Category Archives: Workers’ Compensation

Drug Formularies, Part 1: The Rest of the Story

Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.

A drug formulary is a term describing a list of drugs that are covered by an insurance plan. In workers’ compensation, formularies are touted as a way to reduce prescription costs and lead to more effective care. Formularies are particularly pushed as a solution for opioid use and abuse for injured employees.

The headline numbers about the reduction of prescription costs look eye popping. One group of pharmacy benefit managers, the companies that manage drug formularies, claimed a 9 percent reduction in prescription costs over the last year. Ohio, which has the largest state-run workers compensation fund in the country, claimed a 16 percent reduction in prescription costs in the first three years after they implemented a drug formulary. Ohio reported 15.7 million fewer doses of opioids in that time period and a 36 percent reduction in opioid costs.

The Rest of the Story about Drug Formularies

Florida workers’ compensation judge David Langham has asked “what is the rest of the story” about drug formularies. If drug formularies are so effective, then why have they only been adopted in a few states for workers’ compensation?

While drug formularies are a relatively recent development in workers’ compensation, they are well established in the larger world of health insurance. Drug formularies have long been criticized for increasing costs in health insurance plans by reducing prescription usage because costs are shifted to insureds, which forces insureds to seek more expensive care, because chronic conditions go untreated. Overall costs are increased. The costs are also shifted onto insureds who have to pick up the costs for more expensive procedures that could have been taken care of through medication. Cost shifting from the employer onto the employee, other forms of insurance and the government is already a serious problem in workers’ compensation. Drug formularies in workers’ compensation could exacerbate the issue of cost-shifting.

Do Drug Formularies add up?  Cost = Price * Utilization

When you study drug formularies for any amount of time, you run across the equation that drug costs equal price multiplied by utilization. Proponents of drug formularies tout that they can decrease both the utilization and the price of prescription drugs. Ohio has provided detailed information about the decrease in the utilization of certain drugs like opioids because of formularies. However, the decrease in the utilization in opioids cited by proponents of drug formularies coincides with an overall long-standing decrease in the frequency or number of workers’ compensation claims. Fewer overall claims mean less overall utilization, which could explain some of the cost decrease. A better measure of the effectiveness in drug formularies in controlling costs would be measured by looking at prescription cost per claim. So far, drug formulary proponents have been unable to show that data. Even if drug formulary proponents could show that data, there is still the issue of whether reductions in prescription drug costs lead to increases medical costs by forcing injured employees to seek more expensive care that could have been taken care of by prescriptions.

On the price end of the equation, drug formularies are thought to control costs by having pharmacy benefit managers negotiate bulk discounts on prescription drugs. But pharmacy benefit managers have come under fire with allegations that they actually increase drug prices or at the very least are powerless to stop the increases in drug prices. The issue of drug formularies, pharmacy benefit managers and drug prices is complicated and will be addressed in Part 2 of this series.

Labor Report Urges Study Of A Federal Role In State Workers’ Comp Laws

Howard Berkes and Michael Grabell have been investigating the decline of workers compensation for Pro Publica and NPR.

Today’s post comes from guest author Edgar Romano, from Pasternack Tilker Ziegler Walsh Stanton & Romano.

Howard Berkes and Michael Grabell have been shining a light on the deterioration of state workers’ compensation benefits over the last decade. A new U.S. Department of Labor report bolsters their investigative journalism, noting that those hurt on the job are at “great risk of falling into poverty” because state workers’ compensation systems are failing to provide them with adequate benefits.

The Workers Injury Litigation Group (WILG) has been fighting against this decline for 20 years, and we will continue to advocate for fair benefits for injured workers. The following is a summary of Mr. Berkes and Grabell’s recent article:

A “race to the bottom” in state workers’ compensation laws has the Labor Department calling for “exploration” of federal oversight and federal minimum benefits.

“Working people are at great risk of falling into poverty,” the agency says in a new report on changes in state workers’ comp laws. Those changes have resulted in “the failure of state workers’ compensation systems to provide [injured workers] with adequate benefits.”

In the last decade, the report notes, states across the country have enacted new laws, policies and procedures “which have limited benefits, reduced the likelihood of successful application for workers’ compensation benefits, and/or discouraged injured workers from applying for benefits.”

The 44-page report was prompted by a letter last fall from 10 prominent Democratic lawmakers, who urged Labor Department action to protect injured workers in the wake of a ProPublica/NPR series on changes in workers’ comp laws in 33 states.

The ProPublica/NPR stories featured injured workers who lost their homes, were denied surgeries or were even denied prosthetic devices recommended by their doctors.

A “race to the bottom” in state workers’ compensation laws has the Labor Department calling for “exploration” of federal oversight and federal minimum benefits.

“Working people are at great risk of falling into poverty,” the agency says in a new report on changes in state workers’ comp laws. Those changes have resulted in “the failure of state workers’ compensation systems to provide [injured workers] with adequate benefits.”

In the last decade, the report notes, states across the country have enacted new laws, policies and procedures “which have limited benefits, reduced the likelihood of successful application for workers’ compensation benefits, and/or discouraged injured workers from applying for benefits.”

The 44-page report was prompted by a letter last fall from 10 prominent Democratic lawmakers, who urged Labor Department action to protect injured workers in the wake of a ProPublica/NPR series on changes in workers’ comp laws in 33 states.

The ProPublica/NPR stories featured injured workers who lost their homes, were denied surgeries or were even denied prosthetic devices recommended by their doctors.

“The current situation warrants a significant change in approach in order to address the inadequacies of the system,” the report says.

That’s where federal intervention comes in. The Labor Department calls for “exploration” of “the establishment of standards that would trigger increased federal oversight if workers’ compensation programs fail to meet those standards.”

The agency also suggests a fresh look at reestablishing a 1972 Nixon administration commission that recommended minimum benefits and urged Congress to act if states failed to comply.

“In this critical area of the social safety net, the federal government has basically abdicated any responsibility,” says Labor Secretary Thomas Perez.

Without minimum federal standards for workers’ comp benefits, Perez adds, the current system “is really putting workers who are hurt on the job on a pathway to poverty.”

Prior to the report’s release, employers, insurance companies and others involved in workers’ comp programs expressed alarm at the possibility of federal intervention.

“There has never been federal ‘oversight of state workers’ compensation programs’,” says a statement posted on the website of a group called Strategic Services on Unemployment and Workers’ Compensation, which says it represents the workers’ comp interests of the business community.

“Federal requirements imposed on a national basis would be inconsistent with the state workers’ compensation system, which has been in place for more than 100 years without federal oversight,” the group wrote.

Federal minimum benefits could ensure that injured workers across the country would not receive lesser benefits for often shorter periods of time simply because they lived in a state where lawmakers dramatically cut workers’ comp costs for employers.

“This is a system with no federal minimum standards and absolutely no federal oversight,” says Deborah Berkowitz, a senior fellow at the National Employment Law Project. “Clearly, more federal oversight is necessary to assure that that this system works for those most in need of assistance.”

No direct administrative or legislative action is proposed in the report, but Sen. Sherrod Brown, D-Ohio, says he’s “drafting legislation to address many of the troubling findings laid out in this report and will be working with my colleagues to advance it in the next Congress.” 

Brown echoes Perez, saying injuries on the job shouldn’t force workers into poverty.

“But without a basic standard for workers compensation programs, that’s exactly what’s happening in too many states across the country,” Brown adds. 

Another incentive for federal involvement, the report notes, is a shift of billions of dollars in workplace injury costs to taxpayers when state workers’ comp benefits fall short and workers are forced to turn to Medicare and Social Security for treatment and lost wages.

The report lays the groundwork for federal intervention by providing an extensive section detailing the government’s role in promoting national benefits standards in both Republican and Democratic administrations dating back to 1939.

But many in the workers’ comp world consider workplace injury policy and regulation a states’ right and any prospect of a controlling federal role will likely face stiff resistance.

What Happens If an Employee Gets Hurt at the Work Holiday Party?

“Frosting and beer can be a very fun but lethal combination starting at around midnight,” says Miller, star of the upcoming ensemble comedy “Office Christmas Party” (in theaters Dec. 9). As you know, it’s holiday party season and there’s a new comedy film coming out with some great comedians (Jason Bateman, Kate McKinnon, Jennifer Aniston, Vanessa Bayer) depicting the most out-of-control work holiday party ever. Based on the preview, the employees of a large corporation really, really let loose for an insanely crazy and highly dangerous holiday party. Which leads to the legal question, what happens if an employee is injured at a work holiday party? Like most (if not all) attorney responses, the answer is “well . . . it depends.”

The answer is based on a factors laid out in a North Carolina Supreme Court case from 2007, Frost v. Salter Path Fire & Rescue, and reiterated more recently in the Court of Appeals case Holliday v. Tropical Fruit & Nut Co. In both of these cases, the employee was injured at an employment-related event out of the office. However, in one case (Frost) the worker was denied benefits whereas in the other (Holliday) the injured worker prevailed. In rendering their decisions, the court reviews six factors: 

  1. Did the employer sponsor the event?
  2. To what extent was the attendance really voluntary?
  3. Was there some degree of encouragement to attend by factors such as: taking attendance, paying for time, requiring employee to work if s/he did not attend, and/or maintain known custom of attending.
  4. Did the employer finance the occasion to a substantial extent?
  5. Did the employees regard it as an employment benefit?
  6. Did the employer benefit from the event, not merely in a vague way through better morale and good will, but through tangible advantages such as having an opportunity to make speeches and awards?

Thus, the more the employer is involved in paying for the event and requiring employees to attend, the more likely that a “party-related injury” will also be deemed a work-related injury. So with that in mind, everyone enjoy your holiday parties and go see “Office Christmas Party” for examples of what not to do. Please stay safe and have a happy holiday. 

The High Cost of Fat

Today’s post comes from guest author Thomas Domer, from The Domer Law Firm.

We have reported regularly on the impact of obesity on workers’ compensation (see WFW October 2005 “Diabetes and Work Injuries” Alan B. King, M.D. and WFW Winter 2009 “The Rising Impact of Obesity on Workers’ Compensation” book review).

A recent study in the Journal of Occupational and Environmental Medicine, the official publication of the American College of Occupational and Environmental Medicine, in September 2016 reported that obese and overweight workers are more likely to result in higher costs related to workers’ compensation claims, especially for major injuries.

In a study analyzing 2,300 workers in Louisiana, Dr. Edward Bernacki of the University of Texas—Austin found that workers’ compensation costs and outcomes for obese workers (defined as a Body Mass Index of 30 or higher) incurred higher costs related to their workers’ compensation claim. This study noted that after three years about 10% of claims for significant injuries were still open, meaning the worker had not yet returned to work. Obesity and overweight did not play a role in the delayed return to work. However, for workers with major injuries, overweight was associated with higher workers’ compensation costs. In the group with the higher Body Mass Index, costs averaged about $470,000 for obese workers, $270,000 for overweight workers compared to $180,000 for normal weight workers (with a Body Mass Index between 25 and 30). The study made adjustments for other factors including the high cost of spinal surgeries and injections and, after making the adjustment for these factors, obese or overweight workers with major injuries were twice as likely to incur costs of $100,000 or more. Significantly, Body Mass Index had no effect at all on costs for closed claims or less severe injuries.

Previous studies (including a study in the Journal of Occupational and Environmental Medicine in 2015 linked obesity to a higher rate of workplace injuries and a longer time off. However, the cost effects were not studied until this recent assessment. The new results indicate obesity is a significant risk factor for higher costs in major workers’ compensation injuries.

One significant finding in the study was that more than three-fourths of the workers’ compensation claimants were overweight or obese. Further studies are planned. Previous studies include those from the National Council on Compensation Insurance, Inc. (NCCI) “How Obesity Increases the Risk of Disabling Workplace InjuriesEditor’s Note:  According to most studies, there is a strong correlation between Body Mass Index and injuries such as ankle fracture severity and increase risk of osteoarthritis. For workers’ compensation practitioners, one wonders whether these studies are a prelude to an assault on the “as is” doctrine. Each of us in our own practice can recognize some of the wide-ranging effects in costs of obesity, from special procedures for hospital treatment of obese patients such as open MRIs and more extensive surgical procedures to a reduced fuel economy in commercial vehicles due to fat drivers. Additionally, the cost of treatment for obese patients with work-related injuries increases the work-related injury potential to medical staff (lifting, transferring, etc.). Increasing admissions of severely obese patients leads to a corresponding increase in medical workplace injuries related to lifting and maneuvering obese patients. Workers’ compensation practitioners may see obesity as yet another “pre-existing condition” to surmount in future causation and extent of disability battles.

Workers’ Compensation Advocate David DePaolo Will be Missed

David DePaolo

Today’s post comes from guest author Rod Rehm, from Rehm, Bennett & Moore.

David DePaolo, founder of WorkCompCentral, recently passed away. He was one of the most authentic individuals in the workers’ compensation industry, who often advocated for the injured worker in his blog posts.  

Mr. DePaolo was an intellect, visionary and bridge to all sides of the table in the workers’ compensation arena. It is people like him that the workers’ compensation systems around the country need in order to make things fair, reasonable and just for all.

Thoughts go to his family and loved ones.

Workers’ Compensation ‘Reform,’ Profits: What NCCI Shared

Today’s post comes from guest author Rod Rehm, from Rehm, Bennett & Moore.

Workers’ compensation laws are under constant attack by “reformers” from industry, insurance and self-insureds. NCCI is the National Council on Compensation Insurance, a group that participates in many aspects of workers’ compensation, including setting premiums. The NCCI recently released presentations regarding big issues in workers’ compensation, including information about prescription drug cost-control (listed first below) and an insurance industry financial review (listed last below). These presentations were part of the NCCI’s 2016 Annual Issues Symposium. 

These presentations are interesting. I recommend reviewing them for a snapshot of our current workers’ compensation system in America. The financial review link (“Shape of Things to Come … ” above) shows  high net income for the  insurance industry. Is the constant pressure to “reform” workers’ compensation law fair and reasonable? Is maximizing profit for the insurance industry more important than fair compensation of worker injury and death?

Can I Get Workers’ Comp Benefits For My Loss of Sense of Taste and Smell?

What is your sense of smell and sense of taste worth to you? These senses are truly priceless. In a medical malpractice case, the plaintiff – a chef – was awarded $1.5 million in damages when he lost his sense of taste following a tonsillectomy when the surgeon failed to disclose that this was a risk.

 

Unfortunately, sometimes an injured worker may suffer a head injury or other type of injury that causes him or her to lose his/her sense of smell and/or taste. While no amount of money will ever make a person whole after losing one of their senses, North Carolina workers’ compensation law allows for an injured worker to be awarded some compensation for the loss of sense of smell and taste if the loss was a result of compensable workplace injury. Under North Carolina General Statute § 97-31(24), the “loss or permanent injury to any important organ or part of the body for which no compensation is payable under any other subdivision of this section. . .”. The maximum award for the loss of both senses (combined) is capped at $20,000 in North Carolina.

 

North Carolina law treats the “loss of sense of taste and smell” as the loss of an important internal organ.” See Cloutier v. State, 57 N.C. App. 239, 291 S.E.2d 362 (1982).  In 1997, the North Carolina Court of Appeals (Bess v. Tyson Foods, Inc., 125 N.C. App. 698, 482 S.E.2d 26 (1997) held that the injured worker was entitled to compensation for permanent damage to the olfactory organ but not for compensation for two separate compensable injuries. As a result, in North Carolina the most a plaintiff can receive for losing his or her sense of taste and smell is $20,000.

 

Based on a brief look at other states, it appears that many states do not compensate injured workers for their loss of sense of taste or smell at all. When compensation is allowed, the states have compensation caps less than North Carolina’s cap.  For example, Connecticut allows 17 weeks (max) compensation for loss of sense of taste, and 17 weeks (max) for loss of sense of smell. Minnesota allows a 1% disability rating for total loss of taste and 1% rating for total loss of sense of smell. Washington caps the total body impairment for the loss of taste and smell at 3% (or a max award of $5,977.41). Finally, Wisconsin has a cap of 2.5% for permanent total disability for losses of taste and smell. 

Scorpion Sting While Working at the Grocery Store – Compensable?

In Raleigh, North Carolina, we see a lot of crickets, wasps, bees, lightning bugs, and an occasional cicada. What we don’t have – thank goodness – are scorpions. Those belong far, far away – preferably in other countries or in the Southwest. However, just a few weeks ago, an employee at a grocery store in Raleigh sustained a scorpion sting while working near the bananas in the produce section of the store. Based on the news article, it’s unclear what s/he was doing exactly – perhaps unloading or sorting bananas?

So, would this mean that the stung employee would have a workers’ compensation claim? Based on the limited details from the news article, the answer is “quite possibly.” The Industrial Commission would apply an “increased risk” test to determine whether the employee’s injury from the insect sting arose out of his or her employment, and whether the employment peculiarly exposed the employee to a risk of being stung by a scorpion sting greater than that of other persons in the community. See Minter v. Osborne, 127 N.C. App. 134, 487 S.E.2d 835 (1997).

The case will likely hinge on coworker testimony and expert testimony (i.e. an entomologist testifying about insect habitats and behaviors). In this particular example, a local entomologist from North Carolina State University stated that “scorpions and spiders get to the state [North Carolina] from tropical areas by hitchhiking on bananas or other imported produce.” So, based on this statement, it’s likely if the employee was unloading bananas from out-of-state, s/he was at an increased risk due to his/her employment of encountering and subsequently being stung by a scorpion than, for example, I am sitting in my office just down the street.

The compensability of the case is going to center on a lot of factors. Insect bite cases involving workers’ comp issues are highly fact sensitive and quite interesting. Hopefully the injuries are typically minor and heal in a matter of days. However, when there are complications or reactions from an insect bite, it would be wise to consult with an attorney to discuss aspects of the case.