State News

Eight medical professionals and their associates have been charged in federal grand jury indictments
involving a workers’ compensation kickback scheme in Southern California. The bribery plot
resulted in $25 million in improper claims for medical services and devices that were billed to
California Workers’ Compensation insurance companies. Three federal indictments were
announced by the U.S. Attorney’s office, San Diego District Attorney’s office, FBI, and the
California Department of Insurance against the purported conspirators. The indictments allege that
the defendants, which include a chiropractor, a radiologist, a medical equipment provider, a medical
clinic administrator, and a medical marketer, plus six corporations with which they did business,
paid or received tens of thousands of dollars for referrals of workers’ compensation patients to
therapy companies and a medical equipment provider, who, in turn, paid for every patient referral.
The chiropractors prescribed medical equipment, referred patients for MRIs and X-Rays, and
ordered specialized treatments such as Shockwave therapy, which ostensibly uses low energy sound
waves to initiate tissue repair. U.S. Attorney Laura Duffy called the indictments “the first wave of
charges in what we believe is rampant corruption on the part of some physicians and chiropractors.”
Although the amount pocketed by the medical professionals for any given referral could appear
somewhat de minimis (ranging between $50 and $100), in the aggregate the bills submitted by the
defendants to insurers totaled tens of millions of dollars. The Commissioner of the California
Department of Insurance, Dave Jones, called the practice “insurance fraud, which adds crippling
costs to California’s workers’ compensation system.” He elaborated, “When medical providers
defraud insurers, those costs are passed on to California businesses and consumers.

Hey, Speaking of Rule 127.130... – The claimant suffered an eye injury in January 2011, which he
alleged aggravated his pre-existing glaucoma. The designated doctor assigned to examine his eye
condition was a plastic surgeon, not an ophthalmologist, and the claimant argued that as such he
lacked the experience and qualifications necessary to evaluate an eye condition. To support his
argument, the claimant relied on Rule 127.130(b)(6), which states, “To examine injuries and
diagnoses relating to the eyes, including the eye and adnexal structures of the eye, a designated
doctor must be a licensed medical doctor, doctor of osteopathy, or doctor of optometry.” The Court
of Appeals held that Rule 127.130(b)(6) did not apply in this case because that provision pertains
only to injuries sustained on or after January 1, 2013. However, the Court clarified that even if Rule
127.130(b)(6) did apply, the designated doctor, as a licensed medical doctor, would not be
automatically precluded from evaluating an eye injury merely because of his specialty as a plastic
surgeon. Joe Ballard v. Arch Insurance Company and Transforce, Inc., Houston Court of Appeals
– 14th Dist. 2015 WL 6560531.

Errant Errand – The injured worker died as a result of injuries sustained in a motor vehicle accident
while out of town on a business trip. For the duration of his trip, he was under “continuous
coverage”, which provides round the clock coverage for employees sent out of town overnight on
business by an employer. After work one night, the decedent and his son agreed to meet for dinner,
but the pair chose a restaurant twelve miles from the employee’s Dallas hotel. The worker was
injured in a motor vehicle accident occurred on the way to the restaurant. The Hearing Officer and
the Appeals Panel concurred that the decedent remained in the course and scope of his employment
under the continuous coverage doctrine and had not substantially deviated from the business purpose
of the trip. The trial court granted the carrier’s motion for summary judgment that the worker was
not in the course and scope of his employment at the time of injury, and the Court of Appeals affirmed the trial court’s judgment, stating that the travel at the time of the accident was to
accommodate a personal visit and represented a distinct departure from the course and scope of his
employment for a personal errand. Barbara Pinkus v. Hartford Casualty Insurance Company,
Dallas Court of Appeals – 2015 WL 6751059.

Appointment With Disappointment– A claimant followed her attorney’s (terrible) advice not to
appear for a designated doctor appointment on June 3, 2014. The Hearing Officer determined that
such counsel constituted good cause for her failure to attend. The Appeals Panel reversed, stating
that “bad advice received from one’s own attorney is not an excuse for the failure to comply with
Division requirements.” The designated doctor examination was reset to October 7, 2014, then
rescheduled upon request of the designated doctor to November 4, 2014 with a different doctor. The
claimant attended that exam. The claimant then argued that the insurance carrier should begin
payment of TIBs as of the date of the first scheduled DD exam, October 7, 2014 since it was not her
fault the exam was delayed until November 4, 2014. However, the Appeals Panel clarified that Rule
127.25(a) requires actual attendance at the designated doctor examination and does not allow for the
suspension of TIBs based on a delay in the subsequent appointment of a designated doctor
examination. Therefore, the carrier was permitted to suspend TIBs through November 4, 2014, the
date the claimant actually submitted to her designated doctor exam. Appeal No. 151718

Rule 132.7 – Death Benefits
In accordance with HB 1094, the DWC published an informal draft rule that amends Rule 132.7 to
provide that a remarried former spouse of a first responder killed on the job is entitled to receive
death benefits for life. Formal proposal of the amended rule is anticipated before the end of 2015.

Rule 132.13 – Burial Benefits
An informal draft rule proposes to amend Rule 132.13 to raise the burial benefits for an injured
employee killed on the job to $10,000.00. The rule amendment is required to implement SB 653
and is expected to be formally proposed by the end of 2015.

Rule 127.130 – Designated Doctor Qualifications
The DWC is considering amendments to the qualification criteria for designated doctors to ensure
that the best-qualified doctor is selected for examinations. The working draft of the rule is expected
to be published on the DWC website prior to year’s end.

The DWC, in its regulatory capacity, is required under Section 402.075 of the Texas Labor Code
to assess the performance of insurance carriers at least biennially. For their 2016 Performance
Based Oversight (PBO) assessment, announced publicly in November, the Division will select
carriers based on the volume of initial payment of Temporary Income Benefit transactions between
January1, 2015 and June 30, 2015. Timely payment of TIBs, timely processing of initial medical
bills or request for reconsideration of medical bills, and timely submission of initial payment and
medical bill processing data are the criteria that comprise the 2016 PBO assessment. Incentives for
insurance carriers to achieve high performance include limited audits, modified or reduced penalties,
and access to the High Performer Logo as a marketing tool.

Jerry Franz, M.D. was fined $2,000.00 for failing to meet the standard of care for chronic pain
management for five patients.
Francisco Batlle, M.D. of Dallas has been ordered by the Division to complete additional medical
education after failing to complete a fair and reasonable evaluation of an injured employee.
By Official Order of the Texas Commissioner of Workers’ Compensation dated October 28, 2015,
Dr. Patrick Chidi Obasi, M.D., of Marshall, TX is prohibited from re-applying for DD or MMI/IR
certifications in the Texas workers’ compensation system for two years.

On November 19, 2015, this new bulletin was posted to alert workers’ compensation participants
of the annual change to the Medical Fee Guideline conversion factors. For 2016, the MEI reflects
a 1.1% increase. A table of conversion factors can be found on the TDI website.

Matt Zurek, Deputy Commissioner for Health Care Management and System Monitoring, urges
insurance carriers to identify all injured employees who have been prescribed Fentanyl Transdermal
Patches and/or MS-Contin, which will both require preauthorization beginning on February 1, 2016.
Mr. Zurek advises sending written notification to the injured employee, prescribing doctor, and
pharmacy informing them of the need for preauthorization to allow adequate time to discuss ongoing
treatment if Fentanyl Transdermal Patches or MS-Contin are currently being prescribed. Sample
notification letters for use by insurance carriers are available through the TDI-DWC website at
https://www.tdi.state.tx.us/WC/pharmacy/index.html.

The Division has hired Mayson Pearson as the new traveling Hearing Officer in the central Austin
office. Her employment with the Division commenced in November. Ms. Pearson graduated from
the University of Texas School of Law and has been licensed to practice law in Texas since
November of 2012.

On November 17, 2015, the Division announced that its Hearings section staff had been divided into
two regional docketing workgroups, North Western , comprising field offices located north and west
of Austin, and South Coastal, which includes the Austin Field Office and all points south and east.
The stated goal for the divide is to improve formal and informal dispute proceedings, docket
scheduling, and management. The staff assigned to the new workgroups schedule or reschedule
dispute proceedings, assist with docket management, and communicate scheduled proceedings and
pending actions to system participants. The reorganization establishes a single point of contact for
proceedings management in each field office. Rebecca Allen and Misty Haygood have been
designated as Program Specialists, who act as docketing team leads and oversee the staff for the
North Western and South Coastal regions, respectively.

In May 2015, Deputy Commissioner of Hearings Kerry Sullivan initiated a limited and voluntary
pilot project that introduced a bifurcated approach to resolving cases where the resolution of an
MMI/IR issue is dependent on an active extent of injury dispute. Upon agreement of the parties
during a BRC, the issues could be split between two hearings, the first addressing extent of injury
and then, following an interlocutory alerting the parties to the expected outcome of that issue, a
second hearing to resolve MMI and IR in light of the Hearing Officer’s findings. At the time it was
announced, the pilot project was limited to proceedings conducted in the Division’s Weslaco field
office, and the success of the program was to be monitored before expanding statewide. The
Division appears to be satisfied with the results of the pilot project; in November, the Division
broadened their bifurcation project to include the Dallas Field Office. As of November 5, 2015, the
option to split the extent and MMI/IR issues between two hearings became available at the BRC
level.