State News : Texas

After a report conducted by the Workers’ Compensation Research and Evaluation Group concluded there was no statistical difference in disability duration between CARF-accredited and non CARF-accredited programs, the Division has proposed amendments to Division Rules 134.600 (regarding preauthorization, concurrent utilization review, and voluntary certification of health care) to remove the exemption status from CARF-accredited facilities.   The Division is also proposing to amend Rule 134.230 (regarding return to work rehabilitation programs)  to set one fee schedule for work hardening and work conditioning services, regardless of a facility’s accreditation status, by removing the increased payment to CARF-accredited facilities providing these services. 

The proposed amendments are additionally intended to implement Senate Bill 1494 of the 85th Legislative Regular Session, which amended Texas Labor Code Section 413.014 to require preauthorization and concurrent utilization review for health care facilities providing work-hardening (WH) or work-conditioning (WC) programs.  Currently, health care facilities that are accredited by the Commission on Accreditation of Rehabilitation Facilities (CARF) are exempt from preauthorization and concurrent review requirements for WH and WC.  The bill no longer requires, but instead permits, the commissioner, by rule, to exempt a credentialed health care facility providing WH and WC services from preauthorization and concurrent review requirements.

The Division is accepting comments for the amendments.  The informal working draft is available atwww.tdi.texas.gov/wc/rules/drafts.html.  The comment period closes on February 2, 2018 at 5:00 p.m.

~ This blog submission was prepared by Erin Shanley, an attorney with Stone Loughlin & Swanson, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Stone Loughlin & Swanson is a member of the National Workers’ Compensation Defense Network (NWCDN). If you have any questions about this submission or Texas workers’ compensation in general, please contact Erin by e-mailing her at eshanley@slsaustin.com or by calling her directly at (512) 343-1300.

On January 2, 2018, Medical Advisor Patrick M. Palmer, M.D., sent out a notice advising system participants that the Medical Quality Review Panel (MQRP) had finalized its CY 2018 Medical Quality Review Annual Audit Plan (Annual Plan).  The Annual Plan sets priorities for the types of audits the MQRP will initiate during the year.

According to the Annual Plan as approved by Commissioner Brannan, the two categories of focus will be: (1) the appropriateness of a health care provider’s decision and recordkeeping for prescribing opioids; and (2) the appropriateness and necessity of health care providers (excludes designated doctors) referring for testing.  Notably, the following specific services were specifically mentioned as being subject to review:  muscle testing, range of motion (ROM) testing, needle electromyography (EMG), and nerve conduction tests.

The Division had solicited input from workers’ compensation participants on November 20, 2017 regarding the two potential categories for the Annual Plan, but received no input.  Therefore, Commissioner Brannan approved the plan as proposed on December 27, 2017.
 
The Division plans to obtain stakeholder input on the development of each individual plan-based audit proposal for categories within the Annual Plan, and will then post a plan-based audit that, according to the Medical Advisor, includes: inclusion and exclusion criteria; service time frame to be audited; sample size; and subject and case file selection.  All medical quality reviews initiated on or after January 1, 2018 will be performed in accordance with this approved medical quality review process.  

~ This blog submission was prepared by Erin Shanley, an attorney with Stone Loughlin & Swanson, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Stone Loughlin & Swanson is a member of the National Workers’ Compensation Defense Network (NWCDN). If you have any questions about this submission or Texas workers’ compensation in general, please contact Erin by e-mailing her at eshanley@slsaustin.com or by calling her directly at (512) 343-1300.

The Division is currently accepting public comments on proposed amendments to Division Rules 134.500, 134.530, and 134.540 affecting the provision of compound prescription drugs in the workers’ compensation system.  The proposed amendment to Rule 134.500 would exclude from the closed formulary all compound prescription drugs, and proposed amendments to Rules 134.530 and 134.540 would require preauthorization of compound prescription drugs for both network and non-network claims.

The proposed rule changes would not prohibit the use of compounded drugs, but those drugs would need to be determined to be medically necessary via preauthorization through utilization review prior to being dispensed to a workers’ compensation claimant. 

According to the Division’s data on pharmacy billing and its ongoing audit of doctors’ practices, the cost of compounded drugs doubled from 2010 to 2014, increasing from $6 million to $12 million.  Although the average cost per prescription was $829 in 2016, increasing from $356 in 2010, our firm saw multiple individual prescriptions topping $10K per 30-day supply in 2016.  And a May 2017 report by the Division’s Research and Evaluation group found that the number of compounded drugs increased from 18,020 prescriptions in 2010 to 26,380 in 2014.  Of that, almost a third of compounded drug prescriptions were to treat back injuries.  The Division found these numbers concerning because compounded drugs aren’t recommended as first line medications in treatment guidelines for injured employees, and members of the House Committee on Business & Industry asked the Division to address the issues through a new rule.   As a result, on June 16, 2017, the Division announced an informal draft rule to require that compounded drugs be preauthorized.

Compounded drugs are not FDA-approved, nor does the FDA verify their safety, quality, or effectiveness. In fact, the FDA has found that the labeling of compounded drugs often omits important information.  Moreover, poor compounding practices can result in serious drug quality problems, such as contamination or medications that do not possess the purity, strength, and quality they are intended to have.  Finally, the FDA has reported its concern that some compounding pharmacies and pharmacists produce drugs for patients even though an FDA-approved drug may have been medically appropriate for them.

Commissioner Ryan Brannan believes the preauthorization process will strike a balance against these concerns.  “We want to make sure the use of these drugs is being reviewed and that physicians are considering efficacy and appropriateness of alternatives while still ensuring that patients who need compounded drugs will still be able to get them,” Brannan said.

The Division is accepting written comments to the proposed rule changes until 5:00 p.m. February 20, 2018, and will conduct a public hearing relating to the proposed changes on Thursday, February 15, 2018 at 10:00 a.m. in the Tippy Foster Room of the Texas Department of Insurance, Division of Workers’ Compensation, 7551 Metro Center Drive in Austin, Texas 78744.  The hearing will also be audio streamed and the audio stream may be accessed via the DWC Calendar at www.tdi.texas.gov/wc/events/index.html.

~ This blog submission was prepared by Erin Shanley, an attorney with Stone Loughlin & Swanson, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Stone Loughlin & Swanson is a member of the National Workers’ Compensation Defense Network (NWCDN). If you have any questions about this submission or Texas workers’ compensation in general, please contact Erin by e-mailing her ateshanley@slsaustin.com or by calling her directly at (512) 343-1300.

We must bid a sad farewell to Judge Carolyn Cheu Mobley, who retired from the Division of Workers’ Compensation on December 22, 2017.  As the sole Hearing Officer in Austin since 2010, Judge Mobley handled a heavy docket with courtesy and professionalism.  No word yet on what endeavors she will undertake following her departure from the DWC, but we certainly wish her well.  Judge Mobley’s replacement will be Judge Rabiat Ngbwa, heretofore one of three traveling Administrative Law Judges from the Division’s central office.

The 85^th Legislature amended the Act to change the title of the Division’s “Hearing Officers” to “Administrative Law Judges.” To implement the change, the Division is updating its forms to now refer to “Administrative Law Judges.” We recommend our clients consult the Division’s website to confirm they are using the most recent version of the form.

Touting its efforts to reduce costs through workers’ compensation healthcare networks, a drug formulary, and by encouraging safe workplaces, the Division recently announced that Texas workers’ compensation premiums are down 63% since 2005. The reduced cost of coverage have encouraged more employers to join the system and provide workers’ compensation for their employees. The full press release is availablehere

Responding to Hurricane Harvey, Gov. Abbott declared a state of disaster in several Texas counties. Following the declaration, the Division issued a bulletin extending certain deadlines for workers’ compensation processes and procedures residing in the disaster affected counties. Effective January 10, 2018, the Division will lift the bulletin and all standard workers’ compensation deadlines and procedures will go back into effect. The Division bulletin is availablehere.

The Supreme Court recently confirmed the exclusive jurisdiction of the Division extends to claims made against a workers’ compensation carrier, Accident Fund General Insurance Company and its adjuster Kriste Henderson (collectively, Accident Fund) arising out of the bona fide offer of employment process. In In re Accident Fund Insurance Company, injured worker Rick Sayaz was presented with two bona fide offers of employment by the Employer. Sayaz failed to respond to the offers and failed to seek dispute resolution in the Division to determine the validity of the offers. Sayaz sued the Employer for retaliatory discharge under section 451.001 and for defamation. The injured worker also sued Accident Fund alleging it aided and abetted the Employer’s retaliatory discharge, tortiously interfered with Sayaz’s employment relationship, and conspired with the Employer to wrongfully terminate Sayaz. According to Sayaz, Accident Fund’s participation in the bona fide offer of employment process was a pretext for the retaliatory discharge.
 
In the trial court, and citing the Supreme Court’s opinions inIn re Crawford & Co. and Texas Mut. Ins. Co. v. Ruttiger, Accident Fund filed a plea to the jurisdiction arguing that Sayaz’s claims are within the exclusive jurisdiction of the Division. The plea was denied, and Accident Fund filed a petition for writ of mandamus with the court of appeals. The appellate court denied the petition, and Accident Fund sought relief from the Texas Supreme Court.
 
In aper curium opinion, the Supreme Court held that Sayaz’s claims are within the exclusive jurisdiction of the Division. The Court explained that the Act and Division rules provide the Division with exclusive jurisdiction to determine whether an offer of employment is bona fide for purposes of the Act. In this case, all of the claims alleged against Accident Fund arise from its participation in the bona fide offer of employment process and Sayaz’s complaints about that process. The question of the validity of the offers – and whether they were in fact “bona fide” – was a threshold factual determination for each of Sayaz’s claims. Therefore, Sayaz’s claims asked the trial court to make a determination on a matter within the exclusive jurisdiction of the Division. Citing Ruttiger, the Court concluded, “Sayaz’s claims against Accident Fund arise out of the statutory claims-handling process and, as a result, ‘the current Act with its definitions, detailed procedures, and dispute resolution process demonstrate[s] legislative intent for there to be no alternative remedies.’” Because the Division has exclusive jurisdiction over the bona fide offer of employment process, and Sayaz failed to exhaust his administrative remedies in the Division, the trial court lacked jurisdiction over Sayaz’s claims. The Court granted mandamus relief to Accident Fund and Ms. Henderson and directed the trial court to withdraw its orders denying their plea to the jurisdiction and dismiss all claims against them.In re Accident Fund General Insurance Co., No. 16-0556 (Tex. Dec. 15, 2017).
 
Dan Price represented Accident Fund and Ms. Henderson in this case.
 
-Dan Price, Stone Loughlin & Swanson, LLP.

Also in State Office of Risk Management v. Martinez, the Texas Supreme Court held that, to preserve their case on judicial review, workers’ compensation litigants are only required to appeal the ultimate conclusions of the Division and not the underlying findings of fact supporting those conclusions. In Martinez, the injured worker presented the Court with a cross-petition in support of the court of appeals’ dismissal of the case alleging that SORM waived its right to judicial review by not expressly appealing the Division’s findings of fact. The Supreme Court noted that the courts of appeal were split on whether each finding of fact must be appealed to avoid forfeiture of the right to judicial review. Ultimately, the Court determined that each finding of fact did not have to be appealed. The Labor Code defines incorrect findings of fact as “errors” and not appeals. The parties are entitled to a modified de novo proceeding without deference to the findings of fact of the hearing officer. For this reason, it is not the findings of fact that must be appealed. But rather, the ultimate conclusions of the hearing officer are what must be appealed. In the case of Ms. Martinez, the ultimate conclusions were whether Martinez sustained a compensable injury and whether she had disability. SORM was not required to appeal each finding of fact the hearing officer relied on in coming to these ultimate conclusions. State Office of Risk Management v. Martinez, No. 16-0337 (Tex. Dec. 15, 2017).
 
-Dan Price, Stone Loughlin & Swanson, LLP.

A litigant is entitled to judicial review of a final decision of the Division of Workers’ Compensation, but judicial review is limited to the “issues” decided by the DWC Appeals Panel. In the case ofState Office of Risk Management v. Martinez, the Texas Supreme Court explained what an “issue” is for purposes of judicial review.
 
Edna Martinez was an employee of the State of Texas, who was injured at her home. The disputed issues defined by the benefit review officer were whether Martinez sustained a compensable injury and whether she had disability. At the CCH, Ms. Martinez alleged the injury occurred while working from home. The State Office of Risk Management (SORM), on behalf of the State agency, argued the injury was not in the course and scope of employment because Martinez violated an agency policy by working from home and because the injury did not involve an instrumentality of the employer. The DWC Appeals Panel reversed the hearing officer, determining the injury did occur in the course and scope of employment. SORM filed a petition for judicial review, alleging it is relieved from liability because Martinez violated a statute by working from home. Both SORM and Martinez filed motions for summary judgment. SORM argued Martinez did not sustain an injury in the course and scope of employment while at home because working from home was prohibited by law. Martinez argued that SORM could not raise this “issue” because it was not first presented to the Division and, as such, was not an “issue” on which judicial review was sought. The trial court granted SORM’s motion and denied Martinez’s. The San Antonio Court of Appeals reversed and determined the trial court had no jurisdiction over SORM’s petition because the statutory-violation ground was not first presented to the Division. The question for the Supreme Court was, for purposes of the Workers’ Compensation Act (the Act), what is an “issue” on which judicial review is sought by a party?
 
Citing the Act, the Supreme Court explained that the “final decision of the appeals panel regarding compensability or eligibility” describes the “issues” on which the trial court may render judgment. Those “issues” are defined by the benefit review officer at the outset of the dispute and proceed through the dispute resolution process with the same definition. Because the issue is defined at this early stage, the “issue” is not – and cannot be – a point of error as can be waived in an appellate context. Nor is an “issue” an argument that must be raised at this early stage. Applying this framework, the Court explained that the relevant “issue” on which judicial review was sought was whether the Claimant was injured in the course and scope of employment. The “issue” was not each argument refuting this point, such as the statutory-violation ground raised by SORM. Because the statutory-violation ground is an argument that Martinez was not in the course and scope of employment, SORM could present the argument for the first time on appeal. State Office of Risk Management v. Martinez, No. 16-0337 (Tex. Dec. 15, 2017).
 
-Dan Price, Stone Loughlin & Swanson, LLP.