State News : Texas

PBMs are pharmacy benefit managers.  What do they do, you ask?  They negotiate drug prices, build networks of pharmacies and build formularies.  The largest, Express Scripts, Inc., reported $102 billion in revenue in 2015 (that’s almost more than Pfizer, Coca-Cola and McDonalds, combined!).   Formularies are the primary tool in the PBM arsenal.  Drug companies offer PBMs sizeable rebates to make sure their drugs can stay on the formularies.  Last year, AstraZeneca paid the government $7.9 million to settle allegations that it paid its PBM “kickbacks” in order to stay on the formulary (and ostensibly to keep competing drugs off the formulary).  The drug manufacturers, in order to keep up with the rebates and keep their profit margins up, pass the cost on to the consumer. The lack of transparency in the rebate negotiation process and drug pricing practices is a continuing frustration to insurance carriers and consumers alike.    Numerous factors combine to keep consumers in the dark as the pricing is derived from a combination of premiums, deductibles, formulary availability and pricing, network requirements, coverage and individual price points for a given drug.  Full transparency would allow consumers a bigger voice in the drug pricing equation.   Such transparency is unlikely, however, barring regulatory intervention.

A few Appeals Panel cases of interest in the past couple of months include:

Finality

APD 161628 (decided 10/4/16) - the Appeals Panel analyzed finality in the context of Rule 130.102(h), which provides that if there is no pending dispute regarding the date of MMI or the impairment rating prior to the expiration of the 1st quarter of SIBs, the date of MMI and IR shall be binding and final.  In that case, the first certification was rendered on 9/11/13.  A designated doctor was requested on 10/6/13.  On 10/18/13, a designated doctor was appointed, and saw the claimant on 11/7/13.  The designated doctor certified MMI on 9/4/13 with a 15% impairment rating.  Claimant subsequently applied for SIBs for the 2nd, 3rd and 4th quarters.    The Appeals Panel clarified that it is Rule 130.102(h) that controlled in this case, not Rule 130.12 (which the hearing officer cited).  The Appeals Panel explained that the preamble to the relevant portion of Rule 130.102 makes it clear that the finality provisions of that rule do not apply to any situation where a party has raised a dispute prior to the first quarter of SIBs, and the appointment of a designated doctor does not resolve a dispute of the MMI certification or assigned impairment rating.

APD 161503 (decided 11/7/16) - the hearing officer erred in holding the first certification of MMI/IR was not final based on compelling evidence of a previously undiagnosed condition.  A flight attendant injured her left wrist, hand and forearm when she was flung around the cabin during an episode of turbulence.   She was diagnosed with left wrist and hand contusions and ulnar radicular pain.  A left wrist sprain was accepted by the Carrier.  Her treating doctor determined that she reached MMI with no permanent impairment.  The hearing officer determined that the injury also included left ulnar nerve entrapment, and the Appeals Panel agreed.  The Appeals Panel disagreed, however, the left ulnar nerve entrapment was a previously undiagnosed medication condition that justified an exception to the finality rule.  The Appeals Panel cited evidence that the claimant was diagnosed with early with ulnar nerve radicular pain, and the treating doctor who rendered the first certification had continuously diagnosed her with a left ulnar injury.  Reversed and rendered on the issues of finality and MMI/IR.

Expert Medical Evidence Required - Causation 

APD 161780 (decided 10/18/16) - the Appeals Panel reversed a hearing officer decision that the compensable injury included lumbar radiculitis where there were no medical records that explained how the injury caused that condition, and requiring expert medical evidence to prove causation of lumbar radiculitis.
 
Treatment After MMI Can’t Be Considered in Impairment Rating

APD 161877 (decided 11/2/16) - the hearing officer erred in adopting the designated doctor’s certification of MMI/IR as the designated doctor included a rating for a surgical procedure that occurred after the statutory date of MMI, which was determined to be the proper MMI date by the Appeals Panel. 

Course and Scope - Deviation from Employment

APD 161985 (decided 11/7/16) - the hearing officer erred in holding the claimant was not in the course and scope of his employment when he was involved in a motor vehicle accident.   The claimant was driving to Discount Tire to repair the tires on his personal truck in preparation for a 10-hour drive to a location at the direction of his employer.  Claimant was paid $30.00 per day for the use of his truck and it was company policy to reimburse foremen and operators for use of their personal vehicles.  Claimant was reimbursed each months regardless of whether or not the truck needed maintenance.  The employer directed claimant to choose a crew to travel with him to Baytown for a safety meeting.  ON the date of injury he was driving to get his tires repaired before traveling to Baytown. 

DWC is losing two more Hearing Officers.  John Bell is leaving the Dallas Field Office and Marilyn Allen is leaving the Houston West Field Office.  Meanwhile, in Ft. Worth, long-time Benefit Review Officer, Larry Beckham has retired and in San Antonio, Mery-Margaret Cisneros has moved from BRO to OIEC to manage the ombudsmen in San Antonio and Corpus Christi.  The new year promises to be interesting.  

On 12/1/16, the DWC published its 2016 Biennial Report. The DWC reports significant improvements since the 2005 HB legislative reforms including lower claims costs and premiums, higher employer participation rates, better access to care and return to work outcomes and fewer disputes. While most of the signposts indicate improvement, according to DWC, designated doctor disputes remain high.  The DWC made several legislative recommendations including revising certain Labor Code provisions to allow for electronic transmission or information rather than requiring certified mail or personal deliver in certain circumstances.  The DWC will once again attempt to make changes to the LIBs statute and the archaic language of “incurable insanity” and “imbecility” currently used to describe the degree of a brain injury that qualifies an injured employee to be eligible for LIBs.  The entire 2016 Biennial Report can be found at:http://www.tdi.texas.gov/reports/dwc/documents/2016dwcbienlrpt.pdf. 

115 carriers participated in the 2016 PBO Audit.  42 were High Performers, 70 were Average Performers and 3 were designated as Poor Performers.  Performance measures included timely payment of initial TIBs, timely submission of initial payment data through EDI, timely processing of initial medical bills, timely processing of requests for reconsideration, and timely submission of medical bill processing data through EDI.  A detailed report of the PBO results is available on the DWC website athttp://www.tdi.texas.gov/wc/pbo/pboresults.html#icrslts.

Last month we reported that Travis County District Court Judge Stephen Yelenosky would hear the appeal of the State Office of Administrative Hearings’ (SOAH) decision in the lead group of air ambulance fee disputes between various workers’ compensation carriers and PHI Air Medical.  SLS’s own James Loughlin represents many of the insurers involved in this ground-breaking litigation.  

On December 15, 2016, Judge Yelenosky agreed with SOAH that the Airline Deregulation Act (ADA) does not preempt Texas workers’ compensation laws that govern the amount of reimbursement paid to air ambulance providers for transporting injured workers.  The judge also ruled that air ambulances are entitled to reimbursement of no amount greater than 125% of the Medicare fee schedule, which reversed the SOAH judge’s ruling that those companies could be reimbursed at 149% of the Medicare rate.  

PHI Air is expected to appeal Judge Yelenosky’s decision and the fee disputes at the DWC level have been abated pending the final outcome of this litigation.

On December 1, 2016, the United States Department of Justice (DOJ) announced the unsealing of an indictment returned in November of this year against founders and investors of Forest Park Medical Center (FPMC) in Dallas. FPMC was a chain of five high-end, doctor-owned hospitals in North Texas.  FPMC declared bankruptcy and its facilities were sold off earlier in 2016.

The indictment stemmed from a massive conspiracy involving $40 million dollars in bribes and kickbacks paid by FPMC in exchange for patient referrals over the four years between 2009 and 2013.  The victims named in the indictment included the Federal Employee Compensation Act, TRICARE, Medicare, Medicaid, Federal Employees Health Benefits Program, UnitedHealthcare, Aetna, and Cigna.

In the indictment, it is alleged that FPMC paid bribes to the defendants in exchange for referrals of patients who primarily were insured with high-reimbursing, out-of-network private insurance benefits or benefits under the federally-funded programs listed above.  By obtaining referrals of those patients, FPMC was able to essentially set its own fees and bill at much higher reimbursement rates than those allowed to network providers.  At the same time, however, FPMC attempted to sell patients with lower-reimbursing insurance coverage (Medicare and Medicaid beneficiaries) to other facilities in exchange for cash.  As a result of the bribes, kickbacks and billing practices, FPMC allegedly billed their patients’ insurance plans and programs over half-a-billion dollars and collected over $200 million dollars in paid claims.

Among the 21 people indicted were executives at the hospital, spine surgeons, bariatric surgeons, a pain management doctor, a West Texas chiropractor, a workers’ compensation pre-authorization specialist and a workers’ compensation lawyer.   Some of the physicians indicted were treating doctors in the Texas worker’s compensation system.  

In addition to the charges related to the payment and receipt of kickbacks, the five principal owners of FPMC were also indicted on money laundering charges.  All of the defendants face federal prison time, fines, potential forfeiture of property and restitution if found guilty of the charges stemming from this indictment.

Also, new DWC policy (coming, we’re told, from the Chief Docketing Clerk) is for Benefit Review Officers to set disputes for CCH within 60 days of the BRC regardless of whether the participants can be available on the selected date.　 So, if there is only one slot available within two months of the BRC and one or both parties cannot attend, it will be set anyway.　The conflicted party is advised to request a continuance. How this outcome differs substantively from just setting the thing outside of 60 days to begin with is anyone’s guess.　 We chalk it up to DWC-logic.　

Larry Beckham, one of the Ft. Worth Benefit Review Officers, will be retiring effective November 30, 2016.　

John Bell, one of the Dallas Hearing Officers, has accepted employment with a carrier firm.　He, too, will leave the Division on November 30.　

The DWC is apparently having trouble finding qualified applicants to take Mr. Bell’s place and to fill the vacancy left by David Northup in San Antonio last August.　

Chiropractor Garry Craighead, recipient of the aforementioned kickbacks, treated Texas injured workers until the Division got wise to him and denied him admission to the Division’s former approved doctors list on August 26, 2007. Thereafter, he was prohibited from providing healthcare services in the Texas Workers’ Compensation System. However, he continued to treat federal injured workers until being charged with federal crimes.

Craighead pleaded guilty in December 2015 to counts including solicitation and receipt of illegal remunerations in federal health programs. He was sentenced June 10, 2016 to 14 years in prison and ordered to repay more than $17 million to the U.S. Department of Labor.

Craighead treated mainly U.S. Postal Service workers at his Union Treatment Centers. In 2008, Craighead issued a notice to all AFL-CIO union members and postal employees stating:

Important Notice to all Branch 181 Letter Carriers in the Austin Area, our Union brothers and sisters were recently informed of the numerous advantages being offered by Garry Craighead, a physician and Director of Union Treatment Centers located at 8900 Shoal Creek Blvd. Building 200, in Austin, TX. 78757. . . . .

Dr. Craighead is providing assistance and treatment for all Federal and State Workers Compensation claims to benefit your "on the job injury needs" . . . .

The notice did not identify the specific "advantages" Craighead offered the Union brothers and sisters for treating with him over other providers.