Author: WorkCompAcademy

The WCAB changed course in its second en banc opinion on the landmark case of Jose Dubon v World Restoration, SCIF now known as Dubon II. The new decision comes as some relief to the defense industry that has seen major aspects of SB 863 evaporate in a flurry of judicial opinions attacking some of its major provisions. The applicant community no doubt will have consternation over this newest development.

Last February, the WCAB in Dubon I ruled that the WCAB rather than the IMR process must decide appropriate medical treatment in situations were UR was defective. It reasoned that if a UR decision is invalid because its integrity was undermined due to the defendant’s failure to provide the UR physician with adequate medical records or because the UR physician failed to consider them, there is no valid UR determination and no basis for the employee to invoke IMR. Although both the defendant and employee may submit medical records and reports to the IMR organization a defendant may not use this as a vehicle to cure defects in its UR process if the UR decision has been found invalid. Where there is no valid UR decision subject to IMR, the issue of medical necessity must be determined by the WCAB.

In a surprising reversal, the WCAB has now ruled:

1. A utilization review (UR) decision is invalid and not subject to independent medical review (IMR) only if it is untimely.
2. Legal issues regarding the timeliness of a UR decision must be resolved by the Workers’ Compensation Appeals Board (WCAB), not IMR.
3. All other disputes regarding a UR decision must be resolved by IMR.
4. If a UR decision is untimely, the determination of medical necessity may be made by the WCAB based on substantial medical evidence consistent with Labor Code section 4604.5.3

The new case reversed the prior ruling stating “Therefore, we will rescind our February 27, 2014 en banc decision in Dubon I and affirm the decision of the workers’ compensation administrative law judge (WCJ), which held that the medical necessity of applicant’s requested back surgery must be determined by IMR, notwithstanding any procedural defects in defendant’s timely UR decision.”

“In our February 27, 2014 en banc decision, we held that ‘[a] UR determination is invalid if it is untimely or suffers from material procedural defects that undermine the integrity of the UR determination’ and that ‘[m]inor technical or immaterial defects are insufficient to invalidate a defendant’s UR determination.’ (Dubon I, 79 Cal.Comp.Cases at pp. 315, 320.) We now modify our holding to conclude that a UR decision is invalid only if it is untimely.”

However, the WCAB went on to say that “Legal disputes over UR timeliness must be resolved by the WCAB.” With the exception of timeliness, “all other requirements go to the validity of the medical decision or decision-making process. The sufficiency of the medical records provided, expertise of the reviewing physician and compliance with the MTUS are all questions for the medical professional.” “With the exception of timeliness, all defects in the UR process can be remedied when appealed to IMR. The legislature has made it abundantly clear that medical decisions are to be made by medical professionals. To allow a WCJ to invalidate a UR decision based on any factor other than timeliness and substitute his or her own decision on a treatment request violates the intent of SB 863.”

“All requirements of section 4610 should be complied with, however, failure to do so will not invalidate a UR decision. A defective UR can be corrected by either exercising an internal UR appeal process, if available, or through IMR where both parties may submit records, and for which an appeal process has been established. Timeliness, however, cannot be fixed. Whether a UR decision is timely is a legal determination and must be decided by a WCJ.”

Commissioner Marguerite Sweeney concurred and dissented from the en banc decision. She would affirm Dubon I.

Not only are states approving the use of medical marijuana at an astounding pace, but at least two state supreme courts – in Colorado and in New Mexico – are taking up questions that center on marijuana and the workplace and workers’ compensation. According to the report in the Insurance Journal, such cases are of particular interest to those watching the workers’ comp space, and it has some wondering whether insurers will start being asked to pay for a substance that the federal government considers illegal.

And the National Council for Compensation Insurance (NCCI), says that insurers are starting to receive requests to pay for medical marijuana. However, there are those who believe that at this early stage questions arising around workers’ comp are all talk no action. “It’s got a lot more hype than what’s happening in the marketplace,” said John Leonard, president and CEO of Maine Employers’ Mutual Insurance Co. Leonard said he has surveyed his claims professionals and he’s so far found no instances where medical providers have requested marijuana to treat injured workers. “We have no knowledge of any prescriptions involving the use of medical marijuana,” he said, adding that he’s “perplexed” because that experience is contrary to what he’s so often hearing in the press.

NCCI has been concerned about the implications and been tracking the issue for quite some time, said Lori Lovgren, a state relations executive for the group. “We identified it as an emerging issue a couple of years ago,” Lovgren said, adding that medical marijuana has in many states “had a lot of success in the last few years in the legislature.” Like others in the workers’ comp space, NCCI is particularly interested in cases in Colorado and New Mexico.

In Colorado, in Coats v. Dish Network LLC, a man who was injured and using medical marijuana off-duty was terminated. A judge upheld the termination as lawful because use of marijuana, while it was legalized for both medicinal and non-medicinal uses in Colorado, violates federal law. The Colorado Court of Appeals affirmed the employer’s right to fire the employee, but the Colorado Supreme Court recently granted a review of the case.

Another case being closely watched is the New Mexico case of Vialpando v. Ben’s Automotive Services and Redwood Fire and Casualty. The case is believed to be the first in the nation in which a judge has ordered an insurance carrier to reimburse a workers’ comp claimant for the cost of medical marijuana to treat back pain. That case is being appealed to the New Mexico Supreme Court.

It’s not unreasonable to think that decisions from those high courts could lead the way in other states, said Mark Walls, vice president of communications and strategic analysis for Safety National. “Other states will look at those cases,” Walls said. And when it comes to medical marijuana, states have a history of playing follow the leader.

In 1996 California became the first state to legalize medical marijuana. Some 18 years later, it’s currently legal in 23 jurisdictions and the District of Columbia for medicinal use, and it’s legal without a prescription in Washington and Colorado. “There’s certainly a trend,” said Kambiz Akhavan, president and managing editor of ProCon.org, a nonprofit provider of data on a range of topics that include medical marijuana According to Akhavan, legalizing medical marijuana is now under consideration on a Florida ballot and in the Ohio and Pennsylvania legislatures.

Also trending upward is the list of illnesses that advocates believe marijuana can treat. Among those illnesses being tracked by ProCon.org are: appetite stimulation, Alzheimer’s, arthritis, asthma, Crohn’s, GI tract disorders, glaucoma, migraines, nausea from chemotherapy, general pain, and a host of psychological disorders including depression or schizophrenia, bipolar disorder and Tourette syndrome. “The list is quite long,” Akhavan said.

Other insurance challenges NCCI notes are: an absence of National Drug Code, which creates reimbursement issues; liability concerns for employers and insurance companies that pay for medical marijuana if additional injuries are caused by drug intoxication. And, given federal issues, many state courts will be reluctant to approve medical marijuana for the treatment of work-related injuries.

Sondra Andrews was employed by Securitas Security Services USA, Inc, an independent contractor retained by Verizon to provide security services at its facilities. Securitas employees are stationed at guard shacks, which are small, freestanding structures from which guards monitor those who enter and exit the Verizon facility. Normally an office chair is available for use by Securitas employees during their eight-hour shifts. However, a few days before the incident, the office chair broke. Marvin Kephart, another Securitas employee, replaced the broken chair with a barstool-type chair he obtained from one of Verizon’s buildings with the permission of a Verizon employee.

On the day of the accident, Andrews was working a graveyard shift. At approximately 4:00 a.m., Andrews attempted to get down from the replacement chair, but the top of her right foot became caught in the chair’s footrest. She stumbled trying to stand up from the chair causing both her and the chair to fall. Andrews sustained a fracture to her upper spine, which required surgery and a spinal fusion. She has not returned to work since the incident.

Andrews filed a negligence suit against Verizon, alleging it failed to exercise reasonable care, failed to provide a reasonably safe place for Andrews to work, and failed to “furnish, maintain or repair” a chair that was reasonably safe for her use. Andrews claimed Verizon “knew or should have known the chair was unsafe . . . .”

Verizon moved for summary judgment. After considering the parties’ submissions and conducting a hearing, the court granted Verizon’s summary judgment motion. The court reasoned that Andrews was an employee of Verizon’s independent contractor, and therefore she was required to prove Verizon “affirmatively contributed to the injury.” The court found no “such evidence has been presented.” Her case was therefore dismissed. The Court of Appeal affirmed in the unpublished case of Andrews v. Verizon.

“Generally, when employees of independent contractors are injured in the workplace, they cannot sue the party that hired the contractor to do the work. . . . [¶] By hiring an independent contractor, the hirer implicitly delegates to the contractor any tort law duty it owes to the contractor’s employees to ensure the safety of the specific workplace that is the subject of the contract.” (SeaBright Ins. Co. v. US Airways, Inc. (2011) 52 Cal.4th 590, 594; see Privette v. Superior Court (1993) 5 Cal.4th 689, 696; Toland v. Sunland Housing Group, Inc. (1998) 18 Cal.4th 253, 256.)

Two exceptions are potentially relevant here. First, an exception applies when the hirer’s act of providing unsafe equipment affirmatively contributed to the party’s injuries. (McKown v. Wal-Mart Stores, Inc. (2002) 27 Cal.4th 219, 225 (McKown).) Second, the hirer of an independent contractor may be held liable for injuries to the contractor’s employee if the hirer’s negligent exercise of retained control over safety conditions at a worksite “affirmatively contributed to the employee’s injuries.” (Hooker v. Department of Transportation (2002) 27 Cal.4th 198, 202 (Hooker).)

Neither exception applied here.

Floyd, Skeren and Kelly is pleased to announce its 2nd Annual 2014 Northern California Employment Law Conference.  The Keynote Speaker will be Phyllis W. Cheng, Director, California Department of Fair Employment and Housing. The Conference will cover important workplace topics related to the Interactive Process, Disability Leave, Pregnancy Leave, the Affordable Care Act, Workers’ Compensation and the crossover issues related to the Fair Employment Act, and much more. The event is scheduled for November 6, 2014 at the Hilton Garden Inn, 1800 Powell Street in Emeryville.

California has over 16 statutes related to employee leaves of absences. These statutes are often confusing and more significantly, often impose overlapping employer obligations. This presentation will identify those statutes, focusing in on the triangle of leave related statutes that pose the biggest headache for employers: workers’ compensation, the Fair Employment and Housing Act and the California Family Rights Act/Family and Medical Leave.

Significant changes have been proposed to the California Family Rights Act (CFRA) which governs family and medical leave. This presentation will review key sections of the proposed regulations.

When an employee is injured, all California employers must comply with workers’ compensation laws and all employers with five or more employees must comply with the overlapping disability discrimination laws under the Fair Employment and Housing Act (FEHA) which are likely triggered when an employee sustains a work related injury. Failure to understand the employer’s obligations under both sets of laws can turn a straightforward workers’ compensation case into a FEHA nightmare. This presentation will provide key guidance, focusing on:

1) How a workers’ compensation case can evolve into a FEHA matter;
2) Best practices for complying with FEHA in workers’ compensation cases;
3) A review of the employer’s IP obligations in a workers’ compensation case;
4) Global settlements in a workers’ compensation case;
5) What to expect if a workers’ compensation case becomes a FEHA lawsuit.

Multiple state and federal laws such as the Family and Medical Leave Act, California Family Rights Act and the Fair Employment and Housing Act, govern the amount of pregnancy leave that an employee may be entitled to receive. Employers are often surprised to learn that due to these overlapping laws, eligible pregnant employees may be entitled to more than 7 months of pregnancy leave. Although that may seem like a substantial amount of leave, an employer’s failure to provide the appropriate amount of pregnancy leave can result in a costly claim for pregnancy discrimination. Key areas of this problem area will be discussed.

MCLE and CE credits will be provided. This program, 223509, has been approved for 7 (HR (General)) recertification credit hours toward PHR, SPHR and GPHR recertification through the HR Certification Institute.

Please visit the FSK website for registration information.

Pharmaceutical manufacturers that promote off-label uses for prescription drugs have become litigation targets for third-party payors – especially after Kaiser received a nine-figure RICO award last year against the manufacturer of Neurontin. Health care insurers have filed most of these cases; in May 2014, Humana joined the crowd, suing a manufacturer over off-label use of a device designed for spinal fusion surgeries.

The U.S. Supreme Court, last December, left intact a $142 million jury verdict against Pfizer Inc over the marketing of the epilepsy drug Neurontin. The jury had ruled in favor of an insurer who said it had been misled into paying for the drug for “off-label” uses, or uses for which it was not approved. In 2010, the jury in Massachusetts found that due to Pfizer’s marketing of the drug for off-label uses, Kaiser Foundation Health Plan Inc, one of the nation’s largest health maintenance organizations, and affiliates were damaged because they paid for prescriptions relating to conditions Neurontin did not effectively treat. The Supreme Court’s refusal to hear Pfizer’s appeal means similar claims brought against the company by insurer Aetna Inc and Harden Manufacturing Corp can also go forward.

Workers compensation carriers – and even automobile insurers – can also spend large amounts on the same medications. Their claims face substantial obstacles and the results have been inconsistent, as shown by the recent decision dismissing the complaint in The Travelers Indemnity Co. v. Cephalon, Inc. which was filed in the United States District Court, for the Eastern District of Pennsylvania, case 12-4191.

Cephalon manufactures two opioid pain relievers, Actiq and Fentora, which were approved by the FDA only for the management of “breakthrough” pain in cancer patients already receiving opioid therapy. In September 2008, Cephalon settled with the federal government and several states over its alleged promotion of Actiq for use by non-cancer patients. Follow-on suits included an action by a union health plan and, in June, a suit by the City of Chicago. The Travelers suit alleged that Cephalon’s marketing misleadingly understated the risks of its products for non-cancer patients, and specially targeted doctors who treat injured workers, because workers compensation laws limit insurers’ ability to restrict coverage for particular drugs. As a result, Travelers paid nearly $20 million for the two products. It asserted claims for fraud, negligent misrepresentation, violation of consumer protection statutes, and unjust enrichment.

The court dismissed the complaint on several grounds, beginning with lack of standing. Travelers claimed it was injured when it paid for Cephalon’s drugs, because (1) they were ineffective in off-label uses, and (2) they were prescribed in place of cheaper alternatives. On the first point, the court held that the absence of data proving a drug’s effectiveness for off-label use “does not support the conclusion that the drug is actually ineffective,” and that “[t]he fact that a drug poses – a significant possibility of harm does not – establish injury-in-fact to the party paying for the drug.” These findings also doomed the insurer’s second theory because the court further held that “[a] plaintiff is not injured simply because it paid for a more expensive drug.” It chided Travelers for failing to name “an equally effective, safer, less expensive drug” that could have been prescribed in lieu of Cephalon’s products. It found the failure to allege an injury fatal to the state statutory claims, as well.

The court also dismissed Travelers’s claims for intentional and negligent misrepresentation, as well as for unjust enrichment, on the ground that “off-label promotion is not inherently deceptive,” and that the insurer had failed to specifically allege an instance of false or misleading claims. The court expressly refused to infer the use of false statements from the fact that doctors prescribed the drug for off-label uses.

As Kaiser proved, it is possible to overcome all of these positions – in some cases. But even substantial evidence of improper marketing will not, without more, get a third-party payor before a jury. Yet, other actions are pending around the country, and the stakes are high. Perhaps cases in the 9th Circuit which includes California will be more successful since the 9th Circuit is deemed by many to the the most liberal in the nation. Choice of forum may play a role in the success of these cases.