Tag Archives: permanent disability

How to Know When a Claim Should Settle

Case evaluation is part art and part math. And we’re not even talking calculus; we’re talking arithmetic.

A surprisingly large number of lawyers tell me they’re bad at math. They’re not alone. CNN anchor Chris Cuomo recently had his math corrected by co-anchor Michaela Pereira while discussing Powerball lottery numbers.

 

You can’t come up with a realistic evaluation of a workers’ compensation claim if you can’t quantify the component parts: permanent disability, life pension, Medicare-eligible and non-Medicare-eligible future medical.

In mediation caucus, when parties give me their offer or demand, I often ask how they came up with that number. I want their best argument, the one that will convince the other side. The first answer I get is often vague, something like, “We thought it would settle the case.” Workers’ compensation professionals often neglect running the numbers. Getting parties to see the same numbers moves them toward settlement.

I recently got a call about an offer in a personal injury case. I questioned the plaintiff’s attorney about what he thought this number represented. His answer didn’t sound right to me. I asked him, “Did you ask them how they came up with that number?” No, he hadn’t. I suggested the attorney ask opposing counsel that question to allow things to move forward, toward settlement.

Random demands and offers are unlikely to settle a claim. Before you assume the other side is being unreasonable or before you respond, ask: How did you get to that number?

How Many Pieces Go Into a Settlement?

Question: How many pieces are involved in a workers’ compensation settlement?

Answer: Probably more than you think.

The more issues there are in a negotiation, the greater the opportunity for give and take. This adds flexibility for parties to shape a settlement acceptable to all. Trading across issues in negotiation is called “logrolling.”

Every case has its own unique issues. Here is a partial list, some obvious, some I have seen people miss.

Income issues

Disability percentage, including whether the disability is caused by an industrial injury

Apportionment

Applicable date of injury

Past payments: When were permanent disability payments supposed to start? Was the right rate used? Were past payments properly characterized as permanent disability (PD), or should they have been temporary disability (TD)? Is there a TD overpayment?

If life pension payments will be due, when should they start?

Average weekly wage: Have you taken into account overtime and the value of non-cash compensation?

Ability to perform future work

Return-to-work issues: Will the employer provide modified work?

What about training? Check California law about computer purchases.

Liens

Penalties

Medical issues

What are the accepted body parts?

What expenses are reasonable and necessary? This can include issues about support services.

What is the appropriate medical specialty?

Is the treatment the applicant wants compensable?

Is the applicant’s overall medical condition likely to shorten life expectancy?

SB 863 Update: Is the California Workers’ Compensation System Better Than it Was One Year Ago?

The passage of SB 863 in California came with a promise of higher benefits for injured workers and lower costs for employers.  Just over one year later, where does this promise stand?There has been improvement, but there is still a long way to go.

I recently attended and spoke at the California Workers’ Compensation & Risk Conference in Dana Point, California, where, as expected, the major focus was SB 863.  Just over one year ago, employers and labor came together at the end of the legislative term to pass a bill designed to improve benefits for workers and reduce costs for employers.

I moderated the opening session, which was a diverse panel featuring representatives from employers, carriers, injured workers, and medical providers. My first question to the panel set the tone for the rest of the session, and for the rest of the conference. That question was: “From your viewpoint, is the California workers’ compensation system better off now than it was a year ago?”

Before you can gauge the success of SB 863, you must remember where we started.  Permanent disability (PD) benefits to injured workers had been cut significantly under prior reforms, so injured workers were unhappy with the system. Employers were equally unhappy, as workers’ compensation costs in California had been increasing steadily for years.

With a system that both injured workers and employers were very dissatisfied with, something had to be done.

SB 863 provided an immediate increase in permanent disability benefits for accidents occurring after 10/10/2013.  PD is being increased by a total of 30%, phased in over two years. There is also a $120 million fund to compensate certain workers who are unable to return to their pre-injury job because of physical restrictions.

The savings for employers are to come over time.  The largest of the savings under SB 863 are to come from changing the processes for liens and medical disputes. Thus far, these changes are receiving mixed reviews.

On the plus side, liens have fallen significantly since a fee for filing them was implemented Jan. 1. Some of the drop can be attributed to the fact that medical providers filed all the liens they could before the fee took effect. However, there clearly has been a significant drop in new liens filed.

The filing fee is being challenged, though, by a lawsuit that seeks to have it declared unconstitutional, and some of the anticipated savings from SB 863 are likely to be eroded if the courts don’t uphold the fee.

The bill also restructured the medical dispute resolution process, with the introduction of the Independent Medical Review (IMR). The IMR process was modeled after successful programs in states such as Texas. It is designed to have physicians, not judges, deciding disputed medical issues. It is also designed to expedite resolution so appropriate treatment is provided to injured workers in a timely manner. The IMR process clearly remains a work in progress. First, 10 months after implementation, the process is still operating under emergency rules. Until the final rules are in place, those participating in the process will face uncertainty. Second, it appears there is significant gaming of the IMR process. Approximately 16,000 requests were filed in both August and September of this year alone, significantly more than anticipated.  In one month, there were more disputes filed than in an entire year for the same process under group health.  Employers alone bear the costs of the IMR process, so those filing all these requests may be attempting to cripple the system at absolutely no cost to themselves.

The issues facing the IMR and lien processes illustrate what many see as the major impediment to delivering cost savings for employers in California: There are special interest groups that do not want the system to become more efficient and self-executing, because they make a great deal of money off the chaos.

In her speech at the conference, Christine Baker, director of the California Department of Industrial Relations, expressed concern about “significant gaming.” While this gaming is not unique to California, from my national viewpoint its impact on the workers’ compensation system is more profound in California than in other states.

The biggest challenge is that the workers’ comp system in California is flawed by design. No other state has issues with medical liens in workers’ compensation. Bills are reduced to fee schedule with no further disputes seeking additional payment. Treatment that is not authorized is subject to litigation over necessity. If the employer prevails, “no” means “no.”  In California, “no” means “file a lien and litigate further.”

Another issue facing California employers is continuous trauma (CT) claims, which can be filed for a 1% aggravation of a pre-existing condition. The legislature recently fixed this problem for the National Football League by passing a bill specifically limiting CT claims by professional athletes, but CT claims in California continue to be a significant cost driver for other employers, and their frequency has more than doubled over the last 10 years.  It is common in California for injured workers to file both CT and specific injury claims for the same body part.  In no other state are CT claims as prevalent and embedded into the workers’ compensation system as they are in California.

In addition, allocated loss adjustment expenses (ALAE) covering items such as bill review, utilization review, and litigation costs are higher in California than other states, and these costs are increasing at an alarming rate.

The gaming of the system significantly increases the costs for employers and delays the delivery of benefits to injured workers.  The main stakeholders in workers’ compensation, the employers and workers, need to work together so that benefits can be delivered faster and at lower cost.  SB 863 was a step in this direction, but there is more work to be done. The people who worked together to make SB 863 a reality need to continue to work together to preserve the savings elements designed into the bill.  If they can do this, perhaps California can finally achieve some stability in its workers’ compensation marketplace, which would benefit both employers and injured workers.

25 Axioms Of Medical Care In The Workers Compensation System

  1. The right medical care at the right time is always in the best interest of the injured worker and almost always will result in the lowest claims costs.
  2. The right medical care at the right time will (almost always) result in an earlier return to work with less permanent residual disability.
  3. Evidence-based medicine is the right care for the legitimately injured workers. (There is a hierarchy on how to apply evidence-based medicine).
  4. To control worker's compensation medical costs requires both a fee schedule and an ability to control the frequency and the appropriateness of treatment. One without the others usually results in massive increase in medical costs for the system.
  5. The medical treatment fee schedule should be clear, easy to use, accurate and reflect the latest technology.
  6. A fee-for-service system may result in incentives for physicians to over-treat, inappropriately.
  7. In many jurisdictions Worker's Compensation is generally the last fee-for-service system.
  1. As long as workers compensation uses a fee-for-service system, medical utilization review is needed to make sure that the physicians will treat adhering to evidence-based medicine.
  2. Pharmacy utilization is problematic because of the “Medicalization” of the general population. (Medicalization is the direct advertising of symptoms and diagnoses to the general population by drug manufacturers, resulting in an overuse and/or misuse of some types of drugs and therapies).
  3. There is a significant problem with “off label use” of drugs in the worker's compensation system. (Off Label is the use of a drug for treatment that was not the reason for its approval from the FDA).
  4. Medical decisions should be made by medical professionals. Most Workers' Compensation judges, attorneys, and claims adjusters have little to no formal medical training and are not medical professionals.
  5. Poorly (inappropriate) placed incentives will result in poor medical outcomes. (There are several studies that demonstrate that allowing physicians to do self-referrals or to dispense pharmacy goods from their offices will usually result in a utilization of unnecessary services or inappropriate usage of drugs).
  6. Even if the doctor is not dispensing the drugs, opiates require regular visits to the doctor for renewal of the prescription and also may involve expensive drug testing; so there is a financial interest on the part of some doctors to prescribe opiates.
  7. Some physicians who prescribe opiates do not fully appreciate the addictive power of the drugs that they are using or the difficulty in detoxing the patients.
  8. There are currently enough treating physicians and specialty physicians in most urban areas; however there are not enough physicians (treating, orthopedic or neurosurgeons, etc.) in the rural areas to meet the demand. This problem will only get worse as the population ages and more doctors retire. It will also get worse if physicians leave workers' compensation due to the demand for their services due to the implementation of the federal universal health care programs.
  9. Many surgeons and other physicians want to perform their craft (do surgery, provide injections, etc.). They truly believe that their surgery or injections will work even if the prior treatments have not been successful or if current evidence-based medicine says surgery is not appropriate.
  10. Every patient looks like a good candidate for an MRI when there is an MRI machine in the doctor's office.
  11. Not every person with a surgical or potentially surgical condition is a good surgical candidate. Though pre-surgical psychiatric evaluations are required for spinal cord stimulators (post spine surgery), the same is not true for many other surgeries.
  12. It is difficult for a patient who is in intractable pain to believe that strong medications (including opiates) are not appropriate or are not good.
  13. It is difficult for a patient who is in intractable pain to believe that not having back surgery will have the same ultimate result as having surgery when the surgeon is saying (with confidence) that the surgery will cure all. Even though current evidence-based medicine says differently.
  14. Because “doing something is better than doing nothing” when the patient is in intractable pain, if the surgeon says surgery will not be successful, the injured worker will attempt to find someone who will say that the surgery “will be more successful than not having surgery,” and will then attempt to have the surgery.
  15. Patient advocacy is the application of appropriate treatment and patient encouragement that allows the patient to remain as functional and productive as possible.
  16. Patient advocacy does not always mean the pursuit of treatment a patient desires.
  17. Patient advocacy may require the physician to decline to do the treatment sought by the patient when that treatment is inappropriate.
  18. In Workers'Compensation, there are many (known and unknown) underlying non-industrial, psyche/social issues that may hinder or completely stop optimum medical recovery.

A Tale Of Two Broken Hearts

Imagine, if you will, twin boys born on some sunny day not too long ago. Neither one of the boys, nor their parents, nor even the delivering doctors knew that both boys were born with a heart condition. This congenital heart anomaly, a patent foramen ovale, left a small hole open in the walls of each brother’s heart, exposing them to higher risks of stroke.

These twin brothers, let’s call them Keven and Kenny, seemed to be joined at the hip. They enjoyed all the same activities, all the same food, went to the same school, and, when they decided it was time to purchase homes of their own, bought two adjacent houses. Being as close as they were, they tore down the fence between their properties and right in the middle built a small gazebo where they could enjoy breakfast with their families every weekend morning.

In choosing a profession, Keven wanted a job that would keep him physically fit while allowing him to serve the community and even save the lives of his fellow citizens. So he became a firefighter. The job kept him physically fit and allowed him to maintain a clean bill of health … except for that congenital heart anomaly, which no one knew about.

Kenny, on the other hand, decided to pursue the absolute highest calling — the profession which the bravest and noblest aspire to. He didn’t want to become a physician, or an engineer, or even a scientist. He decided to become a workers’ compensation defense attorney (not unlike your humble author).

Still, the two twin brothers were in every other respect exactly alike, and spent every Sunday morning having breakfast together in that shared gazebo, along with their wives and children.

Then, tragedy struck! One morning, as Kenny and Keven sat next to each other, enjoying the morning air, each with a newspaper in the left hand and a piece of toast in the right, they suddenly sat straight up, looked into each other’s eyes, and both collapsed to the ground with strokes.

Their families rushed them to seek medical treatment and, fortunately, each of the two brothers recovered. Before long, they were sitting next to each other in their shared gazebo, when Kenny had an idea. Why not file workers’ compensation claims for the strokes — surely, the stress of being a firefighter caused Keven’s stroke. And, if being a firefighter is stressful enough to cause a stroke, then being a workers’ compensation defense attorney is even more so!

As the cases progressed, each of the two brothers agreed to use an Agreed Medical Evaluator, and each AME came to the same conclusion: the AMEs both found that, in their respective cases, the “stroke … occurred in an individual whose only major risk factor for stroke in terms of this industrial analysis appears to be his congenital heart defect … all of his conditions apportion 100% to non-industrial causation.”

Kenny was crushed — his case was effectively at an end as the workers’ compensation Judge ordered him to take nothing. After all, the Agreed Medical Evaluator had found that there was only one cause for his stroke — a non-industrial condition acquired at birth. How could any legal system, short of denying a defendant-employer due process, require workers’ compensation payment for something so patently and obviously unrelated to any work causes? Keven’s case, on the other hand, was just warming up.

Keven’s attorney argued that, under Labor Code section 3212, “any heart trouble that develops or manifests itself during a period while [the firefighter] is in the service of the office, staff, department, or unit … shall be presumed to arise out of and in the course of the employment.”

Now, isn’t that presumption rebutted? After all, as in both the case of Kenny and Keven, the Agreed Medical Evaluators have found that the sole reason for both strokes was the congenital heart condition — exactly 0% of the causation had anything to do with work as a firefighter or as a workers’ compensation defense attorney.

Well, as Kenny feels once again misused and ignored by the system he so gallantly serves, Keven has another line of defense: “The … heart trouble … so developing or manifesting itself … shall in no case be attributed to any disease existing prior to that development or manifestation.”

Keven’s attorney would have to prove that Keven is a firefighter — something he could establish without much difficulty (showing up at the Board with a fire axe is not recommended, even if you believe you’ve got “an axe to grind”). Then, he would have to prove that Keven’s injury could be considered “heart trouble.” This should be no problem, considering the fact that case-law has established that there are very few non-orthopedic injuries that might be considered not heart trouble (Muznik v. Workers’ Comp. Appeals Bd. (1975)).

But what about that pesky requirement of “in the service of the office …” as required by Labor Code Section 3212? If the firefighter is sitting in his and his brother’s gazebo, drinking coffee on a beautiful Sunday morning and indulging in that antique of an information-delivery device that people so often read, is he really in the service of the fire department?

For example, the Court of Appeal in Geoghegan v. Retirement Board (1990) upheld a retirement board’s denial of benefits for a firefighter who sustained a heart attack while skiing.

Now, before the applicants’ attorneys out there start mumbling something about a ski-lodge burning and a San Francisco firefighter being called in to ski down the slopes and shovel ice onto the flames, your humble author assures you, this was a vacation. The treating physician found that the heart attack was caused by the altitude and Mr. Geoghegan had recently passed the fire department’s physical exams with skiing flying colors.

The Board of Retirement had rejected Geoghegan’s application for retirement benefits, and he appealed. There, the Court of Appeal rejected Geoghegan’s argument that Labor Code section 3212 applied and that he should be, at that very moment, counting his money instead of appealing his case, because the trial court had found that “the conclusion is inescapable that plaintiff’s disability was due to the myocardial infarction caused by the cold and altitude encountered while skiing.”

Previous decisions, as cited by the Geoghegan Court, included Turner v. Workmen’s Comp. App. Bd. (1968) and Bussa v. Workmen’s Comp. App. Bd. (1968). In Turner, a police officer’s heart attack sustained while on duty after a day off spent abalone fishing was found non-industrial, and the presumption of Labor Code Section 3212.5 was rebutted. In Bussa, a firefighter’s exertions on a second job were used to rebut the presumption of industrial causation for his heart attack.

Well, Keven’s attorney could easily fire back that those three cases can be distinguished because they don’t touch on the anti-attribution clause (“[t]he … heart trouble … so developing or manifesting itself … shall in no case be attributed to any disease existing prior to that development or manifestation.”) And, as the Agreed Medical Evaluator in Keven’s case had found that 100% of the disability was caused by a congenital heart defect, that leaves (let me get my calculator here …) 0% available for causes not “attributed to any disease existing prior to that development or manifestation.”

Geoghegan was already a firefighter when he sustained his heart attack; Turner was already a police officer when he sustained his heart attack; and Bussa was already a firefighter when he had his heart attack. On the other hand, each of these cases showed an injury attributed to something other than a condition in existence prior to the start of the applicant’s career with the fire or police department.

Keven, on the other hand, was not exerting himself at all — he was having coffee with his twin brother and their respective families over a relaxing Sunday breakfast.

But doesn’t something seem strange about sticking the fire department with the bill for a condition which existed at birth? After all, we’re talking about medical care and temporary disability and permanent disability and maybe even a pension. That’s not to mention the litigation costs. The city in which Keven is a firefighter could be deprived of a firetruck or several firefighters’ salaries if it is liable for Keven’s stroke.

Your humble author directs you to the recent case of Kevin Kennedy v. City of Oakland. Mr. Kennedy, a firefighter, had sustained a stroke while he was off work and filed a workers’ compensation claim against the City of Oakland, reasonably arguing that the stroke was “heart trouble” as contemplated by Labor Code section 3212. After an Agreed Medical Evaluator found that Mr. Kennedy’s stroke was entirely caused by a congenital heart anomaly, and had nothing to do at all with any work-related activities or trauma, the workers’ compensation judge found that the City of Oakland was not liable for the injury.

Mr. Kennedy’s attorney made a fairly logical argument: Labor Code Section 3212 prohibits the attribution of heart trouble to “any disease existing prior to that development or manifestation” of heart trouble. Additionally, the same Labor Code section requires heart trouble in firefighters to be presumed industrial, although this presumption may be rebutted by other evidence. Here, there is no evidence available with which to rebut this presumption, because the AME found that 100% of the causation should be attributed to the congenital heart condition.

The workers’ compensation Judge, however, found that Mr. Kennedy could not recover — based on the opinions of the AME, the stroke had absolutely nothing to do with Mr. Kennedy’s employment.

Applicant petitioned for reconsideration, and the Workers’ Compensation Appeals Board granted reconsideration, reasoning that Mr. Kennedy’s patent foramen ovule was a condition existing prior to the development or manifestation of the stroke, and that Labor Code Section 3212 necessitated a finding of compensability. The Court of Appeal denied defendant’s petition for a writ of review.

In issuing its opinion, the Workers’ Compensation Appeals Board was consistent, echoing a similar decision in the matter of Karges v. Siskiyou County Sheriff, finding a deputy sheriff’s congenital heart condition compensable under Labor Code section 3212.5.

So … what’s to be done? Common sense and a basic inclination for fairness militate against this outcome. We’re not talking about a weak heart being aggravated by work conditions, but rather a firefighter at peak physical fitness succumbing to a condition with which he was born and an illness in which his work played no part. It’s entirely possible that if Mr. Kennedy had spent his life behind a desk, much like his imaginary twin brother Kenny, his heart would have been strained by office junk food and a sedentary lifestyle, much like your humble author’s.

As promised, here are a few crackpot arguments to be used only by the most desperate in such cases. Your humble author doesn’t know if these will work, but if they are the only alternative to writing a big check, perhaps they are worth exploring.

  1. As with the Karges decision, the argument should be raised that Labor Code Section 4663 is the more recent law, and therefore reflects the more current legislative intent. In litigated matters, judicial authority should be used to further this Legislative intent and not find impairment caused entirely by non-industrial factors to be compensable.
  2. In the writ denied case of Michael Yubeta v. Workers’ Compensation Appeals Board, a corrections officer’s claim for heart disease was ruled non-compensable when the Agreed Medical Evaluator found cardiovascular disease manifested prior to the start of his tenure with the Department of Corrections. In the Kennedy, matter, the defense might argue that the patent foramen ovule is the “heart trouble” contemplated by section 3212, and it manifested itself at birth, before the term of service with the fire department. Mr. Kennedy’s stroke, being directly and exclusively caused by this manifestation, should not be presumed compensable.

    After all, the poor guy had a hole in his heart — not in the sense that he couldn’t love or open up to other people, but the wall to his heart had an actual hole. Studies had shown that this practically guaranteed that he would sustain a stroke at some point in his life. (Understandably, this one is a stretch).

  3. Webster’s dictionary defines “attribute” as “to regard as resulting from a specified cause.” However, as the Labor Code does not use the words “apportionment” and “attributed” interchangeably, we can only suppose that they mean two different things. So, while section 3212 prohibits us from attributing heart trouble for purposes of AOE/COE (Arising Out Of Employment/In The Course Of Employment), perhaps we are still permitted to “apportion” the heart trouble to non-industrial causes. If such is the case, the Kennedy matter should have found the stroke compensable, and yet apportioned 100% to non-industrial causes.

    In other words, Mr. Kennedy should get the medical treatment but not the permanent disability indemnity.