DELVACCA presents What In-House Counsel and Risk Managers should Know about Cost Containment and Limiting Exposure in Workers' Compensation and Medicare Set-Asides June 24, 2010 DELVACCA thanks BWH for their sponsorship of this event
Introduction: Thomas C. Kelly, Esquire Burns White & Hickton At Burns, White & Hickton, we are committed to representing our clients with excellence. In fact, it was the pursuit of excellence that prompted us to establish our firm in 1987, focusing on transportation, litigation, and business law. Our ideal was and still is to abolish old-school thinking and to apply creative solutions to enhance their bottom-line results.
Introduction: Debbie A. Carlos, Senior Attorney Sunoco, Inc. Sunoco, Inc., headquartered in Philadelphia, Pa., is a leading manufacturer and marketer of petroleum and petrochemical products. It is one of the largest independent refinermarketers in the United States.
Not WC 101 Focus on what we as lawyers can do to avoid litigation and to limit exposure once a case is in litigation.
Issuance of initial bureau documents Notice of Temporary Compensation Payable (NTCP) Medical Only NTCP Notice of Compensation Payable (NCP) Notice of Workers Compensation Denial Statement of Wages
Notice of Temporary Compensation Payable (NTCP) and Medical Only NTCP (LIBC 501) Allows employer 90 days to conduct investigation Automatically converts after 90 days Usually used if possible factual issue or degree of medical issue is involved Good tool if claim is likely compensable (but be careful)
Notice of Compensation Payable (NCP)(LIBC 495) Claim is accepted as compensable Once this is issued the employer/carrier cannot stop payment until either an agreement of the parties or judge s order One exception Notice of Suspension or Modification (LIBC 751) Description of injury and compensation rate generally dictate overall value of claim
NCP continued Description of injury / Medical benefits May also invite litigation Indemnity benefits Calculation of average weekly wage (AWW) and corresponding compensation rate. Concurrent employment.
Notice of Workers Compensation Denial (Denial) (LIBC 496) Usually invites litigation If there is an injury, even if not severe, it must be recognized Penalty Petition for failing to recognize injuries (LIBC 686) Factual contests easier to defend than medical ones Initial investigation crucial
Claim Petition (LIBC 362) Claim now in litigation Claimant s burden Remedial Act
Yellow Freight (Yellow Freight Sys., Inc. v. WCAB (Madara), 423 A.2d 1125 (Pa.Comwlth. 1981)) Untimely Answer to Claim Petition (more than 20 days) Factual allegations deemed admitted Claimant must still prove degree of disability
Limiting exposure Termination Petition Suspension Petition Modification Petition Notification of Suspension or Modification Supplemental Agreement
Termination Petition (LIBC 398 (Multiple Use)) Legal standard (Employer s burden) Must prove that disability has ceased (change in medical condition) or that any present disability is not related to work injury (Daniels v. (WCAB Tristate Transport, (753 A.2d 293 (Pa.Cmwlth. 2000)) Purely medical issue Judges are very claimant oriented (Remedial Act) Medical questions almost always lose Costs involved with Termination Petition must be considered Litigations cost awarded if Employer looses
Suspension Petition (LIBC 398 (Multiple Use) Legal standard (Employer s burden) Return to work (RTW) at wages greater than or equal to preinjury wage (Ede v. Ruhe Motor Corp., 136 A.2d 151 (Pa.Super. 1957)) Claimant needs to be released to RTW in Some capacity Less difficult to obtain Judges are more open to cutting off indemnity benefits if medical can remain open Best if used in conjunction with termination petition Judges more prone to grant lesser relief
Modification Petition (LIBC 398 (Multiple Use) Legal standard (Employer s burden) RTW with a wage loss Employer responsible for 2/3 of difference (medical benefits remain open) Least difficult to obtain (again, best if used with another petition - lesser relief) Job offer with pre-injury employer (work availability) Problem is that claimant may just show up. Labor Market Survey (work generally available) ( Kachinski ) Practically difficult
Modification Petition Continued Labor Market Survey Kachinski v. WCAB (Vepco Const. Co., 532 A.2d 374 (Pa. 1987) Four prongs Employer must produce medical evidence of change in condition (ability to work) Employer must then produce referrals to then open jobs (within geographical areas, physical and educational limits) Employee must prove good faith effort to apply for jobs If no job results benefits continue
Notification of Suspension or Modification (LIBC 751) Unilateral tool Good tool if claimant back to work, is a good employee, and is expected to remain Claim is in suspended status (Medical still open) Burden is on Claimant to come back and show wage loss Reinstatement Petition Employee Challenge Special Supersedeas hearing
Supplemental Agreement (LIBC 337) By agreement of parties Can be difficult to administer if repeated agreement necessary Can be helpful in determining value of a claim for settlement Burden on Claimant to show a recurrent loss of wage Reinstatement Petition
Supersedeas Fund Termination / Suspension / Modification Petitions Always request Application for reimbursement (LIBC 662)
Settlement (Compromise and Release) (LIBC 755) Typically between three and four years Comp rate of $500 per week equals $26,000 annually $78,000.00 $104,000.00 Max Comp rate for 2010 is $845 Three years of benefits at the max comp rate in 2010 is $131,820
Impairment Rating Evaluation (IRE) Limits exposure to 500 weeks if less than 50% impaired. Entitled to an IRE after 104 weeks (No burden of proof needs to be met) Small window of opportunity (? Weeks) After that the case must be tried and Claimant is given the opportunity to rebut findings. If impairment rating is over 50% Claimant is entitled to ongoing benefits (unless you can reduce rate by way of another petition)
Rationale: Assuming an IRE comes back with a rating of less than 50%, the employer is still on the hook for another 9.5 years worth of benefits, settlement at even four years of indemnity benefits greatly lowers that exposure Settlement will usually absolve the employer from future medical treatment as well. More than one way to skin a cat It is possible to leave medical benefits open for a period of time arrived at during settlement negotiations.
Medicare considerations Can be cost prohibitive (but we can help) Open Medical benefits can circumvent this
Cost of a fully litigated claim Typically about $5,000 Cost of an open claim Can be into the hundreds of thousands
Unreasonable contest Claimant s counsel can seek reasonable attorney s fees if Employer prosecutes petition with insufficient evidence Penalties Claimant can seek up to 50% of back owed benefits or medical costs if penalty assessed
Mediations Not really good for employers Nature of the Act is remedial Judges are mostly claimant oriented Basically two against one Once a judge puts a number on a case the Claimant will never come off of it
The bottom line is that once a claim is accepted as compensable we need to make every effort to obtain an opinion that the claimant can work in some capacity and offer them a position Employers best chance of truly limiting exposure is to get the indemnity portion of the claim reduced by way of a job offer and subsequent suspension or modification petition Once a favorable determination is obtained the value of the case is greatly diminished and claimants counsel will usually settle the case for a fraction of what it would be worth without a reduction