Controlling Costs

I received an excellent question today from a reader of this blog.  The question was this:  “I’m looking for some information on whether it is acceptable to bring an employee back for light duty at a wage that is lower than their pre-accident wage provided that they are paid at least at the temporary total rate. So for instance, would it be acceptable to return a construction worker to a desk job at a reduced wage?”

Let me begin by stating that there are no published cases in New Jersey which answer this question. There are also no unpublished appellate level cases that provide guidance.  Decisions have been handed down within the Division of Workers’ Compensation that address this issue but they are not binding on any other court.  As a result, I can only provide guidance with my answer.  There is simply no case or statutory law which answers this question.

Two observations should be made at the outset.  The first is that most employers pay the normal wage when someone is on light duty.  The second is that no employer wants to be the first test case on the question posed above!  The reason there are not published or unpublished appellate division cases is that employers recognize that if they push this issue all the way to the appellate division, they may make bad law for all employers.

Having said that, let me provide some guidelines.  Temporary disability benefits replace lost wages from a work injury or occupational disease.  They are non-taxable, which means that someone who earns $1,300 per week but is receiving $871 per week in temporary disability benefits is nearly made whole when one considers the non-taxability of temporary disability benefits.

The issue raised by the reader above is often discussed in workers’ compensation courts around the state.  The consensus among practitioners and judges is that Judge Cox was right in his opinion in Soto v. Herr’s Foods, Inc., 2012 NJ Work. Comp LEXIS 4 (September 7, 2012).  That case involved an employer who reduced an employee’s wages on light duty below the amount of temporary disability benefits. The petitioner had been earning $976.15 per week at the time of his injury.  His temporary disability benefit rate was $683.31 per week.  The doctor approved four hours per day of light duty initially, but the employee received a net payment of $329.43 per week, which was substantially less than his temp rate.  Judge Cox wrote:

It seems rather obvious to this Court that if Respondent is responsible for the payment of temporary disability benefits, and, in this case, the amount to which Petitioner is entitled is $683.31 per week, to allow Respondent to provide minimum light duty and only pay the Petitioner an amount less than the $683.31 to which he is entitled defeats the purpose of both the temporary disability and the light duty provisions of the workers’ compensation statute.

The employer did not appeal the decision of Judge Cox.  There is no doubt that the decision would have been affirmed had it been appealed.  The Workers’ Compensation Act is social legislation, and courts certainly recognize that injured workers need to live on the amount of temporary disability benefits, which are capped in 2016 at $871 per week and will rise to $896 per week in 2017.  Temporary disability benefits are paid at 70% of wages subject to the annual cap.

One can conclude from Judge Cox’s decision that employers would be unwise to pay someone on light duty an amount less than the temporary disability rate.  For employers who do not wish to pay the full wage on light duty, they should, in this practitioner’s opinion, take into account the tax impact of earned wages to make sure the employee is getting an amount after taxes equal to the amount of temporary disability benefits.  If an employee is being paid $800 per week on non-taxable temporary disability benefits and returns to work light duty at $800 taxable income per week, the employee will argue that he or she is being penalized because earned wages are taxable.

The best way to answer the reader’s question is this: an employer who pays an employee on light duty an amount less than the full wage but equal to or higher than the temporary disability rate is doing something consistent with the decision in Soto, so long as the tax impact is considered.  The Soto decision did not say that the employee must receive the full wage before the injury.  The philosophy behind Judge Cox’s decision is that light duty should not result in a financial penalty to injured workers.  While Judge Cox’s decision is not precedential, the vast majority of judges and practitioners agree with the reasoning in the case.

What is clear is that employers who reduce pay while on light duty below the temporary disability rate run the risk of getting hit with a motion for temporary disability benefits along with penalties.  Our office does not recommend reducing pay on light duty below the temporary disability rate for this reason and most of our clients pay the pre-injury wage while an employee is on light duty.

The other part of the reader’s question is whether an employee who does one type of work can be assigned to another type of work while on light duty.  This is a common practice in New Jersey, and unless there is a collective bargaining agreement prohibiting temporary reassignment to another job on light duty, employers can make such temporary reassignments.  After the light duty, the employee is returned to his pre-injury position.

On January 13, 2011, Paulette Dorflaufer was hit by a car while working as a part-time crossing guard for Livingston Township.  She filed a workers’ compensation claim and filed a negligence law suit against the tortfeasor.  She settled that case for $95,000 for pain and suffering.  PMA Management Corporation put plaintiff on notice of its workers’ compensation lien in the amount of $46,856.22 for medical expenses paid on her workers’ compensation claim.

Plaintiff refused to reimburse PMA for the statutory lien amount.  She argued that she should only have to reimburse the amount paid for temporary disability benefits.  Her position on the medical benefits was that they were not payable from her third-party tort action and therefore should not be reimbursed to PMA.

Both parties sought a declaratory judgment in the Law Division. On November 17, 2014, the Superior Court denied plaintiff’s motion and granted PMA its lien on the medical expenses.  The court based its opinion on N.J.S.A. 34:15-40, which states that any sum the plaintiff should recover from a third party settlement is subject to a lien.  The court reasoned, “There is nothing in the statute that says it matters what the settlement was specifically compensating the plaintiff for or whether the plaintiff recovered full damages from it.”

On appeal, plaintiff argued that reimbursing PMA for its lien violates the Automobile Reparation Reform Act, N.J.S.A. 39:6A-1 to -35.  She contended that “since personal injury protection medical payments are not recoverable from the tortfeasor, a workers’ compensation carrier should not be able to recover medical expenses that it paid arising from an employee’s automobile accident.”  The Appellate Division disagreed for the following reasons:

In circumstances where an employee is injured in a work-related automobile accident, the collateral source rule of N.J.S.A. 39:6A-6 places the primary burden of paying the employee’s medical expenses through workers’ compensation. Lefkin v. Venturini, 229 N.J. Super. 1, 9 (App. Div. 1988).  Even where workers’ compensation benefits were not applied for by the employee, but would have been available, the statute provides that the PIP carrier may apply to the provider of workers’ compensation benefits for reimbursement of any benefits that the workers’ compensation carrier would have otherwise paid.

We are convinced that, based upon the plain language of Section 40, there is no bar to a workers’ compensation lien for reimbursement of medical expenses from an employee’s settlement in a third-party automobile negligence action.  There is nothing in Section 40 that prevents a lien from applying where the settlement represents payment for pain and suffering.  The fact that PIP benefits are not recoverable against a tortfeasor has no bearing on an employer’s Section 40 lien rights. 

This case may be found at Dorflaufer v. PMA Management Corp., A-1727-14T3 (App. Div. August 9, 2016).  This decision came one week after an appellate decision in Donatello v. Qual-Lynx, A-3643-14T4 (App. Div. August 2, 2016).  That case involved virtually the same facts and arguments, with a different appellate panel ruling once again that medical expenses were properly included in a workers’ compensation lien.  The injured worker also recovered in a third party action arising from a car accident and made the very same unsuccessful arguments that medical expenses and income continuation benefits in the third party action should be excluded from the workers’ compensation lien.  The Appellate Division agreed for the same reasons stated in Dorflaufer.

These two cases along with the recently published decision in Talmadge v. Burn, No. A-3160-14 (App. Div. June 22, 2016) make clear that Dever v. New Jersey Manufacturers. Ins. Co., No. A-3102-11T2 (App. Div. October 23, 2013) is bad law.  Section 40 is a powerful statute which has a dominant policy of avoiding double recoveries.

The New Jersey Division of Workers’ Compensation has thousands of medical reimbursement claims in various stages of negotiation and litigation.  Few cases actually get tried because most medical providers do not want to come to court to defend their charges. The vast majority of cases get settled through negotiations.  One recent case, however, involved testimony by a trauma surgeon to obtain reimbursement at the 95th percentile of his charges in the matter of University Physicians Associates v. Transport Drivers CP# 2013-18665.  The case was decided on March 17, 2016.

The case arose from a serious injury to the hip of Mr. Manuel Bonilla who received a workers’ compensation award.  Dr. David Livingston, the Chief of the Trauma Division of University Physicians Associates (UPA), came to court to testify that the insurance carrier, Patriot Risk Services, unreasonably reduced his charges.  He said he performed diagnostic tests and determined that Mr. Bonilla suffered a dislocated hip, crush injury and left acetabular fracture in a 2012 work accident.  He repaired the dislocated hip under conscious sedation without surgery on an emergency basis.  He documented his care as CPT code 27250 and the rate of $9,391. He was paid $3,188.75 and claimed that Patriot Risk owed him $6,202.25.   CPT Code 27250 reads, “closed treatment of hip dislocation, traumatic without anesthesia.” He said that during 2012 he performed three procedures under this code and got paid in full by two different PIP carriers for $9,391. Dr. Livingston also charged $952 for his consult under CPT Code 99245 with modifier code 25 (meaning considerable time was expended). He was paid $500.23 and sought the balance of $451.77.

Following the closed reduction, another surgeon at UPA performed an open reduction and internal fixation to repair the acetabular fracture.  This surgeon, Dr. Adams, did not testify in the case.  He documented his care under CPT Code 27228 at a rate of $71,374 and was paid $24,234.50.  He sought the balance of $47,139.50.

The trial consisted of testimony by Dr. Livingston, Simi Bakshi, the Chief Financial Officer of UPA, and Sandra Corradi (Certified Professional Coder) for respondent.  Dr. Livingston emphasized that he was the Chief of Trauma at a Level One Trauma Hospital, the only one in the northern part of the state.  He said that the New Jersey Department of Banking and Insurance approved a modifier entitled “TS” (trauma service) exclusively for use on PIP charges, but he offered no evidence to prove this point.  He also admitted that CPT Code 25250 is reimbursed at a rate of $150.48 by Medicare.  The remainder of usual and customary rates in New Jersey range from the 50th percentile with payment of $2,376 to the 95th percentile with payment at $9,391 (the amount he contended he should have been paid).

Ms. Bakshi testifed for UPA but admitted that she is not credentialed as a professional coder.  She had no information in court regarding allowed billings by PIP, Medicare or Medicaid.  She stressed that UPA always bills at the 95th percentile of allowed amounts.  The Honorable Nilda Hernandez, Judge of Compensation, did not find her testimony to be helpful on the issues in the case.  However, Judge Hernandez did credit the testimony of Sandra Corradi as a Certified Professional Coder since 1995. Corradi said that she utilizes her certification in her job as Vice-President of bill review, responsible for operating and overseeing about 85,000 workers’ compensation claims.  She said that her job with MCMC, a vendor company that reviews workers’ compensation medical claims, requires review of the applicable codes to determine the appropriate amount of payment.  MCMC uses Fair Health Solutions for value guidance in states that do not have fee schedules (New Jersey, for example).  Fair Health Solutions provides information by geographic region based on zip codes for charges billed and paid.

Judge Hernandez noted that the New Jersey statute requires that reasonable charges must be “based upon the usual fees and charges which prevail in the same community for similar physicians’, surgeons’ and hospital services.” N.J.S.A. 34:15-15. In this case, Ms. Corradi’s company forwarded their assessment to Patriot Risk, which paid the UPA doctors at the 75th percentile.   She also noted that any claim in excess of $25,000 requires review by a nurse, who compares the CPT codes billed against the correlating documentation.  Here the charges were compared with other similar services in the Newark, N.J. zip code.

On cross examination, Ms. Corradi was asked whether her company’s agreement with Patriot Risk contained any incentives for reducing payments.  Ms. Corradi indicated that there were no such incentives.  Her company was paid $8.50 per reviewed submitted bill.

Judge Hernandez rejected the argument of UPA that the decision should turn on only those payments by other commercial carriers with Medicare and Medicaid being disregarded.  She relied on Coalition for Quality Healthcare vs. New Jersey Department of Banking and Insurance, 358 N.J. Super. 123 (App. Div. 2003) for the proposition that paid fees are a more accurate measure of value than billed fees.  “So far as this is applicable to workers’ compensation, I accept that it is appropriate to use paid fees rather than billed fees to make a determination as to the usual and prevailing fees in billing.” Judge Hernandez was persuaded by the testimony of Ms. Corradi and her expertise.  The Judge noted that UPA failed to provide expert testimony to the contrary.  She also found that there is no use of modifiers for physicians’ credentials to warrant a higher amount of payment.  She dismissed the claim with prejudice.

This case is of great importance to practitioners, employers, medical professionals, and carriers because it provides a very useful template for how to handle trials on medical reimbursement claims.  One key element in this case was the use of expert testimony.  Patriot Risk wisely produced an expert in coding, while UPA did not.  Another key aspect of this case is that the Judge of Compensation did not buy the argument that a doctor’s credentials justified an enhanced percentile or modifier.  In this case, Dr. Livingston emphasized his credentials at trial, noting that in addition to being the Director of the Trauma Center, he was a Full Professor at Rutgers School of Medicine.  He contended that these credential justified his practice of always billing at the 95% percentile.  The Judge did not accept that there was any legal standard requiring a use of modifiers based on physician credentials.  The use of a modifier is based more on additional time expended.

What this case shows is that trials on medical reimbursement claims require thought and planning.  One does not just submit bills into evidence and make a request of the judge for payment.  Detailed testimony is required.  The party with the better expert will likely prevail.  For employers the take-away should be that when large amounts are at stake, parties should retain appropriate experts.  In this case, Patriot Risk paid not a cent more after trial than it originally paid.

This is the second article devoted to fitness-for-duty examinations and Functional Capacity Exams (FCE) in workers’ compensation. The first segment focused on how such examinations can lead to significant cost savings for employers and common mistakes that are made by employers.  This segment will focus on when to order a fitness exam or FCE and how to avoid conflict with the FMLA and ADA.

A fitness-for-duty examination must be job-related and consistent with business necessity according to the relevant EEOC Guidance. When an FCE is ordered by a physician as part of a workers’ compensation case, it is generally related to medical care or to determining return-to-work status.  When a physician requests an FCE, more often than not, it is because the physician is not sure that the injured worker can perform light duty or full duty work.  Under those circumstances, the FCE is job related.

Many employers also request FCEs or fitness-for-duty examinations on their own when an employee has been out of work for a lengthy period of time, usually following surgery.  This is particularly true where the employee has a physical job, like maintenance, custodian, construction or the like.  An employer’s request would meet the job-related standard if the employee has certain restrictions imposed by the treating physician, or if the employee has requested accommodations at work.   Employers should be aware, however, of one limitation on such exams: namely those that occur during the 12-week FMLA period.  All workers’ compensation lost time cases are generally FMLA events, and most employers designate the absence from work as FMLA leave.  They run FMLA time concurrent with workers’ compensation absences.  The FMLA does not permit second opinions on return to work.  So if the treating doctor issues a return-to-work note, stating that the employee can perform the functions of his or her job, there is no right to a fitness exam within the 12-week FMLA period.

After 12 weeks when FMLA has expired, an employer has more leeway in requesting an FCE or fitness examination.  The employer must still show that there is a job-related need for the FCE or fitness examination.  That could be satisfied by observations that the employee is having problems walking or getting around.  Alternatively, the employee may speak to supervisory staff indicating that he or she is not sure about being able to perform the essential job functions.  The employee may ask for assistance in doing certain essential functions should he return to work or request that certain functions be eliminated.  All of these reasons justify a fitness-for-duty examination or an FCE.

It is very important to make sure that the physician who is performing a fitness-for-duty examination is familiar with the essential job functions.  The same is true of physical therapists who are performing FCEs.  Functional job descriptions are of great value to doctors and physical therapists.  The examination should be tailored to the injury that the employee has and should not be focused on long-standing medical conditions that have nothing to do with the work injury.  The physician should address the ability of the employee to perform essential job functions as well as  the direct threat standard.

Sometimes employees do not recover adequately from work injuries to be able to return to work and perform their job functions safely.  Before making such a determination, the employer should carefully review the FCE or fitness assessment and then meet with the employee to engage in an interactive dialogue with the employee.  Because the ADAAA so widely expands ADA disability coverage, it is better to assume that the injured employee following surgery or significant injuries is potentially covered under the ADA.  In that meeting, the employer will be able to hear first-hand whether the employee is requesting reasonable accommodations that would allow the employee to perform the essential functions of the job.  It is the employee’s responsibility to make the request for the accommodation, not the employer’s job to guess what they might be.  However, it is the employer’s obligation to decide which accommodation would work best and whether the accommodation poses an undue hardship.

Sometimes treating doctors give short shrift to the return-to-work process and issue full clearance notes without the benefit of an FCE.  The result is that many employees in New Jersey who have had some serious injuries with lasting complaints of pain and limitations may struggle with work duties.  When an employer has job-related reasons to require a fitness examination of an existing employee, the employer should utilize the FCE or fitness-for-duty process.  If an employee in a factory setting with very physical job duties comes into work limping and in pain, the wrong thing to do for the supervisor is to walk past the employee and bid him or her a good day.  That is exactly the circumstance that may justify a fitness-for-duty examination.

Employers should also take note that when a workers’ compensation case is settled in the Division, the employee has to provide his or her complaints on the record to support the award of disability.  The only time this does not happen is when the settlement is under N.J.S.A. 34:15-20.  All orders approving settlement with percentages of disability are premised on proof by the employee of either a substantial limitation in working ability or a substantial impact on non-work activities — or both. Seldom are employers in court to hear these complaints but the defense lawyer should provide details in the closing letter to the client so that the employer is aware that an employee may be complaining of physical problems in doing the essential job functions.  If that is the case, the employer has a right to obtain a fitness-for-duty examination.  An employer can also ask for a copy of the transcript of the testimony before the Judge, as this is sworn testimony.

In this practitioner’s opinion, the reason there are so many re-injuries in New Jersey is that there is not enough attention to the issue of fitness for duty.  Unlike other states where employees settle their cases and agree as a condition of settlement not to return to work, almost every employee in New Jersey returns to the former job because New Jersey is a functional loss state in contrast to Pennsylvania, which is a wage loss state.  Re-injuries are expensive and often lead to much higher awards and sometimes total disability awards costing the employer millions of dollars.  The cost of an FCE or a fitness examination, by contrast, is very modest but that well-timed examination may save the employer tens or even hundreds of thousands of dollars down the line.

We have all seen this situation: an employee with a physical job has major surgery and is given restrictions by the treating doctor, who issues an MMI note (maximum medical improvement).  When temporary disability benefits are stopped, the employee immediately calls to see about returning to work.  The employer indicates that it cannot take the employee back with such heavy restrictions.  The next day the treating doctor issues a note clearing the employee to return to work with no restrictions.  One month later the same employee reinjures his back at work severely, leading to another surgery and hundreds of thousands of dollars or even total and permanent disability. The hit to the employer’s workers’ compensation budget becomes astronomical.

What went wrong? Why does this sort of thing happen so often? This is the first of a two-part series on the critical importance of fitness-for-duty exams and functional capacity evaluations in the New Jersey workers’ compensation system.  In this blog, we will focus on mistakes employers make and why fitness exams can result in enormous savings for employers. The next blog will focus on how to do fitness exams correctly and how to avoid law suits when arranging fitness exams.

Every insurance adjuster in the state can tell you about a claimant with 10 or even 20 claim petitions against the same employer over a period of many years.  Employers throw up their hands and ask, “How can the judge let this guy return to work after all these accidents?”  The answer is that the Judge of Compensation has nothing to do with the decision to allow an employee to return to work. That decision is made by the employer and is outside the realm of workers’ compensation.  Many times the person handling the workers’ compensation case for the company is not in touch with Human Resources, with the result that the return-to-work issue may be missed entirely.

Most of the problem cases stem from injuries that result in surgery to the spine, shoulder, knee and hand, which comprise the majority of orthopedic claims in New Jersey.  The dynamic that frustrates the employer is that the employee will give a host of complaints to the IME doctors and the Judge of Compensation in support of a high partial permanent disability award, but then turn around and tell the employer or supervisor that there are no problems doing the job.

For example, a DPW worker has fusion surgery followed by pain management, and eventually he reaches MMI.  There is no fitness exam requested by the doctor or employer, and the employee returns to work.  Now the comp case continues: the petitioner’s attorney sends the employee to his or her IME, and the respondent’s attorney does the same.  At the IME the petitioner complains about severe pain lifting anything over 15 pounds, difficulty bending or lifting at work, trouble getting dressed, throwing a ball or the like.  The job requires regular lifting over 50 pounds.  The case settles for 40% of partial total or $111,360, and at the time of settlement the employee is asked by the Judge of Compensation for his or her complaints at work and outside work.  The employee says that work is very painful, and at times, others have to help him get through the day.  He adds that there are many tasks that the employee can no longer perform. All the while, the employer has no idea that the employee is complaining about problems on the job or telling the IME doctors about difficulties doing routine work tasks.  Shortly thereafter this employee performs a relatively minor task on the job when he experiences incapacitating pain in the back leading to a long period of work absence followed by another award in workers’ compensation court.

You can see from these scenarios what the major mistakes are:

• Employers seldom request fitness-for-duty exams and FCEs before returning the injured employee to work, perhaps because they do not know they can do this, or because they mistakenly think the workers’ compensation third party administrator or carrier will do this for them. Adjusters do not handle employment issues.
• The carrier or defense attorney does not send the IME report or the summary of testimony at the settlement to the employer to review. Instead it just goes to the adjuster without a copy to the actual employer. So the employer never realizes that their employee is complaining about having problems on the job.
• The workers’ compensation manager in the company may not be familiar with employment issues. Workers’ compensation may be a separate silo from HR, so no one really analyzes the question of whether the employee can safely perform the job functions.
• Treating doctors are often too eager to return a patient to work when asked by the patient for a full-duty clearance rather than deal with what could become an angry patient.

If a fitness-for-duty examination or an FCE is done properly and timely, the employer will have the opportunity to make an informed decision on whether to return the employee to work with or without accommodations.  If there is an ADA issue, the fitness process will help address it.  If the employee cannot perform the essential job functions, that employee may have to be terminated or reassigned to a position within the restrictions.  When that happens, the risk of reinjury is much lower, and workers’ compensation costs are greatly reduced.  For this reason, it is quite fair to think of fitness-for-duty examinations and FCEs as powerful cost-saving tools in workers’ compensation.   Employers with dozens of workers’ compensation claims could save hundreds of thousands of dollars, if not millions, by doing timely fitness examinations.  Unfortunately, however, fitness examinations and FCEs are grossly underutilized.

There was a time in 1979 when workers’ compensation rates amounted to $40 per week for permanency.  An award of 50% of partial total was $12,000.  Those days are long gone.  Now a 50% award amounts to $174,300.  An award of 70% amounts to $341,460 in tax free dollars. Every large employer has multiple employees at work who have such high awards where the employee has given a plethora of complaints about work and non-work activities in workers’ compensation court.

Workers’ compensation medical costs have risen much faster than the rise in permanency costs.  A two-hour fusion procedure may result in a payment of $40,000 to the surgeon, plus fees for the assistant, hospital/surgery center and anesthesiologist.  So the employee who gets back to work but who cannot safely perform the job duties only to be reinjured can cost the employer quite literally half a million dollars in no time at all, considering the medical, temporary disability and permanency costs.

It goes without saying that an employee who cannot safely perform the job duties should not be on the job.  The ADA does not require removal of essential job functions.  An employee must be able to perform the assigned job duties with or without reasonable accommodation. The fitness assessment must be made only with medical analysis usually informed by functional capacity examinations, which compare the physical abilities of the injured worker with the actual job duties.  A good FCE will provide tremendous guidance for employers in determining how much an employee can lift, bend, kneel, push or pull.  There are talented New Jersey physicians who do many fitness-for-duty assessments and are quite adept at helping employers decide whether the employee can perform safely the essential job functions.

Consider this advice: employers should rethink the way their workers’ compensation programs function if injured workers who simply cannot do the job any longer routinely get back to work doing the very same job that caused their initial injury without having undergone a fitness examination.   In the next blog, we will discuss the basic rules for doing fitness examinations and traps to be avoided.

Those who do not remember the past are doomed to repeat it, wrote George Santayana.  In workers’ compensation, those who do not know the past are doomed to pay for it.  Winning in workers’ compensation in almost every state comes down to developing past information about injuries, car accidents, chiropractic care, sports activities, second jobs, pain management and the like.   But New Jersey poses one overwhelming problem for employers and carriers:  there is next to no discovery sanctioned by the rules of the Division.  Once litigation occurs through the filing of a claim petition, it is generally too late for the employer to get the information it needs on causation and credits for prior disability.  Claimant’s counsel will only provide what the rules require, which is very little.

Here is what an employer does not get in litigation in the New Jersey’s workers’ compensation system:

1. Depositions (except in exceptional cases)
2. Interrogatories (except in occupational claims with pre-printed questions only)
3. The right to demand prior family doctor records
4. The right to demand prior chiropractic history

So how can an employer win or reduce costs if a claimant does not have to reveal anything at all about one’s past medical history during the course of litigation?  This is the essential question that all employers, carriers and third party administrators must answer.  After all, only a relatively small portion of accidents are clear-cut and witnessed.  Many are not witnessed and often involve mechanisms of injury that do not seem to correlate with the physical complaints. Without getting a detailed past medical history, employers time and again pay for prior non-work or age-related health conditions masquerading as workers’ compensation injuries.

The solution to this dilemma for employers in New Jersey and most states is to get detailed information about past history of injuries, past treatment, past pain management, prior hobbies and car accidents at the outset of the claim before the case goes to litigation. This can be accomplished by detailed incident or accident report forms filled out by the employee, or by recorded statements taken by insurance professionals.

When the employer, third party administrator or carrier refers the case to medical professionals for treatment, the medical office should also take its own detailed past medical history, and that information needs to be included in the medical reports that go to the third party administrator or carrier.  Causation is the overriding issue in most workers’ compensation cases because so many claimants have a prior history of back, neck, shoulder, knee and other conditions.  Occupational clinics which do not obtain or provide to the employer/carrier this sort of detailed past medical history are costing employers enormous sums of money.  Unfortunately, employers do not get the history forms that most of the occupational clinics use so they do not realize until too late how inadequate the past medical history really is in some of our occupational centers.

When it comes to litigation, less history is more beneficial for the injured worker.  The less past medical information provided to the employer or carrier, the better for the claimant because all present medical conditions can then be ascribed to the work injury, whether or not the condition is really work related or just age related.  For the employer the opposite is true:  the more past medical history is obtained, the less the employer will ultimately pay in workers’ compensation costs.  New Jersey allows a credit under N.J.S.A. 34:15-12(d) for previous disability.  But that presupposes that the employer can get the information about previous disability in the first place.

For example, if the injured employee had a prior herniated disc diagnosed in 2001 from a car accident, and now has a new injury to the same level, the credit for the 2001 condition could save the employer $25,000 to $30,000 – if the employer discovers it to begin with.   The best time to get that information is either by reviewing prior post-offer medical examinations at the time or hire or by reviewing initial accident history forms filled out by the employee at the time of the alleged work injury.   As mentioned above, when the case goes to litigation, the rules are not favorable to employers in terms of prior discovery.  There no bills pending in the Legislature to provide more discovery to employers. Meanwhile, rates are rising considerably with an award of 35% amounting to well over $85,000 at 2016 rates.  Just ten years ago, the same percentage award was worth $67,000.  The only thing that has not changed in this 10-year period is that employers have next to no discovery in the formal litigation process.

So self-help remains the best solution for employers.  Frankly, the choice of physicians and clinics that regularly obtain good past medical information is the single most important decision that a third party administrator or carrier can make.  You need physicians who are skilled and qualified, but you also need physicians who understand that past history bears directly on causation.  There are some physicians in the state who take a thorough past medical history and some occupational clinics as well, but they are in the minority.  Employers need to confer with counsel to identify those medical professionals who will ask about prior car accidents, prior chiropractic treatment, prior sports injuries, pain management and second jobs.  Otherwise when the case gets to court, the Judge of Compensation will have very little information to help assess causation.  It is true that running an ISO is helpful, but practitioners know that the ISO only captures reported insurance claims.  It will not capture the injury in the gym, the long-term back and neck problems treated by chiropractors, the secondary employment which may be linked to the physical symptomatology, and the history of prior pain medications.

If employers triage their workers’ compensation cases in the first 48 hours, and work on getting detailed past medical and recreational information at the outset, the savings will be enormous because the non-work and prior conditions will not be passed through the workers’ compensation system.

Pain management has become a major health issue and cost driver in most state workers’ compensation programs with the proliferation of prescription opiates and consequential addictions arising from workers’ compensation injuries.  One of the central problems that practitioners face in file handling and in court is the absence of any clear standards to decide whether opiates are reasonable and necessary.  The Centers for Disease Control and Prevention (CDC) took a significant step forward on March 18, 2016 with the release of the “CDC Guideline for Prescribing Opioids for Chronic Pain.”

The study is available online and any practitioner of workers’ compensation will find its conclusions to have practical applications to the daily problems employers, third party administrators and carriers have with cases involving prolonged use of opiates.  The focus year for the study was 2012.  In that year alone, family doctors and internists wrote 259 million prescriptions for opioid pain medications.  This number does not include the number of prescriptions that pain medicine specialists and other physicians wrote.  The CDC said it was focusing on family physicians because they tend to write about half of all opioid prescriptions.

The Guideline addresses long-term opioid therapy, which is defined as use of opioids on most days for more than three months. Here are some of the key findings in the Guideline:

• Concurrent use of opioids and benzodiazepines might put patients at greater risk for potentially fatal overdose
• Patients who do not experience clinically meaningful pain relief early in treatment (within one month) are unlikely to experience pain relief with longer-term use
• No evidence shows a long-term benefit of opioids in pain and function versus no opioids for chronic pain with outcomes examined at least one year later

 These observations are particularly relevant to workers’ compensation practitioners, who know intuitively that it does not make sense to continue to prescribe opiates for patients for many months or years when they do not seem to be improving in function or experiencing a diminution in pain.  Even after prolonged use of opiates, many workers’ compensation patients will complain of a pain level of 10 on a scale of 10.  Such prolonged use of opiates often leaves injured workers with even greater problems from dependency and addiction.

 The authors of the Guideline have provided some valuable advice for physicians:

•  Clinicians should consider opioid therapy only if expected benefits for both pain and function are anticipated to outweigh risks to the patient
•  Consider non-pharmacologic therapies (PT, weight loss for knee osteoarthritis, Cognitive Behavioral Therapy) to alleviate chronic pain
•  NSAIDs, acetaminophen, and some antidepressants may be effective for chronic pain

 One theme that permeates the Guideline is that physicians should set a benchmark when they prescribe opiates, and that benchmark should be to achieve both improvement in pain as well as improvement in function.  The Guideline also advises that physicians should not start patients on extended-release opioids.  This would seem like common sense but many physicians leap to prescribe extended release opioids like oxycodone, hydrocodone, and morphine before trying shorter acting opioids.  The lowest possible dosage should be the starting dosage – again, a rule that is often violated in workers’ compensation cases.

 Workers’ compensation practitioners can now draw on the CDC Guideline in asking physicians for a treatment plan and specific timelines.   The CDC suggests evaluating benefits and harms with patients within one to four weeks after starting opioid therapy for chronic pain.  The authors suggest that physicians should periodically review the patient’s history of controlled substance prescriptions using the PDMP (Prescription Drug Monitoring Program).  New Jersey is one of the states that utilizes the PDMP.  Our office has found any number of cases where a claimant’s name has been run through the PDMP only to discover that the claimant is already getting multiple prescriptions for the same opiate that the pain medicine physician was about to prescribe.

One comment from the lengthy Guideline that should resonate with workers’ compensation practitioners, employers, third party administrators and carriers is this one:

“Regarding duration of use, patients can experience tolerance and loss of effectiveness of opioids over time.  Patients who do not experience clinically meaningful pain relief early in treatment (i.e., within one month) are unlikely to experience pain relief with longer-term use.”   Most pain medicine physicians appreciate the points made in this Guideline but there are many who seem to be ignoring the sensible conclusions contained in this report.

Employers are aware that if the claimant has not pursued his or her third party civil action within a year of the injury, the employer can provide a 10-day notice and then sue in the name of the injured worker.  But what happens if the injured worker will not cooperate with the law suit?  Can the employer settle the third party case without the consent of the injured worker?

The most helpful decision yet on this subject is Elhelou v. CVS Pharmacy, Inc., v. Lipinski Outdoor Services v. All State Power Wash, A-4731-13T1, (App. Div. July 9, 2015).  Mr. Elhelou, the manager of a CVS store in Jamesburg, N.J., was injured in February 2010 when he slipped and fell while shoveling snow from a loading dock in the rear of the CVS.  He retained Raymond Shebell, Esq. and recovered medical and indemnity benefits in workers’ compensation.  Elhelou did not pursue any third party law suit arising from this accident.

On February 16, 2011, the third party administrator, Gallagher Bassett Services, wrote to Elhelou stating that his injuries may been caused by the negligence of a third party.  GB provided the proper 10-day notice stating that if Elhelou did not settle with the third party who may have been responsible for his injuries, then GB would protect its rights and file suit.

On March 1, 2011, Shebell wrote to attorney Laub, representing CVS and GB, advising Laub that GB was not to contact his client directly.  GB then wrote to the insurance carrier for Lipinski Outdoor Services, which was responsible for the snow removal at the CVS, putting Lipinski on notice of its workers’ compensation lien.  The lien at that time was $90,630.87.

Laub wrote again to Shebell on December 9, 2011 asking whether Shebell intended to file suit against Lipinski.  When Laub received no response, he filed a complaint against Lipinski on January 23, 2012 in the name of Elhelou, CVS and GB.  Lipinski filed an answer and a third party complaint against All State Power Wash asserting that All State was responsible for clearing ice and snow on the premises.

On January 24, 2013, Lipinski’s lawyers wrote to Laub requesting that Elhelou appear for an IME.  Laub wrote to Shebell also advising that he needed to take the deposition of Elhelou.  Laub asked for permission to contact Elhelou and then followed with another request.  Finally, Laub wrote directly to Elhelou advising that his deposition would be taken on February 15, 2013.  Elhelou appeared for the deposition but not for the IME because he had upcoming surgery.  The lien was by then $105,129.45.

Laub next wrote to Elhelou to advise that his presence would be needed at an arbitration.  Elhelou appeared at the arbitration and his testimony was taken.  The arbitration resulted in a non-binding award in the amount of $105,129.45. CVS negotiated a settlement of $93,500 to resolve its lien against Lipinski and All State. The lien eventually climbed to $198,000.  Laub then wrote to Elhelou requesting that he sign and return a release of his claim against Lipinski and All State.  Robert Morley of the Shebell Law Firm then wrote to Laub advising that Elhelou was seeking the firm’s advice regarding whether he should sign the release.  Morley explained that it advised Elhelou not to sign the release until the Shebell firm could review the entire litigation file.

Several months went by without progress, so in March 2014, Laub filed a motion to compel Elhelou to sign the release or alternatively the court should enter an order declaring that Elhelou’s release was not required.  Elhelou filed a cross-motion seeking the following:  1) permission for the Shebell firm to appear in the action; 2) denying the relief requested by CVS and GB; 3) disqualifying Laub’s law firm; 4) substituting Shebell as counsel, and 5) compelling the turnover of the entire litigation file.

The Superior Court ruled in favor of CVS and GB and held that the suit by CVS was more a “subrogation action” than a personal injury action.  The Court said that there was no attorney-client relationship between Laub and Elhelou and no obligation on Laub’s part to do anything other than to protect the Section 40 lien rights on behalf of CVS.  The Court further held that there was no obligation on the part of CVS to seek a settlement in excess of the lien, which was then $198,000.  Elhelou appealed.

The Appellate Division made a number of very important rulings in this case:

A) “Thus, to the extent that J.S.A. 34:15-40(f) grants an employer or compensation carrier a right of statutory subrogation, it cuts off the employee’s right to participate in settlement or file a lawsuit, and limits the employee’s right of recovery to the excess of the compensation lien.”

B) The employer or carrier has a right “to settle with the third party or its insurance carrier, or to bring an action to recover personal injury damages from a third party when the employee fails to do so.”

C) The employer or carrier’s action “shall constitute a bar to any further claim or action by the injured employee . . . against the third person.”

D) “If the amount recovered ‘is in excess of the employer’s obligation to the employee . . . and the expenses of suit, such excess shall be paid to the employee.’”

E) “Even though the statute requires no notice of the settlement to the employee, its consummation acts as ‘a bar to any further claim or action by the injured employee.’ “

F) “Similarly, the statute does not require that the employee be given notice of a suit brought by the employer or its carrier. The only notice required by the statute is the ten-day notice of the employer or carrier’s right to bring such suit, which must be given prior to the filing of the complaint. There are no notice requirements after that point.”

 G) “[I]f the employee has brought and abandoned his or her own action, the statute allows the employer or carrier to reopen the action and prosecute it ‘in the name of the injured employee,’ rather than on behalf of the employee directly.”

H) The statute does not “mention any right of the employee to participate in reaching a settlement, whether in lieu of litigation or to conclude litigation.”

I) Just as an employee can settle his or her third party action without involvement by the workers’ compensation carrier, the workers’ compensation carrier is authorized to settle or bring suit against the third party after providing a 10-day notice following one year from the date of accident.

The Appellate Division said, “In summary, we hold that CVS and Gallagher had no obligation to inform Elhelou in advance of the settlement.  Instead, they had the right to settle the subrogation action without Elhelou’s consent.”  It said that since the Shebell loaw firm took no steps to file suit in Elhelou’s name during the one-year period and during the 10-day notice period, neither Shebell nor Elhelou could bring any action after the 10-day period.

This case poses the most complete analysis of the rights of an employer to protect its statutory lien when the employee files no civil suit. The case is particularly helpful because it dealt with an attempt by the injured employee to engineer a last minute derailment of the settlement effected by CVS.   The Court made clear that no consent was needed by CVS from the injured employee.

Sanctions against an employer in workers’ compensation are rather rare, and the case of Pschunder-Haaf v. Synergy Home Care of South Jersey, A-3138-13T3, (App. Div. May 12, 2015) provides some guidance on conduct that may lead to such sanctions.

The petitioner, Pschunder-Haaf, a home health aide, injured her low back when a patient fell on her.  She filed a workers’ compensation claim, and the Judge of Compensation entered an order requiring Synergy to provide medical and temporary disability benefits to her.  The Judge also required an evaluation by Dr. Luis Cervantes, a neurosurgeon. An order dated September 7, 2010 ordered  treatment with Dr. Cervantes and continuing temporary disability benefits until either Dr. Cervantes cleared petitioner to return to work or until the company offered light duty authorized by Dr. Cervantes.

Synergy did not pay certain medical bills and terminated temporary wage benefits.  There is no indication in the decision to suggest that Dr. Cervantes cleared petitioner to return to work or that petitioner returned to light duty work.  Petitioner therefore filed a motion to enforce the prior court order.  That led to a second order awarding petitioner temporary disability benefits, medical care, and counsel fees assessed against Synergy.

Fusion surgery followed, and petitioner alleged that she injured her left shoulder during the fusion surgery.  Synergy did not accept the left shoulder injury alleged to derive from surgery, leading to another motion for medical benefits.  Once again the Judge of Compensation ordered the company to provide treatment for the shoulder.

The petitioner amended the original claim petition to include injuries to her left shoulder and left knee.  When Synergy failed to provide additional medical treatment, petitioner filed yet another motion.  Her expert, Dr. Rosen, argued that her right leg gave way as a result of instability caused by radicular pain from her spine, and that in turn caused left knee problems.

The Judge of Compensation accepted the testimony of Dr. Rosen, petitioner’s expert, over that of Dr. Maslow, respondent’s expert, on the question of causation of the left knee condition.  She ordered that Synergy provide treatment for the petitioner’s primary and derivative injuries.  She denied Synergy’s motion for reconsideration and assessed sanctions of $5,000 and $10,000 against Synergy.  She awarded petitioner $7,500 in counsel fees and $5,654.14 in reimbursement for expenses, including the cost of Dr. Rosen’s testimony, which was $4,500.

Synergy appealed both the order in respect to the derivative shoulder and knee claims and the sanctions.  First, the Appellate Division found that there was credible evidence to support the judge’s decision that the derivative claims arose from work.

Second the court noted that there was substantial evidence in the record to support the judge’s conclusion that the shoulder was injured during the fusion procedure, and the left leg was injured because the right leg kept giving out due to radicular pain from petitioner’s work-related back condition.

On the sanctions issue, however, the Appellate Division took issue with some of the court orders.  First, it noted that the Administrative Rules of the Division of Workers’ Compensation allow fines and penalties in an amount not to exceed $5,000 for unreasonable delay or continued noncompliance. The Court vacated the $10,000 sanction because it exceeded the amount contained in N.J.A.C. 12:235-3.16(h)2.  Next, the Court focused on the award for costs of $800 and $4,500, the latter being the expense of Dr. Rosen’s testimony.  It cited N.J.S.A. 34:15-64(a), which limits the fee to an evaluating physician like Dr. Rosen to $400 for the report and another $400 for testimony.  It found that the order for costs was in excess of the amounts allowed by the statute.

The Court did affirm the $5,000 sanction against Synergy and the assessment of counsel fees of $7,500.

The case is important for practitioners because it is one of a very few appellate decisions that focuses on sanctions and costs as well as the statutes and rules that apply. Employers run the risk of sanctions if they choose to disregard a court order as opposed to filing a motion to be relieved form the court order.