THE FUTURE OF LEGISLATIVE REFORMS OF WORKERS’ COMPENSATION IN PENNSYLVANIA

Two years away from the one-hundredth anniversary of the enactment of the Pennsylvania Workers’ Compensation Act, Governor Thomas Corbett has proposed several reforms to the Pennsylvania Workers’ Compensation Act, including provisions that would reform the following:

• Injured Employee’s requirement to procure prescription medications from employer-designated dispensing sources;
• Medical care providers’ requirement to refund overpayments made in excess of medical charges found payable under the Act as reasonable and necessary;
• Requirement that medical care providers not request or accept payment for surgical implants, supplies, or durable medical equipment in excess of 110% of the actual cost to the provider of the same supplies or equipment;
• Requirement that outpatient providers, excluding licensed pharmacies, not require, request, or accept payment for prescription medications in excess of an initial five-day supply;
• Redefining reasonableness and necessity of medical care under the Act, basing the same upon evidence-based medical treatment guidelines, to be developed by the Department of Labor and Industry;
• Initiative for Pennsylvania’s Governor to appoint a Panel of Medical Providers, from each of the medical specialties, Occupational Medicine, Orthopedic Medicine, Neurosurgical Medicine, Pain Management, Physical Therapy, Chiropractic Medicine, Osteopathic equivalent, to develop evidence-based treatment guidelines for medical care for the most prevalent work-related injury, with the Panel to be appointed for six year terms without remuneration;
• Initiative that the Department of Labor and Industry adopt treatment guidelines, based upon nationally recognized evidence-based treatment guidelines, until such time as Pennsylvania’s Medical Treatment Panel has developed treatment guidelines;
• Allowance for Employees and Providers to seek Utilization Review, for treatment or proposed treatment either unaddressed under treatment guidelines, or deviating from the same;
• Establishment of a Medical Review Panel, appointed by the Secretary of the Department of Labor and Industry, to assist the Panel in developing medical treatment guidelines, consistent with Utilization Quality Assurance Reviews, with a party having the right to appeal a Medical Review Board’s determination to the Workers’ Compensation Appeal Board, which will otherwise be required to affirm the Medical Review Board’s determination, unless the Panel proves that the determination is an abuse of discretion, or materially misstates the content of either medical records or guidelines reviewed;
• Requirement that Employers and/or Insurers make payments to Medical Care Providers, the same being required to submit bills and records in accordance with the Act, within one-hundred eighty (180) days of the treatment being provided;
• Requirement that injured Employees seeking compensation benefits from the Uninsured Employers Guaranty Fund place the Fund on notice of the claim within forty-five (45) days after the injured Employee knows that the Employee’s employer was uninsured for workers’ compensation benefits, with compensation being disallowed if notice is not given within forty-five (45) days;
• The barring of any claim against the Fund if not filed within one-hundred twenty (120) days after notice has been given to the Fund of a claim being made based upon the injured Employee’s employer being uninsured;
• Allowance for the Fund to establish Panel Provider lists, by county, consistent with the other provisions of the Act;
• Allowance that the Fund’s payment of medical treatment or service need not exceed payments under the Medical Assistance Program under Article IV of the Public Welfare Code, with disallowance of an injury with disallowance for payments for any treatments not reimbursable by Medical Assistance;
• Allowance for the Fund to not be liable for any wage loss benefits unless the injured Employee proves the payment of wages through checks, check stubs or payroll records, tax returns, or unemployment compensation records;
• Allowance for the testimony of an uninsured Employer to establish the existence of an employment relationship, although that testimony is specifically disallowed as being competent evidence of the payment or amount of wages for the purposes of a claim under the Uninsured Employer’s Guaranty Fund provisions;
• Allowance for the Fund to seek restitution of all payments made as a result of an injury to an Employee of an uninsured Employer, with restitution not being limited to the amount of a compensation award, and also including any administrative and litigation costs incurred by the Fund;
• Limitation for the Fund’s liability being limited to its actual assets, with its liabilities not being borne by the Commonwealth;
• Requirement that uninsured Employers certify to the Fund the possession of records of insurance, that the Employer no longer operates a business, that the Employer no longer employs individuals entitled to workers’ compensation benefits under the Act, or that the Employer is otherwise exempt from the requirements of obtaining insurance;
• Requirement that the uninsured Employer certify the above information to the Fund within fifteen (15) days of the Fund’s demand;
• The assessment of administrative penalties of $200.00 per day against any uninsured Employer that fails to respond to a Fund demand for information as to insurance and business operations;
• Enhancement of the Fund’s enforcement proceedings against uninsured Employers, permitting the Fund to enter an uninsured Employer’s premises or work site, to demand that the uninsured Employer prove insurance status or business operations;
• Empowering the Fund to secure a Cease and Desist Order from the Department of Labor and Industry, to force an uninsured Employer to cease all business operations for failure to insure its workers’ compensation liabilities as required by the Act;
• Such a Cease and Desist Order is to remain in effect until released by either the Department or a Court of competent jurisdiction;
• An Employer’s failure to comply with a Cease and Desist Order empowers the Commonwealth or Department to file suit against the uninsured Employer to enforce a Cease and Desist Order.
• Jurisdiction for such a suit is conferred upon the Commonwealth Court, the Dauphin County Court of Common Pleas, or the Court of the County in which the violation has occurred;
• Requirement that an injured Employee alleging an injury against an Employer domiciled in another State, when the Employer has not secured the payment of compensation as required by the Pennsylvania Workers’ Compensation Act, submit a Decision, Notice, or Ruling from such other State, that the injured Employee has sought and is not entitled to benefits in such other State, with no compensation being payable until the injured Employee submits such a Decision, Notice or Ruling.

As is clear, the proposed reforms primarily deal with six areas:

• Prescription Drugs;
• Utilization Reviews;
• Fee Schedule;
• Managed Care;
• Administrative Burdens; and,
• Uninsured Claims.

REFORMS PROPOSED BY THE PENNSYLVANIA CHAMBER OF

BUSINESS AND INDUSTRY

In addition, reforms have also been proposed by the Workers’ Compensation Executive Committee of the Pennsylvania Chamber of Business and Industry.  The Chamber has indicated that it plans to make reform of workers’ compensation procedures and policies a priority in 2013.  The Chamber is supported by an Employer base, with 75% of Pennsylvania Employers supporting workers’ compensation reform.

The proposed reforms are supported by the Chambers’ 2012 Economic Survey, with Pennsylvania Employers indicating that the Pennsylvania workers’ compensation system should be improved through legislative reforms, specifically directed at the medical costs associated with workers’ compensation claims, as Employers were reporting a workers’ compensation insurance premium increase, with only one percent of Pennsylvania Employers noting a decrease in workers’ compensation insurance premiums, with 34% responding that there had been no change in their workers’ compensation costs, and 52% indicating premium rate increases for workers’ compensation insurance.

The Pennsylvania Chamber is in support of reforms to improve efficiency, provide necessary updates to the Pennsylvania Workers’ Compensation Law, and to address deficiency that the Chamber has identified as being conducive to abuse.

Specifically, the Chamber had advocated for legislation (HB 808), introduced in the 2011-2012 session of the General Assembly, that would have extended the period during which an injured worker would be required to seek treatment through a Panel of medical providers established by the Employer, expanding the 90 day period currently required under the 1996 Reforms to the Pennsylvania Workers’ Compensation Act, most often referred to as Act 57, to a 180 day period, with the Chamber indicating that both Employers and Employees consistently reported that injured workers treating with Panel Providers were more satisfied with the quality of care and often returned to work faster, than injured Employees who treated with non-Panel Providers.

The legislative reforms currently proposed by Governor Corbett and the Pennsylvania Chamber of Business have very strong opposition from several lobbying groups, to include the trial lawyers and physician/medical provider groups, that oppose limitations on managed care, fee schedules, utilization review, and prescription reimbursements.

The proposed legislative reforms remain in committee, with no clear legislative directives as to enactment.

Opponents of the proposed reforms claim that proposals limit access to reasonable and necessary medical care, and otherwise conflict with the humanitarian and remedial public policies forming the legislative basis for workers’ compensation legislation.

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