PREPARING FOR BATTLE TO WIN THE WAR: STRATEGIES TO LEVERAGE A GOOD RESULT

Transcription

1 PREPARING FOR BATTLE TO WIN THE WAR: STRATEGIES TO LEVERAGE A GOOD RESULT Presented and Prepared by: Craig S. Young cyoung@heylroyster.com Peoria, Illinois Heyl, Royster, Voelker & Allen PEORIA SPRINGFIELD URBANA ROCKFORD EDWARDSVILLE 2010 Heyl, Royster, Voelker & Allen _5.DOCX J-1

2 PREPARING FOR BATTLE TO WIN THE WAR: STRATEGIES TO LEVERAGE A GOOD RESULT I. INTRODUCTION... J-3 II. MAKING THE DECISION TO DEFEND... J-3 A. Controlling Medical Expense... J-5 B. Avoid Long Term TTD Exposure... J-6 C. Foster Positive Environment in the Workplace... J-7 D. Send a Message to Petitioners Attorneys... J-8 E. Avoid Permanent Total and/or Wage Differential Exposure... J-8 F. Keep Medicare Options Open... J-9 G. Maintain Settlement Options... J-10 H. You Just Might Win... J-10 III. CONCLUSION... J-10 J-2

3 PREPARING FOR BATTLE TO WIN THE WAR: STRATEGIES TO LEVERAGE A GOOD RESULT I. INTRODUCTION In recent years, we have discussed the impact of the Rod Blagojevich administration on workers compensation exposure for employers in Illinois. Without doubt, policies of the former administration established an environment before the Illinois Workers Compensation Commission which was as hostile towards employers as any other period in our state s history. Unfortunately, we have not seen significant change in that trend under the new administration. Employers continue to face the most difficult workers compensation environment in recent times, and perhaps ever. If anything, potential exposures presented by many workers compensation cases have dramatically increased in the past couple of years, due to factors outside the workers compensation system, such as Medicare and healthcare issues. In the face of these difficulties, employers, their insurance carriers, third party administrators, and workers compensation managers, continue to face difficult decisions with regard to defense and trial of cases. As potential exposures increase, and as decisions from the Workers Compensation Commission continue to be very employee-oriented, many employers continue to pursue the strategy of accepting and paying most cases, regardless of legitimate defenses which may exist. The understandable attitude of many employers is Why should I defend a case I know I will lose anyway? As other presenters in this seminar have documented, there are far too many situations in which employers are receiving unfavorable results from the Workers Compensation Commission in settings where viable defenses exist. Two years ago, the author of this paper discussed the value of making the decision to defend legitimately defensible cases, even when the potential result from the Workers Compensation Commission is uncertain. As previously outlined, the leverage which can be obtained from a viable defense can often result in significant savings, even when the result at arbitration is likely to be unfavorable. In the two-year period since this last presentation, the potential exposures existing for employers who simply accept and pay all claims have dramatically increased. Current trends with Medicare issues, permanent total and wage differential exposures, long term TTD issues, and medical treatment issues have dramatically increased the potential exposures on cases which are voluntarily accepted. In today s environment, the savvy employer must apply a sophisticated analysis to every case, and make an informed decision as to how best to use viable defenses in the ongoing effort to reduce overall workers compensation exposure. II. MAKING THE DECISION TO DEFEND It must be stated at the outset that the decision to defend first and foremost must be based upon an accurate analysis of the facts and the law, as it pertains to each case. It is never good strategy to deny or defend compensable cases, and it is never good strategy to deny any J-3

4 workers compensation benefit, when the facts and the law indicate compensability. Such action not only raises the potential for penalties, it simply is bad case management strategy. When a benefit is owed, the best strategy is to pay it promptly, and then aggressively manage the case to conclusion. The more difficult case management decision develops in those scenarios when a legitimate defense exists, but defense counsel is suggesting that the Workers Compensation Commission might not accept that defense. Many employers in such situations opt to accept the inevitable, save some money on defense, and voluntarily pay defensible claims before proceeding to trial before the Workers Compensation Commission. This decision is often made even when there is a good chance of prevailing before a certain arbitrator, because of a concern the favorable decision at arbitration might be reversed on review. As our firm has discussed in the past, in order to properly make the decision to defend or accept compensability, the employer must look beyond the simple question of whether or not the case will be won or lost at trial. The more important question is whether or not the ultimate expense of the claim can be reduced through an aggressive defense. The difficulty for many employers in making this decision is that the savings associated with an aggressive defense is not always traceable directly to the bottom line in today s workers compensation climate where many defensible cases are lost at trial. In making the pay or defend analysis, employers must consider not only the chances of winning the case and paying nothing, but also what will be paid on the claim if defenses are abandoned and benefits are voluntarily accepted. This calculation must include the awareness that voluntary acceptance of a defensible claim means that TTD and medical benefits will paid until the petitioner, the petitioner s attorney, the petitioner s treating doctors, and the Workers Compensation Commission decides those benefits should end. Also, when a defensible claim is voluntarily accepted, employers must understand that an elevated permanency amount will be paid pursuant to settlement, or will be obtained by the petitioner at trial. As will be discussed below, these elevated amounts are increasing daily, as more and more wage differential and permanent total awards are sought, and as Medicare presents additional costs to settlement. Once a claim is voluntarily accepted, the employer loses leverage to limit or reduce many benefits which will develop over the course of the claim, and the employer also loses leverage to negotiate a settlement at an amount which would be awarded by the Commission. Clearly, in today s environment there is little doubt that arbitration of defensible claims will sometimes result in the case being found compensable and benefits being awarded. No employer in today s environment can blindly assume that an aggressive defense will always result in a favorable decision if the case is tried. Unfortunately, this is true even as to cases which are clearly defensible based on the law and the facts. There are far too many examples of cases which are clearly not compensable being found compensable by our Workers Compensation Commission. A decision to voluntarily accept and pay a defensible claim, however, eliminates numerous opportunities to reduce workers compensation costs, and guarantees a result in which the ultimate amount paid will be the absolute maximum. Giving up valid defenses often reduces or eliminates the ability to manage the claim at all levels, and surrenders control of all J-4

5 TTD, medical, and permanency decisions to the petitioner, petitioner s attorney, the petitioner s doctors, and the Workers Compensation Commission. Conversely, aggressively asserting viable defenses will present many options throughout the pendency of the case to reduce, sometimes dramatically, the ultimate cost of the case. A. Controlling Medical Expense It is no secret that medical costs are perhaps the largest driver of workers compensation expense. Even in clearly compensable cases which are accepted, aggressive strategies must be employed to try and end medical treatment, and limit that treatment to those expenses which are truly reasonable and necessary to cure the effects of the injury. Limiting these expenses can be difficult, even in clearly compensable cases. More difficult decisions arise when the work comp manager is faced with the dilemma of approving or denying certain medical treatment on cases which are arguably defensible. We all have experienced the situation of deciding whether to approve or deny treatment when a viable defense exists, but defense counsel is suggesting that the defense might not be won at arbitration. The tendency is to decide that it is better to begin the treatment immediately, complete it as soon as possible, and then move the case toward resolution. This decision can be especially difficult when a legitimate accident defense exists, but preliminary medical indicates the injury might not be very serious. If it is not certain that the accident defense would prevail, the temptation is to pay for a little medical, a little TTD, and then resolve the case. Unfortunately, this often backfires. Once the accident defense is conceded, it becomes difficult or impossible to raise it at a later time. Far too many workers compensation decision makers have been faced with the dilemma of seeing a strain case develop into a surgical case, at which point there is regret for having given up the accident defense. By removing the pressure of the denied case from the petitioner, as well as from the petitioner s doctors, it becomes far too easy for the petitioner to progress through the system and continue to experience physical difficulty while drawing TTD. With unfortunate frequency, the medical community remains far too likely to continually elevate the treatment levels as the petitioner continues to complain. This occurs often, even in the absence of objective evidence to document a condition of ill-being. In many cases, this scenario can be controlled by asserting a valid accident defense prior to authorizing TTD and medical treatment. It is not uncommon for a petitioner who is refused the opportunity to progress unchallenged through the system to look for other resolution options. Sometimes the mere presence of timing issues associated with getting a disputed case to trial can be a factor in forcing the petitioner to bring medical and TTD to conclusion. Even in cases which are accepted as compensable, legitimate disputes can arise as to the reasonableness and necessity of treatment, or causal connection. Perhaps the most common example of this is when a treater decides that conservative treatment has failed and surgery is necessary, and a credible IME physician has rendered the opinion that surgery is not J-5

6 appropriate. It is not uncommon for defense counsel to advise that the Workers Compensation Commission is likely to follow the treater s opinion over the opinion of the IME physician. At the same time, it is often clear in these cases that the surgery will likely not help the petitioner, and in fact, might make the petitioner worse. As an example, there is a growing body of evidencebased medicine which documents the non-effectiveness of fusion surgeries in many occupational injuries. Despite that growing body of evidence, we see an ever-increasing frequency in some medical communities for fusions to be recommended on a regular basis, simply because conservative treatment has failed. In many of these situations, it might be appropriate to employ a strategy which is directed toward trying to keep the fusion surgery from occurring. While this can be difficult when the Workers Compensation Commission is willing to award the surgical benefit, refusing to voluntarily accept the surgery when credible evidence questioning the necessity of the surgery exists sometimes presents opportunities to bring a case to conclusion prior to the surgery. In some cases, this strategy can be the difference between a settled case with closed medical, and a very expensive permanent total case with open-ended medical exposure. While the disputed surgical case is probably the best example of how medical containment strategies can dramatically reduce exposure, the savvy case manager should not always accept and authorize every conservative treatment measure recommended by treating physicians. When credible medical evidence exists, either by way of IME testimony or UR testimony to deny certain conservative treatments, those defenses should be asserted even in scenarios where the potential of losing that defense at trial exists. There are ever-increasing examples of the medical community being willing to extend therapy, work hardening, glorified chiropractic treatment, and other pain management techniques almost forever. It also must be remembered that our system tends to progress patients along a treatment continuum, and as conservative treatment measures become protracted, the petitioner is simply progressing to more and more serious treatment, ultimately leading to surgery or other more serious medical interventions. These causal relationship and necessity of treatment issues will not always present certain results at trial, but when credible evidence exists to refute treatment, denial of such treatment will likely be advisable. B. Avoid Long Term TTD Exposure Most good claims handlers are aware that one of the most important strategies for limiting workers compensation expense is to limit TTD exposure whenever possible. It is always best to avoid even initiating TTD, if there is evidence to support TTD denial. Most cases are not going to progress in a positive direction, as long as the petitioner is able to continue working without pay. Aggressively relying upon any credible evidence which may be available to support a refusal to pay TTD is always good claims handling strategy. Like so many other issues, there are numerous factual scenarios presented in which the Workers Compensation Commission would be likely to award TTD, if the issue is tried. Sometimes the dispute may be as to overall compensability, if an accident defense exists. Other times, the dispute may be medical in nature, and may turn on the question of disputed medical opinions J-6

7 as to whether or not the petitioner can work. Also, the employer may have a job offer available which matches an IME physician s restrictions, but does not match the restrictions placed on the petitioner by the treating physicians. In many such scenarios, defense counsel may advise that these issues are likely to be lost in front of certain arbitrators. The employer s evidence may be strong, but the reality may be that the Commission, in addressing the evidence, would be likely to award the TTD benefits. In far too many situations, employers opt for voluntarily continuing TTD in these scenarios. Although statistical evidence to document this strategy would be impossible to compile, it is clear that in a majority of cases, the ability to end the TTD benefit often moves the case to resolution prior to any trial. This is often true, even when it is clear to all of the parties that the petitioner would have a reasonably good chance of prevailing on the TTD issue at trial. The prospect of being without a TTD check for an extended period of time while the trial and review process takes place, is often a factor which prompts the petitioner to voluntarily return to work and move toward case closure. As a result, claims handlers should be very aggressive at asserting evidence which allows for termination of TTD. Special care must be taken in this scenario to make reasonable judgments as to the evidence available on the disputed TTD issue. An experienced claims handler will not only try to determine what the Commission s result might be at trial, but also try to determine what the true status of the petitioner s inability to work is. If the best medical evidence documents that the petitioner really isn t capable of returning to work, terminating TTD will likely not positively affect the outcome. It is not enough to have some evidence to justify termination of TTD, it is important to have credible evidence. When such evidence exists, an aggressive termination of TTD makes sense, even if there is concern that the petitioner might win the dispute at trial. C. Foster Positive Environment in the Workplace Employers often overlook the benefits to the workplace of consistently following the credible evidence in workers compensation cases. Unfortunately, it is a reality that if an employer s workforce becomes aware that certain types of claims are automatically accepted and paid, the frequency of those types of claims will dramatically increase. This is especially true when a certain department or segment of the workforce is prone to similar type injuries. The best way to insure that claims will increase in the future is to simply accept and pay any and all claims presented regardless of the evidence. When an employer has credible evidence to deny a case, there are benefits to asserting that denial, even if there is a likelihood the case will be lost at trial. Fellow employees will be less likely to file copycat claims, if they are aware the employer is ready and willing to defend those claims and take them to trial regardless of the result. As is true with all of these disputed situations, special care must be taken to reasonably evaluate the evidence, and to make these compensability decisions upon that reasonable evaluation. As was demonstrated in the Supreme Court s recent decision in the Interstate Scaffolding case, the courts can sometimes author decisions which are extremely problematic in the workplace. J-7

8 Some commentators on the Interstate Scaffolding case have suggested that this case stands for the proposition that you can hit the boss, and collect TTD. While the Interstate Scaffolding case certainly does not stand for that proposition, it does raise the potential argument that an employee terminated for cause as a result of his own bad act could, in certain scenarios, receive TTD. This case is an example of a legal principle which should be carefully analyzed in each individual case. To the extent an employer can isolate any facts in an individual case which can be distinguished from the facts in Interstate Scaffolding, all requests for workers compensation benefits sought by employees who are terminated for their own bad acts should be denied. Even if it is assumed that some of those denied claims would ultimately be held compensable by the Workers Compensation Commission, the negative impact on overall workers compensation expenses of voluntarily accepting workers compensation claims from petitioners who are terminated as a result of their own bad acts could create astronomical workers compensation costs in the workplace. The best strategy for reducing workers compensation claims in the workplace is to consistently and fairly pay those claims which are supported by the evidence, and consistently and fairly deny those claims which are not supported by the evidence. An employer cannot afford to be voluntarily paying claims not supported by the evidence, simply out of fear that the claim might be lost at trial. D. Send a Message to Petitioners Attorneys Although of lesser importance, employers also need to be aware of those situations in which a proper message should be sent to petitioners attorneys. In some settings, petitioners attorneys will not be as likely to continually file claims, if they are aware the employer will assert legitimate defenses. Conversely, some petitioner s attorneys become aware that certain employers always pay cases, even when defenses exist, and those attorneys therefore become prolific filers of cases against that employer. The unfortunate reality is there are many petitioners attorneys who will file workers compensation claims on behalf of their clients, regardless of the approach of the employer. In some instances, however, petitioner s attorneys, especially more accomplished petitioner s attorneys, will decide not to pursue certain types of claims against employers who they know will consistently assert viable defenses. They simply make a business decision that it is not cost-effective for them to pursue such claims. E. Avoid Permanent Total and/or Wage Differential Exposure One of the most troubling trends in decisions from the Workers Compensation Commission over the last couple of years has to do with the dramatic increase in the number of permanent total and wage differential decisions. More and more petitioners have become unwilling to close their cases for reasonable permanency amounts, and have become more aggressive at asserting the right to long term or lifetime benefits. This trend is likely due in part to the liberalization of the Illinois Workers Compensation Commission over the last couple of years, and also due to a significant amount of advertising by petitioners attorneys in which the potential for lifetime benefits is promoted. Physicians who are prone toward doing and saying what their patients desire, often cooperate with this trend, both in terms of recommendations for never-ending treatment, as well as opinions documenting a petitioner s inability to return to work. The J-8

9 unfortunate reality is some employees when presented with the prospect of retiring on work comp will aggressively pursue that option, and in far too many cases, they will be able to garner some evidence to support their position. This move toward more frequent attempts to obtain long term benefits such as permanent total or wage differential benefits is one of the primary reasons for asserting viable defenses available to the employer. Gone are the days of employees getting hurt, being treated, getting better, returning to work, and reasonably closing their cases. While many compensable cases will progress in that fashion, far too many cases in today s environment appear to be simple at the outset, only to ultimately present long term exposure. The best strategy for an employer to avoid this scenario is to consistently and aggressively present viable defenses at every point in the case. If a viable accident defense exists, do not initiate the payment of benefits. When a case is compensable, be certain to aggressively assert any defense which may be available to ongoing benefits, whether those benefits be TTD or medical. The employer, who allows the prospect of losing an issue at trial to result in the voluntary acceptance of benefits which can be reasonably disputed, will far too often be presented with the potential for permanent total or wage differential exposure. F. Keep Medicare Options Open One of the most difficult recent developments in workers compensation practice has been the advent of Medicare s efforts to protect their rights pursuant to the Medicare Secondary Payer Act. Every work comp claims handler is aware of the issues presented by Medicare, and of the difficulty the Medicare issue often presents when attempting to resolve cases. The expense of settling cases has been dramatically increased in those settings when Medicare s future interests must be protected. Numerous strategies are employed to manage the Medicare exposure as we attempt to resolve workers compensation cases. Often these strategies might result in the decision not to set up a Medicare Set-Aside trust. Obviously, when this decision has been made, there needs to be good evidence available to support that decision. One of the most important factors which needs to be looked at in deciding whether or not a set-aside trust should be set up for certain medical treatment is whether or not the treatment has been consistently denied by the employer. If a claim has been accepted, or if a medical benefit has been voluntarily accepted, that voluntary payment might limit the ability to avoid a set-aside even when there is credible medical evidence to dispute future Medicare exposure. In short, it is becoming more and more important for employers to be able to document that they have consistently denied certain treatment. In some cases, this consistent denial could be the difference between a settlement closing all issues without a set-aside, and the inability to settle a case due to the amount of a necessary Medicare Set-Aside. J-9

10 G. Maintain Settlement Options It must always be remembered that denying a workers compensation case or denying certain benefits doesn t mean that the employer will never pay anything. Often, the greatest cost savings will be presented by a settlement and close out which would not have been available but for the defenses previously asserted by the employer. A strategy which contemplates taking every denied case to trial, regardless of the strength of the denial, is not likely to be effective in an overall effort to control workers compensation costs. The greatest cost control strategy is sometimes presented by the case which is settled and closed out for a lump sum after the aggressive assertion of defenses has limited the potential for more expensive long term benefits. The savvy claims handler will always recognize this strategic option available in those cases which have been properly denied. It is a reality that many properly denied cases will be lost at trial by the employer, and in those scenarios, the employer needs to keep an open mind toward the most cost-effective resolution. When viable defenses are asserted, the employer maintains the ability to use some creativity in negotiating case resolution. Often an arbitrator who is very likely to decide against an employer at trial will be much more employer friendly at a pretrial. This pretrial opportunity is lost when an employer voluntarily gives up a defense and accepts compensability. Numerous other creative options for case resolution will present themselves when employers properly assert viable defenses. Very little opportunity for case closure exists when the petitioner is never challenged and questionable benefits are paid on a voluntary basis. H. You Just Might Win Of course the best reason to consistently assert viable defenses is the fact that many cases can in fact be won before the Commission. While there is a wide variance in results expected from different arbitrators, the employer should never give up on the possibility of winning those cases which truly are defensible. Far too many opportunities for an outright win in a workers compensation case are lost due to an employer s willingness to simply accept and pay claims based on a belief that the Commission is going to find all cases compensable. III. CONCLUSION It is no secret that the environment faced by employers before the current Illinois Workers Compensation Commission remains very difficult. We have not yet seen the changes necessary to improve the environment for employers. Until such changes occur, either at the legislative or administrative levels, it seems likely the majority of decisions from the Commission, at all levels, will be in favor of petitioners. This unfortunately is sometimes true, even when credible evidence in favor of the employer exists. Employers however, must continue the effort to limit and reduce workers compensation costs, even in the face of this difficult legal environment. Although every case must be judged on a case-by-case basis, it is clear that a workers compensation policy of paying most cases due to a fear of losing the case at trial will be costly. While the cost of J-10

11 defense always must be factored into the claims handling analysis, the cost of that defense often will be trivial compared to the savings available to the employer who aggressively asserts viable defenses. As increasingly expensive issues such as sky-rocketing healthcare costs, Medicare Set- Aside exposure, and increased permanency values, including permanent total and wage differential exposures, continue to develop, employers must be vigilant in attempting to control those costs. Often, the only viable strategy available to an employer to control these costs is to aggressively assert viable defenses, even when the chance of success at trial is uncertain. J-11

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13 Craig S. Young - Partner Craig practices and has a leadership role in the firm's workers' compensation and employment law practice groups. Craig began his career at Heyl Royster as a summer clerk while in law school and became an associate in the firm's Peoria office in He has spent his entire career with Heyl Royster and became a partner in He is recognized as a leading workers' compensation defense lawyer in the state of Illinois and has handled all aspects of Illinois workers' compensation litigation including arbitrations, reviews, and appeals. He has developed expertise in the application of workers' compensation to certain industries including hospitals, trucking companies, municipalities, large manufacturers, school districts, and universities. In addition to his expertise in litigated cases, Craig has developed a reputation for counseling employers regarding overall management of the workers' compensation risk. Through seminars and presentations to local and national industry groups, in-house meetings, regular claims review analysis, and day-to-day legal counsel, Craig assists his clients in looking beyond each individual case in an effort to reduce overall workers' compensation expense. His comprehensive approach to workers' compensation issues also includes third-party liability and lien recovery issues. Currently, Craig serves on the steering committee for the workers' compensation committee of the Defense Research Institute. He also chairs DRI's Program Committee and in that role has assisted in nationally acclaimed teleconferences on specific issues relating to workers' compensation defense. He has been designated as one of the "Leading Lawyers" in Illinois as a result of a survey of Illinois attorneys conducted by the Chicago Daily Law Record. Craig is actively involved in supporting many local charitable organization and civic causes. He was the 2008 recipient of the Peoria County Bar Association's Distinguished Community Service Award. Public Speaking Elements of a Winning Workers Compensation Program Downstate Illinois Occupational Safety & Health Day 2010 Family Medical Leave Act (FMLA); Americans with Disabilities Act (ADA); and Workers Compensation Risk Control Workshop 2010 Medical Science, Industrial Commission Science - Understanding the Industrial Commission's Approach to Medical Issues Lorman Education Services 2008 The Implications of ADA, FMLA and Collective Bargaining Agreements on the Workers Compensation Claim Defense Research Institute 2008 The Employee Who Can't Return to Work: Wage Differentials, Vocational Rehabilitation & Job Placement Lorman Education Services 2008 Medicare Set-Aside Agreements-The Rest of the Story Defense Research Institute 2007 Workers' Compensation and Illegal Aliens Defense Research Institute 2006 Professional Recognition Martindale-Hubbell AV Rated Selected as a Leading Lawyer in Illinois. Only five percent of lawyers in the state are named as Leading Lawyers. Peoria County Bar Association 2008 Distinguished Community Service Award Professional Associations American Bar Association Illinois State Bar Association Peoria County Bar Association - Board Member and Chair of By-laws Committee Defense Research Institute - Workers' Compensation Steering Committee - Program Chair Court Admissions State Courts of Illinois United States District Court, Central District of Illinois United States Court of Appeals, Seventh Circuit Education Juris Doctor, University of Illinois, 1985 Bachelor of Arts-History (Summa Cum Laude), Bradley University, 1982 J-12 Learn more about our speakers at

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