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October 2022


Compounding Caper

Crime doesn’t pay forever. On October 11, 2022, Ms. Khyati Undavia, owner of Memorial Compounding Pharmacy, was sentenced to 27 months in prison by U.S. District Judge Andrew Hanen.  Ms. Undavia was indicted on July 9, 2021 for conspiracy to defraud federal government programs by billing for compounded drugs that were not medically necessary and that she paid doctors an illegal kickback to prescribe.  She pled guilty on October 12, 2021. The judgment against Ms. Undavia orders her to pay restitution of six million dollars to Tricare and six million dollars to the U.S. Department of Labor, Office of Workers’ Compensation Programs (DOL-OWCP).  

Memorial Compounding Pharmacy was also active in the Texas workers’ compensation system.  The Division issued numerous medical fee dispute decisions ordering carriers to pay Memorial for its expensive compounded topical creams on the grounds that Memorial didn’t have to get preauthorization. Nonetheless, at least three different SOAH administrative law judges have reached the opposite conclusion that Memorial was required to obtain preauthorization for its compounded creams and therefore, it should not be paid.  Upon her release, Ms. Undavia will be excluded from participating as a provider in Medicare, Medicaid, and all Federal health care programs. However, the judgment does not prevent her from participating in the Texas workers’ compensation system.  We may see her again one day.
To view the judgment, click here.

The Tax Man Cometh

On October 20, 2022, the Texas Comptroller’s office ruled in a Private Letter that Designated Doctor exam charges are now taxable. We worry that this sales-and-use tax will drive the remaining Designated Doctors and independent doctors who perform Required Medical Exams and peer reviews further out of the system. The decision is specific to Designated Doctors, but the rationale may apply across the board for doctors who provide services other than medical treatment for system participants.  Of note, sales tax has to be collected “up front”, even before the doctor is paid his fee for the services, and even if they never get paid (or are paid late) on their bill.  No doubt the DWC will have some head-scratching to do to figure out the EDI ramifications of this development, since the decision specifically states that these services are not medical treatment.  Might this mean that there is no EDI reporting requirement? We shall see once the dust clears. We note that large exam scheduling companies can best handle this new administrative burden. The word is that DWC took the position with the Comptroller that these services should not be subject to sales-and-use tax. So much for the concept of comity.

Copyright 2022, Stone Loughlin & Swanson, LLP 

Kids' Chance of Texas Golf News

We can’t send a newsletter out without mention of KCTX.  We have 35 current scholarship recipients and are especially grateful to the brave and water-proof golfers who participated in a very soggy golf tournament at the Dallas Cowboy’s Golf Club on October 28th.  The final numbers aren’t in yet, but the enthusiasm for the cause was not dampened at all. There is pride in overcoming adversity, and the KCTX Board (especially Wendy Schrock with Downs & Stanford, Joanne Anderson with OIEC, Catherine Benavidez with IMO, and all the volunteers) should be very proud of what they managed to weather through – they are true KCTX Champions!

Newsflash: Save the date for the KCTX Top Golf event in The Colony on November 13th from 12:00 noon to 3:00 p.m.  The event is in conjunction with the PRIMA conference in the Frisco, Texas area.  If you are attending PRIMA and get a copy of this newsletter, make sure to sign up!

MRI and CT Imaging Issues and Surgical Outcomes

Evidence-based medicine is the standard of compliance written into the Labor Code and used in evaluating causation issues, but in our experience the standard is often ignored or not understood.  For example, studies show that baseline MRIs do not predict future low back pain, and up to 93% of them show degenerative disc disease regardless of whether the patient is reporting symptoms.  The ODG in fact warns against attempting to correlate MRIs with symptoms.  There is a great new summary written by a well-respected doctor which was provided to us that has the medical statistics thoroughly reviewed for neck, thoracic, lumbar, wrist and hand, shoulder and knee imaging findings.  Of particular interest is the information regarding evaluating the chronicity in shoulder issues and the explanation of the reasons why so many rotator cuff surgeries fail over time.  Ever tried sewing tissue paper to tissue paper?  A link to the article can be found here.    

Copyright 2022, Stone Loughlin & Swanson, LLP 


No, not that Meta.  Meta-analysis of medical data.  We were surprised to read an article summarizing that many common orthopedic procedures don’t have a lot of evidence supporting their efficacy.  The article reviewed the 8 most common surgical procedures and compared the outcome to non-surgical treatment of the underlying conditions.  In only two cases did the study show that surgical treatment was the more effective – carpal tunnel release, and total knee replacement.  The study showed no difference in outcome for partial meniscectomy, rotatory cuff repair, subacromial decompression, anterior cruciate ligament reconstruction, lumbar spine decompression, and lumbar fusion.  One wonders if before recommending these surgeries to injured workers their doctors make this information available to them. We wish someone would do a study specific to Texas workers’ compensation medical treatment, and better yet, to individual surgeons who are frequent actors in the Texas system.  A link to the article is here.    

Speaking of Statistics

DWC’s Subsequent Injury Fund (a separate account at the State Treasury) was recently audited by an actuary.  The SIF is funded solely by death benefit payments from insurance carriers where a compensable death occurs but there is no eligible beneficiary, or the claim for benefits is untimely.  We don’t understand all the numbers, but the bottom line appears to be that insurance carriers are safe from being assessed to make up for any negative balance at the SIF for the foreseeable future.  A link to the report can be found here

On the Move

Amber Morgan is moving up to the DWC’s Appeals Panel from her position as an Administrative Law Judge.  She also has the distinction of having the position of president of the Texas State Bar Worker’s Compensation section. Also on the move is Nick Morgan, who will make the transition from private practice representing injured workers to be the resident administrative law judge in the Waco field office.  We look forward to these changes and wish them both the best!
Copyright 2022, Stone Loughlin & Swanson, LLP

DWC 3 for You and Me

As of this month, the DWC has yet another revised Employer’s Wage Statement on its website.  We appreciate that there is no “fine print” and the form is much easier to read and to understand and the instructions attached to are much clearer than those that came with the prior form.  This is a good time to remind our readers that it is the employer’s responsibility to complete this form and file it with the insurance carrier, the claimant, and the claimant’s representative within the earliest of the date the employer is notified that the employee is entitled to income benefits, or the the date the employee’s death is a result of a compensable injury; and within seven days of getting a request from DWC for a copy of the form. The employer can be fined for failure to provide a DWC 3, but the consequence to the carrier of the employer’s failure to comply is sometimes only realized when the carrier makes a claim to the Subsequent Injury Fund for reimbursement. If DWC can’t verify the correct Average Weekly Wage by reviewing an accurately completed DWC 3, reimbursement is likely to be denied. You can find the new form here.


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