The Workers’ Compensation System as a Prescription for Addiction

The workers’ compensation (WC) system provides the perfect prescription for opioid addiction. There are three types of injured workers that fall into this lair: active addicts, recovered addicts who relapse after taking medications following a work injury, and the neophyte who becomes addicted following their work injury. Thus, the system, although well-intentioned, creates and perpetuates dependency and addiction.

 

A WC claim can provide a lifetime funding source for medication and temporary and permanent disability benefits. One of the most frequent claims is a back claim. Pain cannot be objectively measured. The injured worker complains of pain that is aggravated by work. His physician prescribes opioids and restricts him from working. He is paid for his lost wages. The system for rating permanent impairment automatically qualifies him for an impairment rating after six months of medically documented pain, which then translates to an award of permanent disability benefits often worth as much as –one to two years’ of income.

It is well known that workers with opioid abuse have higher claim costs.

 

While estimates vary, it is believed that the top 5 percent of opioid users likely account for more than half of total opioid use.

When those individuals find their way into the WC system, insignificant injuries turn into nightmare claims. These often involve multiple medical procedures, permanent total disability, and sometimes drug overdose and death. These are difficult and expensive to settle due the thresholds established by Center for Medicare and Medicaid Services requiring that a Medicare Set-Aside fund be established as part of a settlement to ensure Medicare does not have to pay for any medical treatment that it deems to be the responsibility of WC. The lifetime projected cost of the opioid medication alone can often cost half a million dollars.

 

In the late 1990s, it was thought that doctors were undertreating pain and that opioid analgesics could safely ease the suffering. Following the increase in opioid prescriptions, deaths began to escalate. In response, the Center for Disease Control (CDC) released new guidelines concerning prescribing opioids for chronic pain in March 2016. According to the CDC, from 1999 through 2014, more than 165,000 people died from opioid-related deaths in the U.S.

 

In 2012, health care providers wrote 259 million prescriptions for opioid medications. That is one prescription for every adult in the U.S.

 

The guidelines have caused some backlash from physicians and patients who believe the government is interfering with the patient-physician relationship. However, there is a fundamental agreement that more oversight and education is needed at all levels.

 

Long-term opioid use can be counterproductive in workers’ compensation and can be a contributing factor in an injured worker not returning to the workplace. The use of opioids for acute pain and cancer pain is accepted, where symptom relief rather than functional outcome is the goal. However, the use of opioids for chronic pain is controversial; it could be contraindicated and may “do harm.” Opioids cause known side effects of hyperalgesia, constipation, hypogonadism, dizziness, drowsiness, overdose potential, etc. The CDC guidelines[1] note that opioid use disorder “is manifested by specific criteria such as an unsuccessful effort to cut down or control use resulting in social problems and a failure to fulfill major role obligations at work, school, or home.”

 

The Colorado Division of Workers’ Compensation (CDOW) issued amended medical treatment guidelines (MTG) for Chronic Pain Disorder and for Chronic Regional Pain effective November 30, 2017. CDOWC relies heavily on the CDC guidelines. The guidelines, though not binding on any physician, are peer-reviewed by both experts in the field and industry stakeholders.

 

The MTG suggest that chronic use of opioids is not recommended if the patient has an active or previous history of substance abuse or for workers in safety-sensitive positions. Opioids for chronic pain should not be prescribed unless there was a failure of pain management alternatives by a motivated patient including active and cognitive behavioral therapies. A full physical and psychological assessment must be performed. The physician must consider risk factors, including history of severe post-operative pain, opioid tolerance, chronic pain, sleep apnea, being off work for over six months, depression, anxiety, psychiatric disease or disorder, history of substance use disorder, complaint of all-over body pain, opioid sensitivities, and history of intrathecal pump use or spinal cord stimulator.

 

When opioids are prescribed, the physician should continue prescriptions only if “meaningful improvement” in pain and function outweighs the risk of continued use. The guidelines recommend that the patients demonstrate a 30 percent improvement in pain scores and function to justify continued opioid use. In other words, opioids must be used as a method to improve function rather than just sustain the status quo condition. The physician should actively review patient history of controlled substances, document improved function, consult the Prescription Drug Monitoring Program, and conduct random drug screenings.

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[1] The CDC guidelines can be found at www.cdc.gov/mmwr/volumes/65/wr/mm655051e1.htm.


This article was originally published with Best Lawyers® “Legal Insights” on www.BestLawyers.com.”

 

Settlement Procedures in Workers’ Compensation

Member Joseph Gren co-authored an article for the Colorado Lawyer, July 2017 edition. The article, Settlement Procedures in Workers’ Compensation, is an in-depth explanation of the unique procedural requirements governing settlement of Colorado Workers’ Compensation Claims.

The Colorado Workers’ Compensation Act (the Act) has permitted settlement of workers’ compensation claims since at least 1919. As in civil cases, the Act and accompanying Division of Workers’ Compensation (DOWC or Division) rules permit both represented and pro se parties to settle workers’ compensation claims, though there are procedural safeguards unique to the workers’ compensation system. Similar to legal matters outside of the workers’ compensation context, settlement is often an attractive resolution for parties, as settlement can expedite finality and reduce overall risk and exposure. Legal authority for settlement of workers’ compensation claims lies in statute, case law, and the Workers’ Compensation Rules of Procedure (WCRP). DOWC recently amended and renumbered the procedural rules related to settlement effective April 15, 2016, and September 14, 2016.

This article provides a practical overview of the settlement procedure for Colorado workers’ compensation claims and highlights recent changes to administrative rules.

Click this link, or the link in the article name, to read the full article. A new tab will open with the PDF.

LEGISLATIVE UPDATE — FIRST RESPONDERS’ COVERAGE FOR PTSD

2017 saw more legislative action related to workers’ compensation than Colorado has seen for the past few years.  Three bills were introduced in the Colorado Legislature and all three passed.  One of the newly enacted bills, HB 17-1229, was enacted on June 5, 2017, with an effective date of July 1, 2018 (subject to exception)[1].  It amends section 8-41-301, C.R.S., relating to the conditions of recovery for claims of mental impairment.  Under the current law, an employee can file a “mental only” (i.e., there is no associated physical injury) claim only as a result of employment-related situations consisting of a “psychologically traumatic event that is generally outside of a worker’s usual experience and would evoke significant symptoms of distress in a worker in similar circumstances”.   The claimed mental impairment must be proven by the testimony of a licensed physician or psychologist.  Strict judicial interpretation of this statutory language resulted in the de facto disqualification of police officers, firefighters, EMTs and other first responders from the receipt of mental impairment benefits for PTSD claims because violent and bloody incidents, including the deaths of others, were deemed to be within their “usual” work experience.   While it is true some of these professionals do encounter repeat exposure to horrific events as part of their typical work experience without impact, others struggle to secure the coverage and psychiatric care they need to help them deal with gruesome work situations, which might be “expected” in their occupation, but are still somewhat atypical.  Section 8-41-301, C.R.S., as amended, allows workers to claim workers’ compensation coverage for PTSD in a limited set of circumstances, based on repeated exposure to violent incidents.  It also retains the statute’s existing requirement that, outside the few exceptions that apply primarily to peace officers and first responders, mental impairment coverage is implicated only when an incident is outside a worker’s usual experience.  As before, a mental impairment shall not be considered to arise out of and in the course of employment if it results from a disciplinary action, work evaluation, job transfer, lay off, demotion, promotion, termination, retirement, or similar action taken in good faith by the employer. To qualify for mental impairment benefits under the amended statute, the worker must be diagnosed with PTSD by a licensed psychiatrist or psychologist following exposure to one or more of the following events:

 

  • The worker is the subject of an attempt by another person to cause the worker serious bodily injury or death through the use of deadly force, and the worker reasonably believes the worker is the subject of the attempt;
  • The worker visually witnesses a death, or the immediate aftermath of the death, of one or more people as a result of a violent event; or
  • The worker repeatedly visually witnesses the serious bodily injury, or the immediate aftermath of the serious bodily injury, of one or more people as the result of the intentional act of another person or an accident.

 

These changes to the mental impairment statute achieve a balance that is fair to first responders, while maintaining appropriate limitations on coverage for others in nonviolent occupations, and protecting the interests of employers and insurers.  The act applies to injuries sustained on or after its effective date, July 1, 2018.

If you have questions about the recently enacted workers’ compensation legislation, or any questions about workers’ compensation, please contact us.

 

[1] This act takes effect July 1, 2018; except that, if a referendum petition is filed pursuant to the applicable state constitutional provision, then the act will not take effect unless approved by the people at the November 2018 general election.

OBAMA-ERA FAIR LABOR STANDARDS ACT OVERTIME RULE DEFEATED

Last year, the Department of Labor instituted a new overtime rule under the Fair Labor Standards Act (FLSA), which required employers to pay a little more than $47,000 annually to qualify under the white-collar exemptions.  This rule had previously been in limbo given that a Texas Federal District Court judge prevented its enforcement last Thanksgiving.  The same judge has now recently struck down the rule permanently.  Accordingly, short of a successful appeal, employers can now feel safe that the new rule will not be implemented.

 

The FLSA requires that employers pay non-exempt employees overtime for any hours worked beyond 40 hours in a week. An employee must satisfy three conditions to be considered exempt from overtime requirements:

 

  1. the employee must be paid a fixed salary;
  2. the salary must meet a minimum threshold; and
  3. the position must meet certain duties requirements applicable to executive, administrative, or professional positions.

 

Under the Obama administration, the DOL more than doubled the minimum salary requirement, taking it from $455 per week to $915 per week. Additionally, the threshold would have been scheduled to increase again in the year 2020 under an automatic 3-year increase the rule sought to implement.

 

Overview of the Recent Decision

The judge determined that the Department of Labor exceeded its authority in promulgating a new rule, with a salary requirement so high to essentially eliminate the requirement that exempt employees perform executive, administrative, or professional duties.  The judge was clear that the Department of Labor still retains the ability to issue a salary threshold test but the Department went too far.  There is no incite from the decision as to what would be a proper threshold.  The effect of this decision is that the Department’s authority to implement a salary test is now limited.

 

Takeaway for Employers

A sigh of relief can now be taken by all employers who did not want to see the exemption salary requirements increased.  Accordingly, employers do not have to raise salaries of exempt employees to meet the rule’s new threshold or change previously exempt employees to non-exempt status where salaries fell below the threshold.  If an employer has already adjusted its compensation scheme to comply with the new rule, it can consider whether reversing course will impact the workforce.

 

Please contact us with any questions!

SETTLEMENTS POST ENGLAND

The Colorado Supreme Court issued an opinion on May 30, 2017 in England v. Amerigas Propane, 395 P.3d 766 (Colo. 2017).  This case involved settlement of workers’ compensation matters and may even affect settlement of liability matters in a personal injury case.  The case has significant ramifications for employers and carriers moving forward.

 

BACKGROUND

Mr. England was a truck driver for the employer. He injured his shoulder at work in December 2012 and filed a workers’ compensation claim.  He had two surgeries in the first half of 2013 to address the shoulder injury.  Respondents conducted an IME in July 2013 and the physician offered an opinion that the claimant was approaching MMI and would likely reach MMI in about two months.  Claimant agreed to settle his workers’ compensation case in September 2013, despite still having some pain, for $35,000.  The current standard settlement form from the Division was used to settle the claim pursuant to W.C.R.P. 9-9(A). The form contains standard language that cannot be altered per the Rule. Paragraph 4 incorporates the statutory right to reopen for a mutual mistake of material fact under Section 8-43-204(1), C.R.S., and paragraph 6 contains claimant’s waiver of any “unknown injuries.”  Mr. England attempted to reopen his settlement, after it was approved in October 2013, when diagnostic testing revealed a scapular fracture.  It was undisputed that the parties did not know a fracture existed at the time of settlement and there was no evidence that the fracture definitively existed at the time of settlement.  Instead, there was testimony that the fracture could have existed at the time of settlement or could have developed later.  Mr. England’s basis for trying to reopen the settlement was that the scapular fracture was a mutual mistake of material fact and he would not have settled had he known it existed.

At hearing, the ALJ found that the scapular fracture existed at the time of settlement, but reopened the claim on the mutual mistake of fact that the parties believed claimant was approaching MMI when the case was settled.  She further found that, had claimant known that he had a scapular fracture, he would not have settled.  The ALJ’s Order was affirmed at the ICAO level and was appealed further to the Colorado Court of Appeals.  The Colorado Court of Appeals reversed the ICAO and the ALJ’s decisions, finding that the scapular fracture fell into the category of unknown injuries that claimant waived in paragraph 6 of the settlement agreement; ignoring that the mutual mistake relied upon by the ALJ to reopen was that claimant was approaching MMI.

The Colorado Supreme Court took the case and reversed the Colorado Court of Appeals.  The Supreme Court held that the paragraph 6 waiver does not apply to conditions unknown, but existing at the time of settlement.  In this instance, the Supreme Court held that the mutual mistake of fact between the parties was the existence of claimant’s scapular fracture.

 

ANALYSIS

The Colorado Supreme Court has effectively taken two categories of facts existing at the time of settlement, known and unknown, and carved-out a third type of fact that can serve as a basis to reopen settlement, “unknown, but existing facts.”   The logic of this is confusing.  For a fact to be mutually mistaken between the parties, it requires the fact to be known, rather than unknown.  Notwithstanding this logical conundrum, the question remains how to proceed with settlements moving forward.

 

AFTER ENGLAND

The Division settlement form allows for additions in paragraph 9.  9(A) can contain settlement language that is both specific to the settlement agreement and involves an issue that falls within the Workers’ Compensation Act.  Paragraph 9(B) can reference exhibits attached to the settlement agreement related to the workers’ compensation claim, such as Medicare set-aside arrangements.  Paragraph 9(C) can reference other attached written agreements that include matters outside of the Workers’ Compensation Act, such as employment releases, or bad-faith waivers.  Material referenced in paragraphs 9(B) and 9(C) are outside of the enforcement parameters of a Division or Office of Administrative Courts.

Recent attempts have been made to build-around the England decision by including language in paragraph 9(A), and having claimant expressly waive any ability to reopen a claim based on an unknown condition resulting from the work injury.  In some instances, this has been met with objection and a motion to strike this language under 9(A).  At least one pre-hearing conference order has been issued striking this type of language as contrary to the England holding that the paragraph 6 waiver cannot limit the right to reopen under paragraph 4.

Other recent attempts have been made to protect against the effects of the England decision by including terms requiring repayment by claimant of any settlement amounts if the claim is reopened based on a mutually mistaken existing, but unknown, condition.  This has also been met with resistance but Lee + Kinder LLC is unaware of any prehearing conference order striking this type of language.

 

BOTTOM LINE

The England decision certainly disrupts settlements of workers’ compensation claims.  It calls into question the one reason to settle the case, which is finality.  While there is potential for a legislative fix to this problem, settlements need to be negotiated and properly documented until this type of fix can be accomplished.  The England decision can still be built-around.  Agreements under paragraph 9(A) waving the right to reopen based on an unknown, but existing, condition may not work in that location; however, as a separate agreement exhibited under 9(B) and/or 9(C), they should be independently enforceable outside of the workers’ compensation system.  Further, repayment of settlement money in the event of a reopening should be enforceable under 9(A) in the workers’ compensation system or independently under 9(B) and 9(C).  If repayment is not made, whether as a lump or in some other arrangement, there’s also the possibility for stipulated judgment to enter to allow collection of settlement proceeds through civil procedure rules.

Settlements are contracts and there is a freedom of contract issue raised by England.  The Division has limited enforcement capacity and is holding itself by the England decision; however, the parties can agree to terms that can be enforced as contracts, attached as exhibits under 9(B) and 9(C).  Lee + Kinder LLC is using specific language on all settlements that the Firm believes is an enforceable contractual agreement.  If you have questions regarding settlements, please contact us and we will happy to answer those questions.

A FIRST! FDA REQUESTS WITHDRAWAL OF OPANA® ER FROM THE MARKET; MANUFACTURER ACQUIESCES

Amid the nation’s ongoing and “unprecedented opioid epidemic”, (per the U.S. Department of Health and Human Services), on June 8, 2017, the U.S. Food and Drug Administration requested Endo Pharmaceuticals to voluntarily remove its opioid pain medication, reformulated Opana ER (oxymorphone hydrochloride), from the market. The request was based on concerns that the benefits of the drug no longer outweigh its risks related to abuse. This is the first time the FDA has taken steps to remove a currently marketed opioid pain medication due to the public health consequence of abuse.

Opana ER is an opioid first approved in 2006 for the treatment of moderate to severe pain when a continuous, around-the-clock opioid analgesic is deemed necessary. In 2012, Opana ER was reformulated to deter snorting and injecting. While the new product met the FDA’s standards for approval, based on new information about the risks associated with the reformulated product, the agency is now taking steps to remove Opana ER from the market.

Janet Woodcock, M.D., Director of the FDA’s Center for Drug Evaluation and Research, indicated, “The abuse and manipulation of reformulated Opana ER by injection has resulted in serious disease outbreak. When we determined the product had dangerous unintended consequences, we made a decision to request its withdrawal from the market. This action will protect the public from further potential misuse and abuse of this product.”

The FDA requested the manufacturer, Endo International, voluntarily remove reformulated Opana ER from the market. In another first, Endo has announced its plan to voluntarily comply with the FDA’s request. In a July 6, 2017 press release, Endo announced plans to work with the FDA to coordinate the orderly removal of the pain medication, “in a manner that looks to minimize treatment disruption and allows patients sufficient time to seek guidance from the health care professionals.”

The FDA has indicated it will continue to examine the risk-benefit profile of all approved opioid analgesic products and take further actions as appropriate as part of its response to the opioid public health crisis. For further information, read the FDA News Release.

 

What can you do to help manage the chronic prescription of opioids or narcotics on your claims?

• Obtain an independent medical evaluation if:
1. Opioids are prescribed for complaints of pain and there are inconsistencies in the diagnosis and objective findings;
2. There is no reported reduction in pain levels with ongoing prescription of opioids or narcotics;
3. There is no demonstrable improvement in function, including return to work, with ongoing prescription of opioids or narcotics;
4. Abuse, addiction, or deviation is suspected.

 

• Colorado’s Medical Treatment Guidelines address the appropriate use of Narcotics/Opioids in workers’ compensation claims including the following recommendations:
1. Screening for potential alcohol and drug abuse problems, as well as co-morbid psychiatric conditions, to identify those claimants who may be prone to dependence or abuse;
2. Long-term narcotics or opioids should only be offered after other therapies have failed to improve function;
3. Narcotics or opioids should result in demonstrable improvements in function, not just reported pain relief;
4. Random urine drug screens are required by the Guidelines for the chronic prescription of opioids or narcotics;
5. A narcotic pain contract, and compliance therewith, is required by the Guidelines for long term prescription of opioids or narcotics;
6. Periodic re-evaluation of function and side-effects is required for ongoing narcotic or opioid prescriptions;
7. Tapering and discontinuance of opioid or narcotic prescriptions are required when patient goals are not being met.

 

• Medical Utilization Review:
Provides a statutory, tiered, neutral medical review of the reasonableness and necessity of an authorized treating provider’s care, including the prescription of narcotic and opioid medications.
If you have any questions about challenging the ongoing prescription of narcotics or opioid pain medications, or any claim-related medical treatment, please contact us. We are always glad to discuss the facts of your case and work towards the most efficient way to end unreasonable, unnecessary, and/or unrelated medical treatment.

To File or Not to File? That is the Question

An incident takes place within the course and scope of claimant’s employment.  Claimant is confirmed to have sustained an injury but does not miss any time from work.  No permanent impairment is anticipated.  What the adjuster has is characterized as what most of us refer to as a “med-only claim.”   Throughout the course of the claim, claimant receives conservative treatment without any recommendation for surgery.  The claimant is eventually placed at MMI with no impairment.  There is no reason to challenge the claim as you believe the injury is legitimate.  You’re home free!   All you have to do is file the Final Admission of Liability (FAL), wait the statutory 30-day period, and when claimant fails to object, you can close your claim and move on to the next one.  Right?  Not exactly.

 

Most workers’ compensation claims are med-only claims.  In fact, more than two-thirds of claims in Colorado are med-only claims that are never reported to the Division.  When most carriers file a FAL due to claimant reaching MMI on a med-only claim, they do so because they are seeking finality.  Perhaps the employer wants to admit in good faith and make sure that it is noted with the Division that the claimant was taken care of and that there is no challenge to the claim.  Perhaps the carrier requires that a FAL be filed on all admitted claims when a claimant reaches MMI.  Oftentimes, a FAL is filed on a med-only claim to avoid confusion later should something happen.  Whatever the reasoning may be, the adjuster may want to think twice about filing the Final Admission of Liability on a med-only claim due to a recent Industrial Claims Appeals Office opinion and a prior Court of Appeals decision.

 

In Kazazian v. Vail Resorts, W.C. No. 4-915-969 (April 24, 2017), the Industrial Claims Appeals Office reversed the findings of an ALJ that found a med-only claim was closed because the Claimant failed to object to the FAL.  The facts of the claim were simple:  Claimant sustained an injury when she slipped and fell at work and sustained a concussion, she didn’t miss any time from work while treatment took place, and she was eventually placed at MMI without impairment by the authorized treating physician.  The Employer filed a FAL based on the authorized treating physicians’ findings and the Claimant didn’t object within the statutory 30-day requirement.  A significant time later, Claimant began to experience hearing loss. She went to an audiologist for treatment.  The Claimant suspected that her hearing loss was due to the work-related event from a couple of years prior.  The Claimant contacted the adjuster and asked that certain medical apparatuses prescribed by the audiologist be covered under the workers’ compensation claim.  The adjuster refused, citing the FAL and noting that the claimant did not timely object.  The claim was presumed closed.

 

At the hearing, the ALJ agreed with Respondents that the Claimant failed to timely object to the Final Admission and request a DIME.  However, on appeal, the Panel reversed the decision and noted that a FAL that does not admit for indemnity benefits cannot serve to “close” a claim since there was nothing triggering any statutory provisions in the Act for which reopening due to a worsening of condition or requesting a DIME can be sought.  Simply put, a Final Admission of Liability on a med-only claim raises no implications of closure.  You cannot close something that was not significant to begin with.  Citing from a Court of Appeals prior decision, “the statutory consequences of a finding of “maximum medical improvement” can apply only to injuries as to which disability indemnity is payable.”  Given this caveat in the law, the ultimate question is how does an employer or insurance carrier seek closure on a med-only claim?   The answer may be simpler than first thought.

 

By its very nature, a med-only claim is usually not an impactful claim of such severity to require reporting.  In fact, the Act carves out an exception to med-only claims making it easy for employers and carriers to deal with them without being bogged down in paperwork.  Section 8-43-101(1) states, “Every employer shall keep a record of all injuries that result in fatality to, or permanent physical impairment of, or lost time from work for the injured employee in excess of three shifts or calendar days and the contraction by an employee of an occupational disease that has been listed by the director by rule.  Within ten days after notice or knowledge that an employee has contracted such an occupational disease, or the occurrence of a permanently physically impairing injury, or lost-time injury to an employee, or immediately in the case of a fatality, the employer shall, upon forms prescribed by the division for that purpose, report said occupational disease, permanently physically impairing injury, lost-time injury, or fatality to the division. The report shall contain such information as shall be required by the director.”

 

The key portion of the statute deals with lost time and permanent impairment.  If neither of the requirements is met, nothing has to be reported.   If one of the criteria is met, the Act requires that the insurance carrier take a position on the claim within 20 days.  You may even receive a letter from the Division with big bold letters emblazoned on it indicating the insurance carrier has 20 days to file either a Notice of Contest or a General Admission or else Respondents could be sanctioned in the form of monetary penalties.   When the claimant reaches MMI in a med-only claim, most carriers file a FAL; however, it may be good practice to not file anything UNLESS you receive the letter in question from the Division.   Most med-only claims are closed within a few weeks or months.   When a claimant comes back months, or sometimes years later, to seek additional treatment, how does one know if the problem that is allegedly occurring is due to the original event?  A significant amount of time may have passed.  Claimant may be working for another Employer.  Should the adjuster just voluntarily admit and pay benefits?  Typically, the answer is no.

 

Given the caveat in the law that is becoming commonplace among the courts, it is recommended not to file anything in response to a treating physicians’ placement of a claimant at MMI.  This is because the carrier can always challenge the claim on causation grounds later down the road should the claimant return and want to seek additional treatment or claim that indemnity is owed.  Recall that payment of medical benefits is neither an admission nor a denial under the Act.  Even if the Respondents pay for treatment and characterize a claim as a med-only claim for purposes of payment, if no pleadings are ever filed with the Division, Respondents retain the right to file a Notice of Contest should a claimant return in the future seeking additional benefits.  At that time, Respondents can further investigate the causation of the claimant’s ongoing complaints either through a medical records review, IME, or other means such as surveillance.  Oftentimes, the mere passage of time and questioning of the claimant will give rise to answers which would allow the adjuster to deny the claim outright, even though at first the claim was payable in good faith.  The overall thought is that it is much easier to challenge causation and be cautious with a Notice of Contest for further investigation than it is to go back in time and withdraw a previously filed admission, regardless of the type of admission that it is.

 

If you have any questions regarding what next steps to take when dealing with med-only claims, please contact us.   If you get a phone call from a claimant wanting more benefits from a claim you thought was closed, please contact any of the attorneys at our firm.  We will be more than happy to chat about the facts of the particular case and devise the best strategy which will hopefully avoid the reopening of a “closed” claim.

AMA Guides to the Evaluation of Permanent Impairment, Third Edition, Revised: What Are You Doing Colorado?

One of the questions I hear frequently about the Colorado workers’ compensation system from risk managers,AMAguides3rd insurance adjusters, and even some medical professionals is: “Why does Colorado still use the AMA Guides Third Edition, Revised, when calculating impairment?” In other words, why do Division Level II accredited physicians providing impairment ratings to injured workers use the AMA Guides to the Evaluation of Permanent Impairment, Third Edition, Revised (December 1990)? As of 2002, Colorado was, and still is, the only jurisdiction to use the Third Edition in the workers’ compensation system.[1]

The Third Revised Edition’s history in the Colorado workers’ compensation system is simple. The Colorado Workers’ Compensation Act underwent an extensive remodel in 1991. In the 1991 Amendments to the Act, the legislature inserted in section 8-42-107(A)(c), C.R.S., the methods to calculate impairment. In order to establish the medical impairment value for purposes of a permanent partial disability award, the legislature adopted the Third Edition, Revised (December 1990), which, at the time, was state of the art.  Since 1991, the legislature has not altered the statutory language.

The State of Colorado has arguably been cognizant of the fact it is the only state in the nation to hold onto this antiquated edition. In fact, the Colorado Department of Labor and Employment commissioned a study in 2002, concluding that “spinal impairment evaluations are the most frequent type of evaluations performed.”[2] The study stated that, amongst the guides, there are significant differences in spinal impairment. The author pointed out “the impairment estimate for a spinal injury may be quite different depending on which edition is used to rate the condition.” The author concluded “Values were significantly less with both the Fourth and Fifth Editions, although more dramatically with the Fourth Edition.” The study pointed to different range of motion calculations between the guides to explain the discrepancy.

Per its own commissioned study that the use of the Third Edition Revised results in higher impairment ratings, and, therefore, higher permanent partial disability awards, Colorado has held strong to the Third Revised Edition.  In 2007 the AMA Guides Sixth Edition was published. The more recent studies show a decrease in impairment ratings with the Sixth Edition when compared to ratings under the Fifth Edition.[3] The State of Colorado utilizes the medical impairment rating system that on average provides the highest degree of impairment, including spinal impairments, to injured workers. It does not appear that there is any legislative progress to bring Colorado into alignment with any other state anytime soon.  Which begs the final question: Colorado, what are you doing?

________________________________________________________________________________

[1] Study of the Impact on Changing from the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment, Third Edition Revised to the Fourth or Fifth Editions in Determining Workers’ Compensation Impairment Ratings, Christopher Brigham, M.D. (June 30, 2002).

[2] Id. 58.

[3] Impact on Impairment Ratings from the American Medical Association’s Sixth Edition of the Guides to the Evaluation of Permanent Impairment, Robert Moss, et. al. (July 2012) at 25.

COLORADO UNINSURED EMPLOYERS AND A POSSIBLE NEW FUND

BACKGROUND

There has been growing governmental concern in the State of Colorado over uninsured employers. Changes to the Workers’ Compensation Act in 2005 created stiffer fines for employers who fail to comply with mandated coverage for workers’ compensation benefits. The Division of Workers’ Compensation Director is required to impose a fine of $250 per day for an initial offense. The 2005 changes to Colo. Rev. Stat. § 8-43-409 included an increased fine range for companies that were non-compliant for a second time. Those companies now face up to a $500 per day fine. This statute specifically states that the ‘fine’ levied under the statute shall be the ‘penalty’ within the meaning of Colo. Rev. Stat. § 8-43-304, but is in addition to the increase in benefits owed under Colo. Rev. Stat. § 8-43-408.

Colo. Rev. Stat. § 8-43-409 governs the procedures for non-compliant employers. First, the Director is empowered to investigate and notify the non-compliant employer of their right to request a prehearing conference over the coverage issue. Second, if the Director determines that the employer is non-compliant, then the Director must take at least one of the following actions: (1) order the non-compliant employer to cease and desist its business operations while it is non-compliant; and/or (2) assess fines. After a cease and desist order is entered, the Attorney General immediately starts proceedings against the non-compliant employer to stop doing business. Further imposition of any fine under this statute, after appeal time frames have run, can be lodged with the District Court as a judgment. 25% of any fine collected would be directed to the workers’ compensation cash fund under Colo. Rev. Stat. § 8-44-112, with the balance going to the state general fund. Finally, any fine under the statute is in addition to the increased benefits owed by the non-compliant employer under the preceding statute, Colo. Rev. Stat. § 8-43-408. This statute increases ordinary benefit exposure by 50% for non-compliant employers and puts in place a bonding requirement for the non-compliant employer.

 

BALANCING INTERESTS

Significant fines handed down to non-compliant employers have received press attention in the past. As reported in the Denver Post on August 29, 2016, a student run café at the University of Colorado was shut down after it was fined more than $224,000 for not having workers’ compensation coverage. The Complete Colorado, a blog run by local political commenter Todd Shepard, documented a $271,000 fine against a Longmont garden business for failing to comply with coverage requirements, as well as a $516,700 fine levied against fast food restaurant, El Trompito Taqueria. These fine amounts increased quickly as the result of the daily multiplier. The time frames of noncompliance were largely assumed by the Director because the employer could not prove coverage during these intervals. For a small employer to receive such a large fine can effectively put the employer out of business, leaving the injured worker with no practical recourse for benefits.

There are mitigating circumstances that may reduce fines levied against non-compliant employers. For instance, if the employer can show compliance once it has become aware of a lapse in coverage, this will mitigate the fine amount. A non-compliant employer paying benefits, essentially stepping into the shoes of a would-be insurer, also helps mitigate the fine.

The Director is obligated to try to ensure compliance while not effectively forcing employers out of business. This should be done with an eye toward trying to keep injured employees from having no benefit flow or treatment. When an injured worker has no coverage, it forces the injured worker to seek medical treatment through personal healthcare insurance or, or if no health care coverage exists, through self-pay methods, emergency room visits, treatment write-offs and/or charity. Many healthcare insurers reject coverage for treatment of a work injury since that liability should fall on a workers’ compensation carrier or employer. Further losses from unpaid and unreimbursed medical treatment through emergency rooms, write-offs or charity are ultimately passed on to employers and employees at large, who bear the burden of increasing insurance premiums as the result of uninsured employers and their injured employees.

 

LEGISLATIVE CHANGES

Proposed House Bill 17-1119 attempts to address payment for injured workers who do not have coverage through their non-compliant employer. HB 17-1119 is currently a proposed Bill, but is likely to be approved later this year. The Bill was introduced on January 20, 2017, and must still pass the State House and Senate, as well as be signed into law by the Governor.

Coverage:  The fund would cover claims occurring on or after January 1, 2019 that have been adjudicated compensable, where the employer has been determined uninsured and has failed to pay the full amount of benefits ordered. The fund does not cover a partner in a partnership or owner of a sole proprietorship, the director or officer of a corporation, a member of an LLC, the person who is responsible for obtaining workers’ compensation coverage and failed to do so, someone who is eligible for coverage but elected to opt out, or anyone who is not an “employee” under the terms of the Act.

Funding:  The fund is made up of the fines and other revenue collected by the Division that is specifically allocated to the fund, along with any gifts, grants, donations or appropriations. There is also a separate 25% paid to the fund based on benefit amounts owed by non-compliant employers.

Governance:  The fund is run by a board that includes the Director and four individuals representing each of the following: employers, labor organizations, insurers and a claimant attorney.  The board serves for a term of 3 years and may be reappointed with the exception of the initial board members. With regards to the initial board, one member shall serve for an initial term of three years, two members for a two-year term and one member for a one year term.  No one can serve more than three consecutive terms.  Benefits are to be paid at the ordinary rates. If the fund does not have enough money in the fund, the board can reduce the rates.  The board is unpaid.

Powers:  The fund has ordinary powers attendant to handling workers’ compensation claims.  Of interest, the fund has the power to intervene as a party in a case involving an uninsured employer, or other potentially responsible entity. Upon acceptance of the claim into the fund, a lien is created against any assets of the employer and its principles for the amount due as compensation. This lien has priority over all other liens except delinquent tax payment liens.  The lien can be perfected by filing in the appropriate court. Further, the fund becomes something akin to a secured creditor of any insolvent employer for amounts the fund determines may be needed to pay uninsured losses. Payment by the fund does not relieve the uninsured employer of payment obligations for benefits and the fund has the power to pursue any employer who defaults on those payments in District Court.

 

BOTTOM LINE

The proposed legislation creates a small safety net for injured workers of uninsured employers.  Given the ever-increasing costs of medical care, there is a valid question as to whether funding would be adequate to cover workers’ compensation benefits claimed by the injured workers.  Further, it will be interesting to see if respondents may be required to give notice to the fund in cases where liability is being adjudicated on a statutory employer issue. The fund may have a recognizable interest in such litigation, as the burden of paying workers’ compensation benefits would fall on the fund should there be a determination of no coverage. It is not unusual for a carrier or employer to settle potential statutory employer liability on a “denied” basis as opposed to proceeding to litigation, where adjudication might make statutory employer liability clear. The fund intervening in this type of case may prevent pre-adjudication settlement from occurring without some consideration being paid to the fund in the “denied” settlement as well.

EMPLOYEE OR INDEPENDENT CONTRACTOR?

Why is it important to know if the person working for you is an employee or an independent contractor?  Because the answer determines if he or she must be covered by your workers’ compensation insurance policy. An incorrect guess exposes you to substantial penalties under Colorado’s Workers’ Compensation Act.employeeVSic

 

A worker’s status as an “employee” versus an “independent contractor” has been one of the most heavily litigated areas of workers’ compensation since the enactment of Colorado’s Workers’ Compensation Act in 1915.  Fortunately, after decades of appellate decisions addressing the independent contractor versus employee issue, in 1993, the General Assembly enacted section 8-40-202(2), C.R.S.  According to section 8-40-202(2), C.R.S., anyone performing work for you is an employee, unless such individual is:

 

  • Free from control and direction in the performance of the service, and
  • Customarily engaged in an independent trade, occupation, profession, or business related to the service performed.

 

The statute sets forth nine factors which give rise to a presumption that a worker is an independent contractor as opposed to an employee.  The statute contains various factors the courts will consider in determining whether a worker is, based on the totality of the circumstances, “engaged in an independent trade, occupation, profession or business”.  For example, if the worker has a separate business name, carries his or her own business insurance, has business cards, carries workers’ compensation insurance on any employees, is paid at a contracted rate, submits invoices for the work being performed, with payments being made to the named business, is performing services for other companies at the same time he or she is working for you, the facts suggest the worker is independent and you may not be required to cover him or her under your workers’ compensation policy.

 

The statute also requires the worker to be “free from control and direction in the performance of their services”.  If the worker provides their own tools and necessary supplies, performs the services being contracted on their own schedule, exercises independent judgment in performing the services and how they choose to perform them, again these facts suggest the worker is free from control and independent.  Unfortunately, the courts have repeatedly held there is no single dispositive factor, or series of factors, resulting in proof of an employer-employee relationship or independent contractor status under section 8-40-202(2), C.R.S.

 

The statute does provide for the use of a document to satisfy its requirements by a preponderance of the evidence.  If the parties use a written document to establish an independent contractor relationship, it must be signed by both parties and contain a disclosure, in type which is larger than the other provisions in the document or in bold-faced or underlined type, that the independent contractor is not entitled to workers’ compensation benefits and is obligated to pay federal and state income tax on any moneys earned pursuant to the contract relationship.  All signatures on the document must be notarized.  Such a document creates only a rebuttable presumption of an independent contractor relationship between the parties.

 

Still confused or unsure?  Please contact us to discuss the facts of your situation.