January 2012 Workers’ Compensation Law Update

2012 MQRP Audit Includes More Scrutiny for Pill Mills

On January 13, 2012, the Division announced it has finalized the Medical Quality Review Calendar Year 2012 Annual Audit Plan.  Review categories include the following:

·           Health care providers rendering pain management services including opioids;

·           Designated Doctor Examinations ? potentially includes the quality of designated doctor reports and the appropriateness and medical necessity of additional testing ordered by designated doctors; and

·           Insurance Carriers and/or Utilization Review Agents? potentially includes the appropriateness of medical necessity decisions and the appropriateness of the professional certification of the peer reviewer.

For each of these categories, the scope, methodology, and selection criteria remain to be determined.  The Division indicated it would do so at a later date with stakeholder input.

Recoupment No Longer Limited to AWW Miscalculations

The Division has adopted new rules 126.15 regarding procedures for resolving underpayments of income benefits and 126.16 regarding procedures for recouping overpayments of income benefits.

New rule 126.16 expands the procedures for recoupment to include reasons for recoupment other than AWW miscalculations.  Former rule 128.1 did not provide a procedure for recouping overpayments made for reasons other than AWW miscalculations.

In the preamble to new rule 126.16, the Division has seemingly left the door open to arguments that the cause of the overpayment may be a consideration in deciding whether to allow recoupment:

The suggested language would serve to restrict the hearing officer’s ability to fully consider the cause of the overpayment. Cause is best addressed in case specific reviews. There may be instances where the hearing officer may determine there should be no recoupment from future income benefits allowed, just as there may be instances where the hearing officer may allow a 100% reduction of income benefits.

However, this statement is inconsistent with section 408.0815 and the language of rule 126.16 which indicates that the cause of the overpayment goes only to the rate of recoupment and not entitlement to recoupment itself.  It is also inconsistent with earlier AP decisions such as 040876 which held that “[t]he IC is entitled to recoupment pursuant to Section 128.1(e)(2)  even when the overpayment was due to the IC’s error in calculating the proper AWW. Section 128.1(e)(2) supercedes prior AP decisions which looked to the equities in determining an IC’s right to recoup an overpayment.”

News from Around the Country – Learning From Others’ Mistakes

In Washington State, concerns about a high incidence of fatal overdoses of methadone have prompted the state to issue a public-health advisory warning of the unique risks of methadone.  The advisory was sent to pharmacists, drugstores, and health care professionals.  Methadone is reported to be different than other opioids in that it has a long half-life.  As a result, it can stay in the body for days, building to a toxic level that depresses the respiratory system.  The Seattle Times reported that since 2003, at least 2,173 people in Washington have died from accidental overdoses involving methadone.  Methadone was previously designated as a preferred drug by Washington State.  Hopefully, Washington State’s experience with methadone will serve as a warning for anyone in Texas who might be in favor of taking methadone off the “N” list and putting it on the “Y” list.

Eliminating Preauthorization of Drugs in Legacy Claims

The Division has proposed to exempt drugs from the general requirement under rule 134.600(p)(12) that preauthorization is necessary for all treatments and services that exceed or are not addressed by the commissioner’s adopted treatment guidelines.  Under this proposed rule, only drugs that are listed in the closed formulary with a status of “N” would require preauthorization.  Preauthorization would not be required for “Y” drugs whose prescribed use is inconsistent with or outside the ODG.  For example, the long-term use of certain muscle relaxants and benzodiazepines would not require preauthorization. As a result, for legacy claims not subject to the closed formulary, there would be no preauthorization of drugs under any circumstances.  In light of the overutilization of drugs in Texas workers’ compensation claims and the significant adverse health consequences, this change is not recommended.

In the introduction, the Division describes this proposed rule as a clarifying amendment to existing law.  However, this proposed rule actually represents a change in the law.  Rule 134.506(d) states that “drugs included in the open formulary prescribed and dispensed for legacy claims not subject to a certified network do not require preauthorization, except as required by Labor Code §413.014” (emphasis added).  Section 413.014 requires preauthorization for any service specified by the commissioner as requiring preauthorization, and current rule 134.600 requires preauthorization for any services that are inconsistent with the treatment guidelines.

The First Big Comp Case of the Year – Port Elevator?Brownsville, L.L.C. v. Casados, No. 10–0523, 2012 WL 247985 (Tex. Jan. 27, 2012)

On January 27, 2012, the Texas Supreme Court issued an opinion reversing the Corpus Christi-Edinburg Court of Appeals and reaffirming the long-standing rule against split workforces which requires employers to elect workers’ compensation coverage for all employees – except for limited statutory and common law exceptions.  In that case, a temporary staffing agency employee provided to a grain elevator company suffered a work-related fatal injury. Both the temporary staffing agency and grain elevator had workers’ compensation coverage.  The staffing company’s carrier offered to pay burial expenses and paid the required sum into the SIF since the deceased employee had no eligible beneficiaries.  The grain elevator’s carrier denied coverage on the grounds that the deceased employee was an employee of the staffing agency.  The employee’s parents sued the grain elevator which then asserted the exclusive remedy defense.  The employee’s parents argued that the exclusive remedy defense did not apply because the grain elevator’s policy did not cover the employee.  The court rejected this argument.  Because the grain elevator had workers’ compensation coverage, it could not split its work force by electing coverage for some employees but not coverage for all, and none of the exceptions to the rule against splitting workforces was applicable.

The employee’s parents cited three specific reasons the grain elevator’s policy did not cover the employee: 1) the grain elevator did not pay premiums for temporary employees; 2) the deceased employee was not covered by any code classification; and 3) the grain elevator’s carrier denied coverage.  The court rejected each of these arguments in turn.  First, the court reiterated that premiums are an issue between the employer and the insurer and do not affect the employee’s coverage.  It further stated that even a clear and unambiguous attempt to exclude the employee from coverage would violate the rule against splitting workforces.  Second, whether the employee was covered by any job classification in the grain elevator’s policy is not relevant because the rule against split workforces requires that all employees be covered absent a few limited exceptions, none of which were applicable in this case.  Third, in response to the argument that the carrier’s denial of coverage means that the employee was not covered, the court stated the employee was covered by the grain elevator’s policy citing its earlier  holding in Wingfoot. That case held that the employee should be able to pursue benefits from either the staffing company’s carrier or the client company’s carrier.  This raises some interesting questions for carriers that may find themselves in similar situations in the future.  The court did not mention the related principle that an employer’s entitlement to the exclusive remedy defense is not dependent on the carrier’s acceptance of the claim.  Expect to hear more about this case.

Other Recent Cases

Liberty Insurance Corp. v. Camero, No. 05–10–00740–CV, 2011 WL 6146189 (Tex. App.??Dallas, Dec. 12, 2011).

The claimant’s doctor requested preauthorization for knee surgery.  The request was denied.  Neither the doctor nor the claimant requested reconsideration.  Seven months later, preauthorization was requested again and the surgery was approved.  The claimant sued the carrier for bad faith alleging that the carrier originally denied preauthorization for knee surgery without a reasonable basis to do so.  The Dallas Court of Appeals held that because there had been no determination by the Division that surgery was medically necessary when the first request for preauthorization was made, the trial court was without jurisdiction to award damages allegedly resulting from delayed surgery.

Salinas v. Pankratz, No. 13–10–00241–CV, 2012 WL 112812 (Tex. App??Corpus Christi?Edinburg, Jan. 12, 2012).

The court held that the Entergy decision applies to prevent the claimant’s suit against a general contractor.  The court also rejected the employee’s discrimination claim under section 451.001 of the Act which provides that an employer may not discharge, or in any manner discriminate, against an employee because the employee, among other things, filed a workers’ compensation claim in good faith or hired a lawyer to represent him in a claim.  The employee argued that he was discriminated against under section 451.011 because he was not notified whether it was the general contractor or subcontractor that had agreed to provide his workers’ compensation coverage.  The court held that the failure to give notice about coverage does not amount to an act of section 451 discrimination.

State Office of Risk Management v. Joiner, No. 06–11–00076–CV, 2012 WL 90108 (Tex. App.??Texarkana, Jan. 12, 2012).

The court rejected the Division’s interpretation of rule 130.1(c)(3), as set forth by the appeals panel, that if a physician’s report of impairment fails to base the claimant’s condition on the date of maximum medical improvement that impairment rating is invalid and should not be considered.  The court of appeals also held that because the issue of whether the treating doctor’s report was invalid under the AMA Guides was not decided by the appeals panel or the trial court, it could not decide that issue for the first time on appeal.

Barnes v. United Parcel Service, Inc., No. 01–09–00648–CV, 2012 WL 112252 (Tex. App??Houston [1st Dist.] Jan. 12, 2012).

The employee sustained a fatal heart attack at work.  The hearing officer found that the employee’s work was not a substantial contributing factor to the heart attack but rather it was the natural progression of a preexisting heart condition. The hearing officer concluded that the employee’s heart attack was not a compensable injury because his work was not a substantial contributing factor.  The  employer was subsequently sued for gross negligence.  The court held that the gross negligence suit could proceed because it concluded that the causation standard for compensability of a heart attack under section 408.008 is different from that of a plaintiff suing for gross negligence.