Layoff for Economic Reasons Triggers TTD Obligation to Restricted Employee

Suanne Palazzolo was injured on two separate occasions, May 9 and November 6, 2006, while performing cleaning duties for Absolute.  Her claims proceeded to arbitration at the Compensation Commission which, among other things, awarded Suanne outstanding medical bills and 49-6/7 weeks of temporary total disability benefits. 

Regarding the TTD issue, Suanne testified that she was no longer employed by Absolute because “[t]hey laid [her] off because they lost their contract out at the mine.”  She was doing laundry for Absolute in an area not directly connected to the cleaning contracts Absolute had lost.  Absolute was still cleaning other areas and no other employees were laid off at the time she was let go.

The Arbitrator awarded TTD benefits from February 23, 2008 through the date of arbitration on August 5, 2008.  Absolute’s examining physician restricted Palazzolo to lifting no more than 50 pounds, this as of July 12, 2007.  In October 2007, one of Palazzolo’s physicians stated she would benefit from a cervical discectomy.

On appeal, Absolute argued that Palazzolo was not entitled to TTD benefits after the date she was laid off because her termination was due to economic conditions.  Therefore, Absolute asserted that her disability was no longer the cause of her inability to work and thus Absolute was not liable for further temporary disability benefits.  However, the Commission found that at the time she was laid off, Palazzolo was not working at the mines that canceled contracts with Absolute.  Based on this evidence, the court concluded that this foreclosed Absolute’s argument that her termination should affect her entitlement to TTD benefits.

Absolute also challenged liability for medical bills based on Palazzolo having violated the provisions of Section 8(a).  This section provides that the employer is liable all first aid and emergency treatment plus all treatment provided by the physician or hospital the employee initially chooses or any subsequent medical provider in the chain of referrals from the first service provider, plus:

“All medical, surgical and hospital services provided by any second physician, surgeon or hospital subsequently chosen by the employee or by any other physician…or other provider of services recommended by said second service provider or any subsequent provider of medical services in the chain of referrals from said second service provider.”

Absolute claimed that Palazzolo treated with three physicians after her first choice of doctors, thereby exhausting the two-physician allowance permitted by Section 8(a).  To support this argument, Absolute argued that there were no written referrals in the record, claimant’s attorneys were involved in the referral process, and Palazzolo herself asked her doctor to refer to her certain physicians.

The court held that the genesis of a referral has no bearing on whether there has been a violation of the two-physician rule, as long as the treating physician makes the referral.  Therefore, the extent to which Palazzolo’s physician referred her to certain physicians at her or her attorneys’ urging or request, the referrals remained in the chain of referrals.  The court also dismissed the argument that the written referrals were a sham designed to circumvent the two-physician rule.  The court felt there was “ample” evidence in the form of the initial physician’s written referrals, treatment notes from one of the other physicians indicating he saw Palazzolo on referral, and testimony to establish that the last two doctors saw her on referrals from the initial treating physician.  Thus she did not exceed the two-physician limitation.   

COMMENT:  The TTD award is consistent with prior case law where a claimant is under restriction at the time of a layoff.  Thus TTD could have been justified whether or not the claimant was working on one of the contracts her employer lost.  It appears the Commission inferred she was laid off for reasons other than economic, but it was not necessary to reach this conclusion in order to award benefits.

The two-physician limitation is intended to prevent “doctor shopping” which it appears this claimant may have been doing.  The first physician was a chiropractor, so there was an obvious reason for the initial referral.  This physician apparently ‘fired’ petitioner as a patient.  The second referral was to her family physician for a pain medication prescription which the claimant needed and her chiropractor could not provide.  The fourth referral seems questionable in that the claimant saw a physician not recommended by her doctor - the referral was permitted based on the claimant’s testimony that the chiropractor gave her a “choice” of who she would like to see. Also, fourth doctor’s treatment notes contained reference to seeing the claimant on referral from the chiropractor.

One questions how “ample” the evidence was supporting these referrals.  Granting the need to obtain pain medication and to consult with an orthopedic specialist, one does not need a referral to one’s personal physician.  The specialist could have provided the necessary prescription in any event.  The result in this case exemplifies a rather common end-around the two-physician limitation – the claimant requests referrals when none may be in the offing and ensures that the physician she sees documents that she is being seen “on referral” from another physician. 

Recent amendments to the Act permit employers to create PPO networks which employees can utilize.  Employees retain the traditional two choices of physicians; however, if an employee opts not to treat within his employer’s PPO network, he will have exercised one of his two choices.

All PPO networks must be approved by the Commission and must offer access to physicians in the area where the employee resides.  How these arrangements will work in practice is not certain, but the PPO mechanism should produce measureable reductions in medical costs.