The Workers' Compensation Daily News for May 19, 2012
Comp Physicians Say Fees Declining Nationwide
Fri, 18 May 2012 06:41:41 - Pacific Time
An article in Physicians News Digest says that workers compensation has long been regarded by many medical providers as being the one of the best sources of reimbursement. Historically, workers compensation claims were reimbursed at 1.5 to 2.5 times more than HMOs, Medicare and other commercial health plans. The higher reimbursement sometimes, but not always, resulted in higher profit margins..
But, that is slowly changing. While the workers compensation reimbursement is generally good, it is not as good as it used to be. All areas of medicine are susceptible to cost cutting. Workers compensation reimbursement is no exception.
Illinois recently enacted legislation which reduced the workers compensation fee schedule by approximately 20%. Other states have made reductions to their workers compensation fee schedules or are in the process of making reductions. As part of its administrative regulatory process, Tennessee is currently engaged in its notice and comment period for proposed reductions to workers compensation reimbursement. And in February of this year, Florida’s House of Representatives passed a bill to close what it termed a loophole in the workers compensation system for a physician’s sale of repackaged drugs, in an effort to control workers compensation reimbursement to physicians. Delaware also reduced physician reimbursement by migrating from a "usual, customary, and reasonable" approach to a fixed fee schedule.
Most states attempt to limit workers compensation costs through provider fee schedules. Many of these fee schedules reimburse at a multiple of Medicare, even though Medicare-based fee schedules have no relationship to the cost or value of the medical care provided.
California, Maryland, Pennsylvania, and Tennessee are just a few of the many states that tie their workers compensation fee schedule to Medicare. When reimbursement is pegged to fairly current Medicare reimbursement rates, there will always be uncertainty looming, given the current fragility of the Medicare program relative to the Balanced Budget Act.
For instance, Texas’ workers compensation rules require that "[w]henever a component of the Medicare program is revised, use of the revised component shall be required for compliance with Division rules, decisions, and orders for professional services rendered on or after the effective date. . ."
Other states use historic Medicare rates in arriving at a fee schedule. Pennsylvania’s workers compensation fee schedule is at 113% of 1994 Medicare, adjusted annually by the percentage change in the statewide average weekly wage." Read More...
Study Says Inspection Improve Workplace Safety Without High Cost
Fri, 18 May 2012 06:26:37 - Pacific Time
Do government regulations in the workplace protect employees and consumers, or does the high cost of compliance merely drive companies to layoffs and bankruptcy? Proponents of each argument make their cases based on passion and little else since the available studies on the issue have been biased in one way or another. Now, a new study designed to produce more objective results has shown that random safety inspections do indeed improve safety without leading to burdensome expense or job loss. Some scientists say the randomized, controlled study design could be a model for testing whether proposed future regulations are likely to be effective.
According to the story in Science Magazine, researchers looked for workplaces that had been inspected between 1996 and 2006 for which they could find similar companies that were eligible for inspection but hadn't yet been selected. They ended up with 409 matched pairs of inspected and uninspected workplaces. The researchers used workers' compensation claims over the period ranging from 4 years before through 4 years after the inspection to determine illness and injury rates. They also examined injuries during the same block of time for the companies that weren't inspected. Companies included in the study produced "fabricated metal" (doors, car parts, aerospace products), wood, or food products.
Companies undergoing random inspections saw workplace injuries decline by about 9% in the 4 years following the date of inspection compared with injury reports during the same time period in firms that were not inspected. The cost of the injuries reported "including medical treatment and missed work" fell by 26%. Using information from financial data provider Standard and Poor's, the investigators found that the inspections had no effect on employment, total earnings, sales, or the survival of the company.
The study concluded "that randomized inspections work as they're meant to, improving safety while not undermining the company's ability to do business." Read More...
DWC Proposes Administrative Penalties for WCIS Violations
Thu, 17 May 2012 07:29:15 - Pacific Time
The Division of Workers' Compensation (DWC) has drafted regulations providing for the assessment of administrative penalties for Workers’ Compensation Information System (WCIS) reporting violations and posted them to the online forum where members of the public may review and comment on the proposal.
Since March 1, 2000, claims administrators have been required to submit to DWC, via Electronic Data Interchange, comprehensive information on occupational injuries and illness. Senate Bill 826, which was signed into law by the Gov. Brown on Oct. 7, 2011, amends Labor Code section 138.6 by authorizing DWC to assess administrative penalties, up to $5,000 per year for each claims administrator, for a failure to report claim information or the failure to report such information accurately to WCIS.
The proposed regulations provide:
- A schedule of penalties capped at $5,000 against a claims administrator in any given year. The schedule provides for no more than $100 per violation for violations where a mandatory report is not submitted or not accepted, and no more than $50 per violation for violations involving specific errors or late filings.
- Threshold rates of violations that are excluded from the calculation of penalty assessments.
- A requirement for DWC to publish an annual report on the compliance of claims administrators.
The proposed regulations are sections 9705.1 through 9705.2 of the administrative director’s rules in Title 8 of the California Code of Regulations.
The forum can be found on the WCIS public forum Web page.
Comments will be accepted on the forum until 5 p.m. on Wednesday, May 31, 2012. Please feel free to participate in this important process. Read More...
Paint Company Fined $158K for Closed Space Fatality
Thu, 17 May 2012 07:29:09 - Pacific Time
Cal/OSHA issued fines and penalties in the amount of $158,040 against Vista Paint Corporation a large paint manufacturer and retailing company. One man died and another was critically injured after they were overcome by chemical paint remover fumes while working in a storage tank at their Fullerton California headquarters and production facility located at 2020 Orangethorpe Avenue. Vista operates 48 retail stores in the region. The enforcement action is part of Cal/OSHA's campaign to stamp out confined-space deaths.
A co-worker found the two men unconscious about 2 p.m. inside the large storage vessel, which they had been cleaning with JASCO Premium Paint and Epoxy Remover, which contains 60-100% Methylene Chloride by volume. The two were taken to a hospital, where Roberto Magdariago, 62, of Los Angeles was pronounced dead. The fumes were confined to the area where the men were working, and no other employees reported symptoms.
Cal/OSHA says employees were so ignorant about confined-space dangers that when they saw the two coworkers sitting in a tank filled with methylene chloride, they assumed they were "taking a break."
The incident occurred last November when a worker was assigned to clean a 3,000-gallon "let down" tank, a job that had been started several days earlier by another crew. The worker, assigned as a "filler," started cleaning the tank but was overcome. A second worker noticed that the man was stricken and entered the tank to help him, a common confined-space mistake.
About one half-hour later, a third employee walked by the tank and saw the two men "sitting/lying down" in the tank, but "presumed they were taking a break." Ten minutes later he noticed that they were in the same position, "but thought they were asleep." Eventually workers notified a supervisor, who called emergency services and summoned the plant manager.
Investigators found a five-gallon container of paint stripper in the tank, containing at least 60% methylene chloride. Investigators also discovered a half-face air-purifying respirator in the tank, which neither worker had worn, as well as an exhaust hose, which had been "tied off at the 4-foot level of the 9-foot-deep tank."
The Division cited the employer for serious violations of General Industry Safety Orders §5157, the permit-required confined-space standard and GISO §5202, covering respiratory protection for methylene chloride. Total proposed penalties are $159,040.
OSHA records show only one prior incident involving Vista Paint in the last five years. In May 2011, the company resolved a 2008 accident in Palm Desert, CA, by paying a $450 fine for three "other than serious" violations: one regarding its illness and injury plan and one regarding truck operations. OSHA originally issued four citations and a $600 fine in that case. Read More...
Dispute Between Comp Carrier and Insured Not Subject to Arbitration
Wed, 16 May 2012 07:58:37 - Pacific Time
DMS Services, LLC, Diversified Maintenance Services, Inc., DMS Facility Services, LLC and DMS Facility Services, Inc. (collectively DMS) is in the business of providing commercial janitorial services. From 2005 through 2011 DMS annually purchased workers’ compensation insurance policies from Zurich Insurance. Those policies did not contain an arbitration clause. However, Zurich Insurance also required DMS to sign annual deductible agreements, which purported to supersede any deductible endorsement to the workers’ compensation policies. Those ancillary agreements contained an arbitration provision mandating any dispute arising out of the interpretation, performance or alleged breach of the policy agreement to be settled by binding arbitration in Illinois administered by the American Arbitration Association.
During the same period DMS annually contracted with Zurich Services Corporation (ZSC) to act as a third party administrator for workers’ compensation claims filed under the Zurich Insurance policies. Among other things, ZSC was responsible for reviewing claims and loss reports; investigating all qualified claims; creating and maintaining claim files; and adjusting, settling or defending claims. None of DMS’s agreements with ZSC contained an arbitration clause.
Zurich Insurance initiated arbitration proceedings against DMS before the American Arbitration Association (the AAA arbitration) pursuant to the arbitration provision in its deductible agreements with DMS. Zurich sought more than $3.5 million in payment from DMS for premiums and reimbursement of workers’ compensation insurance claim deductibles. DMS filed a civil action in Superior Court against ZSC, asserting claims for breach of contract and other theories.
ZSC and Zurich Insurance filed a joint motion to compel arbitration of the Superior Court civil action or, in the alternative, to stay it pending the outcome of the AAA arbitration between DMS and Zurich Insurance. ZSC argued arbitration was required under the deductible agreement because the action against it arose out of the interpretation of the insurance agreements, including the deductible agreements containing the arbitration provision.
The trial court granted ZSC and Zurich Insurance’s motion to compel arbitration. As to ZSC, the court found, although ZSC was not a party to the arbitration provision in the deductible agreements, and DMS was not suing under those agreements, DMS’s claims were nonetheless "inextricably intertwined" with the deductible agreements DMS had signed. Accordingly, under the doctrine of equitable estoppel, the court concluded ZSC could compel arbitration under the deductible agreements even though it was not a signatory to those agreements.
The Court of Appeal in the published opinion of DMS Services Inc v. The Superior Court of Los Angeles County and Zurich Services Corp. reversed the arbitration order. The trial court erred in compelling arbitration under the doctrine of equitable estoppel because DMS’s claims against ZSC are not founded in, or inextricably intertwined with, the deductible agreement containing the arbitration clause. Read More...
Pebble Beach Couple Plead Guilty
Wed, 16 May 2012 07:58:10 - Pacific Time
Monterey County District Attorney Dean D. Flippo announced that Lonnieta McCallum, 50, and Kevin McCallum, 57, both of Pebble Beach, entered guilty pleas on May 14.
According to the article in the Californian, Lonnieta McCallum pled to one felony count of acting with intent to evade tax in violation of Unemployment Insurance Code section 2117.5 and one misdemeanor count of failure to secure workers’ compensation insurance in violation of Labor Code section 3700.5.
Kevin McCallum pled to two felonies, one count of acting with intent to evade tax in violation of Unemployment Insurance Code section 2117.5 and one count of failure to register as an employer in violation of Unemployment Insurance Code section 2109.
The McCallums own the Sudz Cyber Laundry located in Pacific Grove.
The defendants are scheduled to be sentenced by Judge Marla O. Anderson on Sept. 10.
In August, 2009, prior employees of the Sudz contacted investigators of the District Attorney’s Workers’ Compensation Unit and reported that the defendants did not have workers’ compensation insurance, were not registered with the Employment Development Department [EDD] and were not paying employee state taxes.
The complainants told investigators that they did not receive a W-2 for 2008.
District Attorney Investigator Chuck Hahn investigated the case and discovered the defendants were classifying employees as independent contractors to avoid the tax and workers’ compensation insurance expenses.
EDD Investigator Debbie Misquez determined the defendants failed to register with EDD, file payroll reports or pay employee payroll taxes for the fourth quarter, 2008 through the second quarter, 2009 and did not report all employees for the third and fourth quarters, 2009. Read More...
Level 1 Trauma Centers Reduce Risk of Death and Disability
Tue, 15 May 2012 06:15:02 - Pacific Time
Level I trauma centers provide the most comprehensive care for traumatic injuries and have to meet certain requirements -- like having a specific number of surgeons and other specialists on duty 24 hours a day. According to the article in Reuters Health, studies have found that for severely injured people, getting care at a Level I trauma center can cut the risk of dying by 25 percent. But there'd been some question about whether that drop in death rates might mean more people are surviving with severe disabilities, according to Belinda J. Gabbe, the lead researcher on the study from Monash University in Melbourne.
"Our study shows that care at specialized trauma centers improves the chances of a better functional outcome -- that is, less disability, which really strengthens the evidence for organized trauma systems," Gabbe told Reuters Health in an email.
The study, reported in the Annals of Surgery, found that of nearly 5,000 seriously injured patients treated in the state of Victoria's trauma system, those seen at a Level I center tended to be less severely disabled one year later. The sample included people who'd been in a car or motorcycle accident or had suffered a fall with head, chest or spinal cord injuries.
Overall, 35 percent of patients had a "good" recovery -- either back to their healthy selves or with some disruption to their daily activities and relationships. The odds of a better recovery were 22 percent higher for patients treated at Level I centers versus similar patients at other hospitals. Overall, patients' outlook also got better over time -- with generally lower levels of disability among patients treated in 2008-2009 versus 2006-2007.
In the U.S., about 45 million people live more than an hour away from a Level I or Level II trauma center (by ambulance or helicopter), according to the Centers for Disease Control and Prevention. Like Victoria, where this study was done, some U.S. states have statewide trauma systems that aim to get the right patients to the right hospital as quickly as possible.
"There are studies from San Diego, Los Angeles, Maryland and Milwaukee showing similar results" as the current one, said Dr. Raul Coimbra, who heads the division of trauma, surgical critical care and burns at the University of California, San Diego Health System.
So the new findings are "not novel," according to Coimbra, who was not involved in the study. Read More...
Study Finds Questionable Billing Practices in 4 Percent of American Pharmacies
Tue, 15 May 2012 06:08:04 - Pacific Time
Reuters Health reports that a U.S. government examination found questionable billing practices for Medicare prescription drug coverage at 4 percent of American pharmacies, particularly independent retail drugstores. The report was issued by the U.S. Health and Human Services' Office of Inspector General, which has previously found limited safeguards to prevent fraud and abuse in the Medicare drug program for seniors, known as Medicare Part D.
The Office of Inspector General (OIG) examined billing records from 2009, the most recent full-year data was available. Government inspectors used eight measures to review the pharmacies, including average amount billed per beneficiary, average amount billed per prescriber and percentage of prescriptions for painkillers and other controlled substances that have the potential to be abused.
In total, 2,637 retail pharmacies were found to have exceeded the threshold that indicated extremely high billing for at least one of the eight measures. "While some of this billing may be legitimate, all pharmacies that bill for such extremely high amounts warrant further scrutiny," the report said.
Miami, Los Angeles and Detroit were the metropolitan areas of the country found most likely to have pharmacies where billing was at issue. In Miami, questionable billing was found 19 percent of pharmacies. The report also found that independent pharmacies were eight times more likely than chains to have questionable billing
In response to the report, the National Community Pharmacists Association, which represents owners of more than 23,000 independent drug stores, said the report "lacks sufficient detail to evaluate the medical legitimacy and appropriateness of the claims reviewed."
"As OIG itself notes throughout its report, there could very well be legitimate medical reasons behind many of the claims it has flagged," the NCPA said in a statement, adding it was still reviewing the report. For example, the pharmacist association said, independent pharmacies serve a disproportionately high number of long-term care and other patients who are prescribed more medications than the average Medicare beneficiary.
The OIG report made several recommendations to improve oversight of the Medicare Part D program, including that the Centers for Medicare & Medicaid Services strengthen monitoring of pharmacies and the ability to identify pharmacies for further review, as well as following up on pharmacies identified as having questionable billing. Read More...
DWC Appoints New Medical Director
Mon, 14 May 2012 07:22:36 - Pacific Time
The Department of Industrial Relations (DIR) and the Division of Workers’ Compensation (DWC) announced the appointment of Dr. Rupali Das to the position of executive medical director for DWC.
"The medical director plays a vital role in the division’s mission to provide quality care to injured workers and return them to their jobs," said DWC Administrative Director Rosa Moran. "Dr. Das brings a wealth of knowledge and experience that will enable us to fulfill that mission and ensure the workers’ compensation system is working for all parties."
The executive medical director manages all medical and health-related programs in the DWC, and will provide policy guidance for the division and develop education and training for treating physicians. In addition, the medical director oversees provider networks and research plans related to medical care, and represents DWC on matters related to medical and health issues in workers’ compensation.
Dr. Das comes to DWC from the California Department of Public Health (CDPH), where she was chief of the Exposure Assessment Section in the Environmental Health Investigations Branch since 2009. She joined CDPH in 1998 as a public health medical officer, working to reduce worker illnesses in agriculture and other industries. Before that she worked on air pollution issues at the California Office of Environmental Health Hazard Assessment and was in clinical practice.
She is currently an associate clinical professor of medicine at the University of California, San Francisco.
Dr. Das attended medical school at the University of Illinois, Chicago, and has a master’s degree in public health from University of California, Berkeley. She is board certified in both internal and occupational medicine.
This position does not require Senate confirmation. Read More...
DWC Changes Performance Audit Standards for 2011 Audits
Mon, 14 May 2012 07:20:55 - Pacific Time
Labor Code §4658.5(c), which required employers/claims administrators to provide a notice of potential eligibility for the supplemental job displacement benefit (SJDB), was repealed effective Jan. 1,2012. DWC Newsline 58-11 (Dec. 14, 2011), which announced the audit performance standards for 2012, stated that enforcement of section 4658.5(c) would be suspended effective Jan. 1, 2012.
The administrative director has determined that the repeal of section 4658.5(c) should apply to all audits that were conducted using the 2011 performance standards, but not completed on or before Dec. 31, 2011.
Provision of the SJDB notice had been considered in the 5th performance factor for files reviewed in the profile audit review (PAR) audit process [see 8CCR§10107.1(c)(3)(E)]. The Audit Unit will be recalculating the performance ratings for any audits for which a final report had not been issued as of Dec. 31, 2011 and will issue amended reports for those audits. Read More...
Past Week News Archive
Industry Organizations Push Comp Ebilling: Fri, 11 May 2012 06:41:17 - Pacific Time: Read More...
NCCI Says Combined Ratios Unsustainably High: Fri, 11 May 2012 06:38:14 - Pacific Time: Read More...
U.S. Senate Probes Painkiller Makers: Thu, 10 May 2012 06:30:34 - Pacific Time: Read More...
American Psychiatric Association Schedules Final Public Comments for DSM-5: Thu, 10 May 2012 06:10:48 - Pacific Time: Read More...
Panel Decision Approves Late Correction of MPN Notices: Wed, 9 May 2012 07:00:17 - Pacific Time: Read More...
San Jose Business Owners Arrested: Wed, 9 May 2012 06:48:36 - Pacific Time: Read More...
CHP Officer Loses Appeal of Fraud Conviction: Tue, 8 May 2012 05:32:08 - Pacific Time: Read More...
DWC Launches New Website for Injured Workers: Tue, 8 May 2012 05:32:04 - Pacific Time: Read More...
Beverly Hills Dentist Arrested for Insurance Fraud: Mon, 7 May 2012 06:50:59 - Pacific Time: Read More...
CompWest Selects Valen Technologies for Predictive Modeling: Mon, 7 May 2012 06:50:53 - Pacific Time: Read More...