Navarro - No Big Deal

The California workers' compensation legal community is all abuzz about the most recent opinion out of the Workers' Compensation Appeals Board in Navarro v. City of Montebello.

In the original Navarro decision the WCAB had issued a notice of intent to rule that Administrative Directive Rule 35.5(e) is an invalid interpretation of the Labor Code concerning medical-legal evaluations.

Rule 35.5 had limited injured workers and employers from electing to obtain a different medical-legal evaluator in cases where subsequent claims of injury were asserted and the injured worker had already undergone a QME evaluation. Rule 35(e) required in such circumstances the employee to return to the same QME to the extent possible.

The WCAB said there's nothing in the statutes that could be interpreted to mandate a single QME evaluator -

"Based upon our review of the relevant statutes and case law we hold that:

(1) The Labor Code does not require an employee to return to the same panel QME for an evaluation of a subsequent claim of injury.

(2) The requirement in Rule 35.5(e) that an employee return to the same evaluator when a new injury or illness is claimed involving the same parties and the same type of body parts is inconsistent with the Labor Code, and therefore, this requirement is invalid."

Navarro claimed a cumulative trauma injury through February 9, 2009 and was evaluated by a panel QME. Thereafter he filed additional claims for specific injuries with some overlapping body parts (but not all). Defendant petitioned to compel evaluation of the applicant's two subsequent claims using the original panel QME but did not ask for a re‑evaluation of the prior cumulative injury. Applicant objected arguing Rule 35.5(e) was invalid as an interpretation of the parties rights. The trial judge agreed with applicant and declined to order a re-examination with the same physician.

The language that led to the contest is in Labor Code section 4062.3(j): "The medical evaluation shall address all contested medical issues arising from all injuries reported on one or more claim forms prior to the date of the employee's initial appointment with the medical evaluator.”

Some of the folks in the system believe that the WCAB has opened a can of worms, inviting "gaming" of the system.

Others are more circumspect and don't believe that this decision really makes any big difference.

I'm one of the "others" - this case is much to do about nothing in the grand picture.

First, the case affects a very small percentage of cases - the fact pattern in this case is not representative of but a small minority of claims. Most cases don't get litigated, and when they are litigated most claims don't allege new claims of injury after a QME evaluation.

Second, for those cases where new claims of injury are alleged after an initial QME evaluation, the procedure is now clearly spelled out - get a panel going now and don't mess around with trying to get back to the same doctor.

Applicant attorney John Don remarked to WorkCompCentral that, "Comp is hard enough without overzealous attorneys conflating the claim with needless additional panels," suggesting that the answer was to use Agreed Medical Examiners as much as possible.

And defense attorney Richard "Jake" Jacobsmeyer, in his email blast about the opinion, was likewise conservative in his view of Navarro, stating that the case isn't going to make a big difference in the day to day operations of workers' compensation litigation, and that the opinion clearly states that any QME evaluation is to provide a report that covers all claimed injuries prior to the date of the evaluation.

Navarro is not a big deal folks. Relax. It will have minimal impact on claim costs, means very little in terms of procedural interference at the trial level, and actually clarifies a matter subject to interpretation so everyone's on the same page.

This does not require a legislative fix and there's no need to "reform" anything. Get back to your job of providing benefits as quickly as reasonably possible to get the claimant out of the system and back into the work force.

Nothing changes.

Z, Carey, Fey & WCC - All Together

I know how Jay-Z, Jim Carey and Tina Fey feel now.

I opened up the mail yesterday and was astounded to get a notice that WorkCompCentral is being fined by the New York State Compensation Board $4,000 for failing to secure work comp insurance for it's sole New York employee.

W?! T?! F?!!!!

How did this happen? Who dropped the ball? And that employee was just hired about 8 weeks ago - how could the fine be THAT much (about 8% of the total payroll for that employee)?

And WorkCompCentral of all businesses! Oy vey - the embarrassment and professional shame; probably the worst thing that could happen to a business that so righteously and piously covers the workers' compensation industry's news.

Certainly that piddly amount pales compared to Tina Fey's $79,000 penalty - but then again Tina Fey's investments and businesses likely make more in one week than WorkCompCentral does in an entire year.

Tina Fey's insurance broker took the fall for her, stating publicly that it was a clerical error on the part of the brokerage that caused the oversight.

“We collectively accept full responsibility for this clerical error,” said DeMille Halliburton, vice president of insurance broker Robertson Taylor. “Tina Fey was never delinquent in paying premiums or having the proper … coverage.”

In 2011, the NY SWB obtained an $18,000 judgment against rapper Jay-Z for failing to provide coverage for his household staff in New York City for three months during 2009. The board later withdrew the judgment against the musician after finding that the failure in coverage was caused by a clerical error on the part of his insurer.

I have to make the same sort of claim, so I hope that the powers that be at SWB take pity on me and WCC.

Turns out we covered the employee in New Jersey - that's what my broker says at least - and he has a policy to prove that.

What would my California based broker know? New York, New Jersey - they both are on the East Coast, right next to each other. Both start with "New".

And obviously the intent was there to cover - otherwise we would not have purchased any insurance whatsoever.

Last year, SWB asked the New York County Supreme Court to vacate a $72,000 judgment against comedian and actor Jim Carrey who also ran afoul of policy checks, and it turns out that Carrey actually had coverage in place, but a clerical error by Travelers Insurance Co. made it appear that he didn't.

Certainly New York's policy of presumption of guilty until proven innocent gets headlines and should make employers think twice about skirting their coverage obligations.

But in the case of the happy wanderer, who ignorantly had every reason to believe coverage was in place and has acted quickly to correct the error, such a fine should be waived.

Compliance has occurred. I plead guilty. Just lighten my sentence based on my good behavior...

Benefits Due When Due

In an unusual case, the Ohio 10th District Court of Appeals ruled on Monday that the family of a long-time plastics factory worker was entitled to an award for the loss of use of his arms and legs in the days leading up to his death, even though the medical evidence indicated that he was comatose and not aware of his paralysis, and his family didn't submit a claim for loss of use until after he died.

In State ex. Rel PolyOne Corp. v. Industrial Commission, Glenn Evans was employed for many years as a laborer for the PolyOne Corp. and its predecessor company. PolyOne makes specialized polymer products.

Before he retired in 1994, Evans was exposed to vinyl chloride – a colorless flammable gas used to make plastic and vinyl products. The U.S. Environmental Protection Agency recognizes it as a highly toxic and carcinogenic compound.

In 2010, doctors diagnosed Evans with hepatic angiosarcoma. This is a very rare malignancy with a poor prognosis, according to the Oxford Journals Annals of Oncology. Vinyl chloride exposure is widely acknowledged as a cause of the disease.

Evans filed a workers' compensation claim in October 2010 based on his cancer diagnosis. PolyOne, a self-insured employer, certified his claim.

After his diagnosis, Evans' health quickly deteriorated. On July 4, 2011, orthopedic surgeon Matthew E. Levy examined Evans at his home. Levy noted that Evans had no functional or volitional use of either of his arms or legs. He also did not respond to verbal or visual stimuli.

Evans died four days later, at the age of 74.

He was survived by his wife of 56 years, son, daughter and five grandchildren.

Evans' wife submitted a claim for death benefits and scheduled loss compensation for her husband's loss of use of his arms, legs, hearing and sight prior to his death.

A district hearing officer determined that Evans' family was entitled to death benefits, but denied the family's claim for a loss-of-use award.

A staff hearing officer vacated the DHO's ruling, finding that Evans had indeed suffered the total loss of use of his arms and legs prior to his death, ruling they were the direct result of Evans' angiosarcoma and that Evans' comatose condition was not a bar to scheduled losses.

The SHO also ruled that there was no persuasive medical evidence to suggest that these losses were temporary or transient in nature, the family was entitled to 850 weeks of compensation at the scheduled rate of $775 per week (a grand total of $658,750).

PolyOne took the case to another SHO, lost, and after the Industrial Commission of Ohio unanimously denied PolyOne's request for reconsideration, appealed to the 10th District Court of Appeals. The magistrate to the 10th District recommended PolyOne's request for a writ be denied and the court adopted that position.

Death benefits are intended to compensate a worker's dependents for the loss of support resulting from the employee's death, while loss-of-use awards are comparable to an award of damages in a tort case and have nothing to do with impairment of earning capacity, said the court.

It also reasoned that because Evans would have been entitled to apply for a scheduled-loss award at the time of his death, his dependents were entitled to apply for the benefits to which he was entitled.

As long as the worker would have been entitled to an award for the loss of use of his extremities before his death, his dependents can make the claim on his behalf after his death and receive the award that would have been due to him, the court said.

It's Only One Dollar

The most difficult part about workers' compensation is that there is only one pot of money and so many competing interests trying to get to that pot.

In California that pot of money is about $9.2 billion - that's how much net written premium was reported by the Workers' Compensation Insurance Rating Bureau for 2012.

Nationally it's about $48 billion according to the National Council on Compensation Insurance.

These numbers of course don't include investment income, or the money that self-insured (or non-subscribers in Texas and Oklahoma) set aside for their work place injury obligations.

Nevertheless, the fact is that there's only so much money to go around so it becomes a tug of war with each competing interest arguing that if they don't get their fair share the injured worker and/or the employer suffers.

Workers' compensation has two big component obligations: medical treatment and indemnity.

In most states work comp is, essentially, a medical insurance plan with a bit of disability thrown in - meaning that in most states the medical component (including cost containment expenses) take more of the claim dollar than the disability or indemnity component.

That makes sense to me - the chief task of any work comp system is to ensure that someone injured at work gets prompt medical attention. The disability protection part is secondary and can wait a week or two.

But, of course, anytime there is an attempt to control costs, it comes at the expense of one interest or another.

In Wisconsin the pot of money is about a tenth of California's - there's not a whole lot available for distribution. 

The medical community in that state was not willing to sacrifice their piece of the pie to fund the indemnity slice - at least not in the manner that had been proposed through the usually benign legislative process that deals with work comp.

Assembly Bill 711, a bill introduced last year to that would introduce a work comp medical fee schedule, was effectively killed by medical industry special interests according to an article by a policy expert at the Wisconsin Center for Investigative Journalism.

The bill would allow providers to charge no more than 10% above the average paid by state group health plans and would pass the savings on to injured workers by increasing weekly payments, increasing permanent partial disability to $337 a week, up from $322. Long-dormant rates for some severely disabled workers would also increase. Employers would also have potential cost savings.

The bill came about because proponents argued that medical costs in the state's system were growing too rapidly, exceeding the level of inflation experienced by the general health community.

Bill Leuders, money and politics project director at the Wisconsin Center for Investigative Journalism, said in an article that the medical industry mobilized against the bill, starting a clash of special interest powerhouses.

Fifty lobbying groups had positions on the bill, evenly split for and against. Proponents were business groups, insurers and labor unions. Opponents were groups representing doctors, hospitals and other health care providers.

In the face of such strong lobbying interests the bill was killed because usually changes to the work comp laws are done through consensus in what is known as an "agreed-on" bill process.

The medical community said that they were left behind at the bargaining table so that is why they mobilized.

AB 711 proponents on the other hand said that medical interests just didn't come up with anything workable.

Reformers will try again next year.

They'll get nowhere, though, unless all interests understand that there's only a single dollar, and unlike the Federal Reserve Bank, there is no alchemy or wizardry available to make that dollar seem like more.

Textual Despondency

"Text neck."

This condition reportedly has been a "world wide health concern" since around 2011 when conditions associated with excessive cell phone usage for texting and other mobile communications activities other than a phone call were starting to be identified.

A couple of weeks ago I was in San Francisco for the California Workers' Compensation Institute's annual meeting.

San Francisco must be the leading city where this "condition" could be studied. I was astounded at how many people walk around that town with their necks bent towards the ground, small devices in hand, paying zero attention to where they are, where they're going, or anyone or anything around them.

The number of people with zero spatial orientation or situational awareness as a result of profound hand-held device distraction was amazing to me.

Even in the elevator of the hotel where normally cellular signals aren't strong, if existent at all, a couple of gentlemen occupied the car as I got on heading to upper floors; they both were completely immersed in their devices. They did not look up, acknowledge my presence in any way or even acknowledge each other.

We got to the seventh floor and, without even a short little glance above the screen in his hand held one fellow starts toward the open doors and says, I presume to the other guy in the elevator, "see you at dinner."

The other guy, likewise, did not take his stare off the screen of his hand held device, thumb busy scrambling about presumably entering text, and just grunted, "yep."

That scene was basically played out my entire stay in San Francisco on numerous occasions in elevators, standing in lines, walking the streets.

I experimented a bit by attempting to interrupt the myopically text bound with interjections of conversation such as "have a nice day," "what floor," or a short joke or two about whatever happened to be on my mind at the time.

Zero response. If someone was engaged in their hand held device they were not going to alter that interaction with some actual, live, human conversation - won't happen, no how, no way, at least not in San Francisco.

There are the obvious dangers of using a hand held device while operating machinery, automobiles ... trains ....

I figure that it won't be long, however, until this is condition becomes an "injury" within the meaning of workers' compensation. Certainly in states like California that recognize the continuous trauma theory of causation text neck will be a new injury trend.

There are some medical professionals already recognizing text neck and seeking to cure those afflicted with the condition, warning of dire physical consequences if left untreated: Flattening of the Spinal, Curve Onset of Early Arthritis, Spinal Degeneration Spinal Misalignment, Disc Herniation Disc Compression, Muscle Damage Nerve Damage, Loss of Lung Volume Capacity and Gastrointestinal Problems.

Honest...

I'm being facetious about this, of course, because all of this just seems rather silly.

Certainly the "cure" to this "disease" is to stop texting or using a hand held device excessively.

But in the context of workers' compensation claims, nothing is silly.

In a Forbes article it was noted that some are using knowledge of the condition to get cases of neck injury claims dismissed.

Obviously though if the conditions of compensation exists - you do text your employee once in a while to check on their status or have your assistant get you something for lunch, don't you? - that strategy will back fire.

POSTSCRIPT: Oprah on texting out of social context: http://www.businessinsider.com/just-say-hello-cure-loneliness-2014-3

Trite Financial Cliches Still True

I write sometimes about what would happen if there were no workers' compensation.

Of course I postulate in facetiousness - obviously such an occurrence would certainly teach employers who doubt the value of workers' compensation programs and insurance that it's better than the exposure to tort liability.

But then again, sometimes I'm not so facetious. Sometimes I think that employers do need a lesson every once in a while.

Some New York employers are getting some lessons.

There was a self insurance trust group called the Healthcare Industry Trust of New York. That trust shut down in 2008. That trust was marketed and managed by Compensation Risk Managers which had seven other trusts - all eight have now shut down.

CRM also had a part in five California trusts which have also shut down. WorkCompCentral covered the stories extensively.

Employers who join self-insurance trusts pay premiums, which are pooled, to cover the costs of claims against them. They receive dividends if claims remain under control, but if the group's liabilities exceed its assets, the members have to make up the difference, paying proportional assessments based on their initial premiums. All the members of a group are jointly and severally liable for the group's liabilities.

The Healthcare Industry Trust left its members with a $176.5 million shortfall.

Members are now trying to recoup that expense by suing the brokers that pitched the trust to its members, alleging that the brokers knew that the trusts were in trouble when they marketed it to the employers but that they sold the memberships anyhow.

According to the complaint filed last Monday, the defendants committed multiple related acts of mail fraud by using the U.S. Postal Service to transmit fraudulent and misleading materials to the plaintiffs and other New York employers. These alleged actions serve as the basis for plaintiff's Racketeer Influenced and Corrupt Organizations Act claim.

The trust plaintiffs assert that their brokers knew CRM "lacked the expertise and knowledge" to properly administer the Healthcare Industry Trust, but said nothing because of the generous commissions they earned.

According to the complaint, the brokers "acted in concert with CRM to increase the membership of the trust despite a mounting deficit by aggressively marketing trust membership as a relatively safe and conservative alternative to regulated insurance products, while negotiating, pursuing and accepting excessive and hidden commissions that were dramatically higher than those customary in the industry."

Defendants named are the Cool Insuring Agency, Hickey-Finn & Co., Hirsch Wolf & Co., Marshall & Sterling, Oxford Coverage, The Rampart Group, The Reis Group, Shel-Bern Associates, The Spain Agency, The Treiber Group and The Vanner Insurance Agency.

Self-insurance trusts were all the rage in New York during the mid-1990s after rule changes to make the state's workers' compensation market more competitive.

In September 2005, though, the New York State Workers' Compensation Board declared nearly half of the 62 self-insurance groups then in operation as "underfunded on a regulatory basis."

Seven trusts went dissolved between 2006 and 2007, and another 10 failed in the following year. New security requirements imposed in January 2012 took care of most of the rest.

Only three remain in operation today.

Consequently about 10,000 employers were left holding the bag for nearly $1 billion in claims.

The board reported the outstanding liability for the defaulted trusts had been reduced to $346,076,000 as of the end of 2013 by its settlements with employers and its bond program.

The bond program raised $370 million and the proceeds of the bond sales went to the board to arrange a loss-portfolio transfer that assumed the risks of the defaulted trusts.

The board sued CRM for $450 million in December 2009 but settled for $41 million in 2010 because of CRM's tenuous financial position.

The board currently has 11 pending lawsuits against various administrators, accountants and actuaries for mishandling trust assets as well. CRM is named as a defendant in two of them, although Majestic Capital, CRM's parent company, declared insolvency in April 2011.

A suit similar to the current New York broker complaint was dismissed in California.

The 3rd District Court of Appeal upheld summary judgment, explaining that the only obligation a broker owes a client is to procure legitimate coverage. Brokers have no independent duty to inquire into the financial health of the provider from which it secures coverage for a client, the court said.

But the lawyer for the California plaintiffs told WorkCompCentral that his investigation didn't discover a document that laid out the marketing agreement between CRM and the defendant brokers in his case until after discovery had closed. He thinks this document is material to the New York case.

But regardless the ultimate responsibility falls on the employers to make sure their workers are protected, and relying on another's expertise or knowledge does not delegate that responsibility.

The lesson - you can't get something for nothing. Or probably more accurately, you can pay now, or you an pay later, but eventually you will have to pay. Or, perhaps even more acute, penny-wise, pound foolish.

In other words, all of those trite cliches you learned as a child about proper financial management still apply.

The Business of Politics - Sickening

If you pay, then you can play. But likely, not before.

That seems to be the message coming out of California politics lately.

First it was Senator Ron Calderon in connection with Pacific Hospital and Michael Drobot.

Now we learn that Senator Leland Yee has been indicted and arrested on political corruption charges and arms trafficking.

There is no allegation that anything Yee has been accused of has anything to do with workers' compensation.

But Lee does have a history in workers' compensation legislation, albeit sparse and largely without success.

When it was proposed that the Controlled Substances Utilization Review Evaluation and Management System, or CURES, be paid for by surcharges on medical licenses, it was Yee who cast the sole objection when the matter was heard in the Senate Committee on Business, Professions and Economic Development.

California physicians would have immunity from disciplinary action for prescribing and dispensing dangerous drugs to treat chronic pain under SB 410 authored by Yee, which would have made it even more difficult to control opioid issues in the state.

Yee introduced a bill in 2009 that would exempt small family owned farms from having to carry workers' compensation insurance if it was operated only by family members (the bill died amidst complaints of its complexity).

In 2007 then Gov. Arnold Schwarzenegger signed into law Senate Bill 316, authored by Yee, repealing a requirement that workers' compensation insurers deposit 65% of their written premiums into reserve accounts.

When Yee was in the Assembly he promoted a bill that would have mandated a study by the Department of Industrial Relations and the Commission on Health and Safety and Workers' Compensation into how much the Medi-Cal program pays out for medical treatment that should be paid by the workers' compensation system.

Schwarzenneger vetoed that bill because, he said, the Department of Health Services has a unit assigned to review Medi-Cal cases for cost recovery and "the state does not need yet another report."

Yee proposed letting State Compensation Insurance Fund sell group health insurance.

Granted, Yee is not being accused of any improprieties in workers' compensation legislation, but this is the second time in as many months that a prominent California politician is being indicted after an FBI investigation into political corruption.

Some may chalk all of this up to "business as usual." I can't do that. My faith in our political system has been badly shaken.

It's a shame.