CMS/MSP and the Increase in Drug Costs

Hold onto your seats because the cost of drugs are soaring and so will be the requests from CMS for MSP reimbursements and future allocations for set-aside agreements. CMS just announced that to merely make ends meet next year that it is increasing the drug premium cost 12% for 2009. While CMS announced that this is lower than anticipated it still will be a major increase to workers’ compensation programs through reimbursement procedures.

With 17.4 million beneficiaries enrolled in the program and the average person living longer due to enhanced medical care the issue reimbursement will continue to have a greater impact on State workers’ compensation programs.

EIRSA’s Reach Shortened by the US Supreme Court

The US Supreme Court denied certification in Silverleaf v Resorts, Inc. v. McAteer, 128 S.Ct. 2884, and allowed to stand a 5th Circuit decision, McAteer v. Silverleaf Resorts, Inc., 514 F.3d 411 (C.A.5-Tex. 2008) ,that held that an employee’s state law negligence claim against her employer for the failure to maintain a safe workplace were not preempted by the Employee Retirement Income Security Act (ERISA]. The employee’s action was improperly removed on theory based on ERISA preemption. The employee was required to waive participation in the State of Texas’ workers compensation program in order to participate in the employer’s EIRSA plan. The election made ERISA the exclusive remedy for any on-the-job-injuries.

In the decision rendered by the 5th Circuit, the Court held that RISA does not preempt state law negligence claims relying upon its prior decision in Hook v. Morrison Milling Co., 38 F.3d 776 (C.A.5-Tex. 1994).

The employer, Silverleaf, was a non-subscriber to the Texas workers’ compensation plan and had stabled an ERISA governed plan to provide benefits to employee in the event of a job-related injury and provide for the arbitration of disputes regarding benefits.

Workers’ Comp by an ATM Machine

Workers’ Compensation is high finance and the delivery of benefits a costly procedure. JP Morgan Chase & Co. has announced that it will issue a Visa credit card underwritten by workers’ compensation funds. Ohio’s Central Mutual Insurance Co. is expected to be one of the first companies to use this financial mechanism for distribution of funds.

Since injured workers are probably in financial distress to begin with, as they lack adequate wage replacements and are disabled, it will be important to watch what safeguards are put in place to regulate this vehicle so that the captive market of injured workers does not become prey to credit card companies.

Hospital-Acquired Infections - The Next Wave of Litigation

The old saying, “Sick people don’t belong in hospitals,” was given new meaning by a recent jury verdict for over $2.5 Million against a heart surgeon and his practice group and a hospital in St. Louis Missouri. The patient was admitted for the installation of a pacemaker and a resulting hospital acquired infection resulted in the loss of his right leg a portion of his left foot, a kidney and his a majority of his hearing.

The award was entered after the patient contracted a hospital-acquired infection. The patient had developed a drug-resistant staph infection called methicillin-resistant Staphylococcus aureus (MRSA)

Medicare has taken the position recently that it will no longer reimburse hospital for the conditions, citing them as “never” events. Many infections in hospitals are preventable through proper sanitation and serialization procedure. The verdict serves as a wake-up call to hospitals and their staff’s that they will suffer economic consequences if they fail to maintain a safe working environment.

Governor Patterson Signs Legislation Extending Benefits for 911 Workers

New York State workers’ compensation benefits have been expanded for 911 workers as a result legislation signed Governor Patterson. Under the prior law the registration period would have closed in August 208. The date has been extended to September 10, 2010.

The definitions in this bill expand the scope of a "qualifying WTC condition" under the Accidental Diability Law to include:

(1) members who did not undergo apre-employment physical examination, but who provide access to medical records which demonstrate the absence of a qualifying condition priorto September 11, 2001;

(2) 911 dispatchers who worked on September 11, 2001 and suffered psychological injury;

(3) members who worked for any period of time within the first 48 hours after the first airplane hit the WTC; and

(4) members who repaired, cleaned or rehabilitated vehicles or equipment, including emergency vehicle radio equipment owned by New York City ("NYC") that was contaminated by debris from the WTC site.

Sections 18, 19 and 20 of the bill amend Workers` Compensation Law("WCL") SS 162, 164 and 168 to allow claimants to file a sworn statement indicating the dates and locations of their participation inthe rescue, recovery and clean-up operations until September 10, 2010,with the date of disablement being determined as the date mostbeneficial to the claimant. Claims for disablements occurring between September 1, 2003 and September 11, 2008 will not be time barred. The time period was to have expired on August 14, 2008.

“We have a profound responsibility to provide those who participated in the rescue, recovery and clean-up efforts in the aftermath of the terrorist attack on September 11, 2001 with the benefits they deserve,” said Governor Paterson. “It is imperative that we continue to provide those workers who face health consequences from their work at Ground Zero with the very best care and the opportunity to apply for disability benefits.”

“We also have a responsibility to better protect patients in New York. Strengthening the disciplinary system for physicians and giving the public more information, combined with enhancing infection control measures, is vital to the safety of all of our citizens,” added Paterson.

What Impact Will AIG’s Decline Have on the Workers’ Compensation Industry

AIG’s announcement yesterday, of yet another loss of $5.4 Billion brings their total loss to $18.5 Billion in the last 3 quarters, shook Wall Street. The announcement caused the 5th largest daily decline in the value of its stock. Yesterday alone, AIG stock fell 18% in value as the NYSE fell 224.64 points.

Since AIG is a major component of the national workers’ compensation scene, the devaluation of the company will most probably have financial repercussions thought the workers’ compensation sector. If AIG is unable to meet its obligation in some jurisdictions then an automatic insolvency procedure will be implemented. The ultimate cost will flow into the system itself.

Compounding this issue is the fact that workers’ compensation premiums that are to be collected are heading south. Also announced yesterday was that the job market in the US had become further restricted as unemployment claims rose to 455,000 last week which is a 6 year high.

The NCCI also reported recently that claims nationally were down 2.5% in 2007. These factors may demonstrate that reforms to restrict access to the system are becoming effective, but the massive infrastructure that has been amassed for handling the dwindling claims will need to be ramped down at even a faster rate that anticipated because of the declining economic base signaled by the AIG announcement.

The Odd Lot Doctrine Springs New Life

In 1921 Justice Cardoza while sitting on the Court of Appeals of the State of New York introduced The Odd Lot Doctrine into workers’ Compensation. The Doctrine has been brought to life again in New Jersey.

The “Odd Lot Doctrine” had its genesis in England where a claimant's search for work was fruitless since his physical defects in combination with his lack of skills made him an unmarketable unit. Various States, including New Jersey, have embodied the concept statutorily. In New Jersey where at least 75% of total disability can be attributed to medical reasons, then the other personal handicaps may be considered in combination with the medical conditions in reaching a determination of unemployability.

The Appellate Division remanded a total disability award for failure of the petitioner to provide adequate notice of the assertion of the Odd Lot Doctrine. 06T14598-06T1 JOYCE R. RAMBOUGH, Respondent, v. C.V. HILL REFRIGERATION "Under the ["odd-lot"] doctrine, the worker is viewed in the [context] of the competitive market place, where his inability to sell his labor may be traceable to his [personal] background superimposed upon his physical disability." Id. at 540; see Barbato v. Alsan Masonry, 64 N.J. 514, 526-28 (1974)

See also: "The pretrial memorandum should specify that total permanent disability under the odd-lot doctrine is an issue in the claim so that the respondent can be prepared to meet it at the time of trial. In addition, the ability to perform limited service in one's own enterprise, or a family enterprise, may not of itself be sufficient to negate industrial employability for workers' compensation purposes; the question in such a case is the worker's ability to sell his services in a competitive job market. Germain v. Cool-Rite Corporation, 70 N.J. 1, 355 A.2d 642 (1976)." 38 NJ Practice Sec. 12.12