State News

Dennis Smith v. WCAB (SuperValu Holdings PA),

 No. 796 C.D. 2016 (Pa. Cmwlth. Ct., 2018)

             In an Opinion filed January 5, 2018, close in time to its prior Opinion in the case ofValenta v. WCAB (Abington Manor Nursing Home and Rehab and Liberty Insurance Company), No. 1302 C.D. 2016, (filed December 7, 2017), addressing the issue, the burden of proof in a vocationally based case involving an Earning Capacity Assessment is further explored and clarified by the Pennsylvania Commonwealth Court.

            This was a Claimant’s Appeal from the grant of a Petition to Modify by a Workers’ Compensation Judge based on a Labor Market Survey reflecting five (5) available jobs with an average wage of $456.00 a week.  The WCAB affirmed, noting that in its view there was compliance with the directives of the Pennsylvania Supreme Court set forth in the case ofPhoenixville Hospital v. WCAB (Shoab), No. 32 EAP 2011 (Supreme Court of Pennsylvania, November 21, 2013).  The Commonwealth Court affirmed the WCAB, other than for a small change in the applicable weekly benefit rate. 

            The Claimant, Mr. Smith, sustained a work injury in February 2011 involving his head and neck when a case of product fell on him.  A Notice of Temporary Compensation Payable, later converted, recognized the injury as a cervical strain/sprain with a temporary total disability rate of $661.67, based on an average weekly wage of $992.50.  The subject Petition to Modify was filed in November 2013, alleging earning power of $440.00 a week, which would reduce the Claimant’s weekly rate to $368.33.  The Claimant filed an Answer denying the allegations of the Petition to Modify.  The Employer’s Request for Supersedeas was denied. 

            An Expert Vocational Interview reflected various transferable skills and five (5) employment positions in the Claimant’s geographic area, open and available, including jobs as a dispatcher, alarm dispatcher operator, dispatcher, and two (2) security guard positions.  The pay for the jobs ranged from $360.00 to $440.00 a week.

             The Claimant was post-surgical.  A post-surgical complication in the nature of a failed fusion was noted in the record. 

            Mr. Smith agreed he met with the defense vocational expert and further stated that he applied for the five (5) identified positions.  He was not offered employment.  He also conducted a job search on his own but was not interviewed or offered employment based thereon.

             The Workers’ Compensation Judge accepted the expert vocational testimony as credible and persuasive, notwithstanding that the Claimant applied for the five (5) positions identified therein via the Labor Market Survey, noting that there was no evidence of record suggesting that the five (5) positions were not open and available at the time of application or that the jobs were already filled at that time and did not exist.  The Workers’ Compensation Judge therefore modified wage loss benefits. 

            Both parties appealed to the WCAB which as noted affirmed.  The WCAB noted that the identified jobs were consistent with the Claimant’s transferrable skills and were in a suitable geographic area in terms of the applicable labor market. 

            The Claimant argued that the WCAB improperly shifted the burden of proof to him to establish that the positions in question were not open and available, and thereby improperly applying thePhoenixville case.

            The Commonwealth Court noted that the testimony of the vocational expert was that the identified positions were open at the time of the Survey and further noted that the Claimant applied the positions which apparently remained open - and there was no indication that any evidence was presented that the positions were not open as of the time of the Survey.  In the view of the WCAB, the opinion inPhoenixville provides the Claimant with the opportunity to present evidence that he applied for the indicated positions but that none were open.  The WCAB then observed that the WCJ found there was nothing in the record to indicate the five (5) positions were not open and available at the time of Claimant’s application.  That is, although the Claimant contended that the positions were not open and available, he presented no satisfactory proof to that effect.  The WCAB saw no error in that the Claimant’s record evidence did not establish his contention that the positions were not open and available. 

            The Claimant further argued to the Commonwealth Court that the vocational expert did not establish that the identified positions were located through a transferrable skills analysis. 

            The Claimant also asserted that it was error not to consider his own independent job search in the credibility process.  The Employer argued that the Decision of the WCJ and the WCAB was supported by substantially competent evidence.  It was noted that the vocational expert had testified that the identified positions were “just an example” [of jobs in the labor market].  It was noted that the vocational expert described the suitability of the jobs, noting that they required only a High School Diploma and that each employer was willing to train as necessary. 

            The Commonwealth Court noted that in the Phoenixville case it was required that jobs remain open for a reasonable amount of time to allow for a Claimant to apply for the jobs.  To this end, a Claimant was to be given the opportunity to submit evidence regarding his or her experience in pursuing the jobs identified in the Labor Market Survey, but it was not the Claimant’s burden to do so. 

            The Commonwealth Court noted that in the recent case of Valenta v. WCAB (Abington Manor Nursing Home and Rehab and Liberty Insurance Company), No. 1302 C.D. 2016, filed December 7, 2017,the employer did not offer evidence of the jobs remaining open past the discovery of those jobs, but likewise the Claimant offered no evidence that the jobs were not open and available when she applied for some of them but received no offer of employment. 

             Pointing to Valenta, the Commonwealth Court indicated that it was indeed the employer’s burden of proof to show that the jobs were open and available, but the Claimant could present evidence to the contrary.  The Court held that “if a Claimant offers evidence about her experience in pursuing the jobs identified in a Labor Market Survey, the evidence can be considered against her in the overall evaluation of the availability of the jobs”.  “Based onPhoenixville and Valenta, we hold that a modification of benefits based on proof of earning power associated with specific positions cannot be granted without evidence in the record that the specific positions remain open until such time as a Claimant is afforded a reasonable opportunity to apply for them.  In the absence of such evidence, earning power associated with specific positions cannot be used in the calculation of earning power under §306(b).”  The Commonwealth Court emphasized that the Employer bore the burden of proof of establishing all facts entitling it to a modification of benefits, including the continued availability of the jobs identified as proof of earning power.  If the Claimant presented evidence of pursuant of the jobs identified in the Labor Market Survey, that evidence can be considered on the issue and could be considered against a Claimant in an overall evaluation of the availability of the jobs. 

            The Commonwealth Court then discussed the concept of substantial evidence in the realm of establishing the open and available nature of the jobs identified in the Labor Market Survey.  The Court stated that where there is an in-person application where information is exchanged, evidence of follow-up communications between the Claimant and a prospective employer which prompts acts or inaction by a Claimant, or evidence relating to an interview, such might constitute substantially competent evidence to establish that the jobs identified in the Labor Market Survey remained open and available through that time period.  The Commonwealth Court emphasized that there must be evidence beyond mere application.  Importantly, the Commonwealth Court stated that “consequently, we note the Board’s observation that Claimant only received an interview for the two (2) security guard positions with Am-Guard.  Therefore, we are constrained to hold that only those two (2) positions remained opened and available underPhoenixville.  It was on this basis that the Court affirmed the modification with a slight change in the partial rate.  A concurring opinion by Judge McCullough joined by Judge Leavitt concurred in the result but did not considerPhoenixville Hospital to allow a Claimant’s employment applications to be used against him or her on the question of the open and available nature of the jobs.  There was a dissent by Judge Cosgrove, again citing disagreement with the holding in Valenta to the extent of using the application process against the Claimant.  Judge Cosgrove was of the view thatPhoenixville Hospital was being misinterpreted and considered the misapplication a taint requiring the dissent.

 On March 30, 2017, new legislation signed into law by Governor Branstad made significant changes to the Iowa Workers’ Compensation laws. On December 20, 2017, new administrative rules were adopted. These changes will be applied to injuries occurring after July 1, 2017.  This update addresses the most significant changes.

    Industrial Disability Determinations: Perhaps the most significant legislative change pertains to an employee with unscheduled injuries to the trunk or head (now excluding shoulders) who is able to return to work for the employer, or is offered to return to work by the employer, in a position making the same or greater earnings compared to the time of the injury after a permanent restriction determination has been made. The employee is now only entitled to compensation based on the functional impairment rating assigned by a doctor(s). IOWA CODE § 85.34(2)(u) (2017). An industrial disability (loss of earning capacity) analysis will not be conducted if such a return to work occurs. The new administrative rules contain no specific guidance on how to implement the offer for return to work in the context of this particular code section, however, we are recommending that employers should make any such offers of return to work in writing.

Also of note, when an industrial disability analysis is appropriate, the number of years the employee is reasonably anticipated to work into the future will now be taken into account. IOWA CODE § 85.34(2)(u) (2017).

    Shoulder Injuries: Shoulder injuries are now considered scheduled member injuries, meaning an industrial disability analysis no longer applies. IOWA CODE § 85.34(2)(n) (2017). Employees sustaining a permanent work-related shoulder injury will now be entitled to a percentage of 400 weeks.

    Vocational Training: If an employee sustains a shoulder injury and cannot return to gainful employment as a result of that injury, they may be eligible for financial support from the employer for vocational retraining in an amount not to exceed $15,000. IOWA CODE § 85.70(2). The new administrative rules provide guidance on how this will be implemented. IOWA ADMIN. CODE. r. 876-4.5(5) (2018). First, the employee will be required to complete a form requesting an evaluation and determination by Iowa Workforce Development. Then, Workforce Development assesses whether the employee would benefit from a vocational training and education program offered through an area community college. Once this determination has been made, the employee, employer, or insurance carrier may contest the results of the Workforce Development determination by applying for a hearing before the Division of Workers’ Compensation. The Commissioner’s office will notice a hearing. A telephonic hearing can be requested. Decisions must be issued within 30 working days and can be appealed.

    Functional Disability Determinations: Prior to the changes, hearing arbitrators were allowed discretion in determining the amount of permanency entitlement for a particular scheduled member injury based on lay testimony or agency expertise. The legislative changes made it so that only The 5th Edition AMA Guidelines can be used to determine the extent of permanent impairment for body parts that are scheduled members (not a part of the trunk or head of the body), which now include the shoulders. IOWA CODE § 85.34(2) (2017). The previous version of the applicable administrative rule indicated that The Guides were to be used only “as a guide,” and that language has now been removed. IOWA ADMIN. CODE r. 876-2.4 (2018). This change should make scheduled member award ranges easier to predict.

    Commencement Date: Permanent partial disability benefits now begin when a worker reaches maximum medical improvement (MMI). IOWA CODE § 85.34(2). The previous rule stated that permanency benefits should begin at MMI, return to substantially similar employment, or indication that significant improvement was not likely – whichever occurred first. Under the amendment, permanency benefits are not owed until MMI is reached, even if an employee returns to work prior to reaching MMI.

    Interest: The interest rate accruing on past due benefits has been changed from 10% to the one-year treasury constant maturity plus 2%. This is governed by Iowa Code section 535.3(1) and can be foundhere. Peddicord Wharton’s website calculator (found under Resources) has been updated  to reflect this change.

    Commutation of Awards: Previously, injured workers who received an award of permanency benefits accruing into the future were permitted to commute their award to a present value lump sum payment by making an application to the Division of Iowa Workers’ Compensation. Historically, these requests were freely granted. After the legislative changes, such requests can only be granted if all parties agree. IOWA CODE § 85.45 (2018). The relevant administrative rule has been amended to reflect this change. IOWA ADMIN. CODE r. 876-6.2 (2018). Note, this change applies to all applications for commutation filed after July 1, 2017 (not just injuries occurring after July 1, 2017).

    Offers and Refusals of Suitable Work: Employers and employees are now required to communicate in writing relating to offers and refusals of light duty work. IOWA CODE § 85.33(2) (2018). The new administrative rules provide additional details about this new requirement. IOWA ADMIN. CODE r. 876-8.11 (2018). All offers pertaining to return to temporary work must be in writing and must inform the employee of the details of the offer, including lodging, meals, and transportation. With each offer, if the employee refuses the offer of work, the employee must communicate the refusal in writing, including the reason(s) for the refusal. During the period of refusal, the employee will not be compensated with temporary benefits unless the work refused is not suitable. A failure to communicate the reason for the refusal to the employer in writing precludes the employee from later asserting the work was not suitable until such time as that reason is communicated.

    Permanent Total Disability Benefits: There are a few changes impacting entitlement to permanent total disability benefits. (1) An employee can no longer receive permanent total and permanent partial disability benefits concurrently. IOWA CODE §§ 85.34(2)(x), 85.34(3)(a) (2017); (2) An employee can no longer receive permanent total disability benefits if they are receiving 50% or more of the statewide average weekly wages in gross earnings from another employer or source. IOWA CODE § 85.34(3)(c) (2017); and (3) An employee cannot receive permanent total disability benefits if the employee is also receiving unemployment benefits.  IOWA CODE § 85.34(3)(d) (2017).

    Intoxication Defense: A positive post-injury drug screen (without an appropriate prescription) creates a presumption that the employee was intoxicated at the time of the injury and that this intoxication was a substantial factor in causing the injury, barring benefit entitlement. IOWA CODE § 85.16(2) (2017).

    Credit for Overpayment of Weekly Benefits: An employer who overpays temporary benefits (in good faith) is entitled to a credit against any future weekly benefits due for that injury. IOWA CODE § 85.34(4)-(5) (2017). The credit applies to a current injury, not just a subsequent injury as in the past.

    Independent Medical Examinations: An employee forfeits entitlement to weekly benefits for refusing to attend an IME arranged by the employer/insurance carrier. In the past, benefits were only suspended during the time of refusal. The new law explicitly states that an employer is only obligated to pay these exams for compensable injuries. The reasonableness standard for fees charged by these examining physicians is based on the fee charged by a medical provider for performing an impairment rating.   IOWA CODE § 85.39 (2017).

With only six months since the legislative changes have become effective, we are still unable to predict how the Commissioner will address some issues, but the recently adopted administrative rules do offer some additional indication and guidance.

Let’s take a moment to consider this hypothetical scenario:

John Smith is at work for the Widget Company working on the assembly line.  Mr. Smith has been working for about 10 hours when he faints, causing him to fall and hit his head on the ground beneath him.  The Widget Company gets Mr. Smith to an emergency room where several tests are run to determine the cause of Mr. Smith’s fainting spell.  A review of the diagnostic testing and Mr. Smith’s medical history uncovers that Mr. Smith has a history of fainting due to a personal health condition and he has experienced these fainting spells several times in the background. The Emergency Room physician tells Mr. Smith that the fainting spell was related to his personal health condition and provides him recommendations how to address this issue in the future.

Now, the million-dollar question:  Is the diagnostic testing performed on Mr. Smith a covered benefit under South Dakota workers’ compensation law?

Whenever the purpose of the diagnostic test is to determine the cause of a claimant’s symptoms, which symptoms may be related to a compensable accident, the cost of the diagnostic test is compensable, even if it should later be determined that the claimant suffered from both compensable and noncompensable conditions.  Mettler v. Sibco, 2001 S.D. 64, ¶ 9, 628 N.W.2d 722, 724.  

We get several questions about whether or not diagnostic testing is compensable when the ultimate outcome relates the reason for the event pointing to a personal health condition.  However, keep the above case law in mind when evaluating the responsibility for payment of diagnostic testing to determine the medical explanation for an accident or injury.

As always, please call us if you have any questions, we are happy to help. 

Scott Jeannette was an employee of General Mills Progresso. He went into cardiac arrest at work on June 7, 2011 and died nine days later from complications.   He left a wife, Nacole, and a four-year-old son, Chase. Nacole filed a dependency claim petition over six months past the two-year statutory filing deadline. General Mills Progresso denied the claim as time barred. The Judge of Compensation denied both the widow’s claim and her son’s claim as time barred, leading to an appeal.

Ms. Jeannette argued on appeal that she experienced a period of temporary incapacity, which should excuse her failure to file in a timely fashion. As to her son, she argued that his claim should be tolled due to his infancy.

The Appellate Division considered the main argument of Ms. Jeannette, which was that a decision by the Supreme Court in a non-workers’ compensation context mandated a more liberal interpretation of the workers’ compensation statute, as it reads, N.J.S.A. 34:15-51 requires claimants to file their petitions in workers’ compensation within two years of the date of the accident.   The statute also provides that “proceedings on behalf of an infant shall be instituted and prosecuted by a guardian, guardian ad litem, or next friend.”  The statute goes on to provide that any claims not filed within the two-year period are forever barred.

Counsel for Ms. Jeannette argued that the case of Lafage v. Jani, 166 N.J. 412 (2001) should apply to workers’ compensation. In that case the Supreme Court of New Jersey allowed surviving children to bring a claim under the Wrongful Death Act, N.J.S.A.2A:31-1 to -6, for a parent’s death even after the statute of limitations period had expired.   The Appellate Division rejected the argument that this wrongful death statute applied to workers’ compensation cases:

While we acknowledge the Court’s directive to apply statutes of limitations flexibly, we cannot ‘rewrite a plainly-written enactment of the Legislature or presume that the Legislature intended something other than that expressed by way of the statute’s plain language.’

(citations omitted). The Court reasoned, “Here, the Legislature did not include a tolling provision for minors in the workers’ compensation statute, and we do not presume the omission was a legislative oversight.” The Court noted that the Legislature must have considered the rights of minors because they did provide for guardians to represent minors in workers’ compensation.

In essence, the Court relied on the clear reading of the workers’ compensation statute and acknowledged that workers’ compensation is a creature of statute. It will be interesting to see if the widow seeks certification from the Supreme Court on this issue. The case can be found at Jeannette v. General Mills Progresso, A-5417-15T2 (App. Div. February 6, 2018).

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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 Division’s 14-month project to scan 19,634 boxes of records containing over two million claim files is nearing completion.  The paper files are from cases with injury dates between 1992 and 2005. 

In 2005, the Division began using an electronic management system and has been keeping digital versions of all paper files since that time. 

By law, the Division must maintain records for 50 years.  Files older than 1992 had previously been scanned onto microfilm, and the Division had been leasing a 24K square foot storage warehouse to house the records, at a cost of $300K/year.

~ This blog submission was prepared by Erin Shanley, an attorney with Stone Loughlin & Swanson, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Stone Loughlin & Swanson is a member of the National Workers’ Compensation Defense Network (NWCDN). If you have any questions about this submission or Texas workers’ compensation in general, please contact Erin by e-mailing her at eshanley@slsaustin.com or by calling her directly at (512) 343-1300.

According to a recent report from Columbia University, business travel may lead to serious medical conditions that require treatment and may even result in permanent disability.  The study found that people who travel for business two weeks or more a month report more symptoms of depression and anxiety than those who travel one to six nights a month.  They are also more likely to smoke, be sedentary, and report trouble sleeping.  Additionally, for those who consumed alcohol, extensive business travel was associated with symptoms of alcohol dependence. 

In Texas, employees engaged in business travel (i.e., a special mission) remain in the course and scope of employment for the duration of the special mission unless there has been a “deviation” from or abandonment of the course and scope of employment.   Aetna Cas. & Sur. Co. v. Orgon, 721 S.W.2d 572 (Tex. App.-Austin 1986, writ ref’d n.r.e.).   This is sometimes referred to as the principle of “continuous coverage.”  The "continuous coverage doctrine" extends workers’ compensation liability for injuries even when an employee is technically off duty. 

Bottom line: Employers and carriers should exercise safe protocols to prevent their employees from developing mental health issues, including alcoholism and depression, as there is now scientifically-backed evidence that business travel is a potential occupational hazard.

The results of the study are published online in the Journal of Occupational and Environmental Medicine.  (Andrew G. Rundle, Tracey A. Revenson, Michael Friedman. Business travel and behavioral and mental health. Journal of Occupational and Environmental Medicine, 2017; 1 DOI: 10.1097/JOM.0000000000001262.)

~ This blog submission was prepared by Erin Shanley, an attorney with Stone Loughlin & Swanson, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Stone Loughlin & Swanson is a member of the National Workers’ Compensation Defense Network (NWCDN). If you have any questions about this submission or Texas workers’ compensation in general, please contact Erin by e-mailing her at eshanley@slsaustin.com or by calling her directly at (512) 343-1300.

In the wake of Hurricane Harvey making landfall in numerous counties this past August, the Division had issued a bulletin directing insurance carriers and system participants to extend deadlines for medical examinations, authorize payment for pharmacies to dispense 90-day supplies of medications, reimburse for emergency and non-emergency health care services out of network, and expedite change-of-address processing.  Additionally, the bulletin had suspended deadlines for claims notifications and filing, electronic data reporting, medical and income payments, medical billing, and medical and income benefit disputes. 

The Division has issued a subsequent bulletin directing system participants to resume normal claims processing and dispute resolution operations effective January 10, 2018, stating that it is now practical and in the best interests of the workers’ compensation system to do so.  All standard workers’ compensation deadlines and procedures are now back in effect.

~ This blog submission was prepared by Erin Shanley, an attorney with Stone Loughlin & Swanson, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Stone Loughlin & Swanson is a member of the National Workers’ Compensation Defense Network (NWCDN). If you have any questions about this submission or Texas workers’ compensation in general, please contact Erin by e-mailing her at eshanley@slsaustin.com or by calling her directly at (512) 343-1300.

After a report conducted by the Workers’ Compensation Research and Evaluation Group concluded there was no statistical difference in disability duration between CARF-accredited and non CARF-accredited programs, the Division has proposed amendments to Division Rules 134.600 (regarding preauthorization, concurrent utilization review, and voluntary certification of health care) to remove the exemption status from CARF-accredited facilities.   The Division is also proposing to amend Rule 134.230 (regarding return to work rehabilitation programs)  to set one fee schedule for work hardening and work conditioning services, regardless of a facility’s accreditation status, by removing the increased payment to CARF-accredited facilities providing these services. 

The proposed amendments are additionally intended to implement Senate Bill 1494 of the 85th Legislative Regular Session, which amended Texas Labor Code Section 413.014 to require preauthorization and concurrent utilization review for health care facilities providing work-hardening (WH) or work-conditioning (WC) programs.  Currently, health care facilities that are accredited by the Commission on Accreditation of Rehabilitation Facilities (CARF) are exempt from preauthorization and concurrent review requirements for WH and WC.  The bill no longer requires, but instead permits, the commissioner, by rule, to exempt a credentialed health care facility providing WH and WC services from preauthorization and concurrent review requirements.

The Division is accepting comments for the amendments.  The informal working draft is available atwww.tdi.texas.gov/wc/rules/drafts.html.  The comment period closes on February 2, 2018 at 5:00 p.m.

~ This blog submission was prepared by Erin Shanley, an attorney with Stone Loughlin & Swanson, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Stone Loughlin & Swanson is a member of the National Workers’ Compensation Defense Network (NWCDN). If you have any questions about this submission or Texas workers’ compensation in general, please contact Erin by e-mailing her at eshanley@slsaustin.com or by calling her directly at (512) 343-1300.

On January 2, 2018, Medical Advisor Patrick M. Palmer, M.D., sent out a notice advising system participants that the Medical Quality Review Panel (MQRP) had finalized its CY 2018 Medical Quality Review Annual Audit Plan (Annual Plan).  The Annual Plan sets priorities for the types of audits the MQRP will initiate during the year.

According to the Annual Plan as approved by Commissioner Brannan, the two categories of focus will be: (1) the appropriateness of a health care provider’s decision and recordkeeping for prescribing opioids; and (2) the appropriateness and necessity of health care providers (excludes designated doctors) referring for testing.  Notably, the following specific services were specifically mentioned as being subject to review:  muscle testing, range of motion (ROM) testing, needle electromyography (EMG), and nerve conduction tests.

The Division had solicited input from workers’ compensation participants on November 20, 2017 regarding the two potential categories for the Annual Plan, but received no input.  Therefore, Commissioner Brannan approved the plan as proposed on December 27, 2017.
 
The Division plans to obtain stakeholder input on the development of each individual plan-based audit proposal for categories within the Annual Plan, and will then post a plan-based audit that, according to the Medical Advisor, includes: inclusion and exclusion criteria; service time frame to be audited; sample size; and subject and case file selection.  All medical quality reviews initiated on or after January 1, 2018 will be performed in accordance with this approved medical quality review process.  

~ This blog submission was prepared by Erin Shanley, an attorney with Stone Loughlin & Swanson, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Stone Loughlin & Swanson is a member of the National Workers’ Compensation Defense Network (NWCDN). If you have any questions about this submission or Texas workers’ compensation in general, please contact Erin by e-mailing her at eshanley@slsaustin.com or by calling her directly at (512) 343-1300.

The Division is currently accepting public comments on proposed amendments to Division Rules 134.500, 134.530, and 134.540 affecting the provision of compound prescription drugs in the workers’ compensation system.  The proposed amendment to Rule 134.500 would exclude from the closed formulary all compound prescription drugs, and proposed amendments to Rules 134.530 and 134.540 would require preauthorization of compound prescription drugs for both network and non-network claims.

The proposed rule changes would not prohibit the use of compounded drugs, but those drugs would need to be determined to be medically necessary via preauthorization through utilization review prior to being dispensed to a workers’ compensation claimant. 

According to the Division’s data on pharmacy billing and its ongoing audit of doctors’ practices, the cost of compounded drugs doubled from 2010 to 2014, increasing from $6 million to $12 million.  Although the average cost per prescription was $829 in 2016, increasing from $356 in 2010, our firm saw multiple individual prescriptions topping $10K per 30-day supply in 2016.  And a May 2017 report by the Division’s Research and Evaluation group found that the number of compounded drugs increased from 18,020 prescriptions in 2010 to 26,380 in 2014.  Of that, almost a third of compounded drug prescriptions were to treat back injuries.  The Division found these numbers concerning because compounded drugs aren’t recommended as first line medications in treatment guidelines for injured employees, and members of the House Committee on Business & Industry asked the Division to address the issues through a new rule.   As a result, on June 16, 2017, the Division announced an informal draft rule to require that compounded drugs be preauthorized.

Compounded drugs are not FDA-approved, nor does the FDA verify their safety, quality, or effectiveness. In fact, the FDA has found that the labeling of compounded drugs often omits important information.  Moreover, poor compounding practices can result in serious drug quality problems, such as contamination or medications that do not possess the purity, strength, and quality they are intended to have.  Finally, the FDA has reported its concern that some compounding pharmacies and pharmacists produce drugs for patients even though an FDA-approved drug may have been medically appropriate for them.

Commissioner Ryan Brannan believes the preauthorization process will strike a balance against these concerns.  “We want to make sure the use of these drugs is being reviewed and that physicians are considering efficacy and appropriateness of alternatives while still ensuring that patients who need compounded drugs will still be able to get them,” Brannan said.

The Division is accepting written comments to the proposed rule changes until 5:00 p.m. February 20, 2018, and will conduct a public hearing relating to the proposed changes on Thursday, February 15, 2018 at 10:00 a.m. in the Tippy Foster Room of the Texas Department of Insurance, Division of Workers’ Compensation, 7551 Metro Center Drive in Austin, Texas 78744.  The hearing will also be audio streamed and the audio stream may be accessed via the DWC Calendar at www.tdi.texas.gov/wc/events/index.html.

~ This blog submission was prepared by Erin Shanley, an attorney with Stone Loughlin & Swanson, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Stone Loughlin & Swanson is a member of the National Workers’ Compensation Defense Network (NWCDN). If you have any questions about this submission or Texas workers’ compensation in general, please contact Erin by e-mailing her ateshanley@slsaustin.com or by calling her directly at (512) 343-1300.