C&R Set Aside Over MSA Defects: Attorney Fee Made Proceeds Insufficient to Fund MSA

July 15th, 2016 2 comments

Happy Friday, dear readers!

Your humble blogger has heard many-a-whispers of a case making the rounds (Alvarenga v. Scope Industries) discussing the interplay of Medicare Set-Asides (MSA) and Compromise and Release settlements.  From the looks of it, the parties entered into a C&R which was approved, but then defendant sought to set aside the Order Approving on the grounds of mutual mistake, to wit, that the MSA did not require Centers for Medicare & Medicaid Services (CMS) approval.

The case is an interesting one for many reasons.  The WCAB provided a discussion of CMS procedures and ultimately did rescind the order approving compromise and release, but not because of any allegations of mutual mistake – the WCAB found the settlement inadequate and that applicant was not properly advised of the impact the C&R would have on his Medicare benefits going forward.

With respect to CMS and MSA the WCAB panel noted that if the injured worker is (1) a Medicare beneficiary; or (2) has a reasonable expectation of becoming a Medicare beneficiary in the next 30 months, the parties must protect CMS’s interests.  In other words, you can’t just shift the obligation to pay for medical treatment for an industrial injury onto the federal government.  (42 USC sec 1395y(b)(1); identifying Medicare as secondary payer to workers’ compensation).

CMS, out of a workload consideration, won’t even review (and thus won’t approve) settlements for under $25,000 where the injured worker is a Medicare beneficiary, or $250,000 where the injured worker may become a Medicare beneficiary.

Accordingly, the WCAB pointed out that there is no requirement of CMS approval at all, and that approval by CMS of a Medicare set-aside will only be available to the parties when the workload threshold is met as above.

However, the settlement was still set aside on adequacy grounds.  The MSA came back at $24,079.23, and the C&R was for $39,000, less $11,040 for PDAs and $5,850 for attorney fees.  So the applicant was left with less than enough to cover the medical expenses as projected by the MSA.  But, had applicant’s counsel waived the attorney fee on the MSA portion of the settlement, the “new money” would have been $24,079.23 for the MSA and an additional $1,642.66 for applicant.

But… isn’t the attorney supposed to take a fee out of the MSA amount?  The WCAB has held that attorneys get a piece of the MSA as part of their fee.  Let’s take a case where the parties are five years out past the date of injury (so no chance of a new and further claim) and all TTD and PD has been paid (prior to representation of the injured worker).  All that’s left if the future medical care and for whatever reason, applicant is not entitled to a voucher.  If the MSA comes back at $24,000, and there’s no other benefit to settle, either the applicant’s attorney is entitled to a fee off the  $24,000 C&R, in which case there’s not enough money left to fund the MSA (leaving just $20,400/$24,000) or the attorney is not entitled to a fee.  Which one is it?

Additionally, the panel held that the C&R is inadequate because “based on the language contained within the C&R, it does not appear that applicant was adequately advised of the effect of the parties’ failure to conduct CMS review of the MSA.  If the parties wish to enter into a C&R with an MSA arrangement without obtaining CMS review, applicant should be advised of the fact that CMS may withhold future Medicare benefits if CMS deems the settlement to be inadequate.”   Well… in that case… why is there an attorney fee at all?

The injured worker is ponying up 15% of his settlement for a reason – the attorney is there to advocate for his interest and to advise him of his rights and risks in litigating his case.  If the burden is on the defense to advise a represented applicant of the effects of a settlement, should the WCAB award that 15% right back to the defendant for doing the applicant’s attorney’s job?

As a workers’ compensation defense attorney, I have the privilege of working with lots and lots of applicant’s attorneys.  Some are nice, some are jerks.  Some are competent, and some aren’t.  There are some that put the injured worker’s interests first, and some that will guide their clients by the nose to the operating table for needless but crippling surgeries.  But in all of these cases, the injured worker has his remedy: if the applicant’s attorney breaches his duty of loyalty and competency, there are available actions such as (1) state bar discipline; and (2) malpractice actions.

It’s hard enough being a defendant in California’s workers’ compensation system – let’s not make defendants serve the role of a second applicant’s counsel as well!

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Pokemon Go and Workers’ Compensation

July 13th, 2016 No comments

Alright, dear readers, bear with me, because you’re about to get a dose of two-parts nerd and two-parts dork.

For the longest time, Nintendo has had a franchise called “Pokemon” in which the players collect and train fictional monsters.  Well, modern technology has allowed this franchise to go one step further: the Pokemon Go game allows players to use their GPS and a basic map function to search for these monsters in the real world, and to “catch” them by using the phone’s camera function.

If I haven’t lost you yet, dear readers, I’m about to tie this into workers’ compensation.

The “monsters” appear just about everywhere, but especially in publicly frequented areas and businesses – at Whole Foods by the deli, on the street in front of Pottery Barn, in the waiting room at the local Dignity Health hospital.  You know where else they appear?

While crossing the street.  While driving. While standing in a dangerous area.  This addicting little game which seems to be garnering a lot of attention on social media is also providing a vehicle for a lot of accidents and injuries.  Not only can employers expect their own less-attentive workers to sustain injuries due to being oblivious or taking ridiculous chances while going about their duties, but third parties can be expected to be careless as well.

A Man "catches" a monster as his wife gives birth.

A Man “catches” a monster as his wife gives birth.

Just a thought, dear readers – given this latest craze, employers left and right can expect to lose productivity from their employees as they chase virtual monsters all around them.  Let’s not double the loss by seeing a spike in “work-related” injuries.

Some ways to combat this?  Well, if the employer provides the actual phones for the employees, care should be taken to restrict which applications can be loaded onto the phone (hint: Pokemon game should probably be blocked).

If the employees are bringing their own phones, clear instructions should be made to ban such activity, and, really, the careless use of the phone while walking around or driving.

Finally, if there are any injuries reported that make you scratch your head and ask “who could possibly be THAT oblivious?!?” it’s time to investigate possible smart phone use.  Even if this doesn’t lead to an outright denial of the claim, it may give rise to a reduction of employee benefits under Labor Code section 4551 (employee serious and willful misconduct).

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Too Disabled for Police Work; Ok For Strongman Competitions?

July 11th, 2016 No comments

Work restrictions: the patient is prohibited from any law enforcement activity.  However, he is able to participate in strongman competitions.

Crazy, right? Well, welcome to California, my friend!

Happy Monday, dear readers.  We’ve all heard of Bogdan, the world’s strongest man:

But in our corner of the world, California has its own “strong man” competitions and recently, charges have been filed against a Santa Barbara police officer for competing in strongman competitions while receiving disability benefits.

Presently, this is just an allegation, but we’ve seen similar instances on this blog such as (1) firefighters competing in MMA; and (2) professional dancers performing in car commercials as hamsters while on disability.  Accordingly, this wouldn’t be the first time allegations have flown of an injured worker displaying disability for the worksite and super-human ability away from the eyes of the employer.

Until details emerge, of course, the office charged is entitled to the benefit of the doubt.  Not all injuries preclude all physical activities, and if the strong-man competitions were made under physician supervision, there’s an argument against a finding of Fraud.

The takeaway, for us in the workers’ comp world is that it makes sense to check up on people.  The longer the claimant is on TD, the more it makes sense to check up on him or her.

Most investigator offices will offer you services in the form of a social media or online check, but there are a few basic tricks you can do yourself:

  1. Have you done a basic search on Facebook or Twitter?
  2. Have you set up a google alert for your claimant’s name?
  3. Have you checked any professional updates on LinkedIn?

Just some ideas, dear readers.

See you on Wednesday!

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Happy Independence Day!

July 4th, 2016 No comments

Helllllllooooo dear readers! Your humble blogger is taking a quick break from his BBQ and his fireworks and his flag waving to wish you a happy independence day!

Given the recent news out of Great Britain, it seems like it would be a bit of the ol’ hypocrisy if the Crown were to hold a grudge against the U.S. of A for shrugging off the control of a distant empire.

Anywho – I hope you folks get to enjoy the day and, if you’re really such a glutton for punishment that you’re reading this blog post on Monday, I offer you these thoughts:

We are a people who engage in self-governance.  Whether on the Federal level or in the halls of power in Sacramento, we are, effectively deciding our own fate.  Accordingly, we have exactly the legislature we deserve and exactly the workers’ compensation legislation we have chosen (collectively speaking).  I know this is a thought that is likely to induce nightmares, but it is also a cause for hope: we still have it in us to fix the problems we deal with on a day to day basis.  That’s a reason to wave our flags, grill our burgers, and blow up small pieces of our air-space today.

Here’s another thought – just something else to consider: We often give thanks to our veterans, especially on days like Independence Day.  Freedom is won and freedom is kept not by the benevolence of our would-be conquerors, but, often enough, by the courage and blood of our armed forces.  The best way to thank the men and women who served and survived injury for our country? Be mindful of your fireworks.

It comes as little surprise that explosions overhead of brightly colored fireworks can bring back memories of explosions everywhere of not-so-bright IEDs, RPGs, and a whole host of small arms.  Be mindful of the veterans that live near you and don’t turn their 4th of July into another Fallujah rerun.

Ok – that’s all I’ve got.  Let’s have some fun, celebrate, and get back to work tomorrow with a new zeal to see claims denied!

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And on the 6th Day, He Communicated the UR Determination. And it was good.

June 29th, 2016 No comments

In Russia, they call it “Dein.”  In Israel they call it “Yom.”  In Spain (and most of South America), they call it “Dia.”  And, in California’s workers’ compensation system, we call it confusing.

What is a day? When does it start and when does it stop?

In the recently writ denied case of Green v. Elle Placement, an RFA was received by facsimile at 6:18 p.m. on Friday, April 17, 2015, and a UR denial issued on Monday, April 27, 2015, at 6:18 p.m.  Treating the RFA as received on Monday, April 20, the following Monday, April 27, 2015, would have been the 5th working day.  Was a 6:18 p.m. facsimile late? Or was it still part of that 5th working day?

Well, the matter proceeded to trial (this is for an artificial disc replacement arthroplasty and two days inpatient stay, so it is probably worth the litigation dollars), and the WCJ found that if a business day ends for an RFA at 4:30 p.m., then the business day likewise ends for a  UR denial at 5:30 p.m., rendering the UR decision invalid as untimely.

The WCJ cited Labor Code section 4600.4(a), which states that “a workers’ compensation insurer … shall ensure the availability of [UR] services from 9 a.m. to 5:30 p.m.”

What was defendant’s response?  The decision was made in on the 5th day, prior to the 5:30 p.m. cut-off, as required by Labor Code section 4610(g)(1) (“prospective or concurrent decisions shall be made in a  timely fashion that is appropriate for the nature of the employee’s condition, not to exceed five working days from the receipt of the information reasonably necessary to make the determination…”) but the communication of that decision affords an additional 24 hours.

After ruling that the UR decision was untimely, defendant sought reconsideration.  The WCAB panel granted recon, noting that the 5-day limit of 4610(g)(1) applies once the reviewer has all the necessary information, and, in this case, “there is no evidence of when the UR reviewer received the information reasonably necessary to make the determination.”  Furthermore, the panel majority found that there is no evidence indicating the determination was untimely and that the likely scenario is that the determination was made during regular business hours, and only communicated after 5:30 p.m.

The dissent argued, instead, that there is no support for the contention that the act of communication adds 24 hours to the 5-day limit to make a determination, and would have denied reconsideration.

Granted, dear readers, this is a split panel decision, writ denied though it is.  It has no binding precedent and, at best, indicates the inclination of each of the respect commissioners in interpreter the relevant codes and statutes.  There’s no binding precedent here.

But, that being said, what is the guidance from this opinion as to the following questions:

Does a working day or business day end at 5:30 p.m.?  Can this time limit be applied to the day calculations?  For example, Labor Code section 4062.2 allows a party to request a panel on the “first working day that is at least 10 days after the date of mailing…” a request for evaluation or objection.  But the California Code of Regulations section 30(b) treats all panel requests made after 5:00 p.m. as being received on the next day.  It would appear that this panel decision would hold that the “first working day” would effectively start at 5:31 p.m. on the previous day, but the regulation would instead place the cut-off at 5:00 p.m.  Panel dispute trials have been held for less.

Here is another thought – who bears the burden here?  The majority noted that “there is no evidence of when the UR reviewer received the information reasonably necessary to make the determination.”  Does that mean that the burden is on the applicant to prove when all necessary information was received by the UR physician?  Short of the PTP faxing all relevant reports with the RFA directly to UR, how would this be established?

Also, the majority rejected the inference that the determination was made at the same time as the communication (after 5:30 p.m.)  Who bears the burden in documenting when the determination was made?  Is the determination automatically the date of the report?  But what if the report was written 25 hours prior to being communicated?

This is a great decision for the defense, and hopefully it will be adopted by more commissioners as these cases come up again and again.  However, your humble blogger submits that the defense community would be better off in avoiding the exposure from the get-go: given the state of telecommunication, it isn’t that difficult to fax a UR report prior to 5:30 p.m.

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I SAWW This Coming! TD Rate Increases for 2017

June 27th, 2016 No comments

As my beloved readers are well aware, every year we do a check to see what the average weekly wages were in California, and any resulting increase will determine if increase in the minimum and maximum for temporary total disability benefit rates.

Well, the results are in for the first quarter of 2016, which saw an increase in California’s average weekly wages from $1,120.67 to $1,164.51, which reflects a 3.9% increase.  The resulting increase to the statutory maximum in TD rates, raising it from the current maximum of $1,128.43 to $1,172.57 for injuries sustained after January 1, 2017.  The new minimum will be $175.88 up from $169.26.

But… that’s not all!

Labor Code section 4661.5 provides that any TD benefits made two years or more after the date of injury will also get the benefit of the new minimum and maximum.  Starting January 1, 2017, you may want to adjust TD rates for any injuries sustained prior to January 1, 2015.

Finally, don’t forget to adjust any life pension payments for post 1/1/2003 dates of injury to reflect this increase.

It might make sense to note this on your files now as reminders for January 1, 2017 – there are probably more than a few cases out there that might warrant a rate change come the new year.

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IMR Can Be Late! Defendants Rejoice!

June 24th, 2016 No comments

Hello dear readers!

Your humble blogger is bursting with delight to bring you news of a great victory for defendants everywhere: IMR is not bound by time limitations!

The Court of Appeal ruled in the matter of CHP v. WCAB, Margaris that “the 30-day time limit in section 4610.6, subdivision (d), is directory and, accordingly, an untimely IMR determination is valid and binding upon the parties as the final determination of the director.”  What does that mean?  That means that it doesn’t matter how long it takes IMR to decide on an issue – the parties must sit and wait and be bound by the eventual determination.

IMR Is Never Late. Nor is it early. It arrives precisely when it means to.

IMR Is Never Late. Nor is it early. It arrives precisely when it means to.

Why is this such a good thing for defendants? Well, medical treatment isn’t medical treatment to the defense – it’s money.  Every day that the defendant does not have to pay for a treatment that is medically unnecessary is another day that the defendant gets to protect its money from wasteful spending.  Less money out means lower rates and less exposure for businesses and employers.  That, of course, means lower prices for the rest of us.

The Court of Appeal noted, of course, that it was implementing “the Legislature’s stated policy that decisions regarding the necessity and appropriateness of medical treatment should be made by doctors, not judges.”

As my learned and diligent readers may recall, the Court of Appeal held in Stevens that not only is IMR constitutional, but that there is no mechanism for enforcing the time limits imposed by section 4610.6 – even a late IMR determination is constitutional.

One of the great things about this is that the fact that IMR has more time to make a determination once UR has denied treatment is that it puts parties in the proper posture to settle their case.  Yes, the applicant wants a particular course of treatment.  No, it isn’t medically necessary or reasonable.  But, through the magic of money, the parties can agree to disagree – an injured worker can sell out the treatment to which he is entitled but doesn’t want, in order to buy the treatment he wants but to which he isn’t entitled.

And the best part is – everybody walks away happy and a winner.

Have a great weekend, folks!

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WCAB: RFA Need Not Cite MTUS; But Must Still Justify Itself

June 22nd, 2016 No comments

It’s Wednesday, dear readers – and you know that means… another blog post!

Today’s post is about everyone’s favorite topic – UR!  Often enough, we in the defense community are faced with a late UR report – maybe the vendor made a late determination; maybe the vendor made a late communication; maybe the vendor was late with both!

When faced with this situation, and while trying to avoid an order to provide medical treatment, lots of options are available.  For example, you could sneak into applicant’s attorney’s home and turn all the clocks and calendars back one day, replacing all newspapers with copies of yesterday’s edition and then trying, with one’s best poker face, to convince opposing counsel that the report was actually on time… (just a joke, dear readers, please don’t actually sneak into anyone’s home!)

In the recent pane decision of Hill v. California Highway Patrol, defendant argued that the underlying RFA was defective itself.  To wit, defendant argued that the RFA was invalid because it did not cite the Medical Treatment Utilization Schedule (MTUS).

The treatment in question was a “back defender” system to help applicant-investigator carry his duty belt which weighted heavy on his back, the subject of a stipulated award from 2008.  The system would essentially transfer the 25 pounds of the duty belt from applicant’s hip and back to his shoulders.

But it Would Be Cool if it Was

Not The Back Defender – But it Would Be Awesome if it Was!

Defendant argued that unless the treating physician’s RFA either cites the MTUS or explains why the MTUS doesn’t apply, the RFA is invalid.  The WCJ disagreed, citing, instead Sandoval v. San Diego Unified School District (a 2016 panel case) where the commissioners held that “a requesting physician’s report need not cite to the MTUS in order to comply with Labor Code section 4604.5.”

So, what did the commissioners do with this one?

The commissioners ruled that, much like the WCJ opined, the defendant had blown the deadline for a valid UR determination.  However, the PTP’s recommendations are still subject to the standards of Labor Code section 4610.5(c)(2).  Specifically, the employee bears the burden of proving that the treatment is reasonably required, and the underlying RFA must “refer to any applicable standards under section 4610.5(c)(2) to support his opinion that the Back Defender System is reasonable and necessary.”

The WCAB ordered the matter to return to the trial level for the WCJ to conduct further discovery to develop the record.

Now, here’s something that’s a bit unfair to the defendants.  In her report and recommendation, the WCJ opined that “[a]ny UR determination made now on the request for a back brace would be untimely… since utilization review was not conducted within five working days of the [PTP’s] request, it is too late to conduct it now.”  And that’s fair – it’s too late for the defendant to conduct UR.

However, shouldn’t it also be too late to conduct any further discovery?  Why should the PTP get an opportunity to cure any defects in his RFA with a supplemental report if it is too late for defendant to cure an untimely UR?  As it stands now, it is very likely that applicant cannot carry his burden of medical necessity without further evidence – such as a more detailed report from the PTP.

That aside, this back defender system runs about $200, which might get eaten up with one UR and one IMR.  The back defender system or the particular treatment in this case is not the point.  The point is that less money could be spent on litigation and more money on providing benefits if treating physicians did the leg work to justify their recommendations in the RFA.  If the request for authorization cannot be justified medically, then perhaps the request should not be made.

Unfortunately, as it stands right now, there does not appear to be any binding authority that can be cited for the proposition that the RFA must cite the MTUS to trigger defendant’s UR obligations.

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Little Robot Car Thieves?

June 20th, 2016 No comments

Hello, dear readers!

Your humble blogger greets you this very-beautiful Monday morning.  The sun is shining, the bees are buzzing, and the birds are singing energetically from their heights in the trees.

Birds are Screaming

Speaking of buzzing, your humble blogger brings you news that another series of jobs that might be cycled out and replaced with workers that require no breaks, no overtime pay, and absolutely no workers’ compensation coverage.

Engadget.com  reports on a “swarm of small robots” used to move vehicles like so…

As you can imagine, these little guys will replace quiet a few previously-human jobs.  Going to load cars into a freight contain for shipping? These robots will pack them in a lot tighter than a human driver (who might need space to open a car door) could.  Need to move these around the factory? The little robots can operate without putting extra miles or wear-and-tear on new cars.  Is the car suddenly inoperable and blocking traffic? Use these robots to get it out of the way.

Coincidentally, if your criminal organization is searching for a reliable car thief, look no further…

Valley parking, towing industry, shipping and transportation of cars – all of these have occupation codes in the rating schedule.  What’s more, the jobs that aren’t entirely replaced can be made more safe and less likely to cause injury.

And, as time goes on, we can expect these robots and similar knock-offs to get cheaper – much cheaper than, for example, paying higher premiums for workers compensation.

I know it might seem scary – but fear not! Your humble blogger expects that workers’ compensation defense attorneys are immune to automation.  And,  I think we can all agree, preserving your humble blogger’s livelihood is what we’re all striving for… right?

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Another WC Fraudster Bites the Dust

June 17th, 2016 No comments

Happy Friday, dear readers!

Your humble blogger brings you reports of yet another workers’ comp fraudster biting the dust – Linda Boggess was convicted on four counts of workers’ compensation fraud, as reported by the Ventura County Star.  As reported by the Star, Boggess reported “pain” in 2007, and, after receiving benefits was cleared to return to work in November of 2011 without restrictions.  She then obtain a 5-pound lifting restriction from another physician.

An investigation yielded surveillance footage showing applicant lifting 45-pound tires; applicant testified at deposition that she could lift no than a gallon of milk (for the folks keeping score at home, a gallon of milk is roughly 8 pounds, and, yes, 45 pounds is much heavier than 8 pounds.)

The sub rosa was a sweet catch, but your humble blogger’s “Spidey senses” tell him that someone tipped the employer off.

As always, your humble blogger feels obligated to point out that the employer now has a Pyrrhic victory on its hands – the benefits have already been paid out, and it will have a hard time getting them back from the fraudster.  One possible benefit of a conviction for fraud is that lien claimants stand in the shoes of the applicant, and applicant’s shoes are on some pretty weak footing at the moment.

On the bright side, however, if enough of these stories get prominent display in the news – if it becomes common knowledge among Californians that fraud is investigated, prosecuted, and punished – perhaps the frauds out there will be less likely to do ply their dirty trades.

Have a good weekend, dear readers!


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