State News

The Division is about to take aim at insurance carrier peer reviewers.

The agency is in the process of creating a Peer Review Plan-Based Audit, which it says will define

the scope, methodology, and selection criteria of its review process. A draft of the Plan Based Audit

is posted it on the Division website. It says that its purpose is to:

• Promote the delivery of quality healthcare in a cost-effective manner;

• Ensure peer reviewers adhere to requirements when issuing peer review reports for extent

of injury and/or medical necessity issues;

• Ensure peer reviewers review and maintain records when performing peer review; and

• Ensure that peer reviewers hold the appropriate credentials when performing peer review.

Once the Plan-Based Audit is finalized, the Division will begin collecting and reviewing select peer

reviews that address extent of injury and medical necessity issues. It appears that the Division will

be focusing on (among other things) whether peer reviewers (1) rely on evidence-based medicine,

(2) use Division treatment guidelines, and (3) comply with Division Rule 180.28 which governs peer

review requirements, reporting, and sanctions.

The Division seeks comment from stakeholders on the current draft. Suggestions for improvement

can be emailed to OMA@tdi.texas.gov by 5 p.m. Central Time on November 4.

The Division has published the results of disciplinary action taken last month and, as usual, they

look a little – uh – lopsided.

In September the agency disciplined twice as many carriers (8) as providers (4). Furthermore, the

Division took a lot more hide from the carriers’ backside. The largest monetary penalty it assessed

against a provider was $7,500. In contrast, the Division assessed a penalty of $40,000 against one

carrier and a penalty of $47,000 against another.

This is in keeping with the trend. The Division’s statistics show that since January 1, 2014, it has

assessed penalties totaling $1,658,245 for insurance carriers and only $65,600 for health care

providers.

The Dallas Court of Appeals has denied rehearing of a decision that we first mentioned in our

August newsletter. The decision explains that the “continuous coverage rule” is not exactly what the

name implies. The court held that a Texas-based worker was not covered when killed while on a

business trip to New York City.

Ronald Davis worked in Texas but had a business meeting in New York scheduled for a Monday.

He flew to New York on the previous Saturday and checked into a hotel. The next day, Sunday, he

was crossing a street near Central Park at 10:30 a.m. when he was hit by a bicyclist and killed. He

was 10 blocks away from his hotel. No one knows where he had been or where he was going.

Mr. Davis’ family argued that he was covered under the continuous coverage rule. Under that rule,

an employee whose work entails travel away from the employer’s premises is in the course of his

employment when the injury has its origin in a risk created by the necessity of sleeping or eating

away from home, except when a distinct departure on a personal errand is shown.

The Division of Workers’ Compensation found the injury to be non-compensable, so the Davis

family had the burden of proof on judicial review. Although there was no evidence that Mr. Davis

was on a personal errand at the time of the accident, the court found the injury to be noncompensable.

It reasoned that the Davis family had the burden of showing that Mr. Davis wasnot

on a personal errand or mission at the time of the accident and, because they could make no such

showing, they could not meet their burden of proof.

Davis v. Texas Mutual Insurance Company, ___ S. W.3d ___, 2014 WL 3705130 (Tex. App. –

Dallas 2104).

We in Texas are at ground zero in the Ebola scare. The first person to test positive for the disease

in the United States treated at Texas Health Presbyterian Hospital, and two of his nurses contracted

the virus and were quarantined. These events have raised questions regarding the interplay between

Ebola and workers’ compensation insurance coverage. Specifically, under what circumstances is a

worker covered under a workers’ compensation insurance policy if the worker tests positive for the

Ebola virus or is quarantined for monitoring?

This question has no bright-line answer. On the one hand, a compensable injury includes an

occupational disease. On the other hand, the term occupational disease does not include an ordinary

disease of life to which the general public is exposed outside of employment.

Generally speaking, to prove a compensable occupational disease, a worker must show that the

disease is indigenous to the work or present in an increased degree in that work as compared with

employment generally. Using that standard, the two quarantined hospital nurses probably can meet

their burden of proof to show that their conditions are compensable. The same is true for others on

the front line, such as laboratory workers and emergency responders.

But what about those who are not on the front lines but still face possible exposure, such as airline

flight attendants? Or workers who travel on airlines for business? Would they be covered?

The blogosphere is red hot with discussions of questions like these as insurance carriers, employers,

and state regulators scramble to find answers.

So, remember this: To get a DD to address MMI or IR after a BRC or CCH the BRO or HO will

send a PODODDE, not a DWC-32. Capisce?

It’s called the Presiding Officer’s Directive to Order a Designated Doctor Exam, and it’s the

newest thing at Division field offices. You’ll start seeing it come across your desk, because the

Division now uses it when Benefit Review Officers and Hearing Officers (now collectively

called “Presiding Officers”) order designated doctor exams.

In the past, a Presiding Officer ordered a designated doctor exam like the rest of us – by filling

out a Form DWC-32 (Request for Designated Doctor Exam). Not any more. Effective 10/01/14,

Presiding Officers are to use the new form.

Accordingly to a memo from Kerry Sullivan, the Division’s Deputy Commissioner of Hearings,

“the purpose of this change is to clarify when an examination is ordered by a Presiding Officer

and to identify clearly what the Presiding Officer is ordering the DD to address.” (Why that

requires a new, special form we’re not sure.)

Unless you have been cryogenically frozen in carbonite for the past 3 months, you have probably heard about the recent opinion released by Miami-Dade Circuit Judge Jorge Cueto which declared the Florida Exclusivity Doctrine unconstitutional.  His 22 page opinion (Padgett v. State of Florida No. 11-13661 CA 25) attacked the erosion of the Florida workers’ compensation system as a whole and asserted that the value of the benefits available to claimants did not justify thequid pro quo tort liability protections afforded employers.  The purpose of this article is to provide a general outline of what lead to Judge Cueto’s opinion and to consider its effect on a national scale.

Accident and Injury

The employee, Elsa Padgett, was an account clerk who tripped over some boxes that were left on the floor by a co-worker.  She reportedly fell on her hip and sustained significant injury to her shoulder.  After undergoing replacement surgery for her shoulder, she claimed that the resulting pain forced her to retire. 

Procedural Background

Padgett opted to file a negligence lawsuit against her employer.  In its Answer, the employer asserted the Exclusivity Doctrine (§440.11, Fla. Stat. 2003) as an affirmative defense.  Padgett then amended her Complaint to add a Count for Declaratory Relief asking the Court to declare the Florida Exclusivity Doctrine in violation of the U.S. and the Florida Constitutions.  Once Florida Worker’ Advocates (FWA) and Workers Injury Law & Advocacy Group (WILG) joined the party as interveners, the employer strategically withdrew its Exclusivity Doctrine defense and the negligence action was severed from the Declaratory Relief portion of the lawsuit.  The Florida Attorney General opted not to intervene in order to defend the constitutionality or validity of the Exclusivity Doctrine.  However, she did file a responsive pleading pointing out various procedural and substantive defects in the case.  FWA and WILG next sought a summary judgment but Judge Cueto denied the motion on the grounds that there was no longer a present justiciable controversy.  Padgett then intervened in the Declaratory Relief action which presented a controversy upon which Judge Cueto could rule (Florida empowers a judge to decide an issue if that issue is capable of repetition in the future and might evade review).

Erosion of Benefits

In his written opinion, Judge Cueto noted that the system of workers’ compensation is supposed to be the result of a compromise wherein employees receive immediate access to indemnity and medical benefits through a no-fault insurance system and employers are insulated, with limited exceptions, from tort liability.  He then pointed out that the benefits afforded employees had been greatly reduced as the result of the 2003 amendments that eliminated permanent partial disability benefits, put a 5 year cap on permanent and total disability benefits, capped said benefits at age 75, and apportioned medical care by requiring contribution in the form of co-pays by the employee after reaching maximum medical improvement.   Judge Cueto concluded that the Florida workers’ compensation system no longer provided adequate indemnity and medical benefits for injured workers and that preventing them from pursuing a tort remedy was a violation of due process.

Ruling

Judge Cueto ruled that the Florida Exclusivity Doctrine was unconstitutional on August 13, 2014.  One week later, he denied a motion for rehearing filed by the Attorney General’s office.

Appeal

The Attorney General appealed Judge Cueto’s ruling to the Third District Court of Appeal on August 26, 2014.  The case is now calledFlorida v. Florida Workers’ Advocates.  Should the District Court of Appeal decide to rule, its decision could become the law for the Third District, and possibly followed by the other Florida districts.  The Third District Court declined to certify the case directly to the Supreme Court and the District Court of Appeal also denied that request.  The Attorney General’s initial Brief is due on or before December 4, 2014.

According to Casey Gilson attorney Rayford Taylor, who practices in Georgia and Florida, there is a legitimate chance that Judge Cueto’s ruling will be treated merely as an advisory opinion rather than a declaratory judgment.    None of the Interveners established that they had been injured or prejudiced by the Exclusivity Doctrine, or by the provisions they cited as a basis for a challenge to the statute.  The issue may need to be addressed again the next time an employee sues an employer in tort and the employer asserts the Exclusivity Doctrine as a defense.

Other Constitutional Attacks in Florida

The Padgett case is not the first time this particular claimant’s attorney has taken the offensive against the Florida Workers’ Compensation Act on constitutional grounds.  According to attorney Rob Grace, who practices with the Bleakley Bavol firm in Florida, this same attorney has filed a number of these suits around the state during the last five years. Padgett just happened to be one where a judge accepted his argument.  The attorney filed a similar suit in Broward County which was dismissed approximately five years ago.  At the same time, the attorney had another comparable suit (Stahl v. Tenet Health Systems, Inc.) in Dade County which he lost at the Third District Court of Appeals level. 

The Florida Supreme Court is currently considering a couple of other cases involving constitutional attacks on the state’s workers’ compensation system.  In the case ofWestphal v. City of St. Petersburg, The Court has before it an appeal from a firefighter who was injured and left with no income after his temporary indemnity benefits expired.  His authorized doctors took him out of work and he was not eligible for additional benefits until the doctors placed him at maximum medical improvement.  The firefighter is challenging the constitutionality of the statutory limit on the payment of temporary total disability benefits.

In the case of Castellanos v. Next Door Company, the Florida Supreme Court is considering an appeal challenging the constitutionality of the statute that provides for the calculation of attorneys’ fees in workers’ compensation matters, based solely on a statutory percentage of benefits achieved by the attorney.

Other States

Although it has not yet risen to the level of a national trend, several other states have seen constitutional attacks on certain aspects of their respective workers’ compensation systems. 

In California, the constitutionality of the workers’ compensation lien system was recently raised in the case ofAngelotti Chiropractic v. Baker. 

Approximately 20 years ago, the entire Texas Workers’ Compensation Act withstood a constitutional challenge and, more recently, the Texas Office of Injured Employees Counsel released a few reports last year that pointed out the inequities of the alternative dispute resolution program. 

In Tennessee, there have been some unsuccessful constitutional attacks on other parts of the workers’ compensation statute (i.e. multipliers and the Medical Impairment Registry program) but not the Exclusivity Doctrine. 

Approximately 6 years ago In Alabama, an employee filed a motion seeking to have the $220 cap for permanent partial benefits deemed unconstitutional.  The judge denied the motion but stated in his Order that the cap set 23 years prior basically guarantees poverty for claimants and their families.  The judge further stated that "the trial courts see these workers leave our courtrooms week after week, without the ability to support themselves or their families."  The judge deemed the cap unfair but not unconstitutional and called upon the Alabama Legislature to make the change.  Several legislative attempts at increasing the cap have been made since that time but all have been unsuccessful. 

Moral of the Story

According to Rob Grace, “my prediction is that, in the end, nothing will come ofPadgett.  Maybe I will be proven wrong but I find it difficult to believe that our supreme court is going to basically throw out the entire workers’ compensation statute.”  Rayford Taylor agrees with Grace.  According to Taylor, “I do not see how mere allegations that certain provisions are different from what they once were invalidates the tort immunity of an employer whose only offense was complying with the statute.”  Even if Grace and Taylor are correct, there remain lessons that can be learned from the Padgett opinion and other such cases.  The more you reduce benefits to employees, the more susceptible to constitutional attacks your workers’ compensation system becomes.  In his now already infamous opinion, Judge Cueto referred to a First District Court of Appeal comment on the “minimum” requirements necessary for a workers’ compensation system to pass constitutional muster.  InBradley v. Hurricane Restaurant (an 18 year old case that interestingly involved both attorneys Taylor and Grace), the Court stated that workers’ compensation law continues to be a “reasonable alternative to tort litigation” when it “provides injured workers with full medical care and benefits for disability (loss of wage earning capacity) and permanent impairment regardless of fault, without the delay and uncertainty of tort litigation.”  In Judge Cueto’s opinion, the Florida system does not meet this minimum.  Does yours?

________________________________________

About the Author

This article was written by Michael I. Fish, Esq. of Fish Nelson & Holden LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation matters. Fish Nelson & Holden is a member of The National Workers’ Compensation Network (NWCDN). If you have any questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author atmfish@fishnelson.com or any firm member at 205-332-1448.

The Division is accepting public comment on planned revisions to the PLN‐11 (Notice of

Disputed Issue(s) and Refusal to Pay Benefits). The proposed new form provides an area for

the insurance carrier to check the appropriate box to indicate which issue (extent of injury,

disability, or entitlement to death benefits) that is being disputed. The form also provides a

definition for “disability” for the injured worker. There are also minor revisions to update and

clarify the instructions, including a “caution” for insurance carriers to “explain the reason(s)

for disputing the issue in plain language without unnecessary use of technical terms,

acronyms, and/or abbreviations.” The instructions also include the following cautionary

statement: “Disputes must be based on the information the carrier has obtained or verified.”

While relatively minor, the above changes exhibit an apparent effort by the Division to

encourage carriers to provide more clear and concise language in its disputes so that the

injured worker understands exactly what is being disputed. We have always discouraged the

use of acronyms in a PLN‐11; best practice is to always use full terms so that a claimant is on

notice of what, exactly, the carrier is disputing. For example, instead of disputing extent of

injury to “CTS” or “lumbar DDD,” the carrier should spell out that it is disputing carpal tunnel

syndrome and lumbar degenerative disc disease. Likewise, instead of disputing disability

based on a “valid BFOE,” the carrier should state it is disputing disability pursuant to a bona

fide offer of employment tendered by the employer. As for the Division’s instructions

requiring that “disputes must be based on the information the carrier has obtained or

verified,” we should take this as a reminder that it is best practice for the carrier to document

its claim file as early as possible with written and verified evidence supporting the basis for

its dispute. In other words, don’t wait until a BRC is set to take and transcribe a recorded

statement, obtain medical records for a pre‐existing injury, or obtain a hard copy of a

toxicology report.

The revised form is currently available on the Texas Department of Insurance website, and the

public comment period closes Wednesday, October 1, 2014 at 5 p.m. Public comments may

be submitted by e‐mail, snail mail, or personal delivery to: Texas Department of Insurance,

Division of Workers’ Compensation, Maria Jimenez, Workers’ Compensation Counsel MS‐4D,

7551 Metro Center Drive, Suite 100, Austin, Texas 78744‐1645; Email:

InformalRuleComments@tdi.texas.gov.

The Division made minor changes to its DWC‐26 (Request for Reimbursement of Payment

Made by Health Care Insurer) and DWC‐69 (Report of Medical Evaluation). The revisions to

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the DWC‐26 replace the term “ICD‐9” with the term “diagnosis code,” in order to facilitate

transition from ICD‐9 coding to ICD‐10 coding for workers’ compensation medical billing,

processing, and reporting. (ICD‐9 and ICD‐10 refer to the 9th edition and the 10th edition,

respectively, of the International Classification of Diseases, Clinical Modification and

Procedure Coding System.) Regarding the DWC‐69, the Division has added instructions for

injured employees.

The finalized forms are available on the Texas Department of Insurance website and are

effective January 1, 2015.

The US Drug Enforcement Administration (DEA) has reclassified hydrocodone combination

drugs from Schedule III to Schedule II in the Schedule of Controlled Substances, effective

October 6, 2014. This reclassification change impacts all physicians and pharmacies, including

drugs prescribed and dispensed in the Texas workers’ compensation system. Hydrocodone

combinations are the most frequently prescribed drugs in the Texas workers’ compensation

system.

This change has no direct impact on the application of DWC’s pharmacy closed formulary.

However, prescriptions for Schedule II drugs have specific requirements, and the

reclassification will result in changes to the physician prescription process for hydrocodone

combinations. For example, physicians may not delegate to advance practice nurses and

physician assistant’s authority to prescribe these drugs outside of a hospital or hospice setting,

nor may they “call in” prescriptions for these medications to pharmacies (except in

emergencies, in which case oral transmission must be followed up with written prescription

within seven days). In addition, physicians must use official prescription pads from the Texas

Department of Public Safety (DPS) for written prescriptions; or if e‐prescribing, must use a

certified Electronic Prescribing of Controlled Substances (EPCS) vendor. Most significantly in

our context, physicians may not refill prescriptions of these drugs without a patient visit or

consultation, and prescriptions may be issued for a maximum 90‐day period (three 30‐day

prescriptions to be written at one time). Refills are to be filled on a “not before date” written

on the prescription note by the prescriber. Claimants and pharmacies are encouraged to work

with the physician to resolve any issues regarding these changes when prescribing or

attempting to fill prescriptions for hydrocodone combinations.

Takeaway: Hydrocodone medications will become triple‐script medications, and an injured

worker will have to have a doctor’s office visit to get the script.

The Division has increased the maximum weekly benefit rate for income benefits from $850

to $861, and has increased the minimum weekly benefit rate from $127 to $129. The new

weekly benefit rate maximums and minimums are applicable for dates of injury from

October 1, 2014 through September 30, 2015.

The new maximum and minimum weekly benefit rates will not affect dates of injury prior to

October 1, 2014, as the maximum weekly income benefit in effect on the date of injury is

applicable for the entire time that the benefit is payable. Tex. Lab. Code Section 408.061(g).

A table showing maximum and minimum weekly benefit amounts for dates of injury occurring

from January 1, 1991 through the present is available on the Texas Department of Insurance

website at http://www.tdi.texas.gov/wc/employee/maxminbens.html.