9-24-12; Dr. David Fletcher Rocks the House!!

Synopsis: As always, Dr. David Fletcher Rocks the House!!

Editor’s comment: All the way from the Menard Correctional Center to a crystal ball looking at the future of the State of Illinois, the 20th Annual Work Injury Conference held on September 12th at the Lodge in Oakbrook offered the first report card after year one of the 2011 Workers’ Comp reform. Co-sponsored by the Illinois State Medical Society and SafeWorks Illinois this amazing conference featured the leading voices of the Illinois WC system from the perspective of all interested stakeholders.

Dr. Preston Wolin, an orthopedic surgeon, started off the assessment of the 2011 WC reforms with three questions:

v  Is this WC system better or worse for the reforms of last year and 2005?

v  Are WC costs any lower or higher in our state?

v  Has the quality of medical care for injured workers gotten any better?

Dr. Wolin stated access to care for injured workers from qualified physicians has been one early casualty of the 2011 workers’ compensation reforms because of the drastic reduction in the medical fee schedule that is below Medicare levels for many services, most importantly, the E&M (evaluation and management) codes. Dr. Wolin feels this drastic reduction in reimbursement levels has driven many quality Illinois physicians from taking care of injured workers. Dr. Wolin said “The cuts are particularly affecting non-surgeons. A number of E & M codes are now paying less than Medicare rates. A workers’ comp patient clearly requires more physician work than Medicare. A significant number of providers are now unwilling to see WC patients,” warned Dr. Wolin, an orthopedic surgeon in Chicago. He further complained “Was this envisioned by the legislation’s authors?”

The consensus of the medical community at the conference gave the 2011 IL WC Reforms a “F” grade so far, especially in regards to the intrusion of Utilization Review (UR). Dr. Richard Kube cited the California experience where some observers felt medical costs actually went up with the implementation of utilization review or UR.

Veteran claimant attorney Dave Menchetti outlined the impact of reform so far on IL WC costs and claims. Since the reform was enacted, Menchetti cited the fact the National Council on Compensation Insurance or NCCI has recommended the State of Illinois lower WC premiums 9.1% since 9/1/11 (8.8% decrease 9/1/11; 3.5% increase 1/1/12; and 3.8% decrease 1/1/13 = 9.1% overall) in contrast to the State of Iowa where NCCI has recommended a 5% increase. Attorney Menchetti said a 9.1% reduction in premium costs for insured employers in Illinois (95% of all employers) should save $220 million in premium costs. Attorney Menchetti complained “But show me the money, my WC premium for my law practice employees has not gone down but has gone up.” Menchetti believes the creation of a State Funded Insurance product would force the insurance industry to pass this projected premium savings onto Illinois employers.

Illinois State Chamber President Doug Whitley was called upon to bring the business/employer’s perspective to the program. Mr. Whitley said “I am reminded of my minister who often begins the sermon by referencing the Good Book and the citations he wants the congregation to pay attention to. Today, I’m referencing the ‘Book of Lisa’….as delivered to us by the office of Attorney General Lisa Madigan in the form of a white paper released earlier this year proposing reforms to the state’s workers’ compensation system.” Mr. Whitley stated: “the Office of the Attorney General’s Recommendations to Reform the Workers’ Compensation System delivers an insightful and compelling analysis of the many difficulties that employers often find overwhelming.”

Doug Whitley outlined the goal of the State Chamber to enact additional reform. He said “[t]he Legislature must address and change the causation standard that is currently applied by the IWCC and the courts. Under current Illinois law, the work accident need not be the sole proximate cause or even a primary cause of the employee’s injury,” Mr. Whitley referred to the controversial IL Supreme Court rulings in Sisbro, Inc v. IWCC.

Reflecting on the Menard Correctional Center scandal that triggered the 2011 IL WC reforms, Mr. Whitley mused: ”When I think of “Menard” I think of “the State of Illinois”. Menard is just the short-hand reference. It is the symptom…No private sector company of any size would run its workers’ compensation program like the state of Illinois does!” His speech noted our state overspends about $140 million each year on supposedly injured state workers.

The IL State Chamber’s position is the state’s economic development opportunities are severely challenged by multiple comparative business attractiveness studies. “Expansion of economic opportunity, private sector capital investment and job growth is critical to the state’s future. Yet, many employers have lost confidence in Illinois. Loss of confidence is something that cannot be turned around swiftly. It will take years of proven actions and gains that demonstrate the state is genuinely interested in changing its reputation,” stated Whitley.

A year after reform, there has been no impact felt so far regarding PPPs (Preferred Provider Programs) which are still getting organized. Your editor predicted: “next year’s 21st Annual Work Injury Conference will focus on the impact of PPPs on the IL WC system.” Your editor opined PPPs will reduce the necessity for IMEs and outside UR in the future. Robert Maciorowski, a veteran respondent’s attorney cautioned IL employers may regret what they wish for because PPPs could turn out to employers’ worst nightmare if they are not set up right and with too large of a panel of physicians to choose from.

Conference director Dr. David Fletcher opined WC PPPs will only be effective if they reimburse providers at a higher rate than the fee schedule. Dr. Fletcher opined “PPPs should value and reward elite providers, who provide the skill set to understand the nature of the work environment to effectively treat the injured worker and communicate with all parties with the uniform goal of rapidly returning injured workers back to work,” stated Fletcher, who noted the medical community is taking a very cautious look at PPPs.

Veteran downstate Petitioner attorney Todd Strong noted: “Last fall’s conference was more focused on policy whereas this year conference was more focused on the implementation of the policy. From the petitioner's standpoint you will begin seeing a lot more litigation on picking apart the statute and going after UR, limitation of choice, and use of AMA Guides.”

One of the most important statistics that may be of interest to our readers is the unquestioned fact new litigated WC claims aren’t down a little, they are down a lot. As of August 1, 2012, there were about 26,000 new claims filed. This number is pointing to an all-time IL WC low of less than 45,000 new claims hitting our IWCC during this calendar year. Please remember in 2003, just nine years ago, there were over 65,000 new claims filed in this state. There are many reasons that may account for this trend—fewer jobs in our state, better benefit flow to minimize the need for litigation, more safety training of workers from HR and risk managers along with robotization and mechanization of some work tasks. Whatever it might be, we assure our readers this trend is real.

This article was researched and reported by Dr. Fletcher with minimal editing by your intrepid editor. We look forward to next year’s challenging and controversial 21st Annual Work Injury Conference, whenever and wherever it might be. Watch this space for news. We appreciate your thoughts and comments. Please do not hesitate to post them on our award-winning blog.

9-24-12; Our U.S Court of Appeals for the Seventh Circuit hits the “reset” button on their analysis of...

Case Synopsis: Our U.S Court of Appeals for the Seventh Circuit hits the “reset” button on their analysis of ADA’s requirements for a reasonable accommodation and by doing so, steps in line with the U.S. Supreme Court’s analysis of this crucial issue.

Editor’s Comment: From an employer’s perspective, this ruling imparts a more difficult burden upon companies who must now show a preference to provide a “reasonable accommodation” to a partially disabled employee seeking re-assignment. With this ruling, employers now have an infusion of affirmative-action woven into their ADA obligation for reasonable accommodation of disabled employees.

In EEOC v. United Airlines, Inc., (decided Sept. 7, 2012) our U.S. Court of Appeals for the Seventh Circuit considered whether an employee with medical restrictions must not only be considered for a reasonable accommodation, but whether that employee is entitled to preferential treatment over more qualified candidates for open positions. The case turns on the meaning of the word “reassignment” in the Act.  The ADA includes “reassignment to a vacant position” as a possible “reasonable accommodation” for disabled employees. 42 U.S.C.§ 12111(9). The EEOC contended “reassignment” under the ADA requires employers to appoint employees who are losing their current positions due to disability to a vacant position for which they are qualified. The EEOC argued the Supreme Court’s ruling in Barnett, 535 U.S. at 391 compels such a finding. However, prior Seventh Circuit rulings found that such placement was not mandatory, only that such candidates be equally considered for promotion.

In reversing their own prior Seventh Circuit rulings, the Court agreed with the EEOC, finding the Supreme Court’s analysis now compels a preferential placement of the disabled employee, even where more qualified candidates may be available for promotion. The Seventh Circuit relied heavily on theBarnett Supreme Court decision in reaching this conclusion, noting the Supreme Court found “preferences will sometimes prove necessary to achieve the Act’s basic equal  opportunity goal”.

We would be remiss if we did not point out however, the ruling by the Supreme Court in Barnett actually found for the employer, upholding the validity of their seniority system for promotions (disabled employee loses his position to a more senior employee per the seniority policy). Here, the Supreme Court held an employer is not required to give a disabled employee super-seniority to retain their job when a more senior employee invokes entitlement pursuant the employer’s seniority program.

So, what’s the difference? When is an employer supposed to give preferential treatment to the disabled and when are they permitted to adhere to their promotion policy?

As usual, the devil is in the details. The Seventh Circuit explained a promotion policy based on qualifications alone is for the employer’s benefit. Such a policy does not trump the preference to be afforded the disabled candidate for promotion (as long as the disabled candidate is minimally qualified). However, a seniority system of promotion involves the “property-rights” of the employee, whereby the most senior employee is already entitled to a particular position due to years of service. This was found to override any preference to be afforded the employee in need of accommodation.

In our view, this is a distinction without a difference, for the most part. Perhaps a seniority policy is more easily defined and measured for each employee, so there is no dispute as to who deserves the promotion (you either started before the next guy or you didn’t, regardless if he is disabled). However, it is our impression a superior worker should be recognized for his or her accomplishments and if better qualified, should be given the promotion pursuant good old fashion merit, regardless of whether another employee may or may not have a disability. To the better qualified candidate, their lost promotion is no less painful, simply because they didn’t have a vaguely-defined “property right” to the job through a seniority program.

At any rate, moving forward, U.S. employers must be sensitive to this new layer of consideration and their obligation to place employees with disabilities in available positions, even where a better qualified candidate is available. Not doing so may be perceived as a violation of the ADA.

This article was researched and written by John P. Campbell, Jr., J.D. Please send your thoughts and comments to John at jcampbell@keefe-law.com.

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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