The Centers for Medicare and Medicaid Services (CMS) has released a new policy memorandum dated May 11, 2011 (May 11, 2011 memo) pertaining to workers’ compensation Medicare Set Asides (MSA). CMS’ policy memorandum does not set forth any substantive changes regarding its MSA review thresholds and process, but instead reiterates and clarifies its MSA proposal review thresholds. Those thresholds remain as follows:

CMS recommends that it review MSA proposals when either (1) the claimant is currently a Medicare Beneficiary, AND the total settlement amount is greater than $25,000.00; OR (2) the claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date AND the total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to exceed $250,000.00.

Submission of an MSA proposal to CMS for review and approval is a recommended process, and is not mandatory under any statutory or regulatory provisions. CMS reviews certain workers’ compensation settlements in order to protect Medicare’s interests under the Medicare Secondary Payer Statute, which is codified at 42 U.S.C. § 1395y. An MSA should not be submitted to CMS when settling a workers’ compensation claim with medical benefits remaining open. Furthermore, CMS will not review new MSA proposals if the thresholds are not met.

Finally, ALL claimants, employers, insurers, and their representatives need to be aware that there is no "safe harbor" threshold, and the thresholds set forth by CMS are guidelines only. The parties must still consider Medicare’s interests in ALL workers’ compensation cases and ensure that Medicare is the secondary payer to workers’ compensation. Additional information can be found at http://www.cms.gov/WorkersCompAgencyServices.

An employee of a popular tour company in British Columbia, Canada recently prevailed on his claim for workers’ compensation benefits for post traumatic stress disorder after he was allegedly required to participate in a large-scale slaughter of sled dogs. The worker was employed with Outdoor Adventures Whistler, a tour operator in Whistler, B.C. which provides sled tours of the region. In early 2010, business was booming as the Winter Olympics brought thousands of people into the area. However, the company experienced a significant drop in business afterwards, and in April 2010, it decided to slaughter a number of its idle sled dogs to cut costs. The practice came to light when the filed a claim with WorksafeBC, the Province’s health and safety authority, for post-traumatic stress disorder. The employee claimed his condition developed after he personally killed over 100 dogs by shooting them and slashing their throats. The employee further claimed that the dogs did not always die immediately and stated that he had to witness some ugly incidents.

WorksafeBC approved the employee’s claim for workers’ compensation benefits. After reviewing the file, the B.C. branch of the Society for the Prevention of Cruelty to Animals launched an investigation into the matter.

My Two Cents:

In addition to going to jail, the employee’s claim for workers’ compensation benefits would have more than likely been unsuccessful under Alabama law. First, in order for a psychological injury to be compensable under Alabama law, the employee must suffer a physical injury to the body, and the physical injury must be the proximate cause of the psychological injury. The employee in this case did not suffer any physical injury. In recent years, claimants have attempted to circumvent this requirement by claiming that post traumatic stress disorder is an occupational disease. However, in order for an employee to prevail on a claim for an occupational disease, he must prove by clear and convincing evidence that he was exposed to a hazard greater than those ordinarily incident to employment in general, and the risk must be peculiar to the occupation in which the employee is engaged. In addition, the physical injury requirement also remains for PTSD to be considered an occupational disease.

On May 6, 2011, the Alabama Court of Civil Appeals released its decision in Ex parte Imerys USA, where it held that a referral by an authorized treating physician to another treating physician does not transfer the right to control all aspects of the employee’s medical treatment to the subsequent physician.

Charles Wilson suffered a back injury while working for Imerys in 2006. Wilson selected Dr. Dewey Jones, IV, an orthopedist, as his authorized treating physician from a panel of four. After treating Wilson for several months and then placing him at maximum medical improvement, Dr. Jones referred Wilson to Dr. Mark Downey for pain management treatment. Dr. Downey treated Wilson for several months with epidural steroid injections and then referred Wilson to Dr. Thomas Ryder for continued pain management treatment. After pain management treatment failed to resolve Wilson’s pain, Dr. Ryder requested authorization to refer Wilson to Dr. Andrew Cordover, an orthopedist, for a surgical consultation. Imerys did not authorize Dr. Ryder’s referral to Dr. Cordover because it asserted that Dr. Jones was already the authorized physician for the orthopedic aspect of Wilson’s treatment and Dr. Ryder was not authorized to make an orthopedic referral. A dispute ensued, and motions were filed by both parties. The trial Court ruled in favor of Wilson, ordering Imerys to authorize an orthopedic surgery consultation with Dr. Cordover. Imerys then filed a petition for writ of mandamus.

The Court of Appeals, relying on Ex parte Massey Chevrolet, 23 So.3d 33, 40 (Ala.Civ.App. 2009), held that a physician to whom an employee is referred by the authorized treating physician has implicit authority to control the particular aspect of treatment for which the referral was made, which includes the authority to refer the employee to another physician for that particular aspect of treatment. However, it held that a referral by the authorized treating physician to another physician does not transfer the right to control all aspects of treatment. The Court held that since Dr. Jones, the orthopedist, referred Wilson to Dr. Downey for pain management, Dr. Downey was authorized to control the pain management aspect of Wilson’s treatment only. Dr. Downey’s referral to Dr. Ryder for further or different pain management treatment was within the scope of Dr. Downey’s authority to control that aspect of Wilson’s treatment. However, Dr. Ryder’s subsequent referral to Dr. Cordover was not for pain management treatment but was, instead, for orthopedic treatment. Since Dr. Ryder was only authorized for pain management treatment, his referral to Dr. Cordover was not within the scope of his authority, and the employer did not have to authorize same.