Tag: 2022 News

The Division of Workers’ Compensation (DWC) has issued its notice of intent to re-adopt emergency regulation Section 46.3 to extend the effective date beyond the current expiration date of July 18, 2022.

This regulation addresses the ongoing need for telehealth medical-legal evaluations and office location flexibility resulting from various state and local public health safety measures related to COVID-19. These emergency regulations will help injured workers and employers continue to move their workers’ compensation claims towards a resolution and avoid additional and undue delay.

The Notice, Finding of Emergency and text of the regulations to extend the effective date of these emergency regulations will be filed for review with the state Office of Administrative Law (OAL) on July 8, 2022. The documents can be found on the DWC website.

Upon OAL approval and filing with the Secretary of State, the regulations are effective for an additional 90 days. This is the first re-adoption; DWC can issue a second if needed. The Division intends to commence rulemaking to make this regulation permanent within the next 90 days.

For information on the OAL procedure, and to learn how you may comment on the emergency regulations, go to OAL’s website.

(1) A QME or AME may complete a medical-legal evaluation through telehealth when a hands on physical examination is not necessary and all of the following conditions are met:

– – (A) There is a medical issue in dispute which involves whether or not the injury is AOE/COE (Arising Out of Employment / Course of Employment), or the physician is asked to address the termination of an injured worker’s indemnity benefit payments or address a dispute regarding work restrictions; and

– – (B) There is agreement in writing to the telehealth evaluation by the injured worker, the carrier or employer, and the QME. Agreement to the telehealth evaluation cannot be unreasonably denied. If a party to the action believes that agreement to the telehealth evaluation has been unreasonably denied under this section, they may file an objection with the Worker’s Compensation Appeals Board, along with a Declaration of Readiness to Proceed to set the matter for a hearing;

– – (C) The telehealth evaluation conducted by means of a virtual meeting is consistent with appropriate and ethical medical practices, as determined by the QME and the relevant medical licensing board; and

– – (D) The QME attests in writing that the evaluation does not require an in person physical exam.

A notice will be posted at the DWC website when the re-adoption is approved.

It is not easy for parties to succeed in the appeal of an IMR determination at the WCAB. The California legislature adopted as a standard that the aggrieved party must show that at the IMR level there was a “plainly erroneous finding of fact based upon ordinary knowledge and not expert opinion.” A recent Opinion after Reconsideration demonstrates how this standard is viewed by a WCAB panel on Reconsideration.

In this case, Erlinda Cantillo suffered injury to her back and knee while working for Amazon.com Inc. Following her total knee replacement, and lumbar spine surgery she was using a walker to assist with ambulation, and was having “severe difficulties” with activities of daily living. Her. treating physician requested home health care 4 hours a day and 4 days a week for 3 months. After the UR process, IMR determined that the home health care was “not medically necessary and appropriate” and declined to authorize the request.

The matter proceeded to trial, and the WCJ admitted exhibits entitled Initial Approaches to Treatment Guidelines dated June 30, 2017, Medical Report of Dr. Ahmed dated June 14, 2021, and IMR Final Determination dated January 12, 2022, into evidence. After submission, the WCJ found that the “IMR determination was not the result of a plainly erroneous finding of fact based upon ordinary knowledge and not expert opinion” and denied to reverse the IMR determination.

Applicant petitioned for reconsideration, and a WCAB panel rescinded the F&O and substituted a finding that “the January 12, 2022 IMR determination applied the MTUS Initial Approaches to Treatment Guidelines in a plainly erroneous manner based upon ordinary knowledge and not expert opinion” and substituted an order that the UR determination be remanded to the AD for submission to a different independent review organization or different reviewer as provided in Labor Code section 4610.6(i) in the panel decision of Cantillo v Amazon – ADJ12704660 (June 2022).

The Court of Appeal held that IMR determinations are subject to meaningful review, even if the Appeals Board cannot change medical necessity determinations, noting that “[t]he Board’s authority to review an IMR determination includes the authority to determine whether it was adopted without authority or based on a plainly erroneous fact that is not a matter of expert opinion” (Stevens v. Workers’ Comp. Appeals Bd. (2015) 241 Cal.App.4th 1074, 1100.)

Here, the IMR reviewer relied upon MTUS providing that “[h]ome healthcare is selectively recommended . . . to overcome deficits in activities of daily living . . . [and indicated when] the patient is unable to leave the home without . . . [a] walker.” In doing so, the reviewer explicitly recognized medical evidence that applicant has ” ‘severe difficulty’ with activities of daily living” and “ambulates with [an] assistive device” due to those difficulties.

Yet the reviewer concluded that home healthcare was “not medically necessary” without explaining how this evidence fell outside the MTUS or citing evidence that applicant was able to perform daily living activities without difficulty or ambulate without an assistive device or was not “homebound” as her primary treating physician had opined.

“Hence, inasmuch as the MTUS recommend that home healthcare is to be provided to overcome deficits in daily living – and specifically indicated when the patient is unable to leave the home without major assistance requiring devices such as a walker – it is clear that the IMR determination applied the MTUS in a plainly erroneous manner based upon ordinary knowledge and not expert opinion.”

In addition, the IMR reviewer relied upon MTUS providing that a “home evaluation is necessary to develop the home health care treatment plan” as a separate ground supporting the conclusion that home healthcare was not medically necessary.

However, the MTUS do not state that a home evaluation must be performed in order for home healthcare to be recommended, but rather to ensure that such care is provided safely and correctly.

“It follows that the IMR reviewer’s conclusion that the lack of ‘documentation of home health evaluation’ provided an additional ground to deny applicant’s home healthcare request was also based upon a plainly erroneous application of the MTUS.”

A staffing agency (FlexCare LLC) arranged for a nurse (Lynn Grande) to work at a hospital (Eisenhower Medical Center), which she did for about a week in February 2012.

Under the terms of an agreement between the staffing agency (FlexCare) and the hospital (Eisenhower), the staffing agency purportedly “retain[ed] . . . exclusive and total legal responsibility as the employer of Staff,” including “the obligation to ensure full compliance with and satisfaction of” wage and hour requirements. The hospital retained discretion to assign shifts.

The nurse who filed the present case (Grande) joined the prior action against FlexCare as a named plaintiff, alleging wage and hour violations during the time she worked at the hospital. The hospital was not named as a defendant in this prior action and did not intervene in it.

The parties settled the prior action with the staffing agency to pay no more than $750,000, and the court entered judgment upon the settlement. The settlement did not name the hospital as a released party. For purposes of the judgment, the court certified a class of ” ‘all persons who at any time from or after January 30, 2008 through April 8, 2014 were non-exempt nursing employees of [the staffing agency] employed in California’ “

The nurse then sued the hospital based on the same alleged violations. The staffing agency filed a complaint in intervention, seeking declaratory relief. The staffing agency and the hospital argued both that the hospital was entitled to the benefit of the earlier release, and that the first judgment precludes the nurse from bringing this second suit.

The trial court found that “the language in the release clause cannot reasonably be construed to extend to claims Plaintiff may have against [the hospital] in this case.” The court further concluded that because the hospital “is not in privity with [the staffing agency], as that term is understood for claim preclusion (res judicata) purposes, Plaintiff’s claim against [the hospital] in this case is not barred by the Final Judgment” in the first action.

A divided panel of the Court of Appeal affirmed the trial court in Grande v. Eisenhower Medical Center (2020) 44 Cal.App.5th 1147 (Grande I ). The California Supreme Court agreed to hear the case, and affirmed the judgment of the Court of Appeal in Grande v. Eisenhower Medical Center, (Grande II) S261247 (June 2022).

The core of this dispute concerns the issue of privity. Judgments bind not only parties, but also “those persons ‘in privity with’ parties.Questions about privity typically arise when a litigant attempts to use a judgment against someone who was not party to that judgment The circumstances recognized as creating privity have evolved in appellate decisions over time.

The hospital and staffing agency contend that their position is supported by the Court of Appeal’s decision in Castillo v. Glenair, Inc. (2018) 23 Cal.App.5th 262. Castillo concerned a temporary staffing agency (GCA), the agency’s employees, and its client (Glenair), and two sequential lawsuits filed against the parties for labor code wage violations similar to the Grande II case here.

The Supreme Court distinguished the facts in Castillo such that it was not on point in this case The scope of the (putative) class at issue in this second action against the hospital differs from the class at issue in the first case against the staffing company.

Unlike the first suit, which concerned nonexempt employees of the staffing agency placed throughout the state (not just at Eisenhower), this second suit concerns nonexempt employees of the hospital placed by any staffing agency (not just by FlexCare).

The Supreme Court concluded by say that “For these reasons, the hospital and staffing agency have not demonstrated that the Court of Appeal erred in rejecting their claim preclusion argument. We do not decide whether preclusion would have been appropriate on any other ground.”

It is worthy of note that had the settlement documents and release been drafted with different language, the second action here may have been precluded. In this respect the Supreme Court said “The trial court’s fact-specific determination – construing this particular release, based on the evidence adduced at this particular trial – is supported by substantial evidence. We affirm on that basis. Our decision on this issue is thus fact- and case-specific.”

The lesson here for employers is that the wording of a settlement agreement in anticipation of possible avenues of additional litigation and liability is critical.

Payments for medical-legal services used to resolve medical disputes over compensability issues in California work injury claims have risen sharply under the new Medical-Legal Fee Schedule (MLFS) that took effect last year according to a new CWCI study, with the increase in aggregate med-legal fees in the first seven months after the schedule took effect far exceeding the 25% increase anticipated by the Division of Workers’ Compensation (DWC).

In April 2021, the DWC implemented a new fee schedule that for the first time since 2006, changed the payment formulas for med-legal evaluations and reports.

The old MLFS had provided varying flat fee payments for “basic” and “complex” comprehensive (ML102 and ML103) evaluations, and time-based payments for evaluations involving “extraordinary circumstances” (ML104).

The new schedule replaced those three levels of service with a single code (ML201), for which forensic physicians are paid a single, flat fee, plus $3 per page for record reviews exceeding 200 pages (MLPRR), and time-based payments for sub rosa video reviews (ML205). The new MLFS also continued to allow additional fees for evaluations by an Agreed Medical Evaluator (AME) or those involving an interpreter, and expanded fee multipliers to certain medical specialists.

CWCI’s study compared the utilization and reimbursement of med-legal services rendered before and after the new schedule’s April 1, 2021 effective date, using data from accident year 2015 through 2021 claims, with service dates limited to January through October of each year to account for the timing of billing and payment.

The results indicate that replacing the three levels of evaluations with a single comprehensive evaluation reimbursed at a flat fee of $2,015 likely had the biggest impact on average payments. Basic evaluations (previously billed under ML102) accounted for about 40% of the evaluations paid under the new ML201 comprehensive service code, and the new flat fee increased the payment for these services by 222%. More complex evaluations (previously billed under ML103) represented 18% of the new ML201 evaluations, and payments for these services increased by 115%.

Other key findings from the study:

– – It was hoped that the new MLFS would lead to a redistribution of med-legal services, with fewer supplemental reports, but these reports increased from 34.2% of med-legal services in 2019 to 37.8% under the new schedule.
– – Compared to the same time period in 2019, the average payment for a comprehensive evaluation that includes a face-to-face exam of the injured worker rose 52.9%, and the average payment for a supplemental evaluation rose 39.1%.
– – The new per-page record review fee also contributed to the increase in med-legal payments, adding an average of $1,917 to the base fee for comprehensive evaluations, $1,410 to the base fee for follow-up evaluations and $1,437 to the base fee for supplemental evaluations.
– – Physicians specializing in orthopedic surgery provided 53% of the med-legal services during 2021, while internal medicine physicians were a distant second, providing 9% of the services.
– – One goal of the new fee structure was to attract and retain more Qualified Medical Evaluators (QMEs). A review of DWC data show that 211 new physicians joined the pool of certified QMEs in 2021, while only 18 became inactive, resulting in 2,554 active evaluators, a 3% increase from 2020 yet a 1% decrease from 2019.

CWCI has published its study in a Research Update Report, “An Early Look at the Impact of the New Med-Legal Fee Schedule,” which is available to CWCI members and subscribers who log on to the Research section at www.cwci.org. Others may purchase the report from CWCI’s online store.

A federal judge rejected claims that the three largest US opioid distributors ignored warning signs when they sent millions of pills to a West Virginia community, handing a rare trial win for companies linked to the drug epidemic.

US District Judge David Faber said in an opinion Monday McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. didn’t create a public nuisance in Cabell County, West Virginia, and its largest city, Huntington. The plaintiffs alleged between 2006 and 2014, the companies delivered more than 127 million painkillers to pharmacies in the county — or about 142 pills annually for each man, woman and child in the area.

The judge concluded the local governments didn’t prove the distributors failed to put in place “effective controls” against opioids being diverted to illegal uses and couldn’t properly hold the companies accountable for billions of dollars in harms tied to the painkillers under state law.

The federal judge conceded in his 184-page ruling that the “opioid crisis has taken a considerable toll on the citizens of Cabell County and the City of Huntington, And while there is a natural tendency to assign blame in such cases, they must be decided not based on sympathy, but on the facts and the law.”

In the Cabell County case, lawyers argued the distributors ignored warning signs about excessive opioid orders from West Virginia pharmacies.

“We are deeply disappointed personally and for the citizens of Cabell County and the city of Huntington,- lawyers for the West Virginia local governments said in a statement. “We felt the evidence that emerged from witness statements, company documents, and extensive datasets showed these defendants were responsible for creating and overseeing the infrastructure that flooded West Virginia with opioids.”

Faber’s ruling reinforces arguments Cardinal Health’s lawyers made, Eric Timmerman, a company spokesman, said in a statement. The judge found the firm properly provides a “secure channel to deliver medications of all kinds from manufacturers to our thousands of hospital and pharmacy customers that dispense them to their patients based on doctor-ordered prescriptions.”

“Pharmaceutical distributors like AmerisourceBergen have been asked to walk a legal and ethical tightrope between providing access to necessary medications and acting to prevent diversion of controlled substances,” Gabriel Weissman, a company spokesman, said in a statement. “Today’s ruling will help enable our company to do what we do best — ensuring that health care facilities like hospitals and community pharmacies have access to the medications that patients and care providers need.”

The case is City of Huntington v. AmerisourceBergen, 17-cv-1362, US District Court, Southern District of West Virginia.

Bloomberg News reports that  West Virginia has been among the hardest-hit states in the opioid epidemic, with Cabell County’s overdose death rate more than five times the national average during the period covered by the suit, according to researchers. West Virginia officials opted out of a settlement with the distributors last year, arguing it didn’t provide for their local governments still battling the scourge.

In that settlement, McKesson, based in Irving, Texas, Cardinal Health, of Dublin, Ohio, and AmerisourceBergen, of Conshohocken, Pennsylvania, agreed to pay $21 billion to settle the vast majority of the thousands of opioid lawsuits filed by states and local governments across the US.

The strategy of suing opioid companies by alleging public nuisance has had a mixed track record. An Orange County Superior Court Judge, in November 2021, ruled in favor of four pharmaceuticals (including Endo and Teva) after a bench trial in a lawsuit brought by the counties Santa Clara, Los Angeles and Orange and the city of Oakland. That same month, an Oklahoma Supreme Court overturned a $465 Million ruling against Johnson & Johnson, rejecting the public nuisance argument.

However, juries that heard cases have backed nearly identical allegations in New York state court against opioid maker Teva Pharmaceuticals and in federal court in Ohio against pharmaceutical chains including CVS Health Corp.

San Francisco’s opioid lawsuit against Walgreens and a number of pharmaceutical companies commenced a court trial at the end of April, 2022. Lawyers for San Francisco claims that Anda, Allergan, Teva and Walgreens promoted and distributed the powerful painkillers in ways that created a public nuisance that endangered the health and safety of the city’s residents. The case is still underway as of the end of June, 2022.