Preventing Joint Replacement Surgery in Workers' Compensation Claims

Joint replacement claims are becoming more frequent in workers’ compensation and proving compensability remains challenging. As the aging working population has expanded so has been the need for workers’ compensation to pay for the cost of replacing aging joints.

The cost for a new hip or knee can cost as much as $30,000 to $40,000. for the surgery alone. Additionally, workers’ compensation companies maybe responsible for the payment of temporary disability benefits to injured workers who are required to undergo surgery. Should the medial procedure fail, the insurance company could possibly be liable for the payment of total disability benefits to the injured worker.

Historically workers’ compensation programs were only liable for specific traumatic injuries. The original acts enacted in 1911 were amended the 1940’ and 1950’s to cover occupational conditions and cumulative stress disorders.

Whether a joint replacement is required because of a work related condition sometimes becomes a difficult proof issue. Pre-existing conditions. ie. natural degeneration, may be considered as the sole or contributing factor for the need for replacement. . Ruhe v. Industrial Commission of Arizona, 2010 WL 1253527 (Ariz. App. Div. I), Raymer v. Interstate Brands Company, 2009 WL 277539 (Ky. App.). A prior condition may be ruled out as a con-contributory factor. Anheuser-Busch Co. Inc., 156 N.H. 677, 940 A.2d 1147 (N.H. 2008).

Even if there is a traumatic injury, there may be a need for joint replacement that can be anticipated in the future. Stevens v. Citizens Memorial Healthcare Foundation, 244 S.W.3d 234 (Mo. Ct. App. 2008). In such situations future medical care should be considered at the time of the initial judgment.

Avoiding the need for joint replacement is the best solution altogether. While 400,000 people a year have joint replacement surgery, taking the preventive route of  caring for your joints can save both lot of money and a lot of discomfort. The NY Times has reported some prevention methods that look promising.  Workers’ compensation courts should consider these concepts and order recognized preventive programs when adjudicating claims where potential joint replacement maybe anticipated.

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The Grey Area of the CMS Statute of Limitations for a Recovery Action

CMS (Centers of Medicare and Medicaid Services) has expressed an opinion that there is no specific time limit in its ability to seek recovery. At a recent town hall tele-conference concerning the implementation of mandatory insurance company reporting under Section 111 of the Medicare, Medicaid & SCHIP Extension Act of 2007, 42 U.S.C. 139y(b)(8) a spokesperson for CMS indicated that the traditional 6 year limitations statute was not the applicable time limitation for its recovery actions efforts.

CMS has been increasing its effort to recover money paid erroneously to injured workers’ whose medical benefits should have been paid by their employers or workers’ compensation insurance carriers. In an effort to reduce the CMS “pay and chase” activity, Congress enacted mandatory reporting by insurance carriers so that CMS could enforce the MSP {Medicare Secondary Payer Act] and reduce cost shifting at earlier stages of the claim while enhancing its recovery activity.

“(Tracy) Meador: Okay. And is there any - do you have any type of statute of limitations? I was told in a seminar that there’s a six year statute of limitations. Is that correct? I hadn’t heard that before.

[CMS[ Barbara Wright: This could be another one of those instances where the answer is maybe yes, maybe no depending on what you want to tie to it. Generally, there is a statute of limitations in terms of how long you have to bring a litigation action. But there’s different rules in terms of when it runs from.

And generally, anything we have doesn’t start to run until we have knowledge of the claim. And certainly in a liability situation it’s not the date of accident that controls. What we’re looking at is when there was any settlement, judgment, award or other payment.

So we would have at least six years from that date.

(Tracy) Meador: And after six years then you would no longer pursue recovery?

[CMS] Barbara Wright: That’s not necessarily true. What I said is the six year statute of limitations is generally tied to when we can pursue action in court. But there are other recovery actions that we have that we can take as well.”

FTS-HHS HCFA  Moderator: John Albert, 12-15-09/12:00 pm CT, Confirmation #5650450, Page 77

Insurance Carrier Successful in Seeking Medical Reimbursement

An agreement to equally share the responsibility of medical expenses was held enforceable between insurance carriers after an eight year delay in seeking reimbursement.

A 1999 settlement of a workers' compensation contained a stipulation that two insurance carriers would share in the cost of medical expenses. One insurance company would manage the claimant's medical care and would seek reimbursement from the other insurance carrier. Eight years after the settlement the managing insurance carriers, New Jersey Manufacturers Insurance Company (NJM) sent a letter to the other carrier, Scibal, requesting reimbursement of 50% of the costs. By then, the costs had amounted to $570,629.03.

The Court rejected the application of the Doctrine of Equitable Estoppel as a defense because Scibal did not met the burden of proof. "Scibal must show that NJM had "engaged in conduct, either intentionally or under circumstances that induced reliance, and that [Scibal] acted or changed [its] position to [its] detriment." The Court also rejected the application of the Doctrine of Laches because the offending party, Scibal, was not prejudiced by the mere passage of time.

Kathleen Patry v. West Jersey Health Systems, NJ App Div, Dceided 12.0.2009

Medical Provider Claims Viable RICO Action Against Insurance Company in Petition to US Supreme Court

A Petition for Certiorari has been filed to the US Supreme Court in a RICO claim involving a medical provider who claims an insurance company committed fraud in processing the provider's bills for services. George Schroedinger, MD has filed a Petition to seek review of a Eight Circuit decision that over turned a favorable RICO action against United Healthcare of the Midwest, Inc.

The medical provider alleges that United's computer system "often inappropriately grouped and down coded, improperly suspended claims, unnecessarily requested plaintiffs claims that United continued to classify" the medical provider.

This Petition follows a Petition for Certiorari has been filed in Brown v. Cassens Transport Co., 546 F.3d 347 (6th Cir. Oct 23, 2008) (NO. 05-2089), following the rehearing and rehearing en banc denied (Jan 05, 2009). Brown is a landmark decision of immense national significance, the US Sixth Circuit Court of Appeals ruled that a RICO claim brought by injured workers against their employer, insurance carrier and employer medical expert could proceed. The Brown case is scheduled for a Supreme Court conference on September 29, 2009.

George Schoedinger, et al., Petitioner v. United Healthcare of the Midwest, Inc, No. 09-80 (July 16, 2009)

NJ Proposes Informal Process for Medical Bill Disputes

The number of disputes concerning the payment/reimbursement of medical bills have increased in workers’ compensation claims in New Jersey. The State has proposed converting the Informal Hearing procedure into a new Informal Process to hear such disputes and other matters previously consider as an Informal Hearing.

In a published article, “ Clearing the Workers’ Compensation Benefit Highway of Medical Expense Land Mines ,” the difficulties of the issue were previously identified. “Medical expenses in contested workers’ compensation cases are now a significant and troublesome issue resulting in uncertainty, delay and potential future liability. The recent NJ Supreme Court decision, University of Mass. Memorial Hospital v. Christodoulou, 180 N.J. 334 (2004) has left the question of how to adjudicate medical benefits that were conditionally paid or paid in error. Presently there is no exclusively defined procedure to determine the allocation, apportionment of primary responsibility for unauthorized medical expenses and reimbursement.” “The new benefit highway that embraces a new paradigm which extends to a new
safety net and the existence of these collateral programs require a modification of the
Workers’ Compensation Act and/or Rules to safeguard the interests of the parties, while
remaining consistent with the social remedial intent of the legislation.”

Previously legislation was proposed that would have given the NJ Division of Workers Compensation exclusive jurisdiction over medical bills. A-2501 That legislation was never enacted.

The proposed process would allow medical providers, or their representatives, to appear, without the need of an attorney, to informally discuss their disputes with the parties in an effort to seek a consent agreement for resolution. The proposed rule also repeals the need for registration of party representative.

The proposed rules were published on Monday, July 20, 2009 (41 N.J.R. 2768(a) and a public hearing is scheduled on Monday, August 17, 2009 from 9:00 to 12:00 noon NJ Department of Labor and Workforce Development, Trenton, NJ.

NCCI Reports Workers Compensation Claims Continue to Decline

A report issued by a national workers' compensation rating organization, NCCI Holdings, Inc (NCCI) disclosed that workers' compensation claims frequency is declining.

"Preliminary results indicate a decline of 4.0% for 2008. This is on the heels of a 2.6% drop in claim frequency in 2007 and it extends a trend that started in the 1990s. While the overall decline is widespread .... high-cost Permanent Total claims have emerged recently as a noticeable exception to this decline."

The key finding of their analysis were:

• Over the last five years, there were significant declines in total lost-time claims frequency for all industries, geographic regions, and employer sizes
• The number and frequency of Permanent Total claims have increased significantly over the last four years, with all major causes of injury contributing to the rise
• The rise in Permanent Total claims appears to be driven primarily by workers age 50 or under
  
• While claim frequency generally decreases as risk size increases, single-state risks in some classes have higher claim frequency at the higher payroll sizes than at lower payroll sizes

Court Sets Proof Standard for Medical Bill Review

A challenging aspect of a workers' compensation hearing is the determination of what is the reasonable value of medical services.  The Indiana Appellate Court has now established proof standards to implement legislative criteria. Washington Township Fire Department v. Beltway Surgery Center, No. 93A02-0811-EX-1006 (Ind. Ct. Appeals 2009)

The Indiana Act provides for the valuation of medical services by using a billing review service to calculate the pecuniary liability to a medical provider based on the 80th percentile standard. Ind. Code Section 22-3-3-52.  The Court determined that the employer has the burden of proof to establish excessive charges,

Ind. Code Section 22-3-3-52:

(a) A billing review service shall adhere to the following requirements to determine the pecuniary liability of an employer or an employer‟s insurance carrier for a specific service or product covered under worker‟s compensation: 

(1) The formation of a billing review standard, and any subsequent analysis or revision of the standard, must use data that is based on the medical service provider billing charges as submitted to the employer and the employer‟s insurance carrier from the same community. This subdivision does not apply when a unique or specialized service or product does not have sufficient comparative data to allow for a reasonable comparison. 

(2) Data used to determine pecuniary liability must be compiled on or before June 30 and December 31 of each year. 

(3) Billing review standards must be revised for prospective future payments of medical service provider bills to provide for payment of the charges at a rate not more than the charges made by eighty percent (80%) of the medical service providers during the prior six (6) months within the same community. The data used to perform the analysis and revision of the billing review standards may not be more than two (2) years old and must be periodically updated by a representative inflationary or deflationary factor. Reimbursement for these charges may not exceed the actual charge invoiced by the medical service provider. 7 

(4) The billing review standard shall include the billing charges of all hospitals in the applicable community for the service or product.