State News

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. 

New Jersey public employees who are unable to work due to work accidents may apply for generous accidental disability pensions, providing approximately two thirds to 70% of pay with no federal taxes owed.  The standards for an accidental disability pension are rather similar to those in a workers’ compensation case, as is shown by the recent case of Bowser v. Board of Trustees, Police and Firemen’s Retirement System, A-0568-16T4 (App. Div. June 13, 2018).

The case involved correctional officer, Kristy Bowser, who suffered a fall on ice outside the Mercer County Correctional Center.  On the day of the injury Bowser parked her car on the employer’s property in an area reserved for corrections officers.  She worked one shift already and was then asked to work a second shift.  She asked a co-worker to cover for her while she retrieved feminine hygiene products from her car.  She slipped on black ice near the jail where she worked while walking to her car.  The Board of Trustees agreed that Bowser was totally and permanently disabled from working her job, that the disability was not caused by her own willful negligence, and that she was physically incapacitated from performing her usual duties or any other duty.  However, the Board disagreed that this arose from the direct performance of her duties and therefore the Board denied her claim.

The Appellate Division reversed in her favor.  It cited a prior case which said “Common sense dictates that the performance of an employee’s actual duties incorporates all activities engaged in by the employee in connection with his or her work, on the employer’s premises, from the formal beginning to the formal end of the workday.”

The Court added, “Just as restroom breaks at the work location during the workday ‘are necessary concomitants of an employee’s performance of his or her regularly assigned tasks,’ Kasper, 164 N.J. at 586 n.7, so was Bowser’s break to retrieve those necessary products. She remained on the MCCC premises, and had no intention of leaving.  She obtained relief from a fellow officer so she could briefly leave her post, as she would if she had headed straight to the restroom.  And, she was ‘on the clock,’ as she would be during a restroom break.  Consequently, her accident occurred ‘during and as a result of the performance of her regular or assigned duties.’”

For these reasons, the Appellate Division reversed the Board and awarded the officer her accidental disability pension.  Practitioners should note that accidental disability pensions are for work injuries only and are available to public employees.  Non-work medical conditions cannot be considered in an accidental disability application, unlike less generous ordinary disability pensions.  The standards for compensability in an accidental disability pension application for a public employee are similar to those in workers’ compensation.  Generally in workers’ compensation, on premises injuries are compensable unless the activity of the employee constitutes a deviation from employment or the injury is idiopathic.  Walking to one’s car during a break to retrieve something on the employer’s premises would be covered under New Jersey workers’ compensation law just as it was in this disability pension case.

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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. 

Did you know that, effective June 1, 2018, the Industrial Commission’s Rules were recodified from Title 04 Chapter 10 of the North Carolina Administrative Code to Title 11 Chapter 23 of the Administrative Code? According to the NCIC’s website, all references and citations to an Industrial Commission Rule on or after June 1, 2018, should use the new title and chapter citation. The recodification is part of the transfer of the Industrial Commission from the Department of Commerce to the Department of Insurance.

Please contact our Workers' Compensation Team with any questions about this new procedure.

Written by: S. Scott Farwell

Recent rulings from The North Carolina Supreme Court and Court of Appeals have set Workers’ Compensation Defendants somewhat adrift regarding the burdens of proof relating to disability. With this uncertainty, and to counter the testimony historically provided by Plaintiffs seeking indemnity benefits, Defendants involved in complicated disability disputes should consider early involvement of a vocational expert well in advance of hearings. Otherwise, Defendants risk even strong defenses turning sour, and the higher ranges of exposure being reached.

Recall, first, the matters of Hilliard and Russell historically provided a meaningful structure to evaluate a Plaintiff’s burden of proof. Hilliard v. Apex Cabinet Co., 54 N.C. App. 173, 282 S.E.2d 828 (1981), rev’d on other grounds, 305 N.C. 593, 290 S.E.2d 682 (1982); Russell v Lowes Prod. Distribution, 108 N.C. App 762, 425 S.E.2d 454 (1993). Those matters established that proving disability requires specific and objectively supported persuasive evidence produced by Plaintiff.

With the advent of Wilkes v City of Greenville, ____ N.C. ____, 799 S.E. 2d 838, (2017) , in combination with Neckles v. Teeter, No. COA 16-569-2, 2018 WL 944070, (N.C. Ct. App. Feb. 20, 2018) and Adame v. Aerotek, 809 S.E.2d 922 (N.C. Ct. App. Feb. 20, 2018) however, the evidentiary structure provided by Hilliard and Russell has somewhat unraveled. Wilkes is the landmark case decided by the Supreme Court which held that Plaintiff could prove disability in ways outside of the Russell framework and suggested that the Industrial Commission may rely upon competent lay testimony to prove disability. In Neckles, the Court of Appeals held that the Full Commission did not properly address plaintiff’s wage earning capacity in light of his pre-existing and co-existing conditions. In Adame, the Court of Appeals held that Defendants failed to meet their shifted burden to prove Plaintiff was not disabled. Defendants in Adameutilized a vocational expert who performed a labor market survey and offered testimony; however the expert had limited knowledge of Plaintiff’s education and qualifications. Plaintiffs may argue these newer rulings reduce their burden of proof to a burden of production, which, if met, shifts the burden of proof to Defendants to disprove disability.

While this potential burden shifting is, itself, concerning, the time needed for Defendants to obtain persuasive evidence is, perhaps, even more harrowing. Following notice of a request for hearing, Defendants typically have four to six months to gather and present evidence before the case will be heard. This timeframe can be further reduced depending on when the file is assigned to defense counsel and whether any discovery disputes arise between the parties.

Since Plaintiffs may now be able to meet their burden and demonstrate a job search is futile by offering evidence that their age, education, and experience render future job searches futile, Defendants must spend the limited months available to them before hearing to locate jobs the Plaintiff is actually capable of obtaining given both his work-related and non-work related limitations and present that evidence in a format which will persuade a Deputy Commissioner to rely on it over Plaintiff’s own testimony. This can be challenging given that the Workers’ Compensation Act must be liberally interpreted in Plaintiffs’ favor.

Wilkes, Neckles and Adame leave Defendants wondering how to approach this developing dilemma. Utilization of a well-qualified vocational expert will be essential in many cases, but prudent employers should heed the guidance provided by these recent decisions.

The Industrial Commission has indicated a willingness to consider labor market surveys, but the above cases demonstrate that a labor market survey alone may not be enough. Employers who recognize the need for vocational evidence and retain an appropriate expert must also prepare the expert to both obtain an appropriate labor market survey and offer well-informed testimony at a hearing. This requires Defendants to obtain comprehensive information about Plaintiff’s pre-existing and co-existing limitations in discovery and to ensure the vocational expert has reviewed and considered this information in preparing his or her report and rendering opinions. Satisfying these standards will require early diligent planning by Defendants well in advance of hearing, but appears inevitable in the post-Wilkes era.

Please contact any member of our Workers’ Compensation team with questions or to discuss these issues in more detail.

On June 18, 2018 Senators Portman (R-OH) and Nelson (D-FL) introduced a bill to amend title XVIII of the Social Security Act to provide for the application of Medicare secondary payer rules to certain workers’ compensation settlement agreements and qualified Medicare set-aside provisions.  The proposed legislation (S.3079) was designed to provide specific statutory guidance to CMS in its review of workers’ compensation set-aside determinations.  According to Doug Holmes, the President of UWC – Strategic Services on Unemployment & Workers’ Compensation, the bill is the product of discussions with representatives of all the primary stakeholders in the workers’ compensation system, the Centers for Medicare and Medicaid Services and congressional staff.  Per Mr. Holmes, the legislation would provide for improved administration of Medicare in conjunction with settlements in workers’ compensation cases. 

In summary, the legislation seeks to:

o   Establish clear criteria in the determination of amounts to be set-aside in workers’ compensation settlements;

o   Create legal certainty in determining  the amounts to be included in set-asides and that workers’ compensation laws are appropriately followed;

o   Provide a right of appeal  to CMS determinations for parties to workers’ compensation settlements; and

o   Provide an optional direct payment of set-aside amounts to Medicare to speed payments, increase revenue for Medicare, and provide certainty for injured workers.

For more information regarding the bill, Doug Holmes can be contacted directly atholmesd@uwcstrategy.org or 202-223-8904.

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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.