Author: WorkCompAcademy

The Workers’ Compensation Insurance Rating Bureau has prepared its annual report containing estimated California workers’ compensation costs for 2019. The report in general terms explains how much money came into the system in premiums, and then discusses how it was spent. The report does not include self-insured costs and expenses.

Insurer Losses, Expenses and Profits – Calendar year 2019 earned premium totaled $16.1 billion (as compared to the $17.4 billion of premium earned in 2018). Total insurer paid losses in 2019 were $8.3 billion, or 51% of calendar year earned premium. California insurers incurred $5.4 billion in expenses in 2019, or 34% of 2019 earned premium. (For comparison purposes, in 2018, total incurred expenses were 34% of earned premium).

So how was the remaining 66% of the earned premium spent?

Physician and Medical-Legal Costs – In 2019, $4.6 billion, or 55% of total loss payments, were for medical services.

Indemnity Benefits – In 2019, $3.8 billion, or 45% of total loss payments, were for indemnity benefits (including vocational rehabilitation benefits).

Vocational Rehabilitation Benefits – About $73 million in vocational rehabilitation-related benefits were paid in calendar year 2019. This was 1.9% of all indemnity payments in 2019, of which 97% was for non-transferable education vouchers. (For comparison purposes, in 2018, vocational rehabilitation benefits paid was $87 million or 2.3% of all indemnity payments, of which 97% was for non-transferable education vouchers).

In total, incurred losses and expenses in calendar year 2019 were $13.2 billion, or 82% of earned premium. Based on insurer statutory Annual Statement information, the WCIRB estimates policyholder dividends incurred in 2019 to be 0.2% of 2019 earned premium, resulting in an underwriting profit of $2.9 billion, or 18% of premium. (For 2018, the underwriting profit was 23% of earned premium, or $4.1 billion.)

Fees Paid to Applicant Attorneys – Although generally part of incurred indemnity losses rather than expenses, the amount paid in 2019 to applicant attorneys was derived from the WCIRB’s Annual Expense Call. In 2019, applicant attorneys were paid $446 million. (In 2018, applicant attorneys were paid $386 million.)

As U.S. opioid prescriptions continue to trend downwards, skeletal muscle relaxer scripts are on the rise, according to an analysis of the CDC’s National Ambulatory Medical Care Survey (NAMCS).

Between 2005 and 2016, the number of office visits in which muscle relaxers were prescribed, most commonly for back pain and musculoskeletal conditions, doubled from 15.5 million to 30.7 million, reported Charles E. Leonard, PharmD, MSCE, of the University of Pennsylvania in Philadelphia, and colleagues.

While office visits resulting in new skeletal muscle relaxer prescriptions during this period remained relatively stable at about six million per year, visits for continued therapy tripled from 8.5 million to 24.7 million, the researchers wrote in JAMA Network Open.

The proportion of older adults receiving muscle relaxant prescriptions increased three-fold across the study period such that by 2016, adults over 65 accounted for 22.2% of visits in which a muscle relaxant was prescribed, the team added. Also, 67.2% of continued muscle relaxant visits in 2016 were completed while the patient was on concomitant opioids.

“For a number of years now, the American Geriatrics Society has warned providers of prescribing skeletal muscle relaxers for older adults, and the long-term treatment with skeletal muscle relaxers was particularly concerning to us because most of the available data really only support short-term use of these drugs,” Leonard told MedPage Today, adding that in some cases, especially among younger people, the drugs may be considered.

Nationally, opioid prescriptions decreased by about 20% between 2006 and 2017, in part due to the CDC’s 2016 guidelines on opioid prescribing. Between 2015 and 2018, close to 11% of adults reported being on at least one pain medication prescription, and 6% said they were on opioids, per CDC data.

“The take-home message here is that muscle relaxers are being overprescribed and we need to be aware they are not really innocent medication,” one researcher added.

More than a half a million individuals are transported via air ambulance services each year, according to the Association of Air Medical Services. The majority of these transports are via helicopter in emergency situations; the remainder are fixed-wing transports for longer distances.

While fees charged by traditional medical transport services in California workers’ compensation claims are regulated under the Official Medical Fee Schedule, air ambulance providers argue that they fall under the jurisdiction of the Airline Deregulation Act (ADA) of 1978, which prevents states from enacting or enforcing laws or regulations related to the price, route or service of an air transportation carrier.

In California workers’ compensation, the WCAB issued an en banc decision in 2013 ( Luis Enriquez (deceased) v Couto Dairy and Zenith Insurance Company ) conceding the preemption of federal law over Official Medial Fee Schedule limits if the air ambulance provider could establish that they were an “air carrier” that provides air transportation within the meaning of the Airline Deregulation Act.

Yet the litigation debate over the preemption issue continues to rage in other jurisdictions. The Texas Supreme Court just ruled that preemption does not apply in Texas.

Excessive helicopter transport bills were the crux of the lawsuit in PHI Air Medical, LLC v. Texas Mutual Insurance Company, et al. A trial court rendered judgment in favor of eight plaintiff insurers, which included Texas Mutual Insurance Company and Hartford Underwriters Insurance Company, who disagreed with PHI’s per-trip charge for medically transporting injured workers.

The Texas trial court held the insurers could not be asked to pay more than 125 percent of the Medicare amount for air ambulance transport. On Jan. 31, 2018, however, the Texas Court of Appeals remanded the case, holding that any rate provisions for air ambulance transports are preempted by the ADA.

In Split June 26, 2020 Opinion, the Supreme Court of Texas Rejected Preemption Argument in Worker’s Compensation Disputes. The Court held that the Airline Deregulation Act did not preempt state law pertaining to worker’s compensation insurance benefit payments because the law does not expressly refer to air ambulance providers, and the standard for establishing the amount of reimbursement also was not preempted.

Thus the workers’ compensation industry has not seen the final word on this issue.

San Gorgonio Pass CHP Commander Captain Mike Alvarez announced.that a Banning California Highway Patrol officer was arrested Wednesday on suspicion of workers compensation insurance fraud.

Kathleen Beardsley, 46, was arrested by CHP investigators without incident at the Banning Police Department and was booked into Larry D. Smith Correctional Facility on suspicion of three felony charges tied to fraud as well as a felony grand theft charge, jail records show.

Her bail was set at $10,500. A court date has not been set, according to jail records.

The arrest was the culmination of a seven-month long investigation by the CHP’s Workers Compensation Fraud Investigations Unit based at the agency’s Sacramento headquarters, according to Alvarez.

The investigation began after Beardsley filed a workers compensation insurance claim on February 14, 2019 for unspecified injuries.

In October, a tip was received by the investigations unit about possible illicit activities by Beardsley. Surveillance was used on her by investigators, and she was observed “engaging in activities inconsistent with the limitations outlined in her claim,” according to Alvarez’s announcement.

Beardsley, who has been a CHP officer for 25 years, was summoned for questioning at the Banning Police Department, then arrested.

Beardsley, a 25-year veteran of the CHP, had been assigned to the San Gorgonio Pass Area since 2016. As a result of her arrest, she has been placed on administrative leave and her peace officer powers removed, according to Alvarez.

In addition to the criminal investigation, the CHP is also conducting an internal administrative investigation, according to Alvarez, although details were not released.

A 39-year old Santa Ana police officer has been charged with committing workers’ compensation insurance fraud for continuing to accept his full pay without working even though he was physically capable of returning to work.

On October 5, 2017, Jonathon Ridge was injured on duty while in pursuit of a suspect driving a stolen vehicle. On that day, October 5, 2017, Ridge went out on disability leave due to his injuries. On May 2, 2018, while still on leave, Ridge had surgery on his left wrist, and his doctor continued to keep him off work while he was recovering from the surgery.

In November 2018, Ridge was released by a doctor to return to work with restrictions. The work restrictions were too severe for the City of Santa to accommodate, despite the City of Santa Ana having an extensive return-to-work program for injured employees. This resulted in the City of Santa Ana being required to continue to pay Ridge Total Temporary Disability and for Ridge to receive disability payments through an insurance policy, resulting in Ridge receiving 100% of his pay without working.

From March 2019 to May 2019 the City of Santa Ana authorized surveillance on Ridge because he did not seem to improve despite having had surgery on his wrist in May 2018 for injuries sustained in the on-duty collision 18 months earlier.

The surveillance and subsequent investigation found that Ridge was engaging in activities well beyond what the doctor had imposed. Ridge began attending college classes nearly full-time beginning in June 2018 – just weeks after his surgery. Additionally, he packed up his car and drove to Utah, went to the beach, and drove his motorcycle.

Ridge failed to disclose to his doctor or to the City of Santa Ana what he was actually capable of doing. This deprived the doctor of the opportunity to impose realistic work restrictions that the City of Santa Ana could accommodate. Instead, Ridge continued to receive 100% of his pay without working even though he was capable of returning to work in a modified position.

Ridge has been charged with four felony counts of insurance fraud. He faces a maximum sentence of eight years in state prison if convicted on all counts.

“Workers’ compensation fraud costs honest, hardworking businesses and government entities more than $30 billion a year,” said Orange County District Attorney Todd Spitzer. “We cannot allow those who commit workers’ compensation fraud to go unpunished because the financial cost to government and private business makes the cost of doing business more and more difficult.”

Deputy District Attorney Pamela Leitao of the Insurance Fraud Unit is prosecuting this case.