Investigation of Outstanding Medicaid Liens in Workers’ Compensation Claims

The Colorado Department of Health Care Policy and Financing, through its Medicaid program, is responsible hcpffor collection of outstanding liens for the state.   This department is in charge of disbursement of state funds to indigent citizens in need of medical benefits.  Oftentimes, a claimant will pursue medical benefits through the department if they qualify.   This may be true even when a claimant has a current workers’ compensation claim on file with the Division of Labor.  Qualification for a particular program, through the state funded Medicaid partnerships, involves several criteria.  If a citizen qualifies, benefits may be paid regardless of the current status of a workers’ compensation claim.   The Medicaid department will assert its lien, (referred to as a “recovery right”), against the claimant and the workers’ compensation claim.

A lien usually arises at one of two points in the workers’ compensation litigation.  The first such instance occurs when a claim is denied by the carrier and the claimant chooses to pursue medical benefits through the applicable Medicaid programs.   These claims usually involve substantial forms of medical treatment, (i.e. surgeries), in which time is of the essence and a claimant cannot wait for resolution of compensability and causation issues in their workers’ compensation claims.  The claimant may choose to obtain the surgery through the authorized treating physicians or through their own personal care physician.  Should the claim be found compensable by an ALJ, it is important to distinguish between the benefits provided and through which physicians the claimant received treatment.   Regardless of the legal arguments to be made, Medicaid will assert its right of recovery against the benefits paid and will await resolution of the claim before doing so.

The second such instance occurs when a claimant has received medical benefits through the state funded Medicaid program and the treating physician finds a particular treatment to either be related to the claim, (or not related to the claim). The benefits are disputed through the workers’ compensation process, and the claimant obtains treatment without waiting for resolution of the workers’ compensation issues.   In this example, the opinions from the treating physicians will be important in determining liability for the outstanding lien.  If a treating physician deems the medical benefits to be related to the claim, and the claim is resolved through a settlement or other means, the carrier will be liable for payment of the lien.   Recovery of the lien cannot be shifted by the parties in the workers’ compensation claim.  However, if the treating physicians deemed the treatment to be non-work related, the carrier may be able to dismiss any causes of action by providing the opinions of the physicians to the proper investigative authorities within the department.

 

Legislative Authority

Colorado’s Medicaid programs derive their authority from one main portion of section 25.5 of the Department of Health Care Policy and Financing Act.  Section 25.5-4-301(5)(a), C.R.S. states, “When the state department has furnished medical assistance to or on behalf of a recipient pursuant to the provisions of this article, and articles 5 and 6 of this title, for which a third party is liable, the state department shall have an automatic statutory lien for all such medical assistance. The state department’s lien shall be against any judgment, award, or settlement in a suit or claim against such third party and shall be in an amount that shall be the fullest extent allowed by federal law as applicable in this state, but not to exceed the amount of the medical assistance provided.”

Additionally, section 25.5-4-301, C.R.S. states, “When the applicant or recipient, or his or her guardian, executor, administrator, or other appropriate representative, brings an action or asserts a claim against any third party, such person shall give to the state department written notice of the action or claim by personal service or certified mail within fifteen days after filing the action or asserting the claim. Failure to comply with this subsection (6) shall make the recipient, legal guardian, executor, administrator, attorney, or other representative liable for the entire amount of medical assistance furnished to or on behalf of the recipient for the injuries that gave rise to the action or claim. The state department may, after thirty days’ written notice to such person, enforce its rights under subsection (5) of this section and this subsection (6) in the district court of the city and county of Denver; except that liability of a person other than the recipient shall exist only if such person had knowledge that the recipient had received medical assistance or if excusable neglect is found by the court. The court shall award the state department its costs and attorney fees incurred in the prosecution of any such action.”   (Emphasis added)

Lastly, section 25.5-4-301(5)(b) states, “No judgment, award, or settlement in any action or claim by a recipient to recover damages for injuries, where the state department has a lien, shall be satisfied without first satisfying the state department’s lien. Failure by any party to the judgment, award, or settlement to comply with this section shall make each such party liable for the full amount of medical assistance furnished to or on behalf of the recipient for the injuries that are the subject of the judgment, award, or settlement.”

These three portions of the statute are important to remember prior to resolving any workers’ compensation claim.  Specifically, if the carrier or the insured has any knowledge that Medicaid paid for any potential treatment in connection with the workers’ compensation claim, the carrier must investigate and contact the Department of Health Care Policy and Financing to inquire about any potential liens.  The duty to investigate is not on Medicaid or the State of Colorado, but rather the duty rests with each party to the workers’ compensation claim.   Failure to notify Medicaid prior to resolution of the workers’ compensation claims will cause the outstanding balance to become due and owing in full unless a separate argument can be made regarding the medical benefits provided to the claimant recipient.  This is the case regardless of any language placed into any agreements, stipulations, settlements, or the like that are agreed upon between the parties.

 

Recommendations

The carrier and the Employer, (either through counsel or individually), should always investigate whether any Medicaid liens exist at the state level.   Outstanding Medicaid liens differ from other liens due to the duty imposed on the carrier through statute.  Failure to investigate any outstanding liens could lead to potential reopening of claims long after they have been resolved.  Investigation could happen in a number of ways.  The simplest way involves contacting the department in writing and providing the identifying information of the claimant to search for any liens.  The department will usually respond within a few days notifying the carrier of any issues.    However, this manner may be problematic for adjusters especially in light of the volume of claims at any given time.  If counsel is assigned, the inquiry can be made by email or through general discovery pending on a litigated claim.  Discovery responses from the claimant can reveal receipt of any benefits through Medicaid or otherwise.

For more information about specific Medicaid issues on any workers’ compensation claims and recovery of liens, please feel free to contact us.   References about the Colorado Medicaid programs can be found here.

A Painful Step in Addressing the Opioid Epidemic: An Overview of the 2016 CDC Guidelines

The growing epidemic of chronic opioid use and addiction, and its consequences, permeates theopiod American medical and legal landscape.  Since the spike in the use of ubiquitous pain medications in the late 1990s, there has been little actual oversight in the health care industry to regulate the prescription of these highly addicting drugs.  In March 2016, the Center for Disease Control (CDC) released new guidelines concerning opioid pain prescriptions. The guidelines have caused some backlash from physicians, who believe the government is now overreaching into the patient-physician relationship, and shifting from its historical role of approving the use of opioids at the regulatory level. Aside from the finger pointing amongst stakeholders in the health care industry, from the government, to big pharma, to the physicians who continue to administer, to the legal system, the fact is there is plenty of blame to go around for the cause of the epidemic. The response to the guidelines reflects the fundamental agreement that more oversight and education is needed at all levels.  The CDC’s new guidelines are a broadened approach with the goal of addressing the epidemic from the top down.

 

The authors of the guidelines, which were an amalgam of health care professionals, cited a jaw dropping statistic. In 2012, health care providers wrote 259 million prescriptions for opioid medications. That is one prescription for every adult in the U.S. The increase in prescriptions were found in the areas of family practice, general practice, and internal medicine. From 1999 through 2014, more than 165,000 people died from opioid related deaths in the U.S. The authors pointed out that contemporary studies evidenced that opioids have adverse long term affects including significant physical impairment and distress. The authors stated that, “this disorder is manifested by specific criteria such as an unsuccessful effort to cut down or control use resulting in social problems and a failure to fulfill major role obligations at work, school, or home.” In other words, continued prescription of opioid medications can be a contributing factor in an injured worker not returning to the work place.

 

The substance of the CDC guidelines can be broken into three general categories:

(1) when to start or continue administration of opioids for chronic pain symptoms;

(2) how practitioners should select a particular drug, the dosage, and when to discontinue that specific dosage; and

(3) how to mitigate the potential for addiction from start to finish.

The guidelines are not intended to apply for cancer and end-of-life palliative care. Rather, the guidelines are intended to apply to primary providers, including those who work in out-patient clinical settings.

 

The guidelines emphasize the benefits of non-opioid treatments. For lower back pain, exercise therapy and non-steroid anti-inflammatories are recommended. As an alternative to opioids, cognitive behavioral therapy is recommended to mitigate disability and catastrophic thinking. If, and when, opioids are utilized in a treatment program, the physician should continue prescriptions if “meaningful improvement” in pain and function outweighs the risk of continued use. The guidelines recommend that the patients demonstrate a 30% improvement in pain scores and function to justify continued opioid use. In other words, opioids must be used as a method to improve function rather than as a “band-aid” approach to sustain the status-quo condition.

 

During the continuation process, the physician should actively manage the patient’s case by reviewing any history of controlled substances and utilize their state’s prescription drug monitoring program periodically, while performing, at a minimum, annual urine tests. In Colorado, for example, the Workers’ Compensation Medical Treatment Guidelines (MTG), Rule 17 Exhibit 9, have independent criteria for treating chronic pain in workers’ compensation case. The MTG emphasizes similar recommendations for active case management, including urine screens.  Additionally, the Department of Regulatory Agencies, in connection with several state medical boards, released an “Open Letter to the General Public on the Quad-Regulator Joint Policy for Prescribing and Dispensing Opioids” on October 15, 2014. While the policy does not draw a bright line rule of managing opioid cases in Colorado, the letter does outline the boards’ recognition that “decreasing opioid misuse and abuse in Colorado should be addressed by collaborative and constructive policies aimed at improving the prescriber education and practice, decreasing diversion, and establishing the same guidelines for all opioid prescribers and dispensers.”  The board also emphasized documenting improved functions, the use of the PDMP (Prescription Drug Monitoring Program), and random drug screening based upon the provider’s clinical judgment.

 

The CDC guidelines are important to workers’ compensation treatment and claims. The guidelines suggest that long term opioid use can be counterproductive in workers’ compensation. How these guidelines will be used by workers’ compensation physicians, in order to return injured workers’ back to work, has yet to be known. But the guidelines can be used in an effort to mitigate risk for future exposure in the litigation process. From a legal perspective, the guidelines, though not binding on any physician, are a peer reviewed document by both experts in the field and industry stakeholders. In this author’s opinion, the guidelines itself meet the threshold evidentiary requirement in Colorado as an admissible, reliable medical document. For more information, please feel contact us with specific case-related questions. As a resource, the CDC guidelines can be found here. A copy of the Colorado joint letter on prescribing and dispensing opioids can be found by following the link located here.

 

The EEOC’s New Wellness Program Rule

On May 16, 2016, the Equal Employment Opportunity Commission US-EEOC-Seal.svg(EEOC) released its own final regulations regarding employer wellness programs.  This was in direct response to the two recent court decisions – EEOC v. Flambeau, Inc. and Seff v. Broward County.  In its recently issued regulations, which you can access HERE and HERE

The EEOC has set forth its final position on how the Americans with Disabilities Act (ADA) and Title II of the Genetic Information and Discrimination Act (GINA) apply to employer wellness programs that request the health information of employees and/or their spouses.  While most provisions of the final ADA rule and final GINA rule are identical to their respective proposed rules, there are some key differences, which we explain below in Q&A format below.

  1. Does the ADA’s safe harbor provision apply to employer wellness programs?

No.  The ADA’s safe harbor provision states that the ADA “shall not be construed to prohibit or restrict . . . a person or organization covered by this chapter from establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law.”  42 U.S.C. § 12201(c).

The Commission made no secret about its opinion that Seff and Flambeau were “wrongly decided” (including by appealing the Flambeau decision to the Seventh Circuit).  Despite case law to the contrary and pending appeals, the Commission reaffirmed its position in the final ADA rule that “the safe harbor provision does not apply to an employer’s decision to offer rewards or impose penalties in connection with wellness programs that include disability-related inquiries or medical examinations.”  Rather, the safe harbor provision only applies “to the practices of the insurance industry with respect to the use of sound actuarial data to make determinations about insurability and the establishment of rates.”  An employer’s use of a wellness program to make employees healthier and reduce the costs of health care is not the type of underwriting or risk classification that is protected by the safe harbor provision. See 29 C.F.R. § 1630.14(d)(6).

  1. What wellness programs are subject to these final rules?

Any wellness program that includes disability-related inquiries and/or medical exams is subject to the rule.  This includes wellness programs: (a) offered only to employees enrolled in an employer-sponsored group health plan; (b) offered to all employees regardless of enrollment in the employer-sponsored group health plan; and (c) offered as a benefit of employment by employers that do not sponsor group health plans/insurance.

  1. Do the final rules provide additional clarification as to what makes a wellness program “voluntary”?

Yes.  The Commission has held steadfast in its decision to apply the “30 percent rule” for incentives set under HIPAA and the Affordable Care Act to participatory wellness programs that inquire as to employee disabilities or require employees to undergo medical examinations.  In doing so, the final rule limits the size of the incentives offered by these programs to 30% of the employee’s total cost of coverage.  Many commenters wanted the Commission to adopt an “affordability standard” to protect low-income workers from incentives that prove to be large enough to render health insurance coverage unaffordable.  The Commission declined to adopt this standard however, because in its view, “this rule promotes the ADA’s interest in ensuring that incentive limits are not so high as to make participation in a wellness program involuntary.”

Additionally, in the rule’s preamble specific to 29 C.F.R. § 1630.14(d)(2)(ii), the Commission clarifies that it is of the opinion that the ADA prohibits “the outright denial of access to a benefit available by virtue of employment”, but does not prohibit “an employer from denying an incentive that is within the [30% limit] . . . nor does it prohibit requiring an employee to pay more for insurance that is more comprehensive.”  The Commission likely included this comment to further emphasize its disagreement with the Flambeau and Seff decisions – the Commission has concluded that an employer discriminates against an employee in violation of the ADA, 42 U.S.C. § 12112(d)(4), when it “denies access to a health plan because the employee does not answer disability-related inquiries or undergo medical examinations.”

The final rule explaining the notice requirement, 29 C.F.R. § 1630.14(d)(2)(iv), also clarifies that it applies to “all wellness programs that ask employees to respond to disability-related inquiries and/o undergo medical examinations.”

  1. What types of incentives may be offered to employees and how can employers calculate incentive limits?

In addition to financial incentives, employers are permitted to offer in-kind incentives (e.g., employee recognition, parking spot use, relaxed dress code) and de minimis incentives to employees, despite any difficulties in valuing these incentives.

The final ADA rule, 29 C.F.R. § 1630.14(d)(3), also explains how employers can calculate incentive limits in four situations: (a) where participation in a wellness program depends on enrollment in a particular health plan; (b) where wellness program participation does not depend on employee’s enrollment in an employer-offered single group health plan; (c) where wellness program participation does not depend on employee’s enrollment in any of employee’s group health plans; and (d) where an employer does not offer a group health plan or insurance.

  1. How do these rules relate to other federal discrimination laws?

Employers should pay special attention to interpretative guidance following the final ADA rule.  In it, the Commission states:

“[E]ven though an employer’s wellness program might comply with the incentive limits set out in [29 C.F.R. § 1630.14(d)(3)], the employer would violate federal nondiscrimination statutes if that program discriminates on the basis of race, sex (including pregnancy, gender identity, transgender status, and sexual orientation), color, religion, national origin, or age.  Additionally, if a wellness program requirement (such as a particular blood pressure or glucose level or body mass index) disproportionately affects individuals on the basis of some protected characteristic, an employer may be able to avoid a disparate impact claim by offering and providing a reasonable alternative standard.”

This appears to place the additional burden on the employer to examine all wellness program incentives and requirements for potential disparate impact.  The extent to which an employer must understand specific medical characteristics of every protected class on its employee roster is unknown.

  1. What changes did the Commission make in the final GINA rule?

There are four changes of note, all of which were added to the final GINA rules to clarify and/or enhance the proposed rules.

  • The final GINA rule extends the prohibition on offering inducements for information from the children of employees to all children (minor children and those 18 years of age or older).
  • Every provision of the final GINA rule now applies to all employer-sponsored wellness programs requesting genetic information.
  • There is no longer a different inducement limit threshold for employee spouses. The final GINA rule uses the “30 percent rule” when an employee and the employee’s spouse are given the opportunity to enroll in the employer-sponsored wellness program.  The final rule provides examples of how to calculate incentive limits where this is the case.  See 29 C.F.R. 1635.8(b)(2)(iii)(A)-(D).
  • Employers may not condition an employee’s or an employee’s spouse’s participation in a wellness program or their eligibility for offered incentives on the employee, the employee’s spouse, or a covered dependent agreeing to the sale, exchange, sharing, transfer, or other disclosure of genetic information or waiving GINA’s confidentiality protections.

Take Away

The final rules apply proactively – thus, are only applicable to wellness programs as of the first date of the plan beginning January 1, 2017 or thereafter.  In the meantime, we await the Seventh Circuit’s decision in the EEOC’s appeal of Flambeau regarding whether the ADA safe harbor provision applies to employer wellness programs.  Given the EEOC’s position that the provision does not apply and the growing number of courts that think otherwise, it is looking like the ultimate decision will be made by the U.S. Supreme Court.

COLORADO SUPREME COURT CLARIFIES THE FIREFIGHTER CANCER STATUTE

BACKGROUND

In 2007 the Colorado Legislature enacted a firefighter cancer presumption statute at Section 8-41-209, C.R.S.  The statute created a presumption that certain cancers were caused by work as a firefighter if the individual diagnosed with the cancer worked in the capacity for at least five years. firefighter For the cancer to be deemed a compensable occupational disease, the firefighter would have had to undergo physical examination upon becoming a firefighter that failed to reveal the cancer at that time. The presumption could be rebutted if the firefighter’s employer or insurer could show by a preponderance of medical evidence that the condition did not occur on the job.

This statute is similar to other presumption statutes that sprung up across the country in the wake of firefighters’ and other first responders’ actions during the 9/11 terrorist attacks.  The general premise behind the presumption is that firefighters are exposed to known carcinogens to a greater extent than other occupations and that development of cancer is a known effect caused by exposures to these carcinogens.

A series of cases had been litigated before different ALJs involving varying cancers and exposures wherein employers tried to overcome the presumption of compensability.  The ALJs, the ICAO and the Colorado Court of Appeals in a series of decisions essentially interpreted the presumption statute as being an irrebuttable presumption, requiring the employer to show an alternative cause for claimant’s cancer. The practical effect of this interpretation was to make the presumption statute similar to a strict liability statute. This is due to the fact that it is impossible to demonstrate that an individual’s cancer was in fact caused by something other than work as a firefighter.

THE ZUKOWSKI CASE

Mr. Zukowski began working as a firefighter for the town of Castle Rock in 2000. He underwent a physical examination at the time with his personal physician where there were some concerns raised over moles on his skin. Mr. Zukowski also worked part-time doing construction outdoors and eventually started his own business building decks and furniture. Mr. Zukowski spent a lot of time outdoors running, hiking and cycling when he was not working.

In 2002 Mr. Zukowski had five moles removed and biopsied. In 2008 he developed a mole on his right calf and ultimately in 2011 Mr. Zukowski was diagnosed with melanoma on his right outer calf at the same site where a mole that developed several years earlier. He had several surgeries to remove the mole and returned to full duty work, but made a claim for medical and temporary disability benefits under the presumption statute.  At hearing the parties stipulated that Mr. Zukowski was entitled to the presumption so the only issue is whether the employer overcame the presumption. The employer presented evidence regarding Mr. Zukowski’s known risk factors for developing melanoma including exposure to the sun and a history of abnormal mole growth. The ALJ found that Castle Rock’s burden in trying to overcome the presumption was to prove by medical evidence that claimant’s cancer came from a specific cause not occurring on the job.

On appeal to the ICAO, the ICAO essentially agreed with the ALJ. Castle Rock appealed the ICAO’s decision to the Colorado Court of Appeals, arguing that the ALJ misapplied the presumption when the ALJ determined that risk factor evidence was insufficient to rebut the presumption. The Court of Appeals agreed with the town of Castle Rock, looking at cases from other jurisdictions with a similar presumption statute and concluding that employer may overcome the presumption with specific risk evidence demonstrating that the particular cancer was probably caused by a source outside of work.

The Colorado Supreme Court granted certiorari in Zukowski along with a companion case involving a similar issue.  The Colorado Supreme Court agreed that Castle Rock was not required to establish an alternate cause for the cancer to overcome the presumption. The Colorado Supreme Court further held that in presenting risk factor evidence, which demonstrates the cancer was more probably caused by something other than work, can rebut the presumption.

AFTERMATH OF ZUKOWSKI

The aftermath of the Zukowski decision is not known yet.  I have tried cancer cases similar to Zukowski, where multiple potential employers were liable for the cancer and ultimately won for my client, but only because the last employer in claimant’s employment history was found liable.  I authored an amicus brief for the Colorado Self-Insured Association in Zukowski, so I have a pretty good idea of where these cancer cases are going.

Before Zukowski, firefighter cancer cases were very simple for claimant to prove. Claimant would appear with a doctor who would testify that the firefighter’s particular cancer fell within the types enumerated in the statute. The doctor would offer their opinion that since claimant worked for five years as a firefighter, claimant’s cancer was presumed caused by that work.  There was no amount of alternate risk evidence that would overcome the presumption as interpreted before Zukowski.

After Zukowski, litigating a firefighter cancer case will be much more involved when there are other risk factors to explain the cancer. Further, every risk factor relative to a particular cancer will have to be explored. For instance, the case I tried involved prostate cancer. Claimant had a significant family history of prostate cancer and was clearly predisposed to developing prostate cancer. Further, expert testimony was presented that prostate cancer is not something one would expect to see from exposure to carcinogens as a firefighter. Is predisposition to developing cancer a risk factor after Zukowski? It is certainly not as clear a risk factor as is exposure to sun and developing melanoma, where the cause-effect relationship is clear. Therefore, I believe these cases will become cancer and fact specific.

BOTTOM LINE

Further clarification through litigated cases is required to flesh out the presumption statute. For instance, in my prostate cancer case, claimant had his prostate removed and returned to work as a firefighter. If claimant develops another type of cancer is that an entirely separate claim? If claimant’s prostate cancer spread to a different organ after the prostate was removed, is that a new claim or continuation of the same claim? Is there a medical basis to prove that the cancer has recurred in a different organ or that it is an entirely new instance of cancer?  These questions arising out of the firefighter cancer presumption statute are all still unanswered.

 

COLORADO BALLOT PROPOSED AMENDMENT #69 – POTENTIAL IMPACT ON WORKERS’ COMPENSATION MEDICAL BENEFITS

Amendment 69 Colorado

Colorado State Health Care Initiative 20 (Amendment 69)

 
Background

Initiative 20 got on the 2016 Ballot as Amendment 69.  It was authored by Irene Aguilar, M.D. who is a Democratic member of the Colorado Senate and a primary care physician.  A similar attempt to migrate a state to a single payer system was tried recently in Vermont.  Vermont’s Bill went through the State House and Senate.  It was signed by the Governor in May 2011.  In December 2014, Vermont’s Governor retracted his backing of the single payer program due to a lack of clear funding and the negative effect of the taxes on businesses.  Vermont’s single payer healthcare law, although passed and enacted, has essentially been abandoned.  Similar to Amendment 69, Vermont’s Act 48 purported to integrate workers’ compensation medical benefits into a universal healthcare system.

 

Overview

 Section 1332 of the Affordable Care Act (ACA) allows a state to obtain a waiver from the ACA, if the state sets up a system that provides the same level of coverage.  Amendment 69 creates a single-payer system for health care in Colorado known as ColoradoCare.

 

Funding

ColoradoCare would be funded by a 6.67% payroll tax upon employers and a 3.33% tax on employee income.  Other income sources would also be subject to the premium tax including rents, interest, dividends, capital gains, pensions and annuities.  Certain income would not be subject to the premium tax.  Maintenance and unemployment are not subject to the tax.  In addition, the first $33,000 of Social Security or pension payments are not subject to the premium tax and the same is true for the first $60,000 for those filing jointly.  Those who are self-employed or whose income is from investments would be subject to a flat 10% of that income as a premium tax.  ColoradoCare would not be subject to TABOR (Colorado’s Taxpayer Bill of Rights) limits on new tax increases.  The premium tax would be deductible from income taxes.  The premium taxes are capped at $350,000 for individuals and $450,000 for those filing jointly.  Increased funding, if necessary, would come from members.  A “member” is someone who is 18 years old and has lived in Colorado for a continuous year.

 

Amendment 69 purports to raise 21 billion dollars by 2019.  For comparison, the 2016 total state budget is approximately 25 billion dollars.  The Amendment would nearly double State tax collection.  The projected savings to businesses and individual is supposed to come from the removed need for employer and individual contributions to private plans, reduced administrative costs from private plans and general fraud prevention.  Figures offered in support of Amendment 69 place current premium estimates for private health plans at a monthly contribution of $278 (employer) and $139 (employee) for an employee making $50,000 a year.  These figures go up to $556 and $278 monthly for an individual making $100,000 a year.  There are other ancillary purported savings from various sources based on no required co-pays or deductibles.

 

Governed

ColoradoCare would be operated by an interim board of 15 members appointed by the Governor and legislative leaders.  This board would then develop an election process to create a new Board of Trustees and to formulate rules to ensure the board’s operation.  It would also apply for the exemption from the ACA.

The interim Board would be replaced within three years with an elected 21-member Board of Trustees.  The trustees would be elected from seven state districts of comparable size.  The trustees would be charged with establishing purchasing authority for medications and medical equipment and with establishing an ombudsman’s office for beneficiaries and providers.

 

Coverage

ColoradoCare would provide a comprehensive benefit package.  It includes emergency and trauma services; primary and specialty care; hospitalization; prescription drugs; medical equipment, mental health and substance use services; chronic disease management; rehabilitative and habilitative services and devices; pediatric care, including oral, vision, and hearing services; laboratory services; maturity and newborn care; and palliative and end of life care.  There are no deductibles, or co-payments and any potential co-pay requirements would have to be approved by the Board of Trustees.  The “member” would choose a primary care provider.  A beneficiary traveling or living temporarily out of state is still covered.

ColoradoCare would serve as a supplement to Medicare.  For any other healthcare plan in effect ColoradoCare would be a secondary payer.

 

Delivery of Services

ColoradoCare will assume payment of health services.  The interim Board and the Board of Trustees are charged with implementing payment and billing systems, handling quality and value concerns and any cost saving mechanisms.

 

AMENDMENT 69 AND INTEGRATION OF WORKERS’ COMPENSATION MEDICAL COVERAGE

Amendment 69 integrates workers’ compensation medical coverage into ColoradoCare.  ColoradoCare offers this as an overall cost savings, citing statistical data affixing a 59% medical cost component for benefits paid under the workers’ compensation system.

 

General Considerations

Colorado Workers’ Compensation

Under Colorado workers’ compensation laws, an employer must obtain coverage for workers’ compensation insurance by becoming self-insured, obtaining coverage through a commercial insurer, or through the quasi-governmental entity, residual market insurer, Pinnacol Assurance.  Medical benefits are part of the benefit package provided under Colorado’s workers’ compensation system. Medical benefits are the most expensive component of the benefit package, accounting for over 50% of the total workers’ compensation costs to employers and carriers.  Workers’ compensation is an exclusive remedy to an injured worker.  The injured worker cannot pursue the case in District Court against an employer so long as the employer has complied with the Colorado Workers’ Compensation Act.

 

Medical Care in Workers’ Compensation vs. ColoradoCare

There is no coordination between the proposed Amendment 69 and the Colorado Workers’ Compensation Act.  ColoradoCare simply steps in as a payer for work injuries.  By the same token, there is no coordination between recovery for injuries from a third party.  ColoradoCare simply has recovery rights against third parties, presumably for amounts paid as a result of injury.  Therefore, workers’ compensation third party recovery rights remain intact for benefits not covered under ColoradoCare.

Medical benefits under workers’ compensation are different than those provided under ordinary health insurance.  Workers’ compensation is an event-based coverage, meaning that coverage is dependent on the event of a work injury and extends first so long as treatment continues to cure and relieve the effects of the injury to a point that treatment plateaus.  Medical coverage is then extended for modalities to maintain claimant’s level of function.  The goal of medical treatment under workers’ compensation is to get the worker back to work as quickly as possible and at an optimal level of function. The injured worker has no payment obligation for medical care.  Under the circumstances, the employer and carrier are the primary stakeholders in the workers’ compensation system.  Colorado allows the employer to maintain a degree of medical management of workers’ compensation claims that includes selecting the authorized treating physician in the first instance.  Barring a change of physician that same physician serves as a gatekeeper, making necessary referrals and medically managing the claim to a point of maximum medical improvement and, in certain circumstances, determining a medical impairment for claimant’s injury or condition.  Providers under the Colorado Worker’s Compensation Act generally follow medical treatment guidelines established for most injuries or conditions and are reimbursed under a medical fee schedule aligned with the services provided.

Health insurance is treatment based and extends for the length of the coverage without regard to the cause of the injury, or condition. Health insurance coverage is significantly less structured in approach to care and providers are reimbursed under different systems and rates. Further, there is less emphasis on treatment directed at an individual’s level of function.

Medical providers under the workers’ compensation system generally have accreditation as level I or level II.  This training emphasizes treatment for functional gain and returning the injured worker to work within safe parameters.  Many of these medical care providers are experts in occupational medicine and\or are board certified in physical medicine and rehabilitation.  These providers have a working familiarity with medical treatment guidelines that are designed to foster the goals of treatment directed at functional improvement and returning an injured worker back to work.  Further, only level II providers can provide a medical impairment rating for work injury or occupational disease.  Treatment by a non-level II primary care physician would require a referral to a level II physician to provide a medical impairment rating.  Given the circumstances, integrating medical care under ColoradoCare, with less emphasis on functional improvement and returning an injured worker back to work, will likely extend and increase the cost of this care.

The cost and duration of medical care is also directly tied to increased indemnity cost per claim.  Without emphasis on returning to work within restrictions potential entitlement to wage replacement benefits will increase. In addition, an injured worker’s eligibility for indemnity benefits is capped depending on the amount of medical impairment assigned for an injury or occupational disease.  To the extent an injured worker uses amounts under the applicable cap as wage replacement benefits, it may prevent the injured worker from receiving a full award of medical impairment benefits.  It is likely that incorporating medical care for work injuries or occupational diseases under ColoradoCare will have the indirect effect of creating increased exposure for indemnity benefits on these claims.  There is evidence of this from Vermont where private carriers were either unable, or unwilling, to offer an insurance product to cover indemnity benefits for Vermont’s workers’ compensation system without having medical benefits controlled under that system.

 

Safety Incentives in Workers’ Compensation vs. ColoradoCare

Workers’ compensation insurance premiums are a function of gross wages paid under specific job classifications and factored by an experience modifier.  Therefore, there is strong incentive for employers to maintain a safe workplace, reducing work injuries and occupational diseases.  This, in turn, reduces premiums by lowering the experience modifier.  Integration of workers’ compensation medical benefits into a universal health care system reduces or eliminates employer incentive to ensure a safe workplace as there is no financial ramification tied to a higher experience modifier.

 

Indemnity Obligations Under the Colorado Workers’ Compensation Act

Notwithstanding Amendment 69’s integration of medical benefits into ColoradoCare, other benefits under the Colorado Workers’ Compensation Act are still required to be covered by employers.  These benefits include wage replacement, medical impairment, disfigurement and dependent benefits. ColoradoCare does not integrate or eliminate these other benefits.  Therefore, passage of Amendment 69 would require a mixed model benefit package, with publicly funded medical benefits provided under a different regulatory structure combined with privately funded benefits through a different insurance product.  In an official report to the Vermont Legislature from Vermont’s Director of Healthcare Reform dated January 15, 2016, this type of mixed model is discussed.  Private carriers in Vermont determined that private indemnity coverage required a new insurance product to cover indemnity portions of workers’ compensation claims.  Private carriers operating in Vermont were not interested in offering this product due to the connection between the lost ability to manage the medical component of the work injury or occupational disease and the resulting indemnity obligations.  Removing medical management of the claim would likely increase the amount of indemnity owed on that same claim.

 

Legal Issues Regarding Integration of Workers’ Compensation Medical Benefits into ColoradoCare

 

HIPPA

In general, the HIPPA privacy rules do not apply to workers’ compensation insurers, administrative providers or employers.  These entities are allowed access to otherwise private records to coordinate medical care and to deal with work-related issues, like restrictions and return to work options.  In Colorado, there are close connections between medical care providers, employers and workers’ compensation carriers and/or self-insured employers.  The employer selects the authorized providers for work injuries in the first instance and forms are generated for return to work options.  In addition, there are specific provisions for a change in medical care provider and authorization to treat for a work injury or occupational disease.  Amendment 69 does not address these matters.  Presumably, the entities involved in workers’ compensation matters would remain immune from HIPPA privacy issues, particularly in light of medical treatment and return to work issues connected to wage replacement benefits and permanent total disability benefits.

 

Exclusive Remedy

Colorado has a very strong exclusivity provision that immunizes employers from a lawsuit filed by an employee for a work injury or occupational disease.  This is part of the trade-off under the workers’ compensation no-fault system.  Removal of medical benefits as part of the benefit package under the workers’ compensation system could, through other legislation or interpretation of the exclusivity provision, erode or eliminate workers’ compensation as an exclusive remedy.  Amendment 69 does not address exclusive remedy concerns.

 

ERISA

The Employee Retirement Income Security Act (ERISA) is a federal statute that regulates private-sector, employer-sponsored benefit plans, including health care coverage.  ERISA protections specifically supersede any and all state laws in so far as they may now or hereafter relate to any employee benefit plan.  29 U.S.C. 1144(a).  Workers’ compensation is an exception to this preemption clause, meaning that states have the right to regulate workers’ compensation.  Once medical benefits under workers’ compensation are integrated into a single payer system, medical benefits may no longer be offered for the purpose of complying with the workers’ compensation benefit package and may now be preempted by ERISA laws.  There is no clear precedent over this issue and Amendment 69 is silent on this issue.

 

Treatment and Medical Impairment Under the Colorado Workers’ Compensation Act

Section 8-42-101, C.R.S. of the Colorado Workers’ Compensation Act requires every employer to supply certain medical benefits, including certain conditions for supplying those benefits given the nature of employment and the condition.  Further, it identifies accreditation process as a requirement for a physician to provide primary care and to provide an evaluation for potential impairment of an injured worker.  ColoradoCare would be the payer for work injuries.  Amendment 69 is silent as to its overall effect on the Colorado Workers’ Compensation Act.  Therefore, integration of the medical benefit component in the workers’ compensation system into ColoradoCare would likely require large-scale revision of the Colorado Worker’s Compensation Act, including revision of statutes and rules regarding physicians and determination of medical impairment.

 

Multi-Jurisdictional Employers

Workers’ compensation laws differ from state to state.  Currently, different state requirements and interpretations of when an injury or occupational disease is work-related creates risk for liability for uninsured loss for employers doing business in multiple jurisdictions.  Integration of medical benefits into ColoradoCare compounds this problem.  By its terms, a “member” is someone at least 18 years old, who has lived in Colorado as a primary resident for one continuous year.  Colorado has one of the fastest-growing populations of any state in the country and many of those individuals are moving to Colorado for employment.  If one of these individuals, 18 years old or older, is hurt at work but not a “member” of Colorado Care, that individual would not be eligible for medical coverage for a work injury.  This would leave the employer obligated to fill the gap in coverage or be subject to penalties as an uninsured employer.

 

Existing Claims

There is no provision in Amendment 69 for how existing claims would be integrated into ColoradoCare.  ColoradoCare would simply assume responsibility for payment of medical benefits for injuries arising out of or within the course and scope of employment.  This is a substantive change in the law and would be given prospective application.  Therefore, integration of medical benefits into ColoradoCare creates a different payer, but is unclear as to what it does to the status of any existing medical care provider for any existing workers’ compensation claim.

 

Litigation

Passage of Amendment 69 and the integration of medical benefits into ColoradoCare will spawn significant litigation over the issues identified above.  This litigation would not be limited to hearings in the Office of Administrative Courts, but would involve District Court actions in both the state and federal systems over a myriad of potential situations.  This litigation will be a significant cost to employers in Colorado and will potentially disrupt “… the quick and efficient delivery of disability and medical benefits to injured workers at a reasonable cost to employers.”  Section 8-40-102, C.R.S.

 

ELECTION LANDSCAPE

The Initiative vs. Legislative Process

Initiative 20, (appearing on the 2016 Ballot as Amendment 69), is an example of Colorado’s flawed initiative process.  Initiative 20 needed only 86,492 signatures to get on the Ballot, but received 158,831 signatures.  This demonstrates the ease with which it got on the Ballot and a level of support for Amendment 69.

Amendment 69 is really in the form of a new statutory act.  Ordinarily, such legislative proposals take the form of a bill with a legislative sponsor, committee assignment, public comment and discussion and debate that allows for amendment, etc., before it is passed and potentially enacted by signature of the Governor.  Amendment 69 would never have appeared in ordinary legislative process as it appears on the Ballot.  Instead, as an initiative, Amendment 69 is non-legislation that alters the Colorado Constitution through a simple popular vote.

Outlook

The proponents of Amendment 69 spent a great deal of money getting it on the Ballot and may not have the resources to advocate further for its passage.  Virtually all business organizations oppose Amendment 69 for reasons identified above.  Further, former Democratic Governor Bill Ritter, and current Democratic Governor John Hickenlooper do not support Amendment 69.  Very limited polling data shows stronger than expected support for this Amendment.  In this unique election cycle, it is difficult to forecast whether or not this will pass since it is connected to the demographics of the people coming out to vote.

Sexual Orientation Discrimination: EEOC Initiates its Next Title VII Challenge

A new era of discrimination lawsuits is upon employers nationwide.  Last month, the U.S. Equal Employment Opportunity Commission (“EEOC”) filed its first lawsuits alleging sexual orientation discrimination under Title VII against employers in Pennsylvania and Maryland.  The lawsuits are the latest step by the Commission to confirm its view that “sex” discrimination under Title VII encompasses discrimination based on sexual orientation. As with most discrimination cases filed by the EEOC, it seeks compensatory and punitive damages, as well as injunctive relief in both lawsuits.

Furthermore, with these lawsuits currently pending, the EEOC has also recently issued guidance on gender identity and sexual orientation discrimination.

What You Should Know About EEOC and the Enforcement Protections for LGBT Workers and

Addressing Sexual Orientation and Gender Identity Discrimination in Federal Civilian Employment

This guidance is all stemming from last year’s EEOC decision in Baldwin v. Department of Transportation where the Commission held for the first time that a claim of discrimination, on the basis of sexual orientation, necessarily involved sex-based considerations under Title VII because sexual orientation discrimination: (1) inevitably involves treating employees differently because of their sex; (2) is associational discrimination on the basis of sex; and (3) necessarily involves discrimination based on gender stereotypes, including employer beliefs about the person to whom the employee should be attracted.

As such, with the filing of the two recent lawsuits in Pennsylvania and Maryland, the EEOC is seeking to have two separate courts agree with its guidance on sex-based considerations. In the first challenge, the Commission alleges that a Pennsylvania-based health care company subjected a gay male employee to harassment because of his sexual orientation.  The lawsuit alleges that employee’s manager repeatedly referred to him using various anti-gay epithets and made other highly offensive comments about his sexuality and sex life.  The employee complained to the clinic director, but the director allegedly refused to take any action to stop the harassment.  The employee eventually quit.

In the second challenge, the EEOC alleges that a lesbian employee at a recycling company was harassed by her supervisor because of her sexual orientation.  The supervisor purportedly made comments about the employee’s sexual orientation and appearance on a weekly basis.  The employee purportedly complained to the general manager and called the company’s hotline about the harassment.  She was fired just a few days after she raised complaints.

Take Away: Plaintiff firms are taking notice and it is expected that sexual orientation based discrimination suits will increase over the next year or so, particularly pending the outcome of the recent lawsuits.  Consequently, employers should prepare for the EEOC to continue its focus on investigating sexual orientation and gender identity claims and should address these types of discrimination in training materials and handbooks.  In the end, employers should treat any such complaints of discrimination just as it would for other Title VII based discrimination complaint raised internally.

Legislative Mid-Session Update 2016

The 2016 legislative session is half over. The deadline for introduction of bills has come and gone; however, late bill introduction is very common. This is a brief summary of some of the introduced legislation of interest to clients:

Workers Compensation

Right now there are no pending bills regarding workers’ compensation. It is anticipated that there will be a bill introduced regarding first responders and compensability of posttraumatic stress disorder. A joint bill arising from discussions between Pinnacol Assurance, WCEA and CSIA is also a possibility, along with a bill from Pinnacol Assurance to allow it to establish a separate corporate entity that could write policies outside of Colorado.

Other Bills of Interest 

Senate Bill 16–056

This bill broadens the protections of the state whistleblower laws by including state employees disclosing information that is not subject to public inspection under the Colorado Open Records Act, when the disclosure is made to state entities that are designated as whistleblower review agencies. This bill is in the Judiciary Committee.

Senate Bill 16–070

This bill prohibits an employer from requiring any person, as a condition of employment, to become or remain a member of a labor organization, or to pay dues, fees or other assessments to a labor organization or to a charity organization or other third-party in lieu of a labor organization. Further, any such agreement violates these prohibited activities and are deemed void. This bill was originally assigned to the Business, Labor & Technology committee. After several amendments, the bill passed out of Senate and was sent to the House where it is assigned to State, Veterans & Military Affairs and will likely die.

House Bill 16-1002

In 2009 a bill passed known as the Parental Involvement in K-12 Education Act. This allowed an employee subject to the Family Medical Leave Act to take leave from work to attend various academic activities with, or for, the employee’s child. The leave was limited to 6 hours per month and 18 hours in any academic year. The employer was allowed to restrict the use of the leave in cases of emergency for the employer, or where the employment situation could endanger a person’s health or safety if the employee were absent. Further, the leave was limited to 3 hour increments at any time and required the employee to submit written verification from the school of the activity. The bill had a sunset provision repealing it effective September 1, 2015. This bill re-creates the 2009 bill with a couple of changes. It expands the type of academic activities to include attendance with school counselors. It also requires school districts and charter schools to post information about this statute on their websites. This bill was assigned to the Education committee in the House and eventually passed through the House without amendment. When introduced into the Senate it was assigned to State, Veterans & Military Affairs where it was postponed indefinitely.

House Bill 16 – 1078

This bill concerns whistleblowing protection for public employees not employed directly by the state. The bill prohibits county, municipality or local education providers from imposing disciplinary action against an employee for statements made by the employee about the local government that the employee believes shows a violation of state or federal law, a local ordinance or resolution, or a local education policy provider regarding waste, misuse of public funds, fraud, abuse of authority, mismanagement or danger to the health or safety of students, employees or the public. The bill would allow the employee to file a written complaint with the Office of Administrative Courts alleging some form of disciplinary action that the employee believes violates the whistleblower protection and would allow the employee to seek injunctive relief and damages. If the employee loses at the administrative hearing level, the employee would still have the ability to file a civil suit District Court. This bill was introduced and assigned to the local government committee in the House where an amended version was referred to appropriations. As there will be a fiscal note attached to the bill and given the Office of Administrative Courts involvement, the bill stands virtually no chance of passing.

House Bill 16 1114

This bill eliminates current employment verification standards requiring an employer to attest that it verified the legal work status of an employee and has not knowingly hired an unauthorized alien. It additionally eliminates the requirement for an employer in Colorado to submit documentation to the director of the Division of Labor in the Department of Labor and Employment that demonstrates the employer complied with federal employment verification requirements. This bill was assigned to Business Affairs and Labor where no activity has been taken and it will likely die.

House Bill 16 – 1154

This bill purports to clarify the definition of “employer” to only include a person that possesses the authority to control an employee’s terms and conditions of employment and has the ability to actually exercise that authority directly. The bill eliminates a franchisor from being considered an employer of a franchisee’s direct employees unless the franchisor has control over those employees. This bill was assigned to Local Government where no activity has been taken and it will likely die.

House Bill 16 – 1202

Current law requires employers to examine the legal work status of any newly hired employee within 20 days by using paper-based forms for identification. This bill would require employers to participate in the Federal e-verification program to determine work eligibility for newly hired employees. It then requires the employer to maintain documentation of this practice and submit it to the director of the Department of Labor and Employment. If an employer fails to do this it would be subject to a fine of up to $5000 for the first offense and up to $25,000 for the second offense, along with suspension of the employer’s business license for up to 6 months for continued offenses. This bill was assigned to the State, Veterans & Military Affairs where it was postponed indefinitely and will likely die.

History of Workers’ Compensation, Part III, Emergence of the Modern-Day System

This is the final piece of a three-part series surveying the history of workers’ compensation. Prior to 1911, an individual residing in the United States, regardless of their state residency, who suffered a workplace injury could only recover damages by utilizing traditional tort based law. In other words, an injured worker would need to sue their employer and claim the employer’s negligence or intentional conduct caused the subsequent injury. The employer could raise defenses such as contributory negligence or assumption of risk to bar the receipt of monetary damages. This system was often cumbersome, time-consuming, unpredictable, and expensive for both the employer and employee.

In 1911, the State of Wisconsin passed the first statutory law specifically addressing workers’ compensation entitlement benefits. The goal ofWisconsinAct the act was to create an efficient system to adjudicate claims while reducing legal hurdles for the injured worker thus creating a predictable system where the employer could foresee limited monetary risks. The Wisconsin system created a “no-fault” legal system in which the injured worker would no longer need to prove that the employer engaged in some type of culpable negligent or intentional conduct. According to the Wisconsin Department of Workforce Development, “the intent of the law was to require an employer to promptly and accurately compensate a worker for any injury suffered on the job, regardless of the existence of any fault or whose it might be.” The legislation provided for wage loss benefits, cost of medical treatment, disability payments, and payment for vocational rehabilitation training.

The legislation also eliminated an injured workers’ right to seek damages historically available through the tort system. As discussed in part two of the series, by 1911 the general public had become more concerned about the deplorable and often unsafe working conditions in factories across the nation. The Wisconsin Workers’ Compensation Act barred the injured worker from pursuing non-economic damages awarded by juries, including pain and suffering and loss and enjoyment of life. Similar to today’s ubiquitous state-based worker’s compensation acts, the Wisconsin Act enumerated the specific type of damages an injured worker could receive, thereby duly preventing the injured worker from requesting a jury to adjudicate damages. The judge adjudicating workers’ compensation claims, as a finder of fact, could not award benefits beyond the provided benefits in each respective act. The Wisconsin Act, while providing for specific benefits and shifting liability to the employer under the no-fault system, also provided employer’s with protection by limiting the scope of damages and removing the question of damages from unpredictable juries.

In the decade following the Wisconsin Act, nearly every state in the union promulgated some form of a workers’ compensation act. Mississippi was the last state to pass an act, but did so by 1948. Interestingly, as Gregory Guyton points out in his “Brief History of Workers’ Compensation,” the medical profession did not receive the worker’s compensation system with open arms. Medical professionals generally viewed worker’s compensation as a form of socialized medicine. According to Guyton, when the Social Security disability insurance act was created in the 1930s, disability based medicine expanded becoming lucrative for medical professionals. On the heels of the respective disability acts, the American Medical Association published the first guides to the evaluation of permanent impairment in order to develop a method to provide compensation evaluations. In Colorado, the legislature has decided to continue using the third edition of the AMA Guides to permanent impairment. The guide is currently available in six editions.

Given the volume of claims in any one state for benefits, each state may elect to create administrative agencies to adjudicate workers’ compensation claims. Colorado, for example created the Office of Administrative Courts in 1976 to hear an array of limited subject matter cases, including workers’ compensation. Prior to that time, the District Court handled worker’s compensation claims. Any individual working in workers’ compensation is familiar with the respective administrative system and ministering the claims. As the American workforce changes in age, and disability laws, including the ADA, become more pervasive in the work environment, there are open questions as to whether disability acts or managed health care administered by the federal government will substitute various aspects of workers’ compensation. For now, the workers’ compensation model most are familiar with will remain stable, subject to changes made by each respective legislation.

Personnel Files in Colorado: Who owns the file and what privacy interests are involved?

This is a question that I repeatedly see throughout the year and it comes in a variety of contexts. Often times, personnel-file-28116_960_720employers who may have recently terminated an employee, are suddenly posed with a request from that former employee for his/her personnel file. Sometimes, within a workers’ compensation or other employment related claim, the worker is seeking copies of the personnel file in an effort to bolster his or her claims. Additionally, employers receive requests from plaintiffs or third-parties seeking copies of personnel files concerning witnesses or company representatives. Consequently, employers are often placed in a decision whether or not to disclose this information and if there are any privacy issues with disclosing the information.

While the Colorado Supreme Court and Court of Appeals have not definitively addressed this issue head on, there is support for the conclusion that personnel files are property belonging to the employers and not the employees. In Corbetta v. Albertson’s Inc., it was the first time the Colorado Supreme Court addressed the issues of personnel files and privacy interests. The case involved a suit by a customer of Albertson’s alleging a variety of claims arising out of the plaintiff cracking several teeth on a pebble in a spinach salad she purchased. As part of discovery, plaintiff requested the entire employment files of the store manager, all assistant managers and all deli employees. Albertsons objected to the disclosure of these files invoking a right to privacy argument of the employees. The trial court ordered production of the files and concluded that while the personnel files were the property of Albertsons, disclosure was appropriate under the circumstances.

The Supreme Court overturned the trial court’s decision noting primarily that it did not appropriately balance the privacy interests involved and make appropriate factual findings and conclusions in addressing those privacy interests. However, the Supreme Court, in this decision, did not overturn the conclusion of the trial court that the personnel files were the property of the company. Accordingly, employers can rely on this decision for the conclusion that personal files are company property and not the property of the specific employee. Furthermore, while the Supreme Court did provide a right to privacy balancing test for determination of whether a personal file can be disclosed, the Court later in In re District Court, Cty and County of Denver revised this test, which now is the current law.

The case of In re District Court, Cty and County of Denver involved a former client of a law firm suing for legal malpractice and breach of fiduciary duties. As part of discovery, the former client requested financial information of the law firm members. The Supreme Court determined that when discovery requests implicate right to privacy interests:

  • The requesting party must first prove that the information requested is relevant to the subject of the action;
  • If shown relevant, then the party opposing the request must show that it has a reasonable expectation that the requested information or materials is confidential and will not be disclosed;
  • If the trial court finds that there is a legitimate expectation of privacy in the materials, the burden then shifts back to the requesting party to prove either that disclosure serves a compelling state interest or that there is a compelling need for the information AND that the information is not available from other sources.

There are other issues that implicate personnel files. First, employers are not required to give employees access to their personnel records. Access to personnel files and the information they contain should be restricted. Only authorized employees, supervisors or managers should be permitted to access personnel records on a “need to know” basis. Second, records regarding confidential, sensitive information unrelated to job performance, such as regarding citizenship, garnishments and any medical condition that could cause someone else to conclude the employee has a communicable disease (e.g., HIV), should be maintained in separate, confidential files. For example, if an employee suffers a workers’ compensation claim, it is highly recommended that a separate file be created to avoid confidential and private information being contained within his or her personnel file, such as medical reports.

Take Away

Personnel files are the property of the employers and thus, it is recommended that outside the scope of litigation, any such request for disclosure be denied. When requests are made as part of litigation or insurance claims, it is imperative that the right to privacy issue be properly considered and that the litigants requesting the information properly meet their burdens before a trial court.

EXTRA EXTRA! RULE 16 CHANGES COMING SOON!

 
One of Lee + Kinder LLC’s primary goals is to educate our clients and keep them apprised of changes in Colorado law.

 


 

There are changes coming to Workers’ Compensation Rule of Procedure 16 that will be effective January 1, 2016.
The changes to the rule are noted in RED below.

WCRP 16-9(B) requires a provider to submit a written request for prior authorization with supporting medical documentation when:

(1) The service exceeds recommended limitations under the medical treatment guidelines,
(2) The medical treatment guidelines require prior authorization,
(3) The services identified within the medical fee schedule is requiring prior authorization, or
(4) The prescribed service is not identified in the medical fee schedule.

WCRP 16-10(A) requires the payer notify the provider and the parties in writing of any contest to the prior authorization within seven business days from the date of receipt of the request, including a certificate of mailing.

If the prior authorization request is from an authorized treating provider and includes reasoning and relevant documentation that the treatment is related to the work injury, the payer cannot deny based on relatedness without a medical review of the request.

 

WCRP 16-10(B)(1) now requires the following for a seven-day medical records review:

  • The medical records review must be done by a physician or healthcare professional LICENSED IN COLORADO, and

  • The medical records review must be done by a provider in the SAME OR SIMILAR SPECIALTY, who would typically manage the medical condition, procedures or treatment being reviewed, and

  • The medical reviewer must be LEVEL I OR LEVEL II ACCREDITED by the State of Colorado.

 

WCRP 16(10)(E) provides that failure to timely comply with the denial requirements results in automatic authorization for payment unless:

  1. A hearing is requested within the seven business day time frame; and
  2. The provider is notified about that the request for prior authorization is being contested and the matter is going to hearing.

 

SHOW CAUSE ORDERS AND POTENTIAL PENALTIES ON RULE 16 MEDICAL RECORD REVIEWS:

WCRP 16-10(F) provides, “Unreasonable delay or denial of prior authorization, as determined by the Director or an administrative law judge, may subject the payer to penalties under the Workers’ Compensation Act.”

Recently, the Director has issued show cause orders to payers as a result of complaints by injured workers over disputes regarding medical care. The Director has issued orders requiring payers to show cause as to why a request for prior authorization was denied, when the procedure/treatment in question fell within the Colorado Medical Treatment Guidelines. The Director stated that a response that the matter is set for hearing will not suffice as “good cause” or provide a competent response to a show cause order. The Director expects a substantive response to any show cause order he issues.

Potential changes to Rule 16 that are still under consideration by the Director include: a medical review panel whose opinion regarding authorization would need to be overcome by clear and convincing evidence, and a requirement that payment be made subject to potential reimbursement in the event that a denial is upheld.

This article is intended to provide information only and not as a substitute for legal advice. If you have specific questions or cases that you would like to discuss, please contact the attorneys of Lee + Kinder, LLC for further guidance.

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