State News

DWC has lost two more long-time Hearing Officers. Carol Fougerat is leaving the San Antonio Field Office and Patrice Squirewell-Jean is leaving the Houston East Field Office.  These two ladies have been Hearing Officers for many years.  Their retirement follows a continuing pattern of attrition of experienced Hearing Officers at the DWC.

On 8/1/17, DWC announced changes to the form DWC-45 to allow system participants to request to proceed directly to a contested case hearing.  The DWC explained that parties are not required to participate in a BRC when the DWC determines that mediation would not prove effective to resolve the dispute or that the overall policy of the Workers’ Compensation Act would be advanced by proceeding directly to a contested case hearing.  The stated goal of this change is to “focus BRC time and resources on disputes in which participation is thought to be the most productive.  The revised form can be found athttp://www.tdi.texas.gov/forms/form20numeric.html.  

On 8/18/17, DWC posted changes to the Designated Doctor Rules and asked system participants for informal comments.  The stated reason for the changes is to “simplify certain DD processes, retain and recruit doctors to continue to ensure the most optimally qualified doctor is selected for an examination, provide transparency, and allow for better monitoring of designated doctors. 
 
The DWC Designated Doctor List (DDL) has undergone significant demographic changes since Rule 127 was adopted in September of 2012.  Specifically, there are half as many doctors on the DDL and there has been a dramatic decrease in the number of medical doctors on the DDL, while the number of chiropractors has steadily increased.  Of the 540 total doctors on the DDL, 167 of them are medical doctors and 352 are chiropractors.  When Rule 127 was adopted, there were 1247 doctors on the DDL, 929 of whom were medical doctors and 203 were chiropractors.
 
In an effort to keep designated doctors in the program, and ostensibly to lure more medical doctors back to the fold, the DWC is proposing changes to the selection and qualification criteria that would allow more examinations per appointment and more specialization (in other words, more exams for medical doctors and doctors of osteopathy) for more complex injuries, which have been further defined by the proposed rules.  The current selection process “penalizes” the more specialized doctors by moving them to the bottom of the appointment list when appointed to complex cases.
 
Of interest is the fact that the DWC has not addressed any increase in the fee schedule to take into account changes in the complexity of the system, the Designated Doctor rules and the kinds of examinations designated doctors are appointed to address.
 
The informal comment period closes on 9/1/17, but the rules will be posted for formal comment.  

On August 29, 2017, Commissioner Brannan issued a bulletin, which can be read in its entirety at the following:http://www.tdi.texas.gov/bulletins/2017/b-0020-17.html.  The bulletin refers to the Governor’s disaster proclamation and directs that, for the duration of that proclamation, Carriers must provide or continue to provide: (1) processing and delivery of benefits checks and medical care, services, supplies and equipment; (2) waiver of penalties and restrictions related to necessary and non-emergency health care provided out of network; (3) coverage of payment for necessary emergency and non-emergency health care services obtained out of network; (4) extended deadlines for medical examinations; authorization of payment to pharmacies for up to a 90 day supply of prescription medications (subject to the number of days authorized by the provider) regardless of the date on which the prescription had most recently been filed; and (5) expedited change of address processing.
 
In addition to the direction to carriers, the bulletin informs system participants of a tolling of deadlines for participants who reside in the counties listed in the Governor’s disaster proclamation. For the duration of the proclamation, deadlines are tolled for: (1) workers’ compensation claim notification and filing deadlines; (2) medical billing deadlines; (3) medical and income benefits payment deadlines; (4) electronic data reporting deadlines; and, (5) medical and income benefit dispute deadlines.
 
The DWC also reminded political subdivisions that first responders are on the front lines of the disaster and DWC and those subdivisions shall accelerate and give first priority to an injured first responder’s claim for workers’ compensation medical benefits if that first responder sustains a serious bodily injury in the course and scope of employment.  OIEC has designated a First Responder Liaison, Yolanda Garcia, who can be reached at 512-804-4173 orFirstResponderHelp@oiec.texas.gov.  

Governor Abbott issued a disaster proclamation on 8/23/17, certifying that Hurricane Harvey posed a threat of imminent disaster, including severe flooding, storm surge and damaging winds for the following counties: Aransas, Atascosa, Austin, Bastrop, Bee, Bexar, Brazoria, Brazos, Burleson, Caldwell, Calhoun, Cameron, Chambers, Colorado, Comal, DeWitt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Guadalupe, Hardin, Harris, Jackson, Jasper, Jefferson, Jim Wells, Karnes, Kerr, Kleberg, Lavaca, Lee, Leon, Liberty, Live Oak, Madison, Matagorda, Montgomery, Newton, Nueces, Polk, Refugio, San Jacinto, San Patricio, Tyler, Victoria, Walker, Waller, Washington, Wharton, Willacy and Wilson counties.  On 8/28/17, the Governor added Angelina, Orange, Sabine and Trinity counties to the proclamation.  

Cases involving temporary staffing agencies and professional employer organizations often lead to unusual and complex legal issues in workers’ compensation.  The recent case of Detres v. Workforce Logistics Corp., A-4963-15T1 (App. Div. August 25, 2017) illustrates this point quite well by delving deeply into coverage and conflicts of law issues in a very high exposure claim.

On October 18, 2013, Carlos Ariel Detres was injured seriously when struck by a truck while working for Buy Wise, which specialized in automotive parts distribution.   He was a temporary worker provided by Workforce Logistics Corporation to Buy Wise.  Detres was a New Jersey resident and was injured at the Buy Wise location in Jersey City.  Detres filed a workers’ compensation claim against both Buy Wise and Workforce Logistics Corporation.  Workforce, which was insured in New York by Public Service Mutual Insurance Company, denied that the injury occurred in the course of employment.  Its carrier,  Public Service Mutual Insurance Company, asserted that its policy only applied to New York State locations.  Buy Wise, which was insured by Hanover Insurance in New Jersey, denied that its policy applied to this accident, and pointed at Public Service.

How this tangled mess occurred went back to April 23, 2013 when Workforce applied for workers’ compensation coverage to Public Service.  The application only listed two locations in New York and never mentioned locations in New Jersey.  The application also said that no employees “travel out of state” or “perform work for other businesses or subsidiaries,” and that Workforce did not “lease employees to or from other employers.”  Relying on these representations, Public Service issued the workers’ compensation policy from May 1, 2013 to May 1, 2014.  Under the policy conditions, only the workplaces and locations listed in the policy were covered, and there was language that there was no “duty to defend a claim, proceeding, or suit that was not covered.”  It also said that New York law should apply.

The Judge of Compensation heard a great deal of complex testimony regarding the applicable policies.  One key fact was that an agent for Workforce – after the accident with Detres – -sent an email to an Office Manager with Workforce, informing him that there was no coverage for any New Jersey locations. Workforce’s agent was concerned about other potential claims in New Jersey and suggested that the New Jersey location should be added to the policy.  Eventually there was a request to add two New Jersey locations to Workforce’s workers’ compensation coverage effective December 16, 2013, which was several months after the accident to Detres. The premium more than doubled, and the policy was supposed to start December 16, 2013.  However, the amended policy actually listed the same period as the original policy, namely May 1, 2013 to May 1, 2014 (during which time petitioner had his accident). There was no language limiting the effective date of the New Jersey locations to December 16, 2013.

In December 2015, Hanover Insurance and Buy Wise moved for a judgment that coverage must be provided either by Public Service or by the New Jersey Uninsured Employers’ Fund.  The Judge of Compensation eventually ruled that Public Service had to provide coverage for Detres’s injury as well as providing legal representation for Workforce.  The Judge focused on the fact that the New Jersey locations had been added and that they became part of the original policy dating back to May 1, 2013.

Public Service appealed and argued in part that New York law should be applied, and that the amendment to the policy in January 2014 should not be given retroactive effect.  Public Service also argued that Workforce made several material misrepresentations to obtain coverage and therefore should not be given coverage.

The Appellate Division affirmed the decision of the Judge of Compensation on all points.  The Court focused on the fact that the amendment to the policy adding two New Jersey locations was included in the original policy beginning on May 1, 2013.  While Public Service produced emails showing that the amendment was only supposed to take effect in December 2013 (after the work accident), the Court said that the policy was clear and unambiguous in stating that it began on May 1, 2013.  The Court also rejected the argument that Hanover Insurance, which insured Buy Wise at the New Jersey locations, should pay the claim.

The Court reviewed a little known provision on the New Jersey Workers’ Compensation Act, N.J.S.A. 34:15-87, which states that if an insurer wants to restrict liability of the insurer to a specific location, it must ensure that there is concurrent separate insurance for other locations.  The Court read this provision as meaning that Public Service was required to provide coverage to New Jersey’s locations.  The Court relied on Lohmeyer v. Frontier Ins. Co., 294 N.J. Super. 547 (App. Div. 1996), certif. denied, 148 N.J. 461 (1997).  That case held that a trainer thrown from a horse was entitled to coverage even though the stable where he worked was not specified in the stable’s workers’ compensation policy.

Public Service next raised potential fraud by its insured, Workforce, as a defense.  It argued that Workforce misrepresented that it only did business in New York.  The Court accepted that there were misrepresentations but said that there is no defense to coverage simply because the insured made untrue statements to the carrier.

Lastly, the Court rejected the argument that New York law should apply, not New Jersey law.  The Court began by noting that ordinarily the choice of law made by the parties in a contract is followed, unless some other state has a more significant relationship.  The Court also observed that New York law allows a workers’ compensation carrier to exclude specific locations from a policy, but New Jersey law does not.  In the end, the Court felt that New Jersey had a greater interest in resolving the dispute than New York because petitioner resides in New Jersey and was injured in New Jersey.  “While we acknowledge that two New York corporations entered into a contract for workers’ compensation insurance coverage, and the original policy applied only to the New York locations, we are satisfied that application of New York law would be contrary to the fundamental policies and protections of New Jersey’s Workers’ Compensation Law.”  The Court said that New Jersey had a strong interest in ensuring that an employer and its carrier cannot exclude certain locations from coverage.

The Court added, “Although both Workforce and Public Service are New York corporations, they purposefully availed themselves of New Jersey law by doing business in New Jersey and contracting for workers’ compensation coverage of a New Jersey location.”

One question left unanswered is what would have happened if the Public Service policy amendment had correctly stated that its policy covering the two New Jersey locations had been changed to reflect the commencement date of December 2013.  That may have made a significant difference to the Appellate Division.   It is likely that it was an oversight to issue the amended policy using the same original policy dates, but in the end the Court held the carrier to the language of its policy.

The case is also helpful in realizing that misrepresentations by an insured to its carrier will not exculpate the carrier when a worker is injured.  There may be civil remedies against the insured, but an employee is entitled to workers’ compensation benefits because the employee had nothing to do with the misrepresentations.

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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. 

In University Physicians Associates v. Transport Drivers, Inc., A-3350-15T2 (App. Div. August 22, 2017), the Appellate Division considered an argument that Level I and II Trauma Centers should be given different treatment when it comes to billing along the lines that they receive under the fee schedule for No-Fault automobile policies.

The case stemmed from an accident that took place on October 10, 2012 when a pallet dropped from a forklift and seriously injured Manuel Bonilla, a Transport employee.  Bonilla was taken by ambulance to University Hospital, which is a Level 1 trauma center in Newark, N.J.  There Dr. David Livingston, a general surgeon, performed a hip relocation procedure under conscious sedation.  Two days later, Dr. Mark Adams, an orthopedic surgeon, performed an open reduction and internal fixation under general anesthesia to repair an acetabular fracture.  Dr. Livingston billed $10,343 for his services ($952 for a consultation and $9391 for the hip relocation), and Dr. Adams billed $71,374 for his services.

Respondent’s workers’ compensation carrier paid for $3,688.98 for the services of Dr. Livingston and $24,234.50 for the services of Dr. Adams.  The doctors had billed at the 95^th percentile (meaning that on a scale of 100, only five doctors billed more for charges which prevail in the same community).  The carrier reimbursed at the 75^th percentile, which means they paid at a level that was higher than 75 of 100 doctors for charges which prevail in the same community.

The litigation began in the Division of Workers’ Compensation with a Medical Claim Petition, but unlike 99% of such claims which normally settle, this case went to trial.  Dr. Livingston and the hospital CFO testified.  Respondent produced a Certified Coder on its behalf.  The Judge of Compensation, The Honorable Nilda Hernandez, found for the carrier and dismissed the claim petition.  University Physicians Associates appealed.

The Appellate Division noted that the Judge of Compensation expressed a valid rationale for her decision because respondent’s witness, Sandra Corradi, was the vice president of a bill review company retained by respondent’s insurer.  She was truly an expert in coding and said that the industry standard of reimbursement is paid at the seventy-fifth percentile as indexed by FAIR Health for New Jersey.  The Judge of Compensation noted that Dr. Livingston and the CEO were not expert coders.   They did not provide data on what they were paid by Medicare or other systems.

The Appellate Division found the expertise of the coder to be compelling but also addressed the central argument of the University Physicians Associates, namely that the Court should follow No-Fault regulations which exempt trauma services at Level I and II from its fee schedule.   One of the problems with this argument is that workers’ compensation has no fee schedule to begin with in New Jersey.   The Appellate Division also observed that even if the No-Fault law contains this exemption, all charges by Level 1 and II trauma hospitals must still be proven to be usual, customary and reasonable.

In this case, the Appellate Division affirmed the Judge of Compensation “[b]ecause the judge based her determination upon the usual fees and charges that prevail in New Jersey for similar physicians’ and surgeons’ services.”  The Appellate Division arguably did all parties a favor by so ruling, including hospitals.  To do otherwise would have discouraged the use of Level I and II trauma centers as there would be very little predictability on costs if employers and carriers had to devise a completely different repricing approach for such centers.

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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. 

Last week Hurricane Harvey was predicted to cause significant damage to South Texas.  What we know now is that no one was prepared for the catastrophic devastation Harvey would leave in its wake.  It will, no doubt, be several months before we know the full extent of the damage.  We at SLS send our thoughts and prayers to our friends and colleagues impacted by the hurricane.  

Last week I wrote about how employers should not handle reopener claims, namely trying them on reports without expert testimony.  The case of Kalucki v. United Parcel Service, A-3486-15T3 (App. Div. August 15, 2017) demonstrates the winning strategy for employers to adopt in reopener claims.

The case involved an injury that took place many years ago to petitioner, who was a clerical worker for UPS.  The most recent reopener award took place on June 24, 2009.  Petitioner received two separate awards of disability.  In one claim he received an award of 40% permanent partial disability for the left shoulder and neck subject to a credit of 37.5% for a prior compensation award.  In the other claim petitioner received 17.5% of partial total for bilateral carpal tunnel syndrome subject to a credit of 15% for a prior carpal tunnel award.  The petitioner then reopened both awards seeking an increase in both cases.

Petitioner testified at trial that his left shoulder and neck were more restricted, and it was painful to move his neck from side to side.  He said he had problems laying on his left side.  He experienced shoulder aches and numbness.  He also said that he lost grip strength in his left hand.

Both parties brought in experts to testify.  Petitioner’s expert had examined him four times in the past.  This expert was not a board certified orthopedic physician.  The expert found tenderness and spasm in the left shoulder, limited range of motion, and tenderness in the wrists.  The expert increased his estimate by 25% of the right hand, 25% of the left hand, and 30% in the neck.  The overall disability estimates, when combined, exceeded 100%.

Respondent produced a board certified orthopedic physician who had examined petitioner once before in 2007.  Respondent’s physician actually ordered an x-ray of the shoulder and found no objective findings of any significant pathology in the shoulder or changes in the neck.  In fact, the orthopedist said that petitioner’s range of motion had improved from the time of the last exam.  Overall petitioner had no increased disability with respect to the shoulder, neck or bilateral carpal tunnel.  The expert did concede negative grip strength in the right hand, but he found no atrophy and no decreased sensation.

The Judge of Compensation ruled that there was no objective evidence of increased disability and dismissed the reopeners on the neck, shoulder and hands.  He noted that the only evidence petitioner produced was subjective complaints.  That did not meet the standard of Perez v. Pantasote, 95 N.J. 105 (1984).  Significantly, the Judge observed that petitioner had not seen a doctor or received any treatment since the time of the last award.  Further, petitioner was able to continue to perform his full-duty job without the need of any accommodations. Finally, the Judge stated that respondent’s expert was more qualified than petitioner’s expert.  The Judge was critical of the petitioner’s expert: “The Court finds that claimant’s expert’s finding of an over 100 percent disability when combined, does not ring true based on petitioner’s continued full-duty employment.”

Petitioner appealed the dismissal of the reopeners and argued that the Judge should not have given greater weight to respondent’s doctor based on credentials.  The Appellate Division disagreed and ruled that it was entirely appropriate for the Judge of Compensation to consider the added credentials of the respondent’s doctor, based on his Board Certification, as a factor in credibility of the experts.  The Appellate Division also commented that much of petitioner’s testimony at trial on this reopener was exactly the same as what he testified to at the time of the prior award. The Appellate Division said,  “As just one example, claimant’s expert testified that petitioner’s range of motion in his neck on examination in 2011 was limited by twenty degrees, as compared with a higher limitation of twenty-five percent revealed on examination in 2007.”  Finally, the Court commented that petitioner continued to work full-time and never even saw a physician for treatment since the time of the prior award, taking only over-the-counter medications since then.

For these reasons the Appellate Division affirmed the Judge of Compensation’s dismissal of these claims.  The case illustrates the proper way to handle a reopener claim.  Respondent did everything right here, retaining a board certified orthopedic physician, comparing the complaints with those at the time of the prior settlement, and emphasizing the lack of objective evidence produced by petitioner.   This case provides a textbook case on how reopener claims can be won by employers when handled wisely.

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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 best defense against an occupational disease claim is often the statute of limitations.  That is how the employer won in Mara v. United Parcel Service, A-3691-15T4 (App. Div. August 4, 2017).

The case involved a package car driver named Craig Mara who began working for UPS in 1983.  He filed a claim petition in 2011 contending that his bilateral knee replacement surgery in 2010 was caused by decades of physical stressors on the job.  He argued that he did not realize his knee condition was work related until after he had his surgery, and since he filed within two years of the surgery date, he argued that his filing was timely.

UPS countered with evidence that Mara knew his condition was related to his work in 2006.  Mara had long-standing knee problems, including prior left knee surgery 10 years before he testified.  His personal chiropractor, Dr. Ruth, had been treating Mara for knee pain since 2003 and told him that his condition was work related in 2006.  He admitted in his testimony that he revealed to Dr. Ruth that driving at work and moving around at work caused him knee pain.  He also told Dr. Ruth that his right knee was hurting due to work activities.

The Judge of Compensation found that petitioner’s claim was not timely filed, and the Appellate Division affirmed.  The Court said, “Considerably more than two years prior to his 2011 petition, Mara was well aware that the problems in both his knees were work-related.  Long before the 2010 knee replacements, the problem with at least one knee was sufficiently severe as to require surgery to repair a torn meniscus.”

The Court also rejected petitioner’s alternative argument that his employer lulled him into believing that his knee condition was work related by having the surgery paid for by employer sponsored health insurance.  The Judge of Compensation correctly pointed out that the employer’s health insurance was separate and distinct from its workers’ compensation policy.

The case makes sense because it directly falls within the language of N.J.S.A. 34:15-34, which requires that a compensation petition must be filed “within 2 years after the date on which the claimant first knew the nature of the disability and its relation to the employment.”  The defense was able to show both elements:  that the petitioner knew the nature of his disability and thought the condition was work related.  UPS was able to prove the defense through prior medical records, particularly prior chiropractic records.  It is absolutely essential in occupational orthopedic claims that employers obtain prior chiropractic, family doctor and prior orthopedic treatment records because those records often build the entire defense to the claim, just as in this matter.