Tag Archives: ERISA

Supreme Court holds state laws against drug price hosing not preempted by ERISA

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The Supreme Court ruled 8-0 that state laws regulating pharmacy benefit managers (PBMs) were not pre-empted by the federal Employee Retirement Income Security Act (ERISA). The substantive outcome and the reasoning on preemption could impact workers compensation issues like opioid prescription abuse and air ambulance charges.

Opioid use

Many states have introduced drug formularies or lists of approved drugs  to limit opioid use and abuse in workers’ compensation claims. Drug formularies are run by pharmacy benefit mangers or PBMs which make their money negotiating discounts between drug companies and drug dispensaries. Critics of PBMs argue that their business encourages higher drug prices so they can make more money on the supposed discount.

One Ohio workers’ compensation official stated that a PBM was “hosing” the state of Ohio with high costs in their drug formulary. The new Supreme Court decision could encourage states to adopt formularies in workers’ compensation without having to worry about unfair drug prices.

I emailed fellow workers compensation Jon blogger, Jon Gelman, that I was semi-pleasantly surprised about the decision on PBMs. My feeling that the federal rock of preemption will usually crush the state scissor of state workers’ compensation laws is a common feeling in the plaintiff’s bar. But Justice Sotomayor’s no-nonsense opinion in the Rutledge case, indicated that the supposedly broad pre-emptive effect of ERISA isn’t as broad as commonly believed.

Air ambulance charges

The Rutledge decision gives me some hope about another conflict between federal law and state workers’ compensation law – air ambulance billing. The issue with air ambulance billing poses the federal governments right to regulate air travel charges through the Airline Deregulation Act (ADA) against the right of a state to regulate insurance charges. The issue is important because of the high cost of air ambulances.

Federal and state courts have almost uniformly held that the federal law on air travel preempts state law on what air ambulance providers can charge. But the Supreme Court has used the preemption language in ERISA as a model for interpreting airline deregulation law.

The Supreme Court may soon take up the issue of whether state regulation of air ambulance charges is preempted by federal law. The air ambulance industry has filed an appeal with the Supreme Court asking to overturn a Texas state supreme court decision that held that state laws regulating air ambulance charges was not preempted by federal law. Since there is now a conflict between jurisdictions involving a large state like Texas, the Supreme Court may take up the issue.

One interesting fact about Texas workers’ compensation law is that they do not fee schedule air ambulance charges. The Texas Supreme Court used that fact to distinguish their decision from other decisions involving state laws that were preempted because of a fee schedule. Personally, I think if Texas won in the Supreme Court because of the fee schedule issue, that would be a hollow victory. I believe the use of fee schedules benefits workers because it keeps disputes between payors and medical providers out of court.

Mc Carran-Ferguson

Workers’ compensation laws are commonly regarded as insurance laws, so there is a strong argument that they should not be preempted under the McCarran- Ferguson Act. That law holds that insurance regulation is a state concern. McCarran-Ferguson is often referred to as “reverse preemption” law . A concurring opinion in the Texas Supreme Court air ambulance discussed McCarran-Ferguson in depth. However, the dissenting opinion in the case held that workers’ compensation was not a law regarding insurance but a law that regulates the relationship between the employee and employer. If the Supreme Court takes up the Texas appeal, it may answer the question of whether workers’ compensation is a law about insurance or the workplace relations? In doing so, it may jolt some long-held assumptions about workers’ compensation.

The offices of Rehm, Bennett, Moore & Rehm, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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Claiming workers’ comp, when short-term disability has paid for time off because of a work injury

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A few days ago I wrote “Five reasons why office workers don’t file workers’ comp, claims for hand and wrist claims.” One of those reasons is that I think many employees use private health insurance and short-term disability to pay the cost of work injuries rather than workers’ compensation.

To understand why this hurts workers, it helps to understand the difference between workers’ compensation, short-ter, disability and private health insurance.

The difference between workers’ compensation, short-term disability and private health insurance.

With a few small exceptions, workers’ compensation is mandatory for all employers in Nebraska. Workers’ compensation includes payment for wage loss, permanent disability and medical benefits that are standard for all employers. Employers bear the cost of workers’ compensation. Finally, employees, at least in Nebraska, pay nothing for medical care under workers’ compensation. But workers’ compensation only covers expenses related to work injuries.

In contrast, private disability insurance is not required. Private disability covers income loss for occupational as well as non-occupational conditions. While health insurance coverage is mandatory for larger employers, there is a lot of variation among insurance plans. More importantly, employees generally have to foot some of the cost of private disability and health insurance coverage. Finally, under private health insurance, an employee has out of pocket expenses in the forms of co-pays and deductibles.

The seeming advantage of putting an injury on private insurance and short-term disability is convenience. Additionally, short-term disability policies sometimes pay 80 percent of lost income while workers’ compensation insurance only pays 2/3rds. Additionally, workers’ compensation benefits can undercompensate some highly paid employees.

But on closer examination, workers’ compensation is a better deal most of the time. First of all, workers’ compensation benefits are generally not taxed while short-term disability benefits are more likely to be taxed. Under workers’ compensation an employee doesn’t have to pay out of pocket for medical expenses. Out of pocket expenses for even a simple procedure covered by insurance can range into the thousands of dollars.

Workers’ compensation pays for permanent disability for hand and wrist injuries on an impairment basis for single member claims. This means the employee gets paid something if they have damage to their body, even if they can return back to their job full duty. Long-term disability policies tend not to pay out unless an employee is unable to work.

Claiming workers’ compensation after short-term disability and health insurance pay for the costs of surgery – This is permissible and is often a smart financial move for an injured worker, but attorney involvement is usually needed. In cases where an employer is forced to pay medical bills through workers’ compensation and that the client and their health insurer originally paid, the client and health insurer get reimbursed by the doctor. Out of pocket expenses are eliminated and can be paid to the employee by the provider.

In some such cases employees can get a refund from their private health insurer through the so-called the so-called common fund doctrine if the health insurer gets paid back from a workers’ compensation claim.

Employees pursuing a workers’ compensation claim when short-term disability paid can also end up ahead financially. An employee can be paid permanent disability benefits for a wrist or hand injury even if the employee is able to return back to work and has little if any functional restrictions.

But health insurers and disability insurers will attempt to claim repayment or subrogation rights under a federal law known as Employee Retirement Income Security Act (ERISA) which regulates some disability and insurance plans. ERISA is a powerful tool for insurers, but it doesn’t apply to a broad class of employers including church-affiliated employers and state and local governments.

It’s important than an attorney can get a look at the insurance plan to determine if ERISA even applies. Employees have some leverage in the way of civil fines against an insurer or employer if the plan administrator fails to provide the plan. ERISA laws generally pre-empt or overrule state laws, but since workers’ compensation laws generally regulate the business of insurance, there is an argument that ERISA may not preempt those laws. Additionally, Nebraska has a law against assignment of benefits which could help limit or eliminate repayment rights. So, in short. a lawyer has ways to push back against a private disability insurer and or health insurer claiming an ERISA lien when resolving a workers’ compensation case.

Workers’ compensation cases where private health insurance and or private disability have paid are also, for lack of a better word, messy. Part of that messiness usually involves some dispute over whether an injury was work-related. In those cases, an attorney can help negotiate unpaid medicals bills and any other repayment rights from a private disability or health insurer. Again, the result of this work is that an injured worker emerges from a work injury in better financial condition than they would have without a lawyer.

The offices of Rehm, Bennett, Moore & Rehm, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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More Takeaways from the Demise of the Oklahoma Option in Workers’ Compensation

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oklahoma-ruling-vasquez-v-dillardsThe Oklahoma Supreme Court’s decision to strike down the so-called “Oklahoma Option” in Vasquez v. Dillard’s was one of the biggest events in the world of workers’ compensation. Vasquez represents a growing trend by advocates for injured workers recognizing that workers’ compensation is a matter of constitutional law. But the Vasquez decision is important for other reasons.

Opt-Out is Still Viable

Though some commentators declared the defeat of the Oklahoma option was the death of opt-out, many justices on the Oklahoma Supreme Court who overturned the Oklahoma option would disagree.

A concurring opinion contrasted the Oklahoma opt-out system with the Texas opt-out system. In Texas, employers are not required to have or “subscribe” to workers’ compensation. But if Texas employers do not subscribe to workers’ compensation, injured Texas employees can sue their employer in tort with all affirmative defenses stripped away. This encourages employers to carry workers’ compensation insurance. Nebraska has a similar law for agricultural employers who are exempt from having to carry workers’ compensation.

Oklahoma’s “opt-out” created separate workers’ compensation systems: the state system under the Administrative Workers’ Compensation Act (AWCA) or the private systems under the Oklahoma Employee Injury Benefit Act (OEIBA), where employees were eligible for the same benefits but where employers could draft their own rules for eligibility. Regardless of whether an employee was covered under the AWCA or the OEIBA, employers still had to be covered under one system or another, and employees could not sue their employer in tort for work injuries. What doomed the Oklahoma option was the fact that unfair procedures under the OEIBA created separate but unequal workers’ compensation systems.

The contrast between the now defunct Oklahoma option and the still-viable Texas opt-out system was reinforced when the Vasquez court rejected Dillard’s argument that Vasquez’s claim was pre-empted by the federal Employee Retirement Income Security Act (ERISA) law. Under the Oklahoma option, plans under the OEIBA were to be governed by the ERISA law. However, since OEIBA served as workers’ compensation and ERISA plans that serve as workers’ compensation plans do not pre-empt state workers’ compensation laws, the OEIBA was not pre-empted by federal law. In contrast, state law claims against employers on disability insurance plans who are “nonsubscribers” in Texas are pre-empted by ERISA.

Few, If Any States, Are Going to Implement the Oklahoma Option

The Oklahoma option was struck down on equal-protection grounds based on the Oklahoma state constitution. Most other states have similar provisions in their state constitutions. In Nebraska, that provision is found at Article III, Section 18 of our state constitution. This provision concerns itself with disparate treatment in much the same manner as does the language of the 14th Amendment of the U.S. Constitution, which prohibits a state from making or enforcing any law that denies any person within its jurisdiction “the equal protection of the laws.” Distinctive Printing & Packaging Co. v. Cox, 232 Neb. 846, 443 N.W.2d 566 (1989). Even in a state without an equal protection clause in the state constitution, separate but unequal workers’ compensation systems could be likely be struck down on equal-protection grounds under the U.S. Constitution.

Injured Workers Are a Protected Class

Injured workers are sometimes subject to retaliation for bringing workers’ compensation claims. In 2013, the U.S. Supreme Court distinguished “discrimination” or “protected status” from “retaliation” or “protected activity” cases under Title VII and held that there was a higher burden of proof for employees bringing a retaliation case than for an employee bringing a discrimination case. However, if injured workers are thought of as a protected class, then discrimination in the form of termination should be thought of as a form of discrimination, and those claims should be subject to a more relaxed burden of proof than required in the Nassar case.

The offices of Rehm, Bennett, Moore & Rehm, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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