Tag Archives: 2nd district court of appeal

3rd Wave of P2P Insurance

The P2P insurance model promises to change the conflict dynamic between insured and the insurer. From Friendsurance to Guevara and the eagerly anticipated Lemonade, P2P insurance has already evolved two generations in six years. Now, we see the emergence of the next generation of P2P insurance; the self-governing model.

People-to-People Insurance

The jury may be out on the peer-to-peer insurance model, but that hasn’t stopped the steady stream of new entrants who believe in fundamentally changing the dynamic between insured and insurer.

Back in December, I wrote this article on P2P insurance and featured two very different InsurTech start-ups.

First, there was TongJuBao, a Chinese peer-to-peer insurer that provides social risk sharing insurance products. Recently, Tang Loaec, the founder/CEO sent me this announcement of a strategic partnership to distribute the company’s products through Huaxia Finance across Greater China.

See Also: Is P2P a Realistic Alternative?

The second was Guevara, the U.K. motor insurer that was first to take the P2P model beyond a pure distribution play. I must give credit to Paul Andersen, Guevara’s co-founder and CEO, for the term “people-to-people insurance,” which is way more appropriate than peer-to-peer.

Since that article, there has been a stream of announcements from the pseudo-stealth peer-to-peer insurer Lemonade.

First, the company caught everyone’s attention with a $13 million seed round (which is significantly higher than usually associated with a pre-revenue, no-customer first raise.)

Then, the company announced a list of high profile reinsurers lined up to back the business when it launches later this year. The latest news is the announcement that the company had hired a chief behavioral officer in guru Dan Ariely.

There’s much speculation about what they’re going to do when they go live, but we’ll just have to wait and see on this one.

In the meantime, I’ve been drawn to a new wave of P2P insurers. Some on the blockchain, some using Bitcoin and all based on a self-governing, peer-to-peer network model.

The Next Wave of Peer-to-Peer Insurance is “Self-Governing”

The first wave is based on a distribution model where “friends and family” risk pools self-insured each other’s deductibles to lower premiums.

Then we saw the carrier model, wave 2. Here, the pools are the primary bearers of risk, and they share in any retained premiums not paid out in claims.

Wave 3 is the self-governing model, A back-to-the-future model that takes us further toward a mutual insurance than we’ve seen to-date.

To find out more, I Skyped with Alex Paperno, the co-founder of Teambrella, the Russian InsurTech that uses Bitcoin to hold client money.

This article appeared in The Digital Insurer.

another reversal on 'going and coming'

Another Reversal on ‘Going and Coming’

California’s 2nd District Court of Appeal has reversed a Workers’ Compensation Appeals Board (WCAB) decision, which had in turn reversed a decision by a workers’ compensation judge (WCJ) on a “going and coming rule” case. In Shultz v WCAB (Joint Test Tactics and Training (JT3)), the court ultimately determined that the employee was operating his motor vehicle within the course and scope of employment. So, the going and coming rule, which defines the ordinary commute as not being part of the work day, was inapplicable.

Craig Schulz was a civilian employee working on a secure U.S. Air Force base not open to the public. On the day in question, he drove his personal vehicle to the base and passed through the secure gate using the security pass issued by his employer. Approximately one mile past the gate, he was involved in a motor vehicle accident (MVA) and sustained injuries. He claimed they were in the course and scope of employment. His employer denied the claim, saying he had not yet reached the employer’s premises. The employer also argued that the applicant had sustained injuries because of an idiopathic seizure related to his diabetes, so the injuries did not arise from his employment.

Extensive testimony was taken at trial as to the employee’s duties, his need to travel to various locations on the base during the course of the day and whether his employer expected him to use his personal vehicle. The employee testified that he commonly used his own vehicle to travel from location to location on the base. The employer presented testimony that it provided vehicles for employees to travel around the base and that it did not require the employee to use his own car. Multiple witnesses, however, confirmed that Schulz did, in fact, use is own vehicle on multiple occasions. Schulz provided compelling documentation from his own log (kept for tax purposes) of his vehicle usage. There was also general agreement that, while vehicles were typically available, on occasion they were not. Schulz’s side argued both that he had entered the employer’s “premises” when he went through the secured gate and that his vehicle was used in the course of his employment, based on custom and practice.

The WCJ ruled in Schulz’s favor, relying principally on the use of his personal vehicle on the job site. The judge did not address the premises issue raised by Schultz, nor was there any compelling evidence (at least according to the court) to support the claim of idiopathic causation. On appeal, the WCAB reversed, based on the employer’s evidence of availability of its vehicles and the policy that work could be postponed until a vehicle was available. The WCAB held that the injury was outside the course and scope of employment. The WCAB did not address the applicant’s argument that he was on the employer’s premises at the time of injury.

The appeals court did not focus on either the WCJ’s line of thought nor that of the WCAB but instead focused on the premises argument. The court noted:

“Although Schultz was assigned to a particular building on Edwards, it is undisputed that he and other employees of JT3 performed work at multiple locations at the base at various times. Edwards is a secure location, and JT3 controlled Schultz’s access to the base, which he could only enter with a security pass issued by JT3 and approved by the Air Force. Because JT3 controlled Schultz’s access to Edwards, and Schultz worked throughout the base on assignments, he was on the premises of his employer once Schultz entered Edwards, and his injury therefore occurred during the course of that employment for purposes of the workers’ compensation law. “

The court cited Smith v IAC, a California Supreme Court case, as support for the concept of an understanding of the expanded-workplace concept. The court found that the Schulz case was even “more compelling” than Smith on defining the premises of the employer as beyond the actual buildings where the work was performed. The court found that the discussion as to whether Schultz was required to provide his vehicle was irrelevant once it was determined he was on the premises:

“For purposes of the premises line rule, it does not matter whether Schultz was permitted to use his own car to perform work, as he contended, or if that was not permitted, as maintained by JT3, as the record clearly shows that Schultz was required to work throughout Edwards at times, and his work was not confined merely to Building No. 1440. Schultz was on JT3’s premises for purposes of employment when injured.”

The court summarized as follows:

“We hold that the premises line rule applies to an employee injured in a single-car traffic accident where (1) the employee was a civilian working on a secure U.S. Air Force base not generally open to the public, (2) the employee entered the base in his personal vehicle after passing a guard gate using a security pass issued by his employer with the approval of the Air Force, (3) the employee had traveled one mile inside the base when the accident occurred and (4) the undisputed evidence established although the employee worked out of a fixed location, the employer had multiple locations on the Air Force base and the employee traveled sometimes in his own vehicle, as needed, throughout the base to perform work assigned by his employer.”

Comments and Conclusions:

If we were ever under the illusion that the “going and coming” rule was an inflexible legal concept, this case should certainly dispel the notion.

It is interesting that neither the WCJ nor the WCAB seemed to focus on the ultimate legal issue relied upon by the appellate court, namely whether the employee had entered the employer’s premises once he had passed through the secured gate. Some understanding as to why that may have occurred can be found in some of the court’s discussion as to whether the applicant had raised this issue in proceedings below the appellate level. One of the arguments raised by the defense included the assertion that the applicant was raising the premises rule for the first time on appeal and therefore had forfeited the right to raise the argument. The appellate court rejected that argument, finding the applicant had included a discussion of the issue in the trial brief, thereby preserving it for consideration on appeal. However, it is certainly possible that, with all the testimony on whether and how often the applicant used his vehicle, the parties may have simply overlooked the premises issue. The court certainly found enough evidence in the testimony to make a finding on the issue, so the factual basis was available for everyone to see.

In the grand scheme of things, this case does not increase exposure very much. The number of cases where an employee enters a third party’s premises that will also be considered the employer’s premises and then continues to drive several miles will likely be very limited. The fact that the court relied upon the secured nature of the location also makes expansion of this concept somewhat questionable.

8% Reduction In Claims Costs Spells Success for Workers' Compensation Pilot Program

Physician-Guided Managed Care Achieves Better Results

Ever wondered why managed care costs more every year but the results seem about the same? For decades, the most expensive portion of a claim was the indemnity payments. Today, with medical advances, it’s the medical expenses, which in workers’ compensation alone, have increased nationwide by an annual average of 8 percent, nearly double the medical consumer price index of 4.3 percent over the same six-year period.

Although managed care services vary somewhat from company to company, they are more or less delivered as commodities, with each service providing similar capabilities regardless of vendor. Upfront fees are the selling point, and price is the primary differentiator. Some service providers may be more efficient than others, but only because their technology underpinnings are better (or better managed). Either way, technology-based processes often define the service, with poor accommodation for human intervention.

In this typical managed care model, medical bill reviews sail through software systems as fast as possible, grabbing savings along the way based on automated business rules and built-in triggers. Experienced nurses conduct utilization reviews (URs), but generally in a rubber-stamp role, and escalation of questionable utilization reviews to physicians can slow the review process by days, or even weeks. Similarly, case management is a nurse-based service in which physicians come into play only on an exception basis. And finally, there are the networks of doctors and hospitals that discount fees. Because the managed care vendors that build these networks absorb part of the discounts as payment for network access, they have little incentive to choose these providers selectively.

In this standard managed care model, one service provider might boast the lowest price for medical bill review, another for utilization review, and both will attract buyers on price alone. But insurance entities that choose providers based on upfront fees are sacrificing a higher level of savings — one that can only come with a more holistic view of managed care services.

Current Managed Care Model
Many insurance companies use managed care services to find the obvious savings (or “low hanging fruit”) through case management, bill review, utilization review of patient treatment plans, and provider networks at discount prices.

Yet most managed care service providers seem powerless to arrest medical costs and have been unable to utilize or develop a different approach. They continue to use nurses and clerical review staff to oversee the medical component of a claim, when their valuable input often doesn't reach the treating physician in any meaningful way. And when a physician finally does become involved, the case is often already derailed by out-of-control treatment plans and costs.

Instead of charging fees to catch problems after the fact, industry innovators want a new, more effective model to lower costs and influence the quality of care from the beginning of a claim.

A New Model: Physician-Guided Managed Care Services
What is needed is a managed care infrastructure that leverages the credibility and expertise of doctors at key points in every service.

Physician-Guided Care (PGC), a ground-breaking approach to managed care, combines knowledgeable individuals with predictive analytics and systems to measure and influence medical care. It's a model where treatment is lead by doctors — not clerical review staff or nurses.

Widespread as it is “holistic” in nature, the Physician-Guided Care model informs the overall delivery of all managed care services. Put another way, Physician-Guided Care can be defined as supporting the right treatment at the right time by the right professional — and all at the right cost to workers' compensation programs. And this model has been proven to deliver better results, including:

  • 11% faster return to work for injured persons; and,
  • 8% reduction in overall claims costs.

The Right Treatment At The Right Time — By The Right Professional
To understand the value of “right” in this context, consider the prevailing practice of nurse-conducted utilization reviews (UR). Customers pay for the nurse's review, and again for a second review at a higher incremental price; each time a utilization review case is escalated to a doctor for specialized medical advice.

Alternatively, if the nurse chooses to call the treating physician to discuss the matter, there's no guarantee the call will be returned quickly, if at all, and nothing preventing the provider from proceeding with the planned treatment. Either way, relying on nurses at the initial stage of less-routine utilization review cases can increase costs, slow turnaround times, and prolong the life of the claim.

With the Physician-Guided Care model, only physicians conduct utilization reviews. The collaborative nature of physicians, trained to work together, delivers greater efficiencies and better outcomes to the process. In fact, the approach of using physicians at the appropriate level of every service has upended the commodity-based service model favored by the managed care industry. As trained clinicians, they pinpoint problems, negotiate with treating physicians, and arrive at fair resolutions more quickly and effectively. Physicians are used in the following ways:

  • Medical Bill Review: The Physician-Guided Care model combines the expertise of senior-level bill analysts with proprietary quality assurance technology that flags possible violations of medical procedure coding, PPO network discounts, and state fee schedules. Level of Physician Involvement: Questionable treatment, billing codes, and charges for medical services are escalated to physicians for clinical review.
  • Utilization Review: The Physician-Guided Care model uses staff physicians to review medical treatment plans and collaborate with treating physicians on patient care. Level of Physician Involvement: All utilization reviews are conducted by physicians.
  • Rx Utilization Management: The Physician-Guided Care model reviews prescriptions before they're filled, specifically Class II and III drugs, special requests, and prescriptions flagged by specifically configured triggers as potentially out of scope or harmful to the patient. Level of Physician Involvement: All requests are reviewed by physicians.
  • Case Management: The Physician-Guided Care model for case management combines physician and field nurse case managers who work with treating physicians and families to ensure the best possible patient care without incurring undue costs. Level of Physician Involvement: In the Physician-Guided Care model, physicians are assigned to any claim that meets at least one of dozens of critical factors and anticipates six weeks or more of lost work time, based on predictive modeling.
  • Physician on Call: The Physician-Guided Care model makes physicians available via an 800 number to help claims examiners resolve medical issues quickly, especially when they're under pressure. Level of Physician Involvement: All calls are handled by physicians.
  • 24/7 Nurse Triage: The Physician-Guided Care model uses phone-based triage-trained registered nurses to guide accident victims to the right treatment option the moment an accident occurs. Level of Physician Involvement: Nurse triage operations are overseen by a physician certified in internal and emergency medicine.
  • Claim Analysis: The Physician-Guided Care model helps claims examiners resolve persistent issues and move toward settlement of difficult or long-term claims. Level of Physician Involvement: All analyses are performed by physicians.
  • Medicare Set-Asides (MSAs): The Physician-Guided Care model helps claims staff forecast Medicare Set-Asides more accurately, expedite reporting, and comply with Medicare's Secondary Payer Act for case settlements. Level of Physician Involvement: Physicians oversee the work of analysts and forecasters.

Delivering Better Results For Claims Organizations
Over the last few years, Physician-Guided Care has confirmed its value for businesses by reducing medical costs, accelerating patient recovery, and minimizing appeals of managed care decisions.

Many workers' compensation carriers choose to first pilot the Physician-Guided Care model in order to evaluate results and confirm the benefits of the approach. One example of such a pilot was an insurance company specializing in workers' compensation claims. This organization chose to evaluate the Physician-Guided Care program in order to measure the success of using physician case managers, specifically on cases that involved severe injuries.

This pilot program ran between July 1, 2010 and May 31, 2011, during which time physicians were assigned as case managers to any claim that met the following criteria: involved an injury with certain critical factors and had at least six weeks of anticipated lost work time due to temporary total disability (TTD), based on predictive modeling.

By any measure, the results were impressive. During this pilot program, the use of physician case managers resulted in:

  • Medical expenses to drop by 8 percent.
  • Compare that to the 2 percent increase in the medical cost inflation rate for workers' compensation insurance in 2010, and the effect is a 10-point better result.

The Physician-Guided Care Model: Making an Impact
One thing is certain: the traditional model for managing medical costs and care is outdated and no longer generates sustainable improvements. The new Physician-Guided Care model has been tested with thousands of claims, and shown to deliver measurable improvements in claims outcomes and costs.

Physician-Guided Care is the groundbreaking approach successfully leveraging the credibility and expertise of doctors at critical points in every managed care service. The Physician-Guided Care model is successful due in large part to its foundation — the collegial and collaborative nature of physicians. In an environment where doctors have historically been trained to work together, the Physician-Guided Care model harnesses the peer-to-peer relationship to manage patient care from the start and throughout the entire claims process. The result: the treatment plan is set on the right course to get the injured person back to health quickly, and unnecessary medical procedures, costs, and prescriptions are avoided.

SB 863 Valdez Revisited

As you may already know, the Second District Court of Appeal recently issued their decision on this case which involves in part, the admissibility of non-Medical Provider Network doctor’s reports. This was initially an unpublished decision. However, plaintiff’s counsel petitioned the court which did in fact publish the opinion giving it precedential status. In other words, it could be cited in other cases with the same or similar issues.

In its simplest terms, it says in part that an injured employee may be treated by his/her own non-Medical Provider Network physician pursuant to Labor Code (L/C) 4605 for diagnosis, treatment and attendant reports. The case goes on to acknowledge that the employee is responsible for the payment of these services and that any reports generated by the non-Medical Provider Network doctor are admissible. However, the case was remanded to the trial court to deal with the admissibility as well as other issues left unsettled by the Workers’ Compensation Judge at the time of trial.

However, as you will see below, I am pleased to report that the defense strategy we developed allowing employers to use the current Medical Provider Network system to its fullest advantage was adopted by the Legislature in the recently passed SB 863. This was due to the amendment to Labor Code 4605 as discussed below.

Background
The current Labor Code 4605 was first enacted in 1917 as a part of the then Insurance and Safety Act. Sec. 9(a) of that act is most interesting from a historical perspective in that it reads:

Such medical, surgical and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches and apparatus, including artificial members, as may reasonably be required to cure and relieve from the effects of the injury, the same to be provided by the employer, and in case of his neglect or refusal seasonably to do so, the employer to be liable for the reasonable expense incurred by or on behalf of the employee in providing the same: provided, that if the employee so requests, the employer shall tender him one change of physicians and shall nominate at least three additional practicing physicians competent to treat the particular case, or as many as may be available if three cannot reasonably be named, from whom the employee may choose: the employee shall also be entitled, in any serious case, upon request, to the services of a consulting physician to be provided by the employer: all of said treatment to be at the expense of the employer. If the employee so requests, the employer must procure certification by the commission or the commissioner of the competency for the particular case of the consulting or additional physicians; provided, further, that the foregoing provisions regarding a change of physicians shall not apply to those cases where the employer maintains, for his own employees, a hospital and hospital staff, the adequacy and competency of which have been approved by the commission. Nothing contained in this section shall be construed to limit the right of the employee to provide, in any case, at his own expense, a consulting physician or any attending physicians whom he may desire (my emphasis). The same general language as to responsibilities is now found in L/C 4600(a); 4601 and 4605.

The reason this section is important is that Section 9(a) pre-dates Labor Code 4616, the Medical Provider Network statute. As such, any attempt prior to SB 863 to harmonize the rights of the employee to seek their own doctor at their own expense against the later-enacted Medical Provider Network statute would have to give precedent to the later-enacted labor code section (L/C 4616).

Labor Code 4605 Amended By SB 863
However, all of that was changed with SB 863 which amends Labor Code 4605 in such a way that makes clear the admissibility and subsequent value of any non-Medical Provider Network generated reports:

“Section 4605 of the Labor Code is amended to read:

4605. Nothing contained in this chapter shall limit the right of the employee to provide, at his or her own expense, a consulting physician or attending physicians whom he or she desires. Any report prepared by consulting or attending physicians pursuant to this section shall not be the sole basis of an award of compensation. A qualified medical evaluator (QME) or authorized treating physician shall address any report procured pursuant to this section and shall indicate whether he or she agrees or disagrees with the findings or opinions stated in the report, and shall identify the bases for this opinion.”

Strategy For The Use Of Labor Code 4605 And Medical Provider Networks Going Forward
Employers and their claims administrators (carrier or Third Party Administrator) must aggressively assert and maintain their medical control over any new claim reported under their Medical Provider Network to make this strategy work.

First, employers need to be sure that the required Medical Provider Network notice to each employee and the Labor Code required general postings are complete and well documented.

It is important to note that SB 863 also made significant changes to 4616, the Medical Provider Network statute. However, even with these changes, an employer’s best defense will continue to be quality documentation regarding policies and procedures on their handling of the Medical Provider Network notification and enforcement process which will block applicant attorneys’ (A/A) attempt to seize medical control for failure to comply with the statute.

Consulting And Attending Physicians
The important question raised by Valdez dealing with the use of Labor Code 4605 by applicant attorneys as a means to get their non-Medical Provider Network doctors reports admitted has been resolved. Labor Code 4605, as amended, has clarified clearly and concisely to who and how the non-Medical Provider Network doctor(s) reports are to be submitted and used.

As noted above, “A qualified medical evaluator or authorized treating physician shall address any report procured pursuant to this section and shall indicate whether he or she (my emphasis) agrees or disagrees with the findings or opinions…” You will note that only a qualified medical evaluator in a non-Medical Provider Network claims environment or the “authorized treating physician” which in the case of a Medical Provider Network is the Primary Treating Physician (PTP) have control over the use of such pro-offered reports.

Recommended Procedure Under Labor Code 4605 As Amended

  1. As a first step, I recommend that the injured employee be informed, as part of the employer’s or claims professional’s acknowledgment of the claim, that a valid Medical Provider Network is in place and that the employee’s cooperation is expected.
  2. The same initial notice should also state “that the employee is free under Labor Code 4605 to seek their own consulting or attending physician, at their own expense.” They will be told at that time that if they do avail themselves of this option under Labor Code 4605, their consulting or attending physician’s medical reports will be tendered to the Primary Treating Physician (PTP) for this injury who, under the Medical Provider Network statute, is the controlling doctor (Labor Code 4061.5). Under this scenario, the consulting or attending physician’s report will be submitted to either the qualified medical evaluator or Primary Treating Physician to be used as he/she deems appropriate.
  3. At the same time, the normal Medical Provider Network process will be enforced as is current policy. Demand will be made that the employee continues to be seen for diagnosis and treatment by a Medical Provider Network doctor. If there is a dispute as to diagnosis or treatment by either the applicant’s attorney or the L/C 4605-obtained consulting report, that dispute will be handled under the Medical Provider Network’s 2nd, 3rd and if necessary, the Independent Medical Review process and NOT through a Panel Qualified Medical Evaluator.
  4. We will also be requesting from the employee an acknowledgement, under penalty of perjury that the employee has already paid or understands that he/she is the ultimate responsible party for paying their L/C 4605-obtained physicians as well as any other related bills for treatment, testing and other costs.
  5. We will object to any liens from the consulting physician and will recommend they bill the injured employee directly.
  6. Should the employee continue to refuse to be seen by our Medical Provider Network doctors and treat with the non-Medical Provider Network physician, then a Notice of Suspension of Benefits will be sent to the injured employee, his attorney (if there is one), and the non-treating physician. The notice will inform all of the above that all benefits including both Temporary Total Disability and medical treatment are suspended under Labor Code 4053 for failure to comply with a written demand. It will go on to say that the suspension can be lifted by the injured employee simply showing up at our Medical Provider Network doctor for diagnosis and if necessary, treatment.
  7. Under this scenario, employers and their carriers or Third Party Administrators will be able to use the full weight of the Medical Provider Network process while, at the same time, dealing with non-Medical Provider Network procured medical diagnosis and treatment. This will help keep the employee within the Medical Provider Network and, if handled in a swift and judicious manner, help hasten a timely closure of the claim.