10 Myths and Facts About Workers' Compensation Posted by LexisNexis Workers' Comp Law Community Staff The LexisNexis Workers' Compensation Law Community and the award-winning blog Work Comp Roundup have teamed up to present some common myths and facts about workers' compensation. Our contributors represent different segments of the workers' compensation industry. Questions and comments for our contributors are encouraged. Note that myths are listed below in random order and not in order of importance, since the degree of “importance” depends on the reader and his or her stake in the workers' compensation system. Workers Compensation Myths Rodin's Thinker MYTH #1: Large Discount Networks Are the Key to Success in Workers' Compensation Managed Care “Crisis” was the single word most often associated with workers' compensation back in the early 90's. The unprecedented rise in medical costs sent employers in search of innovative solutions. A few progressive companies looked at the health care model to better control medical costs and began to adapt the concept of networks to Workers' Compensation. Most employers theorized that the more providers you had in your network the better your penetration rate and this would produce a better savings. However, today's reality presents a very different picture. We have found, over time, that while penetration and savings rates are good things, the real keys to a sustainable reduced medical cost are controlling utilization and targeting specialties such as pharmacy, physical therapy, high end radiology and other specific services. Instead of an increase in cost per treatment or per unit cost of a service such as a doctor's visit, it is the amount of services and the types of services being used driving medical inflation. Thus, a broad based discount network, getting you discounts off of the charged amounts, has plateaued in terms of effectiveness in controlling medical cost. The answer to workers' compensation networks is based on a multi-tiered, multi-layered customized approach that addresses all of the dimensions of the cost equation at a jurisdictional and customer specific level. Only by using objective metrics can you identify the needs and cost drivers to build network solutions that are unique and specific to employers medical cost problems. This approach requires finding the right strategic partners and applying proprietary clinical intervention triggers that maximizes the reduction in total loss costs (claim and medical) to produce the optimal claim outcome. Kenneth F. Martino President and Chief Executive Officer Broadspire Services, Inc. www.choosebroadspire.com Atlanta, GA MYTH #2: The Employer's Role Ends Once the Workers' Comp Claim Is Paid Once an injured employee's workers comp claim is paid, the employer's most important role begins. The employer should maintain frequent contact with the employee to monitor their healing progress. By doing so, the employer will be able to gauge when the injured employee will be able to begin the return to work program. According to the 2009 RIMS Benchmark Survey, 86% of companies have a return to work program. However, many small to mid-sized companies lack efficient programs that enable recovering employees to return to work in a limited, but productive role. Most smaller companies feel that setting up a return to work program will require too much effort for the few injuries that occur each year. This is simply not true. Return to work programs reduce the number of lost work days for just about every employee involved. By doing so, it accomplishes two goals. First, it reduces the company's future increases in workers' comp or disability insurance since such policies pay out large claims for lost wages. Therefore, by reducing lost wages, claims will drop, which will reduce premiums. Second, return to work programs are directly correlated to productivity benefits. On average, individuals receiving disability benefits are paid between 50% and 70% of their normal wage. By bringing employees back to work at 100% pay, the company is only paying 50% to 30% more while benefitting from 40 productive hours each workweek. It is in the best interest of the employer to keep close contact with the injured employee during their recovery phase. Using a return to work program not only makes sense from a financial standpoint, but it's the right thing to do. It enhances the employee's recovery both physically and psychologically. Emily Holbrook Editor, Risk Management Blog: Co-Editor, Risk Management Monitor MYTH #3: Workers' Compensation Claims Improve With Age Too frequently, I see adjusters treat complex claims like fine wine. They put the file in the back of their cellar (filing cabinet) and hope that, over time, it will become more palatable. They expect that the medical treatment will diminish, the demand will become more reasonable, and the situation will somehow improve to make resolution of the case easier. Working for an excess carrier we see nothing but complex claims. I can tell you with great certainty that these cases do not improve over time. The longer a person is out of work, the greater the chance they will NEVER return to work. According to Bureau of Labor statistics, if an employee is off work for an occupational illness for more than one year, there is only a 25% chance they will return to work. If they are off work for two years, there is almost no chance of a successful return to work. In addition, medical costs ALWAYS increase over time. Over the last 10 years, medical inflation has been over 48%. Thus, even if the treatment regime stays consistent, your medical costs will go up. Unfortunately, the medical regime usually does not stay consistent. There are always new drugs available to treat a condition, or new treatment options being introduced. These new treatments and drugs usually cost significantly more than the established treatment and drugs they are replacing. Since the situation will continue to worsen, the best time to try and settle the claim or take steps to mitigate the loss is NOW! The additional resources and funds you spend today in resolving complex claims can result in significant savings in the future when those claims are no longer sitting in the filing cabinet. Mark Walls Assistant Vice President – Claims Safety National www.safetynational.com MYTH #4: Technology Will Cure All of Our Ills There are many exciting technological changes on the horizon, and much discussion about how fast and efficient our world will be. Indeed, the possibilities are tremendous, but only if that technology is integrated and used intelligently. Technology, like any tool, must be used with skill and purpose. Give a running chainsaw to a monkey, and the results will not be pretty. All you'll gain is utter devastation and a highly agitated monkey. The same rules apply for the implementation of new technology based systems. Too many companies use process based decisions to conduct technology selection, when they should be focusing on end result goals. New gizmos should not be used just because they are new – they should be used because they help an organization meet a need, and drive the company to successful goal attainment. Technology selection should start with two basic questions: 1) What are we trying to accomplish? This, of course, contains a broad set of queries. What are the pain points? Where are our production bottlenecks? What do we need to stay competitive? What costs need reducing? A successful company will involve their “front line” employees in this discussion, and eliminate any disconnects between reality and upper management's perception of reality. 2) What do we need to solve the issues we just identified? It is a simple idea. Identify the needs, and work with those actually tasked with doing the job to determine what will meet them. It is from this point that a company can begin to define specifically what solutions it should be looking for. A final warning: Technology will likely take your company mobile in the coming years. Having a plan to separate and protect your employee's personal lives will not only make you an employer of choice, it will keep many agitated monkeys off your back. Robert Wilson President & CEO, WorkersCompensation.com, LLC www.workerscompensation.com Blog: From Bob's Cluttered Desk Related Articles: I Saw The Future Of Workers' Comp Today Workers' Comp 20/20: Tethered by Wireless – The Future Office Without Walls Become a “Tech Translator”: National Unemployment Rate for Technology Jobs Is 3.3% MYTH #5: Because FECA Is So Different From State Workers' Compensation Systems, Private Sector Case Management Best Practices Won't Work There are many differences between the federal and most state workers' compensation systems. The federal system features include: Federal agency inability to choose a third party administrator. (All federal workers' compensation claims are managed by the Department of Labor.) There are no settlements – injured federal workers currently have the right to be paid workers' compensation for life if unable to return to work. (There is legislation pending that would impact this.) 45 days of continuation of regular pay by the employing agency early in traumatic injury claims. (There is legislation pending that would impose a 3-day waiting period for this continuation of pay) No system for routine utilization review. (There are certain requirements currently for Prior-Authorization but not for Second Opinions or IME's; there is pending legislation that would require regular independent medical evaluations.) Free choice of treating provider Limited clinical resources available to the Department of Labor Claims Examiners, who make all adjudication and ongoing benefits decisions. These differences are frequently cited as reasons that private sector case management best practices won't work in a federal environment; however, evidence suggests otherwise. Several federal agencies have experienced significant improvement in the performance of their workers' compensation program when they adopted industry best practices such as: Agency directed telephonic case management Early intervention Focused legacy case management programs Ancillary networks including but not limited to pharmacy benefits management, physical therapy, durable medical equipment and diagnostic radiology Stay-at-Work and Return-to-Work initiatives Internal data and trend analysis including but not limited to chargeback audits and the new federal agency performance metrics, POWER (Protecting Our Workers and Ensuring Re-employment). http://www.dol.gov/owcp/dfec/power/ Agencies that have adopted these and other best practices and aggressively monitor and manage ALL open cases have lower costs and disability case rates than agencies that take a more passive approach, relying on Department of Labor and monitoring cases for return to work issues. Marianne Cloeren, MD, MPH, FACOEM Medical Director, Managed Care Advisors, Inc www.MCAcares.com MYTH #6: The Vast Majority of All Medical Reports Using the AMA Guides Are Inaccurate This assertion has been repeatedly made any time a version of the AMA Guides has first been adopted in a state that mandates its use in a state's workers' compensation system. California adopted the 5th Edition of the AMA Guides in April 2004. Within a year, a cottage industry of “expert” reviewers developed in which the recurring mantra was that the vast majority of medical reports written by treating or evaluating physicians were not “accurate.” The fact of the matter is that the authors of the AMA Guides were careful in stating that the Guides is intended for reference by physicians as a guideline only, and each physician should use his or her own clinical judgment in determining an accurate permanent impairment rating. On page 1 of the 5th Edition, the authors state: “The purpose of this fifth edition of the Guides is to update the diagnostic criteria and evaluation process used in impairment assessment, incorporating available scientific evidence and prevailing medical opinion. Chapter authors were encouraged to use the latest scientific evidence from their specialty and, where evidence was lacking, develop a consensus view.” First of all, this directive is misleading. The WPI ratings in all versions of the AMA Guides are not based on any scientific research, epidemiological studies, clinical trials or any other objective analysis. They are “consensus derived”, which means that someone voted on adopting WPI ratings based on some undisclosed criteria and without even discussing minority views of physicians. In real medical science, “prevailing medical opinion” can be totally wrong. Second, there is no correlation between a given WPI rating and loss of function or effects of impairment on activities of daily living. Even the definition of “ADLs” has changed between the different versions of the Guides, with different WPI ratings for the same medical conditions between different versions of the Guides. Third, the diagnostic criteria for ratable impairments have changed since the 5th Edition of the AMA Guides was published in 2000. Current diagnostic criteria for hypertension and complex regional pain syndrome are examples where those listed in the 5th Edition are completely obsolete. The point is that even the individual authors, editors, contributors and followers of the AMA Guides, regardless of version, cannot profess to be any more qualified to write an “accurate” report than any other physician. Each version of the Guides states that the determination of whether an injury or illness results in a permanent impairment requires a medical assessment by a physician. See 5th Edition, section 1.2a, page 2. How can any so-called “expert” reviewer say that the vast majority of medical reports that use the AMA Guides are inaccurate when the reviewer has not performed an assessment of the patient? In California, reports written by these “experts” who review and critique medical reports are not admissible at the WCAB, and cause significant consternation among reputable treating and evaluating physicians who have a deep understanding of the AMA Guides and case law that mandates certain interpretations and applications of the language in the Guides. Hopefully, other states like Illinois will develop similar case law. Robert G. Rassp, Esq. Law Office of Robert G. Rassp Blog: The Rassp Report Rassp, The Lawyer's Guide to the AMA Guides and California Workers' Compensation (LexisNexis) MYTH #7: CMS' Approval of an MSA Is Binding CMS offers a written opinion for workers' compensation settlements meeting its review criteria as to whether an amount set aside for future medical expenses adequately protects Medicare's interests in the settlement of an insurance claim. The program is voluntary, and the evaluation process fairly generic in that it applies a standard of care rather than meets the individual needs of the claimant, while frequently disregarding the legal issues resulting in the decision to settle the claim. Because of this, an amount deemed adequate by CMS will generally be more than an individualized plan, and that differential is representative of the inherent cost of the approval. However, what is the value of that approval? The WCMSA approval process is not mandated by any law or regulation, state or federal. It is administered at the sole discretion of CMS with no official appeal process. Just as participation is completely voluntary, nothing requires CMS to render an opinion if it elects not to do so. And most disturbing, CMS can apparently change its opinion post-settlement based solely upon a request by the claimant. There are documented occurrences of CMS altering its approval, both higher and lower, based upon claimants presenting new evidence post-settlement, regardless of the fact that these settlements were already funded by the carriers and approved by the state agencies. So if CMS' opinion is not binding upon itself, it is certainly not binding upon any of the parties to the settlement unless and until the amount approved is mutually accepted by all parties and incorporated into the state approved settlement agreement. If the parties disagree with CMS, they are free to settle on their own terms, documenting in the agreement that while CMS' opinion was obtained, it was disregarded for valid legal and/or medical reasons. Medicare has no rights in the insurance settlement itself to assert a claim for future inchoate medical expenses that have not, and may not ever, occur. It is undisputed that Medicare is not obligated to make payments for post-settlement related medical care, hence our acceptance of the need for an MSA when future medical care is anticipated. However, unless and until Medicare makes a conditional payment or denies benefits due to its secondary payer exclusion, it has no legal claims against any of the parties to the settlement within its reach under the MSP. And if an MSP situation arises, the parties affected will have access to the Medicare appeal process to dispute the benefit denial or reimbursement demand, which is more than is afforded an adverse MSA determination by CMS at the time of settlement. So long as MSAs are reasonable and defensible, CMS cannot create a greater obligation upon the parties than existed under state law simply because the claimant is a Medicare beneficiary. If you don't like CMS' opinion, disregard it and settle upon your own terms with the understanding that you may someday have to overcome the burden of proving why it was disregarded. Better yet, stop asking for the opinion in the first place. Jennifer C. Jordan, Esq., General Counsel MEDVAL, LLP www.medval.com Blog: The Official Medicare Set Aside Blog and Information Resource Jordan, The Complete Guide to Medicare Secondary Payer Compliance (LexisNexis) MYTH #8: Doctors Prescribe Narcotic Pain Medications Because of Concerns They May Be Sued If They Don't Treat Pain The dramatic rise in the number and amount (morphine equivalents) of narcotic pain medications has been well publicized in 2011. A tipping point materialized where social commentators and observers triggered the start of a national conversation. Even the White House joined the discussion in April 2011. Yet, when pressed, some physicians claim they are legally obligated to prescribe addictive pain medications or they will be civilly liable. This justification is essentially baseless. But, even if true, it does not explain why Americans consume 80% of all opiates and 99% of all the hydrocodone dispensed world-wide. Current narcotics available for doctors to prescribe to patients are up to one hundred times more powerful than morphine. A lucrative business model treating pain erupted across the country. Addiction increased demand, which led to a secondary black market further fueling demand. Physicians' choice to prescribe high levels of narcotics is not just antidotal; one California study revealed that 1% of California doctors prescribed 42% of morphine equivalence. Some states (Texas and Florida for example) are passing laws regulating pill mills (pain clinics and other facilities that primarily treat pain with drugs). Pharmacies have refused to fill oxycotin prescriptions. One national pharmacy recently informed several Florida doctors it would no longer fill their prescriptions for schedule two narcotics. States are also focusing their efforts on drug repackagers and physician dispensers. States and even some businesses are changing their practices in light of the new business of prescribing narcotics. Fear of litigation does not appear to be a driving force in narcotic drug prescribing patterns. Rather, market forces appear to motivate some physicians to augment their practices with different business models and strings of income. These same market forces may be influencing the creation and market placement of these products by their manufacturers. But that conversation is for another day. Stuart D. Colburn, Esq., Shareholder Downs Stanford, P.C. www.downsstanford.com MYTH #9: Workers' Compensation Costs Are Out of Control Although we often hear that workers' compensation is “out of control”, that is not really the case. While it is true that some companies have high workers' compensation costs, for many it is not a problem at all. The general perception is that workers' compensation costs are skyrocketing because attorneys receive contingency fees, labor unions refuse to cooperate, and there are unfavorable state laws. In reality, these things generally are not the cost drivers of high workers' compensation costs. There are many unionized companies in every state – including those states considered the worst – that have high-risk workplaces that are susceptible to a greater than average number of accidents and mishaps, but do not have high workers' comp costs. The real cause of high workers' comp costs is “lack of control.” When companies don't "take charge" of the workers' compensation process in their workplace by implementing policies and procedures to direct what occurs immediately after an injury, then employees – by default – are in control of their own claims and tend to stay out of work longer than necessary. In many of these situations, the claim lasts longer than the injury, and the time out of work is disproportionate to the length of the disability. Companies with a tight post injury procedure dictate what happens from the moment of the injury to when the injured employee returns to work. For example, employees immediately telephone a triage nurse if they are injured, and employers make a first day phone call to the employee, send a get well card, carefully select medical facilities and direct injured employees there (where permitted by state law), offer all injured employees transitional duty assignments temporarily while they are recovering, and conduct weekly meetings to discuss obstacles. The entire process is posted nearby whether employees sit in an office, drive a vehicle, or work in another setting, such as at a restaurant or on a construction site. Companies look elsewhere for the cause of the problem, but they never look in the mirror! Forget about what you "can't do" and start working on what you "can do." Rebecca Shafer, Esq. President, Amaxx Risk Solutions, Inc. www.WCManual.com www.LowerWC.com MYTH #10: The Exclusive Remedy Defense Is Being Eroded Like initial newspaper stories noting Mark Twain's death, reports of the demise of the exclusive remedy doctrine or defense have been “greatly exaggerated.” Sure, there's the occasional “success,” usually with somewhat quirky facts [e.g., Anderson v. A.J. Friedman Supply Co., Inc., 416 N.J. Super. 46, 3 A.3d 545 (2010); $7 million verdict to spouse who, like her husband, was employed by an asbestos-using firm, but who contended she contracted mesothelioma as a result of “bystander exposure” from washing her husband's asbestos-laden work clothes]. A close look shows the exclusivity defense is, however, alive and well. For example, in spite of the fact that Ohio, West Virginia, North Carolina, and a handful of other states [see Larson's Workers' Compensation Law, § 103.04] allow “intentional” tort actions against employers where the employers' actions are “substantially certain” to cause injury, far fewer than one in ten reported decisions show success for plaintiff/employees. Consider also the following recent unsuccessful actions filed by employees against employers: Welch v. Ameriprise Financial, Inc., 2010 Minn. App. Unpub. LEXIS 852 (Aug. 24, 2010); widow's tort action against husband's employer for failure to provide defibrillators. Teasley v. Freeman, 2010 Ga. App. LEXIS 592 (June 28, 2010); widow of slain deputy killed in a Georgia courthouse by escaping convict. Brown v. Cassens Transp. Co., 2010 U.S. Dist. LEXIS 101660 (S.D. Mich., Sept. 27, 2010) and Jackson v. Sedgwick, 2010 U.S. Dist. LEXIS 22792 (E.D. Mich., Mar. 11, 2010); general failure to use RICO Act as end-run around exclusivity. Walters v. Flathead Concrete Prods., Inc., 2011 MT 45, 2011 Mont. LEXIS 48 (Mar. 16, 2011); mother's wrongful death action barred by exclusivity in spite of small ($3,000) death benefits for non-dependent parents. Vacha v. North Ridgeville (City of), 2011 Ohio 2446, 2011 Ohio App. LEXIS 2098 (May 23, 2011); rape by co-worker. Soto v. Nabisco, Inc., 2011 PA Super 249, 2011 Pa. Super. LEXIS 3753 (Nov. 21, 2011); products liability suit against employer fails, even under “dual persona” doctrine. Exclusive remedy provisions within state acts have been a core component of the workers' compensation "bargain" since the initial enactment of state workers' compensation laws in 1911. Injured workers have occasionally experienced buyers' remorse since then, but the essential equilibrium established between employers and employees in those early compensation acts remains an enduring characteristic of our current system. Thomas A. Robinson, J.D. 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