Safeguarding Injured Workers From Cybersecurity Breaches

Under new Federal proposals, injured workers will be protected from cybersecurity breaches. The impact will be greater responsibilities and costs for law firms and, employers and their insurance companies.

Workers' Compensation stakeholders will be required to maintain better cyber hygiene, have better application update procedures and establish an adequate plan to respond to  breaches. Client and governmental agencies will require more secure networks and procedures for handling data transmission, access, and storage.

Hacking is an increasing concern for workers' compensation stakeholders. Some of the attacks by nation states are difficult to contain. Other attacks, by criminal ventures and amateurs, are less invasive. All the attacks can be hazardous, disruptive and costly. In the future, they will probably advance from the invasion of Personal Protective Information (PPI) to industrial ("Internet of Everything"), and national attacks, ie. WannaCry, and WannaCry (2nd wave).  See also, Envisioning the Hack That Could Take Down New York City  NYMag June 10, 2016  and "A Cyberattack "the World Isn't Ready For," NY Times, June 25, 2017.

The scope of potential exposure to injured workers is enormous. It extends from the hypothetical breach of a cardiovascular  (ie. medical device security) implant portrayed on the television series, Homeland, to real-world breaches of Personal Protected Information (PPI). An example of which is the breach of 32,599 patient records resulting in a $4.124 million class action settlement. Columbia Cas. Co. v. Cottage Health System, 2015 WL 4497730 July 15, 2015 Not Reported in F.Supp.3d. "The Court, therefore, DISMISSES the Complaint WITHOUT PREJUDICE, so that the parties may pursue alternative dispute resolution under the terms of the policy." The cybersecurity policy contained an exclusion for "failure to follow minimum required practices." See also the press releases from the NY State Attorney General.

Insurance carriers are not immune from liability as a result of cybersecurity data breaches. A $115 Million proposed class action settlement as a result of a cybersecurity attack on health insurer Anthem, Inc. has been announced. It is the largest data breach settlement in history,

More specifically, a recent American Bar Association opinion mandates that attorneys must take reasonable cybersecurity measures to protect client data. ABA Formal Opinion 477 (May 11, 2017). 

National regulation initiatives have been given a mandate through Presidential Executive Orders. Presidential Executive Order on Improving Critical Infrastructure Cybersecurity 13636 February 13, 2013 and Presidential Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure  May 11, 2017. An Introduction to Data Security  (NIST) June, 2017. Digital Idenity Guidlines 800-63 Rev 3, (NIST) June, 2017.

The National Institute of Standards and Technology (NIST) has initiated a "Framework for Improving Critical Infrastructure Cybersecurity." This voluntary model is rapidly gaining acceptance throughout industry and government.

A Federal statutory cause of action has evolved under the Defense of Trade Secrets Act. 18 USC §1836, et. seq., as well as the Cybersecurity Act of 2015. See also, Cybersecurity Enhancement Act of 2014  P.L.113-274 .

The recent initiatives in electronic security were highlighted at the recent NJ ICLE 2nd Annual Cyber Security Conference. The Presidential initiatives operationalized by National Institutes of Standards and Technology. The Cybersecurity Framework: Implementation Guidance for Federal Agencies - Draft NISTIR 8170 (NIST) May 12, 2017 Comment period through June 30, 2017 . Cybersecurity Framework Workshop 2017 , Addressing Gaps in Cybersecurity: OCR Releases Crosswalk Between HIPAA Security Rule and NIST Cybersecurity Framework  February 23, 2016.

The NIST Framework is being integrated into the infrastructure by the Executive Branch. Adoption and integration is anticipated by Health and Human Services  (HHS) (HIPAA-Office of Civil Rights), and Securities and Exchange Commission (SEC), Food and Drug Administration (FDA).

"An overriding question remains whether lawyers will be able to effectively protect their client’s confidentiality interests at any cost. Clients are becoming more sophisticated and they now demand that law firms adhere to security standards that will prevent a breach and if a breach occurs that the law firm will take adequate action to provide notice and, mitigate the potential damage."
"The ethical responsibility of lawyers, in most jurisdictions, is to take reasonable care to protect the personal information of clients in accordance with well-defined constitutional, statutory and administrative regulations, ethics opinions and the common law phraseology of the Restatement of Torts." See, Cybersecurity is an imminent and costly threat to lawyers and their clients.

Cybersecurity in workers' compensation remains in its infancy.  Cybersecurity is again placing the Federal government yet again in the lead on privacy and confidentiality as workers' compensation moves along the Path to Federalization. Going forward, increased regulation and stricter controls will safeguard injured workers.

This article is based on my presentation on Cybersecurity  at the NJ ICLE seminar on Hot Topics in Workers' Compensation Law 2016. The 2017 supplement to the treatise Workers' Compensation Law provides extensive and expanded coverage on this topic.

Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (2017 West-Thomson-Reuters). 

For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  jon@gelmans.com  has been representing injured workers and their families who have suffered occupational accidents and illnesses.

Updated: 06/29/17 06:30 am

Portability, The Gig Economy And Workers Compensation

Today's post is by guest author, Jon Rehm, Esq., of the Nebraska Bar.


Changing employment laws to encourage so-called “portable benefits” is an idea that goes hand in hand with finding new ways to classify gig economy workers. These proposals are being pushed in a growing number of states. These proposals also enjoy support from Democrats and Republicans in Congress. These proposals could also radically alter workers’ compensation in the United States.

The idea of a third classification of worker between employee and independent contractor is to give so-called “gig economy” workers some protections and benefits without employers having to bear the full costs of employment – including unemployment, workers’ compensation, and health insurance. Sometimes this third class of workers is described as “dependent contractors.

Portable benefits are usually discussed in the context of contractors because traditionally benefits such as unemployment, workers’ compensation, and health insurance have been provided by employers. So-called portable benefits are detached from employers. The Affordable Care Act increased portability of health insurance benefits through the use of exchanges Portability of health insurance was touted as a way to help create new businesses because potential entrepreneurs were not tied to an employer for health insurance.

The idea of portable benefits and a new classification for gig employers is also touted as a way to reduce litigation against companies such as Uber for how they classify employees. But former National Labor Relations Board member Craig Becker pointed out that creating a new class of workers may actually create more litigation when employers try to re-classify employee as dependent contractors. Becker and others pointed out that this is what happened in Italy when Italy created a third class of worker that was neither employee nor an independent contractor.

Becker and others point out that the drive to create a new class of workers is being driven by tech companies such as Uber as a way of reducing labor costs. The real risks of creating a new classification of workers are shared even by some who promote the sharing or gig economy. Gene Zaino, founder, and CEO of MBO Partners, a firm that provides services to independent workers, stated that any new classification of independent workers should only include workers who earn more than $50 per hour. Under such a scheme lower-paid workers would still retain the benefits and protections of the employment relationship.

Though states are pondering portability and dependent contractor laws, there is a push for federal legislation so that laws can remain uniform across the country. Any federal push for portable benefits for so-called independent workers would clash with state-based workers’ compensation laws. Workers’ compensation is traditionally a state law concern because when workers’ compensation laws were enacted the power of the federal government to implement laws regarding workplace safety were limited. During the New Deal-era, that interpretation of the interstate commerce clause changed to allow broad regulation of the workplace.

Advocates for state-based workers’ compensation laws likely have little constitutional grounds to overturn any federal legislation that would substitute “portable benefits” for so-called “independent workers” for state-based workers’ compensation benefits. Some critics who argue, correctly, that many state-based laws inadequately compensate injured workers could also be open to or even welcome a federal substitute for insufficient state workers’ compensation laws.

Opioid Abuse and the NJ Workers' Compensation Act

The implementation of the recently enacted NJ law concerning substance abuse disorders was the subject of an insightful panel discussion today at the annual meeting of the NJ Workers' Compensation Section.

(Left to right) Jag Desai, MD, Nancy J. Johnson, Esq., Jon L. Gelman, Esq,
Christopher P. Gargano, Esq., Mark B. Zirulnik, Esq., Hon Joanne Downey, Member of the NJ General Assembly
Photo Credit: Margaret Sherlock

The reviewed the implications of the newly enacted NJ law, A3, PL2017, c28, that was enacted on February 15, 2017, and become effective 90 days later. That Act requires health insurance coverage for the treatment of substance abuse disorders. It places certain restrictions on the prescription of opioid and certain other drugs. The law mandates abuse educational programs.

It became obvious during the roundtable program that opioid abuse over the last two or three decades has become an epidemic in nature and the impact to injured workers, employers, and the workers' compensation system has increased enormously.

While the Workers' Compensation Act was not embraced expressly in the text of the legislation, Assemblywoman Downey spoke of her continuing concern and commitment to review the issue further. Ms. Downey told the audience that she would continue to address substance abuse in the workplace going forward and more specifically treatment issues and integration into the NJ workers' compensation system.

Reference Material

The Ethics of Pain Management

The Workers’ Compensation Bench/Bar Conference

May 19, 2017

Round Table Discussion Bibliography

Statutes

P.L.2017, c.28 (Passed) 2017-02-15 S3 Requires health insurance coverage for treatment of substance use disorders; places certain restrictions on the prescription of opioid and certain other drugs; concerns continuing education related thereto.

New Jersey State Sources

Summary: http://www.njleg.state.nj.us/bills/BillView.asp?BillNumber=S3

Text: http://www.njleg.state.nj.us/2016/Bills/S0500/3_I1.HTM
Text:http://www.njleg.state.nj.us/2016/Bills/S0500/3_R1.HTM

Text: http://www.njleg.state.nj.us/2016/Bills/AL17/28_.HTM

Roll Call: http://www.njleg.state.nj.us/bills/BillView.asp

Articles

Rousmaniere, Peter, “We’re beating back Opioids-Now What?, WorkCompCentral (2015) https://www.workcompcentral.com/special-report/special-report/id/2

Paduda, Joseph, “Prescription Drug Management in Workers Compensation,” Workers Compensation Issue 2016 Issues Report, CompPharma (2016)

https://www.ncci.com/Articles/Documents/II_IR2016-Paduda.pdf

Opioid Addiction, 2016 Facts and Figures, American Society of Addiction Medicine

http://www.asam.org/docs/default-source/advocacy/opioid-addiction-disease-facts-figures.pdf

The Opioid Epidemic” By the Numbers, US CDC, June 2016

https://www.hhs.gov/sites/default/files/Factsheet-opioids-061516.pdf

Lembke, Anna MD, “Why Doctors Prescribe Opioids to Known Opioid Abusers,” N Engl J Med 2012; 367:1580-1581, October 15, 2012 | DOI 10.1056/NEJMp1208498

http://www.nejm.org/

Alghnam S, Castillo R, “Traumatic injuries and persistent opioid use in the USA: findings from a nationally representative survey,” Injury Prevention 2017;23:87-92.

http://injuryprevention.bmj.com/content/23/2/87

Stahl, Arthur, IAIABC Policy Guide on Reducing Opioid Abuse Offers Blueprint for Effective Reform, (September 8, 2013) https://www.lexisnexis.com/legalnewsroom/idoctor-health/b/recent-cases-news-trends-developments/archive/2013/09/08/iaiabc-policy-guide-on-reducing-opioid-abuse-offers-blueprint-for-effective-reform.aspx?Redirected=true

Blogs

Domer, Thomas, “Opioid Abuse in Workers’ Compensation,” Wisconsin Workers Compensation Experts Blog, June 17, 2016

https://wisworkcompexperts.com/2013/06/17/opioid-use-in-idoctor-health/

Geaney, John, “What impact will New Jersey’s opioid prescription bill have on workers’ comp?,” NJ Workers’ Compensation Blog, March 9, 2017

http://www.nwcdn.com/state-news/what-impact-will-new-jersey-s-new-opioid-prescription-bill-have-on-workers-comp-nwcdn-new-jersey-mem?A=WebApp&CCID=25405&Page=172&Items=1

Gelman, Jon L., “Doctors, Patients and Opioid Abuse,” Workers’ Compensation Blog, October 24, 2012

http://workerscompensation.blogspot.com/search?q=doctors%2C+patients+and+opioid+abuse

Treatise

Gelman, Jon L., “Medical—Medical and surgical treatment,” 38 N.J. Prac., Workers’ Compensation Law § 12.5 (3 ed.), 2017, Thomson Reuters www.westlaw.com

An Increase Predicted of Reported Mesothelioma Cases

Asbestos is a naturally occurring fibrous mineral which was widely used in the manufacture of a variety of products beginning in the late nineteenth century. Although the majority of exposure to asbestos occurred between 1940 and 1980, in occupations such as construction, shipyards, railroads, insulation, sheet metal, automobile repair, and other related fields, exposure continues to this day.

Asbestos fibers are inhaled by workers and remain in the lungs where they can cause disease. Fibers are also inhaled by family members or any other person coming into contact with asbestos wherever it may be.

A recent study predicts that there will be an increase in the number of reported mesothelioma cases in the United States in the future. Therefore the continuing epidemic of workers' compensation claims for mesothelioma will not abate as previously predicted as many exposed workers' and their families seek benefits including medical monitoring.

"Mesothelioma, a rare tumor, is highly correlated with asbestos exposure. Mesothelioma, similar to all asbestos-related diseases, is dose/intensity dependent to some degree, and studies showed the risk of mesothelioma rises with cumulative exposures. Multiple processes occur in an individual before mesothelioma occurs. The impact of mesothelioma in the United States has been continuous over the last half century, claiming between 2,000 and 3,000 lives each year.

"Mesothelioma is a preventable tumor that is more frequently reported as associated with asbestos exposure among men than women. However, the rate of asbestos-associated mesothelioma is on the rise among women due to a better investigation into their histories of asbestos exposure. It is of interest that investigators detected asbestos-associated cases of mesothelioma in women from nonoccupational sources—that is, bystander, incidental, or take-home exposures.

"It is postulated that asbestos-associated mesotheliomas, in both men and women, are likely underreported. However, with the implementation of the most recent ICD-10 coding system, the correlation of mesothelioma with asbestos exposure is expected to rise to approximately 80% in the United States. This study examined the demographic and etiological nature of asbestos-related mesothelioma. Mesothelioma from asbestos exposures: Epidemiologic patterns and impact in the United States, Richard A. Lemen Journal Of Toxicology And Environmental Health, Part B Vol. 19 , Iss. 5-6,2016

"Workers' compensation benefits have been awarded to claimants who have been exposed to asbestos and who have suffered asbestos-related disabilities. Bolger v. Chris Anderson Roofing Co., 112 N.J.Super. 383, 271 A.2d 451 (Co.1970), aff'd 117 N.J.Super. 497, 285 A.2d 228 (App.Div.1971). The courts have recognized an asbestos exposure as causing multiple disabilities, and awards have been made for occupational exposure which has resulted in a “second disease”. Shepley v. Johns-Manville Products Corporation, 141 N.J.Super. 387, 358 A.2d 485 (App.Div.1976). Jon Gelman, Workers Compensation Law, 39 NJ Practice Series 9.20.

The United States has yet to completely ban the use of asbestos and recent regulations to do so have been put on hold by the Trump Administration. In light of the concerns raised by this study, reconsideration of a complete ban of asbestos products in the US should be reconsidered without further delay.

…

Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). 

For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  jon@gelmans.com  has been representing injured workers and their families who have suffered occupational accidents and illnesses.

The Promise of State Initiatives to Prevent Long Term Work Disability

Every year, millions of Americans suffer from medical conditions that affect their ability to work. This puts them at risk of losing their jobs or being forced to rely on Social Security Disability Insurance (SSDI). States could help many of these workers stay in their jobs, but promising options for doing this remain largely untested. The five states with state-mandated short-term disability benefits— California, Hawaii, New Jersey, New York, and Rhode Island—are promising settings for such tests.

Seminar: Feb 23, 2017 12:00 p.m. - 1:30 p.m. Location Online

On February 23, from 12:00–1:30 p.m. (ET) Mathematica’s Center for Studying Disability Policy (CSDP) will host a live webinar. A panel of experts from Mathematica, Sedgwick, and the state of California will discuss the promise of state-based systems from the perspectives of researchers, policymakers, and practitioners. Reporting on studies of state disability insurance (SDI) and workers’ compensation (WC) systems in California and Rhode Island, our speakers will present new evidence on:

• The risk of SSDI entry for SDI and WC claimants
• The extent to which initial data on the characteristics of SDI or WC claimants can be used to predict their risk of entering SSDI
• The availability and utilization of return-to-work supports in state SDI and WC systems
• How states, including those without SDI, could help workers keep their jobs, maintain their economic independence, and save billions of taxpayer dollars

The panel of experts includes:
David Mann, Mathematica
Yonatan Ben-Shalom, Mathematica
David Stapleton, Mathematica
Teresa Bartlett, Sedgwick CMS
Jennifer Richard, California Assembly Labor and Employment Committee

2016 Top Ten Workers’ Compensation Fraud Cases

Today's guest post is authored by Leonard T. Jernigan, Jr., Esq. of the North Carolina Bar. Mr Jernigan's nationally recognized annual employer fraud review highlights "misclassification of employment status" as a major issue. As the "shared economy" continues to expand exponentially the concept of "employment status" becomes increasingly challenged in a workers' compensation system crafted over a century ago.  

Four of the top ten cases in 2016 [valued at $412,000] are from perennial offender California, three from Florida, one each from Massachusetts and Texas, and one involving 20 different states. The misclassification of employees by employers continues to create dramatic financial fraud, with resulting cost shifting, lost tax revenues and hardship to inured employees. As we noted last year, while the “gig economy” pioneered by technology companies has lead to debate about new classifications for workers, these companies remain subject to our laws. We are starting to see widespread litigation and settlements like Uber’s $100 million payment to disgruntled drivers in California and Massachusetts. We’ll keep tracking these new developments in the context of the misclassification and fraud actions that we’ve been tracking for many years.

1. (National) FedEx to Settle Driver Lawsuits in 20 States for $240 Million  (6/16/16) FedEx Ground Systems, Inc. has agreed to pay $240 million to resolve claims by 12,000 FedEx drivers in 20 states. FedEx was labeling the drivers as independent contractors to avoid paying additional taxes, fringe benefits, health care costs, workers’ compensation insurance, and much more. The drivers were also not paid overtime or reimbursed for expenses.

2. (California) Seven People Charged in $98 Million Workers’ Compensation Fraud Case (6/7/16) Seven people have been indicted with 107 felonies in a business scheme designed to commit workers’ compensation fraud. The ringleader, Peyman Heidary, owned or ran numerous businesses, including law firms and health clinics, and used other people to disguise his involvement and create an illegal ownership structure. The clinics were found to have inflated billings to insurance companies by exaggerating patient injuries and treatments. The businesses fraudulently billed more than $98 million to 18 insurance companies, resulting in the businesses receiving over $12.4 million in payments.

3. (Texas) Labor Department “Mole” Helps Business Maintain $30 Million Workers’ Compensation Scam (6/28/16) Lydia Taylor worked at the U.S. Department of Labor in Dallas and used her position to give her family members information about federal workers’ compensation claims and warn them when suspicions arose about their fraudulent billing. Taylor’s uncle, Tshombe Anderson, was the ringleader of the group. Anderson and others formed several businesses that fraudulently billed the federal workers’ compensation program $30 million for unneeded and unrequested medical equipment for rehabilitation patients.

4. (Florida) Fake Construction Company used to Process over $17.4 Million of Fraudulent Payroll (3/28/16) Orquidea Quezada set up Orquicely Construction LLC and used the company to process payroll for subcontractors who employed hundreds of people. In exchange for her services, Quezada kept a five percent fee. The scheme allowed the contractors to avoid paying payroll taxes, workers’ compensation insurance, and to conceal the employment of undocumented workers.

5. (Florida) Fake Construction Company Used to Cash $7.4 Million in Undocumented Worker Payroll (7/7/16) Two men set up a shell company, Sunrise All Contractor Corp., to receive payments and cash checks for a fee on behalf of other companies that would then pay their undocumented workers. The scheme enabled employers to avoid workers’ compensation premiums and payroll taxes. These schemes are popular among employers of undocumented employees because these employees are less likely to blow the whistle on the fraud out of fear of exposing their undocumented status.

6. (California) Insurance Company Agent Misappropriated $7.3 Million and Unable to Pay Workers’ Compensation Claims for California Indian Tribe (8/19/16) The operator of Management Resources Group California LLC, Gregory J. Chmielewski used more than $7.3 million from the company’s reserve accounts for his own personal investments. The company managed another company, Independent Management Resources, which sold workers’ compensation insurance to California Indian tribes. Chmielewski’s actions resulted in the company being unable to cover 117 claims.

7. (California) Contractor Cheated Workers’ Compensation Insurer Out of More Than $5.4 million in Premiums (10/5/16) Michael Harold Kreger, the owner of Michael Kreger Contracting was sentenced to 9 months in jail, 5 years of probation, 1500 hours of community service, and ordered to pay restitution of more than $5.4 million for underreporting his payroll and committing insurance fraud. Mr. Kreger cheated his company’s workers’ compensation insurer out of more than $5.4 million and his employees out of adequate protection for potential workplace injuries.

8. (Massachusetts) Construction Companies Ordered to Pay $2.6 Million for Fraud in Misclassifying Workers (8/2/16) Force Corporation, AB Construction Group, and employers Juliano Fernandes and Anderson Dos Santos were found by the U.S. Department of Labor to have misclassified the bulk of their employees to avoid paying overtime wages, workers compensation insurance, payroll taxes, and more. A consent judgment was entered requiring the companies and employers to pay more than $2.6 million in damages and penalties for their fraud.

9. (California) Company Underreporting Payroll Defrauds Insurer of $2.1 Million (6/7/16) Co-owners Alvin Shih Chen and Fiona Chen of Metro Worldwide, Inc., a trucking company, underreported payroll by $4.7 million. The owners paid their truck drivers in cash to avoid reporting them to the insurer and to reduce their payroll obligation. While the company reported nearly $3 million in payroll to California’s State Compensation Insurance Fund, the actual payroll amount was $7.6 million. An estimated $2.1 million in premiums was lost.

10. (Florida) Construction Company Defrauds Workers’ Compensation Insurer of $1.8 Million by Underreporting Payroll (4/6/16) Maira Chirinos, the owner of construction company Tocoa Builders, Inc. misrepresented information regarding the company’s operations, employees, and payroll when applying for a workers’ compensation policy. The misrepresentations enabled Chirinos to avoid paying at least $1.8 million in workers’ compensation premium payments. An investigation found Chrinos grossly underreported payroll to the insurance company. She reported a payroll of $76,000, but more than $11 million in payroll checks were cashed during the period covered by the policy.