The Division has finally found a replacement for Judge David Northup following his retirement in August 2016.  Mikhail Nagorny has been hired as the newest Hearing Officer in San Antonio.  Prior to coming on board with the DWC, Judge Nagorny served in the Soviet Navy from 1971-1976, then attended Moscow State University, where he graduated with a Master’s Degree in International Relations and Arab Studies.  After graduating from South Texas College of Law in 1999, Mr. Nagorny was employed by the Malaise Law Firm in San Antonio, where he practiced workers’ compensation exclusively. 

The vacancy in the Dallas Field Office has likewise been filled.  Latorya Fowler recently signed on to replace Judge John Bell, who departed in December 2016.  Though she is new to the realm of workers’ compensation, Judge Fowler brings with her extensive adjudicative experience. Following her graduation from Southern Methodist Law School in 2006, Ms. Fowler served as a pro tem judge in Fort Worth’s municipal courts. 

Meanwhile, the statewide hiring freeze seems to have impeded the DWC’s efforts to replace their most recently departed Hearing Officer.  Judge Marilyn Allen left the Division in January 2017 to accept employment with a carrier firm, bringing the number of Hearing Officers in the Houston West Field office down to four. 

The DWC conducted free training in its Houston East Field Office on March 30 and 31 for stakeholders interested in learning more about the Division’s self-created “two-step dispute resolution process.”  The goal of the pilot program is to reduce the number of managed cases (those for which a hearing has been held but no decision can yet be issued) by bifurcating the dispute into two hearings: the first for extent of injury issues only, the second for maximum medical improvement and impairment rating.  (The DWC has yet to reveal how two hearings is any more expeditious for system participants than a managed case would be, however.)   

Nevertheless, the DWC asserts that the pilot program, which began in Weslaco and then progressed to Dallas, has been such a success that it will now be expanded throughout the state.  For the time being, the bifurcated CCH program remains voluntary.  How long it will remain so is uncertain. 

Effective December 1, 2016, the Occupational Safety & Health Administration (OSHA) incorporated into 29 C.F.R. 1904.35 two new provisions regarding retaliation against workers who report workplace injuries.

Section 1904.35(b)(1)(i) clarifies that the process for reporting an injury must be a reasonable one.  To avoid a violation, employers must demonstrate both that there is a procedure in place for reporting work injuries, and that the procedure is not unduly burdensome on the injured worker. OSHA would likely deem it retaliatory for an employer to adhere to a strict, pre-determined deadline by which an injury must be reported in instances where an employee could not realistically have been expected to have done so.

Section 1904.35(b)(1)(iv) prohibits three specific forms of retaliation against employees for notifying an employer of an injury. First, an employer may not initiate disciplinary action against an employee merely for reporting an injury. Disciplining an employee for violating any safety procedures that resulted in an injury is still permitted, but not if it is used as a pretext for punishing a worker for reporting an injury. OSHA will investigate whether other employees have been similarly disciplined for the same infraction or whether the employer had a legitimate business interest for punishing the employee. 

Also forbidden under Section 1904.35(b)(1)(iv) is the use of workplace incentive programs as a means for penalizing those who report work injuries.  Though incentive programs that encourage safe workplace behavior are permissible, withholding the benefits of those programs simply because a work injury has been reported is not.  Such actions would effectively punish a worker for reporting and injury and thereby serve to dissuade timely notification of injuries. 

Finally, drug-testing as a form of discipline against those who report an injury is forbidden, but it may be used to investigate the cause of a workplace injury.  The new rule requires an objectively reasonable basis for drug-testing employees who report work injuries, and the employer must have a legitimate reason to believe that an employee’s drug use contributed to the injury.  OSHA will also consider whether other employees involved in the injury event were similarly tested.  Testing performed in compliance with a state or federal regulation would not be considered retaliatory. 

Most importantly for purposes of workers’ compensation disputes, OSHA would likely find it a violation to test an employee whose drug use could not reasonably have caused or contributed to the work injury. 

The Appeals Panel has once again broadened their definition of “doctor” under Section 401.011(17) of the Texas Workers’ Compensation Act, extending that designation to the holder of a Ph.D. While acknowledging in Appeal No. 162270 that a Ph.D. is not a licensed medical doctor, the Appeals Panel concluded that a cancer research biologist with a Ph.D. in biochemistry and biophysics was qualified to testify to more than just his research; his opinion on causation must also be considered an expert medical opinion, even though a Ph.D. is not listed among those healthcare practitioners (a doctor of medicine, osteopathic medicine, optometry, dentistry, podiatry, or chiropractic) identified in Section 401.011(17). 

The decision expands on APD No. 150372, in which it was determined that even though the definition of “doctor” in does not include physical therapists, “medical evidence may be generated by a number of sources other than by individuals who are defined as ‘doctors’” for the purpose of establishing a causal link between a claimed condition and a work injury. 

For those who thought that the Supreme Court of Texas had issued the final word on bad faith insurance lawsuits inTex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012), proposed legislation seeks to reopen the discussion.  As a reminder, inRuttiger the Texas Supreme Court determined that a cause of action under Insurance Code Section 541.060, pertaining to unfair settlement practices, was unnecessary in light of the rigorous administrative procedures and remedies laid out in the Workers’ Compensation Act.  It seems Representative Nicole Collier (D) disagrees. She introduced H.B. 499 in the 85^th legislature, which seeks to add an unfair settlement practices cause of action to Section 541.060 that reads: “This section applies to a claim by an insured or beneficiary under an insurance policy for workers’ compensation insurance.” If passed, the change would recreate the bad faith cause of action for workers’ compensation claimants. 

Last week, a Dallas federal grand jury returned an indictment charging eight individuals – including three doctors active in the Texas Workers’ Comp System – with defrauding the federal workers’ comp program through excessive, unscrupulous, and fraudulent prescriptions for compound drugs. The indicted defendants included doctors Leslie Benson, Michael Taba, and Kevin Williams, as well as James Noryian, David Nourian, Christopher Rydberg, Sherri Mofid, and Leyla Nourian. Each individual was charged with one count of conspiracy to commit health care fraud. James Noryian, David Nourian, Rydberg, Mofid, and Leyla Nourian were also charged with one count of money laundering.

According to the indictment, from May 2014 to March 2017, James Noryian, David Nourian, and Rydberg operated Ability Pharmacy, Industrial & Family Pharmacy, and Park Row Pharmacy (the Pharmacies), and used the Pharmacies to file claims for reimbursement for compound drugs (creams used to treat, scars, wounds, and pain) with the federal workers’ compensation program. The federal reimbursement rates provided up to $28,000 per container for the compounded drugs.

The doctors in the scheme were paid by Mofid, Rydberg, and Leyla Nourian to refer patients to the Pharmacies and to encourage prescriptions for compound drugs. Payments were presented as loans in effort to conceal their purpose as a kickback for sending prescriptions to the pharmacies. James Noryian is alleged to have also paid doctors make unnecessary and excessive prescriptions through payments, free rent, and by other means.

Dr. Taba allegedly allowed James Noryian and employees from Ability to work with Dr. Taba’s staff to fill out prescriptions for the compound drugs, to stamp Dr. Taba’s signature on the prescriptions, and to then follow up with patients to encourage them to obtain prescriptions from the Pharmacies. Additionally, Dr. Taba allegedly instructed his employees to review the patient schedule each day and to write prescriptions for compound drugs for each patient. Each prescription was identical and not specifically tailored to any individual’s needs. Dr. Taba allegedly received payment for his participation in the scheme.

Dr. Benson allegedly enjoyed a rent-free office as well as other inducements and payments courtesy of James Noryian. In exchange, Dr. Benson wrote prescriptions for compound drugs – whether the patients needed the drugs or not – and referred patients to the Pharmacies.

Dr. Williams allegedly wrote prescriptions for wound and scar medications even though the patients had not had surgery. Additionally, Dr. Williams is alleged to have written prescriptions with the intent that refills be automatic, and to have received prefilled out prescription forms from James Noryian. The indictment alleges that Dr. Williams alone was responsible for $90 million in prescriptions being billed to the federal workers’ comp program.

The indictment is just the first step in the process toward trial. We’ll keep you posted on the outcome.

In our March 2016 newsletter, we voiced our concerns regarding the rise in the number of compound drug prescriptions, especially the so-called “pain creams,” which generate substantial cost to insurers but little to no benefit to injured workers.  As a reminder, compound drugs are not recommended under the ODG Treatment Guidelines as a first line therapy.

Now, it seems the 85th Texas Legislature has taken up the cause. House Business & Industry Chair Rene Oliveira (D) has introduced an amendment to Section 408.028, pertaining to Pharmaceutical Services, which would require the Division to develop rules for the exclusion of compound pharmaceutical medications from the closed formulary. Thus far, no companion bill has been proposed.

Indiana Court of Appeals Upholds Order of TTD Owed for Period During Which Employee Terminated for Misconduct 

The Indiana Court of Appeals has clarified an issue long disputed by the Indiana worker’s compensation community.  That is, whether TTD (temporary total disability)  is owed when plaintiff is unavailable for work for reasons unrelated to the injury per I.C. 22-3-3-7(c).  In this case employee had been terminated for misconduct.  Employee contended he could not do the fully duty work he had been released to do resulting in a verbal altercation with his supervisor in which he cursed and threw an ice pack.  The court affirmed the Board decision ordering payment of temporary total disability benefits from the date of injury to the date of decision and ongoing.

In Masterbrand Cabinets v. Waid, Court of Appeals Case No. 93A-1609-EX-2228, the court confirmed that I.C. 22-3-3-7(c), allows termination of TTD benefits where the employee is unable or unavailable to work for reasons unrelated to the injury (i.e., termination of employment for misconduct), but noted that the statute does not require the work to be for the same employer as when the employee was injured.  Rather, the court determined that even though the employee was terminated from his employment, the relevant inquiry is whether his inability to work, even for other employers, was related to his injury.  Since his inability to work was related to his injury, and his termination occurred prior to having received any TTD benefits (there was no “termination of benefits” involved), Waid’s termination for misconduct did not prevent him from receiving TTD benefits as a result of his injury.  The court’s language stating the relevant inquiry is whether the inability to workany job is related to employee’s injury would appear to apply to instances where employee’s work has been terminated with the relevant employer regardless of  the basis and whether voluntary or involuntary.

Kim Mason was injured on March 22, 2011 falling off her UPS delivery truck and injuring her wrist, requiring surgery.  She reached maximal medical improvement in October 2011. Several months later she requested accommodations for her wrist disability under the ADA.  Her surgeon completed a form which indicated that Mason could not perform all the functions of her current UPS driver position without certain accommodations.  The doctor gave Mason a 25 pound lifting restriction with ability to lift 10 pounds occasionally.

Mason met with Human Resources regarding her accommodation request.  She suggested that she could be accommodated by obtaining a position without the requirement of lifting heavy packages, noting management training and package center supervisor positions.  She also identified other jobs like customer counter clerk, safety, and other less physical positions as suitable for her to perform.  She noted that during her 17 years with UPS she had performed many of these jobs that she was asking to be considered for.

There was no question that Mason could not continue to perform her current job as a delivery truck driver because it involved heavy lifting. HR noted that Mason had the education, skills and experience to perform many of the jobs that she requested transfer to, but unfortunately there were no current openings.  UPS has an ADA committee, and the committee made a final determination that there simply were no jobs available for Mason to perform.  The company kept looking for union jobs during the next six months but none came open.

UPS employees who sought management positions in the company were required to go through the company’s “Management Assessment and Promotion Process” or “MAPP.”  To initiate the process, the employee had to submit a written letter of interest to UPS, and this letter had to be submitted for every year that an employee wished to be considered for a management position.  Letters of interest expired every December 31^st.  Once a letter is submitted, the employee’s supervisor would conduct an initial assessment with scoring in a number of areas.  If an employee passed the first phase, then there were additional steps for the MAPP process.  This MAPP process became pivotal because two positions opened up at the Huntsville, Alabama location that did not require handling packages.  They were not union positions but management positions.  UPS notified Mason regarding these two open positions but Mason had not even started the MAPP process and was unavailable.

Thereafter Mason initiated the first phase of the MAPP process.  Her supervisor gave her a score  between two and three.  A score of 3.5 was required to pass the initial assessment, so Mason was never considered for promotion to a supervisory position in 2012.

From February 2012 to April 2013 several union job openings occurred at the Huntsville facility but all of them required physical functions far in excess of Mason’s restrictions.  Mason alleged that there were people doing some of these jobs who were receiving help in heavy lifting of packages, including the position of customer clerk.  One employee (Ms. Pender) gave testimony that she did get assistance from others on the heavy lifting aspects of the job.

Mason sued under the ADA asserting that UPS failed to accommodate her disability.  UPS moved to dismiss the case by arguing that Mason was not a qualified individual because she could not perform the essential functions of her job or the jobs she desired.  The district court agreed, and Mason appealed to the Eleventh Circuit Court of Appeals.  The Court said that it was Mason’s burden to identify the accommodation she needed and then show that it is reasonable.  The Court rejected Mason’s argument that UPS should have considered her for a management position.  “The ADA does not mandate that employers promote disabled employees in order to accommodate them.” (citation omitted).  Regarding Mason’s argument that other employees would be available to help on the heavy lifting, the Court said:

Mason’s restrictions would require her to leave every package weighing more than 25 pounds and some packages weighing between 10 and 25 pounds for other employees to deal with.  Given that evidence in the record reflects that the Huntsville center is small and leanly staffed, and requires all employees to perform their functions, Pender’s testimony is again insufficient to create a genuine factual dispute regarding the impact requiring another employee to assist Mason with any package weighing more than 25 pounds would have on the package center’s operations.  Thus, this requested accommodation is not reasonable.

In the end, the Court deferred to UPS’s job descriptions on what the lifting requirements were for each job and how the Huntsville facility functioned.  The Court found that Mason failed to prove she was a qualified individual, and therefore UPS had no duty to accommodate her disability.  The case can be found at Mason v. United Parcel Service Co. Inc., 2017 U.S. App. LEXIS 400 (11^th Cir. 2017).  It demonstrates several points: first, how easily a workers’ compensation injury can lead to ADA litigation; second, how important job descriptions are in establishing essential functions of the job; third, if any employee cannot show he or she is qualified to do the job, there is no duty to accommodate.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com.