Tag Archives: work-related injury

Obamacare Expands Into Workers’ Comp

The Affordable Care Act (ACA) was created to expand healthcare coverage. Unfortunately, the act has overstepped its bounds and will dip into the workers’ compensation coffers by requiring mandatory reporting for Medicaid beneficiaries.

Medicaid originated in 1965 to cover low-income people with children who had disabilities. State and federal governments fund Medicaid, with the state being the primary administrator. Each state receives direction for the program from the federal government, but eligibility for the program is based on income and assets.

Now the new twist. As of Oct. 1, 2016, state Medicaid programs will be able to recover all of the proceeds from a settlement that were expended on a beneficiary’s behalf. Medicaid will be able to attach a beneficiary’s third-party liability settlement (including workers’ compensation) for the entire amount of the beneficiary’s award – not just the amount allocated to medical expenses. This means funds intended to compensate beneficiaries for pain and suffering, lost wages or any damages other than medical expenses could be subject to the reach of state Medicaid agencies seeking recovery.

This will affect many employers because adoption of ACA has afforded broader coverage under state Medicaid programs, which now include individuals within 133% of the federal poverty level (roughly $32,252.50 for a family of four in 2015) and under the age of 65 years. Medicaid now covers a greater percentage of the workforce.

Since the inception of the Secondary Payer Act (MSP), the primary focus for Centers for Medicare and Medicaid Services (CMS) has been on Medicare reimbursement, primarily because there was a lack of federal direction to the states to recognize Medicaid’s rights and because, before ACA, the majority of Medicaid recipients were unemployed. The lack of recovery process has placed a tremendous burden on state Medicaid programs, because many of them are paying for treatment for individuals who are now covered by workers’ compensation. Medicaid needs to be reimbursed for these expenditures, because voluntary reimbursement has not been successful, resulting in many state programs experiencing insolvency.

The federal laws regarding the rights and responsibilities of recovery from parties in injury cases such as workers’ compensation had to change. These changes translate into digging deeper into an employer’s pockets and taking away more control from the employer.

The National Conference of Insurance Legislators (NCOIL) is developing a model for legislation to assist in recovery efforts. If adopted, this legislation would apply to all workers’ compensation and personal injury claims for medical payments coverage and third party payments for bodily injury from insurers and self-funded primary plans. Rhode Island, West Virginia, Vermont and Kentucky are already exploring “intercept” programs to help comply with the mandatory reporting requirements. Employers that operate in many jurisdictions may have to navigate many different programs as each has distinct reporting and repayment provisions.

Workers’ compensation was never intended to be part of Medicaid. It is only because of the expanded benefit rights from ACA that more employed individuals are Medicaid recipients. Now, not only do employers have to be concerned with MSP rights for Medicare, but they also have to be concerned with Medicaid. While Medicare is a standard set of federal rules, Medicaid will vary from state to state, so compliance is not consistent.

Employees and carriers alike have to be concerned that any settlement arising out of a work-related injury could be subject to “interception” on behalf of the state Medicaid program. No winners here.

While there is no escaping the law, employers can minimize problems by ensuring that they only accept claims that arise out of the course and scope of employment (AOECOE). If an injury did not occur at work or if work did not exacerbate a condition, then it is not a work-related injury and is outside the scope of the Medicare and Medicaid Secondary Payer Acts.

The EFA-STM Program, a book-end solution for the diagnosis and management of soft tissue injuries, has proven effective in helping all stakeholders – employers, physicians and employees – by helping deliver better care for the work-related injury and identifying whether there is a change in condition; i.e. is it work related or not? The program not only is of benefit for the reduction of workers’ compensation claims, it is instrumental in helping all stakeholders navigate the Secondary Payer Acts.

Please join us for the Emerging Trends in Workers’ Compensation Summit in Carlsbad, CA, on Jan. 28, 2016. To get the special ITL rate of $175, use this promotional code: EMERGE2016.

Better Management of Soft-Tissue Injuries: A Case Study

The Gatesway Foundation, a nonprofit organization in Tulsa, OK, had seen an increase in its work-related musculoskeletal (MSD) cases, which the U.S. Department of Labor and Occupational Safety and Health Administration (OSHA) define as injuries of the muscles, nerves, tendons, ligaments, joints, cartilage and spinal discs. These types of disorders, commonly referred to as soft tissue injuries as well as sprains and strains, most often present as injury or pain of the back, neck, shoulder or knee and are a major source of disability. According to the 2010 report by the Bureau of Labor Statistics, the disorders account for 29% of total cases.

The Gatesway Foundation was experiencing both an increased frequency of claims and a rise in the cost of treatments, so, in 2012, the foundation began employing the EFA’s soft-tissue management program to compare pre- and post-loss data to accurately distinguish if there is acute pathology after a work-related injury. The program determines if pathology arises out of the course and scope of employment. A baseline test is conducted at the time of hire and compared with post-incident tests. State workers’ compensation laws may have many differences but have one thing in common: The employer is only responsible for returning the individual to pre-injury status. 

In the past, determination of pre-injury status, especially for soft tissue injuries, was often guess work.  Having objective findings can prevent costly misdiagnosis, unnecessary or inappropriate surgery, prolonged treatment periods and fraudulent claims. Employees also receive better treatment for compensable conditions.

The Gatesway Foundation began its program in April 2013 and had no MSD claims or OSHA recordables until Sept. 17, when a 52-year-old health care provider reported that a patient had fallen on her.  Initially, her complaints included her arm and shoulder. By the time she saw a doctor, her pain included her back.  The physician ordered a post-loss test for comparison with the baseline test.  The comparison showed a minimal increase in lumbar muscle spasms that decreased with stretching.  Two sessions of physical therapy were prescribed, and the employee has returned to work.

In the adjuster’s words, “This could have involved a great deal more expense and possible lost time without this information” from the baseline test. The program enabled the physician to have objective information and allowed the injured worker to receive appropriate care.

The program has drastically reduced the Gatesway Foundation’s soft-tissue-related workers' compensation claims.  The year prior to initiating the program, the foundation’s developed losses were $1 million. In the first six months of the policy year, before starting the program, the developed losses were $500,000. With the implementation of the program, the developed losses in the last six months of the policy year were $30,000.

A detailed analysis of the data revealed a dramatic decrease in the cost per claim when a baseline test was conducted.

Average Cost of Sprain Strain Claim Since Sept 2011
Without Baseline $18,794
With Baseline $2,241
% Reduction With Baseline 88%

This resulted in a dramatic return on investment (ROI)

Reduction in Claims Cost $316,544
Total Program Cost $9,200
ROI (Impact to Claims) 3,441%

The utilization of this book-end strategy allows for unprecedented access to information and allows for better treatment.

Myths About Obamacare and Workers’ Comp

The Obama administration has said that the Patient Protection and Affordable Care Act, enacted into law in 2010 and scheduled to take effect on Jan. 1, will reduce workers’ comp claims because so many additional people will be covered under personal insurance policies. But there is reason to think otherwise.

The first issue is that so many companies are reducing the insurance they offer employees or are cutting employees’ hours so much that they fall below the law’s threshold, so employees don’t have to be covered at all. Employees who aren’t covered under corporate policies or who are underinsured are more likely to make workers’ comp claims.

Here are just a few examples from National Review Online:

SeaWorld used to let part-time employees work as many as 32 hours per week, but the company is dropping the limit to 28 hours to keep them under the 30-hour threshold at which it would be required to provide health insurance under Obamacare. More than 80 percent of the company’s thousands of employees are part-time or seasonal.

Carnegie Museum in Pennsylvania scaled back the hours of 48 of its 600 part-time employees to less than 30 hours a week to sidestep the mandate to provide health-care coverage

Virginia Gov. Bob McDonnell decided to limit the state’s part-time employees to 29 hours per week.

Brevard County, Florida told a local television station that the county’s 300-plus part-time employees will be “capped at something less than 30” hours to save the county about $10,000 per employee in health insurance.

Fatburger  announced that franchises had begun making efforts to keep employees under the 30-hour threshold, including some franchises’ engaging in “job sharing.”

As more companies shift to shorter work weeks, you can expect claims under workers’ comp to keep climbing.

Proponents of Obamare still say it will decrease workers’ compensation costs in several ways, including through the elimination of lifetime caps on medical insurance coverage. The argument is that these caps on employees’ private policies pushed them to file workers’ compensation claims. Really? Many of the leading cost drivers for work-related injuries are Musculoskeletal Disorders (MSD), better known as soft tissue injuries.  According to the Bureau of Labor Statistics (BLS), soft tissue injuries (sprains and strains) accounted for 40% of all work-related injuries that resulted in lost days of work. I do not believe that these types of injuries would affect the lifetime maximum for health insurance, which is typically $1 million.

Proponents also note that a healthcare insurer can no longer refuse to provide coverage because of preexisting conditions, conditions they claim were often not covered by private healthcare and thus encouraged employees to seek coverage under workers’ compensation. While this is a good point, the National Review’s examples show that many people are losing healthcare coverage or will see it reduced, meaning that there will be a greater likelihood of workers’ compensation claims. Yes, there are penalties for not securing healthcare coverage, but they are modest, especially in the early years of Obamacare, and there is no real mechanism for enforcement. The IRS has the responsibility for collecting penalties but has no true powers to do so.

How are people supposed to afford care if their hours have been cut?  You guessed it: workers’ compensation.

Cumulative Trauma (CT) – The "Wearing Out" Disease

It is time to revisit and re-evaluate the value of this statutory condition (L/C 3208.1), which is rapidly becoming yet another undue burden on both employers as well as the workers' compensation system. Cumulative Trauma claims are currently being used, and in many instances abused, by disgruntled employees who are no longer on the payroll. By filing Post-Termination Cumulative Trauma claims, employees are circumventing the legitimate needs of businesses to make personnel decisions based on the employer's current financial situation and needs.

One need only look at the increase in Cumulative Trauma claims that are being filed after an employee has been laid off. While there has been no specific injury that they can point to, many are now claiming that “work” has worn them out and that they are therefore entitled to even more money than that which was bargained for as a part of their employment agreement.

I would not argue that there are no real and viable events that can lead to a compensable situation. Asbestosis would be the best example of an occupational disease that was unknown to either management or their employees for many years. Litigation over asbestosis has been ongoing since then, and I believe that the compensation awarded to injured workers in such cases is justified.

However, when an employee who is hired to do a job that produces no discernible injuries and who has been laid off for legitimate, non-discriminatory reasons is able to work around the system by claiming a cumulative injury, it is time to reassess the value of that part of the Labor Code. We must decide if both parties to this equation are being properly served. Or, is this an abuse of the system that has been allowed to fester too long?

As a starting point for this discussion, when someone is hired for a job whether it is for either brain or brawn, the employer is taking on the whole person as he/she finds them. When the employee arrives at the jobsite, he/she does not simply place their body in the corner to rest while some mysterious spirit does their job. Employers hire the entire package as he/she finds them and is responsible for same. I would then point out that whether or not we like it, all of us are “wearing-out” as the years pass. The question then is, “Why should an employer be responsible for the normal aging process vs. being responsible for a specific injury?” I argue that they should not.

I therefore offer three possible options for consideration. Any or all of these will allow legitimate cumulative injuries to be raised as part of the work bargain while at the same time making employees responsible for their own “wearing out.”

  • Take “cumulative” claims out of L/C [Section 3208.1(b)] so that it reads: “An injury may be either specific or cumulative occurring as the result of one or a series of incidents or exposure which causes disability or the need for medical treatment” and then remove cumulative trauma from L/C 5412 and place it under 5411.

    This will allow employees to file a cumulative trauma claim just as they would a specific injury. This would also place the burden of proof on the employee to show, just as they must now with a specific injury. In other words, what extraordinary events of employment occurred thereby showing how this cumulative trauma is more than just part of the normal “wearing out/aging” process we all face every day.

  • Change the definition of a Cumulative Trauma injury to more closely mirror that of psych/stress claims (L/C 3208.3). In other words, let the employee show how the preponderance of actual work, absent the normal aging process, had caused a “disability” which should be covered.
  • Since the employer is hiring the entire package, we should set up a “depletion” allowance funded by the employee. There should be a percentage taken from each dollar earned which is placed in a fund similar to a 401K. It will belong to the employee and will be portable so that it follows him/her throughout their working career. At the time they become eligible for Social Security, they would have access to this additional fund of dollars. This would result in taking the burden of the normal aging process off the backs of employers.

Regardless of which of these or any others the legislature feels would be the best solution to this growing problem, the real point is that this is currently just another further drain on employers and therefore the California economy and needs to be addressed.

Baseline Testing: Book End Solution – Does It Qualify as Business Necessity?

Congress enacted the Americans with Disabilities Act in 1990 which included the terms “job-related and consistent with business necessity” in Section 703(k) of Title VII as part of a Congressional compromise. The amendment to the act which went into effect in 2008 did not affect the business necessity provision.

Case law regarding business necessity is very limited; however, a recent case in point is Atkins v. Salazar, 2011 U.S. App. LEXIS 25238 (5th Cir., Dec. 12, 2011), in which the Fifth Circuit issued an instructive opinion analyzing the business necessity defense in the context of diabetes.

The Fifth Circuit described the business necessity standard as follows:

For a qualification to be “job-related,” “the employer must demonstrate that the qualification standard is necessary and related to 'the specific skills and physical requirements of the sought-after position.'” Similarly, for a qualification standard to be “consistent with business necessity,” the employer must show that it “substantially promote[s]” the business' needs.

The court further noted, based on an earlier ruling, that it must “take into account the magnitude of possible harm as well as the probability of occurrence … the probability of the occurrence is discounted by the magnitude of its consequences.”

Under the Americans with Disabilities Act, not only must a medical exam be job-related, it must also be consistent with business necessity. This means that the medical exam must relate to the essential functions of the job. The medical exam must test the ability to perform the primary functions of the job. For example, if you are a cashier at a grocery store, the essential functions of your job would be to ring people up and help them bag their items. Any medical exam your employer required would have to be related to how you perform those functions in order to be consistent with business necessity. It is important to note that as long as the medical exam evaluates some function of the job, it should satisfy the elements of business necessity.

Under the Americans with Disabilities Act, an employer may have the ability to make disability-related inquiries or require medical examination. After the applicant is given a conditional job offer, but before starting work, an employer may make disability-related inquiries and conduct medical examinations, regardless of whether they are related to the job, as long as it does so for all entering employees in the same job category (post-offer). After employment has commenced, an employer may make disability-related inquiries and require medical examinations only if they are job-related and consistent with business necessity.

The Americans with Disabilities Act requires that all medical information obtained during such inquiries or testing be treated as confidential medical information. While this provision covers all employees, only disability-related inquiries and medical examinations are subject to the Americans with Disabilities Act's restrictions. A disability-related inquiry is defined as asking questions or testing that is designed to elicit information about a person's disability. Therefore, questions or testing that is not designed to ask or evaluate information about an individual's disability are not prohibited under the ADA.

A medical test as defined under the Americans with Disabilities Act is a procedure or test that seeks information about an individual's physical or mental impairments or health. Factors that determine if it is a medical test include:

  • whether the test is administered by a health care professional;
  • whether the test is interpreted by a health care professional;
  • whether the test is designed to reveal an impairment or physical or mental health;
  • whether the test is invasive;
  • whether the test measures an employee's performance of a task or measures his/her physiological responses to performing the task;
  • whether the test normally is given in a medical setting; and,
  • whether medical equipment is used.

The topic of medical testing, especially functional testing, is a controversial subject. In the fall of 2009 two major case precedents brought to light these very issues — Indergard vs. Georgia Pacific and the class action lawsuit brought against Sears. On September 29, 2009, the U.S. Equal Employment Opportunity Commission (EEOC) announced a record-setting consent decree resolving a class lawsuit against Sears, Roebuck and Co. under the Americans with Disabilities Act for $6.2 million.

These recent rulings bear out that the Functional Capacity Evaluation (FCE) may be a medical exam. Even when classified as medical evaluations, Functional Capacity Evaluations don't physically correlate with true physiological function. The issue becomes whether or not these tests are able to accurately or objectively test for functionality. These rulings illustrate that Functional Capacity Evaluations that contain validity measurements that are subjective observations, do not correlate with effort and are not consistent with affected body parts are not legally defensible.

As we have seen with the Indergad and Sears cases, courts are examining these issues closely and unless there is an objective assessment, the employer or carrier is left virtually unprotected. For ADA compliance, the testing needs to be repeatable, objective, and address functionality.

Under the Americans with Disabilities Act, an employer may not require a current employee to undergo a medical examination unless the examination “is shown to be job-related and consistent with business necessity.” 42 U.S.C. § 12112(d) (4) (A). This section applies to all employees, whether or not they are disabled under the Americans with Disabilities Act. The Indergard decision clearly demonstrates the need for an objective measure of performance that must conform with business necessity.

In addition, recent case law — EEOC vs. Celadon Trucking — illustrates that if an individual does not meet the essential functions of the job, an employer needs to enter into the interactive process for the position for which they were applying or for any other open position for which the candidate is qualified.

Given all the legal mandates for the ADA and EEOC, coupled with state workers' compensation laws and Federal Mandatory reporting issues for work-related injuries, why do post-offer pre-placement tests? A better solution is baseline testing or a book end solution.

The Americans with Disabilities Act regulates testing that has the potential to evaluate a disability. So if a baseline test is non-invasive, captures the essential functions of the job with not only a reliable validity measurement but with an objective assessment of the muskuloskeltal system and is not read at the time of testing, it is not only acceptable under ADA but technically outside the scope. Why? Data is not evaluated at the time of the baseline test so no disability is identified and no medical questions are asked. It can be done at post-offer or with existing employees.

The book end solution is completed when there is a work-related incident, another test is performed under the workers' compensation pending case, and the results are compared. In the work-related case, the medical evaluation post loss test is allowed and not a violation of the Americans with Disabilities Act. Appropriate releases are signed prior to conducting the baseline testing, and the data is kept confidential. If no work-related injury occurs, the baseline data is never interpreted.

In summary, according to the Fifth Circuit ruling in the Atkins case, for a qualification standard to be “consistent with business necessity,” the employer must show that it “substantially promote[s]” the business' needs. The business needs in the case of baseline tests are to provide better and faster treatment for the injured worker and to accept claims that arise out of the course and scope of employment.