The Office of Administrative Law has approved the DWC final version of the Medical Treatment Utilization Schedule (MTUS) regulations that updates the Chronic Pain Medical Treatment Guidelines and adopts Opioids Treatment Guidelines.

Following national reports of opioid misuse, DWC proposed issuing guidelines and began the process with a forum for public comment in 2014. The guidelines that have been added to the MTUS provide best practices in appropriately treating injured workers while also enhancing safety in using these medications to manage pain.

“We welcome this update and addition to the MTUS. The information in these Guidelines should aid in the provision of safer and more effective care for California’s injured workers,” said DWC Executive Medical Director Dr. Raymond Meister. The changes to the MTUS Chronic Pain Medical Treatment Guidelines are set forth in section 9792.24.2, the Opioids Treatment Guidelines are set forth in section 9792.24.4, and the clarifying changes to the meaning of chronic pain are set forth in section 9792.23(b)(1) of the California Code of Regulations. The MTUS regulations went into effect on July 28, 2016 and will apply to any treatment requests made on or after July 29, 2016.

Christine Baker, Director of the Department of Industrial Relations, said, “These guidelines are an important step toward improving appropriate and safe care for workers.”

DWC Acting Administrative Director George Parisotto said, “DWC will move forward shortly to initiate the process to update all of the current MTUS chapters. This process will include new chapters for chronic pain and opioids. Regardless, the new Chronic Pain Medical Treatment Guidelines and Opioids Treatment Guidelines should be consulted and relied upon when making treatment requests and determining the medical necessity of such requests.”

As a result of this regulatory process, claims administrators now have more clearly articulated guidance on when to approve, or send a request for opioid prescription medication to UR for a more comprehensive review. And UR and the IMR reviewers have much better guidance on how to make decisions.

For example, the regulations have precise requirements for prescribing opioids for “sub-acute” pain which is defined as pain beyond one month following an injury. The physician should “screen for risk using validated tools” and “administer a baseline urine drug test (UDT) in the office toward the beginning of the subacute period,” And this section concludes that “a history of opioid use disorder or substance use disorder is a relative contraindication to continued opioid use during the subacute phase.”

The Executive Summary of the new Opioid guideline is 135 pages in length, and it is not a trivial task to understand the nuances of what has now become a more rigorous set of limits on unfettered prescribing of addictive pain medication. On this topic, the new regulation may be a game changer on the administration of medical care for pain patients.

Ng Kwok was employed as a restaurant manager and waiter by Nu Square Corporation, doing business as Har Lam Kee Restaurant. The owner of the restaurant was King Tak Cheung. Mr. Cheung is the older brother of Kwok’s wife, Yuk Lin Cheung.

On the morning of January 10, 2005, rain was coming into the restaurant dining area. Kwok went out to the backyard area with a ladder to inspect the leak. A few minutes later, Kwok was found lying on the ground unconscious with the ladder next to him. Kwok sustained a brain hemorrhage and was and continues to be paralyzed from the shoulders down. Since the accident, Kwok receives 24-hour medical care.

Ms. Cheung notified Mr. Cheung of Kwok’s accident by way of a phone call the day after it occurred. Mr. Cheung was then in Hong Kong for treatment of an illness.

Ms. Cheung, Kwok’s wife, filed a workers’ compensation claim for Kwok in July 2012, more than seven years after the accident. This came about because Ms. Cheung heard a radio program about workers’ compensation cases and began inquiring with attorneys.

The restaurant was insured for workers’ compensation by Farmers. Kwok’s claim first came to the attention of Farmers in July 2012. Farmers tried to verify coverage but it was difficult to verify the dates of coverage because it was a number of years since the date of injury. Coverage was ultimately confirmed through the Workers’ Compensation Insurance Rating Bureau.

Farmers investigated the claim to determine the owner of the business and the owner of the building. However, only limited information was obtained through the business owner and the owner of the building. The cause of the fall was unknown because no one actually witnessed the fall.

A copy of the application and a DWC-1 Employee’s Claim Form was served on Farmers on July 27, 2012. Farmers also confirmed that it signed a Notice Regarding Denial of Workers’ Compensation Benefits on behalf of Farmers dated March 21, 2013, and that Kwok’s claim was not denied within the 90-day period mandated in section 5402. Accordingly, Farmers agreed that section 5402 triggered the rebuttable presumption that the claim was compensable. However, Farmers did not treat Kwok’s claim as compensable.

The WCJ concluded that Kwok sustained a compensable injury and concluded that the statute of limitations did not bar Kwok’s claim. The WCJ did not address the issue of laches which was raised as an issue in the pre-trial conference statement. Farmers’ contention with respect to laches was that the “carrier was greatly prejudiced by the lengthy delay in filing an Application for Adjudication.”

A petition for reconsideration was denied. The Court of Appeal sustained the WCAB in the published case of Truck Insurance Exchange v WCAB.

Within one working day of receiving notice or knowledge of injury, the employer is required to provide to the employee a claim form and a notice of potential eligibility for workers’ compensation benefits. The WCJ concluded that in this case this “was apparently never done.” If an employer breaches this statutory duty, the limitations period is tolled for the period of time that the employee remains unaware of his rights. (Kaiser Foundation Hospitals v. Workers’ Comp. Appeals Bd. (1985) 39 Cal.3d 57, 60.)

Notice to or knowledge of a workplace injury on the part of the employer is deemed to be notice to or knowledge of the insurer. Since Farmers is deemed to have known of the injury the day after it occurred, Farmers cannot show delay in receiving notice of the claim, which is an essential element of laches

John Franco was working on a film set when a special effects accident caused him to suffer serious injuries. Franco’s injuries included pelvic crush injuries, a broken hip, fractures to both femurs, crush injuries to both knees, broken tibias and fibulas, broken ribs, a punctured lung, and soft tissue injuries to his face.

His employer had two primary insurance policies with Fireman’s Fund Insurance Company, and an excess insurance policy with Ace American Insurance Company. The injured worker sued, Fireman’s Fund defended the case, and the case eventually settled with the participation of and contributions from both insurers.

Fireman’s Fund defended the Warner Brothers entities in the Francos’ lawsuit. The Francos made settlement demands within the limits of the Fireman’s Fund policies. According to Ace American’s complaints, the demands were reasonable and supported by substantial evidence, but Fireman’s Fund “failed and/or refused to pay those demands within [the insurance policies’] limits.” Ultimately the Francos settled their lawsuit – for an amount substantially in excess” of the limits of the Fireman’s Fund policies. According to Ace American, Fireman’s Fund “consented to the settlement and contributed to it”, and Ace American contributed the amounts in excess of the Fireman’s Fund policies’ limits. Following the settlement, the case was dismissed with prejudice.

Ace American then sued Fireman’s Fund for equitable subrogation, alleging that the injured worker initially offered to settle his case within the limits of the Fireman’s Fund policies, and that Fireman’s Fund unreasonably rejected those settlement offers. Ace American alleged that as a result, it was required to contribute to the eventual settlement, which exceeded the limits of the Fireman’s Fund policies.

Fireman’s Fund demurred, arguing that the rights of an excess insurer such as Ace American derive from the rights of the insured, Warner Brothers. As such, an excess insurer may only sue for equitable subrogation if there has been a judgment against the insured that exceeds the limits of the primary policy. Because the Franco lawsuit settled and there was no judgment against Warner Brothers, Fireman’s Fund argued, Ace American could not sue for equitable subrogation. The trial court sustained the demurrer without leave to amend and dismissed the case, and Ace American appealed.

On appeal the question presented is whether Ace American has stated viable causes of action for equitable subrogation and breach of the duty of good faith and fair dealing, or whether the lack of a judgment in the employment injury case bars Ace American’s claims. The court of appeal reversed the dismissal in the published case of Ace American Insurance v Firemans Fund.

There are conflicting decisions from different divisions of the Second District court of appeal on this issue. In Fortman, supra, 221 Cal.App.3d 1394, Division One held that an equitable subrogation action could proceed against a primary insurer that initially breached its duty to settle a case within policy limits, resulting in a settlement that exceeded policy limits. By contrast, in RLI, supra, 141 Cal.App.4th 75, Division Five held that an equitable subrogation action could not proceed under the same circumstances.

The question is whether Ace American has stated viable causes of action for equitable subrogation and breach of the duty of good faith and fair dealing, or whether the lack of a judgment in the employment injury case bars Ace American’s claims.

This division of the Second District Court of Appeal found that because Ace American, the excess insurer, alleged it was required to contribute to the settlement of the underlying case due to the primary insurer’s failure to reasonably settle the case within policy limits, the lack of an excess judgment against the insured in the underlying case does not bar an action for equitable subrogation and breach of the duty of good faith and fair dealing.

Before a drug can be marketed, it has to go through rigorous testing to show it is safe and effective. Surgery is different. The Food and Drug Administration does not regulate surgical procedures.

So what happens when an operation is subjected to and fails the ultimate test – a clinical trial in which patients are randomly assigned to have it or not?

Spinal fusion is an operation that welds together adjacent vertebrae to relieve back pain from worn-out discs. Unlike most operations, it actually was tested in four clinical trials. The conclusion: Surgery was no better than alternative nonsurgical treatments, like supervised exercise and therapy to help patients deal with their fear of back pain. In both groups, the pain usually diminished or went away.

The studies were completed by the early 2000s and should have been enough to greatly limit or stop the surgery, says Dr. Richard Deyo, professor of evidence-based medicine at the Oregon Health and Sciences University. But that did not happen,according to an article in the New York Times. Instead, spinal fusion rates increased – the clinical trials had little effect.

Spinal fusion rates continued to soar in the United States until 2012, shortly after Blue Cross of North Carolina said it would no longer pay and some other insurers followed suit. “It may be that financial disincentives accomplished something that scientific evidence alone didn’t,” Dr. Deyo said.

Other operations continue to be reimbursed, despite clinical trials that cast doubt on their effectiveness.

In 2009, the prestigious New England Journal of Medicine published results of separate clinical trials on a popular back operation, vertebroplasty, comparing it to a sham procedure. They found that there was no benefit – pain relief was the same in both groups. Yet it and a similar operation, Kyphoplasty, in which doctors inject a sort of cement into the spine to shore it up, continue to be performed.

Dr. David Kallmes of the Mayo Clinic, an author of the vertebroplasty paper, said he thought doctors continued to do the operations because insurers pay and because doctors remember their own patients who seemed better afterward.

The latest controversy – and the operation that arguably has been studied the most in randomized clinical trials – is surgery for a torn meniscus, a sliver of cartilage that acts as a shock absorber in the knee. It’s a condition that often afflicts middle-aged and older people, simply as a consequence of degeneration that can occur with age and often accompanying osteoarthritis. The result can be a painful, swollen knee. Sometimes the knee can feel as if it catches or locks. So why not do an operation to trim or repair the torn tissue?

About 400,000 middle-aged and older Americans a year have meniscus surgery. And here is where it gets interesting. Orthopedists wondered if the operation made sense because they realized there was not even a clear relationship between knee pain and meniscus tears. When they did M.R.I. scans on knees of middle-aged people, they often saw meniscus tears in people who had no pain. And those who said their knee hurt tended to have osteoarthritis, which could be the real reason for their pain.

Added to that complication, said Dr. Jeffrey N. Katz, a professor of medicine and orthopedic surgery at Harvard Medical School, is the fact that not everyone improves after the surgery. “It is not regarded as a slam-dunk,” he said. As a result, he said, many doctors have been genuinely uncertain about which is better – exercise and physical therapy or surgery. That, in fact, was what led Dr. Katz and his colleagues to conduct a clinical trial comparing surgery with physical therapy in middle-aged people with a torn meniscus and knee pain.

The result: The surgery offered little to most who had it. Other studies came to the same conclusion, and so did a meta-analysis published last year of nine clinical trials testing the surgery. Patients tended to report less pain – but patients reported less pain no matter what the treatment, even fake surgery.

Then came yet another study, published on July 20 in The British Medical Journal. It compared the operation to exercise in patients who did not have osteoarthritis but had knee pain and meniscus tears. Once again, the surgery offered no additional benefit.

An accompanying editorial came to a scathing conclusion: The surgery is “a highly questionable practice without supporting evidence of even moderate quality,” adding, “Good evidence has been widely ignored.”

Global pressure on health spending is forcing the $1 trillion-a-year pharmaceutical industry to look for new ways to price its products – charging based on how much they improve patients’ health, rather than how many pills or vials are sold.

And according to the article in Reuters Health, some experiments in pricing have already been made.

But shifting the overall industry to a new model requires improvements in data collection and a change in thinking, say drug pricing experts. “Eventually, we are going to get there,” said Kurt Kessler, managing principal at ZS Associates in Zurich, which advises companies on sales and marketing strategies. “But it is a long, tough slog because it’s difficult to get the right data and agree on what the right outcomes are to measure.”

In the past, governments and insurers made room in their budgets for new drugs by switching to cheap generics as patents expired on older drugs. But today generics already account for nearly nine out of every 10 prescriptions in key markets like the United States, and fewer big drugs are going off patent.

That leaves little headroom for pricey new medicines even as they come to market in growing numbers. The U.S. Food and Drug Administration has already approved 16 new drugs this year.

Investors got a wake-up call on the issue last recently when $10 billion was lopped off the market value of Novo Nordisk as the world’s biggest diabetes firm warned of falling U.S. prices.

Pharmacy benefit managers administering U.S. health plans are pushing back hard by excluding some drugs deemed too expensive – including Novo’s – leading to a crunch in areas like diabetes, a disease that now accounts for 12 percent of global healthcare spending.

The Danish group has an unusually high exposure to the U.S. market, but it is not alone in signaling tough times ahead.

The chief executives of Novartis, Eli Lilly and GlaxoSmithKline have all warned recently that pricing will become increasingly challenging across the board.

Accounting for 40 percent of global drug sales, the fate of the U.S. market is front and center in the minds of drug company executives, some of whom privately admit to preparing for a “confrontational” period in relations with politicians.

Novartis CEO Joe Jimenez believes drugmakers must develop value-for-money pricing models, like the performance-based deal the Swiss drugmaker recently struck with two U.S. insurers for its new heart failure drug. Under that deal, payments for Novartis’ Entresto pill are to be calculated in future based on the proven reduction in the proportion of the insurers’ patients admitted to hospital for heart failure, not on the number of pills they consume.

The aim is a flexible pricing system that rebates healthcare providers when a drug doesn’t work as planned and charges more when it works well.

Europe is in the vanguard of such moves. Britain agreed an early performance-based deal for a Johnson & Johnson (JNJ.N) blood cancer drug back in 2007 and Italy also uses patient data to pay for cancer drugs based on actual patient responses.

GSK CEO Andrew Witty sees this outcomes-based approach slowly becoming the norm in more disease areas and geographies. “Whoever wins the election in the U.S., and also in Europe, we will see those conversations play out over the next few years,” he told Reuters. “I am not particularly expecting anything dramatic in 2017. I would say it is worth keeping an eye open for evolution of change, probably in ’18 and ’19.”

The pharmaceutical industry’s European trade association is already discussing ways to shift to outcomes pricing, following price curbs in Germany that have caused some companies to pull products off the market, and effective rationing in Britain, where strict cost-effectiveness rules apply.

Authorities in Asia’s two biggest markets, China and Japan, are also intervening in new ways to cap runaway costs.