State News

Common law marriage will be abolished in the state of Alabama effective January 1, 2017. Act 2016-306, provides that the only common law marriages that Alabama law will continue to recognize are those entered into prior to January 1, 2017. This will have an obvious effect on the eligibility of surviving spouse death benefits in worker’s compensation cases.

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This blog submission was prepared by Karen Cleveland, an attorney with Fish Nelson & Holden, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Fish Nelson & Holden is a member of the National Workers’ Compensation Defense Network. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Cleveland by e-mailing her at kcleveland@fishnelson.com or by calling her directly at 205-332-1599.

On July 22, 2016, the Alabama Court of Civil Appeals released its opinion in City of Birmingham v. Thomas, in which it addressed whether the City of Birmingham improperly reduced Thomas’ employer-provided disability benefits due to his prior workers’ compensation settlement. Thomas had filed a workers’ compensation claim while working for the City, and the parties reached a settlement in October 2013. The terms of the settlement provided that the city would pay Thomas $225,000 in exchange for a release of all claims against the City, except future medical benefits arising under The Alabama Workers’ Compensation Act. The settlement was court approved on December 12, 2013. Then on December 20, 2013, Thomas applied for "Extraordinary Disability Benefits" through the City’s Retirement and Relief Pension Board. In his application, Thomas acknowledged "I am aware that if I am granted an Extraordinary Disability Pension (job related disability), there will be a set-off with any workers’ compensation benefits that I receive". Thomas also signed a document labeled "Notice to Applicants Applying for Extraordinary Disability Pension", which provided that any Extraordinary Disability Benefits awarded by the Board would be offset, dollar for dollar, by the amount of any workers’ compensation benefit, as provided in the City of Birmingham Retirement and Relief System Pension law. The notice also informed Thomas that the City of Birmingham Retirement and Relief System was a separate entity from the City of Birmingham.

In September 2015, Thomas filed a Motion to Enforce Settlement Agreement, in which he asserted that the city had unilaterally decided to reduce his pension benefits, contrary to the workers’ compensation settlement agreement. His argument was essentially that the city improperly set off his Extraordinary Disability Benefits by the amount of his workers’ compensation settlement. The City responded to that motion, asserting that it had made all payments agreed upon in the workers’ compensation settlement; that the Board was a separate entity from the City; and that the Board had informed Thomas that his Extraordinary Disability Benefits would be offset by the workers’ compensation payments. The trial court entered an order finding that since there was no mention of the sett-off in the workers’ compensation settlement agreement and/or order, the City had waived, or was estopped from asserting, any right to a set-off. The order further directed the City to pay all Extraordinary Disability Benefits that had accrued, and to make monthly payments thereafter. The City obtained a stay of the trial court’s judgment and appealed. The Court of Appeals held that the city was not estopped from asserting its right to a set-off. It also held that since the city was separate entity from the board, the city could not have waived any right the board might have to a set-off. Finally, the Court rejected the argument that the board was merely an instrumentality of the city, and that the trial court therefore did not have jurisdiction over the Board in the workers’ compensation case. The Court of Appeals remanded the case back to the trial court with instructions that it deny Thomas’ Motion to Enforce.

My Two Cents:

The outcome of this case could have been much different if it were not for the fact that the City and the Board were two separate and distinct entities. In situations where an employer offers other disability benefits through a plan outside of the Workers’ Compensation Act, it is wise to address what, if any, effects any workers’ compensation settlement may have on eligibility for such benefits.

About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

On July 22, 2016, the Alabama Court of Civil Appeals released its opinion in Smith v Brett/Robinson Construction Company, Inc. and again found that evidence which only establishes a mere possibility that the injuries are related to the work accident is not sufficient to prove medical causation.

In May of 2013 the employee tripped and fell on the job causing her to suffer an injury to her left knee. The employer sent her to Dr. Greg Terral who ordered an MRI and stated the employee possibly suffered from an meniscus tear. Surgery was ultimately scheduled and took place 6 months after the accident. The pre-operative diagnosis was osteoarthritis and suspected meniscal pathology. The post-operative diagnosis was grade 3 chondromalacia of the medial and patellofemoral compartment with unstable chondral tissue. Dr. Terral went on to note in the operative report that the plaintiff had intact meniscal tissue. After surgery the employee stated the pain was worse and ultimately selected Dr. Joseph McGowin from a panel of 4. Dr. McGowin opined that the employee’s symptoms were from arthritis which was pre-existing and that the employee had no evident tears in her knee. In November of 2013, Dr. McGowin stated that he did not think the accident caused the employee’s arthritis. He went on to state that the current symptoms may have been the result of the injury and an aggravation of the arthritis. The employee returned in January of 2014 when Dr. McGowin placed her at MMI with a 5% impairment rating to the left leg. The employee returned in November of 2014 and reported that she felt there was some shifting. Dr. McGowin stated again that he felt that her problems were arthritic in nature. However, an MRI was performed and the doctor noted that the MRI revealed a little intrasubstance degeneration of the medial meniscus, chondrol changes and a little edema of the cruciate ligaments. The employee returned in February of 2015 and the doctor noted that the employee said that she had turned and felt her knee pop about a week prior and had felt pain since. Dr. McGowin opined that she suffered a flare up of her arthritis (of note, at trial the plaintiff denied saying that she had a new accident). In March of 2015, another MRI was performed at which time the MRI referenced a meniscal tear. However, Dr. McGowin read the MRI and again stated that she suffered from intrasubstance degeneration of the medial meniscus and that he did not think there was tear. He also noted that she was suffering from IT band tendonitis. Dr. McGowin then stated that he did not believe she would benefit from surgery. The employee returned to Dr. McGowin in April 2015. Dr. McGowin indicated that there was an option of considering an arthritic arthroscopic exam to assure that there was no tear but there was only a limited likelihood that this would result in some symptom improvement. He recommended that she be evaluated by Dr. James Cockrell for an evaluation and consideration of surgery. During this period Dr. McGowin responded to a letter from the workers’ compensation carrier and stated that it was possible that the meniscal tear was, if there, a new injury given the change in the MRI. He then stated he thought that if there was a mensical tear, it would be unrelated to the original injury. The plaintiff was treated by Dr. Cockrell in November of 2015 and reported that she wanted surgery. The doctor stated that he only thought there was a possible tear and this could all be related to arthritis and the surgery would not be beneficial. As a result, the workers’ compensation carrier refused to pay for the surgery.

At the Trial Court level in Baldwin County, AL, testimony was presented by the plaintiff and her co-workers establishing that prior to the fall she was working full duty without knee problems and that after the accident, she had been unable to do the same. Upon hearing testimony and reviewing medical evidence, the Trial Court found that the employer was not responsible for the surgery. The Trial Court based its opinion on Dr. Terral performing surgery to repair the left knee, which noted no meniscus tear and then Dr. McGowin stating there was no meniscus tear and the employee’s problems were arthritic in nature and not work related. It further noted Dr. Cockrell’s opinion that there was a possibility of a tear but her problems could all be arthritic in nature and the Trial Court stated that Dr. Cockrell gave no opinion on medical causation in making this statement. The Trial Court’s ultimate findings were that the left knee pain, pursuant the medical evidence, was arthritic in nature, not accident related, and that there was no medical evidence supporting that she needed surgery. Therefore, they felt that the surgery was not reasonable and necessary as a result of the original injury.

On appeal the employee argued that her current problems are due to work related meniscus tear and/or the arthritis and that arthritis was caused or accelerated by the on the job accident. The employee support this by the fact that prior to the accident she did not have knee problems and that she had pain ever since. The employee cited Equity Group-Ala. Div. v Harris, 55 So. 3d 299, 311 (Ala. Civ. App. 2010). The Appellate Court pointed out that the employee’s position was correct that the Trail Court can infer medical causation based on someone’s ability to work prior to an accident and then their inability to work after the accident. However, the Court of Appeals state that this did not mean the Trial Court was required to ignore medical evidence indicating that the alleged symptoms were not work related. In the current case, the Alabama Court of Civil Appeals stated that the medical evidence only suggested a possibility of a torn meniscus, therefore, the Trial Court was within its discretion to conclude that there was not substantial evidence to support that the on the job accident resulted in a torn meniscus.

As it relates to the plaintiff’s assertion that the current problems are arthritic in nature and that the on the job accident caused or accelerated her arthritic condition, the Alabama Court of Civil Appeals stated that while it is true that no pre-existing condition is deemed to have existed for the purpose of awarding of workers’ compensation benefits if the employee could work before the accident and then is unable to work afterwards. However, again the Alabama Court of Civil Appeals stated that did not mean that the employee was not required to prove that the work accident actually caused the arthritis to manifest or to become aggravated. The Court of Civil Appeals pointed out that the employee relied on the fact that she was in no pain before and that there was one note from Dr. McGowin that the symptoms may have been the result of the injury and aggravation of the arthritis. The Court of Civil Appeals again stated that the mere possibility was not enough to establish medical causation, especially, when other evidence stated that the current problems were not work related.

ABOUT THE AUTHOR

This article was written by Joshua G. Holden, Esq., a member of Fish, Nelson & Holden, LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in worker’s compensation and related liability matters. Mr. Holden is AV rated by Martindale-Hubbell, which is the highest rating an attorney can receive. Holden and his firm are members of the National Worker’s Compensation Defense Network (NWCDN). The NWCDN is a national network of reputable law firms organized to provide employers and insurers access to the highest quality of representation in workers’ compensation and related employer liability fields. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Mr. Holden by emailing him at jholden@fishnelson.com or calling him directly at 205-332-1428.

Workers’ compensation retaliation claims are rare birds in New Jersey, and the case ofRobinson v. Armadillo Automation, Inc. explains the standard for proving such cases.  Spencer Robinson worked as a valve technician from May 2005 until August 2011.  He alleged that when he was hired, he disclosed a prior low back condition, and he requested a stool to work while seated, a request which he said the company obliged.  The defendant disputed almost everything Robinson asserted, including that Robinson disclosed a prior condition.  The company asserted that in March 2011 it noticed Robinson was having problems standing and gave him a stool to use but not in 2005.

On April 29, 2011, Robinson felt pain in his neck while assembling a valve.  He said he reported the injury to the company vice president.  Robinson alleged that the VP refused to consider this an injury and would not take him to a doctor. So Robinson got treatment from two doctors on his own and presented a full release from his doctor effective May 12, 2011. Company records did show that the work injury was reported to the carrier.

Defendants denied ever refusing to take him to the hospital, saying the company approved plaintiff’s seeing the family doctor.  The company also maintained that when Robinson returned to work in June 2011, he was having great difficulty standing and working on incoming valve orders.  The President of the company asked Robinson to get an evaluation with his primary care doctor as to his fitness for duty.  The company claimed that Robinson never produced the family doctor clearance note.   The company also claimed that plaintiff’s production was dropping sharply.

For his part Robinson said that the company threatened for the first time to take away his stool when plaintiff tried to return to work after his work incident.    Plaintiff also argued that after his work injury, the company president and vice president complimented him on how hard-working he was.  He further averred that the company president and vice president spoke with him about retirement possibilities for the first time after his injury.  Plaintiff further claimed that he got a note from the family doctor which the company refused to honor because they wanted to speak with the doctor.  Robinson said he then signed a release permitting the company to speak directly to the family doctor, but that never happened. One fact that does not appear to be disputed in this case is that Robinson had not been written up during his employment until he failed to clock out in June 2011.  The company advised plaintiff that his production had fallen off and that the company was observing Robinson’s problems on the job.  The company also maintained that Robinson failed to clock out at lunch time six times.  For his part, Robinson said that the clock out rule was not strictly maintained and the clock was not even working well.  He admitted to not clocking out at lunch only one time.

Although virtually every statement in this case was disputed, one thing not in dispute was that the company did not give Robinson a raise on his anniversary date of May 28, 2011; he was suspended for five days on August 1, 2011; and then fired for declining productivity, failing to punch out at lunch, and failure to get a medical clearance note.

Robinson sued alleging that he was retaliated against due to filing a workers’ compensation claim.   The trial court granted the employer summary judgment but the Appellate Division reversed.  The Court adopted the McDonnell Douglas rule in a retaliation law suit requiring plaintiff to prove 1) membership in a protected class; 2) actual performance prior to termination; 3) termination from employment; and 4) the employer’s pursuit of someone to perform the same work after his termination. On the last point, plaintiff alleged that the company hired two people after he was terminated.

The employer gave non-discriminatory reasons for terminating Robinson, including poor performance, lack of productivity, failure to clock out and failure to get medical clearance.  Robinson in turn argued that these were all pretextual.  He argued that his production never dropped after he returned to work even though the company tried to take away his stool.  He pointed out that he had never been disciplined until after he filed the workers’ compensation claim.  He claimed he had gotten a note from his family physician and had not repeatedly failed to clock out at lunch.  His contention was that the company simply retaliated against him for filing a workers’ compensation claim.

Given the dispute in facts, the Court held that plaintiff had offered sufficient proofs to get to a jury.  “If plaintiff’s proofs are believed at trial, reasonable jurors can readily disbelieve defendants’ stated reasons for the adverse employment actions.” The case shows how problematic retaliation cases can be where the employer has no documentation or record of discipline before the work injury.  Further, the company could have easily gotten its own fitness-for-duty examination in this case rather than debate whether the family doctor would approve plaintiff’s return to work.  This was a small company with 30 employees and perhaps that explains why so little of what took place was documented in memoranda or letters, but clearly the absence of any documentation hurt the employer.

This case can be found at Robinson v. Armadillo Automation, Inc., A05927-13T3(App. Div. July 20, 2016).

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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. 

In Pulejo v. Middlesex County Consumer Affairs, A-3133-14T4 (App. Div. July 14, 2016), the petitioner, an investigator for the County, alleged that he worked along side a chain smoker four to five hours per day, five days per week, from 1976 to 1997. Mr. Pulejo was diagnosed in 2000 with lung cancer and underwent a bilobectomy.  Mr. Pulejo did not file a workers’ compensation claim for years after his bilobectomy.  Before working for the County, Mr. Pulejo received an award of 10% permanent partial disability against Johnson and Johnson for chronic obstructive pulmonary disease (COPD).

In 2010, nine years after his lung cancer surgery, when petitioner was 84 years old, he ultimately filed an occupational disease claim petition in the Division of Workers’ Compensation alleging that his cancer had been caused by second hand smoke at work.  He said he himself had never smoked cigarettes, but he argued that the constant exposure to cigarette smoke caused his cancer to develop. In testimony at trial he admitted that he had engaged in conversations with his treating doctors about his cancer, and his oncologist had told him back in 2000 or 2001 that the likely cause of his cancer was cigarette smoke.  Petitioner also recalled telling his doctors at the time of his lung surgery that he had been exposed to second hand smoke at work.

The experts retained by the parties disagreed on the cause of petitioner’s lung cancer.  Petitioner’s expert said the cancer was work related due to second hand smoke, while respondent’s pulmonary doctor said there was no known cause.  Both parties submitted legal briefs without addressing the statute of limitations issue.  The trial judge, who is now the Chief Judge and Director of the Division, the Honorable Russell Wojtenko, asked for supplemental legal briefs addressing the occupational statute of limitations issue.  After receiving supplemental legal briefs, the judge dismissed the petitioner’s claim on the basis of N.J.S.A. 34:15-34.

This statute provides that “where a claimant knew the nature of the disability and its relation to the employment, all claims for compensation for compensable occupational disease except as herein provided shall be barred unless a petition is filed . . . within two years after the date on which the claimant first knew the nature of the disability and its relation to the employment.”

The Judge of Compensation rejected petitioner’s argument that he did not know his lung cancer was work related until he was examined by his expert, Dr. Hermele, in 2012.  That made no sense since the claim petition alleging work-related cancer had been filed in 2010 two years before petitioner saw Dr. Hermele. Additionally, petitioner had spoken with his doctors in 2000-2001 regarding the link between smoking and lung cancer.  The Judge held that petitioner should have filed his claim petition no later than January 2003, two years after portions of his lung had been removed.

The Appellate Division affirmed the decision of the Judge of Compensation. The Court rejected the argument of petitioner that the defense waived the statute of limitations defense by not raising it until well after trial.  This was  a pivotal aspect of the case and addressed a central question:  can an employer waive the statute of limitations? The answer is no.  The Appellate Division ruled that the statute of limitations is jurisdictional.  The word “jurisdictional” means that filing a claim on time relates to the power of the Division of Workers’ Compensation to hear the claim.   If a claim is not filed on time, the Court has no power to hear it.  Even if the defense wants to waive the statute, it does not matter:  the court cannot hear an untimely filed claim.

The Appellate Division also agreed with the Judge of Compensation that petitioner could not switch the nature of his claim petition at trial to argue for the first time that that his COPD condition had been worsened as a result of working for the County.  Counsel for petitioner argued that even if the cancer claim is barred, his client ought to receive an award for aggravation of the prior COPD condition.  The Court noted that this was a new argument and that “Dr. Hermele (petitioner’s expert) never quantified the proportion of lung disability attributable to the exacerbation of Pulejo’s pre-existing COPD.”

This case is important for New Jersey practitioners because it focuses on a little understood provision of the law, namely the time limits for filing occupational disease claims.  New Jersey really has a “discovery” rule for filing an occupational disease claim petition, and it is focused on the knowledge of the claimant as to the nature of his or her illness and relationship to work.

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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. 

                                                                                       Simon Law Group, P.C.

720 Olive Street, Suite 1720, St. Louis, MO 63101

314-621-2828

MISSOURI WORKERS’ COMPENSATION CASE LAW UPDATE

April 2016 – June 2016

Injury Sustained by Stepping Off Steep Edge of Sidewalk While Leaving Work Found Compensable

Lincoln University vs. Narens, Case No. WD79003 (Mo. App. 2016)

FACTS:  At the end of the claimant’s work day, she was walking to her car down a crowded sidewalk on the employer’s campus when she stepped to the right to avoid people walking in the opposite direction, at which time her right foot landed on the steep edge of the sidewalk and turned.  The claimant fell and broke her ankle.  A photograph of the sidewalk where the claimant fell shows that the sidewalk edge is higher than the ground adjacent to it. 

At a hearing, an ALJ found the injury compensable.  On appeal, the Commission affirmed finding that the claimant was in the course and scope of her employment because, although she was leaving work, the extension of premises doctrine applies because she was on premises owned an controlled by the employer.  She also would not have been equally exposed to the risk of walking on a crowded sidewalk with a steep edge on one side in her normal non-employment life. 

HOLDING:  The Appellate Court affirmed the Commission, finding that the risk source of the claimant’s injury was stepping off the steep edge of this particular sidewalk on campus, not simply walking.  Therefore, she was not equally exposed to the risk of injury in her normal non-employment life.  Also, the claimant did not have to prove that she was engaged in a work related activity when the injury occurred, because the sidewalk where she was injured was owned and controlled by the employer and the extension of premises doctrine applies.

Despite Previous Instances of Horseplay, Injuries Sustained after Claimant Intentionally Ignited a Flammable Substance Not Compensable because Risk did not Arise out of the Course and Scope of Employment

Hedrick vs. Big O Tires, Injury No. 11-058168

The claimant worked as a general mechanic at Big O Tires.  Employees sometimes used open flames as part of their job duties, but only when safety methods were utilized to make sure that no flammable materials were nearby.  On his date of injury, the claimant intentionally lit a can of glue on fire while a coworker was holding it, which caused an explosion and serious injuries to both the coworker and himself.  He pointed to several previous instances of horseplay at work, including greasing a doorknob or snapping a rag.  He argued that lighting the can on fire was also horseplay, and since horseplay was prevalent at his workplace, the risk of injury arose out of and in the course and scope of employment.

At a Hearing, the ALJ denied his Claim, finding that the risk did not arise out of and in the course and scope of his employment, because lighting the can on fire was an intentional dangerous act that had nothing to do with his job duties, unlike the prior instances of horseplay, which were not life threatening.  On appeal, the Commission affirmed, holding that the mere presence of dangerous materials on the job site combined with the fact that coworkers occasionally engaged in mild horseplay was insufficient to show that these injuries arose out of and in the course and scope of employment.

Claimant Not Entitled to Permanency or Future Medical because He Failed to Prove that His Continuing Complaints in 2015 were Causally Related to His November 2011 Injury

Jack vs. Triumph Foods, LLC, Injury No. 11-107791 

The claimant worked for the employer trimming fat from meat using a wizard knife with his right hand.  He began having pain, swelling, and triggering in his right hand in February 2011 and was terminated by the employer in November 2011.  He was unemployed until 2014, when he began working for a subsequent employer at a job that required repetitive use of his bilateral upper extremities, and he continued to work there at the time of the Hearing.

The claimant treated on his own with Dr. Prostic in March 2012, at which time the doctor diagnosed cubital tunnel and stenosing tenosynovitis of the long, ring, and little fingers of the right upper extremity.  He returned to Dr. Prostic 2 ½ years later in October 2014, at which time the doctor noted he had no physical evidence of stenosing tenosynovitis but instead appeared to have bilateral carpal tunnel syndrome, and assessed 10% PPD of the bilateral upper extremities.  Dr. Prostic did not diagnose cubital tunnel syndrome at the 2014 visit. 

The claimant was sent by the employer to Dr. Wilkinson in August 2015, at which time the doctor opined that his bilateral upper extremity pain was subjective and found there was no objective evidence of carpal tunnel, cubital tunnel, or stenosing tenosynovitis.  The doctor assessed 0% PPD.

At a Hearing, the ALJ found that the claimant did sustain a work related injury to his right hand in 2011.  However, the ALJ found that he failed to prove that his current condition was causally related to his 2011 work injury.  The ALJ noted that the claimant had been working for a subsequent employer doing repetitive work with his bilateral upper extremities for over a year without accommodations and without receiving treatment for the same.  The ALJ found that he was at MMI for his November 2011 injury and had no disability as a result.  Therefore, the employer was not responsible for any additional medical treatment.  The claimant appealed, and the Commission affirmed the ALJ’s decision.

Employer Responsible for Medical Treatment, Even Though Claimant had a Pre-Existing Condition, Because Claimant was Asymptomatic Prior to Her Date of Injury

Stieferman vs. Optima Graphics, Ltd., Injury Nos. 14-025821 & 14-035591

The claimant worked for the employer as a seamstress.  On April 7, 2014, she tripped on a roll of fabric and fell, injuring her right shoulder.  She underwent physical therapy and reported 75% improvement in her pain.  Two weeks later on April 21, 2014, she tripped again on the same roll of fabric and re-injured her right shoulder.

She was treated by Dr. Hobbs, who diagnosed a retracted full thickness tear of the supra and infraspinatus tendon with retraction to the glenohumeral joint, atrophy, and degeneration with mild glenohumeral osteoarthritis.  Dr. Hobbs opined that her tear preexisted both of her work injuries, since retraction occurs over the course of months or years, and opined that her two work injuries merely exacerbated an underlying condition and were not the prevailing cause of her current right shoulder condition.  He did not recommend any treatment for the work injuries. 

Dr. Emanuel testified on behalf of the claimant and diagnosed a complete tear of the rotator cuff with retraction, joint arthritis, subacromial bursitis, and bicipital tendonitis.  The doctor opined that while the claimant most likely had an asymptomatic full thickness rotator cuff tear prior to her April 7, 2014 fall, her April 7, 2015 was the prevailing factor that caused a complete rotator cuff tear.  The doctor also concluded that her April 21, 2015 fall aggravated her right shoulder but did not tear it.  He recommended a second MRI followed by surgical intervention.

At a Hearing, the ALJ found that both expert witnesses agreed that the claimant had a pre-existing right rotator cuff tear.  However, the ALJ found Dr. Emanuel’s causation opinion more persuasive than that of Dr. Hobbs and held that the April 7, 2015 fall was the prevailing factor causing the claimant’s current condition.  The ALJ noted that she had no pain complaints and did not require treatment prior to April 7, 2015.  Therefore, the ALJ found that the employer was responsible for medical treatment with respect to the April 7, 2014 date of injury. 

Claimant Awarded PPD and Future Medical for Work Related Mental Injury Without Showing That Her Stress Was Extraordinary and Unusual When Compared to Similarly Situated Employees 

Mantia vs. Missouri Department of Transportation and Treasurer of Missouri as Custodian of the Second Injury Fund, Case No. ED103016 (Mo. App. 2016)

FACTS: The claimant worked for MoDOT and assisted at motor vehicle accident scenes.  During her career she was at the scene of multiple serious accidents involving catastrophic injury, dismemberment, and death.  She began to suffer significant emotional and psychological symptoms and filed a Claim alleging psychological injury as a result of an occupational disease.

MoDOT’s expert Dr. Stillings opined that the claimant had work related depressive disorder that resulted in 2.5% PPD to the body. The claimant’s expert Dr. Jovick opined that she had post-traumatic stress disorder and major depressive disorder that resulted in 95% PPD to the body.  Both agreed that she sustained PPD to the body referable to psychological injury as a result of her job duties.

At a Hearing, the ALJ denied the Claim because she failed to prove that she suffered extraordinary and unusual work related stress when compared to similarly situated employees.  The Commission reversed, holding that the 2005 amendments to the Worker’s Compensation Statute abrogated the requirement that an employee compare her stress with that experienced by similarly situated employees.  The Commission awarded 50% PPD of the body referable to her mental injuries and future medical.  MoDOT appealed to the Missouri Court of Appeals.

HOLDING: The Court held that the requirement that an employee compare her work related stress to that of similarly situated employees was a judicially created doctrine which should not be applied under strict construction.  Strictly construed, an employee need only show that mental injury resulted from stress that was work related and extraordinary and unusual as measured by objective standards and actual events. The Court held that the Commission’s decision was supported by the claimant’s testimony and both medical experts, and it affirmed the Award. 

Claimant PTD from Last Injury Alone after She Fell and Injured Her Left Upper Extremity

Smith vs. Premium Transportation Staffing, Inc. and Wil TransTrucking Company, Injury No. 10-019420 

The 54 year old claimant was employed by Premium Transportation Staffing and assigned to Wil Trans Transportation as an over the road truck driver.  Premium’s handbook stated that it was an employer, did not function as an employment agency, and assigns its employees to other companies.  Therefore, the ALJ found that the employer was Premium. 

On March 17, 2010, while working in Denver, Colorado, the claimant attempted to pull a fifth wheel pin, at which time the pin became loose and the claimant fell backwards, injuring her left hand, wrist, shoulder, and tail bone.  Premium arranged for the claimant to be transported back to Springfield, Missouri.  Once there, the claimant wished to return to her home in Alabama and seek treatment there, which she did at an expense of $189.22. 

Dr. Scott, diagnosed a comminuted distal radius and ulnar fracture and traumatic arthritis of the left wrist and performed a left carpal tunnel release on June 21, 2012.  Dr. Hillyer, performed tendon tenolysis at the first, second, and third extensor compartments on October 26, 2012.  She was placed at MMI on April 5, 2013 but continued to have complaints.

Dr. Parmet performed an IME in 2014 on behalf of the claimant and diagnosed post-traumatic left carpal tunnel syndrome which developed into left wrist extensor tenosynovitis and arthritis as well as a frozen left shoulder related to her primary accident due to prolonged immobilization.  He assessed 30% PPD to the shoulder and 75% PPD to the left forearm and opined the claimant was PTD due to her last injury alone.

Mr. Eldred testified on behalf of the claimant and opined that she was unemployable due to her advanced age, low academic testing, medical condition, and limited work history in mainly truck driving.  Premium’s vocational expert did not agree that she was unemployable.

At a Hearing, the ALJ found the testimony of the claimant and her experts credible and persuasive and found her to be PTD based on her last injury alone and that Premium was liable for PTD benefits.  With respect to mileage reimbursement for the claimant’s trip from Springfield, Missouri to Alabama, the Judge found that Premium was not liable because Alabama is more than 250 miles from Springfield, Missouri.  Premium appealed this decision, which was affirmed by the Commission.

Claim against Fund was Untimely because Not Filed within Two Years of Date of Injury or One Year of Claim against Employer/Insurer 

Reynolds vs. Treasurer of Missouri as Custodian of Second Injury Fund, Injury No. 11-080366 

The claimant was a staff support employee at a hospital and sustained an injury on October 9, 2011 when a patient grabbed him in the groin area and pulled/twisted forcibly.  He filed a Claim for Compensation on October 27, 2011 and settled with the employer/insurer on August 2, 2013 for 10% of the body referable to the groin.  He dismissed his Claim against the Fund on August 16, 2013 before refiling his Claim against the Fund on July 30, 2014.

At a Hearing before the ALJ, the Fund argued that his Claim against them was barred under Statute, because it was dismissed and not re-filed within two years of the date of injury or within one year of the date a Claim was filed against the employer.  The ALJ held that the Claim was not barred and awarded PPD benefits from the Fund. 

The Fund appealed to the Commission, arguing that the Court of Appeals decision inCouch v. Treasurer of Missouri as Custodian of the Second Injury Fund required the Commission to reverse the ALJ’s decision.  InCouch the Court of Appeals found that a Stipulation for Compromise Settlement between an employer and claimant does not constitute a Claim that pushed back the Statute of Limitations for a Claim to be filed against the Fund.  The Commission agreed with the Fund and reversed the ALJ’s decision, finding that the claimant’s second Claim against the Fund was barred because it was not timely filed within two years of his date of injury in October 2011 or within one year of filing a Claim against the employer/insurer in October 2011.

Claimant’s Pre-Existing Hearing Loss Constituted Pre-Existing Disability to the Body as a Whole for the Purpose of Triggering Fund Liability

Treasurer of the State of Missouri Custodian of the Second Injury Fund vs. Horton, Case No.  WD79261 (Mo. App. 2016)

FACTS: The claimant was employed by a hospital when he was assaulted by a patient and knocked unconscious, after which he suffered from headaches, sensitivity in his left eye, and shoulder, neck, and head pain.  He settled the Claim against his employer for 17.5% of the body referable to the neck.  He had pre-existing hearing loss in both ears, which one doctor assessed to be 34.75% hearing loss and another assessed to be 75% hearing loss.  He filed a Claim for benefits from the Fund.

At a Hearing, the ALJ found that the claimant had 15.5% pre-existing PPD to the body as a result of his hearing loss and awarded benefits from the Fund, which appealed.  The Commission affirmed.

The Fund then appealed to the Missouri Court of Appeals and argued that the claimant did not qualify for Fund benefits because his pre-existing disability, hearing loss, does not meet the threshold to receive those benefits, because it is not a disability to a major extremity or the body as a whole.

HOLDING: The Court found that hearing loss does constitute an injury to the body as a whole.  Using strict construction, it interpreted §287.220.1 to mean that any pre-existing partial disability must fall into one of the two above categories, either disability to a major extremity or the body as a whole.  Since hearing loss is not an injury to a major extremity, it must be considered an injury to the body as a whole.  To hold otherwise would imply that all injuries except those to the eyes and ears trigger Fund liability.  The Court held that the claimant’s pre-existing hearing loss constituted an obstacle to employment and met the threshold to trigger Fund liability.  Therefore, the decision was affirmed.

Anthony Mazzeo provided technical and sales services to customers in Florida and southern Georgia for Color Resolutions International LLC.  He was diagnosed with a herniated disc in his low back in 2007.  His employer was aware of his condition.  Between January and March 2009 Mazzeo had three discussions with his supervisor regarding possible back surgery which he said would take him out of work for two weeks.  His supervisor, Mr. Boyd, said that it would more than likely take him out of work for eight weeks.  On February 25, 2009, Mazzeo advised Boyd that the surgery was set for the second week of March.  The very next day Boyd began preparing job termination papers for Mazzeo.  Boyd handed the termination papers to Mazzeo two days before the scheduled surgery.

Mazzeo sued under the Americans with Disabilities Act alleging disability discrimination.  The company responded that it let him go because of declining sales revenue over a period of several years in the territory.  A young college graduate was hired by the company shortly after the termination of Mazzeo to help in a different territory for someone else who was retiring.  Mazzeo contended that he had previously asked to merge his territory with the retiring sales person’s territory but had been refused on the ground that his territory was very busy.

The district court dismissed Mazzeo’s claim and held that his herniated disc condition did not meet the test of disability.  The Eleventh Circuit Court of Appeals disagreed with the district court largely because of the impact of the Americans with Disabilities Act Amendments Act. The Court noted that Congress intended in passing the ADAAA to avoid extensive analysis on whether a medical condition meets the test of disability.  Mazzeo’s doctor said that his herniated disc condition impacted his ability to walk, bend, sleep and lift more than 10 pounds.  His pain would increase with more sitting and standing.  The Court also said that the relevant time to focus on whether someone is covered under the ADAAA is when the decision is made to terminate, not years later after surgery.  When Mazzeo was deposed much later he said that his back problems only affected his ability to play golf and have sex.  But Mazzeo had major physical complaints during the time period before his surgery when he was let go from the company.

The Court also commented that the term “substantially limits” when applied to an impairment was redefined under the ADAAA.  Someone meets that test if he or she has “an impairment that is episodic or in remission . . . if it would substantially limit a major life activity when it is active.”  EEOC regulations state that an “impairment need not prevent, or significantly or severely restrict, the individual from performing a major life activity in order to be considered substantially limiting.”  When his back acted up, Mazzeo had intermittent problems with walking, standing, lifting and sitting, all of which are considered major life activities.

Based on this interpretation of the Americans with Disabilities Act, the Court reversed the dismissal of Mazzeo’s case and permitted him to proceed with his law suit.  It also allowed Mazzeo to proceed on his age discrimination claim as well.  For workers’ compensation practitioners, the case is interesting because so many workers’ compensation claimants have problems with neck and back conditions.  These individuals may have covered disabilities under the ADA.  The case shows how much easier it is to meet the test of disability under the ADAAA than the former ADA.  When an employer is considering possible termination of an employee who has a workers’ compensation claim, it is always important to analyze whether the employee may be covered under the ADA.  The timing in this case could not have been worse for the employer in laying off Mr. Mazzeo within days of his having advised of his upcoming back surgery.  Readers may find this case at Mazzeo v. Color Resolutions Int’l, LLC.746 F.3d 1264 (11th Cir. 2014).

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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. 

  Please click on our Inaugural Newsletter: 

http://us13.campaign-archive2.com/?u=0fe971201141285604fd6d1a7&id=2b832dad61&e=[UNIQID]

On May 4, 2016, the Board announced that it has filed a Notice of Appeal to the Court of

Appeals from the decision of the Appellate Division, First Department in American Economy Insurance

Co. et al. v. State of New York, et al, 2016 N.Y. Slip Op. 02924 (First Department 4/14/16). As

reported in our Special Alert of 4/21/16 (below), that decision held that the closure of the Reopened

Case Fund under WCL §25-a as of 1/1/14 was unconstitutional and thus null and void, such that the

§25-a Fund was reopened.

The Board’s appeal effects a stay of the Appellate Division decision, such that the Board will not

adjudicate any claims for transfer of liability to the Reopened Case Fund pending the Court of Appeals

decision.

In its Subject No. 046-851 of yesterday, the Board confirmed that it would accept, but hold in

abeyance, any and all applications for transfer of liability to the §25-a Fund, including Requests for

Further Action (RFA-2s) and requests made on the record at hearings, pending decision from the Court

of Appeals.

The recommendations made in our 4/21/16 Special Alert remain the same. Whether at hearings

or through RFA-2s, you and your counsel should make claims for transfer of liability to the §25-a Fund

on qualifying cases. This will assure that your requests are timely made and can be pursued later in the

event the Court of Appeals affirms the decision of the Appellate Division reopening the §25-a Fund.

Please contact us if you would like to further discuss any of these developments or if we can

assist you in your efforts to transfer qualifying claims to the Reopened Case Fund.

(

April 21, 2016

SPECIAL ALERT: APPELLATE COURT REOPENS

WCL §25-A REOPENED CASE FUND

On April 14, 2016, the Appellate Division, First Department in New York City rendered a

decision in American Economy Ins. Company et al. v. State of New York, ___A.D. 3d ___ (1st Dept.

2016) (Index 156923/13). The Court held that the amendment to WCL §25-a [1-a] enacted as part of the

Business Relief Act of 2013, which closed the WCL §25-a Fund to new claims effective January 1,

2014, was unconstitutional.

ANALYSIS

The Court found that insurance policies issued before October 1, 2013 charged premiums

premised on the assumption that reopened claims may be shifted to the Special Fund for Reopened

Cases under WCL §25-a. For policies issued on or after October 1, 2013, the Department of Financial

Services approved an increase in premiums to cover the additional liability resulting from the closure of

that Fund.

Policies are occurrence based, covering accidents that occur during policy term. A claim for

benefits on a pre-10/1/13 accident made after 1/1/14 would still be covered by the policy in force at the

time of the accident. The premiums paying for that policy assumed that liability for reopened claims

may be shifted to the Reopened Claim Fund under §25-a. The Court agreed that the closure of the §25-a

Fund increased liability on carriers, which they could not recover with increased premiums, creating an

unfunded liability.

The Court held, therefore, that as to carriers with policies issued before 10/1/13, the closure of

the §25-a Fund constituted an illegal retroactive impairment of an existing contractual obligation and

imposition of unfunded liability. Thus, the Statute (WCL §25-a [1-a]) violated the Contracts and Taking

Clauses of the U.S. Constitution.

The lawsuit was brought solely by insurance carriers and the Court’s ruling specifically applied

only to insurance carriers with policies issued before 10/1/13.

Nevertheless, we submit that, in finding the amendment to §25-a[1-a] to be unconstitutional, the

Court rendered the closure of the Fund null and void. Thus, the §25-a Fund is open and we recommend

that insurance carriers and self-insured employers alike apply for §25-a relief on qualifying cases.

We assume that New York State will appeal the Appellate Division, First Department decision to

the Court of Appeals. Decision by the Court of Appeals cannot be expected for many months.

Meanwhile the Appellate Division decision is the law and the §25-a Fund should be considered

reopened.

RECOMMENDATIONS

1. Closed cases: Apply to reopen (RFA-2) and make your claim for §25-a relief on any case that

would qualify (greater than 7 years since D/A and 3 years since last payment of indemnity) citing

American Economy Insurance Company.

2. Cases closed with indemnity only WCL §32 Settlements: Apply to reopen and make your

claim to shift medical liability to the §25-a Fund on qualifying cases, citing American Economy Ins. It

is recommended that on these cases in particular you consult with counsel regarding allocation and other

issues before attempting reopening.

3. Cases in which WCB already found §25-a did not apply because of the supposed closure of

the Fund: Consider applying to reopen the claim, citing American Economy Ins., and seeking

reimbursement from the Reopened Case Fund for payments that should have qualified for §25-a relief.

4. Cases in which you did not seek §25-a relief because of assumption the Fund had been

closed 1/1/14: Consider applying to reopen and seeking reimbursement from the Special Fund.

We remain ready and eager to consult with you and assist you in your efforts to transfer your

liability on qualifying claims to the newly revived Reopened Claim Fund under WCL §25-a.

On 10/5/15, the Centers for Medicare and Medicaid Services (CMS) began implementing a new

process for recovering conditional payments directly from workers’ compensation carriers and selfinsured

employers. CMS is now taking advantage of its ability to recover conditional payments from

primary payers throughout the life of a workers’ compensation claim, not just at times of settlement.

Prior to 10/5/15, the Benefits Coordination and Recovery Center (BCRC) was responsible for

recovering conditional payments from Medicare beneficiaries. Beneficiaries or their representatives

often shared recovery correspondence with primary payers, but the BCRC was not communicating with

primary payers directly in most cases. On 10/5/15 CMS introduced the Commercial Repayment Center

(CRC) which is responsible for recovering conditional payments where the identified debtor is an

insurer or workers’ compensation entity. Recently, the CRC began issuing Conditional Payment Letters

(CPL) and Conditional Payment Notices (CPN) to primary payers. The CRC will send Conditional

Payment Letters and Notices to carriers, Section 111 Responsible Reporting Entities (RREs), Medicare

beneficiaries, Medicare beneficiaries’ attorneys or other representatives. A carrier can also designate a

recovery agent which can be a carrier’s workers’ compensation defense counsel.

Many of our clients have received copies of CPLs or CPNs. At first glance, these letters may

seem daunting, as they contain a myriad of ICD-9 codes and often reference large sums of money.

However, CMS provided a response mechanism along with implementation of the new recovery

process. As a result of the 2012 S.M.A.R.T. Act mandate that CMS develop a formal appeals process

for conditional payment recovery, CMS created a framework for challenging conditional payments. We

recommend taking advantage of that framework in order to minimize conditional payment

reimbursements.

HAMBERGER & WEISS

2

SETTING THEIR SIGHTS :

A BRIEF HISTORY OF CONDITIONAL PAYMENT RECOVERY

A conditional payment occurs when Medicare pays a bill for medical treatment which is the

liability of a primary payer. Workers’ compensation is primary to Medicare; therefore, workers’

compensation insurance carriers and self-insured employers are primary payers. Conditional payments

can only be made when a claimant is a Medicare beneficiary. The Medicare Secondary Payer (MSP)

laws allow CMS to recover conditional payments from primary payers.

Historically, conditional payment research was performed when settling a workers’

compensation claim with a claimant who was also a Medicare beneficiary. CMS essentially limited its

recovery efforts to settlements, despite the fact that the MSP laws always allowed for recovery of

conditional payments at any time. In 2009 Medicare, Medicaid, and SCHIP Extension Act

(M.M.S.E.A.) reporting began, requiring primary payers to report the existence of Medicare

beneficiaries on their rolls.1 Medicare was particularly interested in learning of situations where the

primary payer had an ongoing responsibility for medical (ORM). The new conditional payment recovery

process is a direct outgrowth of M.M.S.E.A. reporting.

The S.M.A.R.T. Act was enacted in 2012. One of the provisions of the S.M.A.R.T. Act required

establishment of a formal appeals process for conditional payments. That formal appeals process was

put into place in October 2015. Prior to formalizing the process, the BCRC and its predecessors sought

recovery of conditional payments from Medicare beneficiaries directly.2 As a result, primary payers

were often unaware of the existence of conditional payments until settlement, and even then often relied

on claimants’ attorneys to provide BCRC correspondence which had been received by claimants. The

BCRC did not communicate directly with carriers. When defense counsel researched conditional

payments by contacting the BCRC, we often received responses that incorrectly identified us as

claimants’ attorneys.

Once a primary payer became aware of a conditional payment reimbursement request, the

process to challenge it was somewhat ambiguous. The BCRC did not and still does not have any

obligation to establish causation, nor is it required to provide any medical records or bills in support of a

recovery claim. In addition, it was not and is not obliged to demonstrate primary payer liability for a

claim. Therefore, there could be a conditional payment recovery effort on a disputed workers’

compensation claim. Defenses were certainly available, but there was no formal mechanism for

advancing them. Often, a time consuming process ensued whereby medical authorizations were obtained

from claimants, medical records subpoenaed from providers, and arguments made on issues of causal

relationship, duplicate payments, etc. In the interim, the BCRC would continue to add to the conditional

payment tallies.

1 Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) added mandatory reporting

requirements with respect to Medicare beneficiaries who have coverage under group health plan (GHP) arrangements as

well as for Medicare beneficiaries who receive settlements, judgments, awards or other payment from liability insurance

(including self-insurance), no-fault insurance, or workers’ compensation, collectively referred to as Non-Group Health Plan

(NGHP) or NGHP insurance. Note: Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 is sometimes

referred to as “Section 111”. https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Mandatory-Insurer-

Reporting-For-Non-Group-Health-Plans/Overview.html

2 Recent predecessors of the BCRC include the Coordination of Benefits Recovery Contractor (COBC) and the Medicare

Secondary Payer Recovery Contractor (MSPRC)

HAMBERGER & WEISS

3

BULLSEYE – DIRECT RECOVERY FROM CARRIERS & SELF-INSURED EMPLOYERS

The formalization of the conditional payment recovery process in 2015 marked the dawn of a

new era in conditional payment recovery. Perhaps the most significant change is the creation of the

Commercial Repayment Center which focuses its efforts on recovering conditional payments directly

from primary payers, rather than Medicare beneficiaries. The CRC is responsible for seeking recovery

from applicable plans which are identified as Non-Group Health Plans (NGHP), self-insured employers,

No Fault and Workers’ Compensation carriers. The CRC communicates directly with workers’

compensation carriers, defense counsel and agents. A multistep recovery process with 30, 60 and 120

day response deadlines has been implemented, as well as a formal appeal mechanism with specific

permissible and excluded defenses.

Now that a formal process is in place, we recommend that primary payers involve their defense

counsel or agents in the recovery process early on, as early intervention will ultimately reduce the

amount of conditional payments, representing a significant savings for carriers and self-insured

employers.

WHAT TO WATCH FOR – THE NEW RECOVERY PROCESS

Currently, CMS learns that a Medicare beneficiary has a workers’ compensation claim either as a

result of the primary payer reporting the claim through mandatory insurance reporting, or by the

beneficiary’s self-report. Either the MMSEA report or the self-report results in conditional payment

research and a Conditional Payment Letter or Conditional Payment Notice to the primary payer advising

of the results of that research.

If the primary payer reports the claim under mandatory insurance reporting, the CRC will

research whether conditional payments were made from the date of the reported incident to the current

date or date of termination of ORM and issue a Conditional Payment Notice to the primary payer. If the

claimant self-reports, the CRC will perform the same research, but issue a Conditional Payment Letter.

Unfortunately, where the primary payer reports under mandatory insurance reporting and the beneficiary

self-reports on the same workers’ compensation claim, two files are created. This can prove confusing,

as each file will be identified with a different Case Control Number, and the primary payer is

responsible for responding to the file created in response to the mandatory insurance report, rather than

the file created in response to the beneficiary’s self-report.

Challenging a Conditional Payment Letter early on can prove beneficial. Conditional Payment

Letters do not have any deadlines for response, but we recommend responding as soon as possible after

receiving the letter. CMS actually encourages primary payers to advise if there is no ORM or if causal

relationship will be disputed. If CMS agrees with the challenge, subsequent conditional payment

amounts can be reduced. Primary payers can also be proactive and inquire as to the existence of

conditional payments if they have not yet received communication from the BCRC or CRC. Therefore,

we recommend researching conditional payments early and responding to Conditional Payment Letters

promptly so as to mitigate future conditional payment notices and demands.

HAMBERGER & WEISS

4

Unlike the Conditional Payment Letter, the Conditional Payment Notice requires a response

within 30 days. If no response is received the recipient is presumed to be identified as the debtor, and

CRC will automatically issue a Conditional Payment Demand within 30 days of the date on the CPN.

Once again, the initial response to the Conditional Payment Notice could challenge causal relationship

or advise that there is no ORM. The majority of challenges we pursued thus far have been on the basis

of causal relationship. The CRC tends to include expenses for treatment of numerous conditions that are

unrelated to the workers’ compensation claim. We find that it is receptive to arguments on causal

relationship and will issue subsequent correspondence reducing the amount of conditional payments.

Once an Initial Determination is made by the recovery contractor, a Conditional Payment

Demand is issued. The primary payer may pay the demand or appeal it.3 In some instances, a portion of

the demand can be paid, while another portion is appealed. If the CRC agreed with challenges to a

Conditional Payment Letter or those received within 30 days of the Conditional Payment Notice, the

successfully challenged conditional payments will not appear in the demand. However, the demand may

include new conditional payments Medicare made after the CPL or CPN was issued.4 If paying the

demand, or the undisputed portion of the demand, payment must be made within 60 days of the date of

the demand letter. Unpaid portions of the demand will be referred to the Department of the Treasury and

interest will accrue.

If the primary payer chooses to appeal the demand, the appeal must be filed within 120 days of

receipt of the Conditional Payment Demand.5 Receipt is presumed to be within five calendar days of the

date on the demand letter, absent evidence to the contrary. If the primary payer appeals the demand,

there will not be a referral to the Department of the Treasury while the appeal is being processed, but

interest will accrue. Therefore, we recommend that the primary payer pay the portion of the demand that

it agrees with pending the outcome of an appeal, so as to avoid interest on that portion. Should the

primary payer elect to pay the full amount of the demand pending appeal, a refund of the disputed

portion of the demand will be issued to the primary payer if the appeal is successful.

Appeals must be written. Only the primary payer is a party to the appeal, meaning the Medicare

beneficiary does not have appeal rights. Permissible defenses include causal relationship and that the

alleged debt should not exist. Other defenses are specifically excluded. For example, the primary payer

cannot argue that it already paid a requested charge to a beneficiary or another party. A primary payer

cannot assert a waiver of recovery which is an option only available to Medicare beneficiaries.

Applicable plans cannot argue for a pro-rata reduction of recovery based upon attorney fees.

3 There is no appeal process for demand letters issued before 4/28/15. If a primary payer wishes to dispute a demand that

pre-dates 4/28/15, it will deal directly with the CMS contractor which issued the demand.

4 CRC’s conditional payment research is ongoing until CMS Is made aware that ORM is terminated. The S.M.A.R.T. Act

provides a three year statute of limitations on recovery of conditional payments, meaning that CMS has three years from

the date it is notified of a settlement, judgment, award or other payment to seek recovery. However, medical providers

have one calendar year from a date of service to bill Medicare. There are several exceptions to the one year time limit

including retroactive Medicare entitlement which is often the case with claimants who are awarded Social Security

Disability benefits.

5 Conditional Payment Demand Letters issued from 4/28/15 forward can be appealed. CPDs dated prior to 4/28/15 are not

subject to the formal appeals process, but can be responded to and challenged through correspondence with the issuing

entity.

HAMBERGER & WEISS

5

The appeal process has several levels. The first step, Redetermination, is decided by the recovery

contractor who issued the Initial Determination. Following Redetermination, the process is taken out of

the hands of the original contractor and addressed for Reconsideration by a CMS Qualified Independent

Contractor. Following Reconsideration, a dissatisfied party may request a hearing before an

Administrative Law Judge.6 If the Administrative Law Judge’s decision is unsatisfactory, a party may

request review by the Medicare Appeals Council. Finally, if the Medicare Appeals Council does not

issue a decision, dismissal or remand to the Administrative Law Judge within a specified period of time,

the appellant can request escalation to Federal District Court. However, a dismissal by an Administrative

Law Judge cannot be escalated.

PROTECT YOURSELF - DEFENSE RECOMMENDATIONS

The best way to resolve conditional payments in primary payers’ favor is to be proactive.

Identifying Medicare beneficiaries who are also workers’ compensation claimants early in the claims

process and researching conditional payments well before settlement can significantly mitigate liability

throughout the life of a claim and at the time of settlement. In addition, there are certain situations, such

as WAMO settlements and disputed claims, where the savvy claims handler can identify the risk of

outstanding conditional payments and reduce liability by researching and disputing conditional

payments.

Once conditional payments are identified, early responses to Conditional Payment Letters and

Conditional Payment Notices are effective ways to limit conditional payments throughout the life of a

workers’ compensation claim. Theoretically, the sooner that the BCRC is aware of the existence of a

primary payer, the less likely it is that Medicare will continue to make conditional payments on a claim.

There are various ways to respond to the BCRC and CRC. CMS established internet access through the

Medicare Secondary Payer Recovery Portal (MSPRP) and a limited CRC portal both of which we can

access. Written responses are also accepted and have proven expeditious thus far. The primary payer, its

defense counsel, or agent can research conditional payments, respond to CPLs and CPNs and appeal

demands. As attorneys for carriers and self-insured employers, we have been researching conditional

payments and responding to the BCRC and CRC for our clients using both the MSPRP and written

responses with success.

We look forward to assisting you in researching conditional payments and responding to BCRC

and CRC recovery efforts. Please feel free to contact us with any questions on conditional payment

recovery generally or for legal assistance on a case by case basis. Attorney Nicole Graci can be reached

at (716) 852-5200 x301 or ngraci@hwcomp.com.