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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A DOUBLE-EDGED SWORD

By Jeffrey D. Snyder, Esquire

A recent, Court ruling in County of Allegheny v. WCAB (Parker), recently decided in 2016, held that attorneys’ fees that are awarded on the basis of unreasonable contest are considered to be litigation costs, that must be reimbursed by a Claimant Attorney, if the unreasonable contest of attorneys’ fees were paid pursuant to a denial of Supersedeas, on a prior Appeal, where the Employer ultimately prevailed that is contests of the Claimant’s claims and Petitions were reasonable.

Factually, this case involved the 80 year old Claimant sustaining a work-related shoulder injury in 1993.  In 2007, the Claimant’s compensation benefits were suspended, as a result of the granting of a Suspension Petition.

Appealed to the Workers’ Compensation Appeal Board, the underlying WCJ’s Decision was reversed, and remanded for an assessment of Counsel fees on the basis that the Appeal Board believed that the Employer’s contest was unreasonable, and that the Claimant was entitled to an award of unreasonable contest of attorneys’ fees under Section 440 of the Act.

The Board, in its infinite wisdom, believed it was bound by a prior 2004 Decision that had denied a Suspension of the Claimant’s compensation benefits.

On the remand, the WCJ did award Counsel fees on the basis of unreasonable contest, with the finding of an unreasonable contest then affirmed by the Appeal Board, although, it actually changed the amount of the unreasonable contest, increasing in favor of the Claimant and against the Employer.

Undaunted, the Employer appealed to the Commonwealth Court, with the Commonwealth Court concluding that the Appeal Board had been mistaken in relying on collateral estoppel, and that it further committed a legal error in awarding counsel fees on the basis of an unreasonable contest, given that the Employer had ultimately prevailed, with the Commonwealth Court sustaining the suspension of compensation benefits in deciding the underlying issues on Appeal.

Applying for Supersedeas Fund reimbursement, as the unreasonable contest attorneys’ fees had been assessed in the amount of $14,750.00, the Supersedeas Fund denied the reimbursement request, on grounds that the Act only allows it to reimburse for medical and wage loss benefits, not for litigation costs.

The Commonwealth Court then explained that to allow a situation where unreasonable contest attorneys’ fees are paid following the denial of Supersedeas on an Appeal, and the Claimant does not prevail with respect to the underlying case and issues, would constitute an unjust enrichment to Claimant’s Counsel, regardless of any intent to distribute the funds to the Claimant.

As a recommendation, the Commonwealth Court suggested that there be an agreement to stay an Appeal in similar circumstances, so that fund disbursements are not issued prior to the issues being ultimately decided.

The Commonwealth Court further noted that the procedure for seeking reimbursement is to file a Petition for Refund, filing the same with the Bureau for assignment to a Workers’ Compensation Judge.  This mechanism appears to extend to all litigation costs that include unreasonable contest of attorneys’ fees, where the issue is ultimately decided in favor of the Employer, that the Employer’s contest in the underlying claim was reasonable, and should not have been subject to an unreasonable contest attorney fee Award.

Finally, in County of Allegheny, the Commonwealth Court remanded the case for the Petition for Refund to be granted, in the amount of $14,750.00 in unreasonable contest attorneys’ fees that the Employer had paid to Counsel, ultimately requiring Counsel to reimburse the Employer for the same fees.

By way of a takeaway, this is an obviously favorable Decision for Employers and Insurers, although, in practice, it has been our experience that unreasonable contest attorneys’ fees, on Appeal, usually result in Supersedeas being granted, meaning that the Employer or Insurer does not become obligated for paying the unreasonable contest attorneys’ fees during the pendency of an Appeal of factual and legal issues decided in a Decision by a Workers’ Compensation Judge or by the Appeal Board.

ConnorsO’Dell LLP

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We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.

An employee works regularly in Cherry Hill, N.J. but three or four times a year is required to work at the company’s north Jersey location in Parsippany.   On the way to the Parsippany office, the employee is in a car accident and suffers serious injuries.  The employer gets the claim and confers with the carrier and defense counsel.  The question is was the employee on a special mission or is this accident barred by the going-and-coming rule, now known as the premises rule?

This issue arises quite frequently in New Jersey workers’ compensation.  A technical reading of the law leads to the conclusion that the claim is barred.  The employee is just on her way to work, even if it is not the normal place of employment.  Counsel for the employee will argue that this does not seem fair at all, but as former Supervising Judge of Bergen County, The Honorable Ray A. Farrington, used to say, “Fair is a place where people come together to see who can grow the biggest watermelon.  Let’s see what the law says.”

Here is what the statute has to say:

Employment shall be deemed to commence when an employee arrives at the employer’s place of employment to report for work and shall terminate when the employee leaves the employer’s place of employment, excluding areas not under the control of the employer; provided, however, when the employee is required by the employer to be away from the employer’s place of employment, the employee shall be deemed to be in the course of employment when the employee is engaged in the direct performance of duties assigned or directed by the employer.

The key word in the statute as far as a special mission is concerned is “away” from the employer’s place of employment.   In this case, the employee is not required to be away from the place of employment at all.  It is just a different place of employment.  An employer could have multiple places of employment where an employee goes to work from time to time, and if that is the case, the employee’s journey to these distant offices is not covered.   It is only a special mission when the employee is required to be away from the place of employment.

This point was made by our Supreme Court in Novis v. Rosenbluth Travel, 138 N.J. 92 (1994).  The petitioner in that case worked in the New Jersey office of the travel company but was sent to the branch office in Connecticut to work for a period of time.  She stayed in a hotel in Connecticut and then commuted from the hotel to the branch office for several days.  One of those days she got out of her car and slipped and fell on the sidewalk on property leading from the parking lot to the building containing the employer’s branch office.  The employer did not own or control the parking lot and denied the claim.

Petitioner argued that this was a special mission.  She worked in New Jersey almost all the time and was sent to the branch office in another state to work for a short period of time.  The Supreme Court disagreed with petitioner.  It analogized her hotel to her home and held that the drive from her hotel to the branch office was her normal commute to work.  Therefore her injury was not compensable because she had not yet arrived inside the work premises of the branch office.

This is the leading case in New Jersey for multiple employer work sites, and practitioners have both this case and the statutory language above for guidance on this increasingly common issue.

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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.

 The annual Minnesota Workers' Compensation Symposium will be held at the Marriott Hotel, Brooklyn Park, MN, on May 11, 2017. This is the largest and most comprehensive Workers' Compensation seminar in Minnesota. The topics will be diverse, with presentations by medical, rehabilitation, psychological experts, as well as practicing attorneys.

Cousineau, Waldhauser, & Kieselbach, P.A. attorneys Richard Schmidt and Jennifer Fitzgerald will be presenting on the topics of settlement and settlement issues.