State News

On January 2, 2024, the Pennsylvania Commonwealth Court issued what may be a decision that has significant effect upon workers’ compensation liability for insurers and self-insured employers, the pharmaceutical industry and may for injured workers as a consequence of the Decision.  In Federated Insurance v. Summit Pharmacy, the Court set aside the Bureau of Workers’ Compensation’s regulatory adoption and use of Red Book values as setting the Average Wholesale Price (AWP) to resolve payment disputes for pharmaceuticals.  It noted that doing so was inconsistent with the phrase AWP as utilized in Section 306(f.1)(3)(vi)(A) as has been interpreted by the Court.  If an agency’s regulations are inconsistent with the legislative intent of the statutory provisions, the regulations are invalid.  Thus, the Court invalidated utilizing Red Book values as to AWP when determining what amount needs to be paid under the Pennsylvania Workers’ Compensation Act and corresponding Medical Cost Containment Regulations when remitting payment for prescription medications.  The Court ordered the Bureau to promptly identify a “Nationally recognized schedule” of AWP which is to be utilized as being the basis of payment for prescriptions. 

This case had its genesis in a dispute over an alleged underpayment of approximately $72,500.00 for prescription medications.  The prescription bills submitted from 04/15/21 – 09/08/22 totaled $74,011.81 and payment was made by the carrier using the AWP of the drugs are reported in the National Average Drug Acquisition Cost Index (NADAC), which totaled $1,511.93.  The Bureau’s Fee Review Section issued determinations apply the costs per Red Book, based upon the cost containment regulations promulgated under the Act.  See 34 Pa. Code §§127.1 – 127.755; see also Section 306(f.1)(3)(vi)(A) of the Act, 77 P.S. §531(3)(vi)(A), which limits reimbursement for drugs and professional pharmaceutical services to “one hundred ten per centum of the … [AWP] of the produce, calculated on a per unit basis, as of the date of dispensing.” 

The Carrier argued that Red Book pricing was artificially inflated and did not accurately represent the actual AWP, which is what the Act required to determine pricing for pharmaceuticals.  It was noted that Red Book is a privately published, electronic compendium of pharmaceutical and over-the-counter “AWPs” available online.  The publisher of Red Book is IBM Watson, which has changed over the years.  It the statement policy, even IBM Watson indicated that, in most cases, the manufacturer’s AWP does not reflect the actual AWP charged by the wholesaler.  The values used in Red Book were what was reported by the manufacturer and IBM Watson did not independently analyze the data to ascertain the amounts paid by pharmacies to wholesalers.  Accordingly, it was asserted that Red Book values were inconsistent with the Act and cost containment provisions.  The Court looked to prior case law, Indem. Ins. Co. of N. Am. v. Bureau of Workers’ Comp. Fee Rev. Hearing Off. (Insight Pharm.) 245 A.3d 1158 (Pa. Cmwlth. 2021) to conclude that the plain meaning of AWP is a price which is an industry average and not one “charged by a single manufacturer,” and “is a number derived by averaging the wholesale prices of all manufacturers or wholesalers.”

While the Bureau adopted Red Book as AWP to be used in payment disputes, it was noted that an insurer may introduce evidence challenging the “accuracy” of the Red Book pricing.  Here the carrier challenged the use of Red Book on the basis that its values can never reflect an accurate AWP.  It was noted that NADAC pricing was based on the aggregated and averaged prices pharmacies typically pay for a drug at wholesale nationally. Whereas, Red Book pricing was chosen unilaterally by a drug’s manufacturer and was not a mathematical average.  It was not based upon an prices in actual wholesale transactions.  The prices under Red Book and NADAC differed considerably, especially for generic drugs.  An example was the acquisition price of a bottle of Prozac, which was $9.00.  The Red Book price for reimbursement was $2,000.00.  Thus, at payment of 110% of AWP, the carrier’s payment could be $2,200 under Red Book or $9.90 under NADAC. 

The Court agreed that the Bureau’s regulatory adoption of Red Book’s values as to AWP to resolve payment disputes was inconsistent with the phrase AWP as used in the Act and that an administrative agency’s regulations cannot conflict with the statutory intent.  Thus, they held as a matter of law that Red Book’s values could not be used as to AWP because they are inconsistent with the Act.  The Court however, did not indicate that NADAC is to be utilized.  Instead, it remanded and directed the Bureau to “promptly identify and publish” in the Pennsylvania Bulletin a “National recognized schedule to determine the AWP of prescription drugs” to be used to resolve payment disputes.

Thus, we are now left with a situation in which there is uncertainty as to what amount is payable for any prescription submitted for reimbursement.  It is uncertain as to when the Bureau may publish a new National recognized schedule.  Does this excuse or toll the payments to now be issued for prescription medications for which bills are submitted.  If payment is not made within 30 days of receipt of the bills, typically statutory interest is to start to accrue on the payment to be issued.  Should carriers now start to pay under NADAC and then if a different schedule is implemented, pay any difference in the amount payable along with interest on the additional payment.  The Bureau may well adopt NADAC.  However, it is not bound to do so.  It should be noted that with the drastic difference in the amount payable, pharmacies may elect to not fill some drugs for workers’ compensation claims.  In the Decision, the expert for the pharmacy indicated that the cost to fill a prescription is $12.50 per prescription such that the pharmacy would be losing money any time they fill a script for a mediation that has an AWP that does not provide for payment above this amount.  This could be problematic for injured workers if they are no longer able to secure certain mediations if pharmacies do not find it cost effective to provide.   However, with how inflated Red Book values are, it is obvious that pharmacies have been significantly profiting to the detriment of insurers and self-insured employers for years relative to the cost of prescription medications.  More likely than not there will be more comment and discussion about how to come up with a schedule that makes sense for all stakeholders.

The Medical Cost Containment Regulations were enacted back in 1994.  They may no longer be adequate in a number of ways in terms of addressing issues that arise in the workers’ compensation and fee review forums.  It may be time for the General Assembly of Pennsylvania to revisit the regulations, seek commentary from all stakeholders and to address any and all deficiencies that are arising either from the regulations not accurately reflecting the times as to payment for medical treatment and pharmaceuticals as well as addressing cases that have been rendered over time that appear inconsistent with the Act and regulations that have led to even further confusion over implementation and interpretation of the Act and Regulations.  This case is most likely going to have a significant financial impact upon carriers in Pennsylvania as well as pharmacies and injured workers’ may also feel the fallout.  However, other than simply forms the basis for determining the cost of prescription mediations moving forward, perhaps, it will provide the impetus for even more broad and sweeping changes regarding the payment of medical treatment under the Pennsylvania Workers’ Compensation Act.  

Minnesota Case Law Update—January 2024

Post-Traumatic Stress Disorder

Tea v. Ramsey County et al., No. WC22-6493 (W.C.C.A. July 28, 2023).

The employee was a licensed social worker working as an adult mental health case manager who learned that in February 2020, one of her clients murdered his girlfriend. The employee initially heard about the incident over the telephone and subsequently through work meetings and conversations where the details of the criminal act were discussed in depth. The employee also conducted her own independent research outside of work via the internet and other news outlets.

The employee filed a First Report of Injury alleging work-related secondary trauma stemming from the violent act committed by her client. She underwent a psychiatric evaluation and was diagnosed with PTSD based on the DSM-5.

The employer and insurer initially accepted primary liability and began administering the claim. They made arrangements for an independent psychological evaluation and their expert opined that the employee did not meet criteria for PTSD under DSM-5. The employer discontinued benefits based upon that opinion.

The employee underwent a third psychological evaluation with a plaintiff’s expert who agreed with the first doctor that the employee met the DSM-5 criteria for PTSD as a result of her repeated exposure to the details of the murder. He also diagnosed major depressive and anxiety disorder. He specifically opined that Criteria A4 was met when the employee initially learned of the murder and with subsequent repeated exposure to the details for the next several days.

At hearing, the compensation judge found the employee sustained work-related PTSD and major depressive disorder and awarded workers’ compensation benefits. The employer appealed.

On appeal, the employer argued that the adoption of the third doctor’s opinion was erroneous and not supported by the evidence. The Minnesota Workers’ Compensation Court of Appeals held that it could not consider arguments as to whether the expert physicians misapplied the DSM requirements to the facts of the case pursuant to the holding in Smith v. Carver County (2019). On that basis, the WCCA affirmed the compensation judge’s findings that the employee’s expert physicians rendered credible medical opinions.

The W.C.C.A vacated the findings that the employee had major depressive disorder. That condition was not pled as consequential to the PTSD claim and major depressive order standing alone is not compensable. So, the judge could not find that as a work-related, compensable condition.

Arising out of and in the Course and Scope (safe ingress/egress)

Chad Olson v. Total Specialty Contracting, Inc., et al., No. WC23-6510 (W.C.C.A. November 9, 2023)

The employee was working as a journeyman heat and frost insulator for an employer who was subcontracted to work on a construction project on the University of Minnesota campus. He was scheduled to meet with another subcontractor to discuss the job. The meeting was set to take place in an area enclosed by a chain link fence and gates because it was closed to the public. The employee was instructed to park nearby, walk across the street and between two buildings, following the fence until he reached the gate and then enter the gate and the building.

When he arrived for the meeting, the employee was already wearing his vest, work boots, pants, hard hat and safety glasses. He arrived for the meeting at 5:45 a.m. and followed the directions for entrance. The chain link fence encroached upon the cement walkway which was covered with wet, frosty leaves and the area was dimly lit. Within five to ten feet of the gate entrance, the employee slipped and fell, sustaining injuries to the back and ankle.  He could not explain the cause of his fall but testified that he assumed he slipped and fell due to the wet leaves.

The employer and insurer denied that the injury arose out of and in the course and scope of employment because the employee didn’t know what caused the injury and there was no evidence connecting the injury to the employment. The employer and insurer also took the position argued that the injury occurred outside the perimeter of the construction site and occurred 15 minutes prior to the meeting, so did not meet the time and place requirements of a compensable claim. Similar to the Dykhoff case, the asserted that it was an unexplained fall on a flat surface prior to the work day and outside the work premises and therefore, not compensable.

The compensation judge found the employee’s injury was compensable and arose out of and in the course and scope of employment because the location where he fell was “used as an extension of the job site” and the walkway was not well lit and was covered in wet leaves immediately adjacent to the fence surrounding the site.

On appeal, the Minnesota Workers’ Compensation Court of Appeals affirmed the compensation judge, explaining that while the employee was not certain what caused the fall, the court could not conclude that the injury was unexplained and that the set of circumstances (wet leaves covering the walkway, poor lighting, unfamiliarity with the area, limited entry and fence encroaching on the walkway while wearing PPE to attend a meeting necessary to begin his work for the employer) increased the employee’s exposure to injury and established a causal connection between the work injury and employment.

Injuries Caused by a Third Party

Profit v. HRT Holdings d/b/a Doubletree Suites and CNA Claim Plus, et. al., No. WC21-6438 (W.C.C.A. April 14, 2022).

The employee was in the course of his employment when he was attacked by an assailant who had checked into the hotel where the employee worked. The employee and the assailant were acquainted and the assailant believed the employee had poisoned his uncle. The compensation judge determined that the assailant assaulted the employee solely for personal reasons entirely unconnected to the employment and that therefore, the employee’s claims were barred by the intentional act defense set forth in Minn. Stat. § 176.011, subd. 16. In doing so, the compensation judge concluded there is no exception to the intentional act defense where the assailant’s motivation arises from mental illness.  On appeal, the denial of benefits was affirmed by the Workers’ Compensation Court of Appeals and the Minnesota Supreme Court.

Notice Requirements for Repetitive Use (Gillette) Claims

Schmidt v. Walmart, No. WC21-6437 (W.C.C.A. May 16, 2022)

The employee suffered from chronic left knee pain that required surgical intervention twelve years before her employment began with employer. She maintained that she was symptom-free and working without restriction leading up to the alleged work injury. She was hired by the employer in 2005 and worked full time in a variety of different roles until 2011. In September 2011, she reported constant aggravations of her knee at work although she didn’t seek medical treatment until May 2015.

When seen by a physician in 2015, she was diagnosed with left knee arthritis and recommended for a total knee arthroplasty. The physician opined that the condition was not due to the alleged work-related incident from September 2011.  A revision surgery was performed on January 16, 2019, but the employee found it difficult to work when she resumed her duties with the employer. She sought legal counsel in March 2019 a filed a claim for a  repetitive use (Gillette) injury to the left knee.

The medical expert for the employer and insurer opined that the condition was not work-related but instead, due to preexisting osteoarthritis. The treating doctor opined that the employee’s preexisting condition had been accelerated by her work for the employer.

At hearing, the workers’ compensation judge found that the employee suffered a Gillette injury on October 27, 2015, that she provided proper notice of the injury to the employer, and that she did not withdraw from the labor market. The employer and insurer appealed.

On appeal, the employer and insurer argued that the employee knew her work activities were causing left knee symptoms in September 2011, and that said date triggered the statutory obligation to give notice of injury to the employer. They also argued that by giving notice to the employer in March 2019, the claim was barred by the statute of limitations.

The court rejected that argument and felt that it was reasonable to conclude that the Gillette injury culminated around the time the employee’s work activities caused her to be disabled from work during surgery and recovery. Moreover, the court reasoned that notice was properly given in March 2019 because prior to retaining legal counsel, the employee was unaware that repetitive minute trauma culminating in an injury could be a compensable work-related injury. 

In late October of 2023, legislation was passed temporarily extending emergency legislation from 2022 that previously barred the payment of an award or compensation in the District if the Claimant had received benefits under the laws of any other states. Titled the Parity in Workers’ Compensation Recovery Emergency Amendment Act of 2023, the Act extended the amendment that now allows the payment or award of compensation in the District of Columbia even if the Claimant has received benefits from workers’ compensation claim in any state. The total benefit received, however, will be reduced by any amount received previously. Thus, if the Claimant received any benefits in Maryland and now brings the claim into the District of Columbia, any further awards of compensation will be reduced by any amount received in Maryland. This Act applied to claims pending as of June 28, 2022 and all claims filed after June 28, 2022. Overall, this likely led to an increase in DC workers’ compensation claims as claimants were no longer barred from recovery in DC if they received any form of benefits in other states.

Moving forward, with this temporary legislation only in effect for 90 days with an expiration date of January 24, 2023, Employers and Insurers should continue to monitor for additional legislation as it is likely further temporary legislation will be enacted to extend the benefits associated with this Act. While the Act is no longer in effect, it is unknown what the courts will do for any claims of benefits during the period that is no longer covered if additional legislation is signed into effect. 

In the case of Cramer v Transitional Health Services of Wayne, the Michigan Supreme Court recently upended several decades of legal precedent concerning the evidence required to properly assess and establish compensability for work-related psychiatric injuries. Pursuant to Section 301(2) of the Michigan Workers’ Disability Compensation Act, “mental disabilities…are compensable if contributed to or aggravated or accelerated by the employment in a significant manner.” Further, the statute provides that, “mental disabilities are compensable if arising out of actual events of employment, not unfounded perceptions thereof, and if the employee’s perception of events is reasonably grounded in fact or reality.”

The previous evidentiary standard to assess the statute's “significant manner” requirement was established by the Workers’ Compensation Appellate Commission in the 2001 case of Martin v Pontiac School District. However, the Supreme Court explicitly overturned the Martin test in its recent Cramer decision, finding that the lower courts’ application of the Martin test had evolved over the years to erroneously construe the statutory language of “a significant manner” to mean “the most significant manner.”

In place of the Martin test, the Supreme Court is reverting to a previous totality-of-circumstances standard which was laid out in its 1993 decision from Farrington v Total Petroleum, Inc. Under the Farrington standard, the plaintiff must now demonstrate that the alleged psychiatric injury and resulting mental disability were “significantly caused or aggravated by employment considering the totality of all the occupational factors and the claimant’s health circumstances and non-occupational factors.”

Thus, when evaluating the statutory “significant manner” requirement under the Farrington standard, the Supreme Court held that finders-of-fact in lower courts should now consider: “the temporal proximity of the injury to the work experience, the physical stress to which the plaintiff was subjected, the conditions of employment, and the repeated return to work after each episode.” Further, depending on the specific circumstances of a given case, other relevant factors to consider might include: “the natural history of any underlying or preexisting condition and whether the condition would have worsened naturally in the absence of occupational contributors.”  The Court also noted the factors provided in its Farrington decision were “not all inclusive.”

January 2024

Tennessee Courts Clarify Notice Defense

In June of 2023, the Workers’ Compensation Appeals Board (the “Board”) decided Ernstes v. Printpack. The holding in this case resulted in a fundamental shift in the understanding of the notice statute and defense penned in T.C.A. § 50-6-201. Confusion arose surrounding the language in the statute regarding (1) failure to give notice; and (2) defective notice. Ernstes was appealed, remanded, and appealed again, before the Board clarified the issue. The Board’s decision was upheld by the Supreme Court of Tennessee, Special Workers’ Compensation Appeals Panel, on January 2, 2024.

The facts surrounding Ernstes are quite simple: an employee worked for a company for thirty-three years, where her job exposed her to loud noises; the employee retired and noticed issues with her hearing; the employee saw a physician who determined that she suffered from substantial hearing loss; the following year, the employee, while sitting with her husband’s workers’ compensation attorney for a hearing loss issue, connected the dots; the employee notified the employer and filed a petition. This notice was untimely.

The lower court battled back and forth over the correct answer to whether the notice given was acceptable, albeit late.  In the first appeal, the Board concluded that the notice was not timely, but remanded the case for determination of whether the employee had a reasonable excuse, and whether the employer had suffered any prejudice due to the lack of notice. This lower court held that the employee offered no reasonable excuse, but the employer had not shown prejudice, and the original award of benefits was reinstated. The case was again appealed.

After the second appeal, the Board caught on to the confusion. The lower court was applying subdivisions (a)(1) and (a)(3) of § 50-6-201 synonymously in this case. The Board clarified that these subdivisions are separated in the Code for a reason. Subdivision (a)(1) applies to failure to give timely notice. Conversely, subdivision (a)(3) applies to defective notice. These are wholly different scenarios. At this point, the Board stepped in to “[draw] a distinction between untimely notice and defective notice and the burden accompanying each notice deficiency.”

The Board held: Firstly, in cases involving the lack of timely written notice, the employee bears the burden of proving that (1) timely written notice was provided; (2) the employer had actual knowledge of the accident or injury; or (3) the employee has a reasonable excuse for the failure to provide timely written notice. Secondly, when an employer affirmatively asserts a defect or inaccuracy in the written notice, the burden shifts to the employer to prove prejudice. Therein lies the problem the court faced in the Ernstes case – defective notice was not asserted, no reasonable excuse was provided, and prejudice to employer was not applicable for this lack-of-timely-notice case.

The lower court could not ignore subdivision (a)(1) – requiring a reasonable excuse for failure to provide timely notice – and instead apply subdivision (a)(3), forcing the employer to show prejudice. This comingling of statutory burdens allowed the lower court to arrive at an incorrect result. This clarification from the Board recognizes an overlooked distinction that attorneys, adjusters, employers, and employees, must take into further consideration – and more acutely consider – for cases pending from this point onward.

For any questions, please contact:

Fredrick R. Baker, Member
Brendan Walsh, Associate
Wimberly Lawson Wright Daves & Jones, PLLC
1420 Neal Street, Suite 201
P.O. Box 655
Cookeville, TN 38503-0655
Phone: 931-372-9123
Fax:  931-372-9181
fbaker@wimberlylawson.com
bwalsh@wimberlylawson.com
www.wimberlylawson.com

In Melton v. Clarksville Sch. Dist., 2023 Ark. App. 282, the Arkansas Court of Appeals considered an appeal and cross-appeal from a decision by the Arkansas Workers' Compensation Commission to award Judy Melton permanent disability benefits for a four percent impairment to her cervical spine and five percent wage-loss disability. On appeal, the claimant contended the Commission should have credited her treating orthopedist’s opinion that she suffered an eight percent cervical impairment, nine percent to her lumbar spine, and five percent for a brain injury. Her employer accepted the four-percent neck impairment, but controverted everything else, including the wage-loss award.

As to the wage-loss award, the Court noted that it reviews the Commission's findings about wage-loss disability for substantial evidence. It also noted that determining wage-loss disability is a “fact intensive” inquiry that calls for the Commission to consider a number of factors.  “As the number of factors the Commission can consider increases, the number of unique combinations of factors increases exponentially. Determining that "no fair-minded person" could have made the wage-loss award requires us to consider every combination of factors the Commission could have weighed and every combination of ways it could have weighed them.”  As such, the Court of Appeals found that unless the Commission recites an improper basis for its award, “the appropriateness of a particular award is beyond meaningful review.”

Total number of Weeks for PPD

 In a 23-page opinion, the Oklahoma Supreme Court made a major ruling regarding how many total weeks of permanent disability benefits an injured worker can receive under the Administrative Workers' Compensation Act (AWCA), the new comp law that has been in effect since February 1, 2014.

 The AWCA limits to 350 the number of weeks of benefits for 100 % permanent partial disability (PPD). However, under the old workers' law that covered injuries up to January 31, 2014, the maximum number of weeks for 100 % disability was 520. In Mr. Cantwell's situation, the Workers' Compensation Court had awarded him 71 % disability to the body for injuries that occurred before the AWCA took effect on February 1, 2014.

 One of Mr. Cantwell's new injuries was to his hip, an injury admitted by his employer. He underwent 3 surgeries culmination in a total hip replacement. A judge of the Workers' Compensation Commission awarded Mr. Cantwell more than $30,000 PPD but followed the letter of the new law and said the insurance company did not have to pay the award because Mr. Cantwell was already over 350 weeks. The full Commission affirmed the judge and Mr. Cantwell appealed to the Supreme Court and claimed that it was unconstitutional for him not to receive up to 100 % disability for his lifetime injuries.

 In Cantwell v. Flex-N-Gate, 2023 OK 116, the Supreme Court, in a 5-4 vote, agreed with Mr. Cantwell and reversed the Commission's decision. The Court repeated the holding in other cases interpreting the AWCA that the law in effect at the time of an injury controls all aspects of a claim. The Supreme Court held that the Commission cannot use the number of weeks of benefits under the new law to determine what 100 % is, but rather must use percentages when old law injuries are present.

 The majority opinion held that the Commission's interpretation that an injured worker is prohibited from being awarded up to 100 % PPD is "constitutionally impermissible." The Court further said that a claimant has a "substantive right" to 100 % PPD and that the Commission's interpretation of the statute would affect that substantive right. A retroactive application of the 350-week limitation would violate Art. 5, Sec. 54 of the Oklahoma Constitution. 

 The opinion summed up its holding:

 "We hold that the 100 % limitation on PPD benefits controls over the number of weeks when awarding compensation for PPD where a claimant has both compensable awards for job-related injuries that occurred before February 1, 2014, and compensable awards for job-related injuries occurring after February 1, 2014."

Claimant was involved in a work-related 9/24/20 motor vehicle accident resulting in injuries to his ribs, bilateral wrists, pelvis and right foot. Claimant had previously undergone two unrelated lumbar spine surgeries involving fusions, first at L4-5 and most recently at L3-4. After this work accident, the claimant underwent two lumbar spinal fusions, performed in February 2021 and May 2021, culminating in a combined lumbar fusion from T10-L5. The claimant filed a Petition to Determine Additional Compensation Due seeking acknowledgement of a low back injury, including payment of the surgeries, and recurrence of total disability. A Board Hearing was held on 12/8/23 at which time the Board appropriately denied claimant’s Petition, ruling the low back injury was not causally related to the work accident and claimant did not sustain a work-related recurrence of total disability.

The Board opined it found “most interesting” the “timeline and chronology of events and emergence of low back issues … in the context of [Claimant’s] preexisting condition.” The crucial facts included the claimant’s prior back injury, the claimant’s prior low back surgeries in 2013, and 6 months before the accident in 2020, as well as pre-accident CT scan images. The claimant’s lumbar spine was fused, with a “cage” inserted into his spinal column in 2013 and again in early 2020. CT scans from before the work accident revealed the surgical cage had migrated beyond the interior cortex of his spine before the work accident even occurred.

Claimant argued that his surgical hardware had failed because of the work accident, which created the need for the final two lumbar spine surgeries. Drs. Piccioni and Rushton testified for the Employer, stating that immediately after the car accident, the claimant identified no low back complaints during his nine-day stay in the hospital. The doctors agreed that if this car accident caused the hardware to fail, then the claimant would have felt similar or even more pain compared to his other factures. The doctors agreed the pre-accident CT scans showed the cage migrating already, and the “wheels were already in motion” for the claimant to need additional back surgery. Post-accident X-Rays were also compared to the pre-accident films, which clearly showed the surgical cage, implanted months prior to his work accident, had migrated but was stable after the trauma of the car accident. Finally, claimant’s surgical hardware failed again, this time between the third and fourth surgeries. If it could fail then with no trauma, then it could have failed previously even without the work accident, contrary to the opinions of claimant’s experts.

The Board agreed that there is no evidence that the work-related trauma accelerated or impacted the claimant’s pre-existing low back condition. The Board issued a Decision finding the low back injury was not causally related to this work accident but was an ongoing issue the claimant had had for many years pre-dating the accident. Finally, because claimant’s doctors linked disability to the low back, the Board found claimant did not sustain a work-related recurrence, and thus the Petition was denied outright.

Should you have any questions regarding this Decision, please contact Nicholas Bittner or any other attorney in our Workers’ Compensation Department.

Young v. IG Burton & Company, Inc., IAB Hrg. No. 1510414 (Dec. 20, 2023)

Can An Employer Face Liability For Providing And Paying For Cannibas Products To “Cure Or Relieve” From The Effects Of An Industrial Injury?

Provided by William Davis, Esq., Hanna Brophy Santa Rosa

An employer is required to provide medical treatment “that is reasonably required to cure or relieve the injured worker from the effects of the worker’s injury”.  (CA Labor Code sec. 4600) But, does this requirement include providing cannibals products, when doing so would require violating federal law? 

In California, treatment requests are evaluated for approval using the “evidence-based” medical (EBM) approach in Labor Code section 5307.27(a).  With this EBM approach in mind, is a request for cannabis reasonably required to cure or relieve an injured worker’s injury under LC 4600?  For now, there is no easy answer to that question for California employers.  However, that does not mean that no one has attempted this.

In California, a medical provider requests treatment modalities by using a Request for Authorization (RFA).  The employer can either approve the requested treatment or have it placed thru Utilization Review (UR).  IF UR non-certifies the RFA, the injured worker can appeal thru Independent Medical Review (IMR).  The IMR stage is where we pick up the issue of employer liability for cannabis.  It appears that, so far, there is just a single IMR decision on employer liability for cannabis to “cure or relieve”, Cm19-0016741, 84 Cal. Comp. Cases 465, 2019 Cal. Wrk. Comp. LEXIS 23.  For those without Lexi access (and really, who would that be), California IMR decisions can be found at https://www.dir.ca.gov/dwc/IMR/IMR-Decisions/IMR_Decisions.asp

The Cm19-0016741 case dealt with a RFA for a referral to a pain physician who specializes in prescribing cannabis for pain control. UR non-certified the request and the injured worker filed for IMR.

The reviewer in this case noted the difficulties in determining whether cannaboids fit within EBM.  It was noted that the Medical Treatment Utilization Schedule (MTUS) 2017 is silent in regards to cannaboids and the Official Disability Guidelines note “Not recommended for pain”.  The reviewer cited a study that noted “there are no quality studies supporting cannabinoid use, and there are serious risks. Restricted legal access to Schedule I drugs, such as marijuana, tends to hamper research in this area. It is also very hard to do controlled studies with a drug that is psychoactive because it is hard to blind these effects. At this time, it is difficult to justify advising patients to smoke street-grade marijuana, presuming that they will experience benefit, when they may also be harmed”.

Request for cannabis denied this time.

Apart from the question of an employer providing cannabis to an injured worker is the question about whether the employer can be made to pay for it.  Why would this be an issue?  Paying for cannabis could violate Federal law.  After all, as the IMR reviewer noted, marijuana is a federal schedule I narcotic.  The employer argument is that it is a violation of the Controlled Substances Act to reimburse or pay for cannabis for the treatment of an injured worker and that state laws to the contrary are preempted by this Act.

A case in Minnesota dealt with this very issue.  In Musta v. Mendota Heights Dental Ctr., 2022 U.S. LEXIS 1036, the Minnesota Supreme Court ruled that the Controlled Substances Act preempted a state order requiring reimbursement for medical cannabis.  The U.S. Supreme Court declined to review.  Other states may have reached contrary positions and it would appear that a federal case will be necessary to resolve this federal question.

A nine year old case in California dealt with the issue of a health insurance provider could be held liable for reimbursement for a claim of medicinal use of marijuana.  That case dealt with the Health and Safety Code sec. 11362.785(d), which notes “This section does not require a governmental, private, or any other health insurance provider or health care service plan to be liable for a claim for reimbursement for the medicinal use of cannabis”.  Cockrell v. Farmers Insurance, 2015 Cal.Wrk.Comp. P.D. LEXIS 95 was a WCAB panel decision that partially addressed this issue and the argument, by a defendant, of no liability. The defendant argued an Award finding liability for reimbursement was in error because of California Health and Safety Code sec. 11362.785(d).  On appeal, the Board sidestepped the issue of reimbursement by holding “[P]arties and the WCJ did not analyze the issue of whether a workers’ compensation insurer constitutes a “health insurance provider” for the purposes of Health and Safety Code section 11362.785(d)”.

So, is an employer required to provide and pay for cannabis products to “cure or relieve” from the effects of an industrial injury?  It appears that the answer is no.  But that no, must be qualified with a “not for now”.  This issue is certainly on the horizon. 

New Year – New Form

The Division has revised the DWC-42 and PLN12 in connection with amendments to the death benefits legislation out of the 88th Legislative Session.  The forms are designed to help eligible beneficiaries file claims for death benefits with the Division or the Carrier.  The new rule was effective December 11, 2023 and the forms are available on the Division’s website here.

Copyright 2024, Stone Loughlin & Swanson, LLP