State News

Legal Update by Attorney Alison Stewart

Governor Reynolds has signed a bill relating to workplace idiopathic falls (SF 507). This bill has become law in response to the 2018 Iowa Supreme Court decision,Bluml v. Long John Silvers, where the Court said there was no blanket rule rendering certain categories of workplace idiopathic falls non-compensable, so long as the employee proved that a condition of the employment increased the risk of injury (e.g. a hard floor). In Bluml, an employee had a seizure while working and fell straight backward onto a ceramic tile floor, striking the back of his head. More information about this decision can be found in an earlier post on this blog, dated November 28, 2018. The Court had held each case like this should be considered on a case by case basis opening the door for an employee to establish an injury resulting from an idiopathic fall onto a hard surface could be found compensable. With this new bill now on the books, however, “personal injuries due to idiopathic or unexplained falls from a level surface onto the same level surface do not arise out of and in the course of employment and are not compensable under this chapter.”

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Ask any practitioner about the nature of Medicare and his or her response will usually be that it is a source of medical coverage for the very poor, such as those receiving SSI (Supplemental Security Income.) Alas, such an answer is no longer correct, nor is it safe. Why? Well, as in the case of ERISA liens, (Ah ha! Now you know where you’ve seen my name before!) we are again dealing with the dreaded “F” word. No, not that “F” word, the one which resulted in Ralphie enjoying the subtle flavor of Lifebuoy (remember, “A Christmas Story?”).  No, once again we have a federal Act, establishing both the benefit and the requirement of recovery of any claims paid for which a third-party source is legally liable. The (somewhat) good news is, however, that the recovery mechanisms (liens) are administered by the states. More on this later.

Medicaid was established by federal law, 42 U.S.C 1396 et. seq. (the Act.)  The intent of this Act was to provide medical coverage for people unable to afford their own coverage. Like other federally-established health coverage such as Medicare and Veterans Administration benefits, Medicaid (and as the title indicates, NJ Family Care – hereinafter NJFC) is intended to pay health care costs for illnesses, injuries, etc., where no other coverage is legally obligated to pay. In other words, they are “payors of last resort.” This is seen in N.J.A.C. 10:49-7.3(1)(b), “Medicaid and NJFC program benefits are last-payment benefits. All [third party liability medical benefits]…shall, if available, be used first and to the fullest extent in meeting the cost of the medical needs of the Medicaid or NJ Family Care beneficiary…”

While established by federal law, Medicaid & NJFC are state-funded and administered. Additionally, and most important to the purpose of this article, the Act contains a requirement that the states establish a mechanism to pursue the recovery of any payments made by Medicaid/NJFC for which a third-party source should be legally liable. These sources include, but are not limited to, workers’ compensation coverage and casualty insurance in tort recoveries. In New Jersey, recovery of improper payments is contracted to HMS.

In addition to recovery efforts by HMS, a provision in N.J.S.A. 30:4D-7.1(b) states “…every recipient or his legal representative shall promptly notify the division (Division of Medical Assistance and Health Services) of any recovery from a third party and shall immediately reimburse the division in full from the proceeds of any settlement, judgement, or other recovery in any action or claim initiated against any such third party…” Clearly, this places a duty to report such recoveries on the injured party’s attorney. However, respondents take note. The Statute on the Code speak of recovery from a third party. And, in Hedgebeth v. Medford, 74 N.J. 360, (1977) our State Supreme Court stated that New Jersey’s Medicaid law evidences an “…unmistakable intent to afford the State every opportunity to recoup its payments from third parties.” Thus, both petitioners and respondents have an interest in the outcome of petitions involving such liens. In the event that a petitioner fails to give notice where Medicaid/Family Care clearly provided treatment, a respondent could likely give notice or file a motion to compel petitioner to give notice.

OK, so with the legal background established, what should a claimant’s attorney do to protect his/her client, him/herself, and honor the law? Well, this process begins with the initial interview with a new client. No attorney should assume that a client has medical coverage through an employer; Medicaid is increasingly the coverage for many people, even those who work for employers which provide excellent coverage. Traditionally, Medicaid/NJFC covered people who were very poor, disabled or both. Now, however, more and more people are covered by Medicaid and NJFC. As a practitioner I have personally observed that more and more people no longer have coverage offered by their employers; in many such situations they can no longer afford the employee’s portion of the premium. And so, they are now covered by N.J. Family Care, a “payor of last resort.”

Accordingly, at this first meeting with a new client the workers’ compensation attorney must ask whether the client is covered by Medicaid/NJFC. If so, notice must be immediately given to HMS of the claim in question. This has always been done by mail; however, HMS now has a Web-Portal for submission of the necessary documents. The mailing address/portal information can be obtained on the HMS website for New Jersey Medicaid. (Sorry, this article is to raise awareness of these issues; I won’t do your work for you!) Once that is done, HMS will send the attorney a set of questions to be answered concerning the happening of the accident, is it workers’ compensation or tort, what body parts were involved, etc. These questions are designed to allow HMS to determine what payments, if any, have been made for which a third party is legally liable. HMS will then send the attorney an initial Statement of Aid Paid, if in fact payments were made. Later, after a settlement has been agreed to but PRIOR to seeking approval of the settlement by a Judge of Workers’ Compensation, the petitioner’s attorney MUST provide HMS a copy of the proposed Order Approving Settlement or Section 20 Order, inclusive of fees and costs. Thereafter, HMS will issue a Final Statement of Aid Paid.  In my experience, (fortunately, to date observing others,) delayed responses from HMS are frequently caused by incomplete/incorrect submission of documents.

OK, so now I’ve discussed the origin of these state-funded plans; what they pay for and, most importantly, what they DON’T pay for; law and mechanisms for recovering payments; and, how to provide proper documentation to HMS. Now, all of you are thinking, I will tell you what guidelines exist for negotiating these liens, the power of workers’ compensation judges to deal with them, etc., etc., all the things to make your lives easier, right? Well, time to cue the occasional chirping of crickets; no other sound to break the silence. Right, you guessed it, I’ve been unable to find any guidelines, code provisions, case law, etc. to smooth the process of closing workers’ compensation cases with HMS liens. Nothing. Nor have I spoken to anyone who has found such guidance. Of course, if the liens contain payments for treatment clearly unrelated to the work-related injury, write to HMS and ask them to please remove them. Still, I and many others believe there should be some guidance in this area.

So, what is the answer? Well, I have a definite idea as to what should be done. I may be told it’s unrealistic, that it is an area in which I have no business treading, I may even upset some people. But, as that increasingly popular little creature says, “Honey Badger don’t care.” (No, don’t ask. I won’t tell!)

Several years ago there were questions as to the proper method to close a workers’ compensation case where the Petitioner was in receipt of an Accidental Disability Pension. High ranking representatives of the Division of Workers’ Compensation met with similar representatives from the Division of Pensions to work out the issues, resulting in a Memo from former Director/Chief Judge Calderone outlining the accepted methods of closing such claims.

I believe similar actions need to be taken here. However, considering the fact we are dealing with benefits created under federal law, and considering the large sums of money which are the subject of HMS liens, I suggest that the Department of Labor and HMS should attempt to work this out. Obviously, the Division of Workers’ Compensation will provide more than significant input. May I also suggest (ok Al, now you are really going out on a limb) that the Commissioner’s Advisory Committee on Workers’ Compensation be reconstituted to provide valuable input here, and in other issues affecting the practice of Workers’ Compensation. Just a thought.

(Editor’s Note:  Many thanks for Attorney Al Vitarelli for educating us all on Medicaid liens.  This is an increasingly important part of the NJ workers’ comp practice.)

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Editor:  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. 

Vinno Verasawmi was the sole proprietor of VKR, which manufactured custom kitchen cabinets for residential and commercial customers.  The company had two other employees. Verasawmi would visit construction sites and meet customers in the ordinary course of business. He drove a Porsche Cayenne, registered in his own name, both for personal and business use.  He testified that he bought the Porsche to impress potential customers.

On April 24, 2012, Verasawmi left his house at 6:45 a.m. to go to his shop in Middlesex, N.J.  Then he proceeded to a construction site in Peapack, N.J. where he installed kitchen cabinets.  He also picked up architectural drawings and started driving back to the shop.  It was then that he noticed a red warning light on the dashboard of his car, indicating a need for service. 

Verasawmi drove to the shop, dropped off the drawings, and then proceeded to drive to an auto dealership in Edison, N.J. arriving at 10:00 a.m. He left the vehicle at the dealership and rented a replacement vehicle.  Subsequently he drove from the dealership in the replacement vehicle back to his shop in Middlesex.  On the way to the shop he was involved in an accident with a tractor-trailer.  He filed a claim petition alleging serious injuries that prevented him from operating his business. He also filed a third party suit.

Verasawmi argued that as the employer, he directed himself to take the Porsche to the dealership for servicing.  He contended that this trip and the return trip to the office were compensable because his employer directed him to make the trips. 

The Judge of Compensation ruled that petitioner was not in the course of his employment at the time of his accident.  The Judge held that the maintenance on his vehicle did not constitute a benefit to his employer.  The Judge also commented that Verasawmi initially claimed he was on the way to a job site when the accident occurred, but in the law suit against the operator of the tractor-trailer he conceded he had been returning to his shop when the accident transpired.  In the end, the Judge of Compensation found that petitioner’s actions were entirely personal in nature, and he would have had to get the vehicle repaired regardless of whether he was working for VKR or not.

On appeal Verasawmi argued that the use of the vehicle redounded to his employer’s benefit.  He maintained that since he owned VKR, and since he was an employee of the company, he had the sole discretion to decide whether he was engaged in his job duties at the time of the accident. 

The Appellate Division affirmed the dismissal of Verasawmi’s claim.  It noted that the car was registered in Verasawmi’s own name, and he used it for both personal and business reasons. Further, he was returning to his shop, not to a construction site.  The Court said, “… Verasawmi was on a personal errand that he would have had to undertake regardless of whether he was working for VKR.  His action, which involved traveling from Middlesex to Edison and back, was not a minor deviation from any prescribed work duties.” This case is instructive because there are not many New Jersey cases involving the often heard contention that a sole proprietor has complete discretion in determining what is and what is not work related.  Clearly, if one’s boss requires an employee to perform a certain activity, like dropping off a car for repairs, that drive would be work related.  In this ruling the Court rejected the argument of the sole proprietor that he directed himself to perform what he contended later was a work mission.  The Court did not reject the concept of dual capacity, namely that the sole proprietor is both employer and employee, but it rejected the claim because the facts suggested that the vehicle was used for personal reasons and the work being done on the vehicle was fairly routine maintenance. The outcome might have been different if the petitioner had been driving to a construction site instead of returning to his office. The case can be found at Verasawmi v. Vino’s Kitchen Renovations, LLC, A-2273-17T3 (App. Div. April 23, 2019).

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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. 

Another bill, House Bill 4300 (authored by Rep. Jim Murphy, R-Houston), would propose allowing lump sum settlements, provided that appropriate provision were made for Medicare set-asides and for taking care of deceased workers’ beneficiaries. 

As those in the Texas workers’ comp system are well aware, Texas does not allow claimants to receive lump sum settlements for medical benefits.  The prohibition has existed since the 1980s, when laws were passed to prevent what many saw as an excess in litigation as well as misuse of settlement funds by workers’ compensation claimants. 

Some employers asked law makers to remove the prohibition on lump sum settlements, so long as the arrangement provided for a Medicare set-aside, the plan was overseen by a corporate trustee or professional administrator, and that any remaining interest on the settlement reverted back to the claimant’s beneficiaries when the claimant died.  Others have criticized the bill, arguing that settlements could result in litigation, particularly if the lump sum turned out not to be large enough to cover a claimant’s long-term care.  Still others were concerned that the money would be used for unnecessary medical treatment, leaving inadequate resources for legitimate treatment.  Ultimately, other businesses, insurance, and some labor interests put up enough opposition against House Bill 4300 to convince legislators not to support it.  Like House Bill 750, the bill has been left pending before the House Business and Industry Committee.

-  Copyright 2019, Erin Hacker Shanley, Stone Loughlin & Swanson, LLP.

Texas is the only state in which employers may “opt out” of the workers’ compensation system.  Most construction contractors have opted out, and testimony taken at the House Business and Industry Committee hearing on April 9 referenced studies showing that only 40% of Texas construction workers are covered.  The number of employers in mining, utilities, and construction that subscribe to workers’ compensation has fallen by half since 2004, to only 17%, according to a 2018 report by the Division of Workers’ Compensation.  And while contractors who opt out expose themselves to tort claims by injured employees, most plaintiffs’ attorneys will not take those cases given most construction companies are not big enough and do not have deep pockets to pay damages. 

House Bill 750 (sponsored by Rep. Armando Walle, D-Houston) proposes to require all construction contractors and subcontractors to subscribe to workers’ compensation insurance.  He says that studies show that construction workers in Texas are four times more likely to be killed at work than in any other industry.  Per the U.S. Department of Labor, Texas had 129 fatal construction injuries in 2017, by comparison to California, which had 69. 

The bill was left pending in committee with no action after the April 9^th hearing, but there is always the possibility that the committee might vote on it at a later hearing.  The Texas Legislature’s House committees have until May 6 to report bills or pass them to the floor for a vote.

 -  Copyright 2019, Erin Hacker Shanley, Stone Loughlin & Swanson, LLP.

The Houston Appeals Court recently found that an insurance carrier was not able to recover subrogation funds from a wife who collected death benefits as the administrator of the deceased’s estate from a third party.  After receiving workers’ compensation death benefits, the children of the deceased filed a wrongful death claim against a third party.  As part of the settlement, the third party agreed to allocate a portion of the funds to the deceased’s estate.  The wife was the administrator of that estate.  The court reasoned the carrier was not entitled to subrogation funds because the wife did not individually recover funds from the third party settlement.  Therefore, the collective-recovery standard did not apply.  Fort Bend County v. Norsworthy, No. 14-17-00520-CV, 2019 WL 1291526 (Tex. App.—Houston [14th Dist.], March 21, 2019).

-  Copyright 2019, Erin Hacker Shanley, Stone Loughlin & Swanson, LLP.

The Appeals Court in El Paso held that, in the absence of a formal judicial or administrative decree, “recovery” from a third party occurs once the funds are actually disbursed, at which point a carrier may suspend benefits payments. Texas Mutual Ins. Co. v. Garcia, No. 08-15-00075-CV, 2019 WL 1467973 (Tex. App.—El Paso, April 3, 2019).  In that case, Texas Mutual stopped paying death benefits when the claimant beneficiaries signed an interim agreement with a third party.  The court found that Texas Mutual improperly suspended benefits before the agreement was funded or executed.  The court noted that Texas Mutual had a duty to continue paying death benefits unless and until the claimant beneficiaries recovered money from the third party.

On April 5, 2019, the Texas Supreme Court held that, while the 45-day deadline to file for judicial review of an Appeals Panel decision is mandatory, it is not jurisdictional-- meaning that judicial appeals from decisions by the Division of Workers’ Compensation Appeals Panel that are filed with the trial court past the 45-day statutory filing deadline do not automatically divest the trial courts of jurisdiction.  The Supreme Court’s decision overrules conflicting decisions from seven different Texas courts of appeals.

On March 17, 2012, Santiago Chicas (Santiago) fell from a ladder, sustaining fatal injuries.  His wife, Berlita Chicas (Chicas), sought workers’ compensation benefits from Texas Mutual, the workers’ compensation insurer for her husband’s employer.  Texas Mutual disputed the claim, and Chicas sought dispute resolution with the Division of Workers’ Compensation.    At CCH, the Hearing Officer found that Santiago was not an employee of the insured at the time of the injury, and therefore, his injury was not compensable.  Chicas appealed to the Appeals Panel.  On January 5, 2015, she was notified that after review by the AP, the Decision and Order was final. 

Meanwhile, and while the administrative proceedings were pending, Chicas filed a wrongful-death suit and then amended her probate-court pleadings, seeking judicial review of the administrative decision. Texas Mutual successfully filed a plea to the jurisdiction.  Twelve days after the probate court dismissed her claims, Chicas sought judicial review of the Appeals Panel decision in District Court. The District Court granted Texas Mutual’s plea to the jurisdiction and dismissed Chicas’ claims.  Chicas appealed.  The Court of Appeals reversed, holding that Tex. Lab. Code Section 410.252(a)’s 45-day deadline for filing for judicial review of the agency’s decision is not a jurisdictional statutory prerequisite, and therefore, the trial court had erred in granting Texas Mutual’s plea to the jurisdiction.  (The Court did not address whether Chicas’ claims were timely, noting that the limitations issue was properly left for resolution by way of a motion for summary judgment.) In an opinion by Justice Brown, the Supreme Court affirmed, holding that Chicas’ failure to file suit before the 45-day deadline did not deprive the District Court of jurisdiction.  In reaching its decision, the Court examined: (1) the plain meaning of the statute, (2) whether the statute contains specific consequences for noncompliance, (3) the purpose of the statute, and (4) the consequences that would result from each possible interpretation of the statute. As part of its analysis, the Court noted that the plain text of the statute did not indicate any legislative intent that the statute be jurisdictional, that the statute did not require dismissal for failure to comply, and that the purpose of the statute was not to deprive courts of jurisdiction in certain cases.  The Court further stated that interpreting the statute as jurisdictional would “leave final judgments vulnerable to attack on the ground that the deadline was not met.”

Bottom line: a party arguing that the 45-day deadline was not met needs to raise and preserve that argument, since such an argument can be waived if not raised properly because it does not go to a court’s jurisdiction to hear the case.

Since Texas Mutual’s plea to the jurisdiction relied solely on argument that the 45-day deadline is jurisdictional, the Supreme Court declined to address argument as to whether the filing deadline is a statute of limitations that would trigger application of the tolling provision in a workers’ compensation appeal.  The case has been remanded to the trial court for further proceedings. Texas Mutual Ins. Co. v. Chicas, No. 17-0501, 2019 WL 1495202, (Tex., April 5, 2019).

After seven weeks of trial, on April 9 a Dallas jury found seven defendants in the Forest Park Medical Center kickback case guilty.  Those convicted are: Dr. Douglas Won, Dr. Michael Rimlawi, Wilton McPherson Burt (co-founder of the specialty surgery hospital), Dr. Shawn Henry (a Fort Worth spine surgeon), Dr. Mrugeshkumar Kumar Shah (a pain doctor), Jackson Jacob (recruiter for Forest Park), and Iris Kathleen Forrest (a nurse).  North Texas prosecutors used a federal law, the Travel Act, to win the bribery and kickback convictions, arguing that the health care workers had attempted to evade federal insurance programs like Medicare to avoid prosecution.

The case involves $40 million in bribery schemes.  Twenty-one individuals were originally charged in the case.  Of those, 10 pleaded guilty prior to trial. Bariatric surgeon Nick Nicholson, MD was acquitted. Also charged is a Texas workers’ compensation claimant attorney Royce Bicklein, who is accused of accepting payment for referring his injured worker clients for medical treatment.  Mr. Bicklein’s case has yet to go to trial. 

By Cortney Lemos-Crawford and Kelsey Paddock

Hanna Brophy Secures a “Take Nothing” in Luis v. WCAB

Click here to review the CCC —> 84 Cal. Comp. Cases 107

Ms. Luis (“Applicant”) sustained an injury on 12/9/2013 while employed by Labor Finders as a bakery assistant. She alleged injury to her lumbar spine, cervical spine, right knee, right upper extremity, bilateral hips, digestive and excretory systems, skin and right hand. Defendant accepted the lumbar spine, cervical spine, right knee, and right upper extremity only. Applicant had sustained at least three prior industrial injuries to overlapping body parts, all of which had resolved by Compromise & Release.

The parties agreed to use Dr. Jeffrey Bernicker as an Agreed Medical Evaluator (“AME”). He evaluated Applicant twice and reviewed 1,800 pages of medical records and prior settlement documents. Ultimately, he concluded that any impairment was the result of the prior industrial injuries. Dr. Bernicker stated, “Rarely throughout my career as a Medical-Legal examiner serving the greater San Diego Workers’ Compensation community (during which time I have issued well over 3000 AME reports) have I encountered a case where there [is] so much evidence supporting extensive apportionment to prior industrial injuries.”

Applicant subsequently alleged an additional injury against Labor Finders from 2015, which was during the period that she was working modified duty due to the 2013 claim. Dr. Bernicker evaluated Applicant for that date of injury as well.  He found that the injury, “either never occurred in the first place or, even if it hypothetically was considered to have occurred, simply represented a mild transient flare-up of the symptoms that have been well documented prior to that date and for which the patient was already under active treatment.”

The matter proceeded to a four-day trial before Judge Ellison at the San Diego Workers’ Compensation Appeals Board (“WCAB”) with Hanna Brophy’s Ms. Lemos-Crawford appearing on behalf of the Defendant. Having relied on the opinions of AME Dr. Bernicker, Judge Ellison ruled in favor of Defendant!

Applicant filed a Petition for Reconsideration arguing that the opinions of Dr. Bernicker were not substantial medical evidence because they were predicated on surmise, speculation conjecture, or guess. Applicant further argued that Dr. Bernicker was biased against her based on her prior work injuries. The WCAB denied Applicant’s Petition for Reconsideration noting that Applicant “mischaracterize[d] the record.”

Applicant then filed a Writ for Review based on the same premise. The District Court of Appeal (“the Court”) denied Applicant’s Petition, noting that it was “[b]ased on the same errors of which Luis complained to the Board.” It emphasized that the Court may only consider whether the “the evidence, when viewed in light of the entire record, supports the Award of the Board.” It may not reconsider the evidence itself. Further, the Court citedPearson Ford v. WCAB (2017) to reiterate that an AME’s opinion should be followed “unless there is good reason to find the opinion unpersuasive, given that the parties typically select an agreed medical evaluator for her expertise and neutrality.” (16 Cal. App. 5th 889, 892).

This case provides further precedent that the opinions of an AME should be followed absent good reason to find the opinion unpersuasive. Defendants should be encouraged to stand their ground when the facts and the law are on their side.