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NWCDN Members regularly post articles and summary judgements in workers’ compensations law in your state.  


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Texas

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With accomplices like these . . . 


The Division recently entered into a consent order with the Langford, Wise, and Farahmand Law Firm through its manager and agent, claimant attorney Roger Farahmand.  

Pursuant to the order, the law firm shall not seek payment of any attorney fee orders issued between July 1, 2017 and August 31, 2019 and shall not seek payment for representing any workers’ compensation participant for the next ten years.  Notably, the order also requires Mr. Farahmand to testify against claimant attorney Leslie Casaubon:
Respondent, through its Manager agent Roger Arash Farahmand, must cooperate fully with the Travis County District Attorney's Office investigation and prosecution(s) of Leslie Casaubon and provide complete and truthful testimony when and if called upon to do so in any criminal proceeding.  
As Paul Harvey would say, the rest of the story is that Roger Farahmand and Leslie Casaubon were both indicted for billing fraud in 2021: https://www.tdi.texas.gov/news/2021/dwc03262021.html.

Mr. Farahmand and Ms. Casaubon were indicted for engaging in organized criminal activity and securing the execution of a document by deception.  The indictments against Ms. Casaubon and Mr. Farahmand allege that they caused data to be submitted to the Division’s attorney fee processing system “representing that services had been rendered by Roger Farahmand and James T. Langford when services were not rendered by Roger Farahmand and James T. Langford.”

The case against Mr. Farahmand was dismissed on December 29, 2022 for the reason that “[t]he defendant has been granted immunity in light of his testimony.”  The case against Ms. Casaubon remains pending with a pre-trial hearing set for March 7, 2023.  Mr. Farahmand will presumably be called to testify against her at trial if a plea agreement is not reached.  
 

Trouble Seeing?  Call an eye doctor, not a chiropractor.


On January 13, 2023, the Division fined chiropractor Poorvi Sandesara, D.C. $8,000.00 for treating an injured employee’s compensable eye injury. For those that don’t know or aren’t frequent readers of our newsletter, chiropractors are not the same as medical doctors. The Texas legislature has limited chiropractors’ scope of practice to the evaluation and treatment of the “biomechanical condition of the spine and musculoskeletal system.” Chiropractors are prohibited by law from performing surgery, giving injections, and prescribing drugs, among other things.  However, the entrepreneurial spirit is alive and well in chiropractors and sometimes they push their scope of practice boundaries, to the detriment of injured employees. According to the Division’s consent order:
Failure to act within the scope of practice for a chiropractor is deceptive and harmful to injured employees, the public, and the Texas workers’ compensation system.  This conduct directly interferes with the division’s goal of providing timely, appropriate, and high-quality medical care supporting restoration of the injured employee’s physical condition and earning capacity.
We couldn’t have put it better ourselves.  This case also raises the obvious question of why someone would treat with a chiropractor for an eye injury.  Did the injured employee not know better or did their attorney refer them to the chiropractor?  It seems the goal in such cases is to stay off work longer rather than to get the best possible medical care.  The Division’s actions in this case are in the best interests of injured employees and are to be commended.  Next up on the Division’s agenda should be chiropractors treating injured employees with burn injuries which, believe it or not, we’ve also seen before.

Un-Rea-liable evidence gets Crump-ed in Dallas Court of Appeals


After water damage to a University of Texas at Dallas building in February 2015 led to mold, which was remediated 3 months later, UT system employee Diane Bartek made an occupational disease claim for exposure to mold in her workplace. To support her claim for conditions such as “autoimmune nervous system dysfunction, immune deregulation, and toxic encephalopathy,” William Rea, M.D. produced a causation opinion which was based, in part, on an assumption that Bartek’s mold exposure lasted for 5 years and, in part, on a series of tests that were neither medically or scientifically recognized to support the claimed medical conditions. Neither a Texas Department of Insurance, Division of Workers’ Compensation (DWC) administrative law judge nor the Appeals Panel fell for the junk science. Despite objections to Dr. Rea’s testimony as based on clearly erroneous assumptions and unsound testing methods, a Dallas County jury was allowed to hear Dr. Rea’s causation evidence, and they found she sustained an occupational disease injury from continuous exposure to mold.

The UT System appealed to the Dallas Court of Appeals, arguing that the jury verdict was based on unreliable medical evidence and so there was legally and factually no evidence to support the trial court’s judgment. Bartek responded by arguing that Dr. Rea was her treating doctor and was, therefore, “empowered by the Texas Workers’ Compensation Act to provide a causation report.” Finding that Transcontinental Ins. Co v. Crump, 330 S. W.3d 211 (Tex. 2010), is not at all moldy, the Dallas Court of Appeals agreed with UT System for two reasons: 1) Dr. Rea’s opinion was based on an unreliable foundation; and 2) each of Dr. Rea’s testing methods were shown to be rejected by the scientific and medical communities. The court of appeals threw out the trial court judgment and rendered a take-nothing judgment in favor of UT System. 

Copyright 2023, Stone Loughlin & Swanson, LLP 

Did someone suggest bringing back extent of injury waiver?   


For about a five-year spell, the Division’s Appeals Panel interpreted Labor Code section 409.021’s 60-day compensability deadline to mean that an insurance carrier could waive its right to raise an extent of injury dispute if it did not dispute a condition within 60 days from its initial notice. This waiver theory meant that the mere utterance of a diagnosis on a medical record or even a work status report obligated an insurance carrier to dispute the condition or waive its right to do so.
 
This waiver theory created a new dimension to CCH evidence: the injured employee had to identify the date the diagnosis was first mentioned and the insurance carrier had to show that it had conducted a “reasonable investigation” and disputed the diagnosis at its earliest opportunity. Extent of injury disputes frequently boiled down to mere words on a page, the adjuster’s ability to scrutinize each medical report, and a hearing officer’s opinion about what is a reasonable investigation.  (See APD 060233).

What’s a reasonable investigation, you ask? Well, for a real rabbit hole analysis, the Appeals Panel once stated that “reasonable investigation with the claimant’s treating doctor would have disclosed a referral, and the referral doctor’s referral for diagnostic testing.” (See APD 081222).

Then, in 2009, the Texas Supreme Court in State Office of Risk Management v. Lawton found that the 60-day waiver in Labor Code section 409.021 should not apply to extent of injury disputes.  That seemed to be waiver’s last breath.
   
That is, until November 2022, when House Bill 790 was filed before the 88th Legislative Session even began.  House Bill 790 would create a statutory right to the extent of injury waiver and require every first designated doctor request to include a request for an extent of injury opinion, proposing changes to Texas Labor Code 409.021 and 408.0041.   

Although this seems to be designed mostly for persons covered under Gov’t Code §§607.051 (first responders), HB 790 proposes to include that an insurance carrier who fails to comply with new subsection (a) (not just the part related to first responders) within 60 days waives its right to deny the extent of the specific injury claimed by the injured worker or “reasonably reflected” in a review of the injured worker’s medical records. We will provide an update if this gets past the committee.
 


Congratulations are in order

 
The Division just issued a list of the hardest working comp attorneys for 2022. Here are the top three claimant and top three carrier attorneys with the average number of hours worked per day assuming they worked every single day of the year, weekends and holidays included, and billed at the Division’s maximum allowable rate of $200 per hour: 

Claimant Attorney    Approved Fees      Hours per day
Bill Abbott                   $958,162.50           13.13
Adam Henderson       $939,700.00           12.87
Kim Wyatt                   $774,820.00           10.61
 
Carrier Attorney      Approved Fees        Hours per day
Dean Pappas            $880,492.50             12.06
Jeremy Lunn             $641,589.00              8.79
Mark Midkiff              $509,600.30              6.98

Bill Abbott moved up to first place from number two in 2021 while Kim Wyatt dropped from first to third and Adam Henderson moved up one spot to number two for 2022. Mr. Henderson was indicted for billing fraud in 2021 along with Leslie Casaubon and Roger Farahmand (see story above). The indictment alleges that Mr. Henderson submitted bills for work he did not do from January 1, 2012 to January 31, 2019. The case remains pending and he has a pretrial hearing set for February 9, 2023. Dean Pappas was the number one carrier attorney again, making him the top carrier attorney five out of the last six years.
 
To view the amount of approved attorney’s fees for each of the top 100 Claimant and Carrier workers’ compensation attorneys for 2022, click the following link: Top 100 2022

Prior years can be viewed here: Top 100 2021, Top 100 2020, Top 100 2019, Top 100 2018, Top 2017

Austin court of appeals may be close to deciding fate of SIBs rule


The Third Court of Appeals in Austin has signaled that it may be on the verge of issuing its long-awaited decision in the challenge to the validity of the Division’s rule on Supplemental Income Benefits. The validity challenge, styled Texas Department of Insurance, Division of Workers’ Compensation v. Accident Fund Insurance Company of America and Texas Cotton Ginners’ Trust, has been at the court of appeals since February 12, 2021. 

The case began when Accident Fund (represented by this firm) and TCGT filed petitions for declaratory relief in Travis County district court, challenging the validity of the SIBs rule. The carriers argued that the Division exceeded its rule-making authority because the rule is inconsistent with the Texas Workers’ Compensation Act – specifically, the rule permits a worker to qualify for SIBs even if the worker does not meet any of the three criteria for SIBs required by the Act. Travis County district judge Maya Guerra Gamble agreed with the carriers, held the rule invalid, and enjoined the Division from applying it. But the Division appealed, and the appeal has stayed the trial court’s ruling for almost two years. 

In a letter this month, the court of appeals notified the parties that the cause is set for submission on briefs on February 1, 2023. That could mean that the court’s decision will issue on that date or soon thereafter. 
 

A case to watch


The 13th Court of Appeals heard oral argument on January 11th in Accident Fund v. Rodrigo Mendiola, Cause No. 13-21-00361-CV.  Although there are several evidentiary issues in the carrier’s appeal, the primary issue is whether the “old law” standard for determining an injured workers’ entitlement to Lifetime Income Benefits (LIBs) can be applied to the “new law.”  This case is of interest because it narrowly focuses on the applicability of the old law case of Travelers insurance Company v. Seabolt, 361 S.W. 2d 204, 206 (Tex.1962) to new law cases.  The case squarely challenges the past practice of the agency and of the courts which until now have applied Seabolt without question.  The trial court applied the Seabolt standard in awarding Mr. Mendiola LIBs rather than the express requirements of the current statute. 
 
Texas Labor Code section 408.161(b) is the current law governing LIBs entitlement. In this case, Mr. Mendiola had to prove that he had lost one foot at or above the ankle, which he proved, and that he had lost one hand at or above the wrist, which Accident Fund argued that he could not prove. The standard of “total and permanent loss of use” of a body part under section 408.161 is now based on the specific impairment of the body part.  It is an analysis of function. In contrast, the old law statute and the Seabolt standard were based on general disability and the injured worker’s ability to work using the body part. Under the old law standard, a worker could qualify for LIBs if he could show that the body part in question no longer had “any substantial utility as a member of the body,” or that the worker could not “procure and retain employment requiring the use of the body part.” The trial court ruled that he met that standard.  But under section 408.161(b), in addition to having had a partial leg amputation, Mr. Mendiola had to prove that one of his hands was totally and permanently useless. Accident Fund’s argument brought to light through traditional means of statutory construction that it was legal error for the court to ignore the requirement under new law that Mr. Mendiola’s hand had to be proved totally useless in order for him to qualify for LIBs.   Given that the worker testified that he could use his hand for many functions, some of which were compatible with work, Accident Fund argued he did not meet the statutory requirement.  

The 13th Court will decide whether the plain and ordinary use of the phrase “total loss of use” should be applied as written to LIBs cases, or whether it is appropriate to expand the meaning of the term by grafting the Seabolt standard into the new law.
 

Announcing a new SLS attorney! 


Nancy Ippolito joins us this month, after almost 4 years as an assistant general counsel at the Texas Department of Insurance, Division of Workers’ Compensation. Prior to her work at the agency, Nancy handled workers’ compensation insurance defense for over 15 years in Austin, Texas.  She has been board-certified in workers’ compensation law since 2009.  According to the Texas Board of Legal Specialization, out of 110,000 licensed lawyers in Texas, only 7,150, or a mere 6.5% of all attorneys, are board-certified which requires passing a rigorous exam among other criteria.  We’re excited that Nancy has joined the Firm and look forward to working with her and getting to know her better.  

We were advised by the Division earlier this month that the Zoom meeting IDs used to access benefit review conferences and other remote meetings were being changed starting in January. Instead of the usual 10-digit meeting ID assigned to each Benefit Review Officer, which we have been using since remote BRCs became the norm during COVID, the new meeting IDs are 11-digit numbers beginning with either 160 or 161. 

Some of us were exposed to the new system a bit early on December 19, when we called in to attend our BRCs using the usual Zoom call-in number. Upon entering the new 160 or 161 meeting ID to access our BRCs we received a recorded message to the effect that the meeting ID was not authorized. We were eventually able to access and participate via the internet by accessing the Division’s Zoom site (https://tdi-dwc-hearings.zoom.us/) and entering the 11-digit meeting ID listed in the BRC notification. 

We were later advised that BRCs may still be accessed by telephone but the call-in number has also been changed. The new dial-in number is 551-285-1373.


Copyright 2023, Stone Loughlin & Swanson, LLP 

On December 28, 2022, the Third Court of Appeals in Austin issued its latest decision in the seemingly never-ending litigation over the stop-loss exception to the Division’s 1997 Inpatient Hospital Fee Guideline.    

The court of appeals affirmed the trial court’s judgment which affirmed the State Office of Administrative Hearings (SOAH) Decision and Order holding that the “stop-loss” exception to the Division’s 1997 Inpatient Hospital Fee Guideline did not apply to 528 inpatient hospital admissions.  These admissions took place at three hospitals, two in Houston and one in Dallas, named Vista Medical Center Hospital, Specialty Hospital of America, Southeast Houston, and Vista Hospital of Dallas (collectively, Vista).  Most of these admissions took place between 2001 and 2007.  A conservative estimate of the average amount sought by Vista for each admission is fifty thousand dollars for a combined total of over twenty-six million dollars at issue in the court of appeals decision plus thirty million dollars in interest due to the age of the disputes and the current interest rate on delayed payment of medical benefits.  

The court of appeals made short work of Vista’s arguments challenging SOAH’s decision.  To sum up Vista’s arguments, the method SOAH used to determine whether an admission involved unusually costly and extensive services wasn’t fair because relatively few of the admissions qualified for stop-loss reimbursement.  However, the court of appeals held that SOAH’s decision was not arbitrary and capricious and is reasonably supported by substantial evidence.  Vista has the right to file a motion for rehearing with the court of appeals and it can also petition the Texas Supreme Court to review the court of appeals decision. However, the courts surely have stop-loss fatigue by this point and the odds of Vista getting the decision reversed are about the same as a SIBs applicant finding a job.

The History of Stop-Loss

As we hopefully near the end of the stop-loss saga, now is a good time to look back on how we got here.  The stop-loss litigation began shortly after the Texas Workers’ Compensation Commission (now the Division of Workers’ Compensation) adopted its 1997 Inpatient Hospital Fee Guideline.  The guideline had a giant loophole in it.  It seemed to say that if the hospital’s billed charges for an admission exceeded $40,000, the hospital was entitled to 75% of that amount. This gave hospitals a windfall because of their grossly inflated billed charges.  The stop-loss exception led many enterprising hospitals to make sure that their billed charges for an admission exceeded $40,000.  This was most often done with large mark-ups on spinal hardware and this was at the point in time when spinal fusions were all the rage and seemingly everyone who complained of back pain got a fusion whether they needed it or not.  Vista actually seems to have been founded on the stop-loss exception.  It focused almost exclusively on spinal surgeries for injured workers covered by the stop-loss exception using questionable doctors who would later have their medical licenses revoked. See, e.g., Eric “The Red” Scheffey, M.D.

SLS was heavily involved in the stop-loss litigation from the beginning.  James Loughlin of the Firm, along with Ron Luke, PhD, and Nick Huestis met with TWCC staff early on to educate them on how the stop-loss provision should be interpreted.  On behalf of various clients, SLS sent a letter to TWCC Executive Director Bob Shipe on December 6, 2004 asking the Commission to take action to address the stop-loss problem by issuing an advisory that would clarify the Commission’s interpretation of its rule.  Mr. Shipe responded by letter a short time later stating that the Division was suspending the issuance of decisions in stop-loss cases while staff reviewed the application and interpretation of the stop-loss provision.  The Commission then issued its Staff Report on February 17, 2005 clarifying that the stop-loss exception is a two-part test meaning that in order for the stop-loss exception to apply, a hospital must demonstrate not only that its audited charges exceed $40,000 but also that the services it provided were unusually extensive and costly. Following the Staff Report, the Commission began deciding stop-loss cases by determining whether the services provided during the admission were unusually extensive and costly. 

On January 12, 2007, an en banc panel of nine SOAH ALJs rejected the Staff Report’s two-pronged interpretation in a 7-2 decision and the trial court upheld SOAH’s decision.  However, in a decision issued on November 13, 2008, the Third Court of Appeals reversed the trial court and held that the two-pronged interpretation of the stop-loss provision is correct.  That decision became final when the Texas Supreme Court denied the hospitals’ motion for rehearing of their petition for review on December 3, 2010.  SOAH was now required to apply the stop-loss exception as a two-pronged test.  

SOAH subsequently consolidated all of the Vista cases for hearing and decision. A two-day hearing was held before a five-judge panel on February 23 and 24, 2016 to take evidence in the cases.  The carriers offered testimony from Dr. Luke.  Following post-hearing briefing, SOAH ultimately issued its consolidated decision on June 24, 2019 finding that only 14 of the 542 disputed admissions qualified for reimbursement under the stop-loss exception.  Vista filed suit for judicial review of SOAH’s decision.  The trial court issued its decision on May 13, 2021 affirming SOAH’s decision which Vista then appealed to the Third Court of Appeals.

In the Third Court of Appeals latest Vista decision, it cites at length from Dr. Luke’s testimony at SOAH.  The court notes that the ALJs did not explicitly adopt one of the proposed methodologies but adopted a two-part analysis that shares certain features with Dr. Luke’s analysis.  In response to Vista’s arguments that SOAH should have used one of its proposed formulaic methods, the court reiterated its earlier holding that what constitutes “unusually costly and unusually extensive” services in any particular fee dispute is “a fact-intensive inquiry best left to the Division’s determination on a case-by-case basis.” 

What Next?

The carriers have been on a winning streak since the Third Court of Appeals’ first decision in 2008 with Vista appealing every adverse decision since then.  If history is any guide, Vista will appeal again by petitioning the Texas Supreme Court for review although it must know that doing so is likely to be in vain and will only delay the inevitable.  If and when the Third Court of Appeals’ decision becomes final, the 528 individual cases it disposed of will become final.  There remain a currently unknown number of Vista stop-loss cases pending at the Division, SOAH, or the trial court which must still be resolved. 


Copyright 2023, Stone Loughlin & Swanson, LLP

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