Medicare Finalizes New Rules To Collect Conditional Payments

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule to tighten its procedure in collecting conditional payments made in workers' compensation actions.. On February 22, 2008 the Department of Health and Human Services published a final rule (PDF) in its program to strengthen CMS's ability to collect payments under the Medicare Secondary Payer (MSP) Amendments.


CMS has designated third party administrators (TPAs) and self-insured plans as "primary payers."

The rule continues to provide that, "...As is the case with group health plan and large group health plan insurance, Medicare may not make payment if payment with respect to the same item or service has been made or can reasonably be expected to be made under workers' compensation..."

The final rule removes the requirement that the reimbursement will be made "promptly" and now substitutes that the primary payer is "...obligated to reimburse CMS if and when it is demonstrated that the primary payer has or had primary payment responsibility. This responsibility may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items and services included in a claim against the primary payer, or by other means, including but not limited to a settlement, award, or contractual obligation. This means that a primary payer may not extinguish its obligations under the MSP provisions by paying the wrong party--for example, by paying the Medicare beneficiary or the provider when it should have reimbursed the Medicare program. Primary payers are expected to reimburse CMS when it is demonstrated that they have or had payment responsibility."

This rule supplements the recent legislation requiring the timely disclosure of information which was contained in the Medicare Medicaid and SCHIP Extension Act of 2007 and again reflects the Administration concern that cost shifting should not be transferred from workers' compensation onto CMS. The insurance industry continues to press for legislation that will would shift the burden from workers' compensation onto Medicare and require the US taxpayers to continue to supplement contested workers' compensation claims. CMS recently announced improper payments in 3 states amounted to $371.5 Million dollars alone. Previously this legislation was introduced and efforts to enact it failed.

Casino Employee in NJ Wins Cancer Suit for Second-Hand Smoke Forecasting a New Wave in Litigation

An Atlantic City NJ casino card dealer employed at the Claridge Hotel who was exposed to second hand tobacco smoke was awarded workers' compensation benefits. NJ Judge Cosmo Giovinazzi awarded $150,00 for lost wages and medical benefits to a card dealer holding that second-hand tobacco smoke materially contributed to the employee's lung cancer.

Environmental tobacco smoke has long been associated with lung cancer. A survey of London casino workers indicated that most wanted their environments should be smoke-free. A recently published study by researchers at the University of Nevada revealed that casino floor workers are exposed to four times more tobacco smoke tham amy other workers increasing their risk of cradiovascular disease and lung cancer. Ventilation does not eliminate the poisonous toxins and chimcal components of secondhand smoking.

In The History of the War on Cancer , authored by Devra Davis, in a recent speech broadcast on Book-TV, expresses the urgent need for the removal of carcinogens, inluding tobacco, from the workplace and indicates the need to eliminate the causes.

The Surgeon General of the United States has stated two major observations:

"For the majority of American workers who smoke, cigarette smoking represents a greater cause of death and disability than their work environment." U.S. Department of Health and Human Service. The Health Consequences of Smoking. A Report of the Surgeon General, U.S. Department of Health and Human Services, Public Health Service, 1985 at p. 11.

"In those worksites where well-established disease outcomes occur, smoking control and reduction in exposure to hazardous agents are effective, compatible, and occasionally synergistic approaches to the reduction of disease for the individual worker ..." However, "asbestos exposure can increase the risk of developing lung cancer in both cigarette smokers and non-smokers." Id. at p. 13.

"Cigarette smoking is a major cause of cancer of the lung, larynx, oral cavity, and esophagus and is a contributory factor for cancer of the kidney, urinary bladder, and pancreas. These cancers will cause 278,700 of the estimated 910,000 new cancer cases in the United States during 1985 (ACS 1985), or 30.6 percent of the cancers occurring in the United States other than skin cancer. Exposures to agents in the workplace other than cigarette smoke will also cause some of these new cancers, and a number of cancers will result from the combined effects of cigarette smoking and carcinogenic exposures in the workplace." Id. at p. 101.

Approximately 30 percent of indoor workers in the United States are not covered by smoke-free workplace policies. Secondhand smoke exposure causes disease and premature death in children and adults who do not smoke. Exposure of adults to secondhand smoke has immediate adverse effects on the cardiovascular system and causes coronary heart disease and lung cancer.

Secondhand smoke contains hundreds of chemicals known to be toxic or carcinogenic (cancer-causing), including formaldehyde, benzene, vinyl chloride, arsenic, ammonia, and hydrogen cyanide. Secondhand smoke has been designated as a known human carcinogen (cancer-causing agent) by the U.S. Environmental Protection Agency, National Toxicology Program and the International Agency for Research on Cancer (IARC). The National Institute for Occupational Safety and Health has concluded the secondhand smoke is an occupational carcinogen.

Eliminating smoking in indoor spaces fully protects nonsmokers from exposure to secondhand smoke. Separating smokers from nonsmokers, cleaning the air, and ventilating buildings cannot eliminate exposures of nonsmokers to secondhand smoke.

Conventional air cleaning systems can remove large particles, but not the smaller particles or gases found in secondhand smoke. Routine operation of a heating, ventilating, and air conditioning system can distribute secondhand smoke throughout a building. The American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE), the preeminent U.S. body on ventilation issues, has concluded that ventilation technology cannot be relied on to control health risks from secondhand smoke exposure. U.S. Department of Health and Human Services. The Health Consequences of Involuntary Exposure to Tobacco Smoke: A Report of the Surgeon General. U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, 2006.

Already an area of new litigation is that of Suing the Smoker Next Door. Ironically, in a lawsuit against their neighbors, tenants allege that the common hallways of their NY apartment building smell like "a Las Vegas casino," jeopardizing the health of those who live and work in building.

Workers' Compensation has been the genius of many lawsuits and one could easily predict that a new wave of litigation will be third-party civl actions generated against building property owners and those who are responsible to maintain the premises including: management companies, co-op and condominium associations.

Employee Cell Chat Results in $5.2 Million Payment to Widow by Employer

The distractions caused by cell phone use and other electronic gadgetry are increasing the exposure of employers to monetary exposure well beyond those benefits that employers are covered for under their workers’ compensation policies. A fatal accident contributed to by the employee’s use of a cell phone while driving resulted in a recent settlement of $5.2 million.

While employers’ are shielded to limited and scheduled statutory benefits under workers’ compensation for injures arising out of and in the course of their employment, injured third parties may pursue a civil action against the employer for the employees negligence. An employee who was distracted by cell phone use caused a motor vehicle accident that resulted in the death of a widowed mother of four children. Her estate filed a civil claim against the employer alleging that employee was negligent for using the cell phone while driving.

In a recent article in TRIAL magazine, Robert L. Sacks Jr., discusses the liability caused by text messaging and other distractions while driving. “Drivers with one hand on the wheel and one hand on the phone are a common sight, at least in states where it’s still legal to talk and drive. But the cell phone is only one of many potential high-tech distractions. It’s now possible to talk, text-message, take pictures, check the global positioning system (GPS), adjust the satellite radio, scroll through the pages of your MP3 player, send e-mail, and try to drive—all at the same time.”44 TRIAL 2 (February 2008).

Sacks cites the work of psychologists at the University of Utah that it is 50% more dangerous to drive while text messaging than while talking on a cell phone. This increase a serious danger to motorists.

This enhanced risk can result in serious economic liability to employers who permit or direct their employees to become distracted while driving in the course of their employment. Employers maybe wise to immediately issue rules prohibiting such activity.

Lead Paint Creates A Potential New Wave of Occupational Disease Claims

Occupational lead exposure, especially to lead paint, has been a well known hazard in the workplace you decades. Recent epidemiological studies demonstrate the causal relationship of exposure to impaired brain function, over time, in adults, results in early aging. Employers and insurance carriers should brace themselves for a wave of claims. Occupational exposures over 30 years ago arise from the exposure to lead in paint, that has deteriorated and flaked off through: decomposition, friction, repair replacement or improper encapsulation, may trigger an enormous amount of expensive claims.

"The federal government has, through multiple agencies, extensively reviewed the health effects of lead upon workers. Coordinating their effort through the Agency for Toxic Substances and Disease Registry (ATSDR), Centers for Disease Control and Prevention (CDC), and the National Institute for Occupational Safety and Health (NIOSH) the federal government has alerted both employers and employees to the health hazards of lead and the techniques to be utilized when handling this hazardous substance.

"Lead, a bluish-gray metal, has been used since ancient times because of its unusual properties, such as a low melting point, pliability and resistance to corrosion. Hippocrates reported in 370 B.C. that a worker who had used lead suffered a severe case of colic. Lead is used in older American homes, and lead exposures occur in the workplace because of the widespread use of lead compounds during the past century in paints, gasoline and industry.

"The worker becomes exposed to lead when dust and fumes are inhaled and when lead is ingested through contamination on hands, water, food and clothing. When lead enters the respiratory and digestive tracts of the human body it is released to the blood and distributed throughout the system. More than 90% of the body's lead is accumulated in the bones where it is stored for many years. The bones then release the lead back into the blood stream and re-expose the system long after the original occupational exposure has ceased.

"Lead damages the blood-brain barrier and subsequently damages brain tissue. Workers exposed to lead may experience fatigue, irritability, insomnia, headaches and other subtle effects of mental and intellectual decline. Prolonged exposure to lead may present symptoms such as anemia. Lead inhibits the synthesis of heme and damages the ion transport system in the red blood cell membranes. Chronic high exposure to lead may result in chronic nephropathy and in some extreme cases, kidney failure. Gelman, Jon, Workers' Compensation Law 3rd ed., 38 NJPRAC 9.24 (West-Thomson 2008)

It has recently been reported in the scientific literature, that lead, absorbed into the blood stream over decades, may result in poor performance in a wide variety of mental functions. In a recent study, Dr. Brian Schwartz of Johns Hopkins University, remarked that lengthy exposure to lead, cumulative over years, may cause an aging brain to function at a level that is 5 years older that it really is. The Studies at Johns Hopkins objectively measured lead absorbed over a lifetime in human bodies. Dr. Brian Schwartz remarked, "We're trying to offer a caution that a portion of what has been called normal aging might in fact be due ubiquitous environmental exposures like lead."

Like asbestos and tobacco, lead exposure may cause a latent disease which causes the brain to deteriorate at an accelerated rate. Those who worked with lead, and those who were bystanders to lead exposures on the workplace, may have a workers' compensation benefits for the mental condition related to the lead exposure.

This significant new research relating lead exposure to aging puts insurance carriers and employers at risk for both direct claims under workers compensation systems and for claims against potential third parties, ie. property owners and paint manufacturers. Unlike tobacco and asbestos, these claims may be significantly more costly since because of the long potential long payment period of benefits under workers' compensation acts and the potential legions of workers who have been exposed in directly or indirectly.

Presidential Primaries Are Defining the Future Course of Workers' Compensation Medical Benefits

Workers' Compensation medical benefits continue to be up for grabs as the US Presidential Primaries continue. The problematic compensation delivery system continues to provide little cost containment, high administrative costs and continues to drain the system by endless delay hampering the delivery of effective medical care.

A recent survey article in the New England Journal Medicine, baes on a Kaiser Family Foundation and Harvard School of Public Health review, crystallizes the political future of universal health care based upon present perceptions and future solutions. The review article analyzes multiple surveys and concludes that while polarization continues in many areas there are common grounds. It are those similarities that will define the future of medical care in the US.

While both Democrats (79%) and Republicans (52%) agree that the nation's health care system is "poor," they both Democrats (46%) and Republicans (28%) agree that it does not need to be completely rebuilt.

Both parties content that the failure to health insurance is a serious problem, Democrats (94%) and Republicans (55%) and the overwhelming majority of both parties feel that employers should not bear the responsibility for medical care, Democrats (19%) and Republicans (19%). The issue over the implementation of a universal coverage program seems to be split consistently along party lines, Democrats (79%) and Republicans (53%).

Interestingly enough very few surveyed wish to reduce Federal government programs, Democrats (5%) and Republicans (12%) which implies that a shift to a more efficient and effective Federal universal system would be warranted. Incorporating workers' compensation medical benefits into such a universally designed system would appear to be the direction where things are headed.

CMS Hammers Work Comp Carriers with Major MSP Reporting Requirements

A new law on the books introduced in the Senate on Dec. 18, 2007 and signed by the President on December 29, 2007 is going to have significant impact on how the workers' compensation system operates in the future concerning Medicare Secondary Payer (MSP) issues. Robert E. Taren, Esq. of California, a national expert on the subject, has alert me to the new legislation.

For years it has been a dirty little secret in the Workers' Compensation Industry that the insurance carriers were shifting the medical liability from themselves to Medicare. Enacted in 1980 the Medicare Secondary Payment Act has had major enforcement problems and Medicare has continued to bleed dollars. Struggling with the issue and after major reports of a failing system, Medicare in 2001 issued the famous Patel Memorandum establishing a system where the workers' compensation industry would be required to obtain Medicare consent before future medical benefits could be compromised. Medicare also established a recovery program from benefits that were paid in the past and actually the responsibility of the workers' compensation system.

Plagued by the multiple network of workers' compensation programs and reluctant players in the system to provide data, Medicare has struggled to establish a efficient program. Attorneys, claimants, insurance carriers and the agencies themselves have been reluctant to provide information to Medicare and in turn Medicare has had to seek information through convoluted reporting procedures.

A stagnating system has caused those in the workers' compensation industry to complaint that that the process is too slow and that the workers' compensation has been placed on life support systems. Additionally the major stakeholders in the system, the insurance carriers and the employers have made failed attempts to cut Medicare off at the knees by eliminating and reducing the past due recoveries and the potential future medical payments.

The Medicare, Medicaid, and SCHIP Extension Act of 2007 requires workers' compensation carriers to submit information to Medicare on a schedule prescribed by the Federal government or be subject to a $1,000 a day fine for each violation.

It's All About the Medical

As the new political and legislative year unfolds, stakeholders are keeping their eye on the prize, medical benefits, in the workers' compensation arena. Recent court decisions continue to emphasize the major significance of medical care and continue to question the ability of the presently crafted system to deliver medical benefits in an efficient and effective manner.

The New Jersey Appellate Court declared that medical providers have standing to seek reimbursement for the full amount of medical fees from a the workers' compensation carrier. Failure to attempt to pay or negotiate an obligation that it denied by implied "refusal to treat" actions resulted in an employer being obligated to pay the full freight, medical bills, and a counsel fee for recovery. Villanueva v. Federal Express, Inc. DOCKET NO. A-4342-06T24342-06T2 Medical liens remain a critical issue in workers' compensation. Legislation is pending to centralize the chaotic and disruptive process.

In another decision the NJ Supreme Court insulated the insurance carrier from an employee's medical malpractice claim, but did not permit the exclusivity doctrine to extend to the workers' compensation medical expert for a deviation from practice action. This dramatically increases the potential recovery for failure to provide adequate care in a workers' compensation claim. Barbara Basil, etc. v. Frank A. Wolf, et al. (A-80-05/A-110-06)

Universal medical remains a critical factor in 2008 politics. While Hilary lost Iowa, the exit poles demonstrate that people who wanted a change voted for Obama. "Obama won huge among those who cared most about change -- 51-19." The New Hampshire poles reflect while health care is a a critical issue to most Americans the major questions remains over what the action should be taken to fix the ailing system.

Compounding the problem is the fact that workers' compensation carriers have continued to shift the burden on to others. Whether it be private carriers or CMS the situation has now been inflamed by those who attempt to legislatively again limit the workers' compensation carriers' responsibility even in contested situations. This short sighted shell game will merely add even more outrage by taxpayers as Medicare fails to be able to pay its own bills.