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November 2016


Air Ambulance Litigation Takes Off

On December 2, 2016, Travis County District Court Judge Stephen Yelenosky will hear the appeal of the decision from the State Office of Administrative Hearings (SOAH) in the lead group of air ambulance fee disputes between various workers’ compensation carriers and PHI Air Medical. SOAH Judge Craig Bennett ruled in favor of the carriers in 2015 when he held that the federal Airline Deregulation Act does not preempt Texas workers’ compensation laws that govern the amount of reimbursement paid to air ambulance providers for transporting injured workers. Judge Yelenosky will decide whether that decision is correct. The Division has intervened in support of the carriers’ position on preemption. Judge Yelenosky is retiring at the end of the year so his decision is expected before then.

On December 7, 2016, the United States Court of Appeals for the Fifth Circuit in New Orleans will hear oral argument in Air Evac EMS, Inc. v. State of Texas, Department of Insurance, Division of Workers’ Compensation. Air Evac, another large for-profit air ambulance provider, filed a declaratory judgment lawsuit against the Division based on the SOAH decision in the lead group of fee disputes with PHI Air Medical. The suit was filed in federal district court in Austin, Texas. Air Evac sought a declaration that the ADA preempts Texas workers’ compensation laws that govern the amount of reimbursement paid to air ambulance providers for services provided to injured workers and therefore, the Division must order carriers to pay its unregulated billed charges.

The carriers in the PHI Air Medical case intervened in Air Evac’s lawsuit. The carriers and Division moved to dismiss on the grounds that Air Evac has no right to bring suit in federal court but that even if it did, Air Evac’s lawsuit should still be dismissed to allow the preemption issue to be decided in the state proceedings where that issue was litigated for the last three years. Federal District Court Judge Sam Sparks granted the motions and dismissed Air Evac’s lawsuit. Air Evac appealed the dismissal to the United States Court of Appeals for the Fifth Circuit to determine whether Judge Sparks was correct to dismiss the case. If it rules he was not, the case will go back to Judge Sparks for further proceedings consistent with the court’s ruling. Oral argument is set in the case on December 7, 2016.

There were 643 air ambulance disputes pending at the Division as of October 21, 2016, by far the single largest category of medical fee disputes. Additionally, there are around 130 more cases pending at SOAH. In April, Commissioner Brannan announced that he directed Division staff to abate all air ambulance disputes until the final outcome of the litigation regarding federal preemption. The number of disputes pending at the Division will continue to grow as more disputes are filed at a rate of about 30 per month.

Travis County Judge Reins in Chiropractic Board, Again

On October 19, 2016, Travis County District Court Judge Rhonda Hurley signed a final judgment in favor of the Texas Medical Association (TMA) in its latest lawsuit against the Texas Board of Chiropractic Examiners (TBCE). Judge Hurley declared void TBCE rules that permit chiropractors to make medical diagnoses and to perform vestibular-ocular-nystagmus (VON) testing.

Judge Hurley determined that the TBCE rule authorizing certain chiropractors to perform VON testing exceeds the scope of chiropractic as defined by the Texas Legislature. She also determined that the TBCE’s definition of "musculoskeletal system" to include "nerves," its definition of "subluxation complex" as a "neuromusculoskeletal condition," and its use of the term "diagnosis" in its scope of practice rule, all exceed the scope of chiropractic, and are therefore void.

The TBCE’s website states that the Board voted to appeal Judge Hurley’s decision. If her decision is affirmed on appeal, it could have implications in workers’ compensation cases where a chiropractor diagnoses a condition outside their scope of practice to do so.

TMA previously brought another successful lawsuit against the TBCE challenging its rules that permitted chiropractors to perform needle EMG and manipulation under anesthesia. Travis County District Court Judge Stephen Yelenosky declared the rules void because they exceeded the statutory scope of chiropractic practice and, therefore, constituted the unlawful practice of medicine. The Austin Court of Appeals affirmed, in an opinion issued July 6, 2012.

The Texas Association of Acupuncture and Oriental Medicine has also brought suit against the TBCE. They seek a declaration that the TBCE rule authorizing chiropractors to perform acupuncture is invalid. That case is presently pending in Travis County District Court.

A Refresher Course in Chiropractic

Chiropractic is a form of alternative medicine founded by Daniel David ("D.D.") Palmer at the end of the 19th century. Palmer worked as a magnetic healer prior to founding chiropractic. In 1895, he met a man with severely impaired hearing. Palmer discovered a lump in his back and claimed that he restored the man’s hearing by adjusting his spine. This led Palmer to develop the theory of chiropractic which is that the underlying cause of all diseases of the body is misalignment of the bones, primarily of the spinal vertebrae. Palmer explained, "A subluxated vertebra ... is the cause of 95 percent of all diseases ... The other five percent is caused by displaced joints other than those of the vertebral column." These subluxations of the vertebrae are treated by manipulating the spinal joints to correct "nerve flow." Palmer opened the Palmer School of Chiropractic in 1897 to teach his techniques. The theory of chiropractic does not have a scientific basis yet it has managed to survive to the present. Today, Palmer’s adherents are heavily involved in the examination and treatment of Texas injured workers, with 365 chiropractors certified to perform designated doctor examinations as of September 2016.

Tragic Circumstances No Exception

The wife and children of a deceased claimant brought wrongful death and survival claims against the third-party administrator that adjusted his workers’ compensation claim. The claimant was a ventilator dependent quadriplegic. Attorneys for the wife and children alleged that repeated requests were made to the administrator for a specialized bed for the claimant; that these requests were either ignored or refused; and that the failure to provide the specialized bed resulted in the claimant’s death. The Texarkana Court of Appeals noted that it’s not clear from their allegations whether they received a denial or no response at all. The Court stated that either way though, the matter could and should have been submitted to the Division. Yet, there is no allegation that they even attempted to exhaust their administrative remedies prior to filing suit. The Court dismissed their suit on the grounds that their claims were barred by the exclusive remedy provision of the Texas Labor Code and the wife and children were required to exhaust their administrative remedies. Having failed to do so, the trial court lacked subject matter jurisdiction.

Freeman v. JI Specialty Services, Inc., No. 06-15-00106-CV, 2016 WL 6503847 (Tex. App.–Texarkana, Nov. 3, 2016).


Compounded Drugs and Health Care Fraud: A Tempting Combination

Nermin Awad-El-Hadik, owner of the Hope Pharmacy in Houston, appeared before a U.S. Magistrate Judge in Austin on November 9, 2016 and pleaded guilty to one count of willful offer and payment of illegal remuneration in relation to a federal health care program.

El-Hadik admitted to paying more than $5 million in kickbacks to Austin chiropractor Garry Craighead, D.C. during a short period between March 2015 and December 2015. Craighead operated the Union Treatment Centers with eight clinics in Texas. El-Hadik paid kickbacks to Craighead to refer federally insured employees to her pharmacy to have their prescriptions filled and for influencing physicians to prescribe compounded drugs that would be filled at her pharmacy. She faces up to five years in prison when she appears before Judge Sam Sparks for sentencing.


That Name Sounds Familiar!

Chiropractor Garry Craighead, recipient of the aforementioned kickbacks, treated Texas injured workers until the Division got wise to him and denied him admission to the Division’s former approved doctors list on August 26, 2007. Thereafter, he was prohibited from providing healthcare services in the Texas Workers’ Compensation System. However, he continued to treat federal injured workers until being charged with federal crimes.

Craighead pleaded guilty in December 2015 to counts including solicitation and receipt of illegal remunerations in federal health programs. He was sentenced June 10, 2016 to 14 years in prison and ordered to repay more than $17 million to the U.S. Department of Labor.

Craighead treated mainly U.S. Postal Service workers at his Union Treatment Centers. In 2008, Craighead issued a notice to all AFL-CIO union members and postal employees stating:

Important Notice to all Branch 181 Letter Carriers in the Austin Area, our Union brothers and sisters were recently informed of the numerous advantages being offered by Garry Craighead, a physician and Director of Union Treatment Centers located at 8900 Shoal Creek Blvd. Building 200, in Austin, TX. 78757. . . . .

Dr. Craighead is providing assistance and treatment for all Federal and State Workers Compensation claims to benefit your "on the job injury needs" . . . .

The notice did not identify the specific "advantages" Craighead offered the Union brothers and sisters for treating with him over other providers.


Comings and Goings at the Division

Larry Beckham, one of the Ft. Worth Benefit Review Officers, will be retiring effective November 30, 2016. 

John Bell, one of the Dallas Hearing Officers, has accepted employment with a carrier firm. He, too, will leave the Division on November 30. 

The DWC is apparently having trouble finding qualified applicants to take Mr. Bell’s place and to fill the vacancy left by David Northup in San Antonio last August. 

New Scheduling Procedure for CCHs

Also, new DWC policy (coming, we’re told, from the Chief Docketing Clerk) is for Benefit Review Officers to set disputes for CCH within 60 days of the BRC regardless of whether the participants can be available on the selected date.  So, if there is only one slot available within two months of the BRC and one or both parties cannot attend, it will be set anyway. The conflicted party is advised to request a continuance. How this outcome differs substantively from just setting the thing outside of 60 days to begin with is anyone’s guess.  We chalk it up to DWC-logic. 



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