State News

The New Jersey statute permits claimants who receive an order approving settlement to reopen claims for additional medical, temporary or permanent disability benefits.  In Holowchuk v. O’Sullivan Menu Publishing, A-5235-14T3 (App. Div. April 6, 2017), the petitioner, Robert Holowchuk, injured his low back lifting two, five gallon drums of chemicals in 2007.  He received an award of 35% for herniated discs at L3-S1 with radiculopathy.

In 2013 Holowchuk moved to reopen his award of partial permanent disability.  He testified at trial that he was unemployed for some time after the settlement but got a job in 2013 for seven months delivering small car parts.  He was laid off from that job and then got another job working 30 hours a week using computer files to set up printing plates for press runs. He did very little lifting in that job.  He testified that his sleep and marital relations both suffered and the numbness in his left foot spread to his entire foot and calf.  He also said he regularly experienced a dropped left foot.

Petitioner’s original expert reexamined petitioner and found on the physical exam increased lack of flexion and restriction on straight leg raising.  The doctor noted a flattening of the normal curvature of the petitioner’s spine and chronic spasm.   She noted that the petitioner’s lower lumbar musculature was harder than it was at the start of the examination.  The doctor took note of petitioner’s complaints that he could no longer do lifting, bending or twisting and would likely need ongoing pain management.  There was no mention of any comparison between old MRIs and new studies, leaving the reader to question whether any new studies were done.  As a result of her examination, petitioner’s expert found an increase of 10% from 75% partial permanent disability to 85%.

Respondent’s expert found no objective proof of worsening.  He noted that petitioner had been recommended for potential surgery in 2013 but it did not take place.  The respondent’s doctor conceded that petitioner had 15 to 20 degrees less range of motion on the left in a straight leg raise compared to the last exam in 2010.

The Judge of Compensation awarded an increase to petitioner of 10%, which was the estimated increase from the expert for petitioner.  For someone with maximum rates, that would amount to approximately $43,000.

Respondent appealed and argued that there was no demonstrable objective evidence supporting an increased award.  The Appellate Division noted petitioner’s testimony that his pain was no longer stable and had sharpened and become more frequent.  The Court also noted the complaint about a dropped left foot.  The most interesting part of the decision is the Appellate Court’s acceptance of the argument that range of motion testing by petitioner’s expert satisfied objective medical evidence:

Petitioner’s expert found objective evidence to confirm those complaints, marked flattening of the lumbar curves, muscle spasm across the flanks, gluteal, posterior thigh and iliac crest areas on both sides and appreciable hardness of the muscles of petitioner’s lower lumbar area following manipulation.

 The Appellate Division noted that the Judge of Compensation refused to put this case through on a Section 20 basis.  The Court affirmed the reasoning of the Judge of Compensation and held that the record supported the findings of the Judge of Compensation that the physical exam of petitioner’s expert satisfied the objective medical evidence requirement.

The case challenges some prior unreported cases that seemed to suggest that range of motion testing is variable and not truly objective. Had there been subsequent MRIs that appeared identical to prior MRIs, it would have interesting to see whether the same result would have been reached.

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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 July, we informed you that Commissioner Brannan had authorized for contested case hearings to be held in the Metro Center Building (commonly referred to as Austin Central) in addition to the Austin Field Office. The expansion was originally to have been a temporary solution intended to accommodate a surge in the number of workers’ compensation claims filed in Austin area and alleviate congestion on the Field Office docket. 

Now, it appears that not only will hearings be held in Austin Central on a permanent basis, the Field Office itself may become a thing of the past.  The DWC is rumored to be planning a complete closure of the Field Office in September 2017, at which point all Austin workers’ comp cases will be heard in the Central Office, presumably by two of the three traveling judges who are based there. 

Plans are under way to renovate the Metro Center Building to accommodate not only two new hearing rooms, but also offices for Benefit Review Officers and ombudsmen, who will also be relocated. 

The Division has finally found a replacement for Judge David Northup following his retirement in August 2016.  Mikhail Nagorny has been hired as the newest Hearing Officer in San Antonio.  Prior to coming on board with the DWC, Judge Nagorny served in the Soviet Navy from 1971-1976, then attended Moscow State University, where he graduated with a Master’s Degree in International Relations and Arab Studies.  After graduating from South Texas College of Law in 1999, Mr. Nagorny was employed by the Malaise Law Firm in San Antonio, where he practiced workers’ compensation exclusively. 

The vacancy in the Dallas Field Office has likewise been filled.  Latorya Fowler recently signed on to replace Judge John Bell, who departed in December 2016.  Though she is new to the realm of workers’ compensation, Judge Fowler brings with her extensive adjudicative experience. Following her graduation from Southern Methodist Law School in 2006, Ms. Fowler served as a pro tem judge in Fort Worth’s municipal courts. 

Meanwhile, the statewide hiring freeze seems to have impeded the DWC’s efforts to replace their most recently departed Hearing Officer.  Judge Marilyn Allen left the Division in January 2017 to accept employment with a carrier firm, bringing the number of Hearing Officers in the Houston West Field office down to four. 

The DWC conducted free training in its Houston East Field Office on March 30 and 31 for stakeholders interested in learning more about the Division’s self-created “two-step dispute resolution process.”  The goal of the pilot program is to reduce the number of managed cases (those for which a hearing has been held but no decision can yet be issued) by bifurcating the dispute into two hearings: the first for extent of injury issues only, the second for maximum medical improvement and impairment rating.  (The DWC has yet to reveal how two hearings is any more expeditious for system participants than a managed case would be, however.)   

Nevertheless, the DWC asserts that the pilot program, which began in Weslaco and then progressed to Dallas, has been such a success that it will now be expanded throughout the state.  For the time being, the bifurcated CCH program remains voluntary.  How long it will remain so is uncertain. 

Effective December 1, 2016, the Occupational Safety & Health Administration (OSHA) incorporated into 29 C.F.R. 1904.35 two new provisions regarding retaliation against workers who report workplace injuries.

Section 1904.35(b)(1)(i) clarifies that the process for reporting an injury must be a reasonable one.  To avoid a violation, employers must demonstrate both that there is a procedure in place for reporting work injuries, and that the procedure is not unduly burdensome on the injured worker. OSHA would likely deem it retaliatory for an employer to adhere to a strict, pre-determined deadline by which an injury must be reported in instances where an employee could not realistically have been expected to have done so.

Section 1904.35(b)(1)(iv) prohibits three specific forms of retaliation against employees for notifying an employer of an injury. First, an employer may not initiate disciplinary action against an employee merely for reporting an injury. Disciplining an employee for violating any safety procedures that resulted in an injury is still permitted, but not if it is used as a pretext for punishing a worker for reporting an injury. OSHA will investigate whether other employees have been similarly disciplined for the same infraction or whether the employer had a legitimate business interest for punishing the employee. 

Also forbidden under Section 1904.35(b)(1)(iv) is the use of workplace incentive programs as a means for penalizing those who report work injuries.  Though incentive programs that encourage safe workplace behavior are permissible, withholding the benefits of those programs simply because a work injury has been reported is not.  Such actions would effectively punish a worker for reporting and injury and thereby serve to dissuade timely notification of injuries. 

Finally, drug-testing as a form of discipline against those who report an injury is forbidden, but it may be used to investigate the cause of a workplace injury.  The new rule requires an objectively reasonable basis for drug-testing employees who report work injuries, and the employer must have a legitimate reason to believe that an employee’s drug use contributed to the injury.  OSHA will also consider whether other employees involved in the injury event were similarly tested.  Testing performed in compliance with a state or federal regulation would not be considered retaliatory. 

Most importantly for purposes of workers’ compensation disputes, OSHA would likely find it a violation to test an employee whose drug use could not reasonably have caused or contributed to the work injury. 

The Appeals Panel has once again broadened their definition of “doctor” under Section 401.011(17) of the Texas Workers’ Compensation Act, extending that designation to the holder of a Ph.D. While acknowledging in Appeal No. 162270 that a Ph.D. is not a licensed medical doctor, the Appeals Panel concluded that a cancer research biologist with a Ph.D. in biochemistry and biophysics was qualified to testify to more than just his research; his opinion on causation must also be considered an expert medical opinion, even though a Ph.D. is not listed among those healthcare practitioners (a doctor of medicine, osteopathic medicine, optometry, dentistry, podiatry, or chiropractic) identified in Section 401.011(17). 

The decision expands on APD No. 150372, in which it was determined that even though the definition of “doctor” in does not include physical therapists, “medical evidence may be generated by a number of sources other than by individuals who are defined as ‘doctors’” for the purpose of establishing a causal link between a claimed condition and a work injury. 

For those who thought that the Supreme Court of Texas had issued the final word on bad faith insurance lawsuits inTex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012), proposed legislation seeks to reopen the discussion.  As a reminder, inRuttiger the Texas Supreme Court determined that a cause of action under Insurance Code Section 541.060, pertaining to unfair settlement practices, was unnecessary in light of the rigorous administrative procedures and remedies laid out in the Workers’ Compensation Act.  It seems Representative Nicole Collier (D) disagrees. She introduced H.B. 499 in the 85^th legislature, which seeks to add an unfair settlement practices cause of action to Section 541.060 that reads: “This section applies to a claim by an insured or beneficiary under an insurance policy for workers’ compensation insurance.” If passed, the change would recreate the bad faith cause of action for workers’ compensation claimants. 

Last week, a Dallas federal grand jury returned an indictment charging eight individuals – including three doctors active in the Texas Workers’ Comp System – with defrauding the federal workers’ comp program through excessive, unscrupulous, and fraudulent prescriptions for compound drugs. The indicted defendants included doctors Leslie Benson, Michael Taba, and Kevin Williams, as well as James Noryian, David Nourian, Christopher Rydberg, Sherri Mofid, and Leyla Nourian. Each individual was charged with one count of conspiracy to commit health care fraud. James Noryian, David Nourian, Rydberg, Mofid, and Leyla Nourian were also charged with one count of money laundering.

According to the indictment, from May 2014 to March 2017, James Noryian, David Nourian, and Rydberg operated Ability Pharmacy, Industrial & Family Pharmacy, and Park Row Pharmacy (the Pharmacies), and used the Pharmacies to file claims for reimbursement for compound drugs (creams used to treat, scars, wounds, and pain) with the federal workers’ compensation program. The federal reimbursement rates provided up to $28,000 per container for the compounded drugs.

The doctors in the scheme were paid by Mofid, Rydberg, and Leyla Nourian to refer patients to the Pharmacies and to encourage prescriptions for compound drugs. Payments were presented as loans in effort to conceal their purpose as a kickback for sending prescriptions to the pharmacies. James Noryian is alleged to have also paid doctors make unnecessary and excessive prescriptions through payments, free rent, and by other means.

Dr. Taba allegedly allowed James Noryian and employees from Ability to work with Dr. Taba’s staff to fill out prescriptions for the compound drugs, to stamp Dr. Taba’s signature on the prescriptions, and to then follow up with patients to encourage them to obtain prescriptions from the Pharmacies. Additionally, Dr. Taba allegedly instructed his employees to review the patient schedule each day and to write prescriptions for compound drugs for each patient. Each prescription was identical and not specifically tailored to any individual’s needs. Dr. Taba allegedly received payment for his participation in the scheme.

Dr. Benson allegedly enjoyed a rent-free office as well as other inducements and payments courtesy of James Noryian. In exchange, Dr. Benson wrote prescriptions for compound drugs – whether the patients needed the drugs or not – and referred patients to the Pharmacies.

Dr. Williams allegedly wrote prescriptions for wound and scar medications even though the patients had not had surgery. Additionally, Dr. Williams is alleged to have written prescriptions with the intent that refills be automatic, and to have received prefilled out prescription forms from James Noryian. The indictment alleges that Dr. Williams alone was responsible for $90 million in prescriptions being billed to the federal workers’ comp program.

The indictment is just the first step in the process toward trial. We’ll keep you posted on the outcome.

In our March 2016 newsletter, we voiced our concerns regarding the rise in the number of compound drug prescriptions, especially the so-called “pain creams,” which generate substantial cost to insurers but little to no benefit to injured workers.  As a reminder, compound drugs are not recommended under the ODG Treatment Guidelines as a first line therapy.

Now, it seems the 85th Texas Legislature has taken up the cause. House Business & Industry Chair Rene Oliveira (D) has introduced an amendment to Section 408.028, pertaining to Pharmaceutical Services, which would require the Division to develop rules for the exclusion of compound pharmaceutical medications from the closed formulary. Thus far, no companion bill has been proposed.

Indiana Court of Appeals Upholds Order of TTD Owed for Period During Which Employee Terminated for Misconduct 

The Indiana Court of Appeals has clarified an issue long disputed by the Indiana worker’s compensation community.  That is, whether TTD (temporary total disability)  is owed when plaintiff is unavailable for work for reasons unrelated to the injury per I.C. 22-3-3-7(c).  In this case employee had been terminated for misconduct.  Employee contended he could not do the fully duty work he had been released to do resulting in a verbal altercation with his supervisor in which he cursed and threw an ice pack.  The court affirmed the Board decision ordering payment of temporary total disability benefits from the date of injury to the date of decision and ongoing.

In Masterbrand Cabinets v. Waid, Court of Appeals Case No. 93A-1609-EX-2228, the court confirmed that I.C. 22-3-3-7(c), allows termination of TTD benefits where the employee is unable or unavailable to work for reasons unrelated to the injury (i.e., termination of employment for misconduct), but noted that the statute does not require the work to be for the same employer as when the employee was injured.  Rather, the court determined that even though the employee was terminated from his employment, the relevant inquiry is whether his inability to work, even for other employers, was related to his injury.  Since his inability to work was related to his injury, and his termination occurred prior to having received any TTD benefits (there was no “termination of benefits” involved), Waid’s termination for misconduct did not prevent him from receiving TTD benefits as a result of his injury.  The court’s language stating the relevant inquiry is whether the inability to workany job is related to employee’s injury would appear to apply to instances where employee’s work has been terminated with the relevant employer regardless of  the basis and whether voluntary or involuntary.