Tag Archives: dwc

Legislative Preview for Work Comp in 2016

Common wisdom suggests that major workers’ compensation legislative activity won’t take place during an election year. For 2016, that would seem to hold true.

That is not to say, however, that various interested parties will be sitting idly by, waiting for the clock to turn to 2017.

CENTERS FOR DISEASE CONTROL ADD TO THE LIST OF CHRONIC PAIN GUIDELINES

On Jan. 13, the Centers for Disease Control and Prevention (CDC) closed the public comment period for its proposed Guideline for Prescribing Opioids for Chronic Pain. According to the CDC, the guideline is being proposed to offer “… clarity on recommendations based on the most recent scientific evidence, informed by expert opinion, with stakeholder and constituent input considered.”

The guideline goes to great lengths to address two important issues. The first is that current guidelines in many states – both public and private – are based on dated information. The second, which is critical, adds to the growing number of voices to say that best practices for providers include accessing physician drug monitoring programs (PDMP) to reduce the risk of doctor shopping and toxic – and sometimes fatal – mixtures of prescription drugs when the patient provides incomplete histories or none at all of their drug use (both prescription and illicit).

This need to access a PDMP before, and during, treatment with opioids is echoed by the Medical Board of California (MBC) and the DWC. Their comments also underscore a considerable problem facing California policymakers when trying to create incentives for providers to use the Controlled Substance Utilization Review and Evaluation System (CURES) without directly mandating access.

This dilemma is best summed up by the analysis of Senate Bill 482 by Sen. Ricardo Lara (D – Bell Gardens) that is at the Assembly Desk pending referral to committee. The bill, which would mandate participation in the CURES system as well as other measures to curb the abuse of opioids, has garnered opposition from medical associations and one medical malpractice insurer. The opposition, according to analyses by legislative staff, is based on two issues – the first being whether the CURES system is capable of handling the volume of inquiries a mandate would engender, and the second being concern that requiring CURES access will become a standard of care that could subject providers to malpractice liability.

As to the former, this issue arose during the campaign waged against the 2014 ballot measure Proposition 46. According to the non-partisan Legislative Analyst’s Office (LAO), “Currently, CURES does not have sufficient capacity to handle the higher level of use that is expected to occur when providers are required to register beginning in 2016.” This raises an important question – does the CURES system now have the capability to meet the demand that a mandate would create? If it doesn’t, then the legislature needs to understand why.

As to the second issue, it is difficult to comprehend the level of distrust that is subsumed in the position that opposing a mandatory review of possible prescription drug abuse by a patient would establish more potential malpractice liability than knowing that the CURES database exists and not checking it. In time, perhaps, it will be the appellate courts that resolve that issue.

There is no shortage of guidelines that address the appropriate use and cessation of use of opioids for non-cancer chronic pain. The DWC is finalizing its latest iteration on this issue as part of the MTUS. It will differ from both the CDC and the MBC guidelines to some degree, but the overall treatment of this issue is very similar. In addition, the division will be implementing a prescription drug formulary as required by Assembly Bill 1124 by former Assembly member Henry Perea (D – Fresno). That, too, will likely provide opportunities to address the proper use of opioids in the workers’ compensation context, preferably after the chronic pain guidelines are completed.

As noted by the CDC and the MBC, and implicit in the DWC’s guidelines, this is not just a question of UR. If all the work by the division is simply viewed as a more effective way of saying “no” regardless of the circumstances, then the public health issues associated with the abuses of opioids will continue.

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Appeals Court Settles Key Work Comp Issue

The U.S. Court of Appeals for the 9th Circuit has issued its long-awaited decision in the Angelotti Chiropractic Inc. v Baker case. In what can only be considered a resounding win for both the legislature’s power to create the workers’ compensation system and the Department of Industrial Relation’s authority to enforce the provisions of SB 863, the appeals court has, in its 32-page decision, upheld the portions of the lower court’s decision that were favorable to the DIR and reversed the portion that had challenged the validity of the statutory scheme. The result is a knockout, but not necessarily final, victory for the legislature and employer community’s efforts to rein in lien litigation madness.

One of the hallmarks of the most recent reforms to the worker’s compensation system in SB 863 was the adoption of both lien filing and lien activation fees. The intent of the fees was to filter out some of the less valid liens, encourage realistic settlement of liens before litigation and ultimately reduce the backlog of pending liens. Under the structure legislatively created, liens filed before Jan. 1, 2013, (the effective date of the statute) would be subject to an “activation fee” of $100 to actively pursue the lien before the W.C.A.B. Additionally, all pending liens as of Jan. 1, 2013, were required to have paid an activation fee by Jan. 1, 2014, or else be dismissed by operation of law. The second prong of the effort to reduce the backlog was to require lien claimants filing after Jan. 1, 2013, to pay a $150 filing fee. The challenge in this case was to the lien activation fee only, but the case has been watched carefully as similar arguments have been made in opposition to the lien filing fee. For many, Angelotti was considered a bellwether case on the lien fee validity.

Not surprising, shortly after its passage, the issue of the validity of the lien fee provisions in SB 863 was attacked in court with various challenges. In a ruling with what appeared to have the most potential for the challengers, a lower court had previously ruled that the plaintiffs in the Angelotti litigation had demonstrated a substantial likelihood of prevailing in their efforts to have the lien activation fee provisions declared unconstitutional. While by no means final, the resulting decision was accompanied by a temporary restraining order prohibiting the DIR from enforcing the lien activation fee provision. In its decision, the lower court rejected some of the plaintiff’s arguments that the lien activation fee violated constitutional prohibitions under the takings clause and the due process clauses of the U.S. Constitution. That part of the claim was dismissed. The lower court, however, was much more impressed with the equal protection arguments advanced by the plaintiffs, finding that the different treatment of institutional lien claimants vs. direct medical providers did not constitute a rational distinction. As a result of the temporary injunction, the DWC suspended its enforcement of the lien activation fee provisions but appealed the ruling.

In its decision, the appeals court upheld the district court’s rulings dismissing the plaintiff’s causes of action based on the takings and due process arguments, finding that the lower court’s rationale was well-founded. (The dismissal of those issues had been sought by the Angelotti plaintiffs.) However, in response to the defendant’s appeal of the restraining order and the failure to dismiss the equal protection claim, the court soundly rejected the lower court’s ruling that plaintiffs had established a probability of prevailing on an equal protection argument, reversing that holding and vacating the existing restraining order prohibiting the DIR from enforcing the lien activation fee provisions. That argument was based on the different treatment between institutional lien claimants (such as insurance companies) and private lien claimants (such as individual practitioners).

In reversing the lower court, the circuit court found the distinctions created by the legislature were both rational and within the wide latitude of the legislature to create:

“The legislature’s approach also is consistent with the principle that ‘the legislature must be allowed leeway to approach a perceived problem incrementally.’ Beach Commc’ns, 508 U.S. at 316; see also Silver v. Silver, 280 U.S. 117, 124 (1929) (stating that ‘[i]t is enough that the present statute strikes at the evil where it is felt and reaches the class of cases where it most frequently occurs.’). Targeting the biggest contributors to the backlog-an approach that is both incremental, see Beach Commc’ns, 508 U.S. at 316, and focused on the group that “most frequently” files liens, see Silver, 280 U.S. at 124,-is certainly rationally related to a legitimate policy goal. Therefore, on this record, ‘the relationship of the classification to [the Legislature’s] goal is not so attenuated as to render the distinction arbitrary or irrational.'”

The appellate court further noted it was the plaintiff’s burden to negate “every conceivable basis” that might have supported the distinction between exempt and non-exempt entities. The circuit (appellate) court said the district court did not put the plaintiffs to the proper test in this regard, instead rejecting the argument made by the defendants (DIR) that the activation fee was aimed at clearing up a backlog of liens. The circuit court found multiple flaws with the lower court’s analysis on this argument, including that it failed to give proper deference to the legislature’s fact finding. Instead, the court held the proper application of correct legal principles demonstrated the plaintiffs, rather than showing a likelihood of success, actually showed no chance of success:

“…that plaintiffs have no chance of success on the merits because, regardless of what facts plaintiffs might prove during the course of litigation, ‘a legislative choice is not subject to courtroom fact-finding and may be based on rational speculation unsupported by evidence or empirical data.’ See Beach Commc’ns, 508 U.S. at 315. Thus, the presence in the commission report of evidence suggesting that non-exempt entities are the biggest contributors to the backlog is sufficient to eliminate any chance of plaintiffs succeeding on the merits.”

While the plaintiffs in this matter have further appeal rights, it does not appear that under this decision the plaintiffs will be entitled to a trial at the lower court. The court not only vacated the injunction but took the unusual step of reversing the trial court’s denial of defendant’s petition to dismiss the equal protection cause of action. As noted in the above quote, the legislative authority to fashion a remedy effectively eliminated any chance of plaintiff’s prevailing.

Comments and Conclusions:

While the decision in this appeal took some time to come, the finality of the decision, and the tenor of the court’s ruling, will undoubtedly be considered well worth the wait. By reversing the lower court’s failure to dismiss the equal protection clause, the appellate court left very little opening for preservation of this lawsuit. While the plaintiffs can both ask for a rehearing and appeal to the U.S. Supreme Court, those levels of appeal come with rapidly diminishing probability of success.

With the DIR no longer hamstrung by the restraining order, we can anticipate a rapid enforcement of the lien regulations requiring activation fees. What will be a fascinating sideshow to this will be what happens to the provisions of Labor Code § 4903.06(a)(5), the requirement to pay the activation fee on any pre-1/1/13 lien claim on or before 1/1/14, a date long since passed. The DWC stopped collecting activation fees pursuant to the now vacated restraining order shortly after the TRO issued. Interestingly the language on the W.C.A.B.’s website indicated lien claimants were not obligated to pay the activation fee to appear at a hearing or file a DOR. However, it makes no mention of the dismissal language in 4903.06.

It is highly likely that few if any lien claimants paid activation fees by 1/1/14. It also seems unlikely, though not necessarily impossible, that the DIR or W.C.A.B. will be able to enforce the dismissal by operation by law provisions without allowing some kind of grace period for lien claimants to comply with the activation fee requirement before lowering the boom on liens without such fees. Lien claimants are now in something of a no man’s land with the faint hope that a further appeal may save them from the lien activation cost, but the compliance clock will probably be ticking, and once it stops the jig will be up on their liens.

It would certainly make sense for any current lien claimants, especially those who are set for hearings, to start looking into complying with the activation fee requirements. Showing up at the W.C.A.B. on a pre- 1/1/13 lien claim without having paid the activation fee may very well result in dismissal in the very near future. For defendants, with the TRO no longer in force, it is game on as far as activation fees are concerned. I intend to start raising the issue tomorrow…(or at least at my next hearing with a pre-1/1/13 lien claim).

On a side note, a similar case in state court, Chorn v Brown, was also recently decided in an unpublished decision. In that case, a lien claimant had challenged the lien statutes on both activation and lien filing fees. The case has been dismissed for lack of subject matter jurisdiction in the superior court. As a practical matter, the dismissal is really more of a procedural issue than a substantive one. The court of appeal noted the proper remedy for Chorn was to pursue a petition for writ of mandamus in the court of appeal, a step Chorn has actually initiated. However, a petition for writ of mandamus requires an appellate court to decide the issue has merit, a rather dubious proposition at this point. However, it is one more step to finally clearing up the DIR/DWC/W.C.A.B.’s authority to deal with the lien morass that, while somewhat abated in the past couple of years, continues to plague the system.

Laying the Foundation for Drug Formularies

When Texas announced an 80% drop in the cost of “N” drugs prescribed for new injuries, workers’ compensation stakeholders took notice. (Medications designated as “N” in the Official Disability Guidelines are not appropriate for first-line therapy.)

Since that announcement, the implementation of a closed formulary has placed near the top of the list on several state legislative agendas. While the results being reported out of Texas are still fairly recent, the concept of a closed formulary is not a new idea in that state. Although changes in Texas’ work comp medical cost trends appear sudden, the process for achieving these was anything but.

When HB 7 was passed in 2005, it created the Division of Workers’ Compensation (DWC) within the Texas Department of Insurance and, among other things, authorized “evidence-based, scientifically valid and outcome-focused” medical treatment guidelines and a closed formulary for prescription medications. These steps, along with the existing preauthorization and dispute-resolution processes, provided the solid regulatory infrastructure needed to implement a successful closed formulary.

The Texas Closed Formulary (TCF) requires preauthorization for medications identified as “N” drugs in the current edition of the Work Loss Data Institute’s Official Disability Guidelines (ODG). These guidelines are updated on a monthly basis to encompass new medications and new research surrounding current medications. The TCF excludes not only “N” drugs but also any compound medication that contains an “N” drug, as well as experimental drugs that are not yet broadly accepted as the prevailing standard of care.

Naturally, implementing these requirements would mean a substantial change in prescribing habits. (That was the point.) The problem was that immediate and strict implementation could mean that injured workers were suddenly denied previously prescribed medications without allowing proper time for weaning. To counter this problem, the DWC created a “legacy period” during which older claims would not yet be subject to the closed formulary, even while providers had to comply with formulary requirements when treating newly injured patients. This approach allowed providers to adapt to the new preauthorization requirements and adjust their treating habits over time in existing claims. At the same time, it ensured formulary compliance from the outset in new claims.

After the conclusion of the two-year legacy period, all claims became subject to the TCF. In effect, this legacy period was a compromise that allowed Texas to begin implementing the TCF in all of its claims without hurting patients already on long-term prescription therapy.

The first (and, to date, only) state to attempt to replicate the Texas model was Oklahoma. Oklahoma followed the Texas model closely and, in some places, added improvements. For example, while the TCF excludes all compound medications containing an “N” drug, Oklahoma’s closed formulary excludes all compound drugs, regardless of ingredients.

Unfortunately, there are also some drawbacks – the main one being limited application. Because the Oklahoma Closed Formulary is contained within the rules for Oklahoma’s new Workers’ Compensation Commission, it applies only to those cases within the commission’s jurisdiction. The commission has jurisdiction over all claims with a date of injury from Feb. 1, 2014, on. Older claims are handled by the Workers’ Compensation Court of Existing Claims, which has no closed formulary provision. This means that a doctor treating a worker who was injured on Jan. 31, 2014, and another who was injured on Feb. 1, 2014, will only have to abide by evidence-based treatment guidelines for the second worker.

While Oklahoma has adopted medical treatment guidelines and taken steps to require preauthorization, these requirements are relatively new within the Oklahoma workers’ compensation system. As a result, providers, patients and payers are still adjusting to the new system, and there has been a fair amount of confusion.

Implementing a successful closed formulary does not happen overnight. Texas started the process 10 years ago and has been consistently working to ensure that its reforms were successful. After taking the time to establish the necessary regulatory infrastructure, adopt treatment guidelines and create a logical solution to ensure a unified standard of care issue across all claims, the state is finally seeing clinical and economic benefits.

As Arkansas, California, North Carolina, Tennessee and other states start thinking about replicating the results of Texas by implementing their own closed drug formularies, they would do well to have conversations about these principles first.

This article was originally posted at: WorkCompWire.

The Audit Joke in Workers’ Comp

Police officers and firefighters in California and Arizona in separate cases are alleging violations of the Racketeers and Influenced Corruption Act against third-party administrators York and Corvel and the municipalities those companies serviced.

In California, the defendant cities are Rialto and Stockton. In Arizona, it’s Phoenix.The California complaint says the companies “routinely and improperly chose to hurl frivolous and legally unsound roadblock after roadblock to wrongfully deny care” to injured first responders.The plaintiffs believe that a “pattern of practice” at the defendant companies together with the involvement of certain personnel for the defendant municipalities created an enterprise to fraudulently deny benefits in violation of RICO statutes.

Michael P. Doyle, a founding partner of the Doyle Raizner law firm, which filed both complaints, told WorkCompCentral the Arizona case already survived a motion to dismiss, and he anticipates going to trial by the middle of summer. The California case is just getting started, he said.

The defendant cities paid the administrators based on a flat fee per claim and a percentage of savings from utilization-review and bill-review services that were provided, creating an incentive for improper conduct, the plaintiffs claim.

The alleged pattern of denying legitimate claims allowed the defendants to “lower the liability of the city, while at the same time maximizing the TPA’s revenues (and allowing the TPA to maintain and obtain contracts with other public entities based on their ‘outstanding’ financial performance at the expense of public servants).”

The defendant employers conspired with the defendant administrators and “denied claims in hopes that some plaintiffs will simply not continue to seek benefits under workers’ compensation entirely,” the complaint says. The complaint also alleges the defendants ignored California law regarding pre-existing injuries that are aggravated by a new incident, as well as statutes creating a presumption of compensability for certain conditions suffered by first responders.

Representatives for the various defendants would not comment on the cases to WorkCompCentral reporter Greg Jones because of the pending litigation or were not available prior to deadline.

But Jones reports that California Division of Workers’ Compensation audits found claims shops run throughout the state by both firms had numerous violations, including late and unpaid indemnity benefits. In all but one case, the fines were waived because the shops scored high enough to escape financial penalties under the division’s profile audit review program.

York was fined $117,036 after the DWC identified 213 violations during a review of claims processed through its shop in Oxnard. Violations included 26 cases in which the company underpaid indemnity benefits by a total of $84,458.42, according to the DWC’s 2010 audit report.

The DWC identified 45 violations at York’s shop in Fresno in 2010.

The same year, the DWC said it uncovered 80 violations at Corvel’s shop in Sacramento, including $2,147 in unpaid indemnity benefits on nine claims.

In 2011, the DWC identified $92,615 in unpaid indemnity benefits on 26 claims from Corvel’s shops in Camarillo, Rancho Cucamonga and San Diego. The proposed fines, all of which were waived, for 128 violations at the three adjusting locations were $78,790.

York in the same year had unpaid benefits of $31,562 on 28 claims audited at its shops in Upland, Valencia and Concord. The proposed penalties of $51,115 for 157 auditing violations uncovered were all waived, according to the DWC’s 2011 audit report.

In 2012, the latest year for which audit results are available, the DWC said York had unpaid indemnity totaling $7,347 on claims handled by its El Dorado Hills office. The audit also identified 52 cases of failing to comply with the requirements to provide notice to the injured worker of the qualified medical evaluator/agreed medical evaluator (QME/AME) process. York faced penalties of $30,175 for 117 violations, but the fines were waived.

There are two things that come readily to mind.

First, the DWC audit system in California just doesn’t work. That injured workers have to resort to seeking civil judicial intervention for redress that the state should be taking care of is sad testament to the respect the state gets.

Kind of like a parent who threatens taking the cell phone or Internet away from the teenager for misbehavior – puh-leeze! Oh! That’s a threat…

Second, maybe there’s an intentional manipulation of the system by the defendant, or maybe there’s a dysfunctional culture that allows such transgression without consequence.

Sadly, what will happen is that the RICO cases will end up in some sort of anonymous settlement; there won’t be any penalties or fines from the state auditors; there will be no change to the audit process; and the practices will continue, albeit via some other employers and other administrators.

The heavy penalization system that was so criticized by employers, carriers, TPAs and other payers (Labor Code section 5814) for unwarranted cost and expense to the system, was castrated by SB 899 10 years ago because the audit system was in place and was supposed to do the job of enforcement.

Clearly, that assumption has proven incorrect.

Enforcement by the state is a joke.

I can pretty much guarantee that if the state actually enforced the penalties instead of waiving them all (except for one, as noted) the culture would change, the behavior would change and there wouldn’t be any RICO challenges surviving the initial pleading stage.

The ball is in the state’s hands – the audit and penalty system is administrative in nature and doesn’t need legislative backing to change. All the state has to do is NOT waive penalties.

Until then, expect injured workers to seek civil redress for performing the state’s obligation.

Good Answer (Maybe) on Opioids in California

The California Workers’ Compensation Institute (CWCI) has added its voice to the growing national consensus that greater controls are needed over the use of Schedule II medications in workers’ compensation medical treatment and disability management. But the CWCI research must be analyzed in a broader context.

First, we continue to view the abuse of these medications in a “going forward” context – we focus on, how can we stop over-prescribing these medications on claims from the effective date of such reforms? Second, we inevitably take these recommendations out of the context of the state being analyzed — can we say that the Texas closed formulary will work in any state whose system otherwise doesn’t bear any resemblance to the Texas system?

One body of work and thought proclaims the overuse of Schedule II medications to treat industrial injuries is “bad medicine” and should be stopped as soon as possible. Guidelines from Ohio, Texas and Washington, however, recognize the need for prescriptions to relieve acute and chronic pain and provide detailed guidance on moving from acute to chronic pain management. Encompassed within that guidance is recognizing when weaning from these medications, or other early interventions, is appropriate and how to taper dosages to maximize clinical effectiveness and minimize adverse consequences to injured workers.

Many of these concepts are embodied in proposed guidelines from the California Division of Workers’ Compensation (DWC) and the Medical Board of California (MBC). It is encouraging that on Sept. 29 of this year the DWC presented its work to the MBC’s Prescription Task Force at a public hearing and that both agencies are moving forward with compatible guidelines. As seen in other states, notably Washington, inter-agency cooperation is critical so as not to create conflicts between the regulatory agencies that oversee benefit delivery systems and licensing agencies that oversee providers.

To take advantage of the potential cost savings in California’s complex workers’ compensation system identified by CWCI and the Workers Compensation Research Institute (WCRI), however, more needs to be done than adopting a closed formulary. That aspect of the Texas system requires prior authorization before prescribing an “N” drug, which includes Schedule II pain medications. After all, the California system already has: (1) claims administrators’ authority to direct medical care though the medical provider networks (MPNs); (2) the ability to adopt formularies through the MPN; (3) utilization review; (4) a medical treatment utilization schedule (MTUS) that sets forth presumptively correct guidelines for treatment, and; (5) post-Senate Bill 863 (DeLeón), independent medical review (IMR) for resolution of treatment disputes.

We are continuing to have the discussion  regarding Schedule II medications because over the past decade the controls that have been put in place to manage the care and cost of medical treatment more efficaciously and efficiently have not produced the desired results. Some of this can be attributed to the pre-SB 863 environment where the MTUS was regularly subverted through the med-legal process. Claims where high level of opioids and other medications were approved for continuing treatment are still in the system and are now subject to IMR. While the adoption of IMR may be viewed as beneficial from a payment standpoint, it is not automatically beneficial in terms of patient care. As the actions of other states have shown, for those who have become addicted or incapacitated because of their overuse of these medications – at the direction of their treating physician – necessary care means more than saying you shouldn’t have had these, or as much of these, so we’re cutting you off.

Also, more needs to be understood about the universe of claims that will be most immediately affected by a closed formulary – long-term, open claims and claims where compensability has been denied, whether completely or whether there is a dispute over a consequence of an accepted claim. As the DWC moves forward with its new Guideline for the Use of Opioids to Treat Work-Related Injuries, there needs to be more specific treatment of legacy claims or any claim where the liability of the employer is in dispute. The MBC’s Pain Management Guidelines, currently under revision, are applicable to all practitioners regardless of the nature of the injury or illness or the mechanism by which a provider is compensated. The DWC would do well to incorporate that work product into the MTUS as a reminder to all providers that, even if the claim is not accepted, it is not “off the grid,” and the MBC requirements still apply.

Finally, the claims administration community needs to take a long hard look at how we review these cases. There is a universe of claims where Schedule II medications are being approved that would not seem to be supported by best medical evidence. Payers are an integral part of the close monitoring of claims where pain management is indicated and determining when it is appropriate to start tapering use of opioids with a goal of returning the injured worker to employment. As noted by the MBC in its draft revised Pain Management Guidelines, when referring to workers’ compensation:

“The use of opioids in this population can be problematic. Some evidence suggests that early treatment with opioids may actually delay recovery and a return to work. Conflicts of motivation may also exist in patients on workers’ compensation, such as when a person may not want to return to an unsatisfying, difficult or hazardous job. Clinicians are advised to apply the same careful methods of assessment, creation of treatment plans and monitoring used for other pain patients but with added consideration of the psycho-social dynamics inherent in the workers’ compensation system. Injured workers should be afforded the full range of treatment options that are appropriate for the given condition causing the disability and impairment.”

As payers, we have the ultimate leverage to make certain treatment of injured workers meets this standard. But if we simply want to find a quicker, better way to say “no” when a request for authorization is faxed in, then a closed formulary will only be yet another attempt at lowering medical treatment costs that failed to meet expectations.