Workers comp nightmare in Texas

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This article from the Journal of the American Bar Association came to me recently. If you think that Oregon has a bad worker's comp system, take a look at the living hell going on in the Republic of Texas. Note that they passed their law changes the same year as Oregon. Freemanhttp://www.abajournal.com/magazine/article/insult_to_injury_texas_workers_comp_system_denies_delays_medical_help/ the entire article is pasted below:Labor & EmploymentInsult to Injury: Texas Workers' Comp System Denies, Delays Medical HelpBy Terry Oct 14, 2011, 03:17 pm CSTAs Deputy Sheriff Ed sat by his squad car in a fast-growing pool ofhis own blood, he called his wife and woke her at 3:30 a.m. He knew he mightdie from the point-blank shotgun blast that greeted him moments earlier whenhe knocked on a door for a 911 call in a tiny east Texas town called China."It's pretty bad and I don't know how it's gonna turn out," told hiswife as he awaited a helicopter medical evacuation. "Get the kids and meetme at the hospital."When they arrived, was on a gurney and covered with a white sheetsplotched red. His wife clutched their sleepy 2-year-old daughter to herchest as their sons, 6 and 10, stood at her side."I know it was tough for them," says, retelling the story of thatnight in June 2006 in the flat monotone of cop-speak. "But I wasn't sure ifI'd make it through surgery and I wanted to at least tell them 'Hello' and'I love you.' "Doctors say 's life was saved by his ballistic vest and the swift tripto the hospital in Beaumont, near the Gulf Coast and the Louisiana border.But the blast vaporized the skin of his inner arm down to bare muscle andtendons, and tore out the main artery.A couple of weeks later, got a phone call from an insurance adjusterhandling his workers' compensation claim. He was told the $7,300 helicopterride was "not medically necessary" and likely would not be covered.As Deputy Sheriff Ed sat by his squad car in a fast-growing pool ofhis own blood, he called his wife and woke her at 3:30 a.m. He knew he mightdie from the point-blank shotgun blast that greeted him moments earlier whenhe knocked on a door for a 911 call in a tiny east Texas town called China."It's pretty bad and I don't know how it's gonna turn out," told hiswife as he awaited a helicopter medical evacuation. "Get the kids and meetme at the hospital."When they arrived, was on a gurney and covered with a white sheetsplotched red. His wife clutched their sleepy 2-year-old daughter to herchest as their sons, 6 and 10, stood at her side."I know it was tough for them," says, retelling the story of thatnight in June 2006 in the flat monotone of cop-speak. "But I wasn't sure ifI'd make it through surgery and I wanted to at least tell them 'Hello' and'I love you.' "Doctors say 's life was saved by his ballistic vest and the swift tripto the hospital in Beaumont, near the Gulf Coast and the Louisiana border.But the blast vaporized the skin of his inner arm down to bare muscle andtendons, and tore out the main artery.A couple of weeks later, got a phone call from an insurance adjusterhandling his workers' compensation claim. He was told the $7,300 helicopterride was "not medically necessary" and likely would not be covered."Not medically necessary," says, repeating the phrase twice insuccession five years after the shooting. "That was my first introduction tothose words. And I've heard them a lot since then."While cops can't be sure what lurks behind a door on an emergency call, theyknow the hazards. But could not have foreseen the traps and trauma instore for him as he entered a state workers' compensation system that wasradically overhauled 20 years ago expressly to drive out lawyersrepresenting injured workers, and that has grown ever friendlier to theinsurance industry., 45, has undergone 11 surgeries to repair his various injuries. Hewas away from work for two years. Such treatment is built in progressivestages, many of which--like his helicopter evacuation--were initially deniedby the insurer and only later approved.The chain of repeated denials of treatment not only kept him from recoveringsooner but also left him with deep, nerve-enveloping scars that today causesharp tingles he says feel like ants constantly biting his hand.As a law enforcement officer, knows it's best to have backup. But henever had a lawyer to help him through the adversarial, multileveladministrative maze that is the Texas Department of Insurance's Division ofWorkers' Compensation. He never had an administrative hearing. His caseplayed out in an endless stream of letters and phone calls between hisdoctor, an insurance adjuster and various division officials. was, however, assigned a case-manager nurse, who was at his side onmost of his doctor visits and who helped him with paperwork. He laterlearned that she worked for the claims management company that was denyinghis medical treatment, and impeding his recovery and rehabilitation."I thought she was with the workers' comp system," says. "She seemedoutraged sometimes at what was happening to me."The Tristar Risk Management claims examiner who handled the case from thecompany's Irving, Texas, regional office declined to discuss 'scomplaints. "I can't talk to you about this and I don't think Tristar wantsto talk to you about it," says Nakilah . "I'll pass this request alongto the lawyers."That was unavailing. says he missed his job as a detective in the Jefferson CountySheriff's Department, which has 60 deputies in law enforcement and another200 on the corrections side. He returned in the summer of 2008, but it wasfar sooner than he and his doctor believe he should have. He had not yetregained full use of his left hand and even today it has only half thestrength of his right. But the only alternative was to go without a paycheckbecause of unyielding workers' comp timelines.Deputy 's workers' comp nightmare is the "vision of what you get ifyou allow strictly cost containment and insurers running the system with nooffset or balance," says Kim Ross, a former vice president and chieflobbyist for the Texas Medical Association, and now a public affairsconsultant and political strategist in Austin. "It's not done from apractical standpoint of managing care properly, but simply by suppressingdemand for medical services."While 22 other states have considered changes tightening their workers'compensation programs in recent legislative sessions, it would be hard tofind one that keeps legal fees as low, denials as high, and efforts ofdoctors and others to scam the system as plentiful as in Texas.Even had had a lawyer, it may not have made much difference in aclaims system that critics charge is now wholly captive to the insurancecompanies that support it. It's the result of a 20-year evolution lardedwith anti-tort politics. It wasn't always so.Once a stand-alone agency, the Division of Workers' Compensation was run bya three-member board appointed by the governor: one from labor, one employerand a lawyer as chairman. Later it was recast with six part-timecommissioners with a similar labor/employee split and a full-time executivedirector, to whom more of the power gravitated.But in 2005 workers' comp was brought into the Texas Department ofInsurance--a regulatory agency long considered by critics as being too cozywith the insurance industry--where it is run by a single commissionerappointed by the governor.But several decades of tweaking--through legislation, policy and businesspractices mostly meant to target scams by physicians and medical servicesproviders--have gone beyond simple reform. Critics of the system say it hasbecome so hostile, so skewed toward delay and denial that lawyers,physicians and even legitimate claimants have been driven away.In the 1980s, Texas legislators decided that too many lawyers were involvedin workers' comp claims, and that something had to be done to stopskyrocketing costs for businesses and insurers. They enacted a severelyrestricted fee structure that made it nearly impossible for claimants-sidelawyers to make a living wage. And it worked. Where previously hundreds ofTexas lawyers had significant workers' comp practices, there now are about30."The goal was to get lawyers out of the system and leave more money forhelping injured workers, and they got it half right," says Rick Levy, a namepartner in Austin's Deats Durst Owen & Levy and a legal director for theTexas AFL-CIO. "So for a long time it's been insurance companies and theirlawyers going up against injured workers usually without lawyers. Theunfairness of that is not difficult to discern."ONE OF THE FEWLegitimate claimants "often just become a statistic in society," says Pena, an Austin lawyer who has represented injured workers since theearly 1980s--a rarity considering the state's anti-lawyer campaign.Pena is one lawyer who refused to walk away after the overhaul went intoeffect in 1991. He continued taking workers' comp cases out of stubbornnessand for moral reasons, though now he relies on personal-injury matters formost of his income. Handling benefits claims for injured workers brings insome of that.Pena keeps a copy of a check for 2 cents he received two summers ago in aworkers' comp case. Though admittedly the final payment on a somewhat largeramount, it is shockingly symbolic to any who see it.Most would expect Pena to be a high roller. He is a former president of theState Bar of Texas and the County (Austin) Bar Association, a formermember of the ABA Board of Governors and former president of the AmericanBar Foundation. But Pena gets paid in only about one-third of the workers'comp cases he takes, and typically receives about $70 a week for nineweeks--$630 per case. That entails workup, document gathering andadministrative hearings, including battles against denials of medicalnecessity.Lump-sum settlements were outlawed by the 1991 changes. If an insurer balkson a claim, everything must be hashed out in administrative proceedings.Medical and compensatory claims are bifurcated: Whether or not the workerwas actually injured on the job must be fought out, determining if theclaimant will get 70 percent of his salary while recuperating; also thenecessity of medical treatment, as well as the extent to which anypre-existing conditions might partially offset covered treatments."Look, the real problem here is that insurance companies deny claims andmedical treatment over and over, disputing claims carte blanche," Pena says."If the treatment request from a doctor is denied, it usually ends there."While Pena and a few others stayed on, a new breed of workers' comp lawyercame in and has found a way to make a living. By digitalizing the process,many could make money through volume.But unlike Pena, they turn away a lot more cases than they take. Lubbocklawyer Gibson, for example, started handling claims for injured workersin 1997. He takes only cases in which he can expect to make a living:high-wage earners (no chain-store greeters, as much as he would like to);serious injuries (removal of disks from the spine don't make his cut becausethose patients return to work quickly); and, emphasizing the last detail,only those who have been out of work for a significant period of time.Gibson says things have worsened for injured workers in recent years, mostlythrough medical denials and delays. He laughs when asked to do what fewrisk-averse lawyers would--go on the record criticizing the powerful TexasDepartment of Insurance's Division of Workers' Compensation."I'm already suing them," he says, "and I suppose you can't be more criticalthan that."Gibson took the department to federal court in Lubbock after the agency'sperplexing demand last winter that his blog be removed from the Internet.For several years his workers' comp website highlighted cases and concernsabout the division and insurance carriers, heavy on facts and analysis witha strong point of view. A January post, for example, probed law and policyissues in his November jury win over Texas Mutual Insurance, which has thebiggest slice of the state's workers' comp pie.In February the department sent Gibson a cease-and-desist letter andthreatened to sanction him up to $25,000 a day if the offending websiteremained up. The site allegedly broke the law by using the terms Texas,workers' compensation and workers' comp.A 2005 state statute cracked down on unscrupulous entrepreneurs who mightdraw on those words to imply they are officially part of the Division ofWorkers' Compensation. It is now illegal to use the terms in connection with"any impersonation, advertisement, solicitation, business name, businessactivity, document, product or service."The department investigates violators of the gapingly broad statute onlyafter receiving a complaint. So someone had dropped a dime on Gibson. Onsketchy information, he believes the agency has gone after just onephysician and two lawyers, both claimants' side. The TDI-DWC won't revealenforcement details.A whole lot of others probably have run afoul of the statute. Indeed,annually for the past 42 years, a prominent defense-side firm in Austin haspublished the authoritative Texas Workers' Compensation Manual, the cover ofwhich apparently uses the words illegally while it is prominently displayedon the firm's website.Gibson, Pena and others on the claimants' side believe both the statute andits selective enforcement add yet more evidence that the workers' compsystem in Texas has become captive to the insurance industry.Questions about enforcement of the statute and other matters were posed toTDI-DWC spokesman Greeley, who asked for them to be put in writing.After receiving them, he didn't respond. An open records request to theTDI-DWC asked two questions: What was the date of the complaint it receivedconcerning Gibson's blog, and how many similar cease-and-desist letters hasit sent out? The TDI's legal office declined to provide the informationunder public disclosure laws, citing an exemption for pending litigation. Itasked the state attorney general's office to rule on its decision and the AGagreed.Greeley did not return a phone call seeking a subsequent interview withdivision officials on various matters, and a request to TDI-DWC CommissionerRod Bordelon's office for an interview went unanswered.Texas is the only state where participation in a workers' comp system is notmandatory for employers above a certain size. (New Jersey technically hasthe option, but it is so strict as to be preclusive.) Most Texas employerscarry workers' comp insurance, but 32 percent of them are so-callednonsubscribers and employ an estimated 17 percent of the workforce--1.7million people. Many of those have private plans, but some go completelybare.Thus Texas Mutual has good reason to limit payouts as much as it can.Competition from private plans combined with a cyclically soft market havedriven down the average workers' comp premium for each $100 of payroll byabout half since the early 2000s, now at $1.47. To keep from losingbusiness, Texas Mutual, chartered by the state in 1991, has paid out $1billion in policyholder dividends since 1998, most of it in the past fouryears. (In its 2010 annual report posted online, Tex as Mutual reports"claim benefits paid and incurred" as $381 million and the dividend payoutfor that year as $116 million.)That's at a time when the customer base was not growing and income frompremiums headed down. One indication of how Texas Mutual still managed toprosper is buried in dry, bureaucratic reporting by the state insurancedepartment.In its 2006 biennial report to the legislature, the insurance departmentnoted that since 2001 the majority of denied claims were deemed "notmedically necessary" (before that, the problem had more often been improperpaperwork), and that "an increasing percentage of these denials" stemmedfrom second opinions by peer-review doctors hired by the carriers.A similar 2008 report added that a possible explanation for stabilization ofmedical costs might be "denials of both workers' compensation claims andmedical services over time." Medical costs were finally being held in check,in part at the expense of injured workers.ON THE RECORDFed up with denials of medical procedures for their workers' comp patients,a San medical group with nine neurosurgeons and an orthopedicsurgeon installed a recording device on an office telephone in 2005 fordealing with denials.They did so, one of the neurosurgeons said in a deposition in a bad-faithinsurance case now at the Texas Supreme Court, because "there were someoccasions that were so egregious that nobody would believe it if we said it,and so we decided to document it."The device was first used on a call from Texas Mutual's medical director,Dr. Tsourmas, known among claimants' lawyers as "Dr. No." Tsourmasalso has a medical practice and does similar case review work for otherinsurers. He did not respond to an interview request.Last year the 5th U.S. Circuit Court of Appeals at New Orleans harshlycondemned Tsourmas for recrafting an opinion at the request of an insurer.Initially, the doctor had determined there was not enough evidence toconclude that an injured worker was capable of resuming work. He asked tosee MRIs (which the carrier had) and for additional X-rays. Instead, he wastold the records were not available and was urged to make a finding on theworker's functionality. Tsourmas then said the man could work.The 5th Circuit said in Scheuermann v. Unum Life Insurance Co. thatTsourmas' addendum was based on no further medical evidence and was "inplain conflict with the medical records."Nevertheless, Tsourmas receives the highest compliment from BarrowNichols, Texas Mutual's senior vice president and general counsel. "I'dtrust my family to him," Nichols says, when told of these complaints.TMI staff attorney Pounds adds that on many occasions Tsourmas hasdisagreed with the carrier and said a particular worker needs surgery, "andwe do it." And , Texas, claimants' lawyer says, "Tobe fair to all these doctors, the only time we really see their names iswhen they deny something. Only the disapproved cases are news to us."More than plenty are indeed worthy of denials. Overtreatment andoverutilization of medical services is almost a constant problem in Texas.In 2003, the legislature imposed Medicare fee schedules on workers' comp tocontrol costs. But that drove out a lot of the best doctors, and many ofthem were replaced by others who knew how to play the new system."A lot of them stopped taking workers' comp patients," says Ross, the formerTexas Medical Association lobbyist. "So a second tier and tertiary tier ofphysicians stepped up, and you got the excessive, repeated, unnecessaryspine surgeries and the 'pop-up' pain clinics handing out pills."We predicted it. I warned against an across-the-board approach. You end upwith patient-milling," he says. "But the carriers, the state and thebusiness interests wanted budget certainty. And they never fixed theunderlying plumbing."Thus, says Briscoe, principal and senior consultant with thenationwide independent actuarial and consulting firm Milliman Inc., "Texasis worse than other states. Those of us who do comp marvel at how southTexas doctors are doing multiple back surgeries--two, four or five--on oneperson. That the doctors talk them into it blows your mind. And the naturalreaction of claims handlers is to fight battles and deny." Which leads tosome legitimate claims being denied, often for alleged pre-existingconditions dubbed "ordinary diseases of life.""I'd get so tired of picking up a file and seeing those same words,'ordinary disease of life,' " says Cain, who retired in February as theassociate director of an ombudsman program that uses nonlawyers to assistinjured workers in their battles with insurance carriers.The ombudsman system, part of the 1991 change, has morphed from handing outbasic information to accompanying claimants in administrative hearings, ifrequested by injured workers. Because of complaints about ombudsmanineffectiveness, the legislature in 2005 created the Office of InjuredEmployee Counsel within the Texas Department of Insurance and put themthere.Cain began his career in the state workers' comp system in 1969 and spent 30years there, interrupted by two stints totaling 12 years doing similar workin the private sector."Sometimes they just create a controversy as to whether they owe on aclaim," Cain says of the carriers. "They'll get a peer-review report and useit as justification to suspend medical benefits or require an exam by adoctor of their choice, who will say there was a pre-existing injury. Andadjusters sometimes take a hard line even when you can tell their heart'snot in it. Some others seem to enjoy it."The climb through the system can be steep. Even if an injured workerovercomes denials through three administrative levels within the division,the insurance carrier can appeal for judicial review in state court. If theclaimant wins there, for the first time in the process the carriers must payany lawyer's fees and costs. Up to this point, a lawyer would have been paidonly 25 percent taken from the claimant's income benefits, with even thatseverely capped.Still, an injured worker's chance of getting a lawyer for state court is soslight, the OIEC has asked the legislature in its past three sessions tofund appointed lawyers. The claimants can win every issue in the workers'comp process "only to lose on a default judgment in district court solelydue to a lack of representation," according to the request last fall.Those who manage to get lawyers usually win, says Gibson, who previouslyblogged about such matters."Once juries hear the facts," he says, "it can be like shooting fish in abarrel. They hate the insurance companies."Texas Mutual is known for more readily taking cases to judicial review thanother carriers. Unlike many of its competitors, it offers only workers' compinsurance and only in one state."I think that [assessment is] fair; we don't always agree with how theagency applies law," says Nichols, adding that "we have the biggest marketshare so we have to care more than anybody else. Those decisions affect usmore than they do the multistate carriers."There is another wrinkle in the system that gives incentive for insurancecarriers to battle medical claims all the way through judicial review: Ifthe carrier wins, it can recover every dime spent on the claim fromsomething called the Subsequent Injury Fund. rs sometimes receivepayments in the hundreds of thousands of dollars from the fund on singlecases, even for lost wages claims. Those payouts totaled about $5 million in2010, nearly doubling since 2007.The special fund was created to make injured workers more employable bytaking prospective employers off the hook should the worker be injured againand qualify for lifetime benefits. But such instances are rare. Most of themoney stays in the fund and goes back to insurance carriers after theyprevail in disputed claims, typically against lawyerless claimants.The failed legislative proposals for appointed counsel suggested paying forlegal representation out of the Subsequent Injury Fund.Texas is the only state to supply such a fund strictly with unpaid benefits.Beneficiaries of workers killed on the job get an amount equal to sevenyears of the worker's pay from workers' comp insurance. If there are nobeneficiaries, the money goes into the fund.And the fund remains flush. Texas led the nation with 480 fatal occupationalinjuries in 2009, according to the most recent report by the U.S. Bureau ofLabor Statistics.Claimants' lawyers complain that carriers can game the fund in bothdirections, not only receiving money from it when they shouldn't, but alsonot paying into it when they should. They can deny a death was work-related;and if no survivors challenge it, the carriers often don't have to pay intothe fund.PUSHBACKWhile carriers have incentives to take cases to judicial review, lawyerspushed back in recent years with increasing numbers of high-dollar victoriesin bad-faith claims. Some insurers were easing off in DWC proceedingsbecause of that threat, says Austin lawyer Joe Longley, who drafted many ofthe consumer protection provisions in the insurance code as chief of theantitrust and consumer protection division of the Texas attorney general'soffice in the early 1970s.But in August the Texas Supreme Court struck that remedy a potentiallydevastating blow in Texas Mutual Insurance Co. v. Ruttiger. The court ruledthat bad-faith claims are not permitted under the insurance code because itdoes not enumerate them.Two dissenting justices said the court was overturning its own precedentand, in effect, rewriting a statute. The labor code made specific exceptionfor actions by insurance carriers that were following orders from theTDI-DWC; and, the dissenters argue, that implies the legislature did notintend to eliminate other bad-faith claims."These cases had become the only check and balance injured workers hadagainst the carriers because they could cost so much more money than theinjury claims themselves, plus attorney fees," Longley says.And lawyers likely will move away from helping injured workers in bad-faithmatters because, as the legislature set out to do in the workers' compoverhaul, Ruttiger removes a big incentive: Cases brought under theinsurance code would allow for attorney fees and costs. The court did saythat some common-law claims might still be brought, for which attorney feescan be recovered."That's really big because it costs a lot to do a case," says Doyleof Houston's Doyle Raizner law firm, who handled Ruttiger and has threeother bad-faith claims in a logjam at the state supreme court. Those othersmight be whittled or scuttled with per curiam decisions after Ruttiger.Doyle primarily does maritime work, but 10-plus years ago he begandeveloping a side niche in bad-faith workers' comp cases.Doyle asked for a rehearing, and he says Ruttiger will prove yet anothermajor disincentive for lawyers who might otherwise help injured workersneeding representation in court.Deputy never received any kind of adjudication, having unwittinglyput himself at the mercy of the workers' comp system with no lawyer orombudsman. That gave insurance adjusters even easier bites at the apple,stretching out his treatment and cutting short his benefits.The final straw came when the division brought in a "designated doctor," atthe insurer's request, to review 's doctor's findings.The reviewing doctor determined that, although had reached what iscalled maximum medical improvement, he was still significantly disabled.That second opinion included an impairment rating of 26 percent, well abovethe 15 percent cutoff that marks the difference in receiving income benefitsfor just two years or for as long as eight.But then Tristar, the third-party administrator handling workers' compclaims for 's employer, Jefferson County, picked yet another physicianto review the second opinion without personally examining the deputy. It ledto a rating of just 11 percent."So I went back to work," says , who very much intended to do so whenable, but who felt this was yet another in a series of bum's rushes.In April 2010, told a brief version of his story to the Texas HouseCommittee on State Affairs as it considered a bill to ensure that firstresponders get expedited consideration in the workers' comp system. Theproposal failed., but the language was tucked into later legislation thatpassed.Other states wrestle with some of the same issues, but Texas is differentbecause the lawyers are so marginalized and the state's unique option forprivate workers' comp plans makes the insurance industry even morecompetitive. Quietly, some carrier-side lobbyists have cautioned that if theplaying field appears tilted too much their way, it could result in abacklash, though the Texas legislature is decidedly conservative andpro-business.In the background, the prospect of nationwide health care reform carrieswith it the possibility of making medical costs, the most expensive aspectof workers' compensation, moot.But for now, a lot of earnest lawyers are saying that a lot of genuinelyinjured workers are being denied their due--often to a terrible end.In the summer of 2010, a Fort Worth orthopedic surgeon asked the Texaslegislature to require that a final decision on workers' comp coverage formedical care be made within 10 to 14 days, or three weeks at most.Dr. testified that he and other physicians believe prolongedbattles over medical denials have led to suicides in recent years."The incidence of those reports has been astonishingly high compared to fiveyears ago," he told the legislators, "when they were, to my knowledge,nonexistent."_.___.__