Written by: Lindsay Underwood

Two return to work decisions were recently handed down from the North Carolina Court of Appeals, both of which are helpful in determining how the Court is currently examining disability issues. The first case, Geraldine Cromartie v. Goodyear Tire & Rubber Co., Inc., involved a machine operator who sustained a laceration to the right hand. Though she returned to work initially, she reported ongoing pain and returned to the authorized treating physician, Dr. James Post for further evaluation. Dr. Post eventually assessed Claimant at MMI and assigned restrictions of no lifting over 20 pounds and no repetitive forceful gripping or grasping. Defendants ended up getting an IME with Dr. Ramos. Soon after, Defendants identified a job they argued was within Claimant’s work restrictions. Specifically, the job required driving a truck to and from building stations over a 12-hour shift, rarely lifting up to 25 pounds, and 30 pounds of force, which could be split between each hand thereby requiring 15 pounds lifting and 15 pounds pushing. Defendants requested the IME provider, Dr. Ramos, review and approve the position. He approved the position, and Defendants formally offered same to Claimant. Claimant refused to return. Through the Form 24 process, opposing counsel sent Claimant back to a plastic surgeon she had seen years prior, who assigned 10-pound lifting restrictions. As is often the case, the Form 24 Application was denied in the administrative setting. This denial led Defendants to send Claimant to another physician for additional examination, and that physician approved the job. Claimant still refused to return to work. The Full Commission found Claimant was disabled, assigning greater weight to the testimony of Dr. Post, the original authorized treating physician. The Court of Appeals agreed, holding that the Full Commission correctly found that the job offered to Claimant was not suitable.

The Court of Appeals focused on the definition of suitable employment, concluding that the job, unless modified in several aspects, was not within Claimant’s physical limitations and was therefore not suitable post-MMI employment. The Commission gave greater weight to Dr. Post’s testimony. As a result, the Full Commission determined the offered position exceeded the restrictions prescribed by Dr. Post because it required lifting over 20 pounds.

The second case, Richards v. Harris Teeter, involved a truck driver who sustained a compensable low back injury. After the incident, Harris Teeter terminated Claimant’s employment after it was determined he violated a safety procedure during the incident. In light of the termination, Claimant was not eligible for rehire pursuant to policy. A defense witness testified that Harris Teeter had a mandatory return to work program for workers’ compensation claimants and numerous temporary light-duty positions were otherwise available. However, since Claimant was not eligible for rehire, Harris Teeter would not offer him a position. Defendants declined to provide vocational rehabilitation to aid in Claimant’s job search.

Claimant’s authorized treating physician testified he would have approved a position with Harris Teeter had he not been terminated. Defendants argued that Claimant constructively refused suitable employment because he was terminated for cause and, but for that termination, he would have remained employed at pre-injury wages.

The Court of Appeals disagreed and indicated Defendants were essentially asking the Court to impose a for-cause bar to recovery of benefits when the employee is terminated for causing the accident resulting in injury and is thereafter unable to find work elsewhere. The Court indicated this was fundamentally incompatible with the workers’ compensation system which deliberately eliminated negligence from its calculus. The Court noted that gross negligence was not a defense to a workers’ compensation claim except in limited exceptions, like intentionally inflicted injuries and intoxication. Even a violation of a safety rule does not bar recovery. Defendants argued fault should have a place in the workers’ compensation system when it comes to determining whether an employer may terminate benefits. However, the Supreme Court considered similar concerns in McRae and noted the risk for abuse if an employer was allowed to evade payments simply because Claimant was terminated.

Though Defendants have numerous options for return to work, the above two cases illustrate the possible barriers and difficulties when it comes to job approval and strict adherence to company policy. The first case is another reminder that the Full Commission, and subsequently the Court of Appeals, which cannot reweigh evidence, will generally give greater weight to the authorized treating physician. Even though Defendants had two physicians stating the position was suitable, the testimony from the original authorized treating physician, Dr. Post, was found more probative.

In the last case, Defendants abided by their company policy and terminated Claimant for violating a safety rule during the incident itself.  Unlike other safety violations that lead to a for-cause termination, the Court distinguished this case noting that Claimant committed the violation during the work injury, and Defendants were essentially trying to argue that Claimant’s negligence led to his termination. Though you can terminate a claimant for cause due to violations, the Court made it clear that it cannot have occurred at the same time as the work injury.  The Court equated Defendants’ argument to trying to read a contributory negligence theory into the Workers’ Compensation Act.  Though strict adherence to a company policy is often encouraged; in this case, it resulted in a significant amount of past-owed TTD benefits for Defendants, and a failed constructive refusal argument. This case seems to suggest that employers are better off agreeing to re-hire an employee that violates a safety rule during the injury by accident for which he or she was injured.  Depending on the severity of the violation, employers may have no choice but to terminate the employee but must recognize that exposure for TTD is a possibility.

Written by: Elizabeth Ligon and Logan Shipman

The 1972 Report of the National Commission on State Workmen’s Compensation Laws and the Elimination of North Carolina’s Cap on Extended Benefits

Created in 1929 as a compromise between the state’s employers and its workers, the North Carolina Workers’ Compensation Act originally contained a 400-week cap on indemnity benefits. On July 31, 1972, the National Commission on State Workmen’s Compensation Laws, a 15-member Commission appointed by President Nixon under the Occupational Safety and Health Act of 1970, published a report on the inadequacies of state-administered workers’ compensation programs around the country. The Commission issued its report after holding hearings over the course of a year and conducting an intensive analysis of each state’s respective workers’ compensation programs. The report concluded that the programs were, in general, “neither adequate nor equitable.” The Commission issued several recommendations it described as “essential,” including a recommendation for states to remove limits on the payment of benefits for permanent total disability or death. Characterizing the limits as “arbitrary,” the Commission recommended benefits be paid “for the duration of the worker’s disability or for life and, in case of death, should be paid to a widow or widower for life or until remarriage.”

The Commission’s report laid the groundwork for reform that would take place in North Carolina the following year. In 1973, N.C. Gen. Stat. § 97-29, the statute governing compensation rates for total incapacity, was amended to remove the 400-week cap on indemnity benefits such that there was no longer any cap on indemnity benefits for cases arising on or after July 1, 1975. In 1977, N.C. Gen. Stat. § 97-29.1 was added, which increased weekly compensation payments by five percent for all permanent and total disability claims arising prior to July 1, 1973. Not surprisingly, these statutory changes resulted in significantly increased indemnity exposure for employers and their insurance carriers, as well as an increase in litigation over claimants’ entitlement to indemnity benefits.

One of the first litigated issues was over which version of the law to apply when a claimant alleged he was permanently and totally disabled. In Smith v. American & Efird Mills, 305 N.C. 507, 290 S.E.2d 634 (1982), the Supreme Court of North Carolina examined this question in the context of an occupational disease claim. In that case, the claimant was forced to quit his employment with the defendant-employer in 1968 due to breathing difficulties. He returned to work elsewhere earning less wages. The claimant filed a workers’ compensation claim in 1978 and obtained expert testimony that he was permanently and totally disabled. The Deputy Commissioner and the Full Commission awarded the claimant 300 weeks of compensation beginning January 1, 1970, which was when his average weekly wage first began to decline. The North Carolina Court of Appeals remanded the case to the Industrial Commission for a finding in accordance with the evidence that claimant was permanently and totally disabled as of 1978. As such, the Commission should apply N.C. Gen. Stat. § 97-29 as it existed in 1978, not 1970. The North Carolina Supreme Court agreed that the claimant’s indemnity benefits vested when the evidence established the claimant was totally disabled. Here, medical evidence established the claimant was permanently and totally disabled as of 1978, so claimant was entitled to lifetime indemnity benefits under N.C. Gen. Stat. § 97-29.

In 1983, the Supreme Court of North Carolina decided Taylor v. J.P. Stevens Company, 307 N.C. 392, 298 S.E.2d 681 (1983). The claimant in this case argued the legislature’s reform of the Act was intended to increase the total benefits to all persons who were entitled to receive benefits prior to July 1, 1973, and who were receiving or would receive benefits after July 1, 1977, when N.C. Gen. Stat. § 97-29.1 went into effect. The Court disagreed, holding the claimant was limited to compensation as provided by the Act at the time of his total incapacity. The claimant’s incapacity was stipulated to having started on August 2, 1963, so the Court held that the claimant’s compensation was governed by the version of the Act in effect on that date. The claimant’s request for benefits in excess of the maximum amount allowed by N.C. Gen. Stat. § 97-29 as written in August of 1963 was properly denied.

In 1986, the Supreme Court of North Carolina analyzed whether an employee who suffered an injury to a body part that was scheduled pursuant to N.C. Gen. Stat. § 97-31, the statute governing schedule of injuries, rate, and period of compensation, may recover compensation under N.C. Gen. Stat. § 97-29 instead if he was deemed totally and permanently disabled. In Whitley v. Columbia Lumber Mfg. Co., 318 N.C. 89, 348 S.E.2d 336 (1986), the claimant suffered severe injuries to his arm and hand and could not return to his previous employment. Since he was illiterate and sixty years old, his return-to-work potential was virtually nonexistent. The Court held N.C. Gen. Stat. § 97-31 was not an exclusive remedy, and therefore did not prohibit an award of lifetime compensation to an employee who was deemed totally and permanently disabled.

Likewise, the North Carolina Supreme Court in Gupton v. Builders Transport, 320 N.C. 38, 320 N.C. 38 (1987), referring to Whitley, held that an injured worker who suffered an eye injury resulting in a blind spot covering seven percent of his field of vision could receive an award of benefits under either N.C. Gen. Stat. § 97-31’s schedule of permanent partial disability benefits or N.C. Gen. Stat. § 97-30, whichever was more munificent to the injured worker. While the claimant could not recover under both provisions, he could select the more favorable remedy. The Court noted that, if the power or capacity to earn is totally obliterated, the claimant is entitled to lifetime total and permanent disability benefits under N.C. Gen. Stat. § 97-29.

The 2011 Amendments and Reinstatement of a Cap on Extended Benefits

There remained no statutory cap on indemnity benefits until 2011, when the North Carolina General Assembly enacted sweeping legislative reform to the North Carolina Workers’ Compensation Act. The reform marked the first major legislative changes to the Workers’ Compensation Act since 1973. N.C. Gen. Stat. § 97-29(b) was amended to limit the duration an employee could receive temporary total disability compensation to no more than 500 weeks from the date of first disability unless the employee qualified for extended compensation.

Pursuant to N.C. Gen. Stat. § 97-29(c), after 425 weeks have passed since the first date of disability, an employee is permitted to apply to the Commission for an award extending his indemnity benefits beyond the 500-week cap. A claimant has the burden of proving by a preponderance of the evidence that he has sustained a “total loss” of wage-earning capacity. If extended benefits are awarded by a Deputy Commissioner, the decision will not be stayed unless the decision is reversed by the Full Commission or an appellate court. An extended benefits award can also be re-reviewed by the Commission at a later time. If defendants can prove by a preponderance of the evidence that the claimant no longer has a total loss of wage-earning capacity, the Commission can terminate the extended benefits.

It should be noted that there are certain claims which allow for automatic permanent and total disability benefits, such as catastrophic cases where a claimant loses two or more limbs. Claimants in these cases are entitled to lifetime benefits without having to show a total loss of wage-earning capacity. Three other categories of claims create a rebuttable presumption of permanent and total disability benefits: (1) spinal injuries involving severe paralysis of both arms, both legs, or the trunk; (2) severe brain or closed-head injuries evidenced by severe and permanent motor or communication disturbances; and (3) second- or third-degree burns to 33% or more of the total body surface. N.C. Gen. Stat. § 97-29(d). Under these three categories of claims, defendants can rebut the presumption by showing the claimant is capable of returning to suitable employment.

Claimants could begin filing Form 33 Requests for Hearing to request extended benefits as of August 2019, so extended benefits appeals are just starting to make their way through the North Carolina court system. The claimants’ bar contends the standard for extended benefits is the same standard as within the initial 500 weeks. The defense bar, however, contends claimant have the burden of proving a total and complete loss of any wage-earning capacity. In other words, claimants must show that their wage-earning capacity has been totally obliterated. If a claimant has at least some wage-earning capacity, they should not be entitled to extended benefits. The decisions from the Full Commission to date have ruled in defendants’ favor, but several of the cases have been appealed to the North Carolina Court of Appeals.

Recent Constitutional Challenges in Florida and Kentucky, and Potential Impact on the North Carolina Extended Benefits Cap

As more and more extended benefits cases make their way through the court system, the constitutionality of North Carolina’s 500-week cap on indemnity benefits could be challenged, like we recently saw in Florida and Kentucky.

In 2016, Florida’s highest court determined that Florida’s 104-week cap on temporary total disability benefits was unconstitutional. In Westphal v. City of St. Petersburg, 194 So.3d 311 (2016), the claimant suffered a severe low back injury in December 2009 and began receiving temporary total disability benefits. Under § 440.15(2)(a) of the Florida Statutes, an injured worker’s entitlement to temporary total disability benefits ended after he reached maximum medical improvement or after 104 weeks, whichever occurred earlier. The claimant in this case did not reach maximum medical improvement prior to the expiration of the 104-week cap on temporary total disability benefits, although he was still incapable of working or obtaining employment according to his medical providers and vocational experts. The claimant requested additional temporary total disability benefits or permanent total disability benefits pursuant to § 440.15(1). The claimant also challenged the statute on the grounds that the statute as plainly written resulted in a denial of access to the courts under Article 1, section 21 of the Florida Constitution, which “guarantees every person access to the courts and ensures the administration of justice without denial or delay.” It provides that the state’s courts “shall be open to every person for redress of any injury, and justice shall be administered without sale, denial, or delay.” Id. Prior case law held that workers’ compensation provided a “reasonable alternative” to tort litigation and thus did not violate the access to courts provision, “so long as it provides adequate and sufficient safeguards for the injured employee.” Id. at 322 (quoting Kluger v. White, 281 So.2d 1, 4 (1973)).

The Florida Supreme Court concluded that the 104-week cap did not provide a reasonable alternative to tort litigation and thus denied the claimant his constitutional right of access to the courts. The Court reasoned the law lacked adequate and sufficient safeguards and could not be said to continue functioning as a system of compensation without contest. The provision did not stand as a reasonable alternative to tort litigation since injured workers, like the claimant in this case, were denied their constitutional right to seek redress when they were not yet legally entitled to assert a claim for permanent total disability benefits at the conclusion of the 104 weeks of temporary total disability benefits. The Court expanded the limit on indemnity benefits to 260 weeks.

Kentucky has also seen constitutional challenges to its statute governing the payment of indemnity benefits. In 2017, the Supreme Court of Kentucky struck down Kentucky Revised Statute (KRS) § 342.730(4) as unconstitutional in Parker v. Webster County Coal, LLC, 529 S.W.3d 759 (2017). At the time, KRS § 342.730(4) allowed termination of disability benefits as of the date the employee qualified for normal Social Security retirement benefits, or two years after the employee’s injury or last exposure, whichever occurred last. The Kentucky Supreme Court initially found this statute constitutional in McDowell v. Jackson Energy RECC, 84 S.W.3d 71 (2002) and Keith v. Hopple Plastics, 178 S.W.3d 463 (2005), as corrected (Dec. 13, 2005). However, the Court in Parker found that the statute resulted in older workers being treated differently from their younger counterparts. Furthermore, not everyone was entitled to Social Security retirement benefits, such as teachers. As there was no rational basis or substantial and justifiable reason for the disparate treatment, the statute violated the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution.

In response to the Parker decision, a 2018 amendment to the Kentucky Workers’ Compensation Act was passed, which terminated an injured worker’s right to indemnity compensation when the worker reached 70 years of age, or four years from the date of injury or last injurious exposure, whichever event occurred last. KRS § 342.730(4) (2018). The constitutionality of the revised statute was again challenged in Cates v. Kroger, 627 S.W.3d 864 (2021). The Supreme Court of Kentucky held that the amendment did not violate equal protection, noting that preventing a duplication of wage-loss protection programs and promoting the solvency of the state’s workers’ compensation system were legitimate state interests. Since the statute’s classification was no longer directly related to Social Security eligibility but was instead based only on age, it did not violate the Equal Protection Clause since the age classification was rationally related to a legitimate state purpose.

Analysis

Ultimately, we anticipate any constitutional challenges to N.C. Gen. Stat. § 97-29 would not be successful, as North Carolina’s extended benefits cap is distinguishable from the caps established in Florida and Kentucky. Whereas Florida’s cap on temporary total benefits created a statutory gap for employees who had received 104 weeks of benefits but were not yet at maximum medical improvement and not yet deemed permanently and totally disabled, North Carolina’s statute allows claimants to begin the process of requesting extended benefits beyond the 500-week cap once 425 weeks have elapsed from the first date of disability. Presumably, claimants would be able to have their request for extended benefits heard at the Industrial Commission well before the 500-week cap was reached and their temporary total disability benefits were terminated. In addition, North Carolina’s statute allows defendants to take a credit for all primary Social Security retirement benefits the claimant receives. Therefore, North Carolina’s N.C. Gen. Stat. § 97-29 does not permit termination of benefits once claimant reaches a certain age or upon receipt of Social Security retirement benefits, unlike Kentucky’s statute.

In addition, N.C. Gen. Stat. § 97-29 as amended in 2011 still allows an injured worker multiple ways to prove entitlement to lifetime indemnity benefits for permanent and total disability, as well as yet another method to prove entitlement to receive extended benefits beyond 500 weeks if they can prove a total loss of wage-earning capacity.

Finally, the 2011 amendments in North Carolina were the result of a bipartisan effort to pass balanced legislation that provided additional positive benefits for both injured workers and the business community. In addition to the 500-week limitation of benefits under N.C. Gen. Stat. § 97-29, injured workers received increased benefits in several areas. Specifically, temporary partial disability benefits under N.C. Gen. Stat. § 97-30 were increased from 300 weeks to 500 weeks, death benefits under N.C. Gen. Stat. § 97-38 were increased from 400 weeks to 500 weeks and burial expenses were increased from $2,500 to $10,000. The amendments to N.C. Gen. Stat. § 97-29 were part of a large cooperative effort between all North Carolina workers’ compensation stakeholders. The 2011 Amendment passed 46 to 0 in the Republican-controlled State Senate and 110 to 3 in the Republican-controlled State House and was signed into law by the then-Democratic governor.

First ALJ Opinion on COVID-19
 
Perkins v. North American Stainless, (WC 2021-01615)
 
Employee Perkins was a mechanical maintenance shift technician working 12-hour shifts in close proximity to his crew partner, Springer. Perkins contracted COVID-19 and died. His widow, Megan Perkins alleged he caught COVID-19 from Springer at work on 8/8/21.

Springer testified that Perkins had been to a party on 8/7/21 at Parkers’ house. Springer had been to the outdoor races earlier in the day but did not go to the party. The two were off on 8/9/21 and 8/10/21 and Springer testified that during their shift on 8/11/21, Perkins was not feeling well and complained of sinus issues. Another employee testified to same.
 
On 8/13/21, Perkins texted Springer that his wife had pneumonia and he didn’t want to go to doctor and was taking Aleve D. Springer developed sinus pressure on 8/14/21 and tested positive for COVID on 8/15/21, texting his results to Perkins. Perkins texted Springer on 8/16/21 that he was also positive, stating: “I bet we got it from parkers. meg said him and all kinds of people are sick from down there…wonder if we should tell hr that so they don’t think we have it at work cause she was down there too.” 
 
Megan denied that he or she went to a party at Parker’s house. She testified that Perkins, herself, her three children, and her mother all lived together. All three children played outdoor soccer and attended public school. She and Perkins ate out in Louisville on 8/4/21 for their anniversary and went to breakfast on 8/11/21. She did not recall Perkin’s having any symptoms until he told her he was feeling sick on 8/15/21. They went to the hospital, and both tested positive for COVID. She had been having sinus issues for three weeks and frequently had infections due to a deviated septum. All three children tested positive after 8/15/21.
 
Perkin’s doctor stated that his COVID symptoms were consistent with exposure at work on 8/8/21 but he could not say for sure that his exposure was from work. The employer’s expert determined there was no way to know for certain how and where Perkins contracted COVID, but he and his wife likely contracted it at the same time since they were symptomatic at the same time and hospitalized at the same time and that their children were the most likely source. He further testified that Springer likely contracted COVID from Perkins since Perkins had symptoms several days before Springer.
 
The ALJ held that Perkins did not prove a workplace injury arising out of employment. He failed to prove an occupational disease since COVID is not “incidental to the character of the business” which is manufacturing steel. Furthermore, Perkins did not prove that the COVID was caused by a work exposure. Perkins had a communicable disease but failed to prove he was at a greater risk than the general public of contracting the communicable disease due to his employment, and therefore the claim is barred.

Coming and Going Rule and Traveling Employee Exception
 
Com. Of Kentucky, Personnel Cabinet v. Timmons (2021-SC-0271-WC)
 
Timmons worked in the office daily but was also required to conduct occasional home visits and off-site trainings. While leaving her home to conduct a training at a nearby church, she fell on the front steps. The Commonwealth contested the work-relatedness of the claim arguing for application of the coming and going rule. Timmons argued that the travelling-employee exception to the going and coming rule applied.
 
The ALJ determined the injury was not work-related and the travelling-employee exception did not apply. The Workers’ Compensation Board reversed finding the travelling-employee exception applicable and the Court of Appeals agreed. The Supreme Court of Kentucky reversed the Court of Appeals, determining that the traveling employee exception to the coming and going rule does not apply until the travelling employee leaves their property, exposing themselves to the common risks of the public street.

2023 Workers’ Compensation Benefit Schedule
 
The 2023 Benefit Schedule has been published by the Department of Workers’ Claims and can be found here:
https://labor.ky.gov/Documents/2023%20Workers%27%20Compensation%20Benefit%20Schedule.pdf
 
2023 Discount Rate Order and Tables
 
The Discount Rate Order and Tables can be found here:
 
https://labor.ky.gov/Documents/2022%20Discount%20Rate%20Order%20and%20Tables.pdf
 

Should you have any questions or wish to discuss any related matters, please contact us at your convenience.

H. Douglas Jones, Esq. – djones@jsbattorneys.com, 859.594.4200
Margo Menefee, Esq. – mmenefee@jsbattorneys.com, 859.594.4200

On 12/30/22, Governor Hochul vetoed three bills pertaining to workers’ compensation matters and signed one into law. She vetoed a bill redefining temporary total disability (S768/A1118), a bill that would have set the minimum rate of compensation as no lower than 1/5 of the state average weekly wage (S8271/A7178), and a bill that would have changed the legal standard for establishing a claim for mental stress (S6373/A2020). She signed into law a bill that prohibits any workers’ compensation board determination from having a collateral estoppel effect in any other action or proceeding arising out of the same occurrence, except for the determination of an employer-employee relationship (S9149/A10349).

Employers and carriers were concerned about the three vetoed bills, which were passed by the legislature over the summer. Each would have increased workers’ compensation premiums and the cost of doing business in the state.

However, the so-called “TT bill” was of particular concern because it had the potential to effectively eliminate partial disability classifications in New York given its definition of temporary total disability as the inability of an injured worker to fully perform their pre-injury job or modified work offered by the employer. Such injured workers would be allowed to receive the maximum benefit rate, no matter how much residual work capacity their own physician believed them to have. We discussed this concern along with our analysis that this bill would have increased the value of permanent partial disability awards and eliminate the labor market attachment defense in our white paper published over the summer. 

The workers’ compensation defense bar was active in educating the public about the potential cost increases that would result from passage of this bill. Our firm wrote an op-Ed in The Buffalo News and our partner Dan Bowers and Mark Hamberger were interviewed by Buffalo Business First in their article about the bill. Attorney Peter Walsh of the Walsh and Hacker firm in Albany was interviewed in an article about the bill published in the Times Union in June 2022.  

We are pleased to learn that the governor vetoed the TT bill and the other two bills that were passed by the legislature this summer. We believe her vetoes to be a “win“ for businesses in New York. This should serve as a reminder that employers and carriers concerned about the cost of doing business in New York State should be sure to monitor the legislative calendar for pending legislation in 2023 and contact their elected officials to discuss any legislation that they are concerned about.

On 1/18/23, Maila Hazen will present "New York Prior Authorization Request (PAR) Basics". This webinar will discuss the New York Workers’ Compensation Board’s prior authorization request (“PAR”) process. PARs generally apply to requests for medical treatment that fall outside of the Board’s Medical Treatment Guidelines. Participants will learn the basics of the PAR process and practice tips for handling PARs from health care providers. This webinar is relevant to New York workers’ compensation claims only.

It will be held at 11:00 AM EST on Wednesday, January 18 2023. Please click here to register. 

This webinar is produced in partnership with WorkCompCollege.com and the National Workers' Compensation Defense Network (NWCDN). 

In 2022, the Board has overhauled the process for health providers to request prior authorization for treatment as well as the process for employers, carriers, and administrators to respond to these requests. The Workers’ Compensation Board's project to do this is called "OnBoard" and the Board has now completed its initial rollout of the project, which is designed to transition payers and health care providers from paper-based processes to online processes. Our white paper discusses the Board’s prior authorization request (“PAR”) process. PARs generally apply to requests for medical treatment that fall outside of the Board’s Medical Treatment Guidelines. You can download it here

For any questions about this topic please do not hesitate to contact Maila Hazen or our partner Renee Heitger.

As Responsible Reporting Entities (RREs), carriers and self-insured employers (SIEs) are responsible to report the existence of any Medicare enrolled claimants to CMS, subject to certain reporting thresholds. CMS ostensibly uses this information to avoid making conditional payments, where a carrier or self-insured employer’s coverage is primary to Medicare. The 2007 Medicare, Medicaid and SCHIP Extension Act (MMSEA) also imposed civil monetary penalties of up to $1,000.00 per day, per claimant, for failure to comply.
 
The penalties are in addition to any MSP reimbursement obligations, such as conditional payment reimbursement. Carriers and SIEs should consider the cost of these penalties as potential added claim expense, in addition to conditional payment reimbursement, MAP lien reimbursement, and WCMSA funding.
 
Highlights of the proposed rules include: 

• Penalties can be imposed if an RRE fails to register and report within one year of the date that a settlement, judgement award or other payment obligation was established. The penalty is up to $1,000.00 for each day of non-compliance for each claimant. The maximum penalty for each claimant is $365,000.00 per year.  
• If a report is made, but the RRE subsequently provides contradictory information in response to MSP recovery efforts, the RRE is subject to a penalty based on the number of days that the RRE failed to appropriately report updates to the claimant’s records. The penalty is up to $1,000.00 per day of non-compliance, with a maximum of $365,000.00 per claimant.  
• CMS proposes a 20% error tolerance. If errors exceed the 20% threshold in four of eight consecutive reporting periods, the RRE may be subject to a penalty upon the fourth occurrence. This penalty is tiered, ranging from $250.00 per day, per claimant, for each day of non-compliance to a maximum of $1,000.00 per day. The maximum quarterly penalty is $90,000.00 per claimant.
• There is five year statute of limitations for imposition of a penalty, tolled from the date that CMS identified non-compliance.  
• The proposed rules are prospective, meaning that CMS will impose penalties on a go forward basis following the effective date, rather than retroactively.   

CMS will informally communicate with the RRE before imposing a penalty, using the same communication procedures already in place under the MMSEA User Guides. The RRE may respond with mitigating evidence. If a penalty is imposed, the RRE will receive formal written notice from CMS. A dispute process is proposed, involving hearings before a federal Administrative Law Judge, appeals to the Departmental Appeals Board, and petitions for judicial review.

We strongly recommend reviewing Section 111 reporting procedures with those responsible for supplying information to your reporting agent, as well as reviewing your reporting agent’s procedures, to be sure that everyone is in compliance before February 2023.
 
As industry pioneers in Medicare compliance, we have been preparing MSAs, defending conditional payments and Medicare Advantage Plan liens, and advising on Section 111 reporting for nearly two decades. As our clients prepare for this latest development, we stand ready to train, advise and, if need be, defend MMSEA penalties. Please contact our partner, Nicole Graci, for more information.

As a reminder, the Hamberger & Weiss LLP New York Workers’ Compensation Law Reference Sheet is available online for claims professionals that need a handy reference tool in day-to-day claims handling. The reference sheet has the maximum and minimum compensation rates dating back to 1990, the SLU and LWEC tables, common due dates, and summaries of laws concerning liability, defenses, settlements, and medical treatment issues.

Insurance carriers and employers in New York exhaled a sigh of relief after the Court of Appeals issued its decision in Green v. Dutchess County BOCES on 10/27/22. This decision from New York's highest appellate court reverses an Appellate Division holding which required posthumous payment of remaining capped permanent partial disability benefits in non-schedule loss of use award cases when the claimant dies for reasons unrelated to their work injury. That decision, now reversed, created a new category of New York workers' compensation benefits with potentially huge additional unplanned liabilities for New York workers' compensation payers. When the Appellate Division’s decision in Green was published, Hamberger & Weiss LLP opined that the decision was wrongly decided because it failed to apply long-standing precedent requiring causally related lost time / lost wages as a prerequisite to permanent partial disability awards.

The Court of Appeals held that there is no statutory basis in the plain language of the workers' compensation law or in the legislative histories of statutory amendments over the years supporting Appellate Division's decision. The Court highlighted the fundamental distinction between schedule and non-schedule permanent partial disability awards over 100 years ago in 1921. One hopes this unambiguous reaffirmation by the Court of that fundamental distinction will lay to rest any future attempts to blur the difference between schedule and non-schedule awards for another 100 years.

Please do not hesitate to contact any of our attorneys with questions about this decision.