Here's a post by Covington Attorney Kash Stilz from Roush and Stilz Law Firm addressing Kentucky Workers Compensation law - its history, its purpose, and its deficiencies in not protecting the injured workers:
Kentucky Workers Compensation: Bad Law and Bad Faith Lead to a Bad Situation for Kentucky's Workers
Introduction
As a comp practitioner, I am keenly aware why other trial lawyers and injury victims are fighting “tort reform” legislation currently being pushed by those that seek to avoid answering for their behavior that causes injury or loss. We lost the tort reform battle 91 years ago and the effects of that loss continue to echo today. In 1916, Kentucky enacted its first set of workers’ compensation statutes. Since its enactment the Kentucky Workers’ Compensation Act (the “Act”) has undergone seven major revisions culminating in the hit that income benefits took in the 1996, 2000, and 2002 revisions.
Recently, we’ve seen an increased assault on another benefit provided by the Act; the medical benefits in K.R.S. §342.020. Several insurance companies that provide comp coverage to employers in the Commonwealth have discovered that the Act creates an uneven bargaining position that significantly affects a workers right to the medical benefits. Specifically, insurance companies are increasingly making the lump sum payment of permanent income benefits contingent on waiver of the injured worker’s right to past, present and future medical benefits. (Under the Act, the judge that decides comp claims cannot award lump sum payments – the judge can only award weekly installment payments).
Even more disturbing, the insurance companies usually offer only a nominal amount for the waiver, in a “take-it-or-leave-it” fashion. If the injured worker chooses not to waive medical coverage, the insurance company will only pay the income benefit in weekly installments. While that may not seem to be a major concern, consider that the income benefits available under the Act are only a fraction of weekly wages earned by the worker before the work injury. In a typical case in Kentucky it is not unusual for an injured worker to be in significant debt, or significantly behind on bills, at the conclusion of a claim. Obviously, a lump sum payment of income benefits is much more of a benefit to the injured worker in most cases. Insurance companies have increasingly used this circumstance to their advantage. And the advantage to the insurance company is clear. Closing the injured workers claim out in its entirety takes the claim off the books and makes a better bottom line. In any other setting this is known as an “unfair claims settlement practice.” In the realm of workers’ comp, however, this behavior seems to be encouraged by law.
Problems Associated With Waiving Medical Coverage Provided By The Act
It’s important to understand that the workers’ comp system is, in practice, not voluntary. K.R.S. §342.690 mandates when a worker is injured in the Commonwealth the exclusive recourse available for the injuries suffered is through the Act. There are some narrow exceptions (a topic for another day).
Because the injured worker has to seek compensation under the Act, access to health care is limited to the coverage provided by the employer’s comp insurance company. Private health insurance and government coverage normally exclude medical expenses due to work related injuries. Waiving the right to medical coverage under the Act in most circumstances means the injured worker is responsible for payment of the medical expenses directly (and at full cost, not the cost mandated by the Act or at rates negotiated by insurance companies). In the event future surgery or other expensive medical treatment is necessary, a waiver of medical benefits can prove catastrophic.
The Act Promotes The Insurance Companies Behavior
The Act creates the situation where an injured worker might think it advisable to waive his or her right to medical coverage “in exchange for” lump sum payment. The situation involves the difficulties associated with procuring approval for treatment, and the lack of recourse available to the injured worker when the insurance company demands lump sum payment conditioned on waiver of medical benefits.
As an initial matter, the insurance company has a hand in every stage of the injured workers treatment. At the beginning of a claim the insurance company can deny the injured worker all benefits because hearings on most issues in Kentucky do not occur for several months. K.R.S. §342.020 mandates, briefly, that the employer pay for all “reasonable and necessary” medical expenses associated with the work injury. What is “reasonable and necessary” is quite often open to debate between the workers treating doctor and the doctor hired by the insurance company to review the claim. If the insurance company has a doctor that supports its position to deny coverage, the insurance company will deny coverage.
The Act also significantly hamstrings an injured workers accessibility to counsel in claims solely for medical benefits. K.R.S. §342.320 dictates what and when counsel may charge a fee for services. A fee may only be charged 1) in the original claim or upon reopening, 2) for income benefits recovered (i.e., contingent), and 3) subject to a cap of $12,000.00. This situation is perfectly fine when an injured worker is fighting for medical coverage and income benefits. However, the Act allows an insurance company to contest the payment of medical treatment (theoretically) every time medical treatment is prescribed. Unless the injured worker has an original claim for income benefits or has suffered a worsening of condition (thus allowing for an increase in income benefits) an attorney that decides to represent the injured worker does so for free (unless the workers treating doctor agrees to hire the attorney to pursue medical expenses already incurred). This is in contrast to attorneys representing employers and insurance companies who are allowed to charge an hourly fee under the Act.
The insurance company is also prominently involved in the care received by the injured worker in some circumstances. Under the “managed care” system, an injured worker is forced to choose from a predetermined (by the comp insurance company) list of doctors, unless the worker continues to treat with the doctor that provided initial emergency care for the injury. This significantly restricts the workers ability to choose a medical care provider.
Even in the absence of managed care it is not uncommon for a carrier to recruit the services of nurses who attend the worker’s doctor appointments and interact with the doctor directly. I’ve been told by insurance adjusters that the apparent benefit of these individuals is to “expedite approval of treatment.” The experience I’ve had with these individuals, however, is quite the opposite. Often the involvement of these individuals results in a displeased doctor who now has better things to do than deal with the injured worker, and ultimately interruption in treatment.
Finally, the Act’s “unfair claims settlement practice” provision has little practical effect on how insurance companies handle claims, and certainly doesn’t deter the insurance company from demanding waiver of medical benefits for lump sum payment of income benefits. The provision provides for nothing more than a slap-on-the-wrist and has yet, to my knowledge, been applied in the circumstance discussed here. Because judges can’t award lump sum income benefits, insurance companies don’t feel they have to pay them. It’s been stated that one of the Act’s primary purposes is to expedite the handling of claims. Instead, by sanctioning the behavior of insurance companies in this instance the Act promotes the filing and litigation of claims.
Conclusion
The goal of this brief article was to demonstrate that the Act needs to be changed to deal with the very real attack that is occurring on an injured workers right to medical coverage. When the General Assembly first enacted this “social legislation” it was intended to “place the burden for injuries received at work upon the industry in which the injury was suffered.” Robinson v. Lytle, 124 S.W.2d 78 (Ky. 1939). Instead, it has created an avenue for the industry to shift the burden on the injured worker through an uneven bargaining position.
The next time the General Assembly meets to revise the Act, it would be doing the injured worker in the Commonwealth a lot of good by changing the Act to 1) allow for the award of lump sum payment of permanent income benefits, 2) allow for an injured worker to seek attorney’s fees and costs from insurance companies if successful in prosecuting the coverage of medical treatment alone, and 3) putting some teeth into the unfair claims settlement practice provisions of the Act.
Concerning the comment I made about an injured workers access to counsel in a medical fee dispute alone, I recently came across the Court of Appeals opinion in Rager v. Crawford & Co. In it the Court, citing a previous case and comp board opinion, indicates that an attorney can ask for a fee in a medical fee dispute, but can only receive it from 1) the claimant or 2) from a percentage of the yet-to-be paid medical expenses. Both of these avenues still present problems. Most claimants are hard pressed to afford legal counsel (which accounts for the reason we have contingent fees in the first place). The second avenue presents the problem of an upset medical provider who will not only have to swallow getting paid according to the comp schedule, but now also faces a further reduction for attorneys fees.
Posted by: Kash Stilz | Thursday, August 30, 2007 at 05:49 PM
A new Hollywood documentary on insurance Bad Faith also titled "Bad Faith", will be showing at the Laemmle #1 Theater in Pasadena, California on August 24, 2007. The award winning producer focuses on the techniques used to routinely and as matter of policy, to deny, delay and minimize the payment of legitimate claims. Information from insurance company insiders is included. Major disability insurance carriers have been trying so far unsuccessfully, to stop the showing of this important film. The film has been cancelled at least once. Contact all who are interested in protecting our first amendment rights to freedom of speech and to learn about how insidious Bad Faith can be. They have set up a website at www.badfaithdoc.com which provides information, showings and sample video clips. It is available in High Definition.
Posted by: Kwikstart | Wednesday, August 22, 2007 at 10:51 PM