U.S. Court of Appeals Allows RICO Suit

Over Workers' Compensation Denials

The following is a summary of a U.S. Court of Appeals decision that is troubling for state workers’ compensation laws and their administration.

Six employees of carhauler, Cassens Transport Company in Michigan, may proceed with their Racketeer Influenced and Corrupt Organizations Act (RICO) suit alleging that the company, its TPA for workers’ compensation, and a doctor, engaged in an illegal scheme to deny them benefits for workplace injuries, the U.S. Court of Appeals for the Sixth Circuit ruled on October 23, 2008 (Brown v. Cassens Transport Co.)

Reversing a lower court’s dismissal of the RICO claims, the appeals court held that the Michigan Workers’ Disability Compensation Act does not preempt the RICO claims because the state law does not regulate the business of insurance within the meaning of the federal McCaran-Ferguson Act, which can preclude application of a federal law that would impair a state insurance law.

The appeals court also held that the employees sufficiently alleged a pattern of racketeering activity by Cassens; its TPA, Crawford & Company, and Dr. Saul Margules, which consisted of at least thirteen predicate acts of mail and wire fraud over a period of three years.

A federal trial judge now must determine whether certain medical evidence and opinions have relevance in denying workers’ compensation benefits. 

Civil RICO rules allow attorneys broad discovery, including the inspection of communications among defendants concerning their claims-handling practices.

To review the entire case, go to http://caselaw.lp.findlaw.com/data2/circs/6th/052089p.pdf.

Health Technology Clinical Committee

Turns Down Use of Implantable Drug Delivery System

After a number of months of consideration and review, the Health Technology Assessment was completed by the Health Technology Clinical Committee regarding Implantable Drug Delivery System devices.  Based on the deliberations of key health outcomes, the committee decided that evidence on infusion pumps did not demonstrate net health benefit because weak or unproven evidence of some effectiveness for certain patients was undermined by significant evidence of serious harms and adverse events associated with the implantation of infusion pumps. The committee found that infusion pumps were not proven to be equally or more safe or effective, and the cost, while not a significant factor for this decision was likely equivalent. Based on these evidentiary findings, the committee voted 8 to 2 for non-coverage.  You can read the complete coverage decision at http://www.hta.hca.wa.gov/documents/it_pump_findings_decision_112408.pdf.

Washington State’s legislature believes it is important to use a scientific based, clinician centered approach for difficult and important health care benefit decisions. Pursuant to chapter 70.14 RCW, the legislature has directed the Washington State Health Care Authority, through its Health Technology Assessment program to engage in a process for evaluation process that gathers and assesses the quality of the latest medical evidence using a scientific research company and takes public input at all stages. Pursuant to RCW 70.14.110 a Health Technology Clinical Committee (HTCC) composed of eleven independent health care professionals reviews all the information and renders a decision at an open public meeting. The Washington State Health Technology Clinical Committee (HTCC), determines how selected health technologies are covered by several state agencies (including the Department of Labor & Industries). RCW 70.14.080-140. These technologies may include medical or surgical devices and procedures, medical equipment, and diagnostic tests. HTCC bases their decisions on evidence of the technology’s safety, efficacy, and cost effectiveness. Participating state agencies are required to comply with the decisions of the HTCC. HTCC decisions may be re-reviewed at the determination of the HCA Administrator.

You can find more of their assessments, including coverage decisions regarding artifical discs, lumbar fusion surgery, arthroscopic knee surgery for arthritis, and others at http://www.hta.hca.wa.gov/assessments.html.

Board of Industrial Insurance Appeals

Business Representative Search Update

As announced in the October 2008 FYI, the employer community is in the process of filling the vacancy on the Board of Industrial Insurance Appeals.  Five applicants have submitted their names for the position.  Interviews with the candidates will be held on Friday, November 21st.  It is hoped that the list of three names, to be submitted to Governor Gregoire for consideration, will be submitted in short order.  Watch this space for updates as they become available.

Self-Insured Ombudsman

Position Gains OPM Approval

With the Governor's executive order limiting travel and placing a freeze on hiring, the position of self-insured Ombudsman has been approved by the Office of Personnel Management to be exempt from the Governor's executive order.  The Department is in the process of compiling the interview questions, and putting together the interview panel.  Apparently the Department is questioning the need for a self-insurer to serve on the interview committee or not.  No decision has yet been made on self-insurer participation, or whether they will seek out WSIA's input on who may wish to serve in that capacity.  Also, no announcement has been made about the timeline for conducting the interviews, and for filling the position.  Please watch this space for updates as they become available.  ADDITIONALLY, if you would like to serve on the interview panel (assuming that the Department does seek out self-insured employer input, please email WSIA Executive Director Dave Kaplan at dave.kaplan@wsiassn.org and express your interest.  There is no guarantee of selection, as the process is entirely at the discretion of the Department.

Draft SIEDRS Rules,

Including Penalties, Announced

A public hearing will be held on December 2, 2008, to allow any interested person to present comments on the proposed rules for SIEDRS.  As required by the 2003 statute, the Department is to adopt rules that will ensure self-insured employer compliance with data submittal.  To effectuate that, the proposed rules include penalties (mostly monetary) up to and including decertification for non-compliance.  If you would like to review the proposed rules, you can find them HERE.

Department Announces

Assessment Rates for Self-Insurers for 2009

The Department of Labor & Industries has released the 2009 assessment rates for self-insurer's Administrative Assessments, Second Injury Fund, and for the new Self-Insured Overpayment Reimbursement Fund.  The rates for the Administrative Assessment (both the Base Rate and the Adjusted Rate) will decline a bit from the prior fiscal year.  The rate for the Second Injury Fund will also decline, in small part due to slightly lower projected costs for 2009 and in large part due to the amount of excess reserves carried forward from 2007.  The new Self-Insured Overpayment Reimbursement Fund is funded through a $.0004 rate per hour ON WORKERS, to fund employer reimbursement for overpayments resulting from benefits paid on appeal that are later overturned at the Board of Industrial Insurance Appeals or in Court.  The Supplemental Pension Fund and Asbestos Fund assessments will be released around the first week in December 2008, when the State Fund rates are finalized.  Click HERE for the memo on the Administrative Assessment. Click HERE for the memo on the Second Injury Fund assessment.  Click HERE for the memo on the Self-Insured Employer Overpayment Reimbursement Fund assessment.  In addition, the Department also released the third quarter memo on the Insolvency Trust Fund rate.  Click HERE for the memo on the Third Quarter Insolvency Trust Fund assessment.

Department Provides Self-Insured

Overpayment Reimbursement Fund Insert

The Department has provided an insert for self-insured employers to include with future paychecks, explaining the assessment for the Self-Insurer Overpayment Reimbursement Fund assessment.  As outlined above, the SIORF assessment will begin January 1, 2009, and is paid by the workers for reimbursing self-insured employers for benefits mistakenly paid on appeal.  You can access the paycheck insert HERE.

Update on Vocational Rehabilitation

Option 2 Proposed Rules

Here's a quick update on the vocational rehabilitation rules concerning Option 2 benefits and Department-approved programs/schools for voc programs.  The Department has confirmed that they currently plan to have draft rule language for the subcommittee in December 2008, and will likely file a CR 102 in February 2009, after additional external stakeholdering.  This would mean hearings in late March/early April 2009, and a rule adoption in May 2009.  This is later than expressed in the semi-annual schedule, which is probably what most of you have been following.  As you know, this schedule gives information to interested parties about what's coming and our planned, tentative dates, but they are estimates that can shift, depending on issues or additional priorities that may come up.

Department Adopts New Crane Safety Rules,

Implementation Begins January 1, 2009

The Department of Labor & Industries finalized the rules concerning Crane safety.  The rules were a required outcome from legislation that became law in 2007.  You can find the text of the new rules HERE.  The effective date of most of the rules is January 1, 2009, with some rules taking effect January 1, 2010.

New Rules Being Considered

Regarding Firefighter Safety

The Department's has announced that they will be updating the firefighting rules in accordance with "current consensus standards and practices." This rulemaking will also address a couple of issues brought to the Department's attention by the Federal Occupational Safety and Health Administration (OSHA) in order to make Washington's rules as effective as theirs.  WSIA will be tracking these proposed rules carefully, and encourages our public self-insured employers to do the same!

IIMAC to Consider Draft Treatment Guidelines

for Work-Related Carpal Tunnel Syndrome

The Industrial Insurance Medical Advisory Committee is reviewing a draft set of Treatment Guidelines for work-related Carpal Tunnel Syndrome.  You can read the draft Guidelines HERE.  Should you have any comments, please email them to Reshma Kearney at kear235@LNI.WA.GOV.  Comments received by December 1 may be incorporated in further revisions.  A final draft will be posted on the IIMAC webpage on December 19 (you can find their webpage HERE).  The final draft will also be presented at the next IIMAC meeting on January 22, 2009.  At this meeting, the public may provide oral comments and IIMAC members will vote to recommend final guideline approval or not.

Department Releases Updated

Third Party Contact Phone List

At the request of self-insured employers, the Department has provided an updated list of contacts within the Third Party Recovery Unit.  Click HERE to see the updated Phone List for the Third Party Claims Unit.

Department Reiterates Prior Policy on

Payment of LEP, Time Loss Benefits to Terminated Employees  Update

On September 4, 2008 the Department issued a memo "clarifying" when Time Loss or Loss of Earning Power was to be paid to a worker that was terminated for cause.  You can find that memo HERE.  The controversy over this issue deals with the last phrase in the memo: "Termination for cause must be for actions occurring during the light duty employment and not retroactively (i.e. the worker failed a drug test that was prior to returning to work)."  Many employers and attorneys have expressed that is not what RCW 51.32.090(4) states, and that was not the law's intent.  If you have thoughts on the Department's interpretation of this law, please email them to WSIA Executive Director Dave Kaplan at dave.kaplan@wsiassn.org.   THIS ISSUE IS NOT RESOLVED!  If you have won cases at the BIIA where you terminated the worker's employment for causes that occurred prior to the start of light duty, AND were able to terminate benefits, please email Dave Kaplan ASAP.  Thank you!

Requesting Self-Insured and

Requesting State Fund Claims Files

In response to changes in public disclosure law, the Department of Labor & Industries has changed the way they process and respond to requests for prior industrial insurance claims files.  You will need to submit TWO requests: one to Norm Voiles for information on self insured claims (faxed to 360-902-6900), and then requests for State Fund claims histories to Paula Clayton (faxed to 360-902-6970.)  If you have questions on the status of State Fund claims information requests, you can call 360-902-5656.  Most State Fund requests will be handled within 10 business days.

Department Publishes

Helpful Leave Guide

With the adoption of yet more leave laws by the Legislature, the Department of Labor & Industries has developed a table listing all of the leave laws, and what the requirements are.  You can find the leave listing table at http://www.lni.wa.gov/WorkplaceRights/files/FamilyLeaveLawsTable.pdf.  For more detailed information on each type of leave, go HERE.  Coordination of leave benefits with workers' compensation benefits will become an even bigger issue in the future, so watch the WSIA website for more information.

as of 11/25/2008