State News

The New Jersey Division of Workers’ Compensation has thousands of medical reimbursement claims in various stages of negotiation and litigation.  Few cases actually get tried because most medical providers do not want to come to court to defend their charges. The vast majority of cases get settled through negotiations.  One recent case, however, involved testimony by a trauma surgeon to obtain reimbursement at the 95th percentile of his charges in the matter of University Physicians Associates v. Transport Drivers CP# 2013-18665.  The case was decided on March 17, 2016.

The case arose from a serious injury to the hip of Mr. Manuel Bonilla who received a workers’ compensation award.  Dr. David Livingston, the Chief of the Trauma Division of University Physicians Associates (UPA), came to court to testify that the insurance carrier, Patriot Risk Services, unreasonably reduced his charges.  He said he performed diagnostic tests and determined that Mr. Bonilla suffered a dislocated hip, crush injury and left acetabular fracture in a 2012 work accident.  He repaired the dislocated hip under conscious sedation without surgery on an emergency basis.  He documented his care as CPT code 27250 and the rate of $9,391. He was paid $3,188.75 and claimed that Patriot Risk owed him $6,202.25.   CPT Code 27250 reads, “closed treatment of hip dislocation, traumatic without anesthesia.” He said that during 2012 he performed three procedures under this code and got paid in full by two different PIP carriers for $9,391. Dr. Livingston also charged $952 for his consult under CPT Code 99245 with modifier code 25 (meaning considerable time was expended). He was paid $500.23 and sought the balance of $451.77.

Following the closed reduction, another surgeon at UPA performed an open reduction and internal fixation to repair the acetabular fracture.  This surgeon, Dr. Adams, did not testify in the case.  He documented his care under CPT Code 27228 at a rate of $71,374 and was paid $24,234.50.  He sought the balance of $47,139.50.

The trial consisted of testimony by Dr. Livingston, Simi Bakshi, the Chief Financial Officer of UPA, and Sandra Corradi (Certified Professional Coder) for respondent.  Dr. Livingston emphasized that he was the Chief of Trauma at a Level One Trauma Hospital, the only one in the northern part of the state.  He said that the New Jersey Department of Banking and Insurance approved a modifier entitled “TS” (trauma service) exclusively for use on PIP charges, but he offered no evidence to prove this point.  He also admitted that CPT Code 25250 is reimbursed at a rate of $150.48 by Medicare.  The remainder of usual and customary rates in New Jersey range from the 50th percentile with payment of $2,376 to the 95th percentile with payment at $9,391 (the amount he contended he should have been paid).

Ms. Bakshi testifed for UPA but admitted that she is not credentialed as a professional coder.  She had no information in court regarding allowed billings by PIP, Medicare or Medicaid.  She stressed that UPA always bills at the 95th percentile of allowed amounts.  The Honorable Nilda Hernandez, Judge of Compensation, did not find her testimony to be helpful on the issues in the case.  However, Judge Hernandez did credit the testimony of Sandra Corradi as a Certified Professional Coder since 1995. Corradi said that she utilizes her certification in her job as Vice-President of bill review, responsible for operating and overseeing about 85,000 workers’ compensation claims.  She said that her job with MCMC, a vendor company that reviews workers’ compensation medical claims, requires review of the applicable codes to determine the appropriate amount of payment.  MCMC uses Fair Health Solutions for value guidance in states that do not have fee schedules (New Jersey, for example).  Fair Health Solutions provides information by geographic region based on zip codes for charges billed and paid.

Judge Hernandez noted that the New Jersey statute requires that reasonable charges must be “based upon the usual fees and charges which prevail in the same community for similar physicians’, surgeons’ and hospital services.” N.J.S.A. 34:15-15. In this case, Ms. Corradi’s company forwarded their assessment to Patriot Risk, which paid the UPA doctors at the 75th percentile.   She also noted that any claim in excess of $25,000 requires review by a nurse, who compares the CPT codes billed against the correlating documentation.  Here the charges were compared with other similar services in the Newark, N.J. zip code.

On cross examination, Ms. Corradi was asked whether her company’s agreement with Patriot Risk contained any incentives for reducing payments.  Ms. Corradi indicated that there were no such incentives.  Her company was paid $8.50 per reviewed submitted bill.

Judge Hernandez rejected the argument of UPA that the decision should turn on only those payments by other commercial carriers with Medicare and Medicaid being disregarded.  She relied on Coalition for Quality Healthcare vs. New Jersey Department of Banking and Insurance, 358 N.J. Super. 123 (App. Div. 2003) for the proposition that paid fees are a more accurate measure of value than billed fees.  “So far as this is applicable to workers’ compensation, I accept that it is appropriate to use paid fees rather than billed fees to make a determination as to the usual and prevailing fees in billing.” Judge Hernandez was persuaded by the testimony of Ms. Corradi and her expertise.  The Judge noted that UPA failed to provide expert testimony to the contrary.  She also found that there is no use of modifiers for physicians’ credentials to warrant a higher amount of payment.  She dismissed the claim with prejudice.

This case is of great importance to practitioners, employers, medical professionals, and carriers because it provides a very useful template for how to handle trials on medical reimbursement claims.  One key element in this case was the use of expert testimony.  Patriot Risk wisely produced an expert in coding, while UPA did not.  Another key aspect of this case is that the Judge of Compensation did not buy the argument that a doctor’s credentials justified an enhanced percentile or modifier.  In this case, Dr. Livingston emphasized his credentials at trial, noting that in addition to being the Director of the Trauma Center, he was a Full Professor at Rutgers School of Medicine.  He contended that these credential justified his practice of always billing at the 95% percentile.  The Judge did not accept that there was any legal standard requiring a use of modifiers based on physician credentials.  The use of a modifier is based more on additional time expended.

What this case shows is that trials on medical reimbursement claims require thought and planning.  One does not just submit bills into evidence and make a request of the judge for payment.  Detailed testimony is required.  The party with the better expert will likely prevail.  For employers the take-away should be that when large amounts are at stake, parties should retain appropriate experts.  In this case, Patriot Risk paid not a cent more after trial than it originally paid.

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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. 

Hospice Family Care v. Joseph Allen, dependant spouse of Suzanne Sharp Allen, deceased
Released June 10, 2016

This case was on appeal from the Madison County, Alabama Circuit Court who ruled the employee’s dependant spouse was owed burial and death benefits in accordance with the Alabama Workers’ Compensation Act. The issues brought up on appeal by the employer were 1) Was the claim barred by the coming and going rule, 2) Was the claim barred due to the employee deviating from her employment, 3) Was the employer entitled to set-off for certain insurance benefits provided by the employer and 5) Was the trial court correct in awarding $6,500.00 in burial expenses.

The employee was a nurse on the day shift from 8:00 a.m. to 4:30 p.m. Her responsibilities included driving to patient’s homes, recording a voice message for the benefit of the night nurse who would take over for the patient, and then entering billing codes and charting on each patient within 24 hours of the visit. The billing codes, voice message and charting could be done anywhere, and employees were encouraged not to come back to the office to chart, with a laptop provided by the employer. As a part of the employment the employee received life and accidental death & dismemberment insurance paid for by the employer. The employee was also reimbursed milage for travel but not the mileage from the last patient’s home to the employee’s home. The employer required that all day shift nurses be available, should a patient call, until 4:30, unless they submitted a leave of absence form.

On February 3, 2014, the employee in this case had called her spouse and informed him she was leaving her last patient’s home and on her way to their home. The employee informed her spouse that she was stopping at the pharmacy to pick up a personal prescription and then would be home. After stopping at the pharmacy the employee was on her way home and involved in a motor vehicle accident that resulted in her death. The accident occurred before 4:30 p.m. At the time of the accident she had not recorded the voice message for the night nurse nor had she completed her billing entries, voice message or charting.

Testimony by the employee’s spouse at trial established that it was common for the employee to come home and work several more hours, which included phone calls to patients, a phone call to the employer and charting. The employer acknowledged that this was actually encouraged that they do this from home or some other location other than the office. The employer also acknowledged that if a nurse, a salaried employee, got home before the end of their shift they were still paid the same. The employer further acknowledged that employees were allowed to complete personal errands during their shift, such as picking up a prescription without requesting permission or leave, they just had to be available to meet a patient’s needs until the end of their shift.

The Alabama Court of Civil Appeals ruled that the while the coming and going rule may be applicable, the subject case fell within an exception to the rule, “when and employee, during his travel to and from work, is engaged in some duty for his employer that is in furtherance of the employer’s business.” See Tucker v/ Die-Matic Tool, Co., 652 So. 2d 263, 265 (Ala. Civ. App. 1994). The Court of Appeals ruled that at the time of the accident the employee was still acting in furtherance of the employers business affairs and the deviation to pick of the prescription was not substantial and had ended at the time of the accident, therefore, the accident arose out of and occurred in the course of her employment. The factors they pointed to are as follows: 1) The employee was required to be available until 4:40 p.m. and the accident happened before that; 2) The employer furnished the employee with a cell phone and laptop; 3) The employer encourage the employee to do charting from her home or another location and actual discourage returning to the office to do it; and 4) The employee had not requested to leave before 4:30 p.m. as required if she wanted to do so. Therefore, they found the employee’s journey home was in furtherance of the employer’s business and she was still fulfilling her duties.

In addressing the set-off issue the Alabama Court of Civil Appeals pointed out that the employer was arguing that workers’ compensation was not designed for double recovery and for the employee’s dependants to receive the employer provided death benefits, as well as workers’ compensation death benefits, would amount to double recovery. The Court said that was true as to third party liability cases. The employer’s argument on this issue focused on §25-5-57(c)(1), which says if the employer paid for the benefits or plan, the employer may reduce the amount of benefits paid under worker’s compensation pursuant to the amount of benefits paid under the disability, retirement or another plan providing for sick pay, and/or §25-5-57(c)(3), which says if an employer continues salary or similar benefit of an injured employee during the benefits period, the employer can set of both of which reference an employer being entitled to a set off in weeks against the compensation owed. As for §25-5-57(c)(1), the Court of Appeals stated it did not apply because the life insurance and accidental death benefits were not a disability plan, retirement plan or another plan providing for sick pay. As for §25-5-57(c)(3), the Court of Appeals stated the plain language of the statute applied to an “injured employee” during weeks salary or similar benefits were continued while the employee could not work, not a deceased employee.

As to the issue concerning the amount of burial expenses, the employee conceded the trial court was in error awarding $6,500.00 so the Court of Appeals did not address it and instructed the trial court to award the appropriate amount under the Act.

MY TWO CENTS

As far as the burial expenses, I would suspect that the amount was reduced to $3,000.00 because that was the applicable amount at the time of the accident, even though $6,500.00 was the applicable amount at the time of the trial.

ABOUT THE AUTHOR

This article was written by Joshua G. Holden, Esq. A member of Fish, Nelson & Holden, LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in worker’s compensation and related liability matters. Mr. Holden is AV rated by Martindale-Hubbell, which is the highest rating an attorney can receive. Holden and his firm are members oft he National Worker’s Compensation Defense Network (NWCDN). The NWCDN is a national network of reputable law firms organized to provide employers and insurers access to the highest quality of representation in workers’ compensation and related employer liability fields. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Holden by emailing him at jholden@fishnelson.com or calling him directly at 205-332-1428.

A national conversation on workers’ compensation took place this month. It was a two day event
where regulators, judges, insurance professionals, academics, union reps, lawyers, and medical
professionals met to correct flaws in the worker’s compensation system. It was so productive, that
a follow up meeting is planned for some time in June or July to take place via telephone. While
there were some complaints that the meeting was secretive, a list of attendees and notes from the
event will be published soon.

An investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Texas State
Fire Marshal’s Office revealed that the April 2013 explosion at a fertilizer plant in West, Texas was
intentionally set. This tragic fire claimed 15 lives and injured hundreds more. The operator of the
plant did not carry workers’ compensation insurance; however, because the fire was the result of an
intentional act of a third party, the carrier would not have been liable even if the operator had
coverage.

After receiving comments from system participants, Commissioner Brannan approved a revised
Compound Medications Plan-Based Audit on April 28, 2016. The audit will look at prescribed
compounds that were filled from September 1, 2014 through August 31, 2015. The goal of the audit
is to: (1) promote the delivery of quality health care in a cost-effective manner; (2) ensure that
doctors adhere to the ODG and medically accepted standards of care when prescribing compound drugs; and (3) determine the appropriateness of medical decision making regarding prescription of
compound drugs.

Our little birds tell us that Hearing Officer Tom Hight has replaced Cheryl Dean as the North Texas
Team Lead. Congratulations, Judge Hight!
We’ve also heard a rumor that Brenna Arredondo, who rose to prominence as a Customer Service
Representative, is currently training to be the new permanent Benefit Review Officer in the Austin
Field Office. We’re saddened to lose Ms. Arredondo in the customer service role, but we look
forward to working with her as a Benefit Review Officer.

A claimant cannot bring a declaratory judgment action with an action for judicial review. The
claimant filed suit against the carrier seeking judicial review of the Division’s determination that
her injury was no longer compensable based on an injurious practices defense. She also sought a
declaration that the injurious practices defense is not a proper defense under the Workers’
Compensation Act. The claimant brought suit against the carrier, but the Division intervened in the
suit as a necessary party to the declaratory judgment action, which it considered “an impermissible attempt to control state action.” The Court dismissed the declaratory judgment action and held that
it was barred by the doctrine of sovereign immunity. The Court noted that the claimant did not
challenge the validity of a statute, but rather its interpretation.
Tex. Dept. of Ins. v. Green, 2016 WL 2745063 (Tex. App.—Houston [1st Dist.] 2016).
A different Court of Appeals has also held that a claimant cannot bring a declaratory judgment
action with an action for judicial review. The claimant sought judicial review of the Division’s
determination that he was not a covered employee at the time of injury and that his injury was not
compensable. He also sought declarations that he was a covered employee, regarding various
provisions of the client contract at issue, and that a worker becomes a covered employee when
certain criteria are met. The claimant brought suit against the carrier, the Division, and the
Commissioner for all claims asserted. The Court held that the judicial review claims were barred by sovereign immunity as against the
Division and the Commissioner, and that no exception applied. Concerning the declaratory
judgments, the Court held that sovereign immunity bars claims against the state that seek
interpretation of a statute, as opposed to challenging the validity of the statute, and the claimant only
sought interpretation of a statute. It held that the claims against the Commissioner did not allege an
ultra vires act, as they challenged a discretionary act only – the decision to deny the claim for
compensation, and were thus barred. It held that, even ignoring sovereign immunity, the remedies
sought by the declaratory judgments were redundant, and in fact identical, to the relief sought in the
judicial review action. Lastly, the Court held that a declaration sought regarding when any worker
becomes a covered employee is not ripe for adjudication, as it concerns the rights of other workers
not before the Court. All claims against the Division and the Commissioner were dismissed.
Texas Dept. of Ins. v. Brumfield, 2016 WL 293380 (Tex. App.—San Antonio 2016).

The Labor Code limits an injured worker’s eligibility for income benefits to 401 weeks from the date
of injury. The injured worker in this case did not receive a certification entitling him to IIBs until
423 days after the date of injury. The carrier argued that he was thus ineligible to receive any IIBs.
The injured worker argued that the statute should be interpreted to mean that an injured worker
cannot receive more than 401 weeks of income benefits total. The Court sided with the injured
employee and found that the maximum number of weeks of income benefits, including TIBs, IIBs,
and SIBs, that an injured worker can receive is 401, but that benefits can be paid after 401 weeks
from the date of injury.
Tex. Mut. Ins. Co. v. McGahey, 2016 WL 2753981 (Tex. App.—San Antonio 2016).

The time limit to seek judicial review is mandatory, and failure to seek judicial review before the
deadline with deprive a court of jurisdiction to hear the claim. The claimant appealed an adverse
Decision & Order to the Appeals Panel, who affirmed the Hearing Officer. The claimant then filed
a bad faith action in district court, which was dismissed. The claimant did not appeal the dismissal,
but several months later filed a new action seeking judicial review of the Decision & Order.
Because the claimant did not file her action for judicial review within 45 days from the date the
Appeals Panel’s determination was mailed to her, the trial court lacked jurisdiction to hear her claim
for judicial review.
Baldwin v. Zurich Am. Ins. Co., 2016 WL 2907939 (Tex. App.—Austin 2016).

The exclusive remedy defense is alive and well. An injured worker won an $8.7 million judgment
at trial against his employer. The plaintiff was hired by Job Link, who assigned him to work for
Tractor Supply. He was injured and brought suit against Tractor Supply. The Court found that he
was a temporary employee of Tractor Supply, as he was working on their premises in the furtherance
of their day-to-day business, his injury was caused by his work for Tractor Supply, he was trained
by, supervised by, and received his assignments from Tractor Supply employees.
The Court next considered whether Tractor Supply, who did not carry their own policy for their
permanent employees, was covered under Job Link’s policy. The court found that they were
covered, because Job Link’s workers’ compensation policy contained a blanket Alternate Employer
Endorsement and they provided the carrier with a list of covered client companies to the carrier
listing Tractor Supply and describing the Plaintiff’s job duties. The Court reversed the award of
damages and held that Tractor Supply was entitled to the exclusive remedy defense.
Tractor Supply Co. of Texas, LP v. McGowan, 2016 WL 1722873 (Tex. App.—Waco 2016).