11-7-11; MEDICARE & SMART ACT UPDATE—As we have been reporting, changes to the Medicare Secondary Payer Statute which should assist in resolving Medicare issues continue to wind through the...

As previously reported starting in March of this year, the Strengthening Medicare and Repaying Taxpayers Act of 2011 (SMART Act) (H.R. 1063) was introduced in the U.S. House of Representatives and has now moved into the U.S. Senate (S. 1718).  

U.S. Senators Ron Wyden (D-Ore.) and Rob Portman (R-Ohio) are joining in a bipartisan effort which includes U.S. Senators Ben Nelson (D-Neb.) and Richard Burr (R-N.C.) to make the Medicare Secondary Payer (MSP) Program more efficient and cost effective to taxpayers and appear to be working off a platform similar to the House proposal. The Strengthening Medicare and Repaying Taxpayers (SMART) Act will hopefully clear a lot of the confusion and speed up the rate by which Medicare and its beneficiaries provide information to applicable parties and it should also speed up the rate in which the Feds are reimbursed for costs that should be borne by another party. The easier repayment process is not just good for Medicare and taxpayers, but also for the beneficiary who should be able to settle their claim more quickly.

Under the MSP program, if a Medicare beneficiary is injured by a third party and a settlement is pursued as a result of that injury, the third party is responsible for paying for the individual’s medical expenses—and as most of us who have been involved with a case in which Medicare arguably has an interest, the process moves slower than molasses in a winter colder than a well-digger’s ankles.

Under current law and procedure, Medicare does not have a way to disclose the MSP amount before settlement, creating unnecessary uncertainty which makes it both difficult and stressful to determine settlement of cases—and also leaves many settlements “open” due to the lack of certainty in being able to address the issues. As a result, unrelated payments may be included, Medicare may spend more money pursuing an MSP payment than they actually end up receiving in payment, sensitive personal information release is necessary causing privacy concerns and since there is no clear statute of limitations on all MSP claims—there is no finality due to the uncertainty.

The SMART Act proposes major amendments to the Medicare Secondary Payer Statute (MSP) including generally

• Require CMS to respond  to requests  for conditional payment information within set timelines (prior to settlement)—and to provide actual amounts
• Provide MSP appeal rights
• Set MSP threshold exemptions to ensure they are not pursuing claims which are not cost-effective
• Establish alternative methods of to identify individuals to protect sensitive personal information
• Set MSP statute of limitations (proposed as three years for most claims)

We will continue to keep you advised of updates as they occur and as previously noted, Shawn R. Biery has been granted the Medicare Set-aside Consultant Certified (MSCC) credential. Please feel free to contact Shawn R. Biery, J.D., M.S.S.C. at sbiery@keefe-law.com with any questions regarding Medicare Set-Aside issues.

11-7-11; Does UR-Peer Review for an IL WC claim have to occur in Illinois? Will such determinations be more “effective” in this state?

We had a reader ask this question and want you to get our thoughts on the topic and send us yours. Utilization review is a medical cost control concept brought to the IL WC system as part of the 2005-2006 Amendments to our WC Act. In our view, at the time of those Amendments, the claimant bar and claimant-friendly hearing officers didn’t truly know what UR was or how it works. When they found out what it was and how it worked, they immediately tried to create “games” or devices to counter its value and impact.

On the other side of the trench, please remember most doctors and surgeons hate, abhor, despise and dislike UR. In our view, lots of docs think they are gods or at least demi-gods and can never be questioned by other mere mortals. Kidding aside, we always wonder how doctors and surgeons can get along with UR on the group health side of their practices but complain so stridently if there is any limitation on their scalpels on the WC side.

Either way, last week at a major confab, a claimant attorney of some note and a defense attorney participated in a panel discussion. Our reader indicated the plaintiff attorney on the panel said the UR rules in this state mandate a Peer Reviewer who is looking at proposed WC care in this state needs to “be in IL.”  On a preliminary note, we have advised lots and lots of defense clients it is a treacherous path to follow if you are going to listen to and then closely follow controversial legal advice from claimant attorneys whose appropriate goals are to maximize recovery for their clients while also maximizing payout from your claim reserves.

For those of you have attended our presentations or webinars about the changes to the IL WC that were signed off by Governor Quinn on June 28, 2011 at 10am, you may note we didn’t say UR rules require the UR doctors be from, in, over or near Illinois—in our view, they only have to be licensed doctors who are URAC-compliant. They are not required to hover over Illinois in an ultralight when they sign their Peer Review reports to somehow impart efficacy to their work.

Our reader went to the top-notch IWCC website which contains the House Bill 1698 reforms, i.e., http://www.iwcc.illinois.gov/act080811.pdf. She astutely noted Page 74 contains Section 8.7, the UR rules. She was nice enough to copy and paste the provisions that addressed the issue.

(5) The medical professional responsible for review in the final stage of utilization review or appeal must be available in this State for interview or deposition; or must be available for deposition by telephone, videoconference, or other remote electronic means. A medical professional who works or resides in this State or outside of this State may comply with this requirement by making himself or herself available for an interview or deposition in person or by making himself or herself available by telephone, video conference, or other remote electronic means. The remote interview or deposition shall be conducted in a fair, open, and cost-effective manner. The expense of interview and the deposition method shall be paid by the employer. The deponent shall be in the presence of the officer administering the oath and recording the deposition, unless otherwise agreed by the parties.

Neither our reader nor any of the defense attorneys at our firm see where it says the Peer Reviewer has to reside in IL or perform the review in IL nor does it indicate in which state the Peer Reviewer has to hold their license to practice medicine. It isn’t in the provision above or anywhere else in the WC Act or Rules that we can find. If any of you are aware of a provision as to the requisite situs of an Illinois WC UR-Peer Review, please send it along.

Basically, she wanted to see if the defense attorneys at this firm or any of our other readers have an opinion on

ü  Whether the initial Peer Reviewer and the Appeal Peer Reviewer must have an IL license to practice medicine AND reside in IL (if indeed, an initial denial determination is made and the UR denial is appealed);

ü  She also asked if we feel or our readers feel using a UR-Peer Reviewer with an IL license and/or residing in IL would make UR more legally or technically effective?

ü  Was this claimant attorney handing her a “pig in a poke?” For those of you unfamiliar with this term, we mean was he trying to get the audience members to accept a questionable idea or plan without a full understanding of its basis.

As veteran defense observers it remains our view, the Plaintiff/Petitioner WC bar hates UR. What they hate the most about the concept is its finality and the fact the medical or surgical decision-making process is being taken from their control.

We assure all our readers as licensed lawyers and adjunct professors of workers’ compensation law, there is no requirement in our law indicating UR analysis has to be in IL or the nurses and docs have to be residents of this state. The nurses and docs providing peer-review have to follow appropriate medical guidelines and national and international medical research. We are sure they all do—it doesn’t make any difference whether they do it in Tennessee, California or Oklahoma. The section of the IL WC Act cited above mandates any question of a peer reviewer will result in a deposition being conducted at the IL employer’s cost and the doc has to be available via “remote electronic means.” Our impression of the UR doc-location question is the legislature must have contemplated out of state UR physicians or they would not have bothered to insert all of the provisions for phone deps or other electronic means.

As to whether it is more “effective” for a UR-Peer Reviewer to be in or from or over IL when they reach their determination, we assert if the UR provider certifies care, it won’t make any difference if they are in IL. If the UR-Peer Review provider non-certifies care, the claimant bar and a few of our pro-Plaintiff hearing officers may blame it on whatever they can scramble up to attack the decision. One of those multifarious attacks will be the fact the Peer Reviewer might not be in IL, making their determinations somehow suspect. We are sure the claimant bar also may similarly assert UR-Peer Review reports they disagree with have to be on purple paper with pixie dust on it because if the reports aren’t on such paper, they may not be quite as “effective.”

We consider it a completely “IL WC” phenomenon that anyone cares the slightest bit whether the UR analysis is conducted in Paris, IL or Paris, France. In our view, it is “crazy-making” of the highest sort. We consider this an unneeded diversion to get you to find new things to worry about in managing IL WC claims. Please remember this sort of “crazy-making” came from the same minds that brought us:

o   Vocational rehabilitation somehow turned into a medical benefit, thereby mystically stripping Illinois employers of the right to defend themselves in the most expensive of IL WC claims—this one hasn’t reached the Appellate Court yet and we hope it doesn’t;

o   The creation of “Odd-lot” or what we call “Lazy-Lot” total and permanent disability awards from a ruling named E.R. Moore v. Commission—the words “odd-lot” don’t appear in any Section of the IL WC Act or Rules;

o   A witness fee to attend a hearing in response to a WC subpoena that magically was transformed into an unlimited copying requirement for medical records in Clayton v. Ingalls Memorial Hospital;

o   “Maximum medical improvement” as a legal concept in Mechanical Devices v. IWCC that could mysteriously require TTD to be paid even after the injured worker returned to light or full work—for legal scholars, the words “maximum medical improvement” don’t appear in any section of the IL WC Act or Rules.

We assure everyone if the situs of the UR-Peer Review becomes an issue and our shiny-new Arbitrators and Commissioners want it to be, it might be. If they don’t want UR to be effective, they will list it as another reason to ignore UR. As to every aspect of the 2011 Amendments to the IL WC Act, it is truly impossible to tell what the “professional, transparent and fair” hearing officers will do. We hope they closely adhere to the letter of the law. If they follow the law as written, it shouldn’t make any difference where UR-Peer Reviews take place. If they are going to make up new and unprecedented rules, as we have been advised this claimant attorney might be doing, we will all have to adjust.

We appreciate your thoughts and comments. We thank our reader for her research and writing on this important topic.

11-7-11; We are happy to see the most liberal of Illinois Appellate Districts issue a ruling that closely follows the law and provides Illinois businesses needed protection...

All staffing, logistics and employee leasing companies in Illinois should carefully review this important ruling—we are sure these facts will repeat themselves in the months and years to come. This year, Illinois amended and clarified parts of our Workers’ Compensation Act but arguably it is still not the clearest piece of legislation. Attorneys continually attempt to dispute the plain language of the act, specifically, Section 5(a) providing an exclusive remedy to the injured employee for work-related injuries that do not involve third-party tortfeasors.

In Mason v. John Boos & Company, Plaintiff worked as a temporary worker and sustained amputation of the thumb and most of the four fingers on the right hand in a machine allegedly lacking safety features. Such an undisputed injury has a high workers’ comp cost but an explosive third-party exposure. Petitioner entered into a global WC settlement agreement and signed a release of all claims against Defendants. Plaintiff later filed a negligence action against both the loaning and borrowing employers alleging potentially millions in damages unavailable in the workers’ compensation setting.

The Circuit Court and now the Fifth District barred the claim based on the fact Plaintiff received a workers’ compensation settlement which was the exclusive remedy under Section 5(a) providing in pertinent part no common law or statutory right to recover damages from the employer other than the compensation under the Act.

The primary rule of statutory construction is to ascertain and give effect to the legislature's intent. Here, the purpose of the Workers' Compensation Act is to provide a speedy recovery without proof of fault for accidental injuries. Approximately 90% of all Illinois workers’ compensation claims are settled at or during arbitration. Again, if the case is likely to settle anyway, a speedy settlement resolution often is best for both sides, the injured worker gets a fast settlement, in this case more than $90,000, and the employer prevents a common law action.

Second, and more important the Circuit Court and the Fifth District on appeal barred the claim because the terms of settlement contract released all claims. We stress the importance of attaching similar terms or riders into all settlement contracts as follows:

In full, final and complete settlement of any and all claims of any nature whatsoever, including but not limited to past, present, and future time losses, medical, surgical and hospital expenses and for any and all permanent disability of whatever nature, allegedly arising out of an accident on or about the “specific date of loss” and all known and unknown injuries and sequelae which allegedly resulted or will result from said accident Petitioner agrees that this settlement shall include all other claims of accident or injury, either by a specific accident or repetitive trauma, for all dates of work by Petitioner for Respondent not limited to the above date of loss.

Plaintiff alleged Defendants allowed him to operate a machine without adequate training, allowed him to operate a machine without a "kill" switch, and allowed him to operate a machine without safety guards and if all true would likely result in an award for pain and suffering, lifelong medical bills, and permanent disability. Again, the fact the employer settled all potential claims quickly and with specific protective language in the contract probably prevented a multi-million dollar jury claim or verdict. Please note the aforementioned “lifesaving” settlement terminology is used in all KC&A settlement contracts to protect the best interests of our clients. We do caution some Arbitrators are reluctant to approve contracts for “all other claims of accident.”

Third, Plaintiff attempted to dispute the exclusive remedy due to the temporary staffing agency which hired him failing to register as an employee leasing company.  Our analysis of the applicable Illinois Leasing Act rule confirms the employee leasing company must:

·         Register with the Illinois Department of Insurance;

·         Secure coverage with the borrowing employee under a master policy;

·         Indicate the policy provides coverage for leased employees;

·         Limit the named insured's employees leased to the clients;

·         Indicate the experience of employees leased to client(s) will be separately maintained by the Employee Leasing Company;

·         Maintain accounting and employment records relating to all employee leasing arrangements for minimum of four calendar years;

·         Maintain addresses of each office it maintains at the principal place of business;

·         Separately maintain the experience of employees leased to clients;

·         Maintain sufficient data by client to permit calculation of experience rating modification for each client;

·         Provide modification or payroll and loss information to a client upon request;

·         Notify its insurer any terminated employee leasing arrangement within 30 days before termination or upon termination.

Under the Illinois Leasing Act the insurer is required to:

·         Provide proof of coverage to the employee leasing company and its clients within 30 days of coverage being effected or changed;

·         Audit policies within 90 days of effective date;

·         Conduct additional audits thereafter;

·         Compare a client's experience rating modification to the employee leasing company's experience rating modification at the inception of the employee leasing arrangement;

·         Report separate client data to NCCI after termination of Employee Leasing arrangement;

·         Report subsequent or corrected client data to NCCI for the continuance of experience rating.

The Fifth District still barred the common law claim because failure to register as an employee leasing company did not negate exclusivity of remedy. The purpose of the Leasing Act is to ensure an employer properly obtains insurance coverage and the only remedy for a violation to register is to deny or revoke registration. Therefore, in the event a company fails to register, that company is not eligible to receive workers' compensation and employers' liability insurance policies and has no bearing on the exclusivity of the Act.

We are happy to see the Fifth District follow the both the letter and spirit of the law. However, the fact this case is one of first impression increases the likelihood of further appeal. We will keep a close watch on further appeals or developments. Please contact our firm with any questions or concerns regarding settlement language and with strategy for speedy resolution. Full disclosure, we want our readers to know we represent John Boos & Company for some of their claims but not the one in question—it is not our intention to affect the outcome of this litigation in any way; we are simply reporting the facts as we understand them.

This article was researched and written by Nathan S. Bernard, J.D. who can be reached at nbernard@keefe-law.com. Please send your thoughts and comments or post them on our award-winning blog.