UR Nation End of Month Regulatory News Summary

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As March begins, here’s a summary of some important regulatory news stories from February.

Oklahoma Workers’ Compensation Commission Deals a Blow To The Injury Benefit Act (i.e. “Opt Out”)

In Vasquez v. Dillard’s, Jonnie Vazquez alleged she injured her shoulder at work in the shoe department of Dillard’s in September 2014. After hearing a pop in her left shoulder, she sought medical treatment and was told she aggravated a pre-existing back condition. Dillard’s, using their own plan pursuant to the Injury Benefit Act , denied wage loss and medical benefits and refused to allow a diagnostic MRI. Pursuant to the Injury Benefit Act, Vazquez appealed her case to the Oklahoma Workers’ Compensation Commission (WCC).

The WCC reversed Dillard’s position and declared the entire Injury Benefit Act unconstitutional. Specifically, the WCC ruled that the effect of the Injury Benefit Act was to allow employers to define the injuries they cover in a manner that was essentially more narrow than should be allowed. In 2013, the Oklahoma legislature passed the Injury Benefit Act with the idea that employers could “opt out” of traditional workers’ comp as long as they provided alternative benefits that were the same or better “than the regular comp system.” The WCC, in its scathing opinion wrote, “The appearance of equal treatment under the dual system is like a water mirage on the highway that disappears upon closer inspection.”

Vazquez’s case will now go before a WCC Administrative Law Judge who will apply Oklahoma’s regular workers’ comp laws. Dillard’s will likely appeal on several grounds, including whether or not the WCC has the authority to declare a state statute unconstitutional, along with possible ERISA preemption issues. Generally, plans that fall under ERISA are preempted by federal law.

California Division of Workers’ Compensation to Start Penalizing Carriers for Submitting Late IMR Medical Records to Maximus

The Division of Workers’ Compensation (DWC) is doing something about adjusters not delivering medical records on time to Maximus Federal Services. DWC has the authority to penalize carriers $500 a day, and up to $5,000 total, for failing to get the required medical records to Maximus within the 15 day window.

As a result, DWC has already issued 10 adjusters an Order to Show Cause (OSC) to show why they should not be penalized. An OSC is not itself notice of a penalty. It just gives the respondent notice and an opportunity to present their side of the case.

New Study Highlights the Dangers of Prescribing Benzodiazepines

The American Public Health Association has published a study that looks at the dangers of prescribing Benzodiazepines. The study looks at the years 1996 – 2013. The findings show that the number of adults filling benzodiazepine based prescriptions increased from 8.1 million in 1996 to 13.5 million in 2013, a 67% increase. The study also found that overdose mortality has increased fivefold over that same time span.

Benzodiazepines include such brand name drugs as Ativan, Valium, Xanax and Klonopin.

Mark Pew, SVP at PRIUM, said that one way to affect the mortality rate would be to schedule Benzodiazepines as an “N” drug on a prescription drug formulary – as ODG has done on their formulary.

Michael Gavin, president of PRIUM, described Benzodiazepines as “a huge patient safety risk” in workers’ comp. Gavin described them as cheap, potentially addictive and particularly deadly when combined with opioids.

Hawaii Bill Proposing Monopolistic State Fund Clears First Committee

Representative Mark Nakashima introduced House Bill 2715 to create a monopolistic workers’ compensation state fund within the Department of Labor and Industrial Relations and require employers to either self-insure or purchase coverage from the state-administered comp program. If adopted into law, Hawaii would join a group of 4 current state-run systems: Ohio, North Dakota, Washington and Wyoming. The law would also make Hawaii the only state in the nation to abandon a private-sector workers’ comp market.

The House Labor and Public Employment Committee unanimously passed the bill on February 9, 2016.

NCCI Sees 2.7 Percent Loss Cost Reduction Due to Tennessee Formulary Based on ODG

NCCI has analyzed the impact of Tennessee’s adoption of a drug formulary based on ODG. Using data from Texas’ experience from 2011 – 2014, NCCI projects that TN will see an 18 percent overall reduction in the total payments for prescription drugs. This equates to a 2.7 percent decline in the total loss costs, according to the NCCI report.

In addition, NCCI said that the Tennessee formulary could see even greater savings. This is because the formulary also reduces the use of compound medications. However, NCCI found that it lacked reliable data to accurately project savings based upon the reduction in compounding.

Tom Swiatek

Tom Swiatek

As Assistant Vice President of Regulatory Services, General Counsel, and Editor in Chief of UR Nation, Tom Swiatek draws on his experience as an insurance attorney on both the general liability side, as well as on workers’ compensation matters. As a California Workers’ Compensation Section Member, Tom is leading the discussion with respect to the regulatory challenges and opportunities facing the workers’ compensation system.