David and Rosetti, LLP

July 16, 2010

"Pill Mills": The Prescription Drug Industry in Georgia

by David W. Willis, Esq.

The prescription drug industry in Georgia has become an increasingly hot topic and bears close monitoring by the workers' compensation industry. As has been detailed in recent weeks by the Atlanta Journal-Constitution and other media outlets, a proposed prescription drug monitoring program in Georgia stalled this year in the Georgia legislature which would have discouraged "pill mills" by tracking the dispensation of prescriptions through an electronic database. The database would identify patients who are doctor-shopping and physicians prone to writing large numbers of prescriptions. As reported by the Atlanta Journal-Constitution, as of January 2010, 34 other states had prescription drug monitoring programs in place. Similar legislation promises to be in the works again next year, but for now local governments must be pro-active with monitoring the prescription drug industry.

Employers and insurers should carefully monitor this situation as it pertains to their workers' compensation claims. Addiction consequences of prescription medications (especially narcotics) have been widely discussed but continue to deserve attention. However, pain clinics and pain management doctors who seem to prescribe an unending cocktail of drugs should also be viewed with a critical eye. Are the medications truly helping to reach the goals of giving relief, effecting a cure, or restoring the employee to suitable employment? Are the medications "reasonably required"? Employers and insurers should keep these questions in mind at the outset of any claim, but particularly those in which ongoing medical treatment is required.

Consequences of an Improper Suspension of Benefits

by David W. Willis, Esq.

The Georgia Court of Appeals recently addressed the notice issue involved with an employee's suspension of benefits. In Bolden v. S&B Engineers & Constructors, Ltd. (decided June 22, 2010) the Court examined the case of an employee who sustained a compensable burn injury to her left hand in June 2006. In November 2006 she began receiving TTD benefits. On March 26, 2007 the treating physician released the employee to light duty work. Unbeknownst to the employee, on April 9, 2007 the doctor indicated she had no more restrictions as related to the original accident. The insurer terminated the employee's benefits on April 24, 2007 without notice or the filing of a WC-2. A short time later the employee requested a hearing seeking a reinstatement of TTD benefits through May 9, 2008, the date she began working for a new employer.

The Court reviewed and cited to a number of previous decisions addressing the notice provisions involved with suspension of benefits. They first examined O.C.G.A.§ 34-9-221(i) and Board Rule 221 which set forth the requirements of an employer/insurer providing 10 days advance notice before suspending benefits based upon a full duty work release. Second, the Court revisited its decisions on several earlier cases dealing with suspension of benefits. The court noted that an improper WC-2 suspension of benefits in some instances may be only a technical violation. See, Sadie Mays Memorial Nursing Home v. Freeman, 295 S.E.2d 340 (1982)(holding an employer which provided the incorrect reason for suspension of benefits on the WC-2 nevertheless placed the employee on notice of a termination of benefits due to a change in condition); Reliance Electric. Co. v. Brightwell 643 S.E.2d 742 (2007)(holding that an employer who provided only six days notice before suspension of benefits needed only to pay the employee the remaining four days of benefits, plus 15% late penalties). However, in other instances the violation is not merely "technical."

Specifically, the Court analogized the case at hand to Russell Morgan v. Velez-Ochoa, 556 S.E.2d 827 (2001). In Russell Morgan, the employer filed a defective WC-2 suspension of benefits. The WC-2 in that case (1) gave the wrong reason for termination, (2) failed to include the required medical reports, (3) failed to explain how to challenge the decision, and (4) failed to give ten days notice before ending its payment of income benefits. The Court affirmed the State Board decision in holding the above defects were not mere technical violations but significant failures by the employer/insurer to afford the employee due process. Id. at 552. Similarly, in this case the Court found that the violation was not merely "technical" as the employer/insurer never filed a WC-2 at all and never explained to the employee why her TTD benefits were being terminated. The Court held that the employee was entitled to a reinstatement of benefits from April 24, 2007 (date of termination) until May 9, 2008 (date the employee returned to work) plus a 15% late payment penalty.
Moral of the story: best practice is to timely and correctly file a WC-2 , but at a minimum notify an employee in writing when benefits are being suspended!

Texting While Driving: Willful Misconduct?

by David W. Willis, Esq.

Effective July 1, 2010 Georgia Governor Sonny Perdue signed two new "distracted driving" bills into law, Senate Bill 360 and House Bill 23. House Bill 23 prohibits persons under 18 years of age from any use of telecommunication devices while operating a motor vehicle. Senate Bill 360 (the Caleb Sorohan Act) impacts the general populace of Georgia and states: "No person shall operate a motor vehicle on any public road or highway of this state while using a wireless telecommunications device to write, send, or read any text based communication, including but not limited to a text message, instant message, electronic mail, or Internet data." Thus, drivers in Georgia are not prohibited from using mobile phones for talking. However, drivers are barred from writing, reading, texting or otherwise sending any text based communication (i.e. text message, email, internet data) while operating a motor vehicle. The fine for offenders is $150.00 and one point on their driver license.

The new Georgia legislation brings up an interesting question for employees injured while in the course of travel for their employer. As in most states, a Georgia employee injured while driving may have a viable workers' compensation claim,so long as the operation of a motor vehicle is part of their job. However, O.C.G.A.§ 34-9-17(a) can provide a defense to employers and insurers when the injury is due to an employee's "willful misconduct, including … the willful failure or refusal to use a safety appliance or perform a duty required by statute." Could a violation of the new Georgia law provide a defense under this statute.

Historically, Georgia courts have taken a narrow approach when asked to disqualify someone from workers' compensation benefits based upon willful misconduct. Even if the reason for an accidental injury is an employee's negligence or gross negligence this is often not sufficient as a defense. See, Travelers Ins. Co. v. Gaither, 251 S.E.2d 66 (1978). Instead, the courts have usually found that the violation must be a statutory one of a criminal or quasi-criminal nature. When it comes to traffic violations the State Board of Workers' Compensation and appellate courts have given varying decisions, finding that driving the wrong way up a one-way ramp and speeding qualify as acts of "willful misconduct" while improperly lane passing around another vehicle does not.

Whether an employee who is injured while texting (or sending emails, reading emails, instant messaging) and driving has a compensable claim will depend on the particular facts involved. However, given the wide publicity and coverage that accompanied Georgia's newest legislation an employee may be hard-pressed to say their violation of this law was not "willful misconduct." In the weeks and months ahead employers and insurers should be sure to examine this issue closely.

June 23, 2010

RECENT MEDICARE DEVELOPMENTS: CONDITIONAL PAYMENTS AND MSAs

By Benjamin I. Jordan, Esq.

1) May 14, 2010 CMS Policy Update

On May 14, 2010 CMS issued a policy to clarify their position regarding off-label and unlabeled uses of prescriptions drugs in MSAs. CMS specifically stated that for claims which settle before June 1, 2010, if the MSA includes the cost of medications prescribed for off-label uses, the claimant may use those funds (from the MSA) to pay for those medications. However, for claims which settle on June 1, 2010 or thereafter which include (in the MSA) medications prescribed for off-label uses, CMS will consider re-pricing the MSA drug costs (eliminating the cost of drugs prescribed for off-label uses). Once the MSA is re-priced, claimants may not use their MSA funds to pay for medications prescribed for off-label uses. Additionally, for claims which settle on or after June 1, 2010 and in which the MSA does not include medications prescribed for off-label uses, claimants are prohibited from using MSA funds to pay for off-label uses.

The practical effect of this change may be that MSAs decrease. In workers' compensation claims, medications are often prescribed for off-label uses (e.g. uses which have not been approved by the FDA). The new CMS policy may have the effect of eliminating several medications frequently seen in MSAs (such as Oxycontin, Actiq, Lidoderm, etc.) which often cause the MSA to be inordinately expensive. Practitioners are hopeful this policy revision will have a positive impact on the ability of claimants and employers/insurers to settle workers’ compensation claims.

2) U.S. v. Stricker – CMS contends no Statute of Limitations on Recovery Actions

On December 1, 2009 the United States filed suit in the U.S. District Court for the Northern District of Alabama against parties to a class action lawsuit and their attorneys, alleging Medicare was not reimbursed from the $300 million class action settlement. Under the Medicare Secondary Payer Statute (MSP), the government specifically contends the parties and their attorneys knew, should have known, or did not ascertain whether the parties receiving settlement payments were Medicare beneficiaries. As a result, the suit alleges that the parties and their attorneys failed to comply with the MSP and are responsible for reimbursing Medicare for conditional payments made by CMS. The U.S. is also seeking damages against several parties.

In response to this lawsuit, the defendants asserted the suit is barred by the statute of limitations. In reply, CMS recently filed a brief arguing (among other things), there is no statute of limitations applicable to CMS recovery actions. While this is merely an argument advanced by CMS in the context of the lawsuit, the prospect of having no limitations as to when CMS can bring a recovery action raises significant concern. Parties to a settlement would have no certainty of avoiding a CMS recovery action unless the parties first obtain the conditional payment amount directly from Medicare. However, obtaining this information can take months and cause harmful delay to the settlement process.

As set forth below, there is a resolution in Congress designed to address this concern, as well as other aspects of the MSP which adversely affect litigants on both sides of workers’ compensation claims.

3) HR 4796 – A Solution?

A proposal in the U.S. House of Representatives, HR 4796 (“The Medicare Secondary Payer Enhancement Act”) is designed to bring more certainty and predictability to Medicare beneficiaries and others participating in resolving beneficiary claims. According to the bill’s proponents, HR 4796 would:

Revise the information flow between parties and Medicare so that the amount owed to CMS can be determined, and paid, before a liability or workers’ compensation settlement;
Create a right of appeal for conditional payments for any party who disagrees with the Medicare Secondary Payer (MSP) calculation;
Establish a three year statute of limitations period from the date the government receives notice of settlement or other payment giving rise to the recovery of payment;
Adopt a sensible MSP recovery threshold so that Medicare does not spend more taxpayer money pursuing a claim than the claim is actually worth;
Remove the requirement that Medicare beneficiaries disclose sensitive personal identification numbers (Social Security and Medicare numbers);
Protect Medicare recipients and facilitate quicker and more efficient payment of settlements to claimants.

For more information, please visit the Medicare Advocacy Recovery Coalition’s website at http://www.marccoalition.com/index.html

If you have questions or comments, please contact your David & Rosetti attorney at 404-446-4488 or by visiting our website at www.davidandrosetti.com. Nothing contained in this blog should be construed as legal advice or opinion on specific facts. For editorial comments or suggestions, please contact David W. Willis at (404) 446-4491 or by email at david.willis@davidandrosetti.com.

The Gulf Oil Spill : Consequences for the Insurance Industry

By Benjamin I. Jordan, Esq.

On April 20, 2010, the oil drilling rig Deepwater Horizon, owned by Transocean Ltd. and leased to British Petroleum sank off the coast of Louisiana after an explosion and fire on board. The explosion, which killed 11 rig workers and left a well gushing hundreds of thousands of gallons of oil a day into the Gulf, will have far-reaching consequences for the oil and insurance industries and the way risks are managed. Claims are expected to soar, impacting insurance and reinsurance companies that cover different aspects of the disaster-- including marine hull, marine liability, general liability, environmental/pollution liability, business interruption, directors' and officers' liability and workers' compensation.

A recent projection by Moody’s Investors Service estimated the total insured losses from the oil spill at between $1.4 billion and $3.5 billion. “With several parties involved in the drilling work, dozens of class-action lawsuits filed and the ultimate extent of environmental damage unknown, the complexities associated with loss claims are significant and could take many years to be resolved,” Moody's said. “It's going to take several years to sort out the various liabilities and what resources in terms of insurance assets and other assets each player is going to contribute,” said John Nevius, a shareholder at Anderson Kill & Olick in New York and an expert in environmental insurance coverage. The trickle down effect this catastrophe will have on the insurance industry, and the economy as a whole, is still unknown. According to Marla Donovan, vice president of product developments at Burns & Wilcox, "all liability coverages will be triggered. This is an enormous property damage loss.” Workers’ compensation, excess casualty and liability, environmental and contingent business interruption are just a few of the coverages that will be impacted by this event. Analysts expect reinsurers will be liable for a substantial amount, and some predict the enormity of the loss to lead to across the board price increases for insureds. This all bears close monitoring in the weeks and months ahead.

To read more, please go to the following links :

http://www.insurancejournal.com/news/national/2010/05/11/109710.htm#ixzz0ppmaBLdV

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201006030746dowjonesdjonline000524&title=at-a-glancebp-gulf-of-mexico-oil-spill-hits-insurers

May 12, 2010

HORSEPLAY – IT’S NOT ALL FUN AND GAMES

by David W. Willis, Esq. and Melissa B. Whitman, Esq.

When are practical jokes in the workplace not funny? When injury results and the employee files a workers' compensation claim. In Georgia, when a nonparticipating employee is injured from a co-worker's "horseplay" the injured worker may be eligible for workers' compensation benefits. On the other hand, an employee who participates in horseplay and becomes injured in the process is probably not eligible for workers' compensation benefits.

There is no bright line definition of "horseplay" to define when an employee is acting outside the scope of his or her employment. As a result, Georgia courts decide what constitutes horseplay on a case-by-case basis. For example, workers' compensation benefits were denied when an employee was injured while engaged in a "finger wrestling match" with another worker (Universal Underwriters Ins. Co. v. Georgia Auto. Dealers Assoc., 182 Ga. App. 595, 356 S.E.2d 686 (1987)). However, benefits were awarded to an employee who, after he stopped engaging in horseplay, was struck by a spitball propelled by a co-worker and became injured. (Baird v. Travelers Ins. Co., 98 Ga. App. 882, 107 S.E.2d 579 (1959)).

What if the employer is aware of the horseplay? An Ohio appeals court recently decided an employer was liable for an employee’s injury when he sustained a neck injury during a river canoe outing, while attending a company team-building event. The employer argued the employee's actions were horseplay. However, the court found that injuries occurring during horseplay are compensable when the employer was "aware of and consented to" the actions which resulted in injury. Georgia has not yet specifically addressed this issue. However, in one older case, Knight v. Liberty Mut. Ins. Co., 131 Ga. App. 409, 233 S.E.2d 453 (1977), the Court of Appeals denied a workers’ compensation claim of an employee who was injured after a co-worker pulled his chair out from under him at work, despite the fact other documented horseplay incidents had occurred at the workplace. Whether Georgia and other jurisdictions begin looking closer at employers' knowledge and/or acquiescence to behaviors of their employees remains to be seen.

Workers’ Compensation in a ‘Precarious' Market – Employers Look For Ways to Reduce Costs and Increase Productivity

by David W. Willis, Esq. and Melissa B. Whitman, Esq.

On May 6, 2010, NCCI Holdings, Inc. released its annual State of the Line workers’ compensation market analysis. The report noted the workers’ compensation insurance industry had a “trying year in 2009” and a “series of unknown factors – from the pace of economic recovery to the long-term impact of the new federal healthcare law – leaves the line in a precarious position and facing a host of challenges.”[1]

In light of this outlook employers and insurers continue looking for new ways to reduce costs and improve safety in the workplace. Starwood Hotels & Resorts Worldwide, INTEGRIS Health, Inc., and Snap-on, Inc. recently addressed these issues at the Risk & Insurance Management Society Annual Conference & Exhibit. Due to ongoing workers’ compensation losses Starwood was forced to revamp its claims management and safety programs to reduce accident frequency and severity. Starwood began providing incentive programs and safety training to managers to accomplish these goals. INTEGRIS, a 14-hospital system with 9,000 employees improved a “very bad” loss scenario among its nurses by focusing on the practices of its nurses that regularly led to worker injuries, particularly moving patients out of hospital beds. To reduce those injuries, INTEGRIS hired a nurse to assess the physical demands of the job and teach peers how to better protect themselves from injury. The company also purchased equipment to assist nurses in lifting patients from beds. These measures helped create a “safety culture” which have reduced the company’s losses. Wisconsin-based Snap-on, a manufacturer of tools and equipment now treats workers’ compensation training as an employee benefit. At the time of hire employees are handed a DVD explaining their rights and responsibilities, and the responsibilities of doctors, claims administrators and other participants. The video includes testimonials from other injured workers who returned to work. Collectively, these companies have all taken pro-active measures resulting in savings on claims and increased productivity.[2]