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A pending Connecticut case will help determine how the state approaches apportionment of permanent disability benefits when workers with pre-existing or chronic conditions suffer debilitating injuries on the job.
Workers with pre-existing conditions or comorbid conditions, such as diabetes, often take longer to recover from an injury, driving up costs for employers — especially if injuries become permanent impairments.
Even when there's knowledge of a pre-existing or comorbid condition, some employers still end up having to pay the entire cost of an injured worker's medical care, sources said.
But certain states, including California, Connecticut, Florida and New York, allow disability benefits to be apportioned between an employer and another entity, such as a former employer, a state-run second injury fund or the injured worker. Most smaller states don't allow apportionment.
Apportionment just doesn't happen as often as employers would like, said Joe Picone, Glen Allen, Virginia-based national claim consulting practice leader at Willis North America Inc.
The apportionment case that will set the tone in Connecticut was argued before the state Supreme Court in late October.
A former United Parcel Service Inc. worker who unloaded trucks and sorted small parts and was diabetic, John Sullins, developed work-related carpal tunnel and cubital tunnel syndromes in 2003, according to court records. He received workers comp benefits, but retired in 2008 due to pain.
A physician assigned a 44% permanent partial disability rating to each of Mr. Sullins' arms and a 40% rating to each hand, attributing 10% of each impairment to his work-related injuries. However, Mr. Sullins, who is seeking full benefits from UPS and insurer Liberty Mutual Insurance Co., argued that workers with a pre-existing disability can collect full compensation in Connecticut if they sustain a second injury in addition to the original condition — such as diabetes — that results in a permanent disability.
UPS and Liberty Mutual argued that apportionment of disability benefits is appropriate when it's caused by two concurrently developing diseases — one occupational and one non-occupational.
Mr. Picone called the case an isolated example — a possible “black swan.”
While some states such as New York and California allow a permanent disability to be apportioned between work-related and nonwork-related causes, it happens infrequently in those states and is not available in most states, said Bob Briscoe, senior consultant and principal at Milliman Inc. in New York.
In states that do allow apportionment, “you argue what body parts go into permanent disability, the judge makes a determination and you're done,” he said.
In California, thyroid disorders and hypertension are considered contributors to a claim, and employers or third-party administrators often are asked to pay for treatments to avoid delaying the healing process, said Dr. Teresa Bartlett, Troy, Michigan-based senior vice president of medical quality and corporate medical director at Sedgwick Claims Management Services Inc.
Based on the most recent survey data from the Workers' Compensation Insurance Rating Bureau of California, about 10% of permanent disability claims involve apportionment, a spokesman said.
“Where you're seeing this litigation is where there's a fairly unusual circumstance where there's arguably strong medical evidence that the ongoing medical condition is largely not work-related,” Mr. Briscoe said.
Diabetes, blood diseases such as anemia, blood clots and thrombocytopenia, and obesity are three comorbid conditions that tend to increase claim costs and slow return-to-work efforts, said Marina Ashiotou, Chicago-based director of predictive modeling at Accident Fund Holdings Inc.
“Smoking is another one. It's not really a condition, it's a choice,” Ms. Ashiotou said, “but we look at it as part of the comorbidities just because we know that smoking leads to other diseases.”
Sources said there are ways employers can prevent such claims and control their costs.
Under the Health Insurance Portability and Accountability Act, employers can ask few questions about a worker's pre-existing or underlying health problems, said William Zachry, vice president of risk management at Pleasanton, California-based Safeway Inc.
“What you can do, though, is a functional evaluation of the employee to see that they're qualified to do the job you're asking them to do, which can be expensive,” Mr. Zachry said.
At Safeway, prospective workers in certain distribution centers undergo a pre-placement physical to determine if they're physically capable of doing the job, he said.
“More and more of the states are saying, 'You have (to accept) this employee the way they are,” which is why some employers have turned to wellness programs, Mr. Bartlett said.
“Many orthopedic surgeons now are saying, 'You need knee surgery, but because you smoke, I won't do it,' ” Ms. Bartlett said. “If the person doesn't quit smoking, then the employer is paying these benefits forever or until the benefits terminate in that jurisdiction. So it motivates both us and the employer to get creative in how we help this individual in a smoking-cessation program.”
Orthopedic surgeons also often take the same cautious approach to knee replacements for obese patients.
While state-run second injury funds can reimburse employers, insurers or employees with pre-existing conditions or comorbidities who sustain a second injury on the job, many have been shut down or closed to new claims for financial reasons, sources said.
Alaska, California, Indiana and Louisiana are some of the states that still have active funds. And the Indiana Workers' Compensation Board said last month that it will collect an assessment from employers in 2015 to replenish the fund balance.