long time (okay, when EAMS was introduced and EDEX taken off line for filing - then filing electronically was limited to a few privileged players so lien claimants were forced to file on paper to be scanned by WCAB clerks into EAMS; yes that was an administrative problem but it was created by DWC itself...).

Liens DO become a problem, however, when a case goes to hearing, whether for a settlement or status conference or to an evidentiary hearing. Suddenly the list of case participants trying to occupy a 200 square foot hearing room swells and complicates the hearing process.

Some time ago the Division of Workers' Compensation (DWC) dealt with this issue by issuing regulations that prevented lien claimants from participating in a hearing until the case in chief was resolved to some extent. DWC did this by providing that lien claimants were not case parties until after the injured workers' case had been resolved (by either Award or settlement, or abandoned). 

Because lien claimants were not parties to the litigation until the case in chief was resolved they had no rights to do anything relative to the case. They sat on the side lines until the case ripened. Once the case in chief was resolved, then lien claimants came out of the wood works to get their share of the pie - creating additional delays on the closure of a claim.

Those rules have since remained on the books without alteration.

Now, the new rule is that a lien claimant, a person or entity that has made a claim of interest in the adjudication of an injured worker's case, is NOT a party to a case until after the injured worker has the dispute resolved, AND must pay a fee before, some times long before, the privilege of becoming a party is bestowed upon it.

In my mind this is wrong and, likely, illegal and will end up challenged and overturned in a civil case.

It's one thing to charge a filing fee to BECOME a party to litigation. It's another to charge a filing or activation fee, and then tell that participant that they have no rights in the litigation until some other status has been achieved.

This is a complete failure in equity and equal protection under the law, particularly when there is a tight (18 months) statute of limitations on the filing of a lien from the date when the services were provided, and the extended time it takes to bring most workers' compensation cases in California to a close (3-5 years) or when failure to pay a fee for a property claim (which a lien is) to be activated results in the summary denial of that claim without further adjudication.

This leaves lien claimants at the outrageous disadvantage of having to fund millions upon millions of dollars in state fees while waiting for their pipeline of cases to "ripen" for adjudication.

Perhaps the drafters of SB 863 knew exactly what they were doing with regards to lien claims, and knew that not a single lien claimant of significant size and volume (perhaps any size or volume?) could possibly afford to pay the filing and activation fees on their entire 3-5 year pipeline of outstanding accounts receivables.

Because one good way to eliminate millions of dollars of "costs" in the system, as promised by the proponents of SB 863, is to simply wipe out millions of dollars in vendor receivables. Lien filing fees, along with the fact that a lien claimant isn't a party to the litigation even if they do pay the fee, spells doom for any provider of services to the injured worker who does not have a direct contractual relationship with the employer. 

Worse, lien activation fees, for those liens that were filed prior to 1/1/2013, must be paid or the lien is summarily dismissed. This causes two things to occur: small value liens likely won't be brought to prosecution, whether valid or not, because of the cost. Second, for the volume of liens whose holders deem there to be sufficient value, will seek resolution en masse creating additional burden on the trial courts. The activation fee itself is not such as issue, but it is the summary disassociation of property rights that is at issue.

In other words, if you are a legitimate business trying to help the injured worker and his or her attorney, you just got run out of town - and your house and all your assets vaporize in the process. If the lien claimant is a high volume, low fee per service vendor (such as a durable medical equipment vendor or pharmacy) there is no recourse and those services become unavailable. 

If liens won’t be heard or considered until the case in chief is resolved, then why require the liens to be filed BEFORE that event – often LONG before that event?

This leaves the injured worker whose case is in dispute but who may legitimately be entitled to, or may require, such services and goods, without recourse.

Let's talk about the "unintended consequence" of what I think will be a typical defense strategy: forcing lien claimants to pay the filing or activation fee before payment of an invoice would even be considered.  Because a lien claimant has no rights - remember they are not a party until the case in chief is resolved - there are no enforcement options a lien claimant has whatsoever. Sure there are penalties and business practice issues in the audit process - those will never come to light in my opinion. 

SB863 makes it far too enticing for employers and defense attorneys to play games with providers and force them to jump through all the new hoops before paying them – and that is going to exacerbate the “lien problem”, not fix it.

The illegal part of this scheme is not relative to the lien claimant vendor attempting to collect a debt. It is illegal to the extent that a California worker may be denied services to which he or she is rightfully entitled and which could provide relief from an industrial injury. The "party in interest" in this lien issue is the injured worker whose claim has been denied and seeks treatment pending resolution of the reason for the denial.

This not a "California workers' compensation system that is equitable and efficient for both injured workers and employers."

While the legislature has plenary power (unqualified and absolute) to "fix and control the method and manner of trial of any such dispute, the rules of evidence and the manner of review," that power is tempered with the duty to provide "for the comfort, health and safety and general welfare of any and all workers and those dependent upon them for support to the extent of relieving from the consequences of any injury or death incurred or sustained by workers in the course of their employment,... to the end that the administration of such legislation shall accomplish substantial justice in all cases expeditiously, inexpensively, and without incumbrance of any character." (California Constitution Article 14, Section 4).

By requiring a non-party to a case to pay a fee so it MIGHT assert a claim against that case some time in the unknown future without any rights whatsoever jeopardizes the constitutional right "for the comfort, health and safety and general welfare of ANY and ALL workers." Article 14, Section 4 clearly applies to "ANY and ALL workers" - not just those workers whose claims are accepted.

There is a simple way to legally correct this conflict: make a lien claimant a party to a case upon the payment of the requisite fee - then that lien claimant will have all of the rights, entitlements AND responsibilities of a case party. This is a simple regulatory change. And no legitimate lien claimant can argue with the fee because then they become a party to the case, entitled to evidence, and procedural protections (and obligations).

The filing of a lien, especially electronically, isn't a burden on ANYBODY. It's just a place marker. It's the Declaration of Readiness to Proceed and subsequent appearances that are the burden.

The fee is on the wrong process. It's either a huge bone-head move, or intended genocide of a very large class of vendors trying to help out injured workers whose cases are either delayed or denied, but otherwise are legitimate.

By the way, don't start writing about all of the "bad" lien claimants out there. I know they exist. These malodorous people will always exist. They exist in all forms of life - they are the outliers. And trust me that lien filing fees won't get rid of them... In the meantime those who are in the business of actually helping people will no longer be helping people.

I hope my cynicism is misplaced.

Out of State UR - I Don't Understand

I know this post is going to provoke some argument and discussion so here goes: I don't understand why it is so important that a medical treatment review physician be located within the state that the claim necessitating review originates.

The issue has come up in Illinois, which just recently passed its utilization review statute and is in the process of implementing regulations.

The Illinois statute, known as the Managed Care Reform and Patients’ Rights Act, has no mandate that reviews be done in state, but regulators have raised hackles in the state with a Department of Insurance bulletin saying that utilization review of Illinois cases must be conducted within the state's borders.

This debate has been going on for some time in Texas, California and other utilization review states.

David Menchetti of Cullen, Haskins, Nicholson and Menchetti in Chicago, a claimant's attorney, told WorkCompCentral, that reviewers "need to be familiar with how medicine is practiced in Illinois...which may be different from how it's practiced in Indiana or India."

Dr. Robert L. Weinmann, of San Jose, Calif., an openly critical and long-time advocate of requiring in-state residency for reviewing doctors in the California system argues that physicians who are not licensed in California will not be responsive to the needs of California residents.

Because reviewing doctors out of state can't be controlled by California licensing authorities, insurance companies are then "free to scour the country" for doctors who are willing to give favorable reviews to the insurers, Weinmann told WorkCompCentral.

I'm not convinced - the only real requirement is that the reviewing doctor follow the treatment guidelines as adopted by a particular state system, and if there is no guideline for the proposed treatment (hardly the case, very few ailments, diseases or injuries aren't covered by some guideline) then other protocol can be followed.

And most states have some sort of secondary review process where a treatment protocol that was originally denied can be "appealed" which provides the party denied the treatment an opportunity to raise other medical evidence of appropriateness.

In Texas, utilization review companies must be licensed in the state, and use health care providers who are licensed in Texas. However, the companies and providers may be located outside of the state.

That's a nice compromise, but I still don't see licensing within a particular state as being any assurance of quality or the ability to regulate the process.

Utilization review is like having an editor - the process is all paper (okay, probably digital now) driven. The reviewing doctor has no relationship with the patient, no face time, no contact other than the assignment to review a file and the proposed treatment then render an opinion based upon approved guidelines whether the treatment is warranted or not.

Last I checked, human anatomy and biology has not changed from state to state. The laws are different, but the reviewing physician isn't being asked to make a legal determination. The practice of medicine may be different in India, as noted by Menchetti, but not if its "Western" medicine.

Leaving carriers "free to scour the country" for doctors who are willing to give favorable reviews as an objection doesn't cut it either, in my opinion. If a carrier is predisposed to deny a treatment request there are plenty of in-state physicians who would be willing to opine such (and visa versa - just as many for the claimant side to opine the opposite). It doesn't matter where the doctor is located.

Utilization review companies, like most everything else in workers' compensation, deal in volume. Volume is what makes profitability in the highly regulated atmosphere of workers' compensation possible, from policy selling to medical management to claimant representation. Workers' compensation on the business side is all about volume.

When dealing with the economics of volume, cost control is critical, and if a review company based in Arizona using doctors from Nevada charges less for a review of an Illinois case than a Chicago physician then the market will demand that course of action. To make utilization review economically viable a review company needs to be as efficient as possible, which may mean having out of state physicians doing the work because it is cheaper.

How does a claimant, and proposed treatment, in California differ from the same circumstances in Illinois other than perhaps the actual standard of review (which is all in writing)? The reviewing physician has no doctor-patient relationship so there is no malpractice issue, thus the licensing of the physician in the review state is irrelevant.

A reviewing doctor or organization that gets routinely overturned on appeals is not going to be used for long because the payor is not going to tolerate the unnecessary expense of review that is ineffective.

I don't know this for fact, but my assumption is that general health insurance has been down this path a long time ago, and that treatment decisions are reviewed by physicians not located in the same state (perhaps even country) in which the requested treatment is being sought. Perhaps someone can enlighten me.

Mandating that utilization review be conducted by physicians located in the state doesn't make any logical sense. I'm sure someone will try to enlighten me.

If You Want to Play You Must Pay

I'm glad to see that the 9th Circuit Court of Appeals has some common sense in the handling of civilian war time contract workers - people put on the front lines of combat in a civilian capacity but who are just as at risk for injury as the military servicemen in similar locations.

The 9th Circuit Court of Appeals rejected an administrative law judge's attempt to reduce a Blackwater security specialist's permanent partial disability rate from $1,114 a week to $1 a week, based upon the date the worker planned on returning to a lower-paying job in the United States.

Daniel Raymond, a Blackwater private security officer assigned to the U.S. Ambassador for Afghanistan, injured his back while jogging during work-related physical training in May 2007. He received treatment and completed the rest of his one-year contract with Blackwater, before returning to the United States in August 2007. Raymond filed a claim for workers' compensation benefits under the Longshore and Harbor Workers' Compensation Act and the Defense Base Act.

Judge Gerald Etchingham awarded Raymond PPD benefits at the maximum rate of $1,114 a week from 2008 through August 2011, as Raymond had been earning $153,400 a year in Afghanistan. However, Raymond testified that he planned to continue serving one-year contracts in Afghanistan until August 2011, when he would return to the states to take a job in Arizona that paid $50,000 a year. He explained that he did not want to permanently relocate to Afghanistan, because his wife and five children in Yuma, Ariz., needed him. Working until August 2011 would allow him to pay off his family's home, Raymond said.

Citing Raymond's testimony about his plans for the future, Etchingham set Raymond's PPD rate after August 2011 at the minimum rate of $1 per week. (The judge based the $1 per week rate upon the fact that Raymond's post-injury wage in the United States was "remarkably similar" to his wages earned before leaving for Afghanistan.)

On appeal by Raymond, the Benefits Review Board (BRB) reversed, concluding that the judge should not have reduced the claimant's PPD after August 2011 because of "speculative" evidence about when Raymond might retire.

The BRB said, "It is well-settled that there is only one average weekly wage per injury on which disability benefits will be based and post-injury events generally are not relevant to determining average weekly wage."

Blackwater (notoriously in past news for unflattering management of its civilian war time employees) appealed. Blackwater's argument is that Raymond is in no different position than had he not been injured.

"Today, Daniel Raymond is exactly where he would be had he not been injured," Blackwater wrote in its appellate brief to the 9th Circuit. "He is in Yuma, Ariz., working in his usual and customary domestic employment. He is earning the same wages he would have had he not been injured. However, there is one big difference: In addition to the check he receives for that domestic employment, he also receives a weekly amount of $1,114.44, tax-free. Under the interpretation of the Longshore Act adopted herein by the Benefits Review Board, he will receive these payments for the rest of his life. At 46 years old, he has a remaining 32-year life expectancy, according to the Social Security Administration. This means that between August 2011, when he would have returned to the United States, regardless of whether he had been injured, through the remainder of his expected lifetime, he will receive a staggering total of $1,854,428.16. This is in addition to his domestic wages, which the Administrative Law Judge held are the same that he would have received regardless of injury."

A "staggering total"?! Blackwater doesn't mention in its brief that the inflation adjusted total of $1,114.44 per week is next to nothing over the course of 32 years. Even assuming a modest 3% rate of inflation, at the end of 32 years this sum has the equivalent of about $325 in purchasing power...

In the meantime Blackwater's government contracts increased from just $736,906 in 2001 to over a billion dollars from 2003 through 2006.

Since then Blackwater has changed owners after the 2007 shooting in Nisoor Square, Baghdad. The company now reportedly is doing about a third of the business it was doing at its height, or about $300 million annually. Out of that $300 million per year it must now pay Raymond about $58,000 per year, or .0019% (i.e. 0.00019) of its annual earnings.

The 9th Circuit did its job - upholding the law.

"We have repeatedly held that the LHWCA does not grant an ALJ any discretion to re-calibrate a claimant's average weekly wages at the time of injury based on future events that would have changed that wage regardless of injury," the court wrote.

It doesn't matter if the law produces an "absurd" result. That's the risk of being in business and of being subject to the laws of the land.

"Finally, Blackwater's argument that applying the plain language of the LHWCA to overseas contractors creates 'absurd' results misapprehends the role of the judiciary. The LHWCA and the Defense Base Act embody legislative choices that we have no authority to disregard. Accordingly, we must interpret and apply the LHWCA and the Defense Base Act as written," the court said.

No one likes the impact of war, either in military or civilian service. But war has a price. If a civilian company wants to play war, it has to pay the price.

And just as a company that wants to play war must pay the price, so too must a religious sect if it wants to engage in commercial activity regardless of whether it pays wages to its member workers or not - at least that's what the Montana Supreme Court ruled.

In Big Sky Colony et al. v. Department of Labor and Industry, No. 11-0572, the center of controversy was the effect of a 2009 amendment to the Montana workers' compensation laws which expanded the statutory definition of "employer" to include religious organizations for workers' compensation purposes.

Big Sky filed a constitutional challenge to HB 119, by Rep. Chuck Hunter. The commune argued that lawmakers unfairly targeted the law at it because the construction industry and the Department of Labor and Industry were under the mistaken impression that Hutterites have a competitive advantage because they can offer lower bids for projects because they don't pay their members wages or pay for worker's compensation coverage.

The Hutterites are Anabaptist Protestants who center their lives on their religion, and share a common ancestry with the Amish and the Mennonites, according to www.hutterites.org.

They believe in sharing their possessions and reside in German-speaking communes scattered across northern United States and Canada. There are about 50 colonies in Montana, with an average of about 100 people in each colony, according to a 2010 state report.

The colony provides all the necessities of life for its members, including food, housing, clothing and medical care. Property ownership is forbidden by church doctrine, and members voluntarily provide their labor and support to the colony as an exercise of their religious faith and without expectation of payment.

The Hutterites are primarily farmers, but in recent years have also begun competing with private companies in the areas of construction and manufacturing.

The state argued that HB 119 was concerned only with the commune's commercial activities in these areas, and that requiring workers' compensation coverage for Hutterite workers would only affect the colony's external relationship with the state, not the relationship between the Hutterite church and its members.

The trial court disagreed and exempted Big Sky from HB 119, but the Supreme Court in a split decision reversed and held that Big Sky was subject to workers' compensation requirements.

Supreme Court Justice Brian Morris, writing for the majority, concluded that HB 119 was facially neutral and placed only an incidental burden on the Hutterites' religion.

"HB 119 regulates the colony's engagement in commercial activities in the same manner that the workers' compensation system regulates the commercial activities of other employers in Montana," he reasoned. "The colony, like all other employers in Montana, simply will make less money on these commercial endeavors once it pays the workers' compensation premiums."

The dissent argued that HB 119 "interferes with the internal relationship between the colony and its members under the central tenets of the Hutterite faith."

I disagree with this argument and agree with the majority - if an organization, regardless of its religious affiliation, desires to compete commercially against other commercial interests, and not just within its own religious community, then it must be on equal footing with its competition within the bounds of the laws applicable to all people.

Mandating workers' compensation insurance is not an interference with the internal relationship between the colony and its members, it is reinforcing the interests of the state to ensure that its citizens are protected from work injury or illness. Should a member of the colony decide to cease his or her relationship or affiliation with the colony then the consequences of that person's well being fall upon the state.

If Big Sky did not with to engage in commercial activities then there would be no argument - no workers' compensation needed for its internal projects staffed by its members, much like most volunteer work. Step into the world of commercial competition, then its a matter of state interests.

Like Blackwater, if you want to play you must pay.

RAND & WCIRB Finally Address Small Employers

Last week the Rand Corporation released a study prepared for the Commission on Health and Safety and Workers’ Compensation on the effect of experience rating modifications.

The conclusion of Rand was that lowering the premium threshold for California employers to be eligible for experience rating modifications would improve worker safety and reduce employer costs.

This has been a topic of discussion for the past couple of years at the Workers' Compensation Insurance Rating Bureau (WCIRB).

As of July 1, 2012, the qualifying threshold for employers to receive an experience modification factor is a total of $25,225 in premium over the previous three years, calculated at the pure premium rate level as opposed to the premium actually paid to the carrier. So while an employer might have paid $28,000 in premiums over the previous three policy years, if its pure premium rates based on employee classification codes total less than $25,225, the employer would not be eligible for experience rating.

The Rating Bureau sets the rating threshold for California employers in its Experience Rating Plan, and the Insurance Commissioner has to approve any changes to the plan.

To measure the impact that experience rating has on employers, researchers compared businesses that recently became experience rated to those that were near the threshold, but didn't qualify for experience rating. The differences between the two groups should come as no surprise to anyone that believes in the power of market economics on human behavior.

This comparison of “virtually identical” employers showed an 8.4% decrease in claim reports after a business became experience rated for the first time.

While there was a decrease in claim activity for employers recently experience rated, the average cost per claim did not change. The researchers say it was unlikely that these employers were suppressing claims.

If employers were not reporting claims, Frank Neuhauser, a researcher with the University of California, Berkley, and one of the authors of the study, said the average cost per claim should increase, in part because smaller claims are easier to conceal. Additionally, smaller claims have a bigger impact in calculating experience modifications, or X-Mods, and the premiums that employers ultimately pay.

Another point of contention in the equation is the "split point" used to determine any discounts.

In calculating an X-Mod, carriers use the full cost of the claim up to the split point threshold, which is $7,000 in California, and discount the cost of the claim above that amount. The premiums charged to a small employer that is experience rated would increase by about the same amount if that business had a single $4,000 claim or a single $1 million claim.

Carriers can apply debits and credits to increase or decrease the premiums they charge, and larger carriers will often have two subsidiaries, one offering lower rates for employers with better claims histories, and the other charging higher rates for more risky employers.

But carriers aren't applying the discounts to small employers, largely because they don't consider the experience of a small employer to be credible in predicting future experience - their loss experiences are too diverse to be predictive of future behavior.

The next step researchers are going to look at, according to the story, is to examine the effect of adjusting the split point for determining primary and excess losses to see if lowering the split point reduces the variability in premiums charged to small employers.

This has been a point of discussion within the WCIRB of late, and the National Council on Compensation Insurance (NCCI), rate maker for most states, has already put into place plans to increase the split point and then tie it to inflation.

Which brings me to my basic point - in California we had a monumental change to the workers' compensation laws dealing with claims, and primarily litigated claims. These changes were pushed by Big Business and to a lesser extent Big Labor.

There was no consideration for Small Business. There was no consideration for dealing with the underwriting component of workers' compensation - the part that most directly affects Small Business.

And yet Small Business when aggregated is by far the biggest employer in the state and is disproportionately affected by the costs of workers' compensation both directly and indirectly.

I see that as a fundamental flaw in the entire negotiation and implementation of SB 863 - especially in light of the fact that in rating an employer for premium purposes the system makes a big distinction concerning the size of the business.

Listen, we all know that Small Business has no say in the California Chamber of Commerce, one of the big proponents of SB 863. We all know that Small Business really has no clout, no organization, no unification whatsoever in the political process of Sacramento. The Small Business owner is too busy trying to make payroll, manage inventory, people, customers all by him or her self.

At least it appears that the WCIRB is listening, and has some idea that Small Business really is important to the economy.

Working the experience modification formula and rating thresholds is a good first step towards making the economic burden of paying workers' compensation premiums, and engendering a more safety conscious Small Business population.

On another note, it was interesting to see, the day after my vacation started, that the Los Angeles Times ran a story about Deloitte's imbalanced ability to leverage contacts, political contributions and persuasion to garner California state information technology contracts and the huge cost overruns, as well as failed implementation, of these systems - notably the Division of Workers' Compensation's Electronic Adjudication Management System.

It's no secret that I'm no fan of EAMS. I'm not a computer expert, but I do know how shared systems should work. EAMS in my opinion is far from where a professionally built multi-million dollar network should be in terms of user access, ease of use, customization, reliability, etc.

The Times story touches on why EAMS doesn't do what I think it should do: money influencing politics. I'm glad to see that a large daily publication at least is bringing this to the public's attention, albeit a bit tardily.

Last Post of the Year and Italian Moments

It's my last blog post of the year.

I was going to go out with a "bang," lots of fight, lots of pejoratives on whatever topic, person or process that I chose to pick on this morning; a vim, viger and vinegar type of thing.

There's no shortage of topics to go after, for sure.

There's the ongoing litigation between football players and their owners about where claims can be filed.

Texas report cards on carriers produced a surprise single poor performer.

North Carolina finally put some fee schedules in place but is still wrangling with dozens of other rules.

And the Pennsylvania Supreme Court said that because the Penn Transportation Authority is not a branch of the state it is not immune from suit under the Federal Employees Liability Act.

But, 'tis the season as they say.

I'm tired! It's been a long, long year, and I met my personal goal of posting something on topic (workers' compensation), hopefully with some artful argument, and hopefully thought provoking, every single business day, including days when I've been sick (I actually don't think there were any) and days when I was on vacation (not really vacation - just away from my desk; I have a hard time shutting down...).

Here's what I've learned:

There's a lot of people in the workers' compensation industry who truly care about how their state (or Federal) system operates.

There's quite a difference in opinion on how workers' compensation should work, or what could be done to make it better.

The differences in opinion may be colored by a person's position in the industry or with a particular company, but often when out of the constriction of authorized speech I've found that many opinions are actually quite similar.

People hate fraud, whether it is being perpetrated by a claimant, vendor or insurance company representative.

People hate disparate treatment of like-situated individuals or companies.

People disagree about how to control costs in workers' compensation but generally agree that overall costs are too high. Some disagree about whether costs are even an issue.

Some are excited about the potential for carve-out programs, work injury insurance plans, and other alternative work injury protection systems, but seem to be pessimistic about whether such alternatives could actually co-exist with traditional systems.

Mostly though I've learned that the single biggest value people cherish in this industry is the network of other professionals.

Workers' compensation has gotten so complex, so specialized, that the skills and knowledge necessary to successfully navigate the system, let alone actually run a business in it that can make a profit, are hard to come by. Whether you're someone looking for work, or someone looking for a person with the right set of skills and knowledge - there just aren't enough people to do the hard work. Our network is special because our industry is so unique - those outside the industry can not relate whatsoever.

When I started out in workers' compensation around 1984, the managing partner of the law firm I worked for told me that work comp was not glamorous, was looked upon with disdain by those who didn't know the law, but that it wasn't ever going away and that those who kept their skills and knowledge up would always be able to make a living.

I agree with that.

Workers' compensation, for all of its faults, is a necessary component to the stability of the economy.

The cost of workers' compensation in the grand scheme of things is not that much relative to the gross payroll insured. Compared to general health, the medical component of workers' compensation is just a drop in the proverbial bucket.

But the beauty of work comp is that there it reduces the friction between the production of products or services and the delivery of same. It's a fine mineral oil - not perfect for all applications, but generally good enough to get the job done.

I suffer from this Italian-emotion malady. My dad did too, and so did my grandfather - who immigrated to Ellis Island from Italy. We get weepy-eyed with any small sentiment or emotion that might provoke some liberal gene in our systems.

I guess that's why Italians are artists....

I get weepy-eyed thinking about our industry, about the millions of people that we actually do help get better from their injuries or illnesses, that actually do put their indemnity benefits to good use to get back into the work force and become helpful, productive citizens.

We tend to focus on the outliers in this business - the ones that we can't help, can't fix, or that won't ever be fixed. Those are the challengers and they escape our notion of good beneficial social repair.

But in reality, the outliers are a very small percentage of the gross numbers that this industry takes care of. These outliers make for great blog columns, but really, after I've thumped my chest and placed a few good adjectives or adverbs in front of inflammatory nouns and verbs, they don't really affect the big picture.

And what is the big picture? We all pay into a system (employers are responsible for the actual payment, but that cost is spread out over the goods and services consumed by individuals) that we hope will be there for us on the day that we have the misfortune to need some assistance.

So during the next 11 days when I'm not complaining or whining about something in our system, pick out one file, one case, where there was a success, where a person injured in the course of work was timely provided treatment, benefits, and went back to work thankful that there was a job waiting. Offset those negative cases with the one positive case that makes working in this industry worth while.

I know, even when I was doing defense work, that I was proud - weepy Italian proud - to be able to close a case knowing that the injured worker really was taken care of, for I assumed that part of my job as a defense attorney was really just reducing the friction.

The kids got home from college last night. My wife got a new doggie for Christmas. We have YET to put up any decorations. So I'm going to enjoy the last few days of the year hoping that my comments in 2012 made some difference in the state of workers' compensation.

I thank you for reading. 2013 is going to be one heck of a year - all of us are going to need some rest before it starts.

So go home. Kiss your spouse, kids and new dog. Do whatever your family traditionally does for the holidays. Stay warm. Be safe.

And be proud that we work in the single largest privatized social benefit system in the world, second only to Social Security in the delivery of medical and indemnity benefits.

When you get down to it, workers' compensation, at its most basic function, is just taking care of people. I like taking care of people; makes my liberal Italian genes provoke those hormone induced weepy-eyes and that feels good.

I'll type at you January 2, 2013. Happy Holidays everyone.

Failure in Evidence Least of Employer's Issues

A recent Florida 1st District Court of Appeals (1st DCA) case highlights what is a common problem with employers attempting to mount a defense in the denial of a claim - failure to have their proverbial evidentiary act together.

For some reason, perhaps because of the lax administrative atmosphere of workers' compensation hearings, employers/carriers/defendants just don't take the rules of evidence seriously, and then when the case goes against them there is a complaint that the system is rigged in favor of the injured worker.

The following case illustrates what I believe is a more common reason for cases being decided against the employer - complete failure to obtain and properly authenticate ADMISSIBLE evidence.

Law.com defines admissible evidence in part as, "evidence which the trial judge finds is useful in helping the trier of fact (a jury if there is a jury, otherwise the judge), and which cannot be objected to on the basis that it is irrelevant, immaterial, or violates the rules against hearsay and other objections."

The 1st DCA in Vaughan v. Broward General Medical Center et al., No. 1S12-0491, basically said that the employer's failure to authenticate a physician's note that was addressed "to whom it may concern" was a failure in evidence and thus this note, which was decisive in the trial judge's ruling on the case, was inadmissible and could not be relied upon as evidence.

Beverly Vaughan was attacked by a patient while working as a patient observer for the Broward General Medical Center in June 2004. She suffered a right shoulder sprain, multiple forehead abrasions and a cervical strain.

Vaughan's authorized treating orthopedist, Dr. Paul Meli, recommended physical therapy to address her cervical strain in January 2008. After a few months of treatment, Meli placed Vaughan at maximum medical improvement in December 2008.

Vaughan returned to see Meli the following November, complaining of pain in her right shoulder and cervical spine. Meli again recommended physical therapy. He reported that Vaughan's industrial injury was the major contributing cause of her pain complaints and her need for treatment.

I interrupt this narrative for an important observation - the date of injury was 2004, soft tissue injuries. Vaughan is still complaining about those same injuries 5 years later. This in itself doesn't make any anatomical or medical sense. The employer/carrier/defense should not have been in this position in the first place...

Back to the story: Two weeks later, in December 2009, Meli ostensibly changed his mind and wrote a letter addressed to "Whom it May Concern" indicating that Vaughan's symptoms were not related to her industrial accident.

Vaughan filed a petition for benefits in November 2010, seeking authorization of continued physical therapy and other benefits, but the medical center denied her request based on Meli's statements in the letter he purportedly wrote in December 2009.

A hearing on Vaughan's claim was set before Judge Hogan, and the hearing date was continued twice. On the date of the hearing, an attorney for the employer requested a third continuance, since the employer had not yet been able to depose Meli and clarify his medical opinion.

Vaughan did not oppose the employer's request, but since the defense counsel said his client would not be prejudiced if the hearing were to proceed, Hogan denied the continuance.

At the hearing, the employer sought to introduce the December 2009 letter supposedly written by Meli, but Vaughan argued the document was inadmissible as unauthenticated and as hearsay. Vaughan further contended that the correspondence did not qualify as a "medical report" under Florida Statutes Section 440.29(4).

Vaughan's evidentiary objections were overruled. Hogan ruled against Vaughan and Vaughan appealed.

The 1st DCA said the first mistake was that Hogan never ruled on whether the employer had complied with the requirements of Section 440.29(4) for admitting the letter as a medical report, or even if the document could qualify as a medical report. She also did not issue findings on whether the letter was authenticated, non-hearsay or covered by an exception to the hearsay rule.

To the extent that Hogan made an implicit finding that Broward followed the procedure set forth in Section 440.29(4) to render the letter admissible, the court said this finding was not supported by the record since the employer's attorney conceded that the employer had not served the letter upon Vaughan's counsel at least 30 days before the hearing, as required by the statute.

Even if the letter were admissible as a medical record under Section 440.29(4), the court added, authentication of it was required prior to its actual admission into evidence.

Since the reliability of the letter was never established, the court said Hogan erred in admitting and relying on statements it contained to deny Vaughan's claim.

Peeling back the skin of the onion a bit, what the 1st DCA is really telling the employer is that there is no real excuse for failing to authenticate the doctor's letter. The letter was dated December 2009. The first hearing was over a year later and continued twice. Surely the defendant could have obtained the doctor's deposition or even a simple declaration under penalty of perjury as to the authenticity of the note.

Nope - workers' compensation in the legal world is a volume business. Sometimes details get missed because the next case has to be dealt with. That's not an excuse, that's just fact. The employer/carrier/defendant simply failed to perform a very routine, easy, task - getting the document in question authenticated and then qualified as a piece of evidence.

Yes, the facts of this case seem pretty obvious: physical therapy for over 5 years for soft tissue injuries? Are you kidding me? I know you're shaking your head, thinking that this court is off base and that there is no semblance of reason in the law.

Sorry employer/carrier/defendant - common sense has no place when there are explicit rules on how things get done; rules that aren't all that difficult to comply with, and rules that, if the shoe were on the other foot, would just as easily benefit the employer/carrier/defendant just as much as the injured worker.

Employers, next time you have a complaint about a ruling coming out of the courts, look first at yourselves - did you proffer GOOD, ADMISSIBLE evidence? It's not that hard. 

Evidentiary rules protect the sanctity of jurisprudence. The court in Vaughn had no alternative in its ruling regardless of whether or not common sense dictates otherwise.

And as I mentioned earlier - how is it that Vaughn was still getting physical therapy 5 years after date of injury? Sorry - claims management was non-existent. If I were the risk manager for the employer someone would be out of a job right now. This case exudes incompetence throughout its history.

By the way, the 1st DCA seems to be able to warp time. The opinion in Vaughn is dated 12/19/2012. Page 4 of the opinion references "the merits hearing held on December 28, 2012."

The Politics in Challenging Independent Review

One of the most controversial elements of the California Independent Medical Review (IMR) process is that the identity of the reviewer is to remain confidential and that there is no right of appeal.

Texas has had IMR for some time, though it differs from California in that in Texas IMR decisions can be appealed. In Texas this process is known as independent review organization evaluations, or IRO. But like California, reviewers remain anonymous.

Texas Rep. Bill Zedler, R-Arlington, has filed House Bill 287 for the 2013 legislative session, which convenes Jan. 8. HB 287 would amend the law so that the identities of IRO physicians is not confidential.

HB 287 would amend Texas Insurance Code Section 4202.009 to require that following the completion of a review determination, a party that sought the review is entitled, upon a written request to the IRO, to the name and professional qualifications of any physician or other individual health care provider who made the review determination.

The bill also would amend Insurance Code Sec. 1305.355 by adding Subsection (h) to provide that after the completion of an independent review, a party to the dispute is entitled, upon written request, to the name and professional qualifications of any doctor or other health care practitioner used to perform the review.

The argument for eliminating the confidentiality of IRO physicians is to increase openness in the IRO process, including ensuring that there are no conflicts of interest on the part of IRO reviewers and that reviewers are not unfairly ruling for or against patients.

"We should be able to find out if a doctor is never ruling in favor of the patient," Zedler told WorkCompCentral.

But is it really in the interests of the injured worker patients to discover the identity of the physicians that are denying medical care?

Or is it really in the best interests of the physician whose treatment recommendation or protocol is being challenged? For after all, if a prescribing physician's treatment is denied then that physician doesn't get paid, and may have further protection against a malpractice incident.

In addition to HB 287, Zedler has also filed HB 286 relating to the investigation and resolution of complaints filed against physicians. HB 286 requires the Texas Medical Board (TMB) to reveal the identity and credentials of any expert physician that will be relied upon at a TMB hearing. HB 286 was filed 12/14/2012.

Zedler has also filed HB 305 relating to the release of complaint information by the TMB to the legislature. The bill amends the Occupations Code to provide that a single member of the Texas Legislature may request and receive all information regarding a complaint against a physician to aid in a legitimate legislative inquiry. The Occupations Code currently provides that TMB complaint information can be released to a legislative committee created under Subchapter B, Chapter 301, Government Code. The member of the Texas Legislature requesting the information would be required to sign a non-disclosure agreement.

The Texas Tribune has questioned Zedler's past relationship with doctors and it seems to me that in reality Zedler has the interests of physicians that he is seeking to protect in mind, not the interests of workers.

In a Texas Tribune article dated April 5, 2011, it states, "Zedler's critics suggest he may have another motive: Of the five physicians Zedler obtained records on from the Medical Board in 2008, at least two were campaign contributors who gave him a combined $25,000. The doctors, who weren’t his constituents, had been accused of “egregious” treatment violations such as injecting natural gas and jet fuel into patients to diagnose chemical sensitivities."

Another Texas Tribune article, dated September 16, 2010, questioned Zedler's access to confidential TMB and Texas Department of Insurance (TDI) Division of Workers' Compensation (DWC) information to help donor physicians who were the subject of TMB and DWC investigations:

"Of the five physicians whose cases Zedler took it upon himself to review, at least two were campaign contributors, campaign finance records show. In a phone interview, Zedler recalled requesting information about Houston anesthesiologist Vladimir Redko and Dallas thoracic surgeon Dr. William Rea, neither of whom were constituents. According to the board's disciplinary orders, both were ultimately sanctioned for 'egregious' treatment violations ranging from performing invasive procedures to injecting natural gas and jet fuel into the patients in order to diagnose chemical sensitivities. Records show that the doctors gave Zedler a combined total of $25,000 in the past half-decade and that some contributions were made just weeks before Zedler requested their case files."

"Zedler testified in April 2009 that he used the tactic of requesting confidential records to get the board to drop at least one case. A letter from Zedler, released by the Texas Medical Board through the Public Information Act, shows he asked for the 'immediate appeal' of one doctor’s sanction (the doctor’s name was redacted). The former executive director of the Texas Medical Board remembers hearing from Zedler frequently. 'He was very active at contacting me about issues he had,' says Dr. Donald Patrick, a neurosurgeon who led the board until 2008. 'Let me just say this: The good legislators called up and asked for information. Legislators that I didn’t regard as good called and tried to influence what we did. I knew the difference.'”

The alleged purpose of removing the confidential nature of IMO/IMR identities is to ensure that there is no conflict of interest.

But in reality it seems the conflict of interest is in reverse; the actual disclosure of that information is not for patients to know who is making decisions on their treatment, but to provide treating physicians information that would assist their professional lives.

Some Californians are actively in the process of challenging the new law's, SB 863, IMR confidentiality provisions. Texas Rep. Zedler's actions and journaled history should be reviewed by any judge or legislator brought the challenge to properly question the motives of such appeal.

And Texas legislators should also pay attention lest they unwittingly increase the risk to patients being treated by physicians who fail the Hippocratic Oath.