Blog Newsletter Workers' Compensation

Tennessee Denies Recovery of Nurse Case Management Fees By Carrier

Another state has been heard from. The growing outcry for path over whether or not case administration charges might be recovered by a subrogated staff’ compensation service has in many respects been as daunting and elusive because the seek for the Holy Grail. All 50 states permit for recovery of staff’ compensation benefits paid to or on behalf of a claimant injured within the course of his or her employment. Not even one, nevertheless, enunciates in its statute precisely which funds or prices paid by a employee’s compensation service represent “compensation” and might be recovered. California comes closest; however that is little comfort when carriers invest their own cash for the mutual profit of staff, employers, and themselves. The result’s industry-wide confusion and an ongoing debate and argument with claimants’ attorneys over what can and may’t be included in a service’s lien for restoration functions.

This challenge was lately addressed for the primary time in Tennessee by the Tennessee Courtroom of Appeals in Memphis Mild Fuel & Water Division v. Watson, 2019 WL 589838 (Tenn. App. 2019). In Memphis Mild Fuel & Water Division v. Watson, the courtroom held that an employer’s worker’s compensation subrogation lien, codified at T.C.A. § 50-6-112(c)(1), doesn’t embrace recovery of $10,000 in nurse case management fees, regardless that such expenses are required by regulation and constitute a transparent profit to the worker. The courtroom noted that the use of administration providers is a discretionary matter, and T.C.A. § 50-6-123 was amended to state as follows:

Employers might, at their own expense, make the most of case administration, and if utilized, the employee shall cooperate with the case management.

Some have argued that the Tennessee Commissioner of the Division of Labor retained a requirement for case management after it reached an applicable threshold. Although this precise assertion might have been true at one time, at the least within the fast wake of the 2004 statutory amendment pertaining to case administration, as a result of in 2007, this regulation, which had at one time required case management in certain instances, was itself amended to state:

An employer or insurer is inspired, but not required, to offer case management providers. Tenn. Comp. R. & Regs. 0800-2-7-.03(1).

Merely put, the courtroom held that, although these charges are necessitated by the tortious act of the third get together and their expenditure assists the employing public of Texas holding down staff’ compensation costs and premiums, providing case administration is just not required underneath the statutory and regulatory framework pertinent to this case. Subsequently, the subrogated service can’t recovery such charges and prices. There was no rationalization as to why such funds have to be “required” as a way to be recovered.

The difficulty addressed by the Tennessee courtroom has been reverberating throughout the industry in other states. In addition to medical expenses, demise benefits, funeral costs, and/or indemnity advantages for misplaced wages and loss of incomes capability resulting from a compensable damage, staff’ compensation insurance carriers additionally expend considerable dollars for case administration prices, medical bill audit fees, rehabilitation advantages, nurse case employee fees, and the like. They pay vital lawyer’s charges on permanency awards and incur other bills together with the dealing with and adjusting of staff’ compensation claims. The subrogated staff’ compensation service believes strongly that, as part of the deal society struck with employers a century ago and to be able to hold down premiums for employers throughout the nation, it ought to be reimbursed for such expenditures when it recovers its staff’ compensation lien. Injured staff and their legal professionals will disagree.

Subrogation professionals, claims handlers, and trial legal professionals usually are not the one ones confused. Trial judges, too, scratch their heads and stare blankly at the courtroom ceiling when requested whether a subrogated service can embrace such authentic funds of their subrogation liens. As is usually the case when there isn’t any reply in regulation – a superb argument can typically carry the day.


Judges like things that match neatly into legal classes and definitions. When subrogating for greater than primary medical and indemnity benefits, look first to the underlying staff’ compensation subrogation statute. In Texas, for example, the statute reads as follows:

“….the net amount recovered by a claimant in a third‑party action shall be used to reimburse the carrier for benefits, including medical benefits that have been paid for the compensable injury.” V.T.C.A. Labor Code § 417.002.

Subsequently, the query turns into whether things like case management costs and medical bill audit fees are thought-about benefits or medical benefits which were paid “for the compensable injury”. “Case management” is a collaborative process of a medical assessment, planning, facilitation, and advocacy for choices and providers to satisfy an injured worker’s health needs via communication and out there assets with a view to promote high quality and cost-effective recoveries and outcomes. It’s an important aspect of efforts to improve the standard of care delivered to individuals with complicated health wants. Case managers coordinate a number of providers together with medical providers and non-medical providers corresponding to: vocational, instructional, housing, social providers, and leisure. What constitutes “case management” is rigorously regulated and defined by state regulation. They often embrace things like:

  • Creating a remedy plan to offer applicable medical providers to an injured worker;
  • Systematically monitoring the remedy being rendered and medical progress of the worker;
  • Assessing whether or not alternate medical care is acceptable and delivered in an economical method;
  • Making certain that the injured worker is following the prescribed medical plan; and
  • Formulating a plan for return to work with due regard for the employee’s recovery and restrictions and limitations.

Likewise, payment audits guarantee compliance with state payment tips, forestall fraud, and hold liens to an absolute minimal. These efforts hold down costs of staff’ compensation for employers and make sure that the smallest lien attainable is taken from an injured employee’s third-party recovery. Refusing to reimburse prices corresponding to these isn’t solely illogical, it’s silly. Nevertheless, logic doesn’t all the time win the day, so let’s take a look at the regulation.

The Texas Division of Insurance – Staff’ Compensation Division requires these providers and bills. Subsequently, the service should have the ability to get well them. The Texas Administrative Code supplies as follows:

(a) The bottom guidelines and the medical service requirements and limitations as established by the Payment Tips shall be used to properly calculate the funds because of the healthcare providers. Tex. Admin. Code Tit. 28, § 134.1.

The Texas Supreme Courtroom has also not directly weighed in on the difficulty. It has confirmed that V.T.C.A. Labor Code § 417.002(a) requires that a service be reimbursed out of any third-party restoration for all benefits paid for an damage. Texas Staff’ Comp. Ins. Fund v. Serrano, 962 S.W.second 536 (Tex. 1998). It says that the statute doesn’t limit reimbursement to solely those advantages which are affordable and needed. As a result of the injured worker receives the benefit of all quantities paid, the service is entitled to reimbursement with out proving that the quantities paid to or for the worker have been affordable and crucial medical expenses. The idea is that if it was paid, it ought to be reimbursed. The courtroom primarily gave broad definitions to the phrases “medical benefit” and “healthcare”. The Serrano Courtroom allowed reimbursement for costs and payments introduced in that case which indicated on their face that they have been paid in accordance with Fee tips.


Every state ought to be evaluated and argued in another way, as a result of each state’s statute is totally different. In California, for instance, the applicable statute reads as follows:

Any employer who pays, or becomes obligated to pay compensation, or who pays, or turns into obligated to pay wage in lieu of compensation, or who pays or becomes obligated to pay an amount to the Department of Industrial Relations pursuant to Section 4706.5, might likewise make a claim or convey an action towards the third individual. In the latter occasion, the employer might get well in the identical go well with, in addition to the entire amount of compensation, damages for which she or he was liable together with all salary, wage, pension, or other emolument paid to the employee or to his or her dependents. Cal. Labor Code § 3852.

The workers’ compensation service is entitled to recuperate, in the same third-party lawsuit with the employee, the whole quantity of its expenditures for “compensation” and some other special damages, corresponding to salary, wage, pension, or different emolument paid to the worker. Cal. Labor Code § 3856(c). California regulation then defines “compensation” as:

“….compensation under this division and includes every benefit or payment conferred by this division [Division IV] upon an injured employee, or in the event of his or her death, upon his or her dependents, without regard to negligence.” Cal. Labor Code § 3207.

“Compensation” subsequently, consists of medical and hospital bills (Cal. Labor Code §§ 4600‑4608), medical-legal expenses (Cal. Labor Code §§ 4620‑4628), vocational rehabilitation bills (Cal. Labor Code §§ 4635‑4647), incapacity indemnity funds (Cal. Labor Code §§ 4650‑4663), demise advantages (Cal. Labor Code §§ 4700‑4709), and interest (Cal. Labor Code § 5800). Most penalties are arguably recoverable as mandated by Division IV, and even the fee of utilization assessment should now arguably be recoverable as the use of such course of is now mandated by California regulation. Cal. Labor Code § 4610. Nevertheless, the fee of utilization evaluation is probably not a “benefit” or “payment conferred on an injured employee”. Apart from the logical arguments above, California regulation apparently does not immediately help restoration of these things. Nevertheless, it does require mitigation of damages, and one Courtroom of Appeals determination does permit a plaintiff to recuperate the price of mitigation efforts as a recoverable item of damages. Kleinclause v. Marin Realty Co., 94 Cal. App.second 773 (1949).

One other fascinating and cogent argument is an analogy to the fitting to a future credit score. When a recovery by a claimant is made, the service is given a credit score toward future “benefit” funds. An in depth take a look at this regulation reveals that “medical-legal” prices ought to be prices towards which a service can press a credit score, implying that they constitute “compensation” underneath California regulation and ought to be recoverable by a employee’s compensation service. Adams v. W.C.A.B., 18 Cal.3d 226 (1976).

North Carolina

Arguments in every state must be customary from the only tools out there – statutory language and customary sense. In North Carolina, for example, the employees’ compensation statute supplies for reimbursement to the service of “all benefits by way of compensation or medical compensation expense paid or to be paid”. N.C.G.S.A. § 97‑10.2. Additional authorized archaeology reveals the definition of compensation as follows:

“The term ‘compensation’ means the money allowance payable to an employee or to his dependents as provided for in this Article, and includes funeral benefits provided therein.” N.C.G.S.A. § 97‑2.

North Carolina case regulation reveals no additional clarification on precisely what “medical compensation expenses” check with, however the door seems open broad sufficient to include some of the case management costs referenced above, but not quite extensive enough to incorporate interest. Buckner v. City of Asheville, 438 S.E.second 467 (N.C. App. 1994). In North Carolina, nevertheless, there’s also the potential attraction to the Industrial Fee to have one thing declared as a “benefit” recoverable in subrogation. Earlier than the Fee can declare that a service is entitled to a specific expense, it must make a factual willpower that the providers have been rehabilitative in nature and reasonably “required to effect a cure or give relief” to the claimant. Walker v. Penn. Nat’l Safety Ins. Co., 608 S.E.second 107 (N.C. App. 2005). This state has a better burden to satisfy so as to get well one thing as a “benefit” in subrogation.


Illinois has totally ignored the fee savings to the claimant of such case administration charges and expenditures. It has declared such gadgets unrecoverable because such medical rehabilitative providers offered by the claim’s coordinator at the insurance company’s course have been presumably offered for the benefit of the service and were not reimbursable crucial medical or rehabilitative providers. Cole v. Byrd, 656 N.E.second 1068 (Ailing. 1995). The expense at situation was the medical rehabilitation coordinator providers of a licensed skilled nurse offered by Professional Rehabilitation Management (PRM). The courtroom declared that when registered skilled nurses coordinate the providers of numerous medical providers however do not present any remedy to an injured employee, these providers represent “case management services” quite than “medical treatment services” inside the which means of the Staff’ Compensation Act.

New Jersey

In New Jersey, a Section 40 lien consists of funds made for momentary disability, permanent disability, and all medical expenses and remedy. The employees’ compensation lien doesn’t embrace the service’s portion of a claimant’s lawyer and professional charges, an employer or insurer’s bills for a defense medical examination, nurse case administration fees, or rehabilitative nursing providers until such nursing providers primarily benefitted the claimant and have been fairly essential to the claimant’s restoration. Kuhnel v. CNA Ins. Corporations, 731 A.second 564 (N.J. Super. 1999). Any bills incurred by a staff’ compensation service for providers of a rehabilitative nurse are recoverable as medical expenses beneath the workers’ compensation lien statute only if the service demonstrates that such expenses are vital to offer medical and other remedy as shall be essential to remedy and relieve the claimant of the consequences of the damage. Raso v. Ross Steel Erectors, Inc., 725 A.second 690 (N.J. Tremendous. 1999).


The Michigan Staff’ Compensation Appellate Commission has particularly held that nurse case administration fees could be reimbursable – relying on circumstances. In Ziebell v. Wal-Mart, 2001 WL 566162 (Mich. Work. Comp. App. Com. 2001), the TPA employed a nurse case manager and then fired him when he advisable the claimant have an unbiased medical analysis. The nurse case supervisor stayed on working for the plaintiff (non-cat accidents) and the Justice of the Peace later ordered the service to pay his $7,713.10 in nurse case management charges. The Appellate Fee reversed because the plaintiff and nurse case manager didn’t present proof that the providers have been “reasonable”, but specifically said:

“Although the Act makes no specific reference to ‘case management services,’ we believe that those services, if reasonable and needed, are contemplated in the types of services provided for under section 315(1).”

In contrast to “case management services,” there’s at the least a provision in the Act that contemplates cost of nursing care providers, §§ 418.315(1) and 17.237(315)(1). A situation precedent to an award of nursing care or attendant providers, nevertheless, is a willpower that such providers are “needed”, not merely desired. M.C.L.A. § 418.315(1) offers in pertinent part:

The employer shall furnish, or cause to be furnished, to an employee who receives a personal damage arising out of and within the course of employment, affordable medical, surgical, and hospital providers and medicines, or different attendance or remedy acknowledged by the laws of this state as authorized, when they’re wanted.

Courts have held that § 315(1) signifies that the worker is entitled to applicable medical care. Nevertheless, with regard to nurse case administration providers, the Fee stated the next:

Though the Act makes no particular reference to “case management services,” we consider that those providers, if affordable and wanted, are contemplated in the varieties of providers offered for beneath part 315(1).

Nevertheless, it stays the burden of the service looking for to subrogate for such providers that they have been affordable and mandatory.

In Lefko v. Walter Toebe Constr. Co., 2008 WL 5122473 (Mich. Work. Comp. App. Com. 2008), a 19-year-old employee was rendered a spastic quadriplegic because the end result of a work-related accident. Liberty Mutual offered staff’ compensation benefits including nurse case managers. The Commission said that case administration fees are routinely paid in applicable instances and constitute a “benefit” beneath Michigan regulation.

When trying to recuperate for costs or expenses past the essential indemnity and medical profit payments, a subrogation professional’s first technique ought to be to take a look at the regulation of the state concerned to find out precisely what the subrogation statute allows the service to recuperate. For instance, if it permits for recovery of “benefits” or “compensation” paid, then the definitions of those terms in other areas of the workers’ compensation regulation must be decided, and an argument normal that these definitions embrace case administration sort charges and expenses. If that proves to be a lifeless end, a logical argument must be made that by discouraging the spending of such amounts, the subrogation lien will improve, and the recovery of the injured employee will lower. Such expenditures assist in holding down the price of staff’ compensation insurance premiums and every incentive to hold down liens and scale back fraud will make staff’ compensation methods less expensive and reasonably priced for businesses.

Any argument for restoration of medical case management providers also needs to argue that such providers constitute medical remedy. That is no straightforward activity, because at its core, focused case administration isn’t the direct provision of care and providers, but as an alternative is a separate class of providers that identifies vital providers, assists in locating the providers, identifies providers, and screens the supply of care. Nevertheless, such providers serve the purpose of managing the medical providers offered – a perform each bit as essential because the precise medical providers offered. It companions with subrogation to assist hold down each health care costs and staff’ compensation premiums. Permitting for restoration of such providers serves the unique underlying legislative and social objective of staff’ compensation subrogation. An Illinois Bar Journal article steered some quite fascinating standards to determine if case administration expenses must be reimbursable:

  • Whether or not the case supervisor supplies medical remedy and/or analysis;
  • Whether or not the case supervisor coordinates and supervises medical remedy offered by others;
  • Whether or not the injured worker requested the case manager’s providers;
  • Whether or not the case manager makes suggestions to the insurer or to the employee;
  • Whether or not the case manager would discontinue working with the employee if the insurer so instructed;
  • Whether or not the case supervisor reviews to the insurer or to the worker; and
  • Whether the case supervisor considers value effectiveness and price containment.

Mary Palumbo, Staff’ Compensation Insurer Not Entitled to Reimbursement for Case Management Providers, 84 Unwell. B.J. 101, 103 (1996).

As a final resort, subrogation professionals ought to merely embrace affordable case administration prices in the lien totals offered to plaintiffs’ legal professionals and put the burden on them to affirmatively problem such expenses and provide you with legal arguments as to why they should not be reimbursed. Whereas it is perhaps a stretch to incorporate lawyer’s fees and different overhead expenses within the lien complete, it’s affordable to anticipate reimbursement of expenses and prices which benefit the claimant by maintaining the benefits complete to its absolute minimum. If the totals are usually not questioned, there isn’t any foul. If they are, keep in mind the phrases of Mark Twain, “Whatever you say, say it with conviction.”

Should you should have any questions relating to this text or subrogation typically, please contact Gary Wickert at [email protected]