State News

In this most recent case, Dr. Vanderwerff, with whom some of you may already be familiar, argued that he was entitled to payment from Travelers because its network provider list was given to the claimant by a website link instead of on paper. Therefore, he argued, the claimant was not given the proper notice of network requirements so the claimant was free to treat out-of-network with Dr. Vanderwerff.

In an opinion issued June 28, 2018, the Dallas Court of Appeals rejected Dr. Vanderwerff's argument. The court held that the term "written description" as used in section 1305.451 of the Insurance Code includes an electronic format rather than paper only. The Court noted that when asked in oral argument, “Are words any less written if they are written electronically rather than on paper?,” Dr. Vanderwerff’s counsel conceded, “No.” Dr. Vanderwerff was represented by claimant attorney Brad McClellan. 
 
The Court also declined Dr. Vanderwerff’s request to reconsider its 2015 opinion in this same case. In that opinion, the Court, citing the redundant remedies doctrine, held that Dr. Vanderwerff cannot seek declaratory relief on the same issue in his suit for judicial review in order to try and recover attorney's fees. It also held that he can’t bring claims for declaratory relief on issues which the Division has exclusive jurisdiction and where he has failed to exhaust his administrative remedies.
 
Among other things, the Court's opinion means that carriers and employers will not have to start handing out 400 page paper provider directories to employees. The Court’s opinion can be readhere.

James Loughlin, with the Firm, represented Travelers in the case. 

-  Copyright 2018,Stone Loughlin & Swanson, LLP

Never, never, never miss a deadline to appeal! Second thoughts will get you nowhere.  

In a recent SIBs case appealed by a Plaintiff workers’ compensation claimant to the Beaumont Court of Appeals, the trial court awarded the Plaintiff SIBs by way of a summary judgment. The Order was signed on April 20, 2016, and neither the workers’ compensation insurance carrier nor the claimant filed a notice of appeal within the deadline to do so. However, within 30 days of the April 20, 2016 order, the Plaintiff filed a motion asking the trial court to “clarify” the order to expressly state the money amount that he was owed in prejudgment interest. Then, in late June, the claimant asked the trial court to increase the amount of the SIBs award, and to increase the amount of the attorney’s fees that were awarded in the April 20th Order. After a hearing held the following October, the court signed an second order on October 12, 2016 granting the claimant’s new requests. While the carrier failed to appeal the April Order, it did appeal the October Order.  

The Beaumont Court of Appeals issued an opinion that the April 20, 2016 Order had become final, explaining that the trial court’s jurisdiction ended 105 days after the April order was signed. Because the October Order was signed more than 105 days after the earlier April Order was signed, the trial court’s jurisdiction had expired. The result? The October Order in favor of the claimant for more money and fees was void. The Plaintiff lost out on the higher award because it was too late to fix the wording of the initial order.Texas Alliance of Energy Producers v. John Bennett, Case No. 09–16–00437–CV, 2018 WL 2246540, (Tex. App.- Beaumont May 17, 2018).

Why is it that in 2012 84% of Designated Doctors were medical or osteopathic doctors, and only 16% chiropractors, but by 2017 the number of medical and osteopathic doctors serving dropped to 34%? The statistics can’t be denied, and the Division is working on solutions that would result in more medical and osteopathic doctors being willing to participate in the designated doctor process.  

Proposed fixes include distinguishing between musculoskeletal and non-musculoskeletal structures of the torso, changes to the rescheduling process, adjusting the computerized selection process to increase the number of exams in a city in a day to accommodate doctors willing to travel to do exams, and creating two lists of doctors – one containing names of medical and osteopathic doctors and chiropractors and the other a list only of medical doctors and osteopathic doctors qualified to do more specialized exams. The proposed rule changes do not, however, address the extensive regulatory and compliance burdens complained about by many doctors who have elected to forego certification to perform designated doctor exams.

-  Copyright 2018,Jane Lipscomb Stone, Stone Loughlin & Swanson, LLP

The law has been settled for years that a waiver of subrogation endorsement contained in many insurance policies effects a waiver of a workers’ compensation carrier’s right to get reimbursement from 3rd party settlement funds for workers’ compensation benefits paid to an injured worker. But in a recent decision, the Texas Supreme Court shot down a workers’ compensation insurance carrier’s argument that a waiver of subrogation applies only to direct recovery against the liable 3rd party, and not to an indirect recovery from the settlement proceeds paid by that party to the injured worker. The Court explained that when the carrier, by way of the endorsement, signed away its right to recover benefits it paid to the employee in exchange for receiving a higher premium to cover the  assumption of the risk, it cannot also try to recover indirectly the same proceeds it agreed not to pursue directly. Put in other words, the Court admonished that “[the Carrier] sought the same money through the back door that it could not get through the front.”  Wausau Underwriters Ins. Co. v. James Wedel and Michelle Wedel, Texas Supreme Court No. 17-0462, Opinion Delivered June 8, 2018.

-  Copyright 2018, Jane Lipscomb Stone, Stone Loughlin & Swanson, LLP

As a reminder to us that disability and entitlement to TIBs can be different questions when a bona fide offer of employment (BFOE) is at issue, the Appeals Panel recently gave guidance and a caution to those of us who care about such things. In a May 29, 2018 decision the AP upheld the ALJ’s determination to throw out a BFOE simply because the DWC-73 attached to the offer was not signed by the doctor. But, the AP then also upheld the ALJ’s determination that the claimant did not have disability. This holding is a reminder that when both BFOE and disability are raised as issues, even if it is determined that there has not been a valid BFOE, the ALJ is still free to find that the claimant did not have disability.Appeals Panel Decision No. 180817, decided May 29, 2018.

-  Copyright 2018,Jane Lipscomb Stone, Stone Loughlin & Swanson, LLP

Cassie Brown, an experienced insurance regulator from the Texas Department of Insurance, is the new Commissioner of Workers’ Compensation.  We look forward to her fresh, informed view of the staffing and structure the Division of Workers’ Compensation to the benefit of all system participants. Commissioner Brown has already confirmed that the attorney fee issue is on her radar and has recommended that all attorneys should take a close look at their hours and fees, and confirm that they are accurate.

Goodbye and well wishes to Bonnie Lopez a well-respected Benefit Review Officer who announced her retirement effective June 28th.  Ms. Lopez has been with Division even longer than our firm has been in business.  She started with the Industrial Accident Board in 1985, leaving that post in 1992. She returned to work at the Division as a BRO in 2005.

Michele Wong Krause, a Dallas based a workers’ compensation attorney, is now a member of  the Board of Governors of the American Bar Association.  Among her other qualifications she served on the ABA Commission on Hispanic Legal Rights and Responsibilities from 2014 to 2017.  She is also an active member of the Workers’ Compensation Law Section of the State Bar of Texas.

-  Copyright 2018, Jane Lipscomb Stone, Stone Loughlin & Swanson, LLP

Attorney Leslie Casaubon has been accused of defrauding injured workers (and the Division of Workers’ Compensation) in regard to attorney fee affidavits she submitted for approval to the Division. She is accused of submitting time under Texas State Bar numbers of other attorneys for work those attorneys did not perform on behalf of her firm. Ms. Casaubon was indicted on three counts. Count I, Securing Execution of a Document by Deception, is a 1st degree felony. The other two counts are 2nd degree felonies but arise out of the same deceptive billing practices. Send an email to jstone@slsaustin.com if you would like to have a copy  of the indictment to learn the particulars of her scheme that has been going on for quite some time. It is a puzzle as to why the Division, who by statute is charged with the duty to regulate attorney fees, did not pick up on the scheme earlier.  

Labor Code 408.221, and Division Rules 152.1-152.3 provide the details of what a claimant’s attorney must certify to the Division when applying for fees. To be paid the 25% of a claimant’s income benefits, the attorney can only submit for payment fees for time the attorney actually worked. It goes without saying that an attorney cannot work more hours than there are in a day, or in a year. It seems as though the Division could easily flag billings where the hours claimed by an attorney under his or her State Bar number exceed a threshold of credibility. For example (based on a recent open records request for 2017 approved fees reported by WorkCompCentral), if an attorney submits fees which are approved for $1,700,000 in a year, that would amount to billing $200/hr. for 8,500 hours worked in that year, which would be around 163 hours per week, which would be close to 24 hours of work every day. Hard working attorneys can sometimes work up to 2,500 hours a year if they work 48 hours every week – and can actually justify billing a client for all of those hours – but anything more than that surely exceeds a threshold of credibility.

The irony is that the “new law” reform of 1989 was driven in part by the perception (or reality) that claimant attorneys were prematurely settling old law claims for medical and indemnity benefits in order to get a quick payout of their attorney fees. Obviously, if a claimant attorney could settle out a case (including medical benefits) for $100,000, 25% of that would be $25,000. There was no tedious administrative  process of having the fees approved the agency by affidavit as there is now under new law. But, the settlements often left the client with no access to medical care even though there may have been latent effects from their work injury.

The “new law” was enacted in 1989, and was promptly challenged on the basis that it violated the Texas Constitution in many respects. In 1995, the Texas Supreme Court eventually determined that the “new law” provisions did not violate the Texas Constitution and issued a lengthy opinion stating its reasoning. Of interest here is that claimant attorneys challenged the “new law” provision that capped the hourly rate for fees at $150 and limited the amount they could be paid to 25% of a claimant’s income benefits. Interestingly, under the “old law” a claimant attorney could not receive fees in excess of 25% of his client’s recovery, but there was also no cap on hourly rates. The “old law” settlements were often insufficient for the claimant to cover his future medical costs. The decision was a blow to claimant attorneys. See Texas Workers’ Compensation Commission v. Garcia, 893 S.W.2d 504 (Tex. 1995).

To quote Winston Churchill,  “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

-  Copyright 2018,Jane Lipscomb Stone, Stone Loughlin & Swanson, LLP

In Marano v. Clifford J. Schob, M.D., A-33915-16T2 (App. Div. June 20, 2018), the Appellate Division held that New Jersey’s lien provision does apply to funds that an injured worker received in a medical malpractice suit pursuant to the terms of a “high/low” agreement.  The case affirmed a prior ruling in Pool v. Morristown Memorial Hospital, 400 N.J. Super. 572 (App. Div. 2008) but dealt with a new regulation that was passed after the Pool decision.

The case stemmed from a work-related injury to a police officer employed by the Union Township Police Department.  The Township was a member of the Garden State Municipal Joint Insurance Fund (GSMJIF).  PMA was the third party insurance administrator for the GSMJIF.  Officer Marano injured his back on July 12, 2010 arising from work and received $51,779.81 in workers’ compensation benefits, including $5,403.07 for nurse case management charges.

Marano filed a suit in the law division alleging that Dr. Clifford Schob was negligent in failing to advise him to visit an emergency room and was negligent in not properly diagnosing his condition.  The parties to the medical malpractice suit agreed to arbitrate the suit with the agreement that following the arbitrator’s decision, plaintiff would receive at least $250,000 (the “low”) but no greater than $750,000 (the “high”).  The arbitrator arbitrated the case over two days and found no cause of action against Dr. Clifford Schob and dismissed the law suit.  However, based on the high/low agreement, plaintiff was paid $250,000 even though Dr. Schob was found not to be at fault.

The issue in this published decision arose because plaintiff refused to reimburse PMA Insurance Company and the Garden State Municipal Joint Insurance Fund its statutory two thirds of the $51,779.81 paid to Marano.  The GSMJIF refused to compromise the lien, so plaintiff filed an order to show cause and a verified complaint in the Law Division seeking a declaration that the payment in the high/low agreement was not subject to any workers’ compensation lien.

The thrust of the argument made by plaintiff was that this issue was not the same as one previously decided in Pool above.  Plaintiff argued that N.J.A.C. 11:1-7.3(a) was passed after Pool was decided. That regulation provides that a medical malpractice insurer must notify the Medical Practitioner Review Panel of any medical malpractice settlement, but not in a high/low agreement where the arbitrator found no liability on the part of the medical practitioner. That language excluding the notification provision for no cause decisions in high/low agreements was added in 2009 after Pool.  Plaintiff argued that fewer high/low agreements will be negotiated if Marano is ordered to reimburse the GSMJIF.  He said that future plaintiffs will have to demand higher “low” figures to take into account lien obligations.

The Appellate Division affirmed the trial judge stating:  “That concern has no relationship to a compensation carrier’s rights under Section 40 to impose a lien on the recovery.” The Court noted that there is a strong public policy in New Jersey preventing double recovery.  It said that “whether an alleged tortfeasor is ultimately held to be liable does not affect the enforceability of a lien.”

As to the nurse case manager fees, the court remanded to the Law Division to decide whether those charges should be considered medical expenses under the New Jersey Workers’ Compensation Act.

This case was an important win for employers, and it was handled successfully by Christopher Carlson, Esq. of Capehart Scatchard on behalf of PMA and the Garden State Municipal Joint Insurance Fund.  The case shows that employers need to be prepared to sue to enforce their lien rights when plaintiff’s counsel refuses to reimburse the employer/carrier for their statutory lien.  The JIF wisely refused to compromise its lien in this case and in the end prevailed at trial and on appeal.

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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.

On June 21, 2018 the New Jersey Assembly passed Senate 2145, which is a bill long lobbied for by counsel for injured workers.  The measure passed by a 2-1 margin and now goes to the Governor for signature, the Senate already having passed the bill.  The legislation makes a significant change in removing the incentive for employers to make voluntary offers of permanent partial disability without having to pay a counsel fee on the amount offered.  The original legislation was passed in the 1920s and has stood the test of time – until now.

The law for the past 90 years was simply this: any offer of permanent partial disability made within 26 weeks of the last active medical treatment or return to work date to injured workers was not feeable.  Neither the petitioner nor the employer paid a fee on the amount of a valid voluntary offer.  Counsel fees to attorneys for petitioners were based only on amounts paid to injured workers in excess of the amount of the voluntary offer.  Injured workers benefited by receiving payments while their case was pending in the Division.  Those funds might help tide the worker over while the ultimate settlement was negotiated. The incentive to employers in making these payments was clearly avoidance of paying a counsel fee on the amount offered.

Under the new law to be signed by the Governor, a petitioner’s attorney is entitled to a fee on all amounts received by the injured worker if the attorney can prove an established attorney – client relationship pursuant to a written agreement prior to the date of the voluntary offer.  In other words, the claimant’s attorney gets a fee on all payments of permanency made after the date of the written engagement letter.

Counsel for petitioners have long argued that the voluntary offer rule, also known as the bona fide offer rule, was inherently unfair because attorneys may have put in a great deal of time and effort on a case only to have their fee reduced by a substantial voluntary offer made within 26 weeks of maximal medical improvement or return to work, whichever is later.

It will be interesting to see how employers react to this legislative change.  Some practitioners predict the end of voluntary offers except in truly rare cases.  The incentive to employers for the past 90 years was to save on counsel fees by making early offers of permanency.  Petitioners’ counsel as well as judges often request that employers make voluntary offers, recognizing that employers benefit by not paying a counsel fee on such early offers and that employees benefit by getting funds when they really need them. That incentive is now for the most part gone.  Arguably, the new legislation hurts petitioners as much as employers. The winners are petitioners’ attorneys, who have fought for many years for this change in the law.

One practical problem for employers is this:  an employer who is considering making a voluntary offer after the Governor signs this legislation has no way of knowing whether the injured worker has a signed agreement with counsel.  There is no obligation to reveal this information on the part of the injured worker.  Whether one has retained an attorney or not is confidential.  Of course, if the employer or carrier has received a letter of representation prior to the offer being made, the employer will know that any voluntary offer would be feeable.  In that situation, voluntary offers will almost never be made. But injured workers may or may not have counsel in the background.  So there may be situations where an offer is made, and the employer will only find out at the end of the case whether the offer is feeable.   An employer may think it is making a non-feeable voluntary offer only to be proven wrong at settlement when a valid attorney agreement is produced.

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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. 

Twin Rivers Paper Company cannot be compelled to reimburse the costs of an injured worker’s medical marijuana because the federal Controlled Substances Act trumps the state’s Medical Marijuana Law.

Gaetan Bourgoin suffered a work related back injury while employed at Twin Rivers Paper Company in 1989 in the State of Maine. Eventually he received total disability benefits. He was not a candidate for surgery and tried numerous medications, including narcotics, to control his pain. Mr. Bourgoin suffered negative side effects from opioids, and he sought a certification to utilize medical marijuana.

Mr. Bourgoin filed a claim seeking to require Twin Rivers Paper Co. to pay the costs associated with medical marijuana. The company refused, stating the federal Controlled Substances Act barred it from paying for marijuana. The Maine Workers’ Compensation Board ruled in favor of the worker, Gaetan Bourgoin, and the state appeals court affirmed. Twin Rivers Paper Co. appealed to the State Supreme Court.

In a 5-2 decision, the Maine Supreme Court reversed in favor of the employer, finding there is a conflict between the federal and state law, and as a result, the Controlled Substance Act preempts the state’s medical marijuana law.

In reaching their decision, the court noted that federal law bars use of marijuana, and any other schedule 1 drug, even for medical purposes. Therefore, ordering an employer to compensate an employee for medical marijuana costs improperly requires an employer to aid and abet in the commission of a federal crime.

Justice Hjelm noted, “A person’s right to use medical marijuana cannot be converted into a sword that would require an employer to engage in conduct that would violate the Controlled Substance Act.”

The ruling will send the case back to the Workers’ Compensation Division to vacate the decision of the hearing officer and deny payment of medical expenses and services for medical marijuana.  While this decision applies only to the State of Maine, the case is significant because the same rationale can be raised in other states that have medical marijuana laws.

The case can be found at Bourgoin v. Twin Rivers Paper Co., LLC, 2018 ME 77.

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Andrea Schlafer, Esq., is a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Ms. Schlafer concentrates her practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation. Should you have any questions or would like more information, please contact Ms. Schlafer at 856.813.4140 or by e‑mail at aschlafer@capehart.com.