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Texas Workers’ Compensation Heads to the United States Supreme Court in PHI Air Medical, LLC v. Texas Mutual Insurance Company, et al.

The “air ambulance” cases are going to the United States Supreme Court!  Generally, workers’ compensation insurance carriers reimburse air ambulance companies in accordance with the rules and guidelines provided for under the Texas Workers’ Compensation Act (TWCA) and Division of Workers’ Compensation Rules.  This reimbursement is significantly less than the fees charged by some air ambulance companies.  As of January of 2019, almost $50 million in Texas air ambulance charges were in dispute.  Some air ambulance companies have asserted that the federal Airline Deregulation Act (ADA) preempts state workers’ compensation laws and insurance carriers must pay the companies’ billed charges, regardless of any state rules or guidelines.  Not just limited to Texas, litigation regarding this issue has taken place across the United States, with many courts finding in favor of the air ambulance companies.  On June 26, 2020, the Texas Supreme Court weighed in on the issue.

In, Texas Mut. Ins. V. PHI Air Med, LLC, __ S.W.3d __, 2020, Tex. LEXIS 615, 2020 WL 3477002 (Tex. June 26, 2020), the Texas Supreme Court addressed thirty-three workers’ compensation fee disputes concerning transports provided by PHI between 2010 and 2013.  The carriers had reimbursed PHI an amount equal to 125% of the Medicare rate for air ambulance services.  PHI sought medical dispute resolution before the Division of Workers’ Compensation, which agreed with PHI that the ADA preempted the TWCA’s fee schedules and reimbursement standards.  The case proceeded to the State Office of Administrative Hearings (SOAH) and an Administrative Law Judge (ALJ) concluded the ADA did not preempt the TWCA and PHI was only entitled to reimbursement under the TWCA’s standards.  The ALJ found the Division’s fee guidelines did not set a specific reimbursement rate for air ambulances and, as there was no contractual rate, a fair and reasonable rate should be applied.  The ALJ determined 149% of Medicare was the fair and reasonable rate.   The case then proceeded through the courts.

The trial court declared that the ADA does not preempt the TWCA’s reimbursement provisions and the carriers did not owe more than 125% of the Medicare amount.  The case was appealed to the court of appeals, which concluded the ADA preempted the TWCA’s reimbursement provisions, reversing the trail court’s findings.  The Texas Supreme Court disagreed with the court of appeal’s conclusions.

The Texas Supreme Court, addressing constitutional issues, federal law, and Texas law concluded the ADA did not preempt the fair and reasonable reimbursement standard under the TWCA.  The Court distinguished its holding from other courts’ findings the ADA preempted state fee guidelines, noting that, in those cases, the fee guideline limited the provider to a maximum fee that was less than a reasonable fee.  The Court explained the TWCA provides a “fact-driven standard,” which requires carriers to pay 100% of “fair and reasonable charges” and did not limit reimbursement to a less than reasonable fee.

On November 23, 2020, PHI filed a petition for a writ of certiorari with the United States Supreme Court asking the Court to review the Texas Supreme Court’s decision.  PHI contends that the Texas Court’s decision impermissibly dictates the rates air carriers may charge and collect and conflicts with other federal court decisions.  The United States Supreme Court is not under any obligation to hear PHI’s case and usually considers such cases only if the cases have national significance, might harmonize conflicting decisions in the federal Circuit courts or could have precedential value. In fact, the United States Supreme Court accepts only 100-150 of the more than 7,000 cases submitted for review each year.  PHI’s appeal characterizes the Texas Court’s decision as jeopardizing the ongoing viability of a critical and growing industry and threatening the dynamic that makes air-ambulance services available to all patients.  PHI also contends that the Texas Court’s decision conflicts with other Federal Courts’ decisions regarding similar issues.  The respondents to PHI’s case have until March 31, 2021 to file their responses to PHI’s petition.

In addition to PHI’s appeal to the United States Supreme Court, a similar federal case is currently pending with the U.S. Court of Appeals for the Fifth Circuit in Air Evac EMS, Inc. v. Sullivan, No 18-50722.  This case concerns an appeal from the U.S. District Court, Western District of Texas, which held the ADA preempts the TWCA and enjoined the enforcement of the TWCA reimbursement provisions against the air ambulance company.   The parties presented oral arguments at the Fifth Circuit Court of Appeals on November 5, 2019, but no decision has been issued.

Travis County District Court Invalidates Rules Regarding Work Search Efforts

By Robert R. (Bob) Graves, Jr

Texas Labor Code Section 408.1415 provides that, to be eligible to receive supplemental income benefits (SIBs), a recipient must provide satisfactory evidence of: (1) active participation of vocation rehabilitation program conducted by the Department of Assisted and Rehabilitative Services or a private vocational rehabilitation provider; (2) active participation in work search efforts conducted through the Texas Workforce Commission; or (3) active work search efforts documented by job applications submitted by the recipient.  The Division of Workers’ Compensation, in implementing Section 408.1415, adopted rules 120.102(d)(1)(D) and 120.102(f).  Rule 120.102(d)(1)(D) provides an injured employee demonstrates an active effort to obtain employment if the employee has performed active work search efforts documented by job applications.  Rule 120.102(f) defines “active work search efforts” as:

As provided in subsection (d)(1)(C) and (D) of this section regarding active participation in work search efforts and active work search efforts, an injured employee shall provide documentation sufficient to establish that he or she has, each week during the qualifying period, made the minimum number of job applications and or work search contacts consistent with the work search contacts established by TWC which are required for unemployment compensation in the injured employee’s county of residence pursuant to the TWC Local Workforce Development Board requirements. If the required number of work search contacts changes during a qualifying period, the lesser number of work search contacts shall be the required minimum number of contacts for that period. If residing out of state, the minimum number of work search contacts required will be the number required by the public employment service in accordance with applicable unemployment compensation laws for the injured employee’s place of residence.

Accident Fund Insurance Company and others challenged the rule, contending that it exceeded the scope of Section 408.1415.  In Cause No. D-1-GN-18-000348, Accident Fund Insurance Company of America v. Texas Department of Insurance, Division of Workers’ Compensation, Travis County District Judge, Maya Guerra Gamble agreed with Accident Fund.  The Court issued a final summary judgment invalidating Division Rule 130.102(d)(1)(D) and enjoining the Division from applying Rules 120.102(d)(1)(D) and 120.102(f), noting the language in the rule pertaining to making “work search contacts” is not applicable to a the claimant that is not participating in work search efforts through the Texas Workforce Commission.  The Court further held the Division could no longer rely on Appeal Panel Decision No. 100229-S and the Appeals Panel Decision manual to the extent that they conflict with the Court’s ruling.

Under the judgment, regarding the work search requirement to qualify for SIBs, it appears injured employees will have to satisfy Labor Code Section 408.1415 requirements regarding work search compliance standards.  Regarding work search not performed through the Texas Workforce Commission, Section 408.1415 requires active work search efforts documented by job applications submitted by the recipient.  The Division has not indicated whether it will appeal the Court’s decision.  As, in response to the COVID-19 pandemic, the Governor suspended the requirement that an injured employee make work search efforts to qualify for SIBs, the judgment has no immediate impact.

Division of Workers’ Compensation Proposes Additional Changes to Interrogatories and Records Requests

The Division published proposed amendments to Rules 142.13 and 142.19 regarding its form interrogatories for public comment.  The amendments increase the time periods to respond to questions posed in the interrogatories and describe the questions a party may ask using interrogatories.  Parties may comment on the proposed rules until January 19, 2021.  To review the proposed rules, please follow the following link:  RuleComments@tdi.texas.gov.

The Division is also accepting comments on the revised Request for Record Check for Copies of Confidential Claim Information (DWC-153).  The revised form allows authorized requesters to ask the Division to check if an employee has a workers compensation claim or ask for copies of confidential the claimant information.  The revised form increases use of technology by allowing requesters to submit the form electronically and receive electronic copies of records.  There will be no charge of records provided in the electronic format.  The Division will continue to charge for paper copies according to the regular schedule of fees for open records requests.

Under the revised form, requesters will no longer be required to notarize the form, but requesters must continue to certify that they are eligible to receive the records.  The $15.00 fee for records checks will be discontinued.  The Division will no longer use the Request for Records Check (DWC-155) after the revised DWC-153 form is implemented.  The proposed forms may be found at www.tdi.texas.gov/wc/rules/drafts.html.  If you wish to comment on this rule, you may do so by emailing your comment to RuleComments@tdi.texas.gov.

Appeals Panel Addresses Finality of MMI/IR in Extent of Injury Cases.

By Daniel Manning

In Appeals Panel Decision 201244-S, the Appeals Panel addressed a case where the ALJ found, among other things, that the first certification of maximum medical improvement (MMI), and impairment from the designated doctor became final.  The designated doctor examined the claimant on four separate occasions, addressing MMI, impairment and the extent of the compensable injury.  For the conditions the designated doctor ultimately found were compensable, the designated doctor found the claimant reached MMI on February 26, 2019 with a fifty-one percent impairment rating.  This was the initial certification of MMI and the insurance carrier did not timely dispute impairment for the conditions found compensable by the designated doctor.  As it was not disputed within 90 days, the ALJ concluded that it had become final.  However, the parties had not asked the ALJ to address the extent of the compensable injury and the carrier had not accepted the conditions found compensable by the designated doctor.

The Appeals Panel overturned the ALJ’s decision.  The Appeals Panel noted there was not an extent of injury dispute in the case.  Therefore, the compensable injury consisted of the sprains and strains of the bilateral wrists and elbows as accepted by the carrier and agreed to by the parties.  Since there had been no final decision regarding the extent of compensable injury that coincided with one of the designated doctor’s assigned impairment ratings, the Appeals Panel found that none of the designated doctor’s certifications could become final.

This decision is significant as it indicates that when the extent of the compensable injury has not been determined, a first certification of MMI and impairment may not become final unless it rates only the compensable injury accepted by the carrier or agreed to by the parties.

Discount Rate and Interest Rate Set

The Division of Workers’ Compensation has determined that any interest or discount provided for in the Texas Workers’ Compensation Act shall be at the rate of 3.59 percent, effective January 1, 2021, through March 31, 20121