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.

NEW OVERTIME RULES

The Department of Labor’s (“DOL”) new overtime rules take effect December 1, 2016,usdol_seal and employers should be reviewing and modifying their compensation and payroll practices in response. Here is a link to the new regulations adopted by the Department of Labor:

http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=28355

As part of this preparation, employers must consider whether and how any changes to their compensation structures will affect their employee benefit plans.

The new overtime rules increase the salary levels at which executive, administrative, and professional workers may be considered “exempt” under the Fair Labor Standard Act (“FLSA”) from overtime pay when a work week exceeds 40 hours. Initially, the standard salary level will increase from $455 to $913 per week and the total annual compensation requirement for highly compensated employee exemption will increase from $100,000 to $134,004 per year.  In addition to these initial compensation level bumps, additional upward adjustments are scheduled to occur every three years thereafter.

The immediate impact on this change is that currently classified “exempt” employees under the lower salary level, will no longer qualify for this status.  As a result, if an employee is no longer exempt under the FLSA, overtime must be paid for work performed beyond the 40-hour work week.

Employers need to respond to these changes in a number of ways.  Some are raising base salaries in order to classify additional employees as “exempt.”  Others are planning to simply pay overtime where necessary.  Others are planning to cap hours at 40 so that no overtime need be paid, or to meet their needs with part-time workers.

Regardless of the planned changes, effects on the employer’s benefit plans must be considered.  The DOL’s new overtime rules will require many employers to make sweeping and expensive changes to their compensation practices.  These changes may impact employee benefit plans in both intended and unintended ways.  Employers are urged to conduct a thorough benefit plan analysis before making any sweeping compensation changes.

If you have questions about the rule, or how it may affect your company, please contact us.

DEPARTMENT OF LABOR REPORT

BACKGROUND

In October 2015, National Public Radio (NPR) and ProPublica did a report over the differences between the states npr_propublicaworkers’ compensation laws.  The report found significant differences in the amount and type of benefits in each states workers’ compensation system.  The report focused heavily on recent attempts by states to allow employers to opt-out of workers’ compensation.  These plans generally allow an employer to set-up a benefit system for injured workers themselves.    In particular, it focused on Oklahoma’s opt-out law – a law that was recently struck down by the Oklahoma Supreme Court as unconstitutional.  The report was very damning of these differences and deficiencies between the states’ systems.

The NPR and ProPublica report led to a letter from 10 prominent national legislators to the Secretary of the Department of Labor.  The letter was itself very critical and condemning of the deficiencies reported by NPR and ProPublica.  As a result, on October 5, 2016 the Department of Labor issued a 43-page report over the state of the patchwork of workers’ compensation laws across the country.

THE REPORT

The Department of Labor report outlines the history of the ‘grand bargain’ that is the workers’ compensation system outlining the reasons behind workers’ compensation and how we ended-up with a patchwork system of laws.  In particular, the report focuses on a national commission report from 1972 that identified 5 basic objectives for workers’ compensation programs:

  1. broad coverage of employees and work-related injuries and diseases,
  2. substantial protection against interruption of income,
  3. provision of sufficient medical care and rehabilitation services,
  4. encouragement of safety and
  5. an effective system of delivery of the benefits and services.

This national commission agreed on 19 essential recommendations to accomplish these goals.  The 19 recommendations themselves focused on six specific areas:

  1. compulsory rather than elective coverage with no exemptions for various employers or types of labor,
  2. broadening employee choice for filing claims interstate, either where the injury occurred, or where the employment was originated,
  3. full coverage for work related diseases,
  4. adequate weekly wage replacement benefits and death benefits of no less than 100% of the states average weekly wage,
  5. no arbitrary limits on the duration of benefits and
  6. full medical and rehabilitation benefits without limit or duration.

The report considers the history since 1972, recognizing that employers’ costs and insurance rates grew from 1984 to 1990.  This cost increase created political pressure to change the benefit packages.  The report cites that per $100 of payroll, costs rose to as high as $1.65, but have since dropped to $.98 per $100 of payroll in 2013.  The report goes on and attributes the decreased cost to states passing legislation to reduce the benefit packages to injured workers. In particular, the report cites to various states that have created ‘proof barriers’ to certain types of claims, such as mental impairment claims, and cites to a reduction in benefits for workers with pre-existing injuries or conditions.  The report mentions mechanisms within each state for reduction of indemnity benefit eligibility through application of apportionment, or other fault-based benefit penalties.  There is also reference to disincentives to workers to report a claim, such as drug screening after an accident or injury.  The report is also critical of restricted medical care for injured workers, through either limited medical care provider choices, or reduced reimbursement keeping medical care providers from accepting work injuries.  Finally, the report is critical of the elimination of second injury funds and other ways in which liability for certain injuries or conditions are accepted.

Overall, the Department of Labor report recognizes that some liability for benefits in the workers’ compensation system is being passed on to other programs, including Medicare, Medicaid and Social Security.  This cost shifting to other public aid programs is a primary concern for the Department of Labor.  The report provides a road-map for Federal action in the future in the form of oversight of state workers’ compensation systems, including mandatory minimums of benefits within each system to halt what the report describes as a ‘race to the bottom.’

Of interest, the report tracks each states progress in complying with the 19 core recommendations from the original national commission.  The report shows how each state was doing in 1972, 1980 and 2004.  In 1972 Colorado had complied with 10 of the 19 recommendations and had increased that to 16 of the 19 recommendations by 1980. By 2004, Colorado compliance had dropped, as is the case with most states, to 12.75.  In 2004 no state had met all 19 recommendations.

BOTTOM LINE

The report tacitly recognizes that the Obama administration is on its way out.  Regardless, the Department of Labor is clearly interested in the functioning of state workers’ compensation systems and it is doubtful that the upcoming election will change that dynamic.  Further, state interest in an opt-out structure only increases this negative attention.  Several states that have considered opt-out arrangements have dropped these proposals.  Under any circumstance, it is to be expected that there will be continued call for increased Federal oversight over workers’ compensation.

OSHA Injury and Illness Reporting Requirements

The Occupational Safety and Health Administration (OSHA) requires many employers with ten or oshalogomore employees to keep a record of serious work related injuries and illnesses (certain low risk industries are exempted).  Employers must report any worker fatality within 8 hours and any amputation, loss of an eye, or hospitalization of any worker within 24 hours.  Minor injuries requiring only first aid do not need to be recorded.   This information helps employers, workers and OSHA evaluate the safety of a workplace, understand workplace hazards and prevent future workplace injuries and illnesses.

OSHA recently announced it is expanding its “Injury and Illness Record-keeping Rule” to encourage greater transparency of employer injury and illness data.  Starting in 2017, the Rule will also require some employers to disclose occupational injury and illness information to OSHA electronically.  Some of the electronically submitted data will then be posted to OSHA’s website.  OSHA believes that this public disclosure of employer information will “nudge” employers to improve workplace safety and provide valuable information to workers, job seekers, customers, researchers and the general public.  The amount of data submitted and publically posted will vary depending on the size of the company and the type of the industry.

The expanded Rule prohibits employers from “discouraging” workers from reporting an injury or illness.  The final Rule requires employers to inform employees of their right to report work-related injuries and illnesses free from retaliation; implement procedures for reporting injuries and illnesses that are reasonable and do not deter workers from reporting; and incorporate the existing statutory prohibition on retaliating against workers for reporting injuries and illnesses.   Originally slated to take effect August 10, 2016, OSHA is delaying enforcement of the anti-retaliation provisions in its new Injury and Illness Record-keeping Rule to provide education and outreach to employers.  Enforcement of the anti-retaliation provisions of the Rule will now begin November 1, 2016 and the record-keeping rule takes effect on January 1, 2017.

You might feel confident that your workplace is already in compliance with the “anti-retaliation” provisions of OSHA’s Injury and Illness Recordkeeping Rule.  You may even be asking yourself, “How is this a change in the law?  Isn’t it already against the law to retaliate against an employee for reporting a workplace injury or illness?”  While section 11(c) of the Occupational Safety and Health Act prohibits any person from discharging or discriminating against an employee for reporting an injury, illness or fatality, OSHA may not act under that section unless the employee files a complaint within 30 days of the retaliation.  OSHA believes the new Rule is vital as it gives OSHA the “ability to protect workers who have been subject to retaliation, even when they cannot speak up for themselves”. Further, the issues under the expanded rule are more complicated than they first appear. You could be inadvertently violating provisions of the rule and unexpectedly land yourself in hot water with OSHA.

Here are some common workplace safety policies that could result in violations of OSHA’s new anti-retaliation provisions:

  1. Mandatory post-accident drug testing programs: The OSHA rule specifically recommends against “blanket post-injury” drug testing policies. However, OSHA also specifically indicates the rule does not prohibit post-injury drug testing of employees.  It only prohibits employers from using drug testing, or the threat of drug testing, as a form of retaliation against employees who report injuries or illnesses.  That being said, in connection with the rule, OSHA stated, “OSHA believes the evidence in the rulemaking record shows that blanket post-injury drug testing policies deter proper reporting.”  Therefore, OSHA’s position on blanket post-injury drug testing appears to be equivocal and leaves employers without clear direction.  OSHA’s recommendation against blanket post-injury drug testing may prove particularly problematic, given that Colorado’s Worker’s Compensation Act clearly contemplates post-accident drug and alcohol screening in light of C.R.S. sections 8-42-112, (“safety rule violation”), 8-42-112.5, (the “intoxication defense”), 8-42-103(1)(g) and 8-42-105(4)(a), (the “termination statutes”).  For employers with “zero tolerance” policies, a positive post-accident drug or alcohol test could result in the termination of an injured employee’s employment, reducing their temporary indemnity benefits to zero.  If the employer proves either an intoxication defense or safety rule violation, the injured employee’s indemnity benefits, temporary and permanent, would be reduced by 50 percent.  While these concerns may not directly impact the course of worker’s compensation litigation, they could give rise to employment litigation outside the workers’ compensation system, particularly in light of OSHA’s independent ability to raise the retaliation issue under the expanded rule, without the need for the worker to file a complaint.

 

  1. Providing incentives exclusively to employees that have not been involved in workplace incidents or accidents: While OSHA indicates the rule does not prohibit incentive programs, it does state employers must not create incentive programs that deter or discourage an employee from reporting an injury or illness. For example, if you are trying to minimize injury by providing cash bonuses, paid time-off, employer-sponsored parties, or other compensation, for a certain number of “injury-free” days, or “no lost time”, you could be in violation of the rule. Unfortunately, OSHA’s alternative direction is vague at best.    OSHA recommends incentive programs that “encourage safe work practices” and “promote safety-related activities”.

 

  1. If injured, off-work employees are excluded from workplace events, which could be considered a benefit of employment, such as luncheons, parties, football pools, birthday celebrations, or other work-related events or functions.

OSHA’s new Injury or Illness and Record-keeping Rule is complicated and could result in a quagmire of retaliation and perceived retaliation claims.  Your current safety policy and procedures should be reviewed for compliance with the expanded rule.  If you have questions about the rule, or whether your policies are in compliance, please contact us.

Investigation of Outstanding Medicaid Liens in Workers’ Compensation Claims

The Colorado Department of Health Care Policy and Financing, through its Medicaid program, is responsible hcpffor collection of outstanding liens for the state.   This department is in charge of disbursement of state funds to indigent citizens in need of medical benefits.  Oftentimes, a claimant will pursue medical benefits through the department if they qualify.   This may be true even when a claimant has a current workers’ compensation claim on file with the Division of Labor.  Qualification for a particular program, through the state funded Medicaid partnerships, involves several criteria.  If a citizen qualifies, benefits may be paid regardless of the current status of a workers’ compensation claim.   The Medicaid department will assert its lien, (referred to as a “recovery right”), against the claimant and the workers’ compensation claim.

A lien usually arises at one of two points in the workers’ compensation litigation.  The first such instance occurs when a claim is denied by the carrier and the claimant chooses to pursue medical benefits through the applicable Medicaid programs.   These claims usually involve substantial forms of medical treatment, (i.e. surgeries), in which time is of the essence and a claimant cannot wait for resolution of compensability and causation issues in their workers’ compensation claims.  The claimant may choose to obtain the surgery through the authorized treating physicians or through their own personal care physician.  Should the claim be found compensable by an ALJ, it is important to distinguish between the benefits provided and through which physicians the claimant received treatment.   Regardless of the legal arguments to be made, Medicaid will assert its right of recovery against the benefits paid and will await resolution of the claim before doing so.

The second such instance occurs when a claimant has received medical benefits through the state funded Medicaid program and the treating physician finds a particular treatment to either be related to the claim, (or not related to the claim). The benefits are disputed through the workers’ compensation process, and the claimant obtains treatment without waiting for resolution of the workers’ compensation issues.   In this example, the opinions from the treating physicians will be important in determining liability for the outstanding lien.  If a treating physician deems the medical benefits to be related to the claim, and the claim is resolved through a settlement or other means, the carrier will be liable for payment of the lien.   Recovery of the lien cannot be shifted by the parties in the workers’ compensation claim.  However, if the treating physicians deemed the treatment to be non-work related, the carrier may be able to dismiss any causes of action by providing the opinions of the physicians to the proper investigative authorities within the department.

 

Legislative Authority

Colorado’s Medicaid programs derive their authority from one main portion of section 25.5 of the Department of Health Care Policy and Financing Act.  Section 25.5-4-301(5)(a), C.R.S. states, “When the state department has furnished medical assistance to or on behalf of a recipient pursuant to the provisions of this article, and articles 5 and 6 of this title, for which a third party is liable, the state department shall have an automatic statutory lien for all such medical assistance. The state department’s lien shall be against any judgment, award, or settlement in a suit or claim against such third party and shall be in an amount that shall be the fullest extent allowed by federal law as applicable in this state, but not to exceed the amount of the medical assistance provided.”

Additionally, section 25.5-4-301, C.R.S. states, “When the applicant or recipient, or his or her guardian, executor, administrator, or other appropriate representative, brings an action or asserts a claim against any third party, such person shall give to the state department written notice of the action or claim by personal service or certified mail within fifteen days after filing the action or asserting the claim. Failure to comply with this subsection (6) shall make the recipient, legal guardian, executor, administrator, attorney, or other representative liable for the entire amount of medical assistance furnished to or on behalf of the recipient for the injuries that gave rise to the action or claim. The state department may, after thirty days’ written notice to such person, enforce its rights under subsection (5) of this section and this subsection (6) in the district court of the city and county of Denver; except that liability of a person other than the recipient shall exist only if such person had knowledge that the recipient had received medical assistance or if excusable neglect is found by the court. The court shall award the state department its costs and attorney fees incurred in the prosecution of any such action.”   (Emphasis added)

Lastly, section 25.5-4-301(5)(b) states, “No judgment, award, or settlement in any action or claim by a recipient to recover damages for injuries, where the state department has a lien, shall be satisfied without first satisfying the state department’s lien. Failure by any party to the judgment, award, or settlement to comply with this section shall make each such party liable for the full amount of medical assistance furnished to or on behalf of the recipient for the injuries that are the subject of the judgment, award, or settlement.”

These three portions of the statute are important to remember prior to resolving any workers’ compensation claim.  Specifically, if the carrier or the insured has any knowledge that Medicaid paid for any potential treatment in connection with the workers’ compensation claim, the carrier must investigate and contact the Department of Health Care Policy and Financing to inquire about any potential liens.  The duty to investigate is not on Medicaid or the State of Colorado, but rather the duty rests with each party to the workers’ compensation claim.   Failure to notify Medicaid prior to resolution of the workers’ compensation claims will cause the outstanding balance to become due and owing in full unless a separate argument can be made regarding the medical benefits provided to the claimant recipient.  This is the case regardless of any language placed into any agreements, stipulations, settlements, or the like that are agreed upon between the parties.

 

Recommendations

The carrier and the Employer, (either through counsel or individually), should always investigate whether any Medicaid liens exist at the state level.   Outstanding Medicaid liens differ from other liens due to the duty imposed on the carrier through statute.  Failure to investigate any outstanding liens could lead to potential reopening of claims long after they have been resolved.  Investigation could happen in a number of ways.  The simplest way involves contacting the department in writing and providing the identifying information of the claimant to search for any liens.  The department will usually respond within a few days notifying the carrier of any issues.    However, this manner may be problematic for adjusters especially in light of the volume of claims at any given time.  If counsel is assigned, the inquiry can be made by email or through general discovery pending on a litigated claim.  Discovery responses from the claimant can reveal receipt of any benefits through Medicaid or otherwise.

For more information about specific Medicaid issues on any workers’ compensation claims and recovery of liens, please feel free to contact us.   References about the Colorado Medicaid programs can be found here.

A Painful Step in Addressing the Opioid Epidemic: An Overview of the 2016 CDC Guidelines

The growing epidemic of chronic opioid use and addiction, and its consequences, permeates theopiod American medical and legal landscape.  Since the spike in the use of ubiquitous pain medications in the late 1990s, there has been little actual oversight in the health care industry to regulate the prescription of these highly addicting drugs.  In March 2016, the Center for Disease Control (CDC) released new guidelines concerning opioid pain prescriptions. The guidelines have caused some backlash from physicians, who believe the government is now overreaching into the patient-physician relationship, and shifting from its historical role of approving the use of opioids at the regulatory level. Aside from the finger pointing amongst stakeholders in the health care industry, from the government, to big pharma, to the physicians who continue to administer, to the legal system, the fact is there is plenty of blame to go around for the cause of the epidemic. The response to the guidelines reflects the fundamental agreement that more oversight and education is needed at all levels.  The CDC’s new guidelines are a broadened approach with the goal of addressing the epidemic from the top down.

 

The authors of the guidelines, which were an amalgam of health care professionals, cited a jaw dropping statistic. In 2012, health care providers wrote 259 million prescriptions for opioid medications. That is one prescription for every adult in the U.S. The increase in prescriptions were found in the areas of family practice, general practice, and internal medicine. From 1999 through 2014, more than 165,000 people died from opioid related deaths in the U.S. The authors pointed out that contemporary studies evidenced that opioids have adverse long term affects including significant physical impairment and distress. The authors stated that, “this 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.” In other words, continued prescription of opioid medications can be a contributing factor in an injured worker not returning to the work place.

 

The substance of the CDC guidelines can be broken into three general categories:

(1) when to start or continue administration of opioids for chronic pain symptoms;

(2) how practitioners should select a particular drug, the dosage, and when to discontinue that specific dosage; and

(3) how to mitigate the potential for addiction from start to finish.

The guidelines are not intended to apply for cancer and end-of-life palliative care. Rather, the guidelines are intended to apply to primary providers, including those who work in out-patient clinical settings.

 

The guidelines emphasize the benefits of non-opioid treatments. For lower back pain, exercise therapy and non-steroid anti-inflammatories are recommended. As an alternative to opioids, cognitive behavioral therapy is recommended to mitigate disability and catastrophic thinking. If, and when, opioids are utilized in a treatment program, the physician should continue prescriptions if “meaningful improvement” in pain and function outweighs the risk of continued use. The guidelines recommend that the patients demonstrate a 30% 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 as a “band-aid” approach to sustain the status-quo condition.

 

During the continuation process, the physician should actively manage the patient’s case by reviewing any history of controlled substances and utilize their state’s prescription drug monitoring program periodically, while performing, at a minimum, annual urine tests. In Colorado, for example, the Workers’ Compensation Medical Treatment Guidelines (MTG), Rule 17 Exhibit 9, have independent criteria for treating chronic pain in workers’ compensation case. The MTG emphasizes similar recommendations for active case management, including urine screens.  Additionally, the Department of Regulatory Agencies, in connection with several state medical boards, released an “Open Letter to the General Public on the Quad-Regulator Joint Policy for Prescribing and Dispensing Opioids” on October 15, 2014. While the policy does not draw a bright line rule of managing opioid cases in Colorado, the letter does outline the boards’ recognition that “decreasing opioid misuse and abuse in Colorado should be addressed by collaborative and constructive policies aimed at improving the prescriber education and practice, decreasing diversion, and establishing the same guidelines for all opioid prescribers and dispensers.”  The board also emphasized documenting improved functions, the use of the PDMP (Prescription Drug Monitoring Program), and random drug screening based upon the provider’s clinical judgment.

 

The CDC guidelines are important to workers’ compensation treatment and claims. The guidelines suggest that long term opioid use can be counterproductive in workers’ compensation. How these guidelines will be used by workers’ compensation physicians, in order to return injured workers’ back to work, has yet to be known. But the guidelines can be used in an effort to mitigate risk for future exposure in the litigation process. From a legal perspective, the guidelines, though not binding on any physician, are a peer reviewed document by both experts in the field and industry stakeholders. In this author’s opinion, the guidelines itself meet the threshold evidentiary requirement in Colorado as an admissible, reliable medical document. For more information, please feel contact us with specific case-related questions. As a resource, the CDC guidelines can be found here. A copy of the Colorado joint letter on prescribing and dispensing opioids can be found by following the link located here.

 

The EEOC’s New Wellness Program Rule

On May 16, 2016, the Equal Employment Opportunity Commission US-EEOC-Seal.svg(EEOC) released its own final regulations regarding employer wellness programs.  This was in direct response to the two recent court decisions – EEOC v. Flambeau, Inc. and Seff v. Broward County.  In its recently issued regulations, which you can access HERE and HERE

The EEOC has set forth its final position on how the Americans with Disabilities Act (ADA) and Title II of the Genetic Information and Discrimination Act (GINA) apply to employer wellness programs that request the health information of employees and/or their spouses.  While most provisions of the final ADA rule and final GINA rule are identical to their respective proposed rules, there are some key differences, which we explain below in Q&A format below.

  1. Does the ADA’s safe harbor provision apply to employer wellness programs?

No.  The ADA’s safe harbor provision states that the ADA “shall not be construed to prohibit or restrict . . . a person or organization covered by this chapter from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law.”  42 U.S.C. § 12201(c).

The Commission made no secret about its opinion that Seff and Flambeau were “wrongly decided” (including by appealing the Flambeau decision to the Seventh Circuit).  Despite case law to the contrary and pending appeals, the Commission reaffirmed its position in the final ADA rule that “the safe harbor provision does not apply to an employer’s decision to offer rewards or impose penalties in connection with wellness programs that include disability-related inquiries or medical examinations.”  Rather, the safe harbor provision only applies “to the practices of the insurance industry with respect to the use of sound actuarial data to make determinations about insurability and the establishment of rates.”  An employer’s use of a wellness program to make employees healthier and reduce the costs of health care is not the type of underwriting or risk classification that is protected by the safe harbor provision. See 29 C.F.R. § 1630.14(d)(6).

  1. What wellness programs are subject to these final rules?

Any wellness program that includes disability-related inquiries and/or medical exams is subject to the rule.  This includes wellness programs: (a) offered only to employees enrolled in an employer-sponsored group health plan; (b) offered to all employees regardless of enrollment in the employer-sponsored group health plan; and (c) offered as a benefit of employment by employers that do not sponsor group health plans/insurance.

  1. Do the final rules provide additional clarification as to what makes a wellness program “voluntary”?

Yes.  The Commission has held steadfast in its decision to apply the “30 percent rule” for incentives set under HIPAA and the Affordable Care Act to participatory wellness programs that inquire as to employee disabilities or require employees to undergo medical examinations.  In doing so, the final rule limits the size of the incentives offered by these programs to 30% of the employee’s total cost of coverage.  Many commenters wanted the Commission to adopt an “affordability standard” to protect low-income workers from incentives that prove to be large enough to render health insurance coverage unaffordable.  The Commission declined to adopt this standard however, because in its view, “this rule promotes the ADA’s interest in ensuring that incentive limits are not so high as to make participation in a wellness program involuntary.”

Additionally, in the rule’s preamble specific to 29 C.F.R. § 1630.14(d)(2)(ii), the Commission clarifies that it is of the opinion that the ADA prohibits “the outright denial of access to a benefit available by virtue of employment”, but does not prohibit “an employer from denying an incentive that is within the [30% limit] . . . nor does it prohibit requiring an employee to pay more for insurance that is more comprehensive.”  The Commission likely included this comment to further emphasize its disagreement with the Flambeau and Seff decisions – the Commission has concluded that an employer discriminates against an employee in violation of the ADA, 42 U.S.C. § 12112(d)(4), when it “denies access to a health plan because the employee does not answer disability-related inquiries or undergo medical examinations.”

The final rule explaining the notice requirement, 29 C.F.R. § 1630.14(d)(2)(iv), also clarifies that it applies to “all wellness programs that ask employees to respond to disability-related inquiries and/o undergo medical examinations.”

  1. What types of incentives may be offered to employees and how can employers calculate incentive limits?

In addition to financial incentives, employers are permitted to offer in-kind incentives (e.g., employee recognition, parking spot use, relaxed dress code) and de minimis incentives to employees, despite any difficulties in valuing these incentives.

The final ADA rule, 29 C.F.R. § 1630.14(d)(3), also explains how employers can calculate incentive limits in four situations: (a) where participation in a wellness program depends on enrollment in a particular health plan; (b) where wellness program participation does not depend on employee’s enrollment in an employer-offered single group health plan; (c) where wellness program participation does not depend on employee’s enrollment in any of employee’s group health plans; and (d) where an employer does not offer a group health plan or insurance.

  1. How do these rules relate to other federal discrimination laws?

Employers should pay special attention to interpretative guidance following the final ADA rule.  In it, the Commission states:

“[E]ven though an employer’s wellness program might comply with the incentive limits set out in [29 C.F.R. § 1630.14(d)(3)], the employer would violate federal nondiscrimination statutes if that program discriminates on the basis of race, sex (including pregnancy, gender identity, transgender status, and sexual orientation), color, religion, national origin, or age.  Additionally, if a wellness program requirement (such as a particular blood pressure or glucose level or body mass index) disproportionately affects individuals on the basis of some protected characteristic, an employer may be able to avoid a disparate impact claim by offering and providing a reasonable alternative standard.”

This appears to place the additional burden on the employer to examine all wellness program incentives and requirements for potential disparate impact.  The extent to which an employer must understand specific medical characteristics of every protected class on its employee roster is unknown.

  1. What changes did the Commission make in the final GINA rule?

There are four changes of note, all of which were added to the final GINA rules to clarify and/or enhance the proposed rules.

  • The final GINA rule extends the prohibition on offering inducements for information from the children of employees to all children (minor children and those 18 years of age or older).
  • Every provision of the final GINA rule now applies to all employer-sponsored wellness programs requesting genetic information.
  • There is no longer a different inducement limit threshold for employee spouses. The final GINA rule uses the “30 percent rule” when an employee and the employee’s spouse are given the opportunity to enroll in the employer-sponsored wellness program.  The final rule provides examples of how to calculate incentive limits where this is the case.  See 29 C.F.R. 1635.8(b)(2)(iii)(A)-(D).
  • Employers may not condition an employee’s or an employee’s spouse’s participation in a wellness program or their eligibility for offered incentives on the employee, the employee’s spouse, or a covered dependent agreeing to the sale, exchange, sharing, transfer, or other disclosure of genetic information or waiving GINA’s confidentiality protections.

Take Away

The final rules apply proactively – thus, are only applicable to wellness programs as of the first date of the plan beginning January 1, 2017 or thereafter.  In the meantime, we await the Seventh Circuit’s decision in the EEOC’s appeal of Flambeau regarding whether the ADA safe harbor provision applies to employer wellness programs.  Given the EEOC’s position that the provision does not apply and the growing number of courts that think otherwise, it is looking like the ultimate decision will be made by the U.S. Supreme Court.