State News : Texas

You might have to disgorge four times the amount of benefits withheld from the injured worker.  An alternative to statutory workers’ compensation is a plan under the Employee Retirement Income Security Act – an ERISA plan provided to an employer by a plan insurer. Like statutory comp, an ERISA plan may provide for disability benefits for an on the job injury. Unlike statutory comp, however, an insurer who denies disability benefits may be ordered to provide withheld disability benefitsand to disgorge any “profits” on the withheld benefits under an “appropriate equitable relief” provision of the ERISA statute. The U.S. Court of Appeals for the Sixth Circuit recently upheld an award of withheld benefits in addition to disgorgement of four times the amount of withheld benefits representing the insurer’s “profits” on the withheld benefits. The trial court found the insurer breached its fiduciary duty simply by denying benefits. Considering the insurer’s potential exposure for disgorgement of profits as a claims handling expense, statutory comp may be a less risky option Texas.

Rochow v. Life Ins. Co. of N. Am., No. 12-2075, 2013 U.S. App. LEXIS 24271 (6th Cir. Dec. 6, 2013).

The Appeals Panel recently reversed a Hearing Officer’s determination that the first certification of MMI/IR provided in 2010 did not become final because the Hearing Officer determined in 2013 that Claimant’s injury extended to include additional, unrated conditions. The preamble to Rule 130.12 warns parties not to delay in timely disputing the first certification of MMI/IR pending resolution of an extent of injury dispute, because such resolution may occur after the 90-day period expires. In this decision, the Appeals Panel noted “there is no provision in [the Act or Rules] that provides that the exclusion of a condition in an assignment of IR constitutes an exception to finality.” The Appeals Panel held that subsequent resolution of the extent of injury dispute is not, in and of itself, an exception to finality. The Appeals Panel did not foreclose the possibility that an exception to finality may exist where a Claimant does not receive adequate treatment for the entire injury prior to the first certification of MMI because of the extent of injury dispute.

Appeal No. 132594-s, dated Jan. 3, 2014.

The Appeals Panel considered whether a designated doctor properly assigned IR based on range of motion (ROM) measurements of a Claimant’s right knee. In his report, the DD recorded 100 degrees of flexion and 10 degrees of flexion contracture of the knee. According to Table 41 of the Guides, these measurements correspond to 4% whole person impairment for flexion and 8% whole person impairment for extension/flexion contracture. The DD did not add the two whole person impairments together (4% plus 8%), but, rather, the DD assigned a whole person IR of 8%. The issue on appeal was whether the AMA Guides required the DD to combine the whole person IR of each angle of the knee joint. The Appeals Panel concluded the AMA Guides do not require the ROM deficits to be combined to increase the impairment for a single joint. Rather, it was within the DD’s discretion as a matter of medical judgment to not combine the different angles of loss of ROM of Claimant’s knee. The DD’s 8% IR was in accordance with the Guides.

Appeal No. 132734, dated Jan. 9, 2014.

Point-of-service drug testing is becoming more common. If a provider decides to do urine drug tests on a patient, the ODG evaluates the need for testing based on the risk of adverse events or of drug misuse by the Claimant. Before paying, the Carrier should look for documentation of a risk assessment, as well as evidence of the reasoning behind the frequency of the testing. For Claimants with a low risk of adverse events or drug misuse, the ODG recommends random testing no more than twice a year. For Claimants at intermediate risk, the ODG recommends random testing 3 to 4 times a year. Claimants with high risk may be tested at every other, or even at every, office visit.

We have seen a few recent cases where Carriers are being charged for designated doctor appointments missed or rescheduled by Claimants. The DWC medical fee guidelines do not permit a designated doctor to bill a Carrier for a rescheduled or missed appointment. DWC Rule 134.204.  Bills that invoice Carriers for a fee for missed or rescheduled appointments should be denied.

The DWC recently circulated a memo reminding system participants that Rule 127.1 requires parties submitting Requests for Designated Doctor Exams (DWC 32s) to send a copy of the DWC 32 to the opposing party at the same time the document is filed with the DWC. The DWC reports that some system participants are not exchanging DWC 32s. As part of a new “customer service initiative” to address the issue, the DWC will begin automatically sending to the injured employee a copy of any DWC 32 filed by a Carrierprior to sending the order for the designated doctor exam. Curiously,

Claimants’ frequent failures to exchange DWC 32s with Carriers is not mentioned.

A number of carriers were fined recently for failing to accurately submit medical bill and payment data. One carrier was fined $15,000 for this violation.  The submission of medical bill and payment data is governed by a complex set of regulations which includes the Labor Code, Division rules 134.800 - 134.808, the IAIABC EDI Implementation Guide, the Texas EDI Medical Data Element Requirement Table, the Texas EDI Medical Data Element Edits Table, and the Texas EDI Medical Difference Table. 

James Madison could have been describing the laws governing the submission of medical bill and payment data when he wrote the following:

It will be of little avail to the people that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man who knows what the law is today can guess what is will be tomorrow.

James Madison, Federalist no. 62, February 27, 1788.

Given the complicated reporting standards and the lack of harm to any system participants from these alleged violations, the Division should consider taking a more collaborative approach with carriers rather than treating potential violations as an opportunity to collect a fine.

SB1322 takes effect September 1, 2013 allowing informal networks for durable medical equipment and home health care. The Act was previously amended in 2011 to allow informal networks for pharmaceutical services. Within 30 days after an informal network is established, it must report certain information to the Division including the name and contact information for the network and a list of the carriers and entities with whom it contracts. At least quarterly, notice must also be given to each contracted health care provider of all carriers given access by the network to the provider’s discounted rates. The notice can be provided in an electronic format or through an Internet website link if certain requirements are met.

Effective September 3, 2013, Kerry Sullivan will join the Division as Deputy Commissioner for Hearings, replacing Dan Barry, Acting Deputy Commissioner for Hearings, who will return to his role as head of the Appeals Panel. Some of you may know Mr. Sullivan from his many years as an administrative law judge at the State Office of Administrative Hearings (SOAH). SOAH proceedings tend to be more formal than DWC proceedings. The rules of evidence apply at SOAH and there are also detailed procedural rules which tend to be consistently and uniformly applied, resulting in fewer surprises for the parties. Mr. Sullivan was well respected as a judge by those who appeared before him and will hopefully be a positive influence on the Division.

This case should serve as a reminder for related companies to be careful how they structure their operations if they want to avoid liability for the company that is not considered the employer of the injured worker.  The deceased employee's wife sued his employer, Delta Steel, and its parent company, Reliance, for negligence in connection with his death. Delta Steel argued that the exclusive remedy defense barred the wife's ordinary negligence claims. The wife challenged the applicability of the exclusive remedy defense by disputing that Delta Steel had workers' compensation coverage even though she was receiving death benefits. Not surprisingly, the Fort Worth Court of Appeals held that the wife was estopped from denying that her husband's employer had workers' compensation coverage when she was receiving death benefits. However, the court of appeals held that the wife could maintain her ordinary negligence claim against Reliance, the parent company.  Reliance did not assert the exclusive remedy defense because it was not the deceased employee's employer. Instead, it argued that it did not owe a duty to the deceased employee and therefore, it could not be negligent since a legal duty is one of the elements of a negligence claim. The court disagreed that Reliance owed no duty to the deceased employee. It held that while parent corporations generally have no duty to control their subsidiaries, Reliance voluntarily undertook a duty to keep Delta Steel’s employees safe. The court held this duty arose because "Reliance generally controlled aspects of Delta Steel’s safety policies, specifically controlled policies concerning the inspection of cranes, had the authority to audit Delta Steel’s Fort Worth plant and to require Delta Steel to correct safety issues discovered upon an audit; audited Delta Steel’s other plants; had the authority to require Delta Steel to take a malfunctioning crane out of service; and required Delta Steel to mail monthly reports on accidents and investigations to Reliance."