TEAMSTERS LOCAL NEWSLETTER® SPRING 2009 ISSUE ¦ by SCOTT A. O’MARA & MICHAEL PADILLA
WORKERS’ COMPENSATION NEWS AND ISSUES OF IMPORTANCE
Some TPA’s have assigned
“phantom” adjusters to make
the caseload being handled by
one person appear smaller.
One of the more disturbing finds was a TPA adjuster who had engaged the services of a defense law firm when there was a very strong social relationship between the adjuster and one of the principals in the law firm. Questions have arisen regarding billings amounting to over $1,000,000, and the rate at which they were billed. Apparently, some third-party entities have had a diminution of income from their cases and have looked for devious ways to continue their cash flow.
Additionally, recent studies issued by the University of California at Berkeley raise the spectre of employer fraud based on findings by researchers Colleen Donovan and Frauk Meuhauser. These studies have determined that employers who have high Workers’ Compensation costs are sometimes tempted to and actually do underreport wages and/or engage in gross misclassification of workers in higher-risk jobs. By underreporting or misclassifi-cation of employees to lower-risk jobs, these employers minimize the costs they are required by law to pay for Workers’ Compensation.
The studies indicate that as much as $100 billion was underreported in payroll in the year 2002. As a result of this occurrence, the fraudulent employers are improperly shifting their economic liability to all employers in California.
State Compensation Insurance Fund is a quasi-governmental agency created by the State of California to provide Workers’ Compensation to California employers. SCIF also works as a third-party adjusting agency under contract with many employers. In spring 2007, the president and vice president of State Compensation Insurance Fund were fired by the Board of Directors. Also at this time, the Board demoted the general counsel.
The terminations and demotion resulted from a study which concluded that two government-appointed Board members, unbeknownst to the Governor, had either actual or potential conflicts of interest. These Board members received monies from SCIF for services provided pursuant to contracts with SCIF while holding their membership on the Board. This was information to which the president and vice president were privy and apparently did not challenge.
These events of mismanagement
and/or fraud raise a serious
question regarding the Workers’
Compensation system relative to
the employers and third-party
entities which govern the benefits
to which California workers
may have entitlement.
These events of mismanagement and/or fraud raise a serious question regarding the Workers’ Compensation system relative to the employers and third-party entities which govern the benefits to which California workers may have entitlement. Workers are aware that many employers create a medical provider network (MPN), which is a captive entity that must please the employer to maintain its status as an exclusive health provider in the Workers’ Compensation system. The medical provider network, without serious review by entities not associated with the employer, third-party administrator or MPN, invites further areas of mismanagement and/or fraudulent behavior.
California workers were not subject to this potential problem of the employer-controlled medical provider network under the previous system, which encouraged a spirit of free enterprise. The previous system allowed workers to select their own treating physicians, and it encouraged medical providers to provide the best quality of care, because failure to do so would disenfranchise them from selection by workers for treatment of their job-related injuries.
The new system creates a
monopoly — a captive audience
of medical providers who only
have to please the employer.
The new system creates a monopoly — a captive audience of medical providers who only have to please the employer. This system also creates a unique opportunity for the provider to solicit and curry favor from employers and third-party administrators at the medical expense of California citizens. This limitation, in view of the current abuses that are coming to light, must cause legislators to revisit this non-capitalistic approach to the provision of medical care.
Part of the increase in medical costs — as well as the increase in abuses to both the employer and the worker — has resulted from the implementation of the utilization review process. This process was created to have a third-party entity review the recommendations for treatment. However, this review also encourages mismanagement and/or potential fraudulent behavior on behalf of the reviewing entity and/or other parties that have nexus to the process. The utilization review companies are separate entities which receive income from carriers and third-party adjusting agencies. Their role is to review doctors’ recommendations for medical care. In speaking with numerous adjusters encumbered by this process, I hear the constant cry that the process is redundant to their review of a file, delays rather than expedites medical care, and is of questionable merit or benefit in the determination of medical need. In summary, the utilization process has increased employer costs and delayed injured employees’ timely return to work.
A positive action that workers can take in response to the limitations of the medical provider network and mismanagement by insurance companies and third-party adjusting agencies is the utilization of Labor Code §4600. This statute, as amended in 2004, allows workers to pre-designate a medical group or personal physician. The revised provision states that to be qualified to be pre-designated as a treating physician, an injured worker’s doctor or medical group must actually have served in the capacity of a personal physician or directed his/her medical treatment, and must retain records which include the employee’s medical history. In addition, the pre-designated physician and/or medical group must agree to be pre-designated. This right may expire as of December. 31, 2009.
Pre-designation (of a medical
provider) remains one of the
more valuable tools that you
as a Teamster have to ensure
higher-quality medical care.
The revised legislation requires additional effort on your behalf to obtain the benefit of pre-designation. Nevertheless, pre-designation remains one of the more valuable tools that you as a Teamster have to ensure higher-quality medical care, as it enables you to select a treater who is not subject to the economic whims of the employer and/or adjuster. However, it may prove to be challenging to find a physician who (1) has some understanding of the Workers’ Compensation system; (2) can provide quality medical care; (3) is a patient advocate; and (4) lives within the community. Nonetheless, this goal can be achieved in most cases.
Your treating physician’s role in providing evidence in a Workers’ Compensation case has likewise changed. No longer does the treater have the presumption of correctness as to what medical care you should receive, how long you should be off work, and how much disability you have sustained. The treater’s opinion now has no greater value than that of the forensic doctor who evaluates you on a one-time basis, and that doctor may or may not even have a practice in California or be licensed in California. Furthermore, if that reviewing physician has an active practice, it could be as remote as Montana, Florida or New Jersey.
No longer does the treater
have the presumption of
correctness as to what medical
care you should receive,
how long you should be off
work, and how much disability
you have sustained.
A significant factor in obtaining adequate medical care is the awareness of both you and your treating physician as to when the ACOEM Guidelines apply and have the presumption of correctness, and when they do not apply. These guidelines were established by the American College of Occupational and Environmental Medicine, and were intended to be just that — guidelines as to appropriate treatment in a given situation — not a final determination as to the adequacy and necessity of medical treatment. Unfortunately, legislators chose to use the ACOEM Guidelines as a determinant as to whether treatment recommended by your physician should be authorized or not. As a result, the ACOEM Guidelines are a direct attempt to limit your access to medical care. Also, as with the utilization review process, the ACOEM Guidelines have ultimately increased costs to the employer and delayed injured workers’ timely return to work in many cases.
The ACOEM Guidelines
are applicable only if
your condition is acute.
However, the ACOEM Guidelines are applicable only if your condition is acute. If your treating physician determinates that your condition is sub-acute or chronic, the guidelines do not apply, and they no longer have the presumption of correctness.
Therefore, it is important that you have a treating physician who is a patient advocate and receives reasonable compensation for the time involved in your case — not one who has direct economic ties with the employer. This reinforces the importance of your pre-designation of a medical provider group which is economically independent of the employer and has motivation to understand the law to ensure adequacy of patient care and treatment.
In conclusion, a continuing need exists to aggressively review the activity of third-party adjusting agencies and fraudulent employers to ensure the costs for other employers are kept down, benefits are timely provided, and injured workers are able to return to work on a timely basis. Treating doctors must perceive their role is that of a treater — not a vendor who has economic ties to employers via the medical provider network, a perception which opens the door to fraud, mismanagement and increased costs for the employer.
A continuing need exists to
aggressively review the activity
of third-party adjusting agencies
and fraudulent employers.
Pending Legislation
On the back page of this newsletter is a reprint of an editorial from the San Jose Mercury News by Attorney Gil Stein addressing inadequacies of the current Workers’ Compensation system and discussing SB 936, one of the proposed legislative offerings by Senate President Pro-Tem Don Perata. Attorney Stein’s editorial presents some of the pertinent reasons why this legislation should be passed.
Third-Party & Product Liability Cases
When an industrial injury is caused by the negligence of a third party (a party other than the employer) or the failure of a defective product (such as equipment malfunctioning, a chair or ladder breaking, etc.), the injured worker is entitled to bring a civil action. For injuries prior to 1/1/03, the time limitation for filing is within one (1) year of the date of injury. For injuries occurring on or after 1/1/03, the limitation period has been extended to two (2) years.
When an industrial injury is
caused by the negligence of
a third party, the injured worker
is entitled to bring a civil action.
If a claim is against certain governmental agencies, stricter time limitations may require the claim to be filed within six months or less after the date of injury.
When an employee receives money by settlement or court judgment in a third-party or product liability case, the employer may be entitled to full or partial reimbursement for Workers’ Compensation benefits paid for medical care, temporary disability, permanent disability and/or vocational rehabilitation.
Recovery in a third-party or product liability case depends on multiple factors. Each case must be evaluated on its own merits and its potential recovery. In some situations, because of liability limits, the benefits received from the third-party case may be completely offset by the reimbursement due the employer.
In some situations, because
of liability limits, the benefits
received from the third-party
case may be completely
offset by the reimbursement
due the employer.
Not every third-party case justifies the filing of a lawsuit. For such action to be considered, the following essential factors should be present:
In situations involving third-party and/or product liability cases, your attorney will work to maximize the compensation received.
Uninsured/Underinsured
Motorist Insurance
Uninsured motorist insurance coverage provides coverage for you and the other members of your household. You may obtain coverage up to the limits of the coverage on your current vehicle policy. This coverage protects you and your family members as a driver, passenger or pedestrian, either in your vehicle or any other vehicle. This coverage is necessary, as many accidents are created by uninsured and underinsured motorists.
Uninsured/underinsured motorist
insurance coverage is necessary,
as many accidents are
created by uninsured and
underinsured motorists.
This additional coverage will provide financial security and protection for you and your household members. It is relatively inexpensive, and all insurance companies licensed in California must sell it. The coverage includes medical bills (past and future), lost earnings (past and future), and pain and suffering.
While the concept of damages for pain and suffering is not covered in the California Workers’ Compensation system, it is provided for with automobile liability insurance.
If a reasonable settlement cannot be reached with your insurance company, binding arbitration is available. This forces your insurance company to act in “good faith”, as failure to do so could create an additional cause of action against it. Your recovery, as in Workers’ Compensation, is tax-free.
I wish you well.
Scott A. O’Mara
Michael D. Padilla
CALIFORNIA TEAMSTERS
LOCAL 542 NEWSLETTER®
is written by SCOTT A. O’MARA
and published periodically by:
THE LAW OFFICES OF
Scott A. O’Mara
1-800-LAW-1199 (1-800-529-1199)
O’Mara & Padilla
12770 High Bluff Dr. ? Ste. 200
San Diego, CA 92130
Tel.: 858-481-5454 Fax: 858-720-9797
O’Mara & Hampton
2370 5th Ave., San Diego, CA 92101
Tel.: 619-239-9885 Fax: 619-239-3523
4049 Brockton Ave., Riverside, CA 92501
Tel.: 951-276-1199 Fax: 951-276-1485
NOTICE
Making a false or fraudulent Workers’ Compensation claim is a felony subject to up to 5 years in prison or a fine of up to $50,000 or double the value of the fraud, whichever is greater, or by both imprisonment and fine.