State News

A number of prominent Medicare experts disseminated Legal Alerts last week to the effect that changes may be occurring with respect to the requirements for CMS to approve zero allocations.  These changes would spell bad news in New Jersey for employers who want to settle disputed cases on a Section 20 basis.  According to Martin Cassavoy of ISO Claims Partners in his October 27, 2016 News Alert, the Workers’ Compensation Review Contractor (WCRC) has stated that CMS will soon require the following for approval of a zero allocation:

• The case or the body part in question has been denied throughout the case;

• There has been no medical or indemnity payment for the denied case or body part; and

• There is either a finding from a hearing by the Judge of Compensation relieving the carrier of liability or a report from the treating physician recommending no future treatment.

  No official enactment of these requirements has occurred to date, but if this is the new approach that CMS is going to adopt, it will be very hard for employers to obtain zero set aside allocations in New Jersey and other states.  Compensation judges in New Jersey have enormous caseloads.  They have not historically been actively involved in ruling on Medicare issues.  If a judge now has to determine that no compensable workers’ compensation claim exists, that will create a long back-up of trials on cases that were formerly resolved simply and efficiently by way of Section 20 settlements.

  Attorney Heather Schwartz Sanderson, Esq., Chief Legal Officer for Franco Signor, LLC.,  wrote in her Alert: “Our recommendation has always been where the workers’ compensation claim is completely denied, no medicals have been paid, and the claim is settling on a compromise basis CMS approval is not recommended.”  Ms. Sanderson’s statement makes sense since Medicare would have been and would continue to be the primary payor in this situation.  Her reasoning is persuasive and should be considered by employers.  She argues that there should be no allocation for future medical care in the above situation.

  Our office will continue to update clients if these changes are adopted by CMS.  Thanks to Marita Tortorelli, Assistant Vice President of PMA Insurance Companies for bringing this issue to the undersigned’s attention.

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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.

One of the most anachronistic aspects of New Jersey workers’ compensation law is that employers pay workers’ compensation benefits even when intoxication is a substantial cause of injury.  In Diaz v. National Retail Transportation, Inc., A-3927-14T2 (App. Div. November 9, 2016), Antonio Diaz was injured moving a heavy lift which fell over on him.  He admitted that prior to work on January 28, 2014, he drank at least two eight-ounce glasses of half whisky and half ice and water.  Respondent’s toxicologist testified at trial that petitioner had a blood alcohol level of at least .173 percent.  Had petitioner been driving, that percentage would have been more than double the legal limit.

Respondent denied the workers’ compensation claim on the basis that petitioner’s intoxication was the cause of the injury based on the expert testimony of respondent’s toxicologist.  Petitioner argued that there was another factor which contributed to the injury, namely a flat tire on the lift.  He said that the lift fell over when it “tilted to one side at the same moment” that he was pulling the lift.  He noted that one of the tires on the lift was flat.

Respondent produced a forensic engineering expert, who testified that “a flat tire didn’t contribute in any way to this accident.” The expert did concede that a flat tire on the lift could have caused the lift to tilt to one side or the other.  The expert conceded that if someone pulled the lift backwards and it had a flat tire, the lift could fall backwards “cockeyed.” The expert said, however, that the lift with a flat tire would tilt only a very small amount, only the one inch that the equipment is off the ground.

Petitioner did not offer expert testimony. Instead, petitioner filed a motion to dismiss the intoxication defense on the basis that under N.J.S.A. 34:15-7, respondent must prove that intoxication is the sole cause in order to defeat a claim.  In this case the Judge of Compensation believed that both the petitioner’s intoxication and the flat tire contributed to the cause.  Therefore the intoxication was not the sole cause, and petitioner prevailed.

Respondent appealed the dismissal of its intoxication defense.  The Appellate Division affirmed the dismissal of the intoxication defense on the grounds that respondent failed to prove that intoxication alone caused the accident.  Even if the flat tire contributed in just a small degree, that was enough to permit petitioner to recover workers’ compensation benefits.

The case underscores the onerous burden that employers must meet in New Jersey to defeat a workers’ compensation claim on the intoxication defense.  In most states, if intoxication is found to be a substantial cause, that is enough to defeat the claim.  In some states, merely a contributory case is enough.  But in New Jersey the legislature requires the employer to prove that there was no other factor which contributed to the happening of the accident.  Sole cause means sole cause, which is why there have only been a couple of reported cases over many decades where the intoxication defense succeeded.

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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.

Sioux Falls, SD.— (November 5, 2016) Awards were presented for outstanding contributions to the workers compensation industry at the 5th Annual Comp Laude Awards and Gala,  Saturday, November 5 in Burbank, CA.

“Our mission with this event is to show what is going right with our industry,” said Yvonne Guibert, Marketing Director. “This event was the vision of WorkCompCentral’s founder, the late David DePaolo. He felt our industry gets so much negative press, he wanted to change the story of our industry. So we’ve designed these awards with rigorous judging protocols in place to identify the best of the best.”

The Attorney Comp Laude Award was presented to Michael S. McKnight, of Boyce Law Firm, LLP for his contributions and leadership in the work comp industry.

The Comp Laude Awards, meaning “with honor” were presented to individuals and companies representing many segments of the workers compensation industry, even injured workers. This year, awards were presented in 13 categories.

Top honor awards were presented to two well-known industry veterans. Mark Pew, Prium received the Magna Comp Laude (with great honor) award, and Richard Victor, Sedgwick, received the Summa Comp Laude (with highest honor) award. WorkCompCentral announced that the Summa Comp Laude award will now be called the David J. DePaolo award, in memory of the company’s founder and CEO who passed away earlier this year.

For a complete list of the nominees and Honor Roll Recipients, visit http://bit.ly/2016Nominees

Next year’s Comp Laude Awards and Gala event is scheduled for October 30-November 1 in San Diego, CA. Call 805-484-0333 for details.

About WorkCompCentral

Based in Camarillo, Calif., WorkCompCentral produces daily news, continuing education courses and other live events and can be reached at 805-484-0333 and viawww.workcompcentral.com.

WorkCompCentral contact:

Yvonne Guibert, marketing director
805-484-0333, ext. 140
yguibert@workcompcentral.com

This month US Labor Secretary Thomas Perez released the highly anticipated report on workers’ compensation entitledDoes The Workers’ Compensation System Fulfill Its Obligations to Injured Workers?The report’s answer to that question is “no,” and it cites deficiencies  in the workers’ compensation system and ominously recommends that legislators consider “whether to increase the federal role in oversight of workers’ compensation programs.” 

We note with interest that the report commented on the recent Workers’ Compensation Summit, stating that “a gathering of diverse workers’ compensation experts in a self-styled summit concluded that benefit adequacy, system failures, and delays in medical treatment were the three foremost issues requiring action.” Our own Jane Stone was one of those “diverse workers compensation experts” that participated in the Summit. 

More information regarding the Summit is available at
Workerscompensationcentral.com. 

The owner of a health clinic has pleaded guilty to insurance fraud after billing comp carriers for medical services even though the clinic had no licensed doctor on its staff. Rosemary Phelan, owner of Houston Healthcare Clinic, was sentenced to seven years deferred adjudication and ordered to pay $88,000 in restitution. 

A joint investigation by the TDI-DWC and Texas Mutual Insurance Company led to the guilty plea. According to DWC, the clinic had a licensed doctor on staff at one time, but when that doctor left in 2012 the clinic began hiring unlicensed, foreign medical students to act as doctors and treat patients. Phelan reportedly submitted $166,843 in fraudulent workers’ compensation claims, involving more than 50 workers, claiming they had been treated by the clinic’s previous doctor.  

This month the TDI published its 2016 Workers’ Compensation Network Report Card. The report card assesses health care costs and utilization, employee access and satisfaction of care, and return-to-work outcomes. According to TDI, the report card results show that “networks continue to experience improvements in average claim costs and outcomes when compared to non-network claims and to previous years.”

Compound cream fraud isn’t just a comp problem. It’s everywhere. The U.S. Attorney’s office for the Northern District of Texas announced this month the arrest of nine defendants in connection with their roles in a $100 million health care fraud conspiracy perpetrated against TRICARE, the health insurance program for members of the military and their families. The defendants allegedly defrauded TRICARE in connection with the prescription of compounded pain and scar creams by, among other things, paying kickbacks to prescribing physicians. 

One doctor in El Paso allegedly wrote thousands of prescriptions for compounded drugs to TRICARE beneficiaries whom he had never met in person and for whom he conducted only a cursory consultation via telephone. In the nine-month period from October 2014 to June 2015 TRICARE reportedly paid more than $102 million for compounded drug prescriptions generated by some of the defendants.

Did you catch that? $102million in a nine month period. These are taxpayer dollars we’re talking about. Think about that the next time you look at the "Federal Withholding" deduction on your paycheck stub. 

This month the Occupational Safety and Health Administration issued a memorandum which seeks to clarify the extent to which OSHA will consider post-accident drug and alcohol testing to be a violation of federal regulations.  

The memorandum addresses questions that have arisen about a rule that OSHA published in May. That rule, theElectronic Recordkeeping Rule, prohibits retaliation against employees who report workplace injuries and illnesses. In comments to that rule OSHA previously stated that the rule “does prohibit employers from using drug testing (or the threat of drug testing) as a form of adverse action against employees who report injuries or illnesses.” Those comments ignited a firestorm, and since then there has been debate as to whether all post-accident drug or alcohol testing is now prohibited.

In the new memorandum, dated October 19, 2016, OSHA’s answer to that question is “no.” It explains that the rule does not prohibit  employers from drug testing employees who report work-related injuries “so long as they have an objectively reasonable basis for testing.” According to OSHA, when assessing whether the basis for testing is objectively reasonable, “the central inquiry will be whether the employer had a reasonable basis for believing that drug use by the reporting employee could have contributed to the injury.” If so, says OSHA, it would be objectively reasonable to subject the employee to a drug test. Conversely, says OSHA, “drug testing an employee whose injury could not possibly have been caused by drug use would likely violate” the rule. 

Enforcement of the rule originally was scheduled to begin in August 2016 but OSHA has delayed it to December 1, 2016. 

The Division of Workers' Compensation has expanded to all 20 of its field offices the availability of a two-step dispute resolution process for certain types of disputes. The process started as a pilot program available only in Weslaco and Dallas and it has proven successful. 

The two-step process is voluntary and is available when a  dispute includes the trifecta issues of extent of the injury, the date of Maximum Medical Improvement, and the correct impairment rating. Under the bifurcated process, the parties can elect to have the hearing officer resolve the extent of injury issues first and then they can assess whether another hearing is needed to resolve the issues of MMI and IR. 

TERMINATING COMPENSATION BENEFITS IN PENNSYLVANIA

By Kevin L. Connors, Esquire

“I’m never going to be disabled.  I’m sick of being so healthy.”

Thank you, Homer Simpson.

“All my life I’ve had one dream, to achieve my many goals.”

Thank you again, Homer!

With those self-evident truths behind us, we can now focus on the recent Decision of the Commonwealth Court inBaumann v. WCAB, decided on September 23, 2016.

This Decision is relevant why?

Because, the Commonwealth Court addressed the burden of proof that an Employer carries when seeking to terminate workers’ compensation benefits requiring proof that there has been a change in the Claimant’s physical condition from a prior Independent Medical Examination under Lewis v. WCAB, 919 A.2d 922 (Pa. 2007).

All of us will recall the Pennsylvania Supreme Court’s Decision in Lewis, in which the Court had held:

In order to terminate benefits on the theory that the Claimant’s disability has reduced or ceased due to improvement of physical ability, it is first necessary that the Employer’s Petition be based upon medical proof of a change in the Claimant’s physical condition.  Only then can the WCJ determine whether the change in physical condition has effectuated a change in the Claimant’s disability, i.e., the loss of his earning power.  Further, by natural extension, it is necessary that, where there have been prior Petitions to… terminate benefits, the Employer must demonstrate a change in physical condition since the last disability determination.

In so holding, the Lewis Court had explained:

Absent this requirement “a disgruntled Employer… could repeatedly attack what he considers an erroneous Decision of a WCJ by filing Petitions based on the same evidence ad infinitum, in the hope that one referee would finally decide in his favor., citingDillon v. WCAB, 640 A.2d 386 (Pa. 1994).

In Baumann, the Claimant sustained a right shoulder and upper back injury as a result of a car accident in 2007.  The claim was accepted as compensable by the Employer, with workers’ compensation benefits being paid to the Claimant.

In 2008, under a WCJ Order, the Claimant’s injury description was amended by Stipulation to include right C-6 radiculopathy.

In 2009, the Employer sought to terminate the Claimant’s compensation benefits in reliance upon an Independent Medical Examination performed by Dr. Richard Bennett, a board-certified neurologist.

In opposition to the Employer’s Termination Petition, the Claimant testified that he was not fully recovered from the work injury, and he presented the deposition testimony of his orthopedic surgeon, Dr. Norman Stempler.

The Employer’s Termination Petition was then denied by the Honorable Bruce Doman in a Decision issued in 2009.

In 2010, the Claimant again underwent a second Independent Medical Examination performed by Dr. Bennett, with Dr. Bennett again finding that the Claimant was fully recovered from the work injury, resulting in the Employer filing a second Termination Petition, in reliance upon Dr. Bennett’s full recovery opinions.

The second Termination Petition was then litigated before the Honorable Tina Rago, with there also being an Employer Modification Petition, and a Claimant Penalty Petition. 

In support of the Termination Petition, Dr. Bennett’s testimony was again presented, with the Claimant testifying, both at deposition and live before the WCJ, that he was continuing to see Dr. Stempler, but that he was not actively treating for his work injury.  The Claimant also testified that he continued to have pain in his shoulder and neck, and that his activities of daily living were significantly limited.

In 2011, the WCJ found the Claimant’s testimony of ongoing shoulder pain was not credible, since the Claimant was not actively treating for it, and that the activities that the Claimant did testify to, including playing guitar and video games, as well as getting several tattoos on his arms, evidenced that the Claimant was fully recovered from the work injury, conclusions supported by the Independent Medical Examination opinions of Dr. Bennett.

Granting the Termination Petition, the WCJ also granted the Claimant’s Penalty Petition, finding that the Employer had violated the Act by failing to pay for the Claimant’s shoulder surgery, although a 0% penalty was assessed with the granting of the penalty.

No surprise that the Claimant then appealed with WCJ’s Decision at the Appeal Board, with the Board remanding the matter back to the WCJ, to determine whether the Employer had met his burden of proving that the Claimant’s medical condition had changed between the denial of the 2009 Termination Petition, and the granting of the 2010 Termination Petition. 

In a Decision then issued in 2014, the WCJ again granted the Employer’s Termination Petition, as well as granting the Penalty Petition, in the course of which the WCJ found that the failure to pay for the Claimant’s shoulder surgery was not sufficiently significant to warrant more than a 0% penalty.

The WCJ’s Decision was then appealed to the Appeal Board, which affirmed the WCJ’s Decision, resulting in the Claimant appealing the Decision to the Commonwealth Court.

Recognizing that the evidence necessary to prove a change from a prior adjudication “will be different in each case,” the Commonwealth Court held that the WCJ is empowered to accept the Employer’s medical evidence of full recovery as being credible, allowing the WCJ to make a finding that the Employer has met the standard set forth underLewis to prove a change in a Claimant’s condition, as a prerequisite to granting a Termination Petition.

Affirming the granting of the Termination Petition, the Commonwealth Court held that “it is not necessary for the Employer to demonstrate that the Claimant’s diagnoses have changed since the last proceeding, but only that his symptoms have improved to the point where he is capable of gainful employment.”  Simmons v. WCAB, 96 A.3d 1143 (Pa. Cmwlth. 2014).

The Baumann Court held that a change sufficient to satisfy the Lewis requirement exists if there is a lack of objective findings to substantiate a Claimant’s continuing complaints.

Analyzing the WCJ’s findings, the Baumann Court specifically noted that the WCJ had found the Claimant’s testimony, as to his activities in relation to his shoulder pain, to be “incredible”, and that the Claimant’s lack of any active medical treatment since 2009, supported the IME’s physician’s conclusion that the Claimant had fully recovered from the work injury.

Finding that there was substantial evidence to support the WCJ’s conclusion that the Employer had proved that there was a change in the Claimant’s physical condition between the 2009 Decision and Judge Rago’s 2010 Decision, the Commonwealth Court affirmed the granting of the Termination Petition.

As for the Penalty Petition, the Commonwealth Court also agreed with both the WCJ and the Appeal Board, finding that when a Claimant has satisfied their burden of proving a violation of the Act, the amount of penalties to be imposed for that violation are left within the sole discretion of the WCJ.  Indiana Floral Co. v. WCAB, 739 A.2d 984 (Pa. Cmwlth. 2002).

Noting that the WCJ had awarded a 0% penalty in reliance upon the Claimant’s own incredible testimony concerning his pain levels and activities, as well as his intercontinental travels and tattoos, the Commonwealth Court found no error in the WCJ’s Decision, or the Appeal Board’s conclusion to affirm the WCJ’s Decision to assess a 0% penalty against the Employer.

The Takeaway

First, yahoo!

Tough case with familiar faces.

Two different WCJ’s, two different results.

Two very well-used physicians, both marginalized by their respective orientations, albeit disabled or recovered.

So, what was the tie-breaker?

Like Homer Simpson says, “if something’s hard to do, then it’s not worth doing.”

As backwards as Homer’s logic sometimes seems, elusive truths survive every fall.

ConnorsO’Dell LLP

Trust us, we just get it!  It is trust well spent!

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.