9-24-12; Interesting WC Report from New Jersey

Synopsis: Interesting WC Report from New Jersey—How Many TPA’s have Undisclosed Fee-Sharing Agreements with Vendors? Does Yours?

Editor’s comment: Third-party administrators and some insurers may be quietly generating revenue through undisclosed “side agreements” that drive up public and private employers' workers compensation costs, a report by the New Jersey Office of the State Comptroller cautioned recently. These side agreements, or “undisclosed revenue-share agreements,” involve money paid to TPAs by companies they contract with, such as managed care providers and medical bill repricing services.

The money paid to the TPA is not generally disclosed to employers that contract with the TPA for claims management services. New Jersey's comptroller's office investigated the practice after a public entity reported the workers’ comp TPA it contracts with received undisclosed money back from a managed care and bill repricing vendor.

“Upon reviewing this TPA's contracts with other public entities, the Office of the State Comptroller or OSC found other examples of these undisclosed revenue-share agreements,” the OSC's Aug. 29 report states. “In fact, industry experts claim that this practice is pervasive among TPAs, indicating that numerous other public entities in New Jersey may have incurred these hidden costs.”

Workers’ Comp Claims Programs' cost-effectiveness may be masked or hidden in this fashion

Industry experts have criticized such undisclosed arrangements for compromising the ability of employers to determine whether their workers comp claims program is administered in a cost-effective manner, according to the OSC report. In our view, it is also possible for a TPA to greatly undercut other competitors if they are able to get all their “favored vendors” to kick back thousands of dollars. While the claims cost piece might be low, the unknowing employers later find out lots of WC costs may be wildly high.

“As these experts have pointed out, such arrangements create perverse incentives in that TPAs are in the precarious position of deciding whether to refer a case to a vendor with which the TPA has a revenue share agreement or to another vendor that has not entered into any such agreement but may be better suited to perform the service in question,” the report states. “As a result, there arises a potential conflict between minimizing client costs and maximizing the TPA's revenue.”

The OSC recommends employers should require disclosure any financial arrangements in contracts with their TPAs. They also should periodically review their programs and consider unbundling services received through TPAs.

We are aware some IME providers may charge additional amounts to locate the medical specialist and set the appointment—when such services are provided the company may not always openly disclose all costs when they invoice the exam.

We have also heard many rumors over the years about nurse case management firms and law firms that have fee-sharing agreements with TPA’s. In our view, this sort of arrangement is questionable for NCM companies and specifically unethical for lawyers. The problem is how to “catch” the company or firm that might engage in such a practice. It is hard to imagine either side will openly admit to it.

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9-4-12; Our Appellate Court Outlines the Right Way to Handle the “Full Moon.”

We don’t think you need to add this your personnel manual but that is clearly your call. In Selch v. Columbia Management, 2012 IL App (1st) 111434 (August 29, 2012), the Illinois Appellate Court affirmed the trial court’s dismissal of the claim over retaliatory discharge.

Plaintiff investment analyst was given a formal warning after "mooning" two superiors, but was later terminated upon the opinion of their chief executive officer who felt such behavior was egregious and harmful to the company and leadership. The trial court found Plaintiff violated the employee handbook rule and regulations by behaving in disruptive, unruly, and abusive manner, and thus violated his duties as employee.

The trial court found and the Appellate Court affirmed Plaintiff was justly terminated for cause. We assume claimant may want to avoid “moonlighting” in the future.

9-4-12; Fibromyalgia Raises Its Ugly and Ill-Defined Head in the Social Security Disability Setting--Please Assume This Will Be Coming Back to the Work Comp Arena Soon

Fibromyalgia is a disorder characterized by widespread musculoskeletal pain, fatigue, and tenderness in localized areas. As anyone in the defense industry will note, the problem with the definition/diagnosis is we all have varying levels of muscle pain, fatigue and tenderness; such conditions are a fact of life. The question is how one can “tell” or prove it is disabling when the only true way to measure it is in the mind of the person claiming to suffer from it.

We were saddened to hear the Social Security Administration issued a ruling paving the way for even more folks to get benefits for the hard-to-define-and-impossible-to-confirm diagnosis of fibromyalgia. In July 2012, our Social Security Administration published a ruling giving guidance to disability claims examiners and their administrative law judges on how to assess fibromyalgia cases. This ruling will almost certainly cause a spike in the number of fibromyalgia claimants who will bring disability claims for SSDI benefits. Please also note in the last six years, the number of claimants getting SSDI have gone up about one million from 5.5M to 6.5M. This growth is now choking taxpayers on the current and projected cost of this national benefit program.

How Does our Social Security Administration Now View Fibromyalgia?

When an SSA disability claims examiner received a case in which the only allegation or reason for disability was fibromyalgia, the outlook for an initial approval was poor. Disability examiners generally gave little weight to a claim of fibromyalgia unless another condition was involved, such as arthritis or degenerative disc disease. For example, if a claimant made a disability claim and the chief impairments were fibromyalgia and rheumatoid arthritis, or fibromyalgia and degenerative disc disease, the fibromyalgia allegation automatically carried more weight. This may be because fibromyalgia was seen as a logical and plausible extension to what are generally thought of as "more proven" impairments. As a result, unless a fibromyalgia diagnosis was made in conjunction with another diagnosis, especially one of a musculoskeletal nature, a disability claimant with just fibromyalgia had little chance of getting approved after the initial disability application.

Part of the problem has to do with the nature of fibromyalgia itself. Fibromyalgia may be considered an “impairment” whose symptoms are largely subjective. Because its symptoms and speculated causes vary from one person to the next, and because the medical profession continues to struggle with the diagnosis, SSA disability examiners were never sure how to classify such cases.

In many cases, when a primary care physician diagnoses fibromyalgia without a corroborative diagnosis by a specialist, to a disability examiner many feel the doctor gave the patient a label for lack of a better way to diagnose a patient's pain. Many times when treating doctors were unable to find or confirm any independent or verifiable cause for pain their patients claimed, they diagnosed "fibromyalgia" as the cause. As a result, a fibromyalgia diagnosis made by an orthopedist or rheumatologist is felt to be more credible to a disability examiner and strengthens a Social Security disability claim, in contrast to situations where the fibromyalgia diagnosis has been made by an internist or family doctor.

To even be considered for SSDI benefits, a claimant must have an impairment that has been established by medical evidence, including objective symptoms and lab tests – the asserted impairment cannot be established on the basis of symptoms alone. This is called having a "medically determinable impairment." Proving this was difficult with fibromyalgia since evidence of the illness was based on subjective reports of pain, fatigue, and tenderness.

New SSR ruling

In July 2012, the Social Security Administration issued a ruling explaining fibromyalgia will be found as a medically determinable impairment or MDI. The ruling directs SSA claims examiners and judges to rely on criteria issued by the American College of Rheumatology to determine whether an applicant has fibromyalgia, and thus has an MDI. There are two alternatives in this criteria that can be used in determining whether you have fibromyalgia; either one will suffice.

·         Evidence of chronic widespread pain, including pain in the back, neck, or chest

·         Evidence that shows your doctor ruled out other diseases that could cause the same symptoms (the symptoms of fibromyalgia often overlap with those of lupus, hypothyroidism, and multiple sclerosis), such as lab tests and examination notes, and

·         One of the following:

o   Tender points sites in at least 11 of 18 tender point areas of the body, with tender points occurring on both sides of the body and both above and below the waist. A list of the tender points can be viewed in the SSA's recent ruling on fibromyalgia.

o   Repeated manifestations of six or more fibromyalgia symptoms, signs, or conditions that often occur with fibromyalgia, particularly fatigue, non-restorative sleep, cognitive or memory problems (“fibro fog”), depression, anxiety, or irritable bowel syndrome (IBS).

If the SSA determines a claimant has fibromyalgia, according to the above criteria, the SSA evaluation will then start. The agency will investigate whether claimant is doing any substantial work, whether fibromyalgia is severe and has more than a minimal effect on the ability to work and whether the claimed impairment will last at least 12 months. If claimant passes these tests, the SSA will consider whether fibromyalgia alone or in conjunction with other impairments can be considered equivalent to any of the disabilities listed in its Blue Book of impairments (such as rheumatoid arthritis).

As fast as we saw the news of this SSA, we just saw a decision from the Federal District Court in Farrell v. Astrue, No. 11-3589 (August 28, 2012) where the federal judge reversed and remanded a denial of benefits finding the record failed to support the ALJ's denial of claimant's application for Social Security Disability benefits based on her anxiety, depression, fibromyalgia and carpel tunnel syndrome conditions.

Claimant presented new evidence supporting her claim she had a legitimate fibromyalgia condition, and Social Security Administration Appeals Council erred in ignoring the evidence when rejecting claimant's appeal. Moreover, a new hearing was required since the ALJ failed to analyze medical evidence from treating doctor that supported claimant's disability claim and failed to consider evidence indicating claimant could function only inconsistently in normal work environment. We expect thousands of such claims to follow across our country.

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