SAWCA Regulators Roundtable

The 2016 SAWCA Annual Convention kicked off with a Regulators Roundtable where workers’ compensation regulators from various jurisdictions discussed a variety of industry issues. The panel was moderated by John Williams the Commissioner from Virginia and featured representatives from sixteen jurisdictions.

Attorney Fees

The Florida Supreme Court recently ruled that the part of their statute that capped plaintiff attorney fees was unconstitutional.  Attorney fees in Florida are paid by the defendant in addition to any benefits owed. The regulators were asked to explain how attorney fees work in their states.

• Every jurisdiction represented caps plaintiff attorney fees in some way, usually as a maximum percentage of the plaintiff’s recovery.
• Some states allow for penalties in addition to attorney fees for gregarious acts.
• Very few states cap defense attorney fees.
• In every jurisdiction represented, attorney fees are paid by the injured worker from the benefits they receive.

OSHA and drug testing

Recently issued OSHA regulations are seeking to restrict the use of post-accident drug testing because they feel such policies discourage workers from reporting accidents. Under the new regulations, post-accident drug testing will only be allowed if probable cause is present. OSHA may make exceptions if the state workers’ compensation statutes have drug-free workplace provisions that require post-injury drug testing. The regulators were asked their thoughts on this topic.

• In several states, if the injured worker was intoxicated at the time of the accident, and that intoxication was the probable cause of the accident, benefits are either reduced or completely disallowed by statute.
• Proving that intoxication was the probable cause of the accident is something subject to litigation and it is extremely difficult to prove.
• In a small number of states, if the injured worker fails a post-injury drug test then it creates a rebuttable presumption that the injury was caused by the intoxication.

Fraud

There has been several stories in the news recently about medical fraud rings in California workers’ compensation where there were kickbacks being paid for referrals and unnecessary surgeries were being performed. In addition, employer misclassification of their workers as independent contractors to reduce payroll subject to workers’ compensation has long been an issue in industries such as construction, trucking, and agriculture. There are also many examples of fraud involving injured workers, adjusters, and other vendors in the workers’ compensation system.

Psycho Social Testing

Colorado now requires psycho-social testing for patients with chronic pain, and before certain surgeries. They are the only state represented to have such a requirement. The thought is this will help identify psychological issues that will inhibit a patient’s recovery early in the claim and adjust the treatment accordingly. Physicians are financially incentivized to obtain certification to conduct such testing.

Affordable Care Act 

There has been much discussion about the potential impact of ACA on workers’ compensation, but little in terms of actual studies of the impact. The biggest concerns have been access to care and cost shifting to workers’ compensation. According to early research, access to care does not appear to be an issue that has worsened under ACA.

One area of concern is state workers’ compensation fee schedules tied to Medicare rates. For some services, ACA has resulted in significant cuts in reimbursement rates which lead to a corresponding cut in the fee schedule. There are concerns that some physicians will stop accepting workers’ compensation due to these lower reimbursement rates. There is no data indicating this is happening yet but it is something to watch.

WCRI studies found that when workers’ compensation fee schedules were significantly higher than group health reimbursement rates there was an increase in the number of soft tissue claims seen in the workers’ compensation system.

24 Hour Coverage

Colorado has a Constitutional amendment on the November ballot that would make 24-hour medical coverage available for all residents. This would have a significant impact on workers’ compensation if it passes. No other jurisdictions represented have considered such an initiative.

Jurisdictional Issues to Watch

Each jurisdiction gave a brief overview of some of the significant issues they are facing:

South Carolina- The biggest concern right now is funding for their Division of Workers’ Compensation. Their funding has been very contingent on fines and penalties and the temporary tax they passed to fund operations has sunset. They are looking for the legislature to implement a permanent funding mechanism.

Virginia – This is one of the last states without a fee schedule and the legislature passed a law last year requiring this to be implemented. They are starting the process of constructing a fee schedule from scratch as the legislative directive requires different fee schedules for different parts of the state. This is a massive project.

Georgia – Opioids continue to be a major issue in the state. They are continuing to look at ways to address this. Another concern is delays in getting medical authorizations so physicians can treat and get paid timely.

Texas – Air ambulance bills are a concern and they are litigating this issue but past efforts to address this have failed in multiple states as it is a federally controlled issue. Another concern is around compound drugs.

Colorado – The single payer initiative is the biggest concern right now. In addition, Colorado does not have an uninsured worker fund to provide a backstop if someone is injured and their employer did not have coverage. This is something the legislature needs to address. They have significant penalties for being uninsured, but these funds go to the general fund. In addition, none of these fines is actually being collected.

(A quick poll of states attending indicated that Florida, Georgia Louisiana, and Mississippi do NOT have funds to protect injured workers of uninsured employers. If an employee is injured and their employer does not have workers’ compensation then that injured worker’s only recourse is to pursue civil action. Usually the employer in such situations goes out of business leaving the injured worker with nothing.)

Tennessee – One big issue they have is injured workers not being able to get representation on certain cases. Their last reforms significantly restricted attorney fees so attorneys are refusing to accept disputed cases without significant potential recovery. They are also looking at implementing guidelines for claims adjusters.

Maryland – Their biggest challenge right now is computer systems they utilize. Their systems are outdated and they are looking at solutions.

Florida – Florida’s physician reimbursement fee schedule needs to be updated regularly and doing this requires ratification from the legislature. They legislature has little interest in that so they are looking to change the law. Collecting employer uninsured penalties continues to be challenging with them collecting less than a third of penalties issued.

Kentucky – There are political things happening where the governor tried to replace many administrative law judges. This has led them to being significantly short staffed. Also, the decrease in employment for the coal industry has resulted in a significant spike in the filing of black-lung claims. The combination of fewer judges and more claims is creating significant stress on the system.

Louisiana – Opioids are a challenge and the legislature recommended statewide study on the issue. They are also looking at a drug formulary. They have medical treatment guidelines but the process where these were implemented are under constitutional challenge. They are looking to rewrite the process for determining the guidelines to circumvent the court challenge.

West Virginia – Budget is the biggest issue. Their state budget is heavily dependent on the coal industry and with that industry being downsized they have significant budget shortfalls.

Mississippi – They are looking to develop treatment guidelines and a drug formulary. They also have budget issues and their funding now flows through the general fund which means the Division’s surplus was taken by the State.

Washington DC – They are highly paper driven and need to work on automation but this has not happened due to constant turnover at the department.