Volume 1
No. 5
06-15-2003
http://siennastaffing.com

inside:

• Editor's Two Cents
• Sounding Board
• Global Settlements
• Medicare
• Legislation & The Law
• That Pesky Mouse - Part II
• Flexible scheduling - when employees cross the line
• The Last Laugh
• Events Calendar
• Readers Poll - Who do you think will win control of State Fund?

Editor's Two Cents

in response to Governor seeks to reform workers' comp

May 2003 Legislation and The Law

I think that if they adopt the AMA guide, that it would even be worse. In order to provide those types of benefits, you must have some control. In Longshore you used to have the control. In the state forum you have no control over anything. Applicant’s attorney's just go ahead and get those treating doctors and then you have the chiropractor's plugging along doing all kinds of unnecessary treatment. As a matter of fact, I saw something indicating that it was the reason why the medical industry is spending a lot of money, was in fact due to the chiropractors. When they changed the law regarding a chiropractor, to get rid of a chiropractor, over an orthopedic opinion, that's when all hell broke loose. They need to concentrate on getting rid of the bad apples. What happened to all of the bad doctors that were arrested and put behind bars in Los Angeles? I see that they are now back on the streets of Los Angeles and doing the same thing as they did before. The mills continue to pop up, and the Boards and Judges need some clean up also. As you are aware, the Labor Code does indicate that they will be liberal towards the employee. I have my self-insured certificate, so how many more certificates do we need?

You will need reform in all areas to get some control, and cut costs.

Why should the carrier care how much it spends to defend a claim. All they are doing is charging more money and piling up work on examiners.

Unsigned

Your point regarding work related injuries vs.. non work related injuries and the time frame to heal is correct, however money is not the only issue. I work for 15 orthopedic physicians that see both types, the other factor is motivation. The biggest complaint the physicians have is the fact most workers comp patient don't want to get better. Some of the issues are patient's are doing mostly non aggressive treatment for months and become lazy and less hopeful of a good outcome. I can agree that some physicians are motivate by the money long term care can provide, but most do not care for the patients who is in the office every week without progress. As physicians they feel that getting a patient in to an aggressive program without long delays will help the patients by keeping them active. The worst patient is one who has been sitting on the couch 24-7 thinking about the pain, they are very difficult to motivate and symptom magnification is a side effect.

   Thank you for the forum to give my opinion. Overall the workers comp system has so many delays that it also can be its own enemy in helping get patients back to work.

   Sincerely

   Shannon Carlson
Muir Orthopedic Specialist

By Anthony L. Alford
Marsh Risk Consultant
Anthony@adjustingworld.com

Recent California court rulings have recognized the validity of an employee’s release of the California Fair Employment and Housing Act (FEHA) relating to discrimination and/or harassment claims which were included in the general release language of a workers’ compensation compromise and release agreement.

For many years, employers, workers compensation carriers, defense and applicant attorney’s, and judges have been reluctant to pursue “global” release settlements of workers’ compensation cases and civil claims for numerous reasons such as:

• Reluctant California civil court judges to recognize the validity of civil releases exclusively in workers’ compensation agreements based on a view that the two systems have a different system of laws.
• Reluctant workers’ compensation judges to approve compromise and releases with general civil releases due to a perception that the Workers’ Compensation Appeals Board (WCAB) does not have jurisdiction.
• A general belief that workers’ compensation releases should be narrowly defined to workers’ compensation claims.

In the case of Kohler v. Interstate Brands (November 25, 2002) 2002 DJADAR 13273, A California appeals court has held that when an employee signs a workers’ compensation release agreement that releases “all claims and causes of action” against an employer, this includes a waiver of claims in a civil lawsuit against the employer of which the employer had not yet been given notice.

Additionally, in the case of Jefferson v. Department of Youth Authority (July 1, 2002), 28 Cal. 4th299, the California Supreme Court ruled that when an employee signed a workers’ compensation settlement agreement that covered "all claims and causes of action" relating to her injury, she is barred from bringing a sexual harassment lawsuit based on the same events that caused the injury.

In the wake of Kohler and Jefferson, California employers and their defense counsel can pursue global settlement with respect to worker's compensation and civil claims. Previously, to ensure that an industrially injured employee released all known or unknown claims at the time of executing a C&R, civil defense counsel being aware of a pending C&R might typically prepare a separate civil release of claims to be executed by the industrially injured employee. This process usually resulted in a delay of the settlement. Now, apparently, all releases can be effected through the C&R and associated documents. To do so, however, employers and their counsel must remain alert to the possibility of potential civil claims by their industrially injured employees and then carefully draft the C&R to reflect certain language the courts apparently will look for in determining whether to enforce such agreements. The Kohler and Jefferson courts seemingly suggest that even a boilerplate workers’ compensation C&R form will effect a “global” settlement if the industrially injured employee is aware of potential civil claims and the C&R form has general release language.

In conclusion, if an industrially injured employee, at the time of signing a workers’ compensation C&R that includes general release language, has knowledge of potential civil claims against his/her employer or co-employees, the burden shifts to the employee, and the C&R will cover all claims unless the employee establishes through extrinsic evidence that the parties intended to except civil claims from the C&R. This is true even if the employee has filed a civil lawsuit against his/her employer and/or co-employees – so long as the employer and/or co-employees have not been served with the lawsuit or otherwise are aware of the lawsuit.

Teddy Snyder
Ringler Associates
www.RinglerAssociates.com
TSnyder@RinglerAssociates.com

Medicare is a forty-year-old federal program that pays for basic medical care for retired and disabled people who qualify by paying into Social Security for the required number of calendar quarters. For twenty years, federal law (42 USC 1395y) has provided that Medicare is a “secondary payer.” If there is a “plan” for workers’ compensation insurance or self-insurance, the plan is the primary payer, the one Medicare expects will pay the bills. If Medicare is called upon to pay a bill which should have been paid by a primary payer, it can bring an action to recover against any entity that should have paid the bill, such as an insurance carrier or self-insurer, or an entity which received payment, such as the Applicant or Applicant’s attorney. The theory is that if an Applicant has received money to pay for future medical expenses, that Applicant should not be able to squander the settlement and then turn to the taxpayers to pay bills which were already compensated.

Medicare did not enforce its secondary payer rules in workers’ compensation cases until recently. Beginning in July 2001, the Center for Medicare and Medicaid Services (“CMS”) has released several memos which require parties to “take Medicare’s interests into account” when settling a workers’ compensation case with a Compromise & Release. For cases C&R’d with a settlement over $250,000 and where the Applicant is “reasonably expected” to be eligible for Medicare within 30 months (including people already receiving social security disability or retirement benefits), the settlement should include a set-aside account for future Industrially-Related Medicare-Eligible Expenses (“IRMEE”) which has been approved by CMS. If you have a case which may settle for more than $250,000, count on getting CMS approval. With a value that high, chances are good that the Applicant will be applying for disability benefits.

In smaller cases, if the Applicant might become eligible for Medicare within 30 months, either by reason of retirement or disability, a set-aside should be included in the settlement. However, CMS review is not necessary. A good rule of thumb is to include set-asides in lump-sum settlements valued at $100,000 and up and get CMS approval for cases valued over $250,000. Medicare will pay IRMEE in excess of the amounts properly set aside.

Start the set-aside process by gathering the records of medical expenses paid over the last two years along with medical reports (AME, QME, PTP, life care plan). Typically, a carrier or self-insurer will hire an expert to analyze these records to determine the Applicant’s future IRMEE needs. On your authorization, the expert will obtain CMS approval for the planned settlement and set-aside.

A typical set-aside might provide for projected IRMEE of $2,000 per year over the Applicant’s life expectancy. Your structured settlement broker can create a “rated age” to determine the Applicant’s likely life expectancy, taking into account the Applicant’s unique medical history. Then the broker can determine the present cost to fund the set-aside economically through periodic payments.

Set-asides can be self-administered or formal trusts. Applicants who self-administer must keep records of the medical bills paid from the set-aside and to account annually for same. This task is similar to record-keeping by individuals who itemize medical expenses on their tax return. Professional trustee companies will administer set-aside trusts for a fee. They will pay the bills as they come in after determining they are IRMEE. Monies to be paid into set-asides should be structured. This reduces the initial amount required leaving more money for cash at settlement, usually produces a higher rate of return, and keeps trustee’s fees to a minimum.

Your structured settlement broker can help you through the process, including finding an expert if you are not already working with one. Properly taking Medicare’s interest into account at time of settlement means Medicare will pay Applicant’s IRMEE in excess of the set-aside, and the carrier or self-insurer has no liability exposure if a self-administering Applicant spends the set-aside on expenses other than IRMEE.

Teddy Snyder is an attorney and Structured Annuity Specialist with Ringler Associates

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