Workers' Compensation

2010 Year in Review: The Top 10 Workers’ Compensation Issues From a National Perspective

 As I gaze back over this rapidly closing year and try to describe the dominant issues that have engaged those of us within the workers' compensation arena, I am mindful of the story of the three blind men who were asked to describe an elephant. Their eyes useless to them, they all awkwardly gathered close to the beast and grabbed a different part—a snake-like trunk, an enormous ear, a tree-like leg. Each gave an accurate description from his perspective; each was certain the others were wrong. So it may well be with our views on the status, at year's end, of workers' compensation. Your view may legitimately differ from mine; we're likely holding a different part of the elephant.

The first two issues—the use of the AMA Guides to the Evaluation of Permanent Impairment ("the AMA Guides") and the prevalence of cost-shifting from state workers' compensation programs to the federal government—were extensively discussed on November 16, 2010, before the U.S. House Subcommittee on Education & Labor.

Testimony was given by the following:

·         Emily Spieler, Dean, Northeastern University School of Law

·         John Burton, Professor Emeritus, School of Management and Labor Relations, Rutgers University and Professor Emeritus, School of Industrial and Labor Relations, Cornell University

·         Christopher Godfrey, Commissioner, Iowa Workers’ Compensation Commission

·         Dr. John Nimlos, Occupational Medicine Consultant

·         W. Frederick Uehlein, Founder and Chairman, Insurance Recovery Group

As initially observed by Chairwoman Woolsey (D-CA), Congress rarely examines state workers' compensation programs. That Congress may have the state programs within its cross-hairs may offer you hope or, alternatively, grave concern. Either way, the testimony before the Subcommittee was important. I summarize that testimony below, in some fair detail. I treat the other important 2010 issues in a more cursory manner.

Issue One: The Use of the AMA Guides

Testimony of Emily Spieler, Dean, Northeastern University School of Law

Many of you are familiar with Dean Spieler's background. She was a member of the seven-member Steering Committee appointed by the American Medical Association to provide advice on the development of the Fifth Edition of the AMA Guides. As you may know, that committee was disbanded before the edition was completed. Five members of the committee then published “Recommendations to Guide Revision of the Guides to the Evaluation of Permanent Impairment” in the Journal of the American Medical Association [JAMA 283 (4) 519-523 (2000)].

Dean Spieler observed that the AMA Guides had been developed as part of a "quest" for an efficient, reliable and valid methodology that

·         would be fair to individual workers by reflecting the true extent of their disabilities;

·         would be equitable to injured workers as a group by providing consistent awards for similar injuries and disabilities;

·         would limit transaction costs so that benefits are provided efficiently and without undue delay; and

·         would provide predictive value to payers so that premium rates would not be unduly inflated by excessive caution in the face of uncertainty.

Spieler noted that since the first publication of the AMA Guides in 1971, each subsequent edition had been critical of prior editions, and each edition had made changes in the assessment techniques. She was not, therefore, surprised that the 6th Edition of the AMA Guides had been highly scrutinized. She noted, with considerable irony, that the impairment ratings in the AMA Guides had become a proxy for the rating of disability in many state workers' compensation programs in spite of the admonition in the Guides that its purpose was to rate impairment and not disability.

Changes in the Sixth Edition of the AMA Guides

Spieler noted five key areas of change in the 6th Edition:

1.    Definitional structural changes (Adoption of the ICF definitional structure and changes in key definitions)

2.    Conceptual congruity among organ systems through creation of diagnosis-based grids

3.    Reducing inter-rater variability and reliability by eliminating subjective factors

4.    New direct links to legal issues relating to compensation

5.    Specific changes in whole person impairment ratings

She observed, however, that at least six core problems in earlier editions of the AMA Guides were retained in the 6th Edition:

1.            Impairment ratings are not now, nor have they ever been, evidence based.

2.            Although the Guides are predominantly used for assessment of work disability, there has never been any attempt to correlate the percentage values to work. In fact, ability to work is excluded from consideration in setting the percentage.

3.            The process for development of these WPI numbers is opaque. The numbers are developed based upon consensus of a small number of physicians.

4.            The Guides presume that 100% represents a state close to death – a scale inappropriate for assessing the impairment of workers.

5.            The Guides combine impairments by reducing the value of each subsequent injury after the first injury, failing to reflect the true effect of multiple injuries.

6.            The Guides are not broadly acceptable to the many constituencies involved in workers’ compensation.

Spieler said that a number of these points had been raised in the JAMA article noted above, prior to the publication of the 5th Edition, but they have still not been addressed. She indicated another concern—that the Senior Editor of the 6th Edition, Dr. Christopher Brigham, has a separate business called Impairment Resources, which is a primary conveyor of physician training. This represents an appearance of a conflict of interest.

Status Quo—Use of AMA Guides is Unacceptable

According to Spieler, there needs to be continued discussion of the difficulties in assessing impairment for injured workers. In her view, however, the status quo, in which the AMA Guides form the basis for these discussions, is "simply unacceptable." She continued, "With the widespread adoption of the Guides, a small number of physicians is designing the system based on consensus without validation or any real attention to justice. The Sixth Edition has only made this worse." She is pessimistic about the ability of the AMA to produce guides that serve the real needs of workers’ compensation programs for impairment ratings that are accurate predictors of work disability.

She concluded that just as the AMA Guides had indicated in each edition, "physicians lack the necessary expertise to assess non-medical issues. Moreover, they are typically driven by normative judgments of ‘what is right’ – thus making social policy in the guise of medical science." She urged the National Academies of Science/Institute of Medicine to conduct a review that would include recommendations regarding the best way to develop a new system for rating workers' injuries.

Testimony of Christopher Godfrey, Commissioner, Iowa Workers’ Compensation Commission

Commissioner Godfrey indicated that he wanted to explain the impact of the publication of the 6th Edition of the AMA Guides on his jurisdiction, which, like a number of other states, historically had relied upon "the most recent edition" of the Guides for assignment of impairment ratings. The commissioner stated that as a result of the publication of the 6th Edition, Iowa had convened a Task Force comprised of two medical professionals who frequently practice in the Iowa Workers' Compensation system, two "claimant" and two "defendant" attorneys who frequently practice in the system, two former Deputy Workers' Compensation Commissioners from Iowa, and one moderator to perform various administrative tasks and issue the final report.

The Task Force was assigned five primary agenda items:

1.            Provide an analysis of the new paradigm for rating impairment contained in the sixth edition as compared to the prior editions of the guides as well as other rating guides. Identify advantages and disadvantages of the new paradigm.

2.            Document errors or areas of concern contained in the sixth edition of the AMA Guides.

3.            Outline an analysis that can be used to determine whether there is a significant impact on impairment ratings when using the sixth edition of the Guides as compared to prior editions of the Guides – most specifically the fifth edition. If possible, provide an analysis of the impact on ratings and corresponding benefit payments.

4.            Provide a recommendation on whether the sixth edition of the Guides should be used, whether parts of the sixth editions should be used, or what other impairment guides should be used in evaluating permanent impairment. Provide a further recommendation as to whether Iowa should create its own “Iowa Guide” for assigning impairment in Workers’ Compensation claims – and if so recommended, outline what process and timeline would be necessary to create the new “Iowa Guide”.

5.            Report back on other considerations that the Task Force might find compelling.

After meetings, extensive discussions, the taking of testimony, and the consideration of comparative data, the Task Force rendered its findings. The Task Force noted a paradigm shift in the 6th Edition and a concomitant blurring of boundaries between medical and legal determinations. In the view of the Task Force, the 6th Edition crossed into the area of assigning disability as opposed to merely assigning impairment.

Commissioner Godfrey said that Iowa had long held that the level of an injured worker's disability was a legal question—not a medical one. He added that the level of disability should be decided by the Workers’ Compensation Commissioner, as the trier of fact, with the causation standards as set forth in the Iowa Code. According to the Commissioner, the 6th Edition “crosses the bridge into,” “attempts to determine,” and “is a surrogate for” legal disability. Such encroachment of state law by an unelected body, according to Godfrey, was a serious breach.

Other Concerns

Godfrey detailed a host of other concerns:

·         The failure of the AMA, when asked, to explain a legitimate rationale for the paradigm shift to the ICF

·         That much of the construction of the 6th Edition and assignment of impairment values was not the result of a consensus as much as it was the work of one person, Dr. Christopher Brigham, who had a successful enterprise based upon reviewing, correcting, or commenting on other physicians' ratings.

·         a number of errors and editorial concerns

·         cultural bias

Based on the experience in Iowa and the concerns he had described, Commissioner Godfrey cautioned against use of the 6th Edition of the AMA Guides.

Testimony of John E. Nimlos, M.D., Occupational Medicine Consultant

Dr. Nimlos specialize in Occupational Medicine and is board certified in the field. Continuing a theme that had been offered by both Commissioner Godfrey and Dean Spieler, Dr. Nimlos reminded Congress that the terms "impairment" and "disability" are not the same, although they are frequently (and incorrectly) used interchangeably. Nimlos offered a personal example of the important distinction. He explained that he injured his shoulder years before, that after his injury, his arm was weak, and that he could hardly lift a gallon of milk. He told the Subcommittee that he was impaired. He could, however, do all his work as a physician, so he was not disabled. He noted that had he been a carpenter with the same impairment, he would have been both impaired and disabled. Impairment ratings, Nimlos reminded Congress, were just the beginning of a disability determination.

Nimlos testified that:

·         The 6th Edition greatly increased the complexity of impairment ratings.

·         The 6th Edition still used consensus-based estimates for impairment ratings that were no more scientific than before and, with various non-medical factors now present in these estimates, there was even less medical science used within the 6th Edition than the 5th.

·         Many of the 6th Edition ratings were different than before, with no explanation of why the rating is changed. Most changes were to a lower rating, some are far lower.

·         It was expensive and difficult to maintain an adequate population of qualified doctors for impairment ratings under the 6th Edition.

·         6th Edition ratings took much more time and were more likely to add to the rating examination expense.

Dr. Nimlos concluded by saying he agreed with the states of Iowa, Kentucky, Washington, Colorado, Utah and others that the 5th Edition should remain in use, until something "truly better comes along."

Testimony of W. Frederick Uehlein, Esquire—Founder and Chairman, Insurance Recovery Group

The Subcommittee heard testimony from one individual who favored the use of the 6th Edition of the AMA Guides. Mr. W. Frederick Uehlein testified that he was an attorney with 40 years experience in the field of workers' compensation and social security. His company, Impairment Resources, reviews thousands of ratings.

Uehlein indicated that he spoke as a proxy for Christopher Brigham, M.D., the Senior Contributing Editor of the 6th Edition, who could not testify in person because of a long-standing commitment in Australia (Brigham submitted written testimony). Uehlein indicated that Brigham had "voluntarily, without pay, devoted thousands of hours to the effective development and utilization of the Guides."

Uehlein stated that his firm's studies showed that rating percentages for the same injuries—on the whole—were not significantly different between the 4th, 5th and 6th Editions, that the methodology and approach to reach the ratings were different, of course, but that in Uehlein's experience, the 6th Edition extended ratings to more injuries than the 5th Edition. He acknowledged significant push back from the plaintiffs' bar. He indicated that in many respects he thought we were witnessing a battle by proxy, that state legislators and other policy experts were substituting a discussion of appropriate benefit rates with a debate over the pros and cons of the AMA Guides.

Uehlein argued that modern medicine improving health and functionality, that we could and should acknowledge that impairment is trending down. Uehlein said that he did not think it was better to use the 5th Edition and tell an injured worker who had a successful spine injury that he had a permanent impairment of 25% when, in fact, the surgery was successful.

Issue Two: Cost-Shifting from State Workers' Comp Programs to the Federal SSDI Program

Testimony of Professor John Burton before the U.S. House Subcommittee on Education & Labor

The second subject of testimony before the House Subcommittee on November 16 and, therefore, the second important 2010 issue for workers' compensation is cost-shifting. Testimony related to that phenomenon was provided by Professor John Burton. As most know, Burton is a giant in the workers' compensation arena. For more than four decades, his writing and econometric studies have been invaluable to our field. A colleague of my own mentor, Dr. Arthur Larson, Burton served as the chair of the National Commission on State Workmen’s Compensation Laws ("the National Commission) established by the Occupational Safety and Health Act of 1970.

Burton first provided some historical context, observing that in the decades after World War II, the level of workers’ compensation cash benefits relative to wages deteriorated in most states (one consequence of that deterioration was the creation of the National Commission).

The National Commission’s 1972 Report was highly critical of state workers’ compensation programs, made 84 recommendations, and described 19 of them as essential. Burton observed that the reforms in state workers’ compensation programs were impressive in the next few years after the Report were impressive, but that the reforms slowed, so that by 2004, on average, the states had complied with only 13 of the 19 essential recommendations of the National Commission.

Workers' Compensation and SSDI

Switching gears a bit, Burton reminded Congress that Social Security Disability Insurance (SSDI) was the largest income replacement program for non-elderly Americans and that Congress should be concerned about the possible shifting of the costs of workplace injuries and diseases from the state workers' compensation programs to the federal SSID program. According to Professor Burton, Cost-shifting can occur in a number of ways. Burton noted:

·         That 15 states have "reverse offset" provisions that allow carriers and employers to reduce workers' compensation benefits when the SSDI program is paying benefits to disabled workers.

·         Evidence indicates that SSDI is paying benefits to workers who were disabled at work but who did not qualify for workers' compensation benefits.

·         Recent changes in law (narrowing of compensability) mean there is likely to be an increase in the number of workers whose disabilities were caused by the workplace, but who do not qualify for workers' compensation benefits.

·         Studies tend to show that opposite trends in workers' compensation and SSDI benefits during the past 25 years, raising the question of whether retrenchments in one program increase demands on the other.

·         Evidence shows that experience rating works; that is to say that firms react to incentives to improve safety in order to reduce premiums and to remain competitive. To the extent, however, that the costs of workplace injuries are shifted from workers' compensation to SSDI, the safety incentives provided by workers' compensation programs are diluted.

According to Burton, the reduction, during the past ten years, in benefits paid out to injured workers is reminiscent of the deterioration of state workers' compensation programs in the decades prior to 1972 [for a more detailed examination of current trends, see Guo, Xuguang (Steve) and John F. Burton, Jr., “Workers’ Compensation: Recent Developments in Moral Hazard and Benefits Payments,” Industrial and Labor Relations Review, Vol. 63, No. 2 (January 2010), 340-55]. As was the case prior to 1972, many states are currently hesitant to reform their systems because they think it will put them at a competitive disadvantage.

Burton pointed out that pressures to promote better standards in workers' comp benefits was not just a concern for the injured worker; it is an understanding that when a state has an inferior benefit structure, it amounts to a cost-shifting to the SSDI system.

Federalization of Workers' Compensation Not Called For

Burton reminded Congress that one approach considered and rejected by the National Commission was federalization of the state workers' compensation programs. Instead, the National Commission had recommended the enactment of federal standards for the state programs that complied with the National Commission's 19 essential recommendations. Burton indicated that in the current political environment, it was probably unrealistic to expect promulgation of any new federal standards. Burton further opined that "the advantage of federal standards as a way to conserve the essential characteristics of the state-run workers' compensation system—however paradoxical at first glance—also warrants reaffirmation."

Could "Set-Asides" for SSDI be the Answer?

Addressing state cost-shifting does not require federalization of state workers' compensation programs, indicated Burton. As indicated above, Congress could (but is not likely to do so) enact Federal standards requiring adequate PD benefits. Alternatively, it could pass legislation treating applications for cash benefits from the SSDI program in a manner roughly similar to the current federal policy for Medicare benefits when the patient's need for medical care was due at least in part to a workplace injury or disease (the Medicare Secondary Payer Act). Burton concluded that with the heavy pressure on the federal government to reform the Social Security and Medicare programs, it is not likely that Congress will ignore the idea of "pushing back" to the states what they are currently pushing onto the federal government.

Parenthetically, I would add that Chairwoman Woolsey indicated the subcommittee will be asking the GAO to do a study and issue recommendations on the impact of cost-shifting.

Issue Three: Medicare Set-Aside Arrangements

Neither the Medicare Secondary Payer Act ("the MSP") [42 U.S.C.S. § 1395y(b)], enacted in 1980, nor regulations promulgated in 1989 by DHHS, the parent agency of the Centers for Medicare and Medicaid Services (CMS), specified the procedure for establishing and filing Medicare Set-Aside Arrangements (MSAs). The essential procedure was finally set forth in a memorandum by then CMS Deputy Director Parashar B. Patel entitled "Workers' Compensation: Commutation of Future Benefits," the infamous "Patel Memo," whose tenth anniversary will be marked (and, perhaps, cursed) in July 2011. That the federal government developed enforcement of the MSP in a piecemeal fashion and did so by means of "guidance memoranda" that lack the force of statutory law (or appropriately promulgated regulations that were subjected to public scrutiny) has produced a dangerous mine field for attorneys, employers, carriers and others in the field of workers compensation (and not a few opportunities for experts providing advice on how to maneuver among the mines).

These issues continue to be vital to both sides in a workers' compensation dispute. For example, under the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007, failure to give notice of a settlement to Medicare results in a civil money penalty of $1,000 for each day of noncompliance with respect to each claimant. The parties to a workers' compensation settlement must determine if Medicare has provided any benefits related to the claimed injury and make reimbursement. Failure to do so may result in statutory interest accruing and double damages if the government has to file suit to recover. Finally, by statute, Medicare is prohibited from making payment for treatment that is the responsibility of another party. Absent provisions for future medical treatment made at the time of settlement, injured parties may be without medical care if MSP issues are not dealt with appropriately at the time of settlement.

Pressures on the federal government for revenue, particularly within the Medicare and SSDI areas, mean more and more focus will be placed on compliance with the MSP.

Issue Four: Undocumented Workers/Illegal Aliens

Citing decisions from other jurisdictions (Illinois and New York), the Court of Appeals of Kentucky, in Abel Verdon Constr. v. Rivera, 2010 Ky. App. LEXIS 194 (Oct. 15, 2010), joined appellate courts from a number of other states (e.g., Connecticut, Florida, Ohio and Minnesota) in holding that there is no essential conflict between the Immigration Reform and Control Act of 1986 (IRCA), 8 U.S.C. § 1324a, et seq. and state workers' compensation law, which generally permits indemnity and medical benefits payments to aliens illegally employed within the state. The Kentucky court observed that Ky. Rev. Stat. Ann. § 342.640(1) defines an employee for purposes of workers' compensation benefits as “[e]very person … whether lawfully or unlawfully employed, in the service of an employer.” While IRCA made it illegal to employ anyone in the country illegally and made it a crime to falsify documents for the purpose of obtaining employment, there was no statement within IRCA that state workers' compensation law had been preempted.

A few state statutes deny or limit coverage to illegal aliens [see Idaho Code § 72-1366(19)(a), Maine Rev. Stat., tit. 39-A, § 218(8) and Wyo. Stat. Ann. § 27-14-102(a)(vii)]. Some employers argue that an injured worker who is present illegally within the United States may not be offered a job after recovery. Since they can't perform a job search, they should be disqualified from continued benefits. Others point to the fact that in some cases the jobs are procured through the use of fraudulent identification papers. Should such fraud be rewarded with workers' compensation benefits?

Still others argue that employers benefit from the presence of illegal aliens within the work force, that undocumented workers are much less likely than U.S. citizens to file a claim for benefits.  The debate within the workers' compensation world is loud; the sounds of the national debate over the status of illegal immigrants is even louder. The issue will continue to be important within and without the comp arena.

Issue Five: RICO Claims Involving Workers' Compensation

Another issue where federal and state interests collide relates to the use of the federal Racketeer Influenced and Corrupt Organizations Act (RICO) to resolve issues related to workers' compensation.

In September, for the second time in five and one-half years, the United States District Court for the Eastern District of Michigan dismissed claims filed under RICO against a self-insured employer, its claims administrator, and a physician who allegedly colluded to deprive plaintiffs of the workers' compensation benefits due them under the Michigan Workers' Disability Compensation Act ("WDCA") In Brown v. Cassens Transp. Co., 2010 U.S. Dist. LEXIS 101660 (E.D. Mich., Sept. 28, 2010, Judge Paul D. Borman noted that fellow District Court Judge Edmunds, on indistinguishable facts, had reached the same conclusion earlier in the year in Jackson v. Sedgwick, 2010 U.S. Dist. LEXIS 22792 (E.D. Mich., Mar. 11, 2010). Judge Borman granted defendants' motions to dismiss, finding that the WDCA set forth the exclusive administrative scheme for the resolution of plaintiffs' claims for wrongful denial of their workers' compensation benefits, foreclosing plaintiffs' RICO claims. The court indicated that the "gravamen of Plaintiffs' Complaint [was] that Defendants failed to abide by their statutory duty under the WDCA to provide benefits for claimed work place injuries." According to the court, these were "the very damages for which compensation [was] provided under the WDCA." Judge Borman concluded that regardless of how plaintiffs framed their claim, "a conclusive finding that Plaintiffs were wrongly denied workers' compensation [was] essential to their theory and resolution of such workers' compensation benefits claims [had] been firmly vested in the comprehensive administrative enforcement scheme embodied in the WDCA."

Still pending before a federal district court in Colorado is a class action suit filed against the nation's largest retail operation, Wal-Mart, in which plaintiffs allege that the defendants (Wal-Mart, its workers' compensation carrier, a third party administrator, and Wal-Mart's provider of health insurance) conspired improperly and unlawfully to control and manipulate the system of medical care providers that provides medical treatment to Wal-Mart employees who are injured on the job and who are entitled to medical treatment under Colorado's workers' compensation system. On March 29, 2010, the court denied the defendants' Motion to Dismiss [see Gianzero v. Wal-Mart Stores, Inc., 2010 U.S. Dist. LEXIS 38370 (D. Colo. Mar. 29, 2010).

Issue Six: Employee Misclassification

It is axiomatic that for both tax and nontax purposes, workers must be classified into one of two mutually exclusive categories: employees or self-employed (the latter sometimes are referred to as independent contractors) and that, with certain limitations, employers are generally required to withhold income and FICA taxes and to pay Federal Unemployment Tax Act taxes and state unemployment compensation taxes with regard to their employees, but not to self-employed individuals. Employers must also generally provide workers' compensation coverage for employees.

Significant incentives to "mischaracterize" employees as self-employed, or as independent contractors, exist, therefore, within the various tax and regulatory systems. Government studies indicate that as many as 20 percent of businesses misclassify employees as independent contractors, that such misclassification involves as many as 3.4 million workers, resulting in a loss of some $4.5 billion annually to the federal government. That doesn't count the estimated $3 billion lost annually among the states.

Legislation has been introduced in each of the past two congressional sessions that would close some of these gaps. With deficits in the federal budget reaching forward as far as the eye can see, one wonders whether the newly elected Congress will chose employee misclassification as an area where some bipartisan spirit can be showcased for the public. State houses are often quicker to respond to potential pots of money. Connecticut and New York have already amended various statutes to close up existing loopholes. Their statutes target the construction industry, in which many of the perceived violations are occurring. She said that all indications are that the 15 percent figure has risen to 20 percent and that the misclassification is currently costing the federal government as much as $5 billion each year, with an additional loss of $3 billion annually to the states.

The National Conference of Insurance Legislators has formed a subcommittee to move forward with an Employee Misclassification Workers' Compensation Coverage Model Act. The draft model, based upon Florida and Wisconsin statutes, targets transparency, disclosure, and accountability in workers' compensation insurance.

Issue Seven: Return-to-Work Challenges in a Bad Economy

While national and local news gatherers have been busy chronicling the financial and regulatory difficulties facing businesses during the current deep recession, inadequate attention has been focused on the burdens these tough times have placed upon injured workers—many of whom desperately want to return to work—and upon those in employer safety and transitional work programs around the nation who are trying to assist them. The fact remains, finding transitional positions in these days is challenging. How do you find light duty for a worker when full-time, full-duty workers are being laid off?

As is often pointed out, employment tends to lag the actual recovery, rebounding much later than the economy itself. In the meantime, the injured worker sits at home, bombarded by sad overall employment news. She begins to worry that what actually sits at the end of her recuperative period is a layoff and an end to disability benefits. The difficult economic times have produced an incentive not to get well.

Other challenges face those who aren't injured and who haven't been laid off. There's more work to be done by fewer people. Employment counselors point out that sometimes those who remain at their jobs have a lower view about the employer than those who were laid off or those who are in a recuperative period. Ill will breeds ill will. An employer may find that its most able workers move on to less stressful scenes; only the worst workers are left.

Issue Eight: PPOs

Cost-saving is at the core of many workers' compensation issues. As noted above, if one state can save the employer money over the cost that would be imposed by another state, the first has an advantage. If one workers' compensation carrier can show an employer cost savings in the handling of claims and expenses, it has an advantage. For a number of years now, medical costs have been the fastest growing segment of the overall workers' compensation claim. Employers and carriers have turned to preferred provider organizations (PPOs). Medical care providers within these PPOs generally agree to accept less for their services than they might otherwise command under normal "usual and customary" fee arrangements.

What happens when the PPO rates are less than the approved schedule of fees allowed under state law? During 2010, there has been a flurry of litigation activity in Louisiana to resolve the issue within that state. In late November, the matter was contentiously resolved. Reversing lower appellate courts, the Supreme Court of Louisiana, in Agilus Health v. Accor Lodging N. Am., 2010 La. LEXIS 2605 (Nov. 30, 2010), held that under appropriate circumstances, payments to a health care provider may, pursuant to a valid PPO contract, be discounted below the reimbursement schedule provided within the Louisiana Workers' Compensation Act ("LWCA"). Citing strong policy that favored the freedom of parties to contract with each other, the high court observed that the employer/insurer was simply paying what the medical care provider had contractually agreed to accept under the PPO arrangement. The court also stressed that in no way did the payment of the lesser amount to the health care provider relieve the employer or carrier of any liability to the injured employee under the LWCA.

It will be interesting to watch for developments from other states.

Issue Nine: Mental-Mental Injuries

Some fifteen states, including Connecticut, do not provide workers' compensation benefits for purely mental disorders; they must be causally connected to a physical injury [for a list of the other fourteen, see generally Larson's Workers' Compensation Law, §§ 56.03[6], 56.06[4]]. The difficulties in resolving so-called "mental-mental" cases—mental disorders that have their origin not in a physical injury, but in a mental stimulus—is illustrated by two recent cases.

In the first, a Stamford, Connecticut police officer was involved in a high-speed car chase during a torrential rainstorm. At the conclusion of the chase, he was involved in a gun battle with the suspects and in fear of losing his life. During the course of the gun battle, the officer injured his right elbow and left knee as he attempted to leap over a guardrail. As a result of those injuries, the officer was diagnosed with a small level of percent permanent partial disability. The officer also sought benefits for post-traumatic stress disorder associated with the event. The police department did not dispute that the officer suffered from the disorder; it contended, however, that the disorder was not compensable under the Connecticut workers' compensation law. The commissioner determined that the weight of the medical evidence did not support the contention that the officer's PTSD was causally connected to a physical injury he sustained on the day of the incident. The board affirmed, and the officer appealed.

In Biasetti v. City of Stamford, 123 Conn. App. 372, 2010 Conn. App. LEXIS 366 (Aug. 24, 2010), the Appellate Court of Connecticut affirmed. Although the officer's injuries and the gun battle were "inextricable parts of one event," the court indicated the medical evidence showed that the officer's PTSD was caused by the life-threatening event and not the officer's injuries to his elbow and knee. The evidence suggested that the officer would have sustained the mental condition even if he had not injured his elbow and knee. There could be no compensation under the Connecticut statute as it existed at the time of the officer's injury [effective October 1, 2005—subsequent to the incident involving the police officer—a mental injury that arises from a police officer's use of deadly force or subjection to deadly force in the line of duty may now be compensable].

Pennsylvania does not exclude recovery in mental-mental injury cases; it does require, however, that the initial mental stimulus be "abnormal" or "extraordinary." In a recent case, a police officer sought benefits for PTSD associated with the death of a mentally-disturbed woman who ran in front of and was struck by his patrol car. Agreeing with the Board's conclusion that a police officer knew that as a part of his duties he might be subjected to traumatic visuals, such as injured children, maimed adults, and death, the Pennsylvania Commonwealth Court, in Payes v. Workers' Comp. Appeal Bd., 2010 Pa. Commw. LEXIS 546 (Oct. 6, 2010), affirmed the Board's decision denying benefits. The incident, while tragic, was neither "abnormal" nor "extraordinary."

Issue Ten: Injuries to Telecommuters

According to one law journal article, some 34 million American workers telecommuted to some degree during 2006 (“Telecommuting: A Reasonable Accommodation Under the Americans With Disabilities Act As Technology Advances,” 19 Regent U. L. Rev. 537, 544 (2006-2007)). Issues arise as to the compensability of injuries sustained by employees in these home-based offices. Is the employer—who, after all, has little control over conditions within an employee’s residence—nevertheless responsible for workers’ compensation benefits along the same basis as if the employee were injured on the company’s premises?

Ordinarily, for a true telecommuting arrangement to be established, the home must be transformed into a work situs generally. Normally there must be some evidence that both the employer and the employee receive some important benefit from the arrangement and that the arrangement is part of the overall bargain of employment, less “teachers who prepare lessons or correct papers at home, lawyers who take home briefs, salespeople who work on accounts at home, and newspaper columnists who polish up a bit of writing at home … might be tempted … to assert compensation coverage of all their movements to, from or around the house by virtue of some morsel of work carried around in their pockets” (Larson’s Workers’ Compensation Law, § 16.10[1]). As at least one court has indicated, “[the] contemporary professional frequently takes work home. There, the draftsman designs on a napkin, the businessman [or woman] plans at breakfast, the lawyer labors in the evening. But this hearthside activity—while commendable—does not create a white collar exception to the going and coming rule” (Santa Rosa Junior College v. Workers’ Comp. Appeals Bd., 40 Cal. 3d 345, 220 Cal. Rptr. 94, 101, 708 P.2d 673, 680 (1985). Nor does it mean that an employee injured at home while pursuing some of this “hearthside activity” has a compensable claim under the workers’ compensation system for providing disability and medical benefits.

A recent unpublished decision from New Jersey, Renner v. AT&T, 2010 N.J. Super. Unpub. LEXIS 2847 (Nov. 29, 2010), illustrates some of the important issues involved. There a New Jersey appellate court determined that a telecommuter's fatal pulmonary embolism was not a compensable occupational disease in spite of contentions on the part of her survivors that when she worked at home, she sat at her computer for long hours to meet various deadlines and a medical specialist indicated that the pulmonary embolism could have been caused in part by her sedentary job. The appellate court observed that the employee was 47-years old and morbidly obese (weighing 304 pounds). Quoting Larson's Workers' Compensation Law, § 42.02 [see also § 52.04], the appellate court held that her job required her to meet deadlines, not to sit in front of her computer and remain still. The employee was free to decide whether she should sit, stand, or walk. Her condition did not develop gradually and was not compensable.

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