WCDefenseCA

Centers for Medicare and Medicaid Services’ (CMS) regulations regarding Medicare Set-Asides have had a devastating effect upon California Workers’ Compensation practice.  Even when the parties want to settle a claim for a legitimate, good-faith amount, the nature of CMS’ approval system makes this nearly impossible.

Presently, CMS will not review set-asides for settlement amounts under $25,000, citing a shortage of man-power.  This means that the parties can settle a claim by compromise and release for under $25,000, only to have CMS later recoup costs from the self-insured employer or the insurer.  Naturally, this proves a strain to settlement negotiations.

Some parties have been adding language as an addendum, shifting the responsibility of all future medical costs to the applicant as part of the Compromise and Release.  A vendor is usually hired (Gould and Lamb is one example, Carr Allison is another) to perform a Medicare Set-Aside Analysis report, providing an estimate of how much future medical treatment will cost.  This figure is ear-marked for that purpose.

In one recent case before the Workers’ Compensation Appeals Board, Isaac v. Paramount Pictures, the validity of this addendum language was tested.  The Workers’ Compensation Judge rejected the addendum language, yet still held the rest of the compromise and release binding upon the parties.

Defendant filed a petition to set aside the order approving the compromise and release.

The skinny:  an addendum to a compromise and release agreement addressing the interests of Medicare may not be rejected by a WCJ without rejecting the entire agreement.

The WCAB ordered the approval of the compromise and release with the CMS addendum included.  The extent to which the addendum language will be binding on CMS down the road is questioned by the WCJ, WCAB, and most likely the parties as well.

But, if nothing else, the efforts on the part of the defense in this case firmly establish that the interests of the Federal Government have been fairly considered, and efforts have been made not to shift any of the burden of applicant’s treatment to Medicare.

If the applicant is on Medicare or is soon to be on Medicare, it’s probably a good idea to include some language in a compromise and release agreement addressing future medical costs.

In an earlier post, I mentioned the Valdez v. Warehouse Demo Services (en banc) case, in which the Workers’ Compensation Appeals Board first ruled that defendants are not responsible for treatment bills originating outside of a validly established Medical Provider Network, before deciding to take more time to consider the issue.

While we are in limbo, waiting to see who foots the bill for extra-MPN charges, a thought comes to mind about the companion arena to the MPN: what about the Pharmacy Benefit Networks established pursuant to Labor Code § 4600.2?

In the case of Brambila v. Vons, Inc. (2010), the WCAB denied a lien-claimants petition for reconsideration of the Workers’ Compensation Judge’s ruling that liens asserted by extra-PBN suppliers of drugs are not valid or enforceable.  The WCAB denied reconsideration, relying on § 4600.2.

(As an aside, I have had lien-claimant argue that because the injured worker didn’t understand the PBN network notices, the PBN does not apply to the worker and he or she can obtain drugs wherever he or she wants.  But even if the worker doesn’t understand the plain meaning of the notice, the pharmacist does, and the meaning of the objection letters that followed the first filled prescription as well.)

Since the WCAB now needs more time to consider whether or not insurance companies and self-insured employers are liable for extra-MPN treatment, is it possible that the same reasoning applies to extra-PBN dosages.  The Valdez case is newer and en banc, giving it controlling power over Brambila.

Until the Valdez decision comes out, Brambila is still good law.  If lien-claimants demand payment of extra-PBN liens, settle for token amounts or rush to trial before the WCAB changes its mind in Valdez!

Utilization Review, as previously discussed here and here, is an effective tool in filtering out unnecessary treatment.  However, Labor Code § 4610 has its own requirements to make Utilization Review reports valid, including deadlines and qualifications for reviewing physicians.

If a denial of medical treatment is based on UR, and the UR report does not comply with § 4610, can the denial give rise to sanctions?

Labor Code § 5813 provides that sanctions may be imposed “as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.”

Recently, an applicant took this issue up on appeal, finding no sympathy from the Workers’ Compensation Judge, the Workers’ Compensation Appeals Board or, ultimately, the Court of Appeal (Dominguez v. Workers’ Compensation Appeals Board).

There, the applicant claimed that defendant’s denial of dermatologic treatments based on a UR report was sanctionable conduct because the UR report was not timely and was prepared by an anesthesiologist, rather than a dermatologist or an orthopedist (the underlying industrial injury was an orthopedic one).

The WCJ and the WCAB both found that applicant’s contentions regarding the validity of the UR report were without merit.  But, even if applicant was correct on both counts, the denial does not rise to the level of § 5813 sanctions.  The applicant kept saying sanctions, and the courts responded with…

In other words, go with your gut, and stick to the UR report – at the most, you’ll end up paying the treatment, but no sanctions should be forthcoming.

Under Labor Code § 4600, the insurer or self-insured employer must provide medical treatment “reasonably required to cure or relieve the injured worker from the effects of his or her injury” or else face the risk of having to reimburse the employee for his or her visits to Dr. McOver-Prescribe.

But at what point do the adjuster’s duties of approving the treatment or undertaking the expense of Utilization Review kick in?  For example, if a chiropractor calls the adjuster and says “Jim needs 100 more treatments of Placebo-tox” or “your employee Kathy would really benefit from my patented Medo-Widget,” must the adjuster act?

Or what if you open your mail and there is a note from a treating physician, simply saying “please authorize treatment X”?

Labor Code § 4603.2(a) states that the employee’s treating physician “shall submit a report to the employer within five working days of the initial examination and shall submit periodic reports at intervals that may be prescribed by rules and regulations adopted by the administrative director.”

So what regulations have been adopted by the administrative director?  Take a look at 8 CCR § 9792.6 (o).  This sets out the requirements for a request for treatment.  If the request is made orally, such as in a telephone call, it must be followed by a written request within seventy-two hours.

The written requests (both as originals and as the follow-up) must be on forms PR-1 or PR-2.  Otherwise, the request must be in a narrative, containing the same information as a PR-2, and “the document shall be clearly marked at the top that it is a request for authorization.”

In other words, if the proper procedure is not followed, no soup for you!