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                                                                                       Simon Law Group, P.C.

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

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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.

Ever since the decision in Dever v. New Jersey Mfrs. Ins. Co., No. A-3102-11T2, (App. Div. Oct. 23, 2013), plaintiffs’ counsel have been arguing that respondents do not have a lien for medical bills paid in workers’ compensation from a work-related car accident where the plaintiff had PIP coverage.  But civil courts have not been following Dever, and workers’ compensation carriers won another big decision on this issue in Talmadge v. Burn, No. A-3160-14T1 (App. Div. June 22, 2016).

Tina Talmadge was injured while working for Child and Family Services, Inc.  She was driving her own car when her vehicle was struck by a car driven by Ms. Burn.  Plaintiff underwent a cervical fusion procedure, and The Hartford Insurance Company (workers’ compensation carrier) paid $127,000 in medical and indemnity benefits.  The Hartford sought reimbursement of two thirds or approximately $84,500 and intervened in the civil case from which plaintiff recovered $250,000 as damages.   Plaintiff conceded that she owed two thirds of the indemnity benefits but argued that The Hartford had no right to a lien on medical benefits because as a no-fault insured, she herself could not recover medical benefits from the other no-fault insured Burns.  She contended that if she could not make a recovery of medicals in her law suit, The Hartford could not either as its rights are derivative of her own rights.

Both the trial judge and the Appellate Division rejected plaintiff’s arguments. The Appellate Division initially observed, “When an employee suffers an automobile accident while in the course of employment, workers’ compensation is the primary source of satisfaction of the employee’s medical bills, as provided by the collateral source rule, N.J.S.A. 39:6A-6, which ‘relieves the PIP carrier from the obligation of making payments for expenses incurred by the insured which are covered by workers’ compensation benefits.'” 

The Court went on to discuss how the PIP statute interacts with the workers’ compensation statute.  “In instances where an employee, as a result of a work related automobile accident injury, also has a claim for recovery against a third party, the Legislature overcame the possible ‘inequity of double recovery’ by including section 40, which requires an injured employee to refund paid workers’ compensation benefits once recovery is obtained from the tortfeasor, thereby avoiding duplication of the workers’ compensation benefits by the tort recovery.”

The Appellate Division concluded, “The employer’s workers’ compensation carrier’s lien, which includes medical expenses paid, must be satisfied from plaintiff’s $250,000 recovery from Burn.”  It did not matter that plaintiff could not recover the medicals from the other party in her law suit.  The Court made clear that this was still a double recovery.  In this practitioner’s opinion, the Appellate Division got it right in Talmadge.Dever is an outlier case because the workers’ compensation carrier was not even a party to that decision.  The dispute in that case involved the UIM carrier, and the comments in Dever regarding the workers’ compensation lien were what is known as “dicta,” the expression of an opinion that went beyond the facts before the court.

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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. 

 Each year thousands of Granite State workers are injured on the job. Many of these injuries are minor and the worker loses no time from work and requires little to no medical attention. A  small portion of the reported injuries are more severe, and workers miss time from work and require extensive medical treatment to return to their pre-injury status. The New Hampshire Department of Labor releases a biennial report that contains information regarding the number and types of injuries, the industries in which the injuries occur, and the number of cases litigated before the Department every year.[1]

The most recently published biennial report found that the majority of injured workers sustain minor ailments that do not result in lost time from work. In fiscal year 2013, there were 38,998 reported workplace injuries and 644,000 non-agricultural employees in New Hampshire, resulting in an incident rate of 6.1%. Lost time from injuries occurred in 3,530 cases: less than 10% of all injuries.

The causes of injuries in New Hampshire are diverse. Greater than 10 percent of the injuries in fiscal year 2013 were the result of an object hitting an employee (4,101), while nearly 19 percent were the result of an employee lifting an object (7,359). The most common injury type involved a muscle pull or strain which accounted for 13,926 of the 38,998 injuries, or approximately 36% of all injuries. Bruises, cuts, or puncture wounds accounted for another 37% of the reported injuries (14,591).

The biennial report also provides a breakdown of the industries that account for the majority of workplace injuries. While nearly a third of reported injuries (13,156) were not classified by industry, the remaining two thirds (25,842) were. Health Care and Social Assistance resulted in the most reported injuries, tallying 5,013 out of 25,842, or approximately 19% of classified injuries. Motor Vehicle and Parts Dealers came next with approximately 12% (3,086) of all reported injuries. Accommodation and Food Services, Educational Services, and Metal Manufacturing separately accounted for approximately 7% of all reported injuries, with 1,893, 1,755, and 2,022 injuries reported respectively. These five industries account for more than half of all classified injuries in the state.

Looking at these numbers, it is clear that New Hampshire is a safe state in which to work, with only slightly more than 6% of employees injured each year and less than 10% of all injuries resulting in lost time from work. It should come as no surprise that a large percentage of all injuries result from employment in Health Care and Social Assistance or Motor Vehicle and Parts Dealers since these industries employ thousands of people in New Hampshire and require substantial amounts of physical work.

Of the thousands of incidents that result in injuries to Granite State workers, only approximately 5% result in litigation before the New Hampshire Department of Labor. When litigating a case, injured employees and insurance carriers or employers are usually represented by counsel.

[1] http://www.nh.gov/labor/documents/biennial-report-2012-2013.pdf

 Earlier this year the New Hampshire Supreme Court published its decision in the matter of Appeal of Raymond Cover. The result of the decision is that part-time employees injured at work have a right to reinstatement under New Hampshire law (RSA 281-A:25-a).

The Court dealt with the validity of New Hampshire Administrative Rule, Lab 504.05 (b) (3) and whether part-time employees are entitled to reinstatement under the Workers’ Compensation Act. The statute, RSA 281-A:25-a, states “[a]n employee of an employer who employs 5 or more employees, who has sustained an injury, shall be reinstated by the employer to the employee’s former position of employment upon request for such reinstatement… .”  At the time of this litigation, Lab 504.05 (b) (3) stated, “[a]n employer shall not be obligated to provide the former position to… a part time employee as defined by the employer’s personnel policy.” The Court found that “the rule impermissibly modifies the statute and is therefore invalid.” The Court reiterated its longstanding edict that the Workers’ Compensation Law should be read “liberally to give the broadest reasonable effect to its remedial purpose and resolve all reasonable doubts in favor of the injured worker.” Since RSA 281-A:25-a does not specifically exclude part-time employees from the right to reinstatement, while Lab 504.05 (b) (3) does, the Court stated that “the rule cannot be characterized as a rule that merely fills in the details to effectuate the purpose of the statute.” 

Acknowledging the likelihood of the Court deciding in this fashion, the Department of Labor had already began the process of altering Lab 504.05 (b) (3) earlier this year. The rule now omits the language quoted above and provides for reinstatement to any full time or part time employee (though temporary employees are still exempt and some other qualifications apply).

The Court also went into some detail in dismissing a jurisdictional argument. The employer argued that the only way to challenge the validity of the Department of Labor rule was through a Declaratory Judgment action brought in Superior Court with the Department of Labor as an opposing party.

Raymond Cover had challenged the validity of Lab 504.05(6)(3) before the Department of Labor Hearing Officer initially and the Compensation Appeals Board on appeal.  RSA 541-A:24 provides that parties “may” challenge a Department of Labor administrative rule at the Superior Court via a Declaratory Judgment action, including the Department of Labor as a party. The employer argued “that the word ‘may’… is meant to express a right … to challenge a rule’s validity [and] if that right is exercised, then the action must be filed” in Superior Court and include as a party the agency that adopted the rule. The Court disagreed. The Court focused on the definition of the word “may” to mean “permissive, not mandatory” and cited three prior cases in which the Court had reviewed the validity of agency rules under similar circumstances. The Court found that it could exercise subject matter jurisdiction over Mr. Cover’s appeal. 

Employers should know that all full-time and part-time employees are likely eligible for reinstatement to their job within 18 months of a compensable workplace injury. Some qualifications still apply, and your labor and employment or workers’ compensation attorney can likely provide helpful counsel on this issue.

 In Appeal of Northridge Environmental, LLC, the New Hampshire Supreme Court held that home care services provided to the injured worker by his non-medically trained spouse qualify as a compensable medical expense under New Hampshire’s workers’ compensation law.

In Northridge, the claimant sustained serious injuries at work.  After his release from the hospital he required constant care that included cleaning of his wounds and assistance with moving, bathing, and dressing, all of which was provided by his spouse. The claimant sought payment for his spouse’s services from his workers’ compensation carrier, under the theory that but for his spouse’s care he would have needed to hire a medical professional to perform the home care.

The New Hampshire Department of Labor initially denied reimbursement for the spouse’s home care services and the Compensation Appeals Board (CAB) upheld the decision. After an initial appeal to the New Hampshire Supreme Court, the case was remanded to the CAB with instructions to revisit the issue and determine whether, and to what extent, the services provided by the claimant’s wife were reimbursable. On remand, the CAB determined that the claimant was entitled to reimbursement for the services his spouse provided, noting that RSA 281-A:2, XII-b of the workers’ compensation statute “does not exclude a spouse as a home health care provider and should include a spouse as a home health care provider because the workers[‘] compensation statute is a remedial statute and a spouse is not excluded as a provider.” Appeal of Northridge, Case No.: 2014-0776, March 22, 2016, 2. The Court affirmed the decision of the CAB and stated that “the CAB did not err when it decided that the petitioner was entitled to reimbursement for his wife’s services.” Id., 5.

The workers’ compensation carrier also had objected to the CAB’s finding concerning the amount of reimbursement to be provided to the claimant for the services rendered by his wife. After the initial appeal and remand to the CAB, the CAB determined that the claimant should be reimbursed at the rate of $15 an hour, 12 hours a day for the care provided by his wife. The carrier argued there were no time cards or other records available, and that the CAB should not have determined that “twelve hours per day, every day” is “an appropriate reimbursement rate in this instance.” Id., 6. The Court held that it could not “conclude that the CAB erred when it determined that reimbursement for 12 hours per day was reasonable.” Id., 6.

The Court also considered whether the claimant’s attorney was entitled to attorney’s fees. The Court determined the claimant’s attorney had “prevailed” under the definition in RSA 281-A:44, I as the attorney had obtained a remand from the Supreme Court and obtained relief at the remand CAB hearing. Although it “did not award benefits to the petitioner in the earlier appeal, [its] prior decision was an essential step in the process that eventually led to the CAB awarding reimbursement.” Id., 9. As such, the Court determined that the petitioner was entitled to reasonable attorney’s fees and costs incurred in the earlier appeal to the Court.

 This ruling potentially exposes employers, carriers, and third party administrators to liability for reimbursement for care provided by the spouses and other non-medically trained individuals who provide care to an injured worker. In Northridge, the carrier had offered to pay for a licensed healthcare provider to perform the in-home services which were prescribed.  The claimant declined the offer. If the injured employee requires medically necessary homecare and foregoes a visiting nurse or other medical professional, this case supports the argument that the statute does not preclude reimbursement for a spouse or other non-medically trained individual who provides that care. Furthermore, nothing in the decision appears to limit this holding to a spouse. 

The Court’s second consideration – that the claimant’s attorney was due reasonable fees and costs for an earlier appeal when prevailing at the remand hearing – also exposes employers, carriers, and third party administrators to potential liability for payment of attorney’s fees. Claimants’ attorneys will undoubtedly request their fees be paid by carriers for their time before the Supreme Court when they obtain a remand from the Supreme Court that results in a favorable decision before the CAB.

 Bill 1084 went into effect on July 1, 2016.　 This legislation abrogates the holding inWheeler, and sets forth the applicable law as it relates to aggregate wages for an employee when calculating an employee’s average weekly wage.　 While we suggest reading the entirety of Bill 1084 and, of course, calling us for any questions you may have, keep the following in mind:

To be prudent, you should ask an injured employee if they are employed in any other position and ask that they provide wage information to support the same and note your file accordingly.

 If you have any questions relating to calculating the comp rate, what needs to be included, or general questions on South Dakota law, please contact Charlie Larson atcalarson@boycelaw.com or 605-336-2424.