Monday, September 22, 2014

Quick Read

The shortest blog post I have ever done - self explanatory...

Since I saved you so much time this morning by not having to read a few hundred words of text, take the time NOW to nominate either an injured worker, employer or industry professional for a Comp Laude Award. Nominations close October 12. Go to Awards will be presented December 6 at the Los Angeles Sheraton LAX Gateway Hotel.

Friday, September 19, 2014

Texas Pressure

I usually attend the annual Insurance Council of Texas' Workers' Compensation Conference, which was held yesterday in Texas. I'm participating in my nephew's wedding this weekend, complicating the travel, so I elected to stay in California.

But Texas-based WorkCompCentral reporter Joey Berlin did attend, and filed a report indicating that there was quite a bit of speculation that the Texas legislature just might look at making workers' compensation mandatory for the construction industry.

Construction work has always been a greater risk than most other occupations. The work is arduous, more often than not performed by low-wage immigrant labor lacking resources, education or nerve to seek appropriate (or any) remedy when injured on the job.

And for the most part the majority of construction "companies" are solo contractors without the assets to make pursing legal action worthwhile.

The construction industry in Texas is estimated to employ about a million people and generate about $54 billion in economic activity. About half of those workers are undocumented, doing the hard labor that doesn't require a license.

Texas construction kills more workers than any other industry, and more than in any other state - 493 in 2013 (though the ratio of workers killed per employed capita is greater, significantly, in North Dakota).
Screen shot from Gov. Perry's website.

"Charity care" from taxpayers, is how longtime Texas AFL/CIO legal director Rick Levy described how the injured, uninsured get along in Texas, the implication being that the cost is shifted to government programs in some fashion or another.

Levy has been pushing for mandatory coverage as long as I have followed the Texas workers' compensation industry.

Sam McMurray, probably one of the most knowledgeable people in the Texas work comp system, seems to think that the issue of compulsory comp in some economic sectors, such as construction, may be ripe for legislative review.

There's always a magic number that gets political attention. Big round numbers make good bullet points and focus attention on a problem.

In Texas, that big round number seems to be 500,000 to 600,000 - that the estimate of workers in Texas with absolutely no work injury protection whatsoever.

“And at some point, the politics are going to change,” Levy is reported to have said.

Could it be that the one state that has resisted compulsory workers' compensation since its inception, and has fostered alternative work injury protection schemes into other states, may soon mandate the construction industry to provide coverage?

According to Berlin's report, larger construction companies are calling for it because the small contractors are beating them on price since they don't provide protection to their workers, and also cheat on payroll as well.

Workers' compensation is a matter of politics - enough noise is made in the right places to the right people and things happen.

“That’s a number that’s hard to justify,” McMurry said about the large number of uncovered workers. “So I would expect the Legislature to try to address that in some way. It won’t be mandatory comp, not even for the construction industry. But at the very least, I expect to see more mandatory reporting for nonsubscribers, and perhaps an attempt – it’s probably premature this session – but an attempt to provide (some type of mandatory) coverage.”

"Texas is a land of ongoing success and endless opportunity; Texans aren't too shy about telling people about it, either," Governor Rick Perry says on his website. "It's not bragging if it's true, however, and the Lone Star State’s winning mix of low taxes, reasonable regulatory structure, fair court system and world-class workforce has been paying dividends in terms of press recognition, economic rankings and, most importantly, good jobs for hard-working Texans."

I think that statement needs to be read with a bit of circumspection in light of the alarming message about the construction industry. While McMurray could be right that compulsory comp will not be on the agenda this legislative session, it seems to me that momentum is building - which is ironic given the Lone Star State's proud independence.

Thursday, September 18, 2014

Perils of Non-Subscription

Though a lot of us have been crowing about the benefits of good non-subscriber plans, they are not without risk to the employer, some of the same issues with fair treatment and delivery of benefits still apply as in standard workers' compensation cases.

A Texas employer discovered that tough reality when the 5th District Court of Appeals at Dallas determined that the employer's alternative benefit plan wrongfully terminated its payments to a seriously injured worker less than three months after his near-fatal fall.

In B & S Welding Work Related Injury Plan v. Oliva-Barron, No. 05-13-00394-CV, Juan Pedro Oliva-Barron began working as welder for B & S in 2007, sustaining an injury in June 2009.

B&S is a Texas non-subscriber that provides its employees with a welfare benefit plan governed by and construed in accordance with the provisions of the Employee Retirement Income Security Act.

This plan paid benefits to Oliva-Barron after he had fallen from a height of more than 15 feet while working at a job site in Oklahoma City, landing in a sitting position on hardened concrete.

Oliva-Barron suffered compression fractures in his thoracic spine, as well as injuries to his wrists and right arm.

The B & S Injury Plan paid for Oliva-Barron's emergency care in Oklahoma, and for his housing and food. It also covered the cost of transportation to his home in Dallas, and for his surgery and rehabilitation.

The plan also began conducting video surveillance on Oliva-Barron.

Video showed Oliva-Barron driving a car, climbing stairs without apparent difficulty, carrying his walker and his wheelchair, pushing a child's stroller and maneuvering a shopping cart laden with groceries one-handed, while using his cell phone.

Meanwhile, Oliva-Barron had grown dissatisfied with his treating physician, complaining that he had to wait four to five hours before seeing the doctor at every appointment.

Oliva-Barron consulted an attorney in July 2009 to see about getting a new authorized treating doctor.

Just one week later, an attorney for the plan met with Oliva-Barron at the Belmont Hotel in Dallas. Oliva-Barron brought his wife to the meeting, but did not have an attorney with him.

The plan's attorney had made arrangements for Burl and Jo Anne Malicoat, the owners of B & S Welding, to be present, and a translator, since neither Oliva-Barron nor his wife could speak English.

The attorney for the plan presented Oliva-Barron with a document, written in English, that promised payment of $5,000 in exchange for a release of all of his claims against the plan and B & S. Oliva-Barron claimed he was told "things would change" if he didn't sign the form.

Oliva-Barron refused to sign the document, so the plan allegedly decreased his salary continuation benefits by 30%, without explanation and terminated his transportation services for doctor appointments.

On Sept. 18, 2009, attorney Jason January sent a letter to the plan informing it that Oliva-Barron had retained his services. That same day (11 weeks after Oliva-Barron's fall) the plan filed a lawsuit against both Oliva-Barron and his wife, accusing them of fraud, conspiracy to commit fraud and unjust enrichment.

The plan averred that Oliva-Barron had "grossly exaggerate(d)" his "purported need for medical benefits" and had "attempted to continue and increase those benefits" even though they were "no longer justified or necessary."

Even though the plan had paid no benefits to Oliva-Barron's wife, the plan contended that she had been "complicit" in assisting him "in exaggerating and creating alleged maladies and in obtaining benefits from the plan to which he is not entitled given his actual medical condition."

Nearly two weeks after the suit was filed, the plan served a notice of adverse benefit determination on Oliva-Barron and his attorney.

Oliva-Barron counterclaimed against the plan, seeking unpaid medical and indemnity benefits.

The plan sought dismissal of the counterclaims, asserting that it provided an administrative means for Oliva-Barron to appeal an adverse benefit decision and he had not exhausted this process.

Judge Ken Molberg of the 95th Judicial District Court in Dallas ruled that there was no need for Oliva-Barron to exhaust his administrative remedies.

In light of the "baseless hostility" exhibited by the plan towards Oliva-Barron, Molberg reasoned that any administrative appeal for the denial of benefits would have been futile.

Molberg then dismissed the plan's fraud claims and awarded Oliva-Barron $52,247 for unpaid medical care, $82,880 in unpaid indemnity and $177,784 in attorney fees.

The plan appealed, arguing that a trial judge shouldn't be able to "second-guess a plan administrator’s discretion when objectively verifiable facts support a reasonable basis for terminating plan benefits."

Based on a 2013 decision from the U.S. 5th Circuit Court of Appeals titled Truitt v. Unum Life Insurance Co. of America, the plan argued that ERISA plan administrators can make a benefits decision based on any "relevant information," which includes video surveillance, even in the face of conflicting evidence.

The plan also relied heavily on Truitt for the principle that it had no duty to undertake any investigation before making a benefits decision.

On appeal, the 5th District said there was no reasonable basis for the plan's benefit decision with regard to Oliva-Barron.

In Truitt, the court pointed out, there was no dispute that there was substantial evidence to support the plan administrator's decision to deny benefits. This decision also came after four years of investigation and administrative review.

By contrast, the court said, the B&S plan terminated benefits and filed suit for fraud less than three months after Oliva-Barron was injured and provided him no opportunity for administrative review.

While there may be no duty to reasonably investigate on the part of the plan, the court said, there still must be some "rational connection between the known facts and the decision or between the found facts and the evidence" to support the termination of benefits.

The 5th District said that in this case it was undisputed that Oliva-Barron had gotten hurt, and that his accident easily could have been fatal. It was also undisputed that he needed medical treatment and rehabilitation, including a back brace and a walker.

The record also indicated that all of Oliva-Barron's doctors – including his authorized treating physician – didn't expect him to be able to return to work for four to six months after his accident, and that he was progressing as expected after his injury and surgery.

None of the medical records reflect any misrepresentation by Oliva-Barron as to his physical condition, the court added.

As Oliva-Barron also was still undergoing treatment, and the estimated time for his recovery had not yet elapsed by the time the plan cut off his benefits, the court said the plan's actions were "arbitrary and capricious."

The court also said it felt there was sufficient evidence to uphold the trial judge's finding that an administrative appeal of the plan's decision would have been futile under the circumstances.

The 5th District reduced the damages award because Oliva-Barron failed to show evidence in the record as to the amounts expended for Oliva-Barron's treatment after the plan terminated his benefits, so the judgment in favor of Oliva-Barron had to be reduced to $14,102.02, to cover only his unpaid indemnity benefits and attorney fees.

The lesson? A) don't believe everything you see on video; B) ensure that mono-lingual claimants are presented documents in their native language; C) when an employer's attorney meets with a claimant, ensure that the claimant is also represented...

Oh, and when a claimant, make sure you have all of your evidence in the record to support your damages claim.

Wednesday, September 17, 2014

Walking A Highline

The tension between social responsibility and financial gain that is the workers' compensation insurance industry is reflected in the latest California Workers' Compensation Insurance Rating Bureau's data report.

Lower frequency and continued premium growth is making the business in California more attractive to carriers seeking to profit from underwriting the system.

Carriers are projected to write $16.1 billion in premium in 2014, WCIRB Vice President and Actuary Tony Milano said during a webinar yesterday, and have already recorded $8.2 billion through the first six months of the year.

The projected total written premium for calendar year 2014 would be 8.7% more than the $14.8 billion reported for 2013 and would mark the fifth consecutive year that premium has increased.

Written premium in 2013 was 68.2% higher than the $8.8 billion reported in 2009, while the projected $16.1 billion for the current year would be 83% more than what carriers wrote in 2009.

Some of this premium growth is due to the improved labor market which would boost payroll based premium, but it's more a reflection of the insurance industry's willingness to charge more to make up for paltry investment returns as earlier bonds and other financial instruments come due, and get replaced by current low interest rate backed portfolios.

According to the WCIRB, through the first six months of the year, carriers on average charged $2.96 per $100 of payroll, 3.9% more than the $2.85 they charged last year. The average rates charged in the first two quarters of 2014 is 41% higher than the average $2.10 charged in 2009.

Ultimate losses and allocated loss-adjustment expenses are projected to be $12.7 billion for accident year 2013. In the first quarter insurer experience report, the WCIRB was projecting ultimate losses and ALAE for 2013 of $13.1 billion.
It's a balancing act... we're in this together.

This is leading the bureau to lower its projected losses and costs for accident years going back to 2009 by $500 million. The WCIRB reduced projected ultimate costs for accident years 2009 through 2011 by $100 million each, and reduced its projection for accident year 2012 to $12 billion from $12.2 billion.

Claims are cheaper too.

The projected ultimate total loss and ALAE per indemnity claim dropped to $86,845 in accident year 2013 from $87,232 in 2012. It is the first decrease in ultimate claim costs since 2005.

While the WCIRB, and nearly every other insurance company in nearly every state, decries combined ratios in excess of 100 - meaning that more money goes out the door in claims than is taken in through premium - that obfuscates the financial picture.

The combined ratio is a cash basis measurement, but most all other measures of the insurance business are accrual basis.

There's good reason for that: cash in today does not pay for claims today. Cash in today buys investments, the returns of which will partially be used to pay for claims tomorrow, the balance of which will represent profit (after some deduction for operational expenses).

So while the projected combined ratio for 2013 is 109%, down from 114% in the previous year and the lowest ratio since 2008, and is higher than the national average of 101% for 2013 (National Council on Compensation Insurance estimate), this is simply a reflection of better profitability.

Workers' compensation insurance is not designed to generate an underwriting profit, which would be reflected by a combined ratio of less than 100. It was designed as an investment platform that also generates social value.

For every claim that is measured, and for all of the numbers that are analyzed, by the insurance industry, at the end of the day there are employers paying for the system, and there are injured workers that are supposed to be the beneficiaries of the system

A healthy insurance market is necessary to support a good portion of the workers' compensation system because that is how most businesses secure their obligation to provide compensation.

But if my premium, as an employer, continues to go up, regardless of causation, then another reformation will be forthcoming. Employers give money to politicians...

And don't forget about the injured worker. We continue to see both anecdotal and evidentiary reports of failures to deliver both timely and adequate medical treatment and indemnity benefits. I can't say that this part of the equation has improved, other than the statutorily based increase in disability indemnity weekly benefits.

Florida's Chief Workers' Compensation Judge, David Langham, said in his blog the other day, "all workers' compensation cases, involves real people, important issues, critical points of law and construction."

It's good that the insurance industry is seeing a better overall picture than what was previously expected.

But without employers willing to pay for securing their obligations, and without injured workers getting their legally entitled benefits in a socially acceptable manner and time frame, the industry fails to meet its mission and whether or not it's healthy is no longer important.

It's a tricky balancing act. The insurance industry can't be smug - we're all in this together.

Tuesday, September 16, 2014

Monopoly Part Deux

Yesterday was an exploration on monopolies and workers' compensation - it was my conclusion that competition is what makes workers' compensation inefficient.

Many have taken exception to that statement, understandably, because it defies conventional wisdom.

After all, we would think that competition would compel companies and people to be MORE efficient because if they are not then someone else will come in with a better mouse trap and do the job cheaper, faster, better.

But that's not how workers' compensation is, in large part because workers' compensation itself is not a market based system - it is a REGULATED market, which means that governmental interference with the market is necessary because system stakeholders - employers and employees - are compelled to participate.

Workers' compensation was established in the first place as a monopoly system, meaning the state was the monopoly and dictated the terms of engagement. The state creates as level a playing field as can possibly be created, and thereafter its job is then to enforce the rules of play.

When we disrupt the state's role, when we remove the monopoly power of the state, the playing field gets distorted because players with unequal strengths (in this instance, money) enter the game. When unequal powers are introduced inefficiency occurs because of misallocation of capital and resources.
The state's monopoly fostered innovation.

In California this happened starting in 1993, when Open Rating became the law.

Prior to OR, the Department of Insurance dictated a minimum rate structure. Workers' compensation insurance companies could charge more than the minimum rate, but could not charge less.

The reason for this rule was brilliant forethought by the people that created the system. Their initial reasoning was that in order for the market to be stable there must be a secure capital system, meaning that there would always be money available to meet the risk.

The less obvious role of the minimum rate rule was that it forced insurance companies to compete on service levels because pricing, if a company was efficient in and of itself, was a commodity; if everyone is forced to charge the same price then the buyer needs some other distinction in order to make a purchase decision.

Workers' compensation is a service pure and simple. There are no widgets to sell (except perhaps durable medical equipment, and that is something that is not core to the system). The only way for an insurance company under the minimum rate law to distinguish itself is to provide service levels over and above the next guy who happens to be charging the same price for that service.

When the minimum rate law ruled the insurance landscape there were oodles more (I think upwards of nearly 350+) insurance companies JUST WRITING COMP. They weren't very big insurance companies but they were all specialty carriers that knew their risk industries intimately, and they offered INNOVATIVE  services in claims management that were designed to get people back to work as soon as possible.

Because the ONLY way to save an employer money was to ensure that it's experience modification factor (x-mod) was low.

And the only way to get a low x-mod was by getting benefits initiated and delivered quickly, timely and efficiently to minimize the impact of a claim; the longer a claim stays open the more expensive it is, a fact that is immutable.

Sometimes there were failures in the delivery of services, of course. Nothing can be 100%.

And of course rates rose for various reasons, but overall the rise of rates was relatively benign - there were no huge spikes or rises, nor were there any huge declines. Rate inflation existed, but it was relatively smooth and predictable.

Most businesses don't care too much about rate inflation so long as it can be predicted and modeled into a company's products and services. Disruption occurs when the unexpected happens and rates deviate from the pricing model causing an expense item that wasn't accounted for, which can affect profits (which was part of the Grand Bargain in the first place, smoothing the disruption of a potentially disastrous jury verdict).

When OR came along innovation died because carriers competed on price only. Workers' compensation became a price-dictated commodity. Employers didn't understand the value of specialty services, or the impact of those services on their x-mod, and the ultimate affect was that pricing competition put insurance companies out of business, there became less choice in the market, and worse, less expertise for any given risk model and less service.

That's when wild fluctuations started to occur in the market as capital fled.

Because when an insurance company competes on price, that means that expenses become acutely more important. Trimming expenses means trimming service levels since payroll is by far the single largest fungible expense item.

Trimming service happens at the claims management level since it is reactionary: the level of service necessary to manage a claim isn't known until that claim arrives, and even then it's a guess as to severity.

In the end employers actually have less choice - competition actually destroyed competition! Business shock reverberated through California as employers saw premium increases of over 50% in a single year, destroying any plans and models that relied on stable pricing.

Worse, competition destroyed innovation. No longer was there a reason for an insurance company to specialize in Central Valley cotton crops, or East Los Angeles body shops, etc. There was no reason for a carrier to truly understand an industry, understand intimately the particular risks, or understand operational challenges, because what mattered to the business owner was the price of a policy.

The value of innovative claims management was lost on the business owner or financial officer until a claim came through the mail, and by then it's too late.

I'm not saying that all innovation died with OR, because there are still some players doing good things. But the pace of innovation, the creativity in the insurance market, slowed considerably.

All of the small specialty carriers have left the state or just called it a day.

And the market became much, much more volatile ... and expensive at the premium level, which is what really counts for employers.

So with the minimum rate floor, insurance carriers provided good value. They helped businesses grow, and helped injured workers get on with their lives.

California needs to return to the monopoly of dictating minimum rates.

Monday, September 15, 2014

Work Comp and Monopoly Profits

In our Blogger's Panel at the California Workers' Compensation and Risk Conference in Dana Point, CA last week we were asked about whether the Grand Bargain was still relevant.

The panel was commenced on September 11, 2014, 13 years to the date after that fateful day in New York City that changed the face of American history, and that of the world, forever.

What arose out of that day affected not only airline travel, our sense of security and safety, but also workers' compensation.

Because the people at work on that day in the Twin Towers, and the people that rushed to rescue them, were treated differently than the people that were responsible for building the Twin Towers, cleaning up the site for reconstruction and erecting the memorial.

The people directly affected by 09/11 got special treatment. Workers' compensation wasn't good enough for those injured or dead. For whatever reason, Congress and the political powers that oversaw New York's workers' compensation programs determined that the thousands of people and their families deserved more than what their system provided.
Pepperdine University's annual 09/11 flag display.

Perhaps this was just one step along the 100 plus year history of workers' compensation that the previously negotiated Grand Bargain may no longer represent sufficient compensation.

Earlier this year, a Florida trial judge wrote a scathingly long opinion in a case of limited legal affect declaring that state's workers' compensation as unconstitutional because it no longer represented a fair and equitable bargain.

I've written before about the conflict between the social mission of workers' compensation and the business mission - the inherent friction is what creates, in my mind, inefficiencies because people just get confused on what they are supposed to do.

There are some in our community who argue that the only thing that matters is that the employer get good value for the insurance they purchase.

There are others that say that the injured worker is the only one that matters because the safety net of work comp was established for those people.

There are plenty amongst us that say neither part of the deal is working any longer, that government hasn't done a good job of ensuring the viability and ongoing relevancy of workers' compensation.

And there are plenty who make convincing arguments that without all of the vendors to the system, the doctors, the lawyers, the brokers and agents, risk professionals, interpreters, pharmacies, etc., that there would be no system.

Without the big interaction of everyone "on the team" workers' compensation simply would not function. The people that are charged with providing goods and services to make workers' compensation system function won't do so unless there is an upside - and that upside is profit.

Though workers' compensation is a compulsory (for the most part) revenue redistribution system, it takes businesses, clusters of people with a mission of making money, to make it function. Because work comp is compelled by the state, i.e. businesses must have coverage and workers must accept the benefits, we tend to think of it as a monopoly held by the state.

The state seems to hold the power over what does and doesn't happen with work comp. Sometimes there are challenges as to the state's power (witness Judge Cueto in Florida) and sometimes the state itself challenges it's own powers (e.g. California's huge reform, SB 863).

But maybe we are looking at this incorrectly.

What may be the issue is that workers' compensation is NOT a monopoly.

You may take issue with this statement but I was moved to this thought as I read the Wall Street Journal yesterday.

In business, money is either an important thing or it is everything, writes Peter Theil, PayPal co-founder and overall wealth dude, in a Wall Street Journal opinion Sunday.

He opines that there is only one thing can allow a business to transcend the daily brute struggle for survival and that is monopoly profits.

Theil uses the term "monopoly" a bit liberally - his use is not in the pure, complete, domination sense of the word, but in the sense that a business gets so big that there generally can not be any true competition in very tight, albeit vertically deep, niches.

He uses Google as an example of a company with monopoly powers. Think of search and you think of Google. Google dominates web based advertising and though it has a multitude of other products and services, most of which don't make any money, the company is fabulously successful in monetizing Internet search by selling advertising.

Google figured out how to make money out of very small advertising transactions, millions of transactions that are enabled through mass distribution. Most people and businesses don't have a lot of money for advertising in the traditional sense - magazine, television and radio advertising is very expensive.

Google figured that the cost of distribution of ads on the Internet, when personalized through search algorithms, could be arbitraged in a huge way, so an ad that could have cost thousands of dollars in the traditional advertising model only costs a few pennies in the Google model.

But if you look at Google from the bigger picture - that of the advertising world, it represents just pennies on the dollar in terms of the global advertising market.

Yet, Google transformed the Internet, transformed our lives, and I argue has transformed the global society, and the company and its shareholders, have made spectacular profits - what Theil calls "monopoly profits.

Theil ponders:

"So a monopoly is good for everyone on the inside, but what about everyone on the outside? Do outsize profits come at the expense of the rest of society? Actually, yes: Profits come out of customers' wallets, and monopolies deserve their bad reputation—but only in a world where nothing changes.


"But the world we live in is dynamic: We can invent new and better things. Creative monopolists give customers more choices by adding entirely new categories of abundance to the world. Creative monopolies aren't just good for the rest of society; they're powerful engines for making it better.


"But the history of progress is a history of better monopoly businesses replacing incumbents. Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate. Then monopolies can keep innovating because profits enable them to make the long-term plans and finance the ambitious research projects that firms locked in competition can't dream of."

And I think that Theil describes the present state of workers' compensation eloquently, "If your industry is in a competitive equilibrium, the death of your business won't matter to the world; some other undifferentiated competitor will always be ready to take your place."

That's what happens in workers' compensation insurance. The death of a company, or several companies as was the case in the late 1990s and early 2000s, affected rates and premiums for a short while because of the dearth of capital, but ultimately the system continued functioning. Folks weren't happy, but it didn't collapse either.

What Theil argues, if applied to the workers' compensation industry, is that it hasn't evolved; that there isn't any "monopoly profits" to be derived because the system itself stifles innovation. There won't be any huge improvement to workers' compensation in any respect unless someone can see, and realize, excess profit by doing something different.

Is this just to say that work comp "is what it is" and won't be any better no matter what we do? I don't think so.

But I do think that without profits for the companies and people that provide service and goods to the industry there would be no work comp - whether it's doctors, carriers, TPAs, etc.

The government's job under the present workers' compensation model is to regulate all those vendors to ensure a fair playing field, to make sure no one takes excessive profits, that no one be taken advantage of.

Maybe government is doing too good of a job - maybe government needs to focus on those who take, but don't give back.

In Theil's model, the monopoly is rewarded because it returns so much more in value to society and the economy. In workers' compensation there isn't any great reward in returning value, so that just isn't done.

Remember, for some businesses money is either an important thing, or it is everything...

Is workers' compensation still relevant? Yes, I believe it is. But I also believe that 100 years of competition has stifled innovation.

Friday, September 12, 2014

Protect The Brand

The conversation is changing about SB 863, California Department of Industrial Relations chief Christine Baker advised yesterday at the California Workers' Compensation and Risk Conference in Dana Point, CA.

Baker immediately followed former basketball star, James Worthy, who delivered the motivational keynote speech about teamwork.

Both were serendipitously thematic.

I expected Baker to be sanguine about the state of work comp in the post SB 863 world, and largely she was. But the tone was different 18 months after that landmark reform bill became law.

As one person in the audience pointed out in a question to her, she said that 16% of Independent Medical Review requests reversed the utilization review denials, rather that stating that IMR upheld 84% of UR decisions.

"That's a lot of care that should have been approved," she said.

When SB 863 came out the conversation was about fraud and abuse - those were the driving issues that fostered the law.

Now, Baker said, the issue is delivering appropriate medical care timely and efficiently.

"How do we bring back the humanity in the system," she counseled the audience.

And though I doubt it was intended, Baker's comments seemed perfectly orchestrated to follow Worthy's speech, as she said it will take dedicated teamwork among all system participants to make that happen.

COMMITMENT to the PHILOSOPHY that has been given to you even though you don't understand it, was the first element to successful teamwork, Worthy said.

Next, you must be a really good LISTENER to understand what is really going on and what is really necessary to be a part of success.

TRUST the team, said Worthy - you may be a star, but without the team you can't succeed.

A platform is given to you, and it is YOUR OBLIGATION to give back to that platform, he said, and understand what YOUR ROLE is on the team.

The Circle of Communication is what Worthy and his teammates on the Lakers used when egos and money got in the way of a followup championship after the first National Basketball Association title. Only the players were allowed into the Circle, but EVERY player was expected to be there, and EVERY player was required to speak up and use the 2 minutes allotted.


What happened in the Circle was that the players with the least star power, the ones that basically warmed the bench, and who hardly ever saw any game time, had the most poignant comments and observations - not out of bitterness or disappointment, but because they had the time to observe, listen and understand what was going on without the cloud of stardom obfuscating the picture.

In California work comp we don't commit, we don't listen, we don't trust. People in the various service segments don't understand their roles and fail to give back to the platform.

Most of all, there is no single Circle of Communication. Each of the segments has their conferences, has their LinkedIn pages, has their podium. None of them, however, talk to the other players, at least not without interruption.

So I asked Baker, since she is the team leader, what is the philosophy that we need to commit to, and she replied without any hesitation that it is to deliver quality medical treatment to the injured worker and provide resources as quickly as possible to allow that person, that HUMAN, to return to as normal a life, and work, as possible.

Here's the deal, as Worthy pointed out: WE have to protect the brand because the brand is bigger than any one of us.

That brand is workers' compensation. It is the reason we are here, have jobs, have security.

The brand of workers' compensation is to deliver quality medical treatment to the injured worker and provide resources as quickly as possible to allow that person to return to as normal a life, and work, as possible.

I've written in the past that we have an identity crisis. Workers' compensation has a negative image, even though it is our job to DO GOOD. Why? Because we, collectively, don't commit to the philosophy.

It certainly is a challenge.

In the past I have questioned the relevancy of workers' compensation in the modern economy and society.

It is.

We just need to understand our roles, how we fit into the picture and give back to the platform.