Alliance National Insurance Company

1. Alliance National Insurance Company In-House Presentation – Friday February 21, 2014, Ft. Washington, Pennsylvania

2. New York Workers’ Compensation Law SeminarPresented by Melissa A. Day, Esq., and James B. Cousins, Esq.The Law Offices of Melissa A. Day, PLLCFriday, February 21, 2014ALLIANCE NATIONAL INSURANCE COMPANY370 Commerce DriveSuite 110Ft. Washington, PA 19034

3. Agenda • Loss of Wage Earning Capacity Review and Recent Developments • Valuing and Negotiating Claims for Settlement • SLU Review • ATF Deposit Calculations • Review of RFA-2 Procedure • Individual Claim Questions

4. I. Loss of Wage Earning Capacity Review andRecent Developments

5. LWEC/PPD Classifications Review

6. Maximum Medical Improvement

8. Maximum Medical Improvement The starting point for determining both schedule and non-schedule permanent disabilities is the finding by a medical professional that the injured worker has reached maximum medical improvement (MMI) and has a causally related permanent impairment.

9. Non-Schedule Permanent Disabilities • Under Buffalo Auto Recovery Services, 2010 N.Y. Wrk. Comp. 80703905, LWEC is determined based upon the preponderance of the evidence concerning the nature and degree of the work-related permanent impairment, work restrictions, claimant's age, and any other relevant factors, with wage earning capacity as its inverse. • Longley Jones Management Corp., 2012 N.Y. Wrk. Comp. 6070 4882 (February 8, 2012) decision overrules part of Buffalo Auto Recovery. RTW wages are just one of the factors taken into account in determining LWEC. • While the impairment rating may coincidentally be the same percentage as the ultimate finding of loss of wage-earning capacity, the medical impairment rating is not to be used as a direct translation to loss of wage-earning capacity (see e.g. Matter of Patchogue-Medford School Dist., 2011 NY Wrk Comp 40803044).

10. Cameron v. Crooked Lake House, 106 A.D.3d 1416 (3rd Dept. 2013) • The Appellate Division considered Claimant’s appeal after a finding that he had a 75% LWEC and affirmed finding: • Inasmuch as claimant has not worked since sustaining his partial disability, the Board is authorized to "fix such wage earning capacity as shall be reasonable . . . having due regard to the nature of his injury and his physical impairment" (Workers' Compensation Law § 15 [5-a]; see Matter of McCann v McCormack's Garage, Inc., 203 App Div 387, 388-389, 197 N.Y.S. 19 [1922]). In fixing that capacity, the Board relies upon various factors, including "the nature and degree of the work-related permanent physical and/or mental impairment, work restrictions, [and] claimant's age" (Employer: Buffalo Auto Recovery Serv., 2009 NY Wrk Comp LEXIS 15501, *27, 2009 WL 5177881, *10 [WCB No. 8070 3905, Nov. 12, 2009]). Here, in addition to the medical evidence documenting claimant's degree of impairment, the Board considered claimant's testimony in this regard, as well as his age and his efforts to train for or seek other work within his limitations. Deferring to the Board's assessments of credibility, substantial evidence supports its decision that claimant's established, partial disability has deprived him of 75% of his wage-earning capacity (see generally Matter of Haibel v C.G. Haibel, Inc., 101 AD2d 678, 679, 475 N.Y.S.2d 576 [1984]).

11. Three Steps to LWEC

13. Three Steps to LWEC • A medical determination of permanent medical impairment; • A medical assessment of functional abilities/limitations; and, • A judicial (legal) determination of LWEC using the impairment, functional, and vocational (non-medical) evidence.

14. Step One – Permanent Medical Impairment

15. Permanent Medical Impairment • Definition of Impairment: A deviation, loss, or loss of use of any body structure or function in an individual with a health condition, disorder, or disease as defined in the 2012 Impairment Tables. • Impairment is a purely medical determination made by a medical professional, and is defined as any anatomic or functional abnormality or loss. • Once physician determines that there is a PMI, its severity must be determined.

16. Severity of the PMI • Each category of impairment is assigned a severity ranking from A to Z. • Impairment severity is based on the estimated impact of the condition on overall health and bodily function. • The physician’s role is to objectively assign the category of impairment that best fits the claimant at the time of MMI. • A medical impairment ranking is not to be used as a direct translation to loss of wage earning capacity • BUT, in general, more severe impairments lead to greater losses of work opportunity and reduced earning capacities. (Chapter 9.3).

17. Medical Impairment – How Measured Example 1: Claimant sustained a low back injury after a chair she was sitting on at work collapsed beneath her. She landed on her buttocks. After physical therapy and medications, her symptoms improved. She now has intermittent pain across her low back with radiation into the back of her legs, but not her feet. Her neurological exam is normal.

18. Medical Impairment – How Measured Example 1 (continued): • Non surgically treated soft tissue spine condition - use Table 11.1 • Claimant meets "Class 2" because of persistence of symptoms without objective clinical findings or correlative imaging findings. • "Class 2" for lumbar spine on Table 11.1 = "A" Severity Ranking (least severe)

19. Medical Impairment – How Measured Example 2: Claimant lifted a 80lb. concrete slab, resulting in a back injury. His MRI showed a L4-5 herniated disc with right L5 nerve root displacement. He failed conservative treatment, leading to a L4-5 surgical discectomy. On exam he has: 1) absent right ankle jerk; 2) straight leg raise with radicular pain in L5 pattern at 30 degrees; and 3) leg atrophy of 2cm, comparing right to left.

20. Medical Impairment – How Measured Example 2 (continued): • Surgically treated spine condition – use Table 11.2. • Claimant meets "Class 4" because of surgical intervention with residual symptoms and additional objective findings. • "Class 4" for lumbar spine on Table 11.2 = "D" through "J" Severity Ranking. Need to refer to supplemental tables to determine exact severity ranking.

21. Medical Impairment – How Measured Supplemental Tables Example • Table S11.4: Radiculopathy Criteria: add up the points from claimant's objective testing. • After obtaining point total, refer to Table S11.7 for exact letter Severity Ranking in class. • Claimant has muscle atrophy, demonstrated by bilateral circumferential measurement - 6 points • Claimant has absent right ankle jerk - 6 points • Claimant has positive SLR - 4 points • Total = 16 points • This translates to an "E" severity ranking.

22. The Crosswalk • Chapter 18 (“The Crosswalk”) of the 2012 Guidelines translates each impairment's letter ranking into a 1-6 severity ranking to allow comparisons across different types of impairments.

23. Crosswalk (Ch. 18) • Letter rankings can be translated to a numerical severity ranking: 0 – 6 and total. • PILWECG say that “In principle, the severity rankings for the Classes of one chapter should not be compared to the rankings in other Chapters.” • There may be a temptation to equate these numerical rankings to functional abilities/loss assessments or LWEC.

24. Medical Impairment Crosswalk • Example 1: "A" Severity Ranking = "1" (least severe) on Crosswalk • Example 2: "E" Severity Ranking - "2" on Crosswalk • Even though claimant in Example 2 had more significant injury, treatment, and residual problems, his ranking is only one level higher than Claimant 1 on the Severity Crosswalk. • Would probably be "mild" and "marked" under 1996 Guidelines.

25. Fresh Direct Holdings, Inc., 2013 NY Wrk. Comp G032 3859, 2013 NY Wrk. Comp. Lexis 11430 • Claimant evaluated and found to have medical impairments with a severity ranking of 4G at two levels: in his cervical spine and his lumbar spine. • “Utilizing the guidelines crosswalk, a 4G impairment rating for either the lumbar or cervical spine translates to a moderate or 50% permanent partial disability. While the guidelines do not specifically address the situation where, as here, the claimant has been assessed with a 4G rating at two levels of the spine, the Board Panel deems it appropriate to take this factor into consideration in assessing the overall level of impairment for all compensable injuries. Based upon the credible medical findings of Dr. Schwartz, and pursuant to the reference to the Board's impairment guidelines, the Board Panel finds that the claimant is properly assessed with a 66-2/3% medical impairment when taking into consideration the claimant's disability pertaining to both the cervical and lumbar spines.

27. Use, but don’t use, the Crosswalk • In Price Chopper, 2013 NY Wrk. Comp. G026 0095, 2013 NY Wrk. Comp. LEXIS 9492, the Board discusses how the new severity ratings can be translated into the old system: • “Taking this finding and applying the Medical Impairment Severity Crosswalk (id. at 120) which creates a range of 0 - 6, (0 representing no medical impairment, 1 representing 25% medical impairment, 2 representing 33.33% medical impairment, 3 representing 50% medical impairment, 4 representing 66.66% medical impairment and 5 representing 75% medical impairment and 6 representing total medical impairment), the Board Panel finds the claimant has a marked permanent partial medical impairment (75%) as a brain injury severity rating Q - S drawn from Table 15.1 falls within relative severity class 5 on the Medical Impairment Severity Crosswalk.”

28. More Crosswalk Claims • In Community Memorial Hospital, 2013 NY Wrk. Comp. G026 3055, 2013 NY Wrk. Comp. LEXIS 9493, the Board again uses the crosswalk to translate a severity rating into the old system: • Here, the Board Panel finds Dr. Hausmann credibly found the claimant has a class 3 low back medical impairment, with a severity ranking B, given the claimant has a soft tissue lumbar injury with persistent pain and mobility symptoms and given the May 20, 2011 MRI showed annular bulges and stenosis at several levels of the claimant lumbar spine. A review of the record showed the claimant was not treated surgically and did not have radicular symptoms…Taking this finding and applying the Medical Impairment Severity Crosswalk (id. at 120) which creates a range of 0 - 6, (0 representing no medical impairment, 1 representing 25% medical impairment, 2 representing 33.33% medical impairment, 3 representing 50% medical impairment, 4 representing 66.66% medical impairment and 5 representing 75% medical impairment and 6 representing total medical impairment), the Board Panel finds the claimant has a mild permanent partial medical impairment (25%) as a lumbar spine injury severity rating  B drawn from Table 11.1 falls within relative severity class 1 on the Medical Impairment Severity Crosswalk, as the claimant does not have radicular symptoms.

29. Step Two – Functional Capacity

30. Evaluation of Functional Capacity • "The medical assessment of the injured worker’s residual functional abilities and losses is a key component in a judge's determination of loss of wage earning capacity." (2012 Guidelines) • Physician to document claimant's functional capabilities on new C-4.3 Form. • Physician to obtain job description of claimant's pre-injury employment and discuss with claimant. • If alleging claimant can return to pre-injury job, employer to provide job description to physician.

31. Functional Impairment • Determine if Claimant is able to perform his or her “At-injury job” • Measure the claimant’s Functional Abilities/Restrictions • Rate the Claimant’s Exertional Abilities

32. At-Injury Job • Physician should first document whether or not the injured worker is capable of performing the work activities of the at-injury job. • To understand the major work requirements of the at-injury job, the physician should request a job description or other similar documentation from the employer and speak with the claimant about the job requirements. • If the employer maintains that the injured worker is capable of performing the at-injury job, the employer must provide appropriate detail about the physical job requirements. • The physician should document whether the claimant can perform the at-injury job requirements based on the best information available to the physician about the job requirements at the time of evaluation.

33. Functional Abilities/Restrictions • On examination, the physician should measurethe injured worker’s performance and restrictions across a range of functional abilities, including dynamic abilities (lifting, carrying, pushing, pulling and grasping), general tolerances (walking, sitting and standing) and specific tolerances (climbing, bending/stooping, kneeling, and reaching). • These abilities and restrictions, including specific weight and time limitations, should be recorded on the Form C-4.3. • Alternatively, the physician may refer the injured worker to a physical or occupational therapist for completion of the functional measurements and, after the physician’s review, incorporate them into the Form C-4.3.

34. Exertional Abilities • The physician should rate the injured worker’s residual exertional capacity according to the standard classification system of Sedentary to Very Heavy. • The exertional capacities relate to those activities that require lifting and/or pushing or pulling objects. • The definitions of each category, which are derived from the Dictionary of Occupational Titles and used in the Social Security system, are as follows: • Sedentary • Light • Medium • Heavy • Very Heavy

35. Sedentary • Exerting up to 10 pounds of force occasionally and/or a negligible amount of force frequently to lift, carry, push, pull or otherwise move objects, including the human body. • Sedentary work involves sitting most of the time, but may involve walking or standing for brief periods of time. • Jobs are sedentary if walking and standing are required only occasionally and all other sedentary criteria are met.

36. Light • Exerting up to 20 pounds of force occasionally, and/or up to 10 pounds of force frequently and/or negligible amount of force constantly to move objects. • Physical requirements are in excess of those for sedentary work. • Even though the weight lifted may only be a negligible amount, a job should be rated light work: • (1) when it requires walking or standing to a significant degree; or • (2) when it requires sitting most of the time but entails pushing and/or pulling of arm or leg controls; and/or • (3) when the job requires working at a production rate pace entailing the constant pushing and/or pulling of materials even though the weight of those materials is negligible. NOTE: The constant stress of maintaining a production rate pace, especially in an industrial setting, can be and is physically demanding of a worker even though the amount of force exerted is negligible.

37. Medium • Exerting 20 to 50 pounds of force occasionally, and/or 10 to 25 pounds of force frequently, and/or greater than negligible up to 10 pounds of force constantly to move objects. • Physical demand requirements are in excess of those for light work.

38. Heavy • Exerting 50 to 100 pounds of force occasionally, and/or 25 to 50 pounds of force frequently, and/or 10 to 20 pounds of force constantly to move objects. • Physical demand requirements are in excess of those for medium work.

39. Very Heavy • Exerting in excess of 100 pounds of force occasionally, and/or in excess of 50 pounds of force frequently, and/or in excess of 20 pounds of force constantly to move objects. • Physical demand requirements are in excess of those for heavy work.

40. Miscellaneous Considerations • Psychiatric limitations: For claims involving an established, permanent psychiatric impairment, the treating provider should document the impact of the psychiatric impairment on the claimant’s ability to function in the workplace, including activities that are relevant to obtaining, performing and maintaining employment (e.g. personal hygiene and grooming, interpersonal relations, etc.) • Other limitations: The physician should also document other limitations caused by the permanent impairment(s) that impact the claimant’s ability to function in the workplace. This includes any limitations caused by the medical condition or treatment, including prescription medication, that impact the claimant’s ability to work.

41. Multiple Claims or Conditions • Not uncommon for an injured worker to have a permanent impairment of more than one body part or system. • PILWECG do not provide for a mathematical combination of medical impairments. • The impact of each impairment on function and wage earning capacity to determine their cumulative effect.

42. Adesa Corporation, 2013 NY Wrk. Comp 8060 0263, 2013 NY Wrk. Comp. Lexis 8492 • Where a Claimant has multiple workers’ compensation claims which both contribute to his overall disability, there must be a determination as to what percent of the disability is related to a claim where LWEC is determined. • The Board remanded the claim for permanency opinions which provided the claimant’s overall disability, the extent to which the claimant’s disability was caused by both claims. • The prior claim was an SLU and there is no indication that the SLU claim should be reopened.

43. Non-Causally Related Conditions • Guidelines are completely silent on the effect of non-occupational medical conditions which may affect earning capacity. • The medical impairment and functional loss evaluations and findings are limited to the occupational conditions and affected injury sites. • Defending LWEC claims may require demonstrating that disability is caused by non-occupational medical conditions.

44. Co-Morbidities’ Effect on LWEC • In Town of Riverhead, 2013 NY Wrk. Comp. G002 4531, 2013 NY Wrk. Comp. LEXIS 9677, the Board discounted the opinion of a voc expert, because her, “report disregards the claimant's causally related psychological disability and the claimant's list of co-morbidities that impact his wage earning capacity.”

45. Co-Morbidities’ Effect on LWEC • In Price Chopper, 2013 NY Wrk. Comp. G026 0095, 2013 NY Wrk. Comp. LEXIS 9492, the Board affirmed a finding that the Claimant had an “aggregate loss of wage earning capacity to a PTD” considering the claimant’s impairment and “pre-existing conditions, such as diabetes and a serious heart condition.”

46. FORM C-4.3 • The results of the impairment and functional assessments should be recorded on the Doctor’s Report of MMI/Permanent Impairment which is a new WCB form, Form C-4.3.