Author: WorkCompAcademy

A federal judge in Texas put an end to Obamacare, the Affordable Care Act, on Friday night, ruling in the case of Texas v. Azar, that the entire health-care law is unconstitutional because of a recent change in federal tax law. The ruling came on the eve of the deadline Saturday for Americans to sign up for coverage in the federal insurance exchange created under the law.

As part of the tax overhaul passed last year, the ACA penalty for not having health insurance was abolished. This went into effect in January, 2018.Officials in 20 states led by Texas Attorney General Ken Paxton – argued that with elimination of the health insurance requirement there is no longer a tax, and therefore the law loses its constitutionality.

In a 55-page opinion, federal judge Reed O’Connor agreed, and writes regarding the lawsuit: “The court finds the individual mandate can no longer be fairly read as an exercise of Congress’s tax power and is still impermissible under the interstate commerce clause ― meaning the individual mandate is unconstitutional“. [T]he court finds the individual mandate is essential to and inseverable from the remainder of the ACA.”

Since the lawsuit was filed in January, many health-law specialists have viewed its logic as weak but nevertheless have regarded the case as the greatest looming legal threat to the 2010 law, which has been assailed repeatedly in the courts.

The Supreme Court upheld the law as constitutional in 2012 and 2015, though the first of those opinions struck down the ACA’s provision that was to expand Medicaid nationwide, letting each state choose instead. No matter how O’Connor ruled, legal experts have been forecasting that the Texas case would be appealed and could well place the law again before the high court, giving its conservative newest member, Justice Brett M. Kavanaugh, a first opportunity to take part.

It is expected that this ruling will be appealed to the Supreme Court. Pending the appeal process, the law remains in place. A spokeswoman for California Attorney General Xavier Becerra, who leads a group of states opposing the lawsuit, said that the Democratic defenders of the law are ready to challenge the ruling in the U.S. Court of Appeals for the 5th Circuit.

It was not immediately clear what the legal path will be from here. Technically, O’Connor granted summary judgment to the lawsuit’s plaintiffs – the Texas attorney general, with support from 18 GOP counterparts and a governor.

Because the judge did not grant an injunction, as the plaintiffs had asked for, “it’s unclear whether this is a final judgment, whether it’s appealable, whether it can be stayed,” said Timothy Jost, a health-law expert who is a professor emeritus at Washington and Lee University. Jost, an ACA proponent, predicted that a stay would lock in the law during appeals, saying that, otherwise, “it’s breathtaking what [O’Connor]’s doing here on a Friday night after the courts closed.”

The WCIRB has released its quarterly update on California statewide insurer experience valued as of September 30, 2018. The report is mostly good news for California employers and industrial insurance carriers.

California written premium for the first nine months of 2018 is $13.1 billion, which is 3% below the written premium reported for the first nine months of 2017. Written premium for 2017 was 2% below that for 2016. The decrease in 2017 following 7 consecutive years of increases is primarily driven by decreases in insurer charged rates more than offsetting increases in employer payroll.

The projected industry average charged rate per $100 of payroll for policies incepting in the first nine months of 2018 is $2.28, which is 10% below the average rate charged in 2017. The January 1, 2019 approved advisory pure premium rates are on average 42% below those for January 1, 2015.

The WCIRB projects an ultimate accident year combined loss and expense ratio of 87% for 2017, which is 4 points higher than 2016 projections as premium levels have lowered while average claim severities moderately increased. Despite the projected increase, the combined ratios for 2014 to 2017 remain the lowest since the 2004 to 2006 period.

Indemnity claims continue to settle quicker, improving significantly over the last 6 years.

Claim frequency increased by 11% from 2009 to 2014, but has decreased by 4% from 2014 through the first 9 months of 2018. Frequency increases since 2011 have largely been attributed to increases in cumulative injury claims and claims from the Los Angeles Basin area.

Cumulative trauma (CT) claim rates increased by over 75% from 2005 to 2015. The ratio for 2016 declined modestly suggesting the CT claim growth is beginning to level off. Recent sharp increases in CT claims is focused entirely in the Los Angeles and San Diego areas.

Decreases in medical severities from 2011 to 2015 were driven by the medical cost savings arising from SB 863. The projected 2017 medical severity increase of 2% represents very modest growth compared to other post-reform periods of medical inflation in California.

The WCIRB projects the average cost (or “severity”) of a 2017 indemnity claim to be approximately $69,500, which is 2% higher than the projected severity for 2016. Total claim severity growth over the last several years has been relatively modest as increases in average indemnity and ALAE costs have been in part offset by declines in average medical costs through 2016.

The full report is available in the Research section of the WCIRB website, WCIRB Quarterly Experience Report – As of September 30, 2018

The Office of Self-Insurance Plans is a program within the director’s office of the Department of Industrial Relations responsible for the oversight and regulation of workers’ compensation self-insurance in California.

OSIP is also responsible for establishing and insuring that required security deposits are posted by self-insurers in amounts sufficient to collateralize against potential defaults by self-insured employers and groups.

OSIP has posted proposed regulations that will require self-insured public entities to file annual reports providing demographic, claim and financial data regarding their workers’ compensation programs. The reports will be due by October 1 of each year and shall cover liabilities for the preceding July 1 – June 30 fiscal year.

The proposed regulations, mandated by Governor Edmund G. Brown Jr.’s 2012 workers’ compensation reforms, will allow for greater transparency of the solvency and viability of self-insured workers’ compensation programs and the true liabilities of public entities.

As specified by Labor Code section 3702.2(a), the changes would require public entities to report portions of their financial statements pertaining to workers’ compensation liabilities.

Public entities would also be required to provide aggregate information as a point of reference for other public entities.

The proposed regulations were developed in accordance with the recommendations of a 2014 report conducted by the Commission on Health and Safety and Workers’ Compensation, Examination of California Public Sector Self-Insurance Workers’ Compensation Program.

The notice and text of the regulations can be found on the proposed regulations web page.

A public hearing on the proposed regulations has been scheduled for 10 a.m. January 23, 2019, in Room 11 at the Elihu M. Harris State Building, 1515 Clay Street, Oakland, 94612. Members of the public may also submit written comments on the regulations until 5 p.m. that day.

Section 111 of the Medicare/Medicaid SCHIP Extension Act (MMSEA) of 2007, at its most basic level, requires insurers and self-insureds to both identify Medicare beneficiaries with whom they pay benefits or settlements associated with workers’ comp, no fault or liability claims and – once identified – report data to Medicare as directed by the Secretary of Health & Human Services.

The reporting act originally mandated that failure to comply with the reporting requirements “shall be subject to a civil money penalty of $1,000 for each day of noncompliance” for each individual for which the information should have been submitted. With the threat of severe penalties, the insurance industry quickly responded, obtaining Responsible Reporting Entity (RRE) IDs and implementing claims system updates and section 111 compliance programs as quickly as possible.

Enter the SMART Act. On January 10, 2013, President Obama signed into law the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012. The SMART Act, among other things, softened the language relative provide CMS with discretion not only to the imposition of the penalty but also into the amount of the penalty.

Now, civil money penalties “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant.” The SMART Act also required the Secretary to quickly solicit proposals determining “specified practices for which such sanctions will and will not be imposed” via the regulatory process.

About a year after the SMART Act was signed into law, CMS kicked off the rulemaking process with an advance notice of proposed rulemaking (ANPRM). The ANPRM sought comment on: what types of practices “would or would not” result in the imposition of civil money penalties; methods to determine the dollar amount of civil money penalties; and ways in which CMS may define what constitutes “good faith efforts” to identify a Medicare beneficiary. CMS received thirty four written comments to the ANPRM, but has done little since issuing the ANPRM.

In the ten years following the introduction of mandatory insurer reporting, the industry has yet to see any evidence of enforcement in the form of the imposition of dreaded civil money penalties.

However, CMS has issued yet another abundantly clear signal that Medicare Secondary Payer (MSP) enforcement will be a priority in 2019.

Now, an additional notice on the Office of Management and Budget (OMB) website has been posted which indicates that CMS will move forward with a Notice of Proposed Rulemaking (NPRM) on “Civil Monetary Penalties (CMPs) and Medicare Secondary Payer Requirements.”

Aaron Lindh, was employed as a law enforcement officer when he sustained injury arising out of and in the course of employment to his left eye. More specifically, Lindh took three to six blows to the left side of his head while engaged in a canine training course.

Afterwards, he “suffered severe headaches lasting between several hours to one or two days.” Over a month later, while off-duty, Lindh suddenly lost most of the vision in his left eye.

Dr. David Kaye, a neuro-ophthalmologist and the QME, concluded, as had the other physicians, that Lindh’s “blood circulation to his left eye was defective.” He stated Lindh “did not have any disability prior to receiving the blows to the head.” And “[a]bsent the injury,” he thought Lindh “most likely would have retained a lot of his vision in that eye,” although he could not “guess” how much. Dr. Kaye agreed “it [was] possible that [Lindh] could have gone his entire life without losing vision.” He also agreed, however, that even had Lindh not suffered the blows to his head, he still could have lost his vision “due to this underlying condition.”

As to apportionment, it was Dr. Kaye’s “opinion that [Lindh’s] underlying vasospastic personality and vasculature placed him at high risk for damage to different parts of his body.” In discussing his initial apportionment of 90 percent (which he adjusted to 85 percent), Dr. Kaye stated, “90 percent [is] due to the underlying condition and 10 percent due to the stress of the injuries,” He subsequently repeated it was “unlikely” Lindh would have suffered a vision loss if he had not had the “underlying condition” of “vascular spasticity,” a condition that is “rare.”

The parties stipulated “the medical record, not including apportionment, rates 40 percent permanent disability, and with apportionment, rates six percent permanent disability.” The ALJ rejected Dr. Kaye’s apportionment analysis, and found Lindh had 40 percent permanent disability, and the WCAB affirmed the ALJ’s decision. The Court of Appeal reversed and ordered 85% apportionment in the published case of City of Petaluma v WCAB and Aaron Lindh.

The Court of Appeal rejected the arguments presented by the Board, and the California Applicant’s Attorneys Association acting as amicus,”that there must be medical evidence that an asymptomatic preexisting condition will, in and of itself, naturally progress to disable the claimant..” pointing out that the argument “reflects the law prior to 2004.”

The 2004 enactment of Senate Bill No. 899 overhauled the statutes governing apportionment. The Legislature intended to reverse a number of the features of the worker’s compensation law, including eliminating the bar against apportionment based on pathology and asymptomatic causes.

“Lindh’s suggestion that apportionment is required only where there is medical evidence the asymptomatic preexisting condition would invariably have become symptomatic, even without the workplace injury, reflects the state of the law prior to the 2004 amendments.”

“Under the current law, the salient question is whether the disability resulted from both nonindustrial and industrial causes, and if so, apportionment is required.“

“Whether or not an asymptomatic preexisting condition that contributed to the disability would, alone, have inevitably become manifest and resulted in disability, is immaterial.“

The post-amendment cases uniformly focus on whether there is substantial medical evidence the disability was caused, in part, by nonindustrial factors, which can include pathology and asymptomatic prior conditions for which the worker has an inherited predisposition.