Take a Proactive Approach to Reduce Opioid Liability Risk
Workers’ comp payers are increasingly on the hook for problems related to opioids prescribed for injured workers, according to a new report. The National Safety Council examined several recent cases and issued a warning and suggestions for employers and insurers to take steps to protect injured workers and themselves.
“Recent court decisions have determined that in certain circumstances, overdoses suffered by injured workers from opioid pain medications prescribed for occupational injuries are compensable by the workers’ compensation insurer,” the report noted. “Employers and their workers’ compensation insurance carrier have been ordered to pay for detoxification and medical-assisted treatment services as well as death benefits to surviving family.”
The NSC cited more than two dozen cases from state appellate or state Supreme Court decisions between January 2008 and March 31, 2015. “These cases demonstrate that it is not a regional issue but a national problem meriting employer and workers’ compensation program action,” the report said. “The courts relied on several key legal concepts.”
Proximate cause, for example, is identified as “any legally recognizable set of facts which, in natural or probable sequence, produced the individual’s injury.” If a worker slipped on spilled water at work and sustained an injury, the spilled water is the proximate cause of the injury.
The “chain of causation” determines whether any injury after the original is related to the workplace injury. Sometimes a separate action by the injured worker can be considered an independent intervening act, or superseding cause. In such a case, the intervening act breaks the chain of causation and ends the liability for the workplace injury.
“For the cases reviewed in this paper, the chain of causation is clear,” the report said. “A workplace injury occurred. The injured worker received treatment that included prescription pain medications and subsequently died of an opioid-related prescription drug overdose. The legal question at the center of all these cases is whether an intervening action broke the chain of causation to the workplace injury.”
States differ in their workers’ comp laws and rules of evidence. Nevertheless, in the majority of cases noted in the report overdose deaths of injured workers may be compensable “even when the medication is not taken as prescribed, taken with alcohol or inappropriately prescribed.”
Employers and insurers are advised to reduce their risks and potential compensable costs related to the use of opioid pain medications in workers’ comp claims by:
- Requiring workers’ compensation and network providers to use opioid prescribing guidelines issued by the American College of Occupational and Environmental Medicine. These include guidelines on opioid prescribing thresholds and recommend precautions for the prescribing provider. Among the precautions are undertaking thorough patient histories with a more detailed screening if the treatment is to continue beyond two weeks, urine drug monitoring, checking the state prescription monitoring database, avoiding co-prescribing benzodiazepines with opioids, and discontinuing treatment when patients have reached meaningful functional recovery.
- Using caution and requiring prior approval for the use of methadone to treat chronic noncancer pain.
- Screening injured workers for depression, mental health conditions, and current or prior substance use.
- Requiring all pharmaceuticals be purchased and managed by a pharmacy benefit manager.
- Educating all workers about the hazards associated with prescription pain medication use. “Many workers do not understand the unique risks and dangers posed by opioid pain medications,” the report said.
Closed Formularies a Useful Tool
“Many workers who have taken opioid painkillers following on-the-job injuries have become addicted, suffered additional injuries or fatally overdosed,” according to the National Safety Council. “As a result, courts have ordered employers and workers’ compensation insurance carriers to pay for detoxification, medication-assisted treatment and death benefits to surviving family members.”
The situation has escalated to the point where the NSC is calling on employers to create policies around the use of opioids. Workers’ comp stakeholders are looking to additional strategies to address the misuse of opioids, including closed pharmacy formularies.
“A formulary is an approved medication list often based on clinical review of evidence-based medicine and both nationally and regionally approved medical guidelines,” according to a recent drug trend report from pharmacy benefit manager Helios. PBMs have used formularies for a number of years. Now states have begun to adopt them for their workers’ comp systems.
“Basically there are two types [of closed formularies],” said Brian Allen, vice president of government affairs for Helios. “There is the Texas style, which is more inclusive, where there is a list of drugs not included, and all other medications are included. Washington and Ohio have a type that is a preferred medication list, and providers prescribe off of that list. It’s a narrower list. Both [types] work well.”
“It is to workers’ comp what a hammer is to construction. It will be used daily and will have an impact.” — Brian Allen, vice president, government affairs, Helios
Several states have implemented closed formularies in their workers’ comp systems, and others are considering their use. In addition to Texas, Oklahoma, Washington, and Ohio, the idea is also being considered in Arkansas, California, North Carolina, and Tennessee. Maine, Michigan, and South Carolina are said to be interested. Louisiana’s Legislature failed to pass a formulary proposal, but state regulators have indicated they will begin developing a rule. Early results are looking positive from the states that have implemented the formularies.
“We’ve seen a lot of numbers in our drug trends report,” said Nichole Wilson, director of pharmacy product development for Coventry First Script. “In general, the implementation (of closed formularies) will typically lead to a reduction in narcotics opioids utilization; a reduction in ‘N’ list drugs; compounds typically decrease, depending on the rules. They basically target some of those high-dollar, riskier drugs.”
‘N’ drugs are those included on a list of medications that will not be approved without prior authorization. They are typically taken from the Official Disability Guidelines — Treatment in Workers’ Comp Appendix A. Drugs that are not on the ‘N’ list and have been approved by the Food and Drug Administration are generally allowed for injured workers with some exceptions.
The use of formularies varies among the states using them. But experts say a formulary can lead to better outcomes for injured workers and lower costs for payers.
“Is it a panacea? No. Is it a nice tool to have on the tool belt? Yes,” Allen said. “It is to workers’ comp what a hammer is to construction. It will be used daily and will have an impact.”
Nuances of Formularies
Texas adopted a closed formulary in 2011. A 2014 report from the Texas Division of Workers’ Compensation said the cost to the system for ‘N’ drugs had fallen by 82 percent; the total number of prescriptions for ‘N’ drugs was reduced by 74 percent; and there were 66 percent fewer injured workers receiving ‘N’ drugs.
But concerns in the Texas formulary have come to light in the intervening years, and industry stakeholders are advising other states to take note. The biggest centers on compound medications, which are being easily approved.
“Typically, there would be a mix of several drugs to create a topical formula,” explained Donald Lipsy, manager of regulatory, communications, and compliance at First Script. “If they include one or more on the ‘N’ list, they require prior authorization. If not, those are allowed to go through.”
Oklahoma, which implemented its closed formulary last year, required all compounds to be treated like ‘N’ list drugs. Other states may take the same approach.
Formularies are most successful when multiple parties to the workers’ comp system are involved in their creation, the experts say. California, for example, is taking that approach.
“They are creating a mandate for a formulary and mandate of a committee of medical people, including pharmacists, to help set up the formulary and the variances,” Lipsy said.
Both Lipsy and Allen agree that when formularies are developed with the help of PBMs, physicians, and nurses working together, there is a better chance of getting the right drug to the right person at the right time. One of the values of formularies is the empowerment it gives the parties involved with workers’ comp claims, especially physicians.
“Since the incorporation of the Affordable Care Act some of a [physician’s] reimbursement is tired to patient satisfaction and that is starting to impact workers’ compensation as well. With that, if you have to say no to a patient it would be bad,” Allen said. “Physicians have said, ‘I’ve had people ask for medications and I don’t want to say no, but now I can say it’s not me [saying no] it’s the state.’ If the state says so, it kind of takes the physician off the hook.”
The experts believe formularies (when used with other tools to reduce overutilization and costs of prescriptions) can add great value. They say many jurisdictions are taking a closer look.
“What’s interesting is when Texas implemented and published the results [of its formulary] a lot of places paid attention,” Wilson said. “I have a feeling more and more states will be considering them because of decreases in prices and utilization. I have a feeling we will see that trend.”
A Global Perspective
As any traveler knows, the world is full of uncertainty and dangerous places, where the challenges of simply trying to run a profitable business far from home are complicated by even greater risks, such as political violence, civil unrest, credit risk, corruption, expropriation of private assets by the government, and more.
Anyone doubting this need only take a look at current events. Some 70 percent of the world’s nations currently have serious corruption problems throughout their governmental and civil service framework. Nearly 40 percent of all nations are experiencing some form of significant civil unrest. Signs of economic distress are everywhere, from falling oil prices to Eurozone debt crises to economic slowdown in China.
Despite such geopolitical risks, the world still needs its businesses to continue running amid dangers that range from warfare and terrorism to punishing economic conditions caused by international sanctions, to simple graft and hostility toward foreigners.
For global and multinational companies, keeping an eye on their political risk profile is as important as handling worker safety, environmental impact, products liability, or any other insurable risk. Thankfully, political risk exposures are insurable as well, and Starr Companies is there to provide its clients with robust political risk insurance coverage, a suite of unique support services that truly is second to none, and the ability to educate clients on how to manage their political risk.
Political risk hazards generally fall into one of the following categories:
Breach of Contract and Non-Honoring of Financial Obligations
These related hazards involve the failure of a local actor to uphold their contractual or financial obligations to a foreign investor, and the inability or unwillingness of local authorities to intercede on the foreign investor’s behalf. This is perhaps the most common form of political risk hazard, as it is a major problem in any environment where there is substantial economic instability and/or corruption.
Confiscation of Property
Also known as “expropriation,” “ownership risk” and “nationalization,” this is when a government seizes property or assets without compensating the owners for them. An overt example of expropriation would be a revolutionary government seizing an office building or a factory belonging to a foreign-owned corporation. An example of creeping expropriation would be a series of successive events by a government to gradually deprive an investor of their property rights.
This is when the local laws change in such a way as to constrict foreign investors’ economic activity in some way. It could range from creeping expropriation to changing taxation or labor laws that might simply make it far less profitable or far less efficient for a foreign entity to operate in a local jurisdiction.
Inconvertability of Currency
Also known as “transfer risk,” this is when a government takes action to prevent the conversion of local currency to another form of currency, making it difficult or impossible for foreign investors to transfer their profits elsewhere. This tends to happen in countries undergoing some kind of political crisis, like when Zaire—now the Democratic Republic of Congo—declared a new national currency in 1980.
Property or income losses stemming from violence committed for political purposes, including, but not limited to declared and undeclared warfare, hostile actions taken by foreign or international forces, civil war, revolution, insurrection and civil strife (politically motivated terrorism or sabotage).
Kidnap and Ransom
Political violence might also manifest itself as a kidnap, ransom and extortion hazard, but that is typically covered by a separate, specialized policy.
To protect against these risks, insurers can provide comprehensive and custom-tailored political risk solutions, which at a client’s request can be broadened to cover investment contract repudiation, currency inconvertibility and political violence. Such policies typically last for periods of 5 to 10 years. Protected assets for this coverage include fixed assets (e.g., a factory, farm, warehouse or office), mobile assets (e.g., harvested natural resources, raw or manufactured inventory or mobile equipment), leased assets (e.g., aircraft, watercraft or construction vehicles) and investment interests in assets abroad (e.g., money dedicated to funding a foreign project, held in a host country bank and subject to expropriation).
Kidnap & ransom coverage protects company personnel and family by providing financial reimbursement for such an event. Depending on the insurer, some K&R programs also provide independent expert consultancy before and after a potential act of kidnapping, ransom or extortion.
Great insurance coverage isn’t enough to adequately protect against political risk, however. Businesses need extra support to stay on top of their exposures, and to know what the latest geopolitical developments are.
Starr Companies, for example, does this through Global Risk Intelligence, a specialized team of political risk experts with long-standing backgrounds in national intelligence and international affairs. GRI delivers to Starr clients a unique risk advisory service that spans the gamut of commercial property & casualty exposures. GRI also produces two assets that are extremely helpful. The first is the Executive Intelligence Brief, a world-class monthly analysis of ongoing geopolitical developments (especially in emerging markets) available exclusively to a carefully selected readership of top executives. The second is the Global Risk Matrix, a quarterly ranking of the overall political security risk of every country on the planet.
The world’s geopolitical landscape is changing at a remarkable pace, with new risks and uncertainties arising in even the unlikeliest of places. And yet, as business becomes ever more globalized, insurers can provide their clients with tailored coverage to absorb the losses that stem from political turmoil. By finding the right insurer, with the financial strength to cover their risks as well as the analytical acumen to help turn risk into opportunity, businesses can create partners in prosperity anywhere in the world.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Starr Companies. The editorial staff of Risk & Insurance had no role in its preparation.