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2011 Workers' Comp judicial and governmental action offer insights for employers in 2012

A review of some of the top 2011 legal and government actions relating to Workers' Comp provides keen insight into issues that may dominate 2012.

The growing problem of opioid abuse in the Workers' Comp system received much attention in 2011 and led to a number of court cases, including several involving deaths due to overdoses. Recent cases in Pennsylvania and Tennessee found that the deaths were causally related to an accidental overdose of pain medications that were prescribed for work-related injuries and granted death benefits to the employee's beneficiary. On the other hand, compensation was denied in an Ohio case because documented use of street drugs and a melting and injection of the prescribed drug (OxyContin) broke the chain of causation linking the death to the workplace injury.

While some cases will be compensable and others will not, it is clear that opioid usage in Workers' Comp is contributing to the national epidemic of addiction and deaths resulting from the over-prescription of painkillers. Long-term usage of narcotics creates a downward spiral for both the employee and employer. Claimants on these drugs are not likely to return to work, incur higher medical costs and risk the danger of becoming addicted, drifting into depression and hopelessness or even death.

Employers need to recognize physicians who exhibit patterns of prescribing drugs that are not medically necessary and address the issue at an early stage. They also should make an effort to identify claimants who are developing a dangerous dependence on such drugs and encourage physicians to address the problem. Washington State is a model of how increased control can work. It saw a 50% reduction from 2009 to 2010 in opioid related fatalities among its Workers' Comp claimants by placing limitations on prescribing pain killing opioids and requirements that the patient consult a pain management expert.

The problem is not limited to Workers' Comp claims. Increasingly, employers must deal with the growth of impaired workers as a result of opioid abuse. The Center for Disease Control and Prevention reports a staggering statistic that enough pain relievers were prescribed in 2010 to keep every adult in the country medicated 24 hours a day for a month.

Training supervisors on how to recognize signs of drug abuse and developing a thorough and consistent drug testing policy that spells out the drugs workers might be tested for and under what circumstances can help reduce the exposure to devastating claims. Such programs have gained traction in industries that use heavy machinery, such as manufacturing, and in medical fields where employees have regular access to prescription drugs.

OSHA and Workers' Comp insurers
While the loss control efforts of Workers' Compensation insurers align with OSHA's overall goal of improving employee safety, typically their actions are separate. Workers' Comp insurers have a fiduciary responsibility to the employer and if there is an OSHA investigation the information possessed by the insurance carrier could be used against the employer.

However, in a 2011 case, Hilda L. Solis v. Grinnell Mutual Reinsurance Co., a federal court upheld a subpoena issued by OSHA requesting documents and testimony from Grinnell Mutual Resinsurance Co. concerning inspection and reports prepared for Haasbach, LLC, following the death of two teenage workers at a Mt. Carroll, IL, grain elevator. Grinnell had objected to the subpoena, arguing in part that loss control inspection reports created by an insurer are privileged documents that could end up in the hands of plaintiffs' lawyers or other outside parties if turned over to OSHA.

While OSHA routinely does not request such reports, it has the legal ability to do so. Employers should carefully consider insurers' inspections and recommendations and document all efforts to respond to problem areas. Also, employers should ask to be notified of any subpoena received by OSHA or other third party before a response is made and ask for a copy of any information provided.

Although the rules of the game can be murky and ill defined, the government's arsenal of weapons targeting misclassification has strengthened. The Department of Labor and the Internal Revenue Service have agreed to share information and coordinate enforcement and states, such as California, have passed laws that provide for fining employers that classify employees as independent contractors.

All this means heightened scrutiny at the federal and state levels. Employers should expect more questions and rigorously assess whether their independent contractors are properly classified.

The consequences of misclassification-whether intentional or not-are significant and a Workers' Comp issue can be the trigger for a dispute. An employer is liable for back wages and federal and state employment taxes, and may also have to pay retroactive benefits to the employee that he or she would otherwise have received. The IRS can impose penalties even for unintentional mistakes.

FMLA, ADAAA, GINA and Workers' Comp
2011 saw changes that added to the already complex web of these overlapping leave laws, including the new ADAAA regulations, GINA's safe harbor rules, DOL's interpretation of the in loco parentis rule, and several court cases interpreting the FMLA and related issues. Of particular significance to Workers' Comp are the EEOC cases that address an employer's obligations to provide additional leave as a reasonable accommodation under the ADA even though the employee has exhausted leave under FMLA and/or Workers' Compensation. The only exceptions are if there is another effective accommodation that would return the employee to work or granting additional leave would cause the employer an undue hardship.

There is little doubt that there is increased crossover between ADA-protected disabilities, FMLA-protected serious health conditions and Workers' Compensation. Each case is unique and understanding the interplay of the three laws is crucial to compliance. Employers are well advised to take a close look at all their leave of absence policies as well as their procedures for administering and enforcing them.

While the definition of "course and scope of employment" has never been cut and dry, it takes on new challenges as telecommuting continues to take root in the workforce. Although there is little case law on this matter, there were two cases in 2011 that clearly demonstrate the exposure to employers and the importance of having policies that specifically deal with telecommuting.

The Court of Appeals in Oregon overturned the Oregon Workers' Compensation Board and awarded a J.C. Penney salesperson benefits for a broken wrist from tripping over her dog when carrying fabric samples from her car to her home. In New Jersey, the husband of an obese woman who died of a blood clot after working long hours in her home office was awarded Workers' Compensation survivor benefits in a specific and fact-based decision.

In addition, telecommuting is increasingly being requested as an ADA accommodation. Not having a telework program is not sufficient grounds for denying the request.

Employers that have or may have employees who telecommute would be wise to establish a telecommute policy that defines work areas, ergonometric conditions, safety expectations, and work hours as well as allows for work site inspections.

Undocumented workers
As the heated national debate about immigration continues to rage, the issue of Workers' Compensation for undocumented workers continued to find its way into state courts. While in 2011 the U.S. Supreme Court passed on a case to decide whether federal law preempts state laws requiring Workers' Comp coverage for employees who are illegal immigrants, the Court will hear arguments regarding the constitutionality of the Arizona immigration law in 2012.

For now the issue remains squarely with the states. While several states considered or are considering proposals to limit or completely ban undocumented injured workers from the Workers' Comp system, courts have generally ruled in favor of entitling Workers' Compensation benefits to the undocumented worker, some with limitations. In Florida, the courts handed down decisions in two separate cases affirming the right of immigrants working in the U.S. illegally to receive Workers' Comp benefits.

If a state allows undocumented workers to recover benefits there are subtle issues that further impact employers' exposure to Workers' Comp claims, such as light duty return-to-work, vocational rehabilitation benefits and job offers. All of which indicate just how important it is for employers to understand their rights and responsibilities both under federal laws and new and changing state laws.

Navigating the Medicare Secondary Payer Statute has posed issues for many employers in 2011 causing uncertainty and expensive delays. A recent court decision did little to ease concerns. In a 2-1 ruling in November 2011, a panel of the 6th U.S. Circuit Court of Appeals in Cincinnati said Medicare should recoup $62,300 of Vernon Hadden's $125,000 liability settlement from a 2004 auto accident. Another case to watch is USA vs. James J. Stricker et al., which is to be heard by the 11th Circuit U.S. Court of Appeals which could answer more questions about the statute of limitations for Medicare subrogation, as well as Medicare set-sides.

Efforts to address the issue with federal legislation have been mired in congressional gridlock. It remains a slippery slope of uncertainty.

2011 was the year in which employers began to amend their plans to comply with the health care reform law, attempting to deal with a law that continued to change and now will be reviewed by the U.S. Supreme Court. The Supreme Court will review four issues raised by the act: (1) whether the individual mandate is constitutional under the Commerce Clause, (2) whether the individual mandate is severable from the remainder of the act, (3) whether the act's expansion of Medicaid is constitutional, and (4) whether the suit challenging the act is barred by the Anti-Injunction Act (which could put off the issue until 2014 when the individual mandate goes into effect). Oral argument is expected to occur in March 2012.

While the impact of the health care law on Workers' Comp remains uncertain, changes to Medicare Reimbursement levels may impact those states that utilize Medicare as a basis for the reimbursements in their state Workers' Compensation fee schedule and the change to Black Lung Benefit entitlement provisions will increase benefits payable. Indirect effects may be cost shifting, quicker access to generic drugs and expansion of wellness initiatives.

The review by the court is considered "narrow" by some, including only two of the 10 Titles within the act. While there is uncertainty, prudent employers will develop plans to comply with the law, while following new developments closely.

It also behooves employers to consider wellness programs to get a handle on the comorbid conditions among its workforce, such as obesity, hypertension and smoking that can cause manageable claims to spiral out of control.