NWCDN Members regularly post articles and summary judgements in workers’ compensations law in your state.
Select a state from the dropdown menu below to scroll through the state specific archives for updates and opinions on various workers’ compensation laws in your state.
Contact information for NWCDN members is also located on the state specific links in the event you have additional questions or your company is seeking a workers’ compensation lawyer in your state.
After at least four decades of disagreement on lien reimbursement calculations in high third party settlements, the Appellate Division this week handed down a reporteddecision in Liberty Mutual Insurance o/b/o Sabert Corporation v. Jose R. Rodriguez, A-0112-17T4 (App. Div. April 2, 2019). Betsy Ramos, Esq., co-chair of Capehart’s litigation department, successfully argued the cause for the workers’compensation carrier.
The facts of the case are simple. Mr. Rodriguez was injured in 2012 arising out of his employment with Sabert Corporation. Liberty Mutual, the workers’ compensation carrier for Sabert, paid $148,590.40 in workers’ compensation benefits including medical and temporary disability benefits. Mr. Rodriguez sued the tortfeasor and settled his third party suit for $1,200,000. The question was how to calculate Liberty Mutual’s lien: was it two thirds or higher than that percentage? The law firm for Rodriguez sent a check for two thirds minus $750 for costs. Liberty Mutual rejected the offer and filed an order to show cause and verified complaint claiming that the percentage should be calculated based on the actual fee paid by the injured worker to his lawyer as a percentage of the overall settlement.
There is a standard court rule for legal fees in large civil settlements. Rodriguez paid his third party lawyer based on the court rule at that time: one third of the first $500,000; 30% of the next $500,000 and 25% of the next $500,000 for a grand total of $366,666. The current court rule applies to stages of $750,000 today. Rodriguez actually paid 30.56% of the total settlement of $1,200,000 in counsel fees. Liberty Mutual therefore argued that its lien should not be 66.67% but rather 69.44% (100 minus 30.56 = 69.44). The trial court agreed with Liberty Mutual, and Rodriguez appealed to the Appellate Division, which affirmed the trial court.
Rodriguez argued that Liberty Mutual should be limited to two thirds because he paid only one third of the first $500,000 to his lawyer, and Liberty’s lien did not exceed $500,000. It totaled $148,590.40. The Appellate Division reviewed conflicting decisions on this issue, one Supreme Court case going back to 1955 (favoring Liberty’s position) and one reported Appellate Division decision from 1974 (favoring Rodriguez’s position).
In the end, the Court ruled that the 1955 Supreme Court decision in Caputo v. Best Foods, Inc., 17 N.J. 259 (1955) was binding on the Court in spite of subsequent Appellate Division decisions that took issue with Caputo. The Court ruled in favor of an approach which focuses on how much the injured worker paid his or her lawyer. One takes that figure as a percentage of the total settlement. So Liberty Mutual’s lien was in fact 69.44% of the $148,590.44 or $103,181.20 because that is the composite percentage of how much Rodriguez paid his lawyer. It did not matter that Rodriguez paid one third of the first $500,000. You need to work through all the staged payments that Rodriguez paid, the first at one third, the second at 30% and the third at 25%. This is a significant victory for employers, third party administrators, and carriers. There are many million dollar settlements in third party cases stemming from workers’ compensation injuries. We now know how to calculate the lien. The confusion between competing published cases has been resolved. The ruling means that respondents will recover greater than two thirds when the third party settlements are significant such as those in the seven figure range. As practitioners know, it is not always accurate to say that respondent’s lien is two thirds. It is never less than two thirds, but it can be more than two thirds, as this case illustrates.
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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 recent study by the Division shows that nearly one-third of Texas small businesses opt out of subscribing to workers’ compensation insurance. According to the Division's investigation, 28% of small business owners (those with fewer than 50 employees) opted not to subscribe. That number increased to 36% for small businesses with one to four employees. However, of those who opt out, 30% report offering some alternative form of workers’ compensation coverage.
Small business owners cited having “too few employees” and “too few on-the-job injuries” as reasons for opting out of coverage. Nineteen percent said they opted out because premiums were too high. The largest industries with non-subscribers were healthcare (38% opt out), wholesale (33% opt out), and arts and entertainment (32% opt out).
Texas is the only state where businesses have the option to subscribe to the state workers’ compensation system. The majority of employers choose to participate. The number of employees covered by the state’s workers’ compensation system has been around 80% since 2004.
The Division is offering free webinars for health care providers and staff explaining the ins and outs of medical care for injured workers. The webinars will cover topics like utilization review, verification of coverage, medical bill processing, bill disputes, MMI and IR, and healthcare networks. The webinars begin at noon and are an hour long. Registration is available on the Division’s website. For more information on upcoming webinars and a list of topics, please visit:https://www.tdi.texas.gov/alert/event/dwchealthcare.html.
- Copyright 2019, Stone Loughlin & Swanson, LLP.
Early this month, Kevin Williams, M.D. voluntarily surrendered his medical license. The Division audited Dr. Williams in 2016, and found that he prescribed compound medications which were not reasonable and/or medically necessary for his patients, and that he failed to follow the Division's fee and treatment guidelines. Dr. Williams was ordered to pay an administrative penalty of $10,000.00, to cease and desist from prescribing compound medications as routine practice in the Texas Workers’ Compensation system, and to attend further record keeping courses.
The Texas Medical Board also investigated Dr. Williams for his excessive compound drug prescribing practices. Rather than face continued investigation, Dr. Williams agreed to surrender his license. In the Board Order, Dr. Williams neither admits nor denies the accusations, but rather, he chooses to voluntarily surrender his Texas Medical License in lieu of further disciplinary proceedings. The voluntary surrender of his license becomes effective on March 29, 2019.
Dr. Williams may petition the Texas Medical Board to reissue his Texas Medical License in one year.
We are glad to report that Governor Abbott reappointed Jessica Barta as the Injured Employee Counsel. Not only does OIEC provide excellent assistance to injured workers, Jessica and her staff have been an invaluable resource for Kids’ Chance of Texas. Jessica serves on the board and has transformed Kids’ Chance’s outreach program out of the dark ages and into the light of the tech-savvy potential scholarship applicants . . . Kids’ Chance not only tweets now, it is also on FaceBook! Check it out atwww.kidschanceoftexas.org. Please do not forget to refer to Kids’s Chance children of any age who have had a parent killed or catastrophically injured while working in Texas. Outreach and fundraising efforts are underway for 2019!
It is no secret that opioid addiction is a major problem in this county. In 2017, President Trump declared the opioid crisis a national emergency, and states have started fighting back. The Oklahoma attorney general recently announced a $270 million settlement the state reached with Purdue Pharma, the largest manufacturer of prescription opioids. Nevada, Texas, Florida, North Carolina, North Dakota, and Tennessee also filed suit against Purdue Pharma alleging violations of state consumer protection laws by falsely denying or downplaying the addiction risk while overstating the benefits of opioids. Several municipal and county governments in New York are also pursuing litigation against leading opioid manufacturers, including Purdue Pharma, to recover the medical, public health, and law enforcement costs related to opioid abuse.
It seems doctors have heeded the public outcry, as opioid prescriptions are down. A study done by the California Workers’ Compensation Institute found that previously, nearly 33% of medications prescribed in its system were opioids. Now, opioids account for about 18% of the medications.
The fact that opioid prescriptions are down does not mean we are out of the woods. Efforts to curb unnecessary opioids should not result in simply replacing those drugs with others that may carry their own risks. The drug group that now accounts for a growing share of workers’ compensation prescriptions has its own set of risks, side effects, and potentially dangerous drug interactions. Benzodiazepines, for example, are highly addictive and have been implicated in overdose deaths. Originally prescribed as tranquilizers, they are found in multiple therapeutic drug groups, such as anticonvulsants and NSAIDs. Recent research published in the Journal of the American Medical Association shows that prescriptions for these drugs for conditions such as back pain, chronic pain, anxiety, and insomnia are increasingly common.
The Texas legislature is busy at work in the capital. There are several pieces of proposed legislation affecting workers’ compensation. The following are some of the more notable bills:
- Copyright 2019, Stone Loughlin & Swanson, LLP.
PHI Air Medical, the global helicopter transport company at the heart of the dispute over whether air ambulance firms can be bound by workers’ compensation fee schedules, filed for Chapter 11 bankruptcy protection this month. The move came as no surprise following the company’s widely reported financial struggles in recent months. PHI’s bankruptcy filing has put the air ambulance litigation at the Texas Supreme Court on hold. On March 22, 2019, the Texas Supreme Court abated the case until further order of the Court. The Court has asked the parties to file a status report no later than May 21, 2019.
PHI’s bankruptcy is the third among major helicopter service companies in recent years, including CHC Helicopters and Erickson in 2016. Jeff Frazier, a partner with Sentinel Air Medical Alliance, indicated that PHI’s bankruptcy could signal the beginning of a shakeout that could lead to lower fees. He indicated that PHI's, and other air ambulance companies, bankruptcy may lead to a restructuring of the industry, including a move to more hospital-based air services, which could lead to more reasonable rates.
Whatever the effect of PHI’s bankruptcy, it is clear that the current business model is not working. Air ambulance services borrow heavy to buy more helicopters, and then charge exorbitant prices to help pay the debt. Some air ambulance services have loads of debt and reported profits have dropped sharply in recent years. Air Evan EMS wrote in a court brief that it “faces market pressure in Texas” and, from 2012 through 2017, “suffered net losses in three years and posted minimum profits in the others.” Evidently, billing patients for the balance did not really help air ambulance companies’ bottom line . . . .
On March 29, 2019, the Alabama Court of Civil Appeals released its opinion in Ex parte Trusswalk, Inc. wherein it addressed a trial court’s ability to order pain management in the absence of a supporting medical necessity opinion from a doctor. InTrusswalk, the trial court ordered the employer to send the injured employee to pain management despite the fact that no doctor had recommended it. In issuing the order, the trial court relied on the fact that, after 5 back surgeries, the employee claimed to have chronic low back pain. The employer promptly filed a petition for a writ of mandamus.
In its petition, the employer argued that the trial judge lacked the authority to direct a referral for pain management where the authorized treating physician had not recommended same. In its brief and during oral argument, the employer argued that the trial court lacked the authority to order pain management in the absence of a supporting medical necessity opinion from any doctor.
In its opinion, the Court of Appeals cited to the Alabama Administrative Code for both the Board of Medical Examiners and the Department of Labor for the proposition that pain management is a specialty that necessitates a supporting opinion from a medical expert. Since no doctor had offered such an opinion, the Court granted the petition and directed the trial court to vacate its order.
My Two Cents
It is well settled in Alabama that a trial court cannot compel medical treatment when the issue of compensability remains in dispute. So as not to lose control of treatment, employers will sometimes agree to direct medical care while, at the same time, deny the claim. In Trusswalk, the employer denied all the material allegations of the Complaint in its Answer and, therefore, the issue of compensability remained in dispute. This was not raised in the employer’s petition and so it was not addressed by the Court of Appeals.
Two More Cents
Following the hearing on the plaintiff’s motion to compel pain management, the trial court issued an order that included findings of fact and conclusions of law. Interestingly, one of the findings of fact was that the employee suffered a work-related back injury. The trial court also held that the employee’s chronic pain condition arose out of his work related accident and injury. Such findings should have only been made following a trial on the merits. If the judge elected to treat the hearing on the employee’s motion as a trial, then the employer’s right to 60 days’ notice was violated. If the hearing was not treated as a trial, then the issues of compensability and chronic pain should remain at issue. Unless the employer can get another Marshall County judge to handle the trial, the proverbial cards on these important issues have already been laid down.
About the Author
This blog submission was prepared by Mike Fish, an attorney with Fish Nelson & Holden, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Fish Nelson & Holden is a member of the National Workers’ Compensation Defense Network. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Fish by e-mailing him at mfish@fishnelson.com or by calling him directly at 205-332-1448.
As practitioners well know, many ADA law suits begin with a workers’ compensation injury. But where is the line between an issue that must be handled in workers’ compensation and one that can be brought in civil court? That was the issue that the New Jersey Supreme Court decided on March 25, 2019 in Caraballo v. City of Jersey City Police Department (A-71-17) (080467).
Caraballo joined the Jersey City Police Department (hereinafter JCPD) as a police officer in February 1973. He injured his hands, back, and legs in August 1999 during a motor vehicle accident and filed a workers’ compensation claim. He underwent anterior cruciate ligament reconstruction surgery on his left knee.
Two city-appointed physicians gave opinions that Caraballo would eventually need bilateral knee replacement surgery. Caraballo’s workers’ compensation attorney contacted defense counsel for JCPD in 2008 and requested approval for the knee replacement surgery. Caraballo’s attorney also requested a specific physician to perform the surgery, noting that Risk Management had approved that physician.
Surgery did not take place for reasons that are not clear in the opinion. In August 2010, Caraballo put in his retirement papers with the New Jersey Division of Pensions and Benefits effective March 1, 2011. Lieutenant John McLellan of the JCPD Medical Bureau was of the impression that Caraballo did not intend to pursue the surgery. McLellan also noted that Caraballo refused to see a certain doctor “who would be able to determine unequivocally whether or not he should have the surgery.”
Caraballo retired on March 1, 2011. Thereafter Risk Management authorized an orthopedic surgeon to evaluate Caraballo for bilateral knee replacement surgery. The doctor told Caraballo to contact the office to pick a date for surgery pending medical and cardiac clearance. However, Caraballo never called the doctor’s office to schedule a date for surgery.
On March 4, 2013, Caraballo finally settled his workers’ compensation claim. A short time later, he brought a civil suit alleging that the City violated his rights under the New Jersey Law Against Discrimination for failing to authorized the knee replacement surgery and failing to make reasonable accommodations to his disability.
The trial court ruled against Caraballo because he failed to enforce his rights to have knee surgery in workers’ compensation court. Apparently, he never filed a motion for medical and temporary disability benefits. The Appellate Division reversed in favor of Caraballo. The Appellate Division observed that Caraballo may have been able to perform the essential functions of his job had he obtained a reasonable accommodation of knee surgery.
The New Jersey Supreme Court accepted certification and reversed the Appellate Division. The Court relied on prior case law to the effect that an employee must first exhaust all administrative remedies under workers’ compensation before seeking enforcement in the Law Division. The Court said:
Here, Caraballo filed his workers’ compensation claim in 2001, retired in 2011, and settled his claim with the JCPD in 2013. In the interim, Caraballo contacted Risk Management several times to obtain authorization for double knee replacement surgery but never sought to enforce his right to the surgery in the workers’ compensation court. Caraballo’s failure to utilize the Act’s administrative remedies to obtain knee replacement surgery precludes his failure-to-accommodate claim under the LAD.
The court next went on to consider whether surgery can be considered a reasonable accommodation in New Jersey. The court first cited to the language in the LAD and ADA for specific examples of reasonable accommodation: (i) making facilities used by employees readily accessible and usable by people with disabilities; (ii) job restructuring, part-time or modified work schedules or leaves of absence; (iii) acquisition or modification of equipment or devices; and (iv) job reassignment and other similar actions.
The Court observed that no New Jersey case prior to Caraballo had ever addressed the question of whether medical treatment qualifies as a reasonable accommodation under the LAD. A case in Connecticut was instructive to the Court, Desmond v. Yale-New Haven Hosp., Inc., 738 F. Supp. 2d 331, 350 (D. Conn. 2010). In that case the Connecticut District Court ruled against a workers’ compensation plaintiff who argued that in order to continue working she would need medical treatment, including pain management and physical therapy. The Connecticut Court held that a reasonable accommodation must relate to workplace barriers. There was no responsibility under the ADA or state civil rights law to make sure an injured employee is receiving appropriate medical treatment.
The New Jersey Supreme Court agreed with the ruling in Desmond:
The medical procedure sought by Caraballo – his double knee replacement surgery – is neither a modification to the work environment nor a removal of workplace barriers. Rather, it is a means to treat or mitigate the effects of his injuries, like the treatments at issue in Desmond. We therefore find it consistent with the LAD, the ADA, and their regulations that Caraballo’s total knee replacement surgery cannot qualify as a reasonable accommodation under the LAD.
This case is truly significant for practitioners, carriers, third party administrators and workers’ compensation professionals. Had the ruling gone the other way, employees would have been able to pursue civil action against employers for potential denial of benefits in workers’ compensation. The Court is undoubtedly correct that this would violate the basic rule that workers’ compensation is the exclusive remedy for injured workers regarding medical benefits.
Thanks to Rick Rubenstein, Esq. for bringing this case to our 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.