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October 2016


DWC does the two-step everywhere it goes: expands pilot program of bifurcated dispute resolution process

The Division of Workers' Compensation has expanded to all 20 of its field offices the availability of a two-step dispute resolution process for certain types of disputes. The process started as a pilot program available only in Weslaco and Dallas and it has proven successful. 

The two-step process is voluntary and is available when a  dispute includes the trifecta issues of extent of the injury, the date of Maximum Medical Improvement, and the correct impairment rating. Under the bifurcated process, the parties can elect to have the hearing officer resolve the extent of injury issues first and then they can assess whether another hearing is needed to resolve the issues of MMI and IR. 

Urine big trouble: OSHA clarifies circumstances under which post-accident drug testing violates federal law

This month the Occupational Safety and Health Administration issued a memorandum which seeks to clarify the extent to which OSHA will consider post-accident drug and alcohol testing to be a violation of federal regulations.  

The memorandum addresses questions that have arisen about a rule that OSHA published in May. That rule, the Electronic Recordkeeping Rule
prohibits retaliation against employees who report workplace injuries and illnesses. In comments to that rule OSHA previously stated that the rule “does prohibit employers from using drug testing (or the threat of drug testing) as a form of adverse action against employees who report injuries or illnesses.” Those comments ignited a firestorm, and since then there has been debate as to whether all post-accident drug or alcohol testing is now prohibited.

In the new memorandum, dated October 19, 2016, OSHA’s answer to that question is “no.” It explains that the rule does not prohibit  employers from drug testing employees who report work-related injuries “so long as they have an objectively reasonable basis for testing.” According to OSHA, when assessing whether the basis for testing is objectively reasonable, “the central inquiry will be whether the employer had a reasonable basis for believing that drug use by the reporting employee could have contributed to the injury.” If so, says OSHA, it would be objectively reasonable to subject the employee to a drug test. Conversely, says OSHA, “drug testing an employee whose injury could not possibly have been caused by drug use would likely violate” the rule. 

Enforcement of the rule originally was scheduled to begin in August 2016 but OSHA has delayed it to December 1, 2016. 

Compounding the problem: Compounded drug fraud not limited to comp

Compound cream fraud isn’t just a comp problem. It’s everywhere. The U.S. Attorney’s office for the Northern District of Texas announced this month the arrest of nine defendants in connection with their roles in a $100 million health care fraud conspiracy perpetrated against TRICARE, the health insurance program for members of the military and their families. The defendants allegedly defrauded TRICARE in connection with the prescription of compounded pain and scar creams by, among other things, paying kickbacks to prescribing physicians. 

One doctor in El Paso allegedly wrote thousands of prescriptions for compounded drugs to TRICARE beneficiaries whom he had never met in person and for whom he conducted only a cursory consultation via telephone. In the nine-month period from October 2014 to June 2015 TRICARE reportedly paid more than $102 million for compounded drug prescriptions generated by some of the defendants.

Did you catch that? $102 million in a nine month period. These are taxpayer dollars we’re talking about. Think about that the next time you look at the "Federal Withholding" deduction on your paycheck stub. 

If the case goes to trial, several of us here at SLS volunteer to serve on the jury!

Networks make the grade: TDI  releases workers' compensation network report card

This month the TDI published its 2016 Workers’ Compensation Network Report Card. The report card assesses health care costs and utilization, employee access and satisfaction of care, and return-to-work outcomes. According to TDI, the report card results show that “networks continue to experience improvements in average claim costs and outcomes when compared to non-network claims and to previous years.”

Is there a doctor in the house? Owner of Houston health clinic owner sentenced for comp fraud after investigators find no licensed doctor on staff

The owner of a health clinic has pleaded guilty to insurance fraud after billing comp carriers for medical services even though the clinic had no licensed doctor on its staff. Rosemary Phelan, owner of Houston Healthcare Clinic, was sentenced to seven years deferred adjudication and ordered to pay $88,000 in restitution. 

A joint investigation by the TDI-DWC and Texas Mutual Insurance Company led to the guilty plea. According to DWC, the clinic had a licensed doctor on staff at one time, but when that doctor left in 2012 the clinic began hiring unlicensed, foreign medical students to act as doctors and treat patients. Phelan reportedly submitted $166,843 in fraudulent workers’ compensation claims, involving more than 50 workers, claiming they had been treated by the clinic’s previous doctor.  

Big Brother keeping an eye on SLS lawyers? Well, sort of . . .

This month US Labor Secretary Thomas Perez released the highly anticipated report on workers’ compensation entitled Does The Workers’ Compensation System Fulfill Its Obligations to Injured Workers? The report’s answer to that question is “no,” and it cites deficiencies  in the workers’ compensation system and ominously recommends that legislators consider “whether to increase the federal role in oversight of workers’ compensation programs.” 

We note with interest that the report commented on the recent Workers’ Compensation Summit, stating that “a gathering of diverse workers’ compensation experts in a self-styled summit concluded that benefit adequacy, system failures, and delays in medical treatment were the three foremost issues requiring action.” Our own Jane Stone was one of those “diverse workers compensation experts” that participated in the Summit. 

More information regarding the Summit is available at


Please reply back and let us know what you think.

Jane Stone:
James Loughlin:
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