Workers' Comp: What's Next?

On the heels of allegations last week by former employees of the Texas Department of Insurance’s Division of Workers’ Compensation that their higher-ups have failed to sanction or remove dozens of doctors accused of overtreatment and overbilling, Texas lawmakers are pledging to investigate the consequences for patient care and the state’s finances. In addition, sources say the division’s lead enforcement attorney has resigned, bringing to six the number of employees who’ve exited the division’s medical oversight and enforcement staff since February.

The Texas Tribune reported last Wednesday that nearly 70 cases of doctors found by independent review panels to be overmedicating patients or overcharging insurers are pending inside the division. Since 2005, only five doctors have been removed from the system, but none for patient-harm violations. Early this year, the commissioner of the Divison of Workers’ Compensation, Rod Bordelon, closed nine cases — eight just as enforcement was about to begin, and one just after the doctor had been selected for review. Bordelon told the Tribune that the process by which doctors were selected for review was flawed, but former employees blame political pressure for the closure of at least one case. An internal agency document obtained through an open records request shows the nine cases alone cost the state nearly $50,000 to review, and that the nine doctors combined to bill $14.7 million in medical treatment over an average of 18 months.

“My primary concern is patients getting improper treatment — things that are going to end up hurting them or getting them hooked on painkillers,” says state Rep. Joe Deshotel, D-Beaumont, who chairs the House Business and Industry Committee, which oversees workers’ compensation laws in Texas. “What’s the impact of fraudulent claims on our already strapped budget?”

Deshotel said he plans to hold a committee hearing as early as mid-June to address the enforcement questions. Nearer on the horizon — May 25 — is the Sunset Advisory Commission’s public hearing and final recommendations for changes to the division’s statutory structure, which will guide legislation next session. Bordelon is expected to appear before the Sunset commission, according to its chairman, state Sen. Glenn Hegar, R-Katy.

“I will ask the commissioner questions regarding the issues brought up in the [Tribune] story,” Hegar says. “I firmly believe that Texans deserve quality medical care, especially those who have been injured in the workplace. We don't want any doctors scamming the system in any shape, form or fashion. I am very interested in making sure there is a fair and equitable process.”

The Sunset commission’s staff recommendations have already been released and do not address enforcement stalls, but Hegar says any of the 10 lawmakers and two public members on the panel can modify recommendations. Another member of the commission, state Rep. Rafael Anchia, D-Dallas, says he is concerned about questions that “political pressure [was] brought to bear” in the division’s decision to throw out cases.

Three former employees of the division — Dr. Bill Nemeth, its first medical advisor, who served from 2001 to 2007; Dr. Ken Ford, the assistant medical advisor from 2004 to March of this year; and Dr. Clark Watts, a consultant on the division’s Medical Quality Review Panel (MQRP) — each say they resigned out of frustration that cases were not being enforced, and in some instances, the division leadership “traded political favors” (Nemeth’s words) in keeping cases from moving into enforcement.

As an example, the doctors cite the case of Dr. Aaron Calodney, a Tyler pain management specialist, a contributor to various candidates since 2006 and a gubernatorial appointee at the time he was under investigation by the MQRP. State Rep. Leo Berman, R-Tyler, told the Tribune he intervened on Calodny’s behalf after learning the doctor was under review. Berman said he reached out to Bordelon, who then decided “there was no need to evaluate” what Caldoney was doing. Division records show Caldoney billed insurers $1.9 million for workers’ compensation claims over two years.

 “I think [what happened] involves processes in the agency and is appropriate for questioning as part of Sunset,” Anchia says.

The additional legislative vettings come during a period of internal tumult at the division. One of its enforcement attorneys, Cathy Lockhart, and a nurse paralegal, Ronnie Glenn, were fired in January, with higher-ups citing their “clandestine” behavior. The division’s medical advisor, Dr. Howard Smith, an M.D. who was employed in a statutory role to oversee physician fraud investigations, turned in his letter of resignation in late April. He was joined by Watts. Both left not long after Assistant Medical Advisor Ken Ford, a Houston-based orthopedic surgeon, submitted his resignation by e-mail.

After the Tribune story ran last week, sources inside the division said the attorney manager of the enforcement division, Cass Burton, also resigned. Reached by phone last Wednesday, Burton said he “can’t comment on that resignation except to refer calls to the Public Information Office.” Division spokesman John Greeley said he would not comment on personnel matters.

Bordelon declined requests for a follow-up interview, but on Monday, Greeley produced a document showing that files on eight of the cases closed by the commissioner were sent on to the appropriate medical licensing boards “to make sure no harm to patients was occurring.” The Texas Medical Board could not confirm that any of the cases were being reviewed at their agency, as all investigations are private until action is taken.

In an e-mail, Greeley emphasized that an audit underway by the State Auditor’s Office to “determine whether the Department issues appropriate and consistent disciplinary orders for workers compensation providers … that have committed violations” covers a broad range of enforcement issues and was not sparked by the decision to close the doctors’ cases in January.

Looking ahead to next week’s Sunset commission hearing, Hegar says he doesn’t want enforcement issues to “take over” the limited meeting time to review a handful of other state agencies. But, he says, he will allow testimony from “anyone who wants to come.” Ford and Lockhart say they both plan to testify.

“What I’m interested in is: How do we move forward?” Hegar says. “The agency needs to exist, so how do we maximize doctors’ efficiency and put workers back to work? I don't want to place greater emphasis on one problem over another. But individual patient care is number one. That has to number one.”