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CHAPTER 38 Workers Compensation



Managed Care Physicians………….. 38:2

Non-Managed Care Physicians.. 38:3

Physicians Responsibilities Under the Workers Compensation System 38:3




Fraud & Misrepresentation….. 38:8

Improper Acceptance of Benefits & Referral Fees.. 38:9

CONCLUSION…….. 38:10





Workers Compensation is traditionally one of the most regulated areas of health care. Due to the cross-over between the medical profession and business in general, the power and significance of workers rights (unionized or otherwise), and the substantial potential for fraud and other wrongdoing, the Workers Compensation system requires strict compliance with detailed, specific policies and procedures. Nevada provides physicians and other health care providers detailed guidance on how to operate successfully and legally within the Workers Compensation or Industrial Insurance system. There are specific guidelines concerning the selection and use of physicians to address employee injuries and claims, rules regarding the billing for services rendered, and defined penalties for abuse of the system.

This chapter will provide an overview of some of the more important statutory requirements and limitations for physicians working in the Workers Compensation system. There are two sections of the Nevada Revised Statutes that focus on this issue. The first is Chapters 6161.A – 616.D inclusive, which address Industrial Insurance.



In a general sense, physicians providing medical services and assistance to injured employees fall into two categories. There are those physicians associated with, and made available through, the managed health care system. Employers, and their insurers, contract with organizations for managed care to provide medical assistance and treatment to the employees at a reasonably competitive price.   In the event the employer does not have an existing contract with a managed care organization, there are other physicians, not associated with managed care organizations, that may be selected by employees from a standing list maintained by the employer. In either case, the physician has certain responsibilities or obligations, not only to the patients, but to the system that provides for treatment of employees.


Managed Care Physicians

The first option for an injured employee may not be an option at all. Under NRS 616C.090, if the employer, either directly or more likely through the employers insurance agent, has contracted with an organization for managed care, the injured employee must choose his treating physician or chiropractor pursuant to the terms of that contract. NRS 616C.090(3). Organizations for managed care are simply groups of health care providers, organized to ensure the availability and accessibility of medical and health care services. Chapter 616B of the Nevada Revised Statutes explains how a group of health care providers may apply for a permit to form a managed care organization. Many of the relevant statutes are provided in the Appendix of this chapter. See NRS 616A.280; 616B.530; 616B.536. Once such an organization is duly formed, employers and their agents may contract with the organization to provide medical services. In many instances, the contract may have provisions for selecting a non-program physician. This often occurs when emergency medical treatment is required, and a physician from the managed care organization is not available to render such aid. The contract will often spell out what steps the insured must take to obtain prior approval to use a non-program physician, or to notify the organization, after the fact, that a non-program physician was consulted. These issues usually arise between the injured employee, his or her employer, and the insurance company. Physicians should be aware that as more companies take the managed health care route, the process of choosing a physician, and paying for the services rendered, may become increasingly more complex for the patient, the employer, and the physician.

Non-Managed Care Physicians

If an employer is not under contract to an organization for managed care, the employer must maintain a standing list of physicians and chiropractors, reasonably available to the employee, that may be used by the employee in the event of injury or illness on the job. NRS 616C.090(1). The list is established and maintained by an administrator from the Division of Industrial Relations of the Department of Business & Industry (Division). The administrator shall establish a panel of physicians and chiropractors who have demonstrated special

competence and interest in industrial health. NRS 616C.090(1). Employees who are injured, while working for an employer whose insurer does not have a contract for managed care, may choose any physician from the panel designated by the administrator. NRS 616C.090(2). There are procedures established to choose an alternate physician, in the event the first physician chosen does not meet the employees expectations. Once the physician is notified that his or her services are no longer needed, the insurer will not pay any further costs associated with the treatment of the patient. Clearly, if a physician is dropped by a patient for any reason, the physician should stop the treatment program as soon as it is practicable to do so.


Physicians Responsibilities Under the Workers Compensation System

.           Due to the highly regulated nature of the Workers Compensation system, physicians have certain duties and responsibilities to the patient and to the system. Probably more so than in any other area of administrative medicine, physicians should pay attention to, and comply with, their obligations under Workers Compensation.

Under NRS 616C.095, the physician has the responsibility to inform the patient of his or her rights under the Industrial Insurance provisions of the Nevada Revised Statutes. NRS 616A – 616D inclusive. The physician has an obligation to assist the employee, either to prepare an application for compensation, or to provide proof of matters asserted, according to the rules of the Division. Naturally, in order for the physician to fulfill this obligation competently, the physician must be very familiar with the rules and regulations regarding Industrial Insurance (Workers Compensation). This service or assistance must be provided to the employee free of charge. NRS 616C.095.

Physicians providing treatment to injured employees and desiring to be paid for their services, must provide the insurer: (a) an itemized statement for the services rendered; and, (b) a certificate stating that a copy of the itemized statement has been filed with the injured employees employer. NRS 616C.130. The insurance company will not pay the physician until the paperwork is completed and filed. As with any administrative system or bureaucracy, the sooner the paperwork is submitted, the sooner the request and payment is likely to work its way through the system.

Physicians prescribing drugs to injured employees must generally prescribe generic drugs in lieu of a name brand, if the generic drug meets certain criteria. Specifically, the generic brand must:

  1. Be biologically equivalent to the brand name.
  2. Have the same active ingredient(s), in the same strength, quantity and form of dosage, as the name brand.

NRS 616C.115.

There are exceptions to this general rule. If the generic drug is more expensive than the brand name, or if the generic drug would be detrimental to the health of the patient, the physician may prescribe the name brand drug. NRS 616C.115(2). Treatment and care of the patient is the first consideration, followed closely, however, by financial concerns.

During the course of examining and treating a patient, the physician will communicate with the patient regarding the injury, as well as make certain determinations concerning the cause of the patients injury and the magnitude of the injury. Often, under Chapter 49 of the Nevada Revised Statutes, communications between the patient and the physician, as well as the observations of the physician, are legally privileged. Under the Workers Compensation system, however, the physician may have a duty to disclose the contents of those communications. Under NRS 616C.140, an insurer may request that an employee submit to an examination by a physician, in order to verify that the employees permanent disability still exists. The employee has the right to have a physician or chiropractor, of his or her own choosing, present during the examination (the employee is responsible for the payment of his own physician). Either the physician who conducts the examination or the physician who is present as an observer may be called upon to testify as to the results of the examination. NRS 616C.140 (6). Presumably, the physicians may not make a claim of privilege to avoid testifying. A similar provision exists under Chapter 617 (Occupational Diseases) of the Nevada Revised Statutes. Under NRS 617.370, the insurer has the same right to request an examination, and the physician may be called upon to testify as to the results of the exam.

Under 616C.350, a physician or chiropractor, who attends an employee within the provisions of chapters 616A to 616D [Industrial Insurance] or chapter 617 [Occupational Diseases] . . . in a professional capacity, may be required to testify before an appeals officer. NRS 616C.350(1). The statute spells out in detail the conditions under which the information gained by the attending physician is not privileged. Specifically, if the information is required by the appeals officer in order to properly understand the case, or to investigate an allegation of fraud under the Workers Compensation system, the information is not privileged.

There are protections provided the physician to help ensure that routine requests for information are not improperly made or demanded. NRS 616D.330 spells out specific steps an employer or insurer must take if they desire to initiate oral communication with the treating physician of an injured employee. Basically, the communication must be reduced to a written log, which must be made available to interested parties as defined in NRS 616D.330(1)(a)(2). Any written communication between the physician and certain interested parties must be provided to the injured employee or his designated representative. It is the responsibility of the Division administrator to monitor compliance with these provisions, and there are specific penalties, including fines, enumerated in the statute. NRS 616D.330(2).

The physician has certain specified responsibilities with regard specifically to occupational diseases. For instance, any examination given by a physician pursuant to NRS 617.455 or 617.457, must include a thorough test of the functioning of the hearing of the employee. NRS 617.454. Also, the insurer of an employee claiming compensation for death from an occupational disease may request an autopsy. The findings of the physician performing the autopsy must be filed with the insurer, and are considered a public record. NRS 617.380.


Not surprisingly, there are specific administrative procedures that must be followed by the physician when treating an injured employee. Many of the procedures cross over between Chapters 616A – 616D and Chapter 617. Attention to detail regarding the reporting of injuries and claims for compensation will ultimately save the physician a great deal of time and trouble.

The responsibility for ensuring that the proper forms are used to report injuries or claims is a shared responsibility between the insurer and the Division administrator. The insurer must ensure that the employer has available all forms for reporting injuries that have been revised in the previous twelve months (starting September 1 of each year). NRS 616C.005(1). The administrator has a similar responsibility with regard to treating physicians and chiropractors. NRS 616C.005(2). It is recommended, however, that physicians be proactive in the maintenance of required forms. It is unlikely that the administrators error will serve as a legitimate excuse when an outdated form is inadvertently used.

NRS 616C.040 requires that the treating physician file a claim for compensation with the injured employees employer and insurer within 3 working days after he or she first treats the employee. Forms may be submitted electronically; however, the insurer or employer may also request the original form with appropriate signatures. NRS 616C.040(1). A fine may be imposed on a physician not in compliance with this subsection. An identical requirement exists under Chapter 617 (Occupational Diseases). NRS 617.352.   The claim must be on the form specified by the administrator, and the physician must keep an adequate supply of forms. There are additional requirements if the physician files a certificate of disability with the claim for compensation. See NRS 616C.040(3).

There are guidelines provided to assist the physician in determining the extent to which a given injury results in temporary of permanent disability for the employee. Under NRS 616C.110, for the rating of permanent disability under NRS 616C.490, the Division shall use the regulations incorporating the American Medical Associations Guides to the Evaluation of Permanent Impairment, amending those guides and regulations as it (the Division) deems necessary. These guides serve to assist the physician in rating the extent of the disability or impairment. If more than method of rating exists, the administrator shall determine which method to use to rate an impairment, for the purposes of NRS 616C.490. Certain disabilities are, de facto, considered total and permanent, unless evidence to the contrary can be presented. These injuries include:

  1. Total and permanent loss of sight in both eyes;
  2. Loss by separation, at or above the knee, of both legs;
  3. Loss by separation, at or above the elbow, of both arms;
  4. Spine injuries resulting in complete and permanent paralysis of both legs, both arms, or one leg and one arm.

NRS 616C.435.

Unless an employee is injured by one of the injuries specified above, NRS 616C.490, entitled Permanent partial disability; Compensation, dictates how an injury is to be rated, and the compensation an employee may receive for a permanent, partial disability. Once a treating physician has determined that an injury may have caused a permanent disability, a rating physician or chiropractor uses formulas to determine the amount of compensation.

NRS 616C.490.

Physicians involved in the treatment or rating of permanent disabilities must be familiar with 616C.490. In a 1993 case, the Nevada Supreme Court determined that the provisions of 616C.490 do not apply to award compensation for psychological conditions resulting from industrial accidents. According to the court, only physical impairments are addressed by this section of the Nevada Revised Statutes. Maxwell v. State Industrial Insurance System, 109 Nev. 327, 849 P.2d 267 (1993).

Not all disabilities are permanent. NRS 616C.500 addresses the compensation due an employee for injuries deemed to be temporary, partial disabilities. Although the statute does not provide the physician any additional guidance, nor impose additional responsibilities, it is important to note that temporary disabilities are a provision under the Workers Compensation system.



As with other aspects of the Workers Compensation System, the fees that may be charged are regulated by the state. Insurers are free, presumably, within certain guidelines, to negotiate fees and other charges with organizations for managed care. This includes, to a large extent, the fees a physician may charge for services rendered to an injured employee. For those employees whose insurers have not contracted with organizations for managed care, the state, in the form of the administrator for the Division, will establish allowable fees. This schedule of allowable charges shall be used by those insurers (and those physicians paneled by the Division) not under contract with an organization for managed care. The administrator may request information from HMOs and others to assist in the development of the schedule, and he must review and revise the schedule each year, on or before October 1. 616C.260. The statute also empowers the Division to adopt those regulations it deems necessary to carry out and enforce the provisions of this statute.

The fees and charges permitted must not: (a) exceed fees and charges usually paid in the state for similar treatment; or (b) unfairly discriminate between persons legally qualified to provide treatment of service. NRS 616C.260(1). The concern over discrimination is also reflected in the statute, which prohibits insurers from using fee schedules that unfairly discriminate among physicians. NRS 616C.055(2).



The potential for fraud, misrepresentation, and collusion in the medical insurance – Workers Compensation area has generated Nevada Revised Statutes specifying those actions as illegal with severe penalties for committing such offenses.


Fraud & Misrepresentation

Fraud or misrepresentation can manifest itself in the falsifying of a bill, in an inaccurate or untrue statement concerning the condition of an injured employee, or his right to compensation under Workers Compensation; in the overlooking or condoning of illegal acts; or in simple negligence by failing to perform ones duties competently. Regardless of the circumstances, a physician can be punished, both in the civil and the criminal courts, for fraudulent actions.

The specific sections of the Nevada Revised Statutes, Chapter 616D, dealing with fraud and misrepresentation are contained in Appendix A of this chapter. Physicians should review these statutes, and seek legal counsel to clarify any issues that may tend to confuse or mislead the physician. In general terms, falsifying invoices, reports, or other documents may be either a misdemeanor or a felony criminal offense. In addition, persons receiving payment based on their illegal and fraudulent activities, may be civilly liable for a significantly larger sum of money than they received for their services. Even inadvertent overpayments must be repaid to the insurer. Employers, as well as insurers and providers of health care, may be civilly or criminally liable for their acts. Finally, it is the duty of every person involved in the industrial insurance system, to report violations to the fraud control unit for industrial insurance.

The specific sections of interest in the Nevada Revised Statutes, Chapter 616D, are:

  1. NRS 616D.360 – Circumstances under which person is deemed to have knowledge of falsity or deemed to have made or caused certain action.
  2. NRS 616D.370 – False charges, representation, and statements; penalty.
  3. NRS 616D.380 – Invoices containing false information; signatures required; presumption.
  4. NRS 616D.420 – Provider of health care convicted of fraudulent practice prohibited from receiving or accepting payment for accident benefits; penalty.
  5. NRS 616D.430 – Civil Penalties
  6. NRS 616D.440 – False claim for payment: Withholding by insurer of payment to provider of health care; procedure for withholding appeal.

NRS 616D.550 – Duty to report violations to fraud control unit for industrial insurance.


Improper Acceptance of Benefits & Referral Fees

The Workers Compensation and Industrial Insurance system is often perceived as a way for unscrupulous persons to quickly obtain insurance money. The bureaucratic nature of the system and the necessary discretion afforded to medical practitioners does make it difficult for some forms of misconduct to be easily identified and prosecuted.

Offering payments for referrals to physicians providing care under the Workers Compensation system is statutorily prohibited. NRS 616D.390. It is illegal to accept or offer goods, services and supplies, for sale or lease, for which payment may be made, in whole of in part, under Chapters 616A – 616D and Chapter 617, and at the same time accept anything of additional value in return for the purchase of a lease. The statute does not preclude the normal discounts and benefits made in the ordinary course of business, nor does it preclude payments accurately reflected in all records submitted to insurers, but is instead designed to eliminate kick backs and other improper financial inducements.


Workers Compensation or Industrial Insurance is necessary to provide for the care of injured employees. It is a highly regulated area of medicine, and one full of potential pitfalls – administratively, medically, and financially. Physicians desiring to participate in the system, either through organizations for managed care, or through insurers not under contract with such organizations, must pay careful attention to the regulations, and work especially hard to comply with the requirements established by the legislature and the Division of Industrial Relations of the Department of Business & Industry.