Wednesday, July 29, 2015

Illinois Light on Fraud

Illinois has been criticized in the past for a lax attitude towards workers' compensation fraud.

Back in 2013 the Illinois Department of Insurance's Workers' Compensation Fraud Unit referred 18 workers' compensation fraud cases to prosecutors in 2012 that resulted in seven indictments, according to an annual fraud unit report by Insurance Director Andrew Boron released on June 28. The unit received only 119 fraud referrals and investigated a total of 64 workers' compensation fraud claims in 2012.

When WorkCompCentral ran that story, it compared the state's overall statistics to Los Angeles County, which generates more than 10,000 fraud reports each year alone. LA County has a population of 9.9 million people, 3 million less than the state of Illinois' population of 12.9 million.

This year the critics will likely still be vocal. And they should be. 
IL WCFU website graphic...

The latest report from the WCFU reflects there were just six convictions in 2014, with only one resulting in jail time.

This pales in comparison to other jurisdictions. California convicted five people of workers’ compensation fraud in April alone. The Ohio Bureau of Workers' Compensation reported 11 workers' compensation fraud convictions in May alone and the Florida Department of Financial Services reported 259 workers' compensation fraud convictions in 2013.

It's easy to say that Illinois is easy on fraud. Certainly there isn't a whole lot of deterrent - the risk of getting caught, whether cheating employees, employers or other, is very, very low.

The statistics reflect a failure in the allocation of responsibilities.

Local Illinois prosecutors do not pursue workers’ compensation fraud claims on their own, relying instead on referrals from the WCFU, according to Cynthia Vargas, the communications manager for Lake County State’s Attorney Mike Nerheim.

The WCFU does not actively look for cases, but relies on referrals, according to the report. There were 29 accusations of fraud made by lawyers, 17 from investigators working for insurance companies, 15 directly from insurance companies, 13 by employers, nine from private citizens and the rest from other sources.

That WCFU doesn't actively look for fraud doesn't explain the light activity.

What the state lacks is an incentive for local prosecutors to pursue fraud.

California, for instance, makes dollar allocations to district attorneys offices for fraud prosecutions. The system has its flaws of course, and may result in misallocated dollars, but certainly Illinois seems to lack any incentive for local law enforcement to deter fraudulent activity.

While the budget for the WCFU was $950,000 for the unit's operations in the 2014-15 fiscal year, according to Gov. Bruce Rauner's budget proposal the unit spent only $370,300 of that money.

Is it any wonder that, despite three years of investigative activity into fraudulent claims made by a huge population of prison guards at a single facility, there were no arrests, despite all of the media coverage?

The WCFU website is at http://insurance.illinois.gov/WCFU/.

Tuesday, July 28, 2015

Opioids - the Webinar

We were part of creating the problem, now its time to be part of correcting the problem.

I'm talking about opioid addiction.

In his seminal white paper, published by WorkCompCentral, Peter Rousmaniere presents an overview of how workers' compensation fueled the opioid epidemic, and matter of factly states that "the use of opioids is by far the most controversial and risky kind of care in workers' comp."

One of the driving forces behind the over-prescription of narcotics in workers' compensation is chronic pain. The data is incontrovertible - the longer a treatment case stays open and left unattended by even nearly benign, conservative care, the more the acute pain patient becomes chronic.

There are many potential explanations for this, but I think one of the most compelling is in the brain's curious way of mapping itself into behavior; behavior that essentially gets learned by the brain.

This is called neuroplasticity. The brain can learn pain, and the brain can learn relief.

But most workers' compensation victims are devoid of the resources to enable reformatting of the brain to deal with pain. There are many reasons for this, and certainly the industry's reaction to over-zealous physical medicine providers has contributed to the reduced bag of tricks that treaters previously used to deal with pain.

Pills are easy to dispense, and easy to take. And the habit is well supported by pharmaceutical concerns eager to please Wall Street.

The medical community is happy with the pill dispensing too - we have all seen physician revenue enhancement systems pitched by pharmacological monitors...

In the past few years there has been so much negative publicity and public awareness of opioid issues that there has been a decline in prescription habits, and consequently a decline in opioid related health problems (which include overdose deaths among a host of other complications).

Still, there is a hangover and we have chronic pain, and opioid addiction, to deal with real time, and in an ongoing manner.

Dealing with chronic pain is of primary concern to the workers' compensation industry. If we can't remedy chronic pain then claims never close, and consequently end up worse and more costly.

Today I'm hosting a free 2 hour webinar: "We're Beating Back Opioids - Now What?"

In addition to white paper author Peter Rousmaniere, my guests include CompPharma's Joe Paduda, David Hanscom, MD, Michael Shor, MPH, and Webility's Jennifer Christian, MD. These folks are on the leading edge of chronic pain research and remedies, and will present strategies for the claims industry to deal with chronic pain, opioid addiction, and moving on to the next chapter in the lives of traumatically injured workers.

Registration for the webinar, which starts at 1 p.m. Pacific Time is at https://www.workcompcentral.com/education/course/course_pk/958.

I hope you'll join us.

Monday, July 27, 2015

Auto Pilots and Hearing Aids


It was too smooth, I thought, as I flew down to Oceanside Saturday to check on Mom.

There I was, flying Forty One Mike along the Orange County coastline, abeam Hermosa Beach, in prefect trim and configuration: 5,500 feet, 23 inches of manifold pressure, 2300 RPM, 13.2 gallons per hour, all engine temperature readings within spec.

The air was clear, relatively cool at altitude for a mid-summer day, and surprisingly very little radio chatter indicating air traffic was light.

As we passed the Hermosa Beach pier southbound Forty One Mike sort of "burbled" in altitude by a couple feet, as though we had passed through a river of slightly turbulent air - like what would happen if we had encountered some wake turbulence.

Except there were no other planes near us to generate any wake turbulence.

I thought nothing of it until about a mile later we were in an un-commanded descent of 500 feet per minute.

"Not the autopilot again," I thought, as I disconnected it, reestablished altitude straight and level, re-connected the A/P and again noted the discrepancy.

"Something different," I said to myself - the past few autopilot malfunctions have been with roll attitude. This time it was pitch attitude.

Ugh - the prior owner had told me that the A/P was always an issue with Forty One Mike.

Seems it continues to be!

So on I went to Oceanside flying manually - at least an A/P failure is good for maintaining proficiency, but the hassle factor (and the expense) of repair is an issue. Oh well, has happened before, will happen again probably.

Saturdays at Oceanside Municipal Airport, aka Maxwell Field, are usually busy. When the weather is Ceiling And Visibility Unlimited it can be crowded, what with vacationers, sky divers, and weekend travelers - such it was this past Saturday.

Fortunately my frequency to KOKB has engendered good relations with airport management, and they instructed me to park Forty One Mike along side hangar 4 so I didn't have to hike a mile and a half back to the terminal (all of the transient parking was taken by weekenders).

After securing the plane it was off to Mom's.

When I arrived, Mom was asleep in a chair in the engagement area. She had one hearing aid in, the other was missing. The safety cord that connects the two was broken where the missing aid would be, with scotch tape wrapped on the cord.

The hearing aid that was present was in the wrong ear. 

I confirmed that it was working and placed it into the correct ear. 

A caregiver retrieved the missing hearing aid. I did not inspect it beyond testing for charge and it was not responding, so she took the non-responsive hearing aid to the nurses station to place in the charging unit.

After lunch I retrieved the non-responsive hearing aid from the nurses station and tied it to the broken cord as a temporary solution. 

I noted then that it still was not charged.


I placed both hearing aids in the charging unit and the non-responsive unit was not charging. I then inspected it more closely and it was apparent that it was damaged.

Mom's hearing aids have always been an issue it seems. They are important. Social engagement is a huge part of dementia rehabilitation, but without hearing there is virtually no engagement - imagine trying to participate when you can't hear...

I brought the hearing aid problem to the attention of staff and management at Mom's facility - again.

Repetitive issues: auto pilots, hearing aids and medical marijuana in workers' compensation.

At the California Coalition on Workers' Compensation conference last week a panel presentation on medical marijuana warned that "it was coming" - Federal rescheduling from Schedule 1 to Schedule 2, meaning that workers' compensation payers will need to have a strategy in place to deal with a drug that is of unclear objective medical benefit.

There are ancillary issues too, of course, such as how to tell when one is "intoxicated", all of the various strains and names, standardization of dosage, distribution, overdosage, etc.

Let's be real about this entire debate - medical efficacy of marijuana is highly suspect. It may help some people with some symptoms, but so does alcohol.

Alcohol has long had some medical benefit - it's used to disinfect, to help with insomnia, and other very limited purposes and in varying strengths and blends.

But alcohol is also a hugely popular recreational drug that used to be completely outlawed. Now it is a large source of taxation revenue for government.

Qualifying for, and obtaining medical marijuana is a complete joke. It's basically legalized for "recreational" use except the buyer has to go through a couple extra steps to get it. There's pricing consistency, home delivery, fancy packages ... and lots of money involved. 

If you want weed, you just have to go through the process and pay some money. It's not a daunting task.

What is going to drive the marijuana bus is money, and ultimately the government will not be able to resist.

Big tobacco is in on the game, and states are starting to wake up to the wind fall as well. Eventually the federal government just won't be able to "say no."

Marinol is the real medical marijuana. It is controlled in its production and distribution. Its efficacy has been tested. There are warnings and indications for its prescription.

If marijuana is to be smoked or eaten, then it is of questionable medical efficacy - and that's the bottom line.

New Mexico is forcing payers to reimburse for marijuana that's smoked. Minnesota is putting together a fee schedule.

Whatever - eventually a standardizing body will issue model regulations, medical guideline writers will author use restrictions, and the pharmacological benefits will be controlled.

And we'll still have issues with it - because people will, just like alcohol or any other drug, understate their consumption, dismiss the effects, and ignore the hazards.

I'm taking Forty One Mike into the shop this week. The auto pilot will be removed and I'll fly around for a couple of weeks by hand until the repaired unit returns with some new transistors and capacitors (remember, that thing was built 35 years ago!).

And I'll have the hearing aids shipped off for repair or refurbishment. Mom will walk around unhearing, disengaged, more deep into her little confused world for a couple of weeks, unable to really communicate other than smiling, nodding and repeating "what did you say?".

Eventually Forty One Mike will have an operational auto pilot and Mom will have functioning hearing aids.

Eventually this medical marijuana issue will be fixed too and we'll move on to the next issue.

Friday, July 24, 2015

Kids

The "happiest place on earth" might seem like an odd place for a conference on workers' compensation, but the attendees I talked to at the California Coalition on Workers' Compensation's 13th annual conference did indeed seem ebullient.

Sessions included many of the usual topical elements: politics, controversy, techniques, issues, problems, solutions.

We learned about politics, drugs, communications, and settlements.
Soule Innovations

Presentations included panels on recent case law, pharmacology, and the UR/IMR process.

But what got my attention the most was the presence of Kids' Chance of California, the people that make up the organization, and most importantly the recipients of the scholarships that this organization has placed.

Kids' Chance provides scholarships to children of workers who suffer either fatal or very severe industrial accidents, and the stories the "kids" have are, of course, incredible.

Think about the impact of losing a parent (or both) at one of the most critical times of a young person's life: age 18, when we are considered "adults" with absolutely zero adult skills. This is the point in life when we are supposed to take care of ourselves, but the fact is that the vast majority of us lack the maturity, the knowledge, the fortitude, to take on the challenges of life, let alone go to college.

At the Kids' Chance reception we heard from Trent Johnson, son of double amputee Dwight Johnson, the organization's most recent scholarship recipient. He'll be going to University of Idaho to study agricultural engineering. To say that Kids' Chance is a huge help in this dream is an understatement - Trent comes from a family of seven, so family resources are stretched thin (even though Dwight, his father, helps make ends meet with his awesome custom art shoes). Without Kids' Chance, Trent wouldn't have this chance ... bottom line.

We heard from the Andrade brothers - Kids' Chance of California's first scholarship recipients. Their father was killed on the job in 2006.

Brittney Hudler told us about her pursuit of education, and the shock that came when she discovered how expensive it was.

Several others tugged at my heart as they described losing both parents to work tragedies, picking up the pieces, trying to get on with life, and finding Kids' Chance to help them get an education, create a career, and a new life's path.

It's easy to get hung up on our differences in workers' compensation. We all have issues and disagreements. Workers' compensation, for some reason, creates divides. There are walls that get in the way of communication. Some folks want to limit benefits, others want to expand them. Some feel they aren't treated fairly, others think the fairness is too one sided.

I don't care what your issues are. In workers' compensation we are charged with making sure that we provide people, and their families, support during bad periods of life. Some require more assistance than others. Some seek to take advantage of the system's gratuity, and others feel slighted by the program's inefficiencies.

Listen, we all do what we can within the limits of our resources and the law. I think that most people in the workers' compensation field, though, are genuinely humanitarian. I see it in the faces of the people I engage with. I hear it in their voices. I experience it through their actions.

Kids' Chance is one way that this industry can take down that wall of divide and disagreement, and demonstrate its goodness to the world. 87% of all donated dollars to Kids' Chance California (there are 26 state chapters now) go directly to scholarship recipients. In this age of questionable charities and diverted dollars, this is huge.

Kids' Chance will gladly accept donations - of course! But one of their challenges is finding and identifying qualified recipient candidates.

They're not concerned with GPAs, class placement, etc. Their only concern is that the children of work place tragedies get a degree.

If you're reading this blog, then you know of, or you know someone who knows of, a family that qualifies. Whether you're an applicant attorney, or a claims adjuster, contact Kids' Chance and learn how to nominate a young adult who needs that little extra help.

Thursday, July 23, 2015

The Shared Risk


I wrote a couple of days ago about declaring a third employment option: the Dependent Contractor.

I was corrected by my law school roommate, ET, who told me later that he did not in fact coin that phrase, but it was some law school professor quoted in some general media article, likely the Wall Street Journal.

Thanks for the correction ET.

It seems that the shared economy has, nevertheless, piqued the interest of insurance companies who see opportunity with a new class of workers and businesses to protect, and this may expedite recognition that this economy isn't what we were raised on.

WorkCompCentral reporter Ben Miller today writes that while regulators, as well as the insurance industry, appear to be taking a wait-and-see approach to the shared economy, there is much more interest now than just a year ago.

James Lynch, chief actuary for the Insurance Information Institute, said the opportunity could be ample. He pointed to Uber, which reported that it paid its drivers more than $650 million during the fourth quarter of 2014.

Using that number as a starting point, Lynch said it would be reasonable to assume that a carrier writing workers’ compensation coverage for Uber would be covering more than $2 billion in payroll for the year. On top of that, Uber has grown rapidly throughout its existence. Business Insider reported that the company grew from about 10,000 drivers at the beginning of 2014 to nearly 40,000 at the beginning of 2015.

“Obviously that would be a very attractive market for anybody to want to write,” Lynch said. “And that's one company.”

“Taxicab drivers in New York and I think Chicago and some other cities have to have workers' compensation and they're in kind of a similar part-time, add-on role,” Lynch advised. “So I think the industry is certainly capable of handling that. But at this point it's a small niche of the workers' compensation market.”

Another point is that the workers' compensation industry is uniquely positioned to service this new dynamic. We are used to merging medical services, disability determination, third-party liability, and payroll analysis. Risk managers and actuaries in this industry have the skills to fairly accurately determine the risks and how to account for them.

While many interviewed in Miller's story think that the shared worker will ultimately be classified as an employee, the economies of doing so mitigate that trend and threaten shared economy business models, which is why I think a new class of workers will be designed.

Regardless, it appears that workers' compensation will ultimately benefit from this new model, one way or the other. 

The shared economy may spawn the shared risk....

Getting to stability might be painful and a bit frightening, but the workers' compensation industry is resilient and I believe the industry's future with the shared economy is an optimistic one.

Wednesday, July 22, 2015

FECA, DEA and OIG

Who is an employee entitled to workers' compensation benefits anyhow?

If it's the Federal Government, employees include informants and whistleblowers who remain anonymous due to their intentionally secret lifestyle as a consequence of their spy status.
Something doesn't smell right...


And because they're so secret, the government doesn't even know how much, or for how long, some of these informants receive compensation under the Federal Employees Compensation Act because no one keeps any records - these people are, after all, confidential sources.

An audit report released yesterday by the Office of the Inspector General, the investigative arm of the U.S. Department of Justice says informants working with the Drug Enforcement Agency also get federal employee workers' compensation and death benefits without any oversight or review, according to a story published this in this morning's issue of WorkCompCentral News.

The OIG report says the DEA has been using FECA to pay informants for more than 30 years, but the cost is unknown because there are only a handful of records for any of the claims.

The report references a DEA manual that states FECA pays benefits when a confidential source is injured or killed as a result of cooperating with the agency. The manual references another DEA document that says non-federal law enforcement officers injured or killed while apprehending someone who committed a federal crime are covered by FECA and suggests this also applies to informants.

The DEA cites United States Code Title 21, Section 886 as the basis for allowing informants to collect comp benefits. But that section simply authorizes the attorney general to pay confidential sources out of DEA funds. It has no relationship to FECA, according to the OIG.

"In our view, 21 U.S.C. 886 does not provide a legal basis for the DEA's position that its confidential sources were appropriately categorized as non-federal law enforcement officers eligible for FECA benefits," the audit says.

After reviewing a draft of the audit report, the DEA said U.S. Code Chapter 5, Section 8101(1)(B) extends FECA benefits to any person working with the federal government and performing jobs similar to what another federal worker might do.

Regardless of whether this section does, in fact, allow the DEA to qualify informants for federal workers' compensation benefits, the OIG said, it is not the legal basis the agency cites in its own policy documents. The agency needs to consult with the Department of Justice "to come to a conclusion about whether there is a legal basis and, if so, whether it is appropriate to extend eligibility for FECA benefits to confidential sources," the audit says.

The extent of confidentiality of this program is highlighted by sources cited in the report who said they don't keep any files on these cases. They rely on the Department of Labor to manage and administer the claims. But the DoL likewise handles confidential cases differently, and likewise keeps nearly zero records on them, so there is no audit trail, no accounting for the cost, no accountability, period.

What OIG has uncovered is alarming. The report cites investigative cases uncovering millions of dollars paid by the DEA to informants for things like housing, while the informant also collects monthly FECA payments.

The DEA in response to a 2005 audit said confidential sources are not "choir boys" and the DEA sometimes has to rely on information from people whose credibility is questionable.

"Therefore, when the DEA submits an application for a confidential source to receive FECA benefits, we believe that the DEA should employ appropriate oversight and evaluate these cases thoroughly," OIG said. "Although the identity of the claimants may be sensitive, this does not alleviate the DEA's responsibility to be judicious stewards of taxpayer dollars and ensure that payments are warranted."

As you might expect on something as embarrassing and culpable as this is, WorkCompCentral's calls to the DEA's Office of Congressional and Public Affairs were not returned Tuesday.

Tuesday, July 21, 2015

The Dependent Contractor


It seems that everyone that has an interest in employment law, whether it's workers' compensation, taxation, insurance, or whatever, has consternation about the booming trend of the "shared economy."

Uber, AirBnB, Lyft, and the many other types of services out there that are now obscuring even more the previously foggy line (that we pretend is absolute in definition) of the employee-employer relationship even further.

The government doesn't know what to do with these services; the US Department of Labor recently issued a memorandum declaring that it is the "dependency" of the relationship that determines contractor versus employer status.

Uber got slapped by the California Department of Labor recently for misclassifying those who perform the job of transporting customers.

There are many more examples of lawsuits, claims, complaints, penalties, audits, etc. against all of these new shared economy services ... and they won't stop soon.

That's because we have two classes of employment relationship: contractor and employee.

In the eyes of the law there aren't any others.

The employee is deemed to be dependent on the employer. The contractor is deemed to be independent of the employer. And never shall the two meet, according to the law. Despite the law's tendency towards obfuscation, at least with regards to employment status the law seeks a clear dividing line.

But technology, as The Law has learned many, many times in the past, doesn't care. The value of the shared economy is a trend that cannot be stopped; not by lawsuits, not by audits, not by penalties, not by anything.

Because people want to engage in efficient, profitable relationships regardless of the constrictions mandated by those who dictate social conformance.

Which is why we need to stop thinking that there are only two possible employment relationships.

The times now dictate that we have a third possible employment relationship: the Dependent Contractor as my law school roommate, ET, coined it.

The DC is going to be someone, like an Uber driver, who desires to work on his own, call his own hours, determine when he is on the clock and off, pays his own expenses, uses his own tools - but derives a specified contractual amount for his services and is clearly dependent on that relationship for economic benefit.

The employer might dictate where those services are going to be provided; might dictate exactly HOW those services will be delivered; may even dictate detailed control over dress, customer interaction, etc. In other words, may exert sufficient control over the DC that a court would otherwise find an employee-employer relationship.

But what if we created, legislatively, a sector for the DC to live in? What if there were specified legal requirements for determining DC status, that everyone could understand and follow?

For instance, for workers' compensation, the employer could require the DC to have his own coverage, but since the DC is small, the employer would create a pool into which the DC pays to cover his own on-the-job injuries.

The same could be done for liability insurance or any other sort of risk.

And what about taxes? Who pays for what and when could be ironed out so the government doesn't lose out on the deal.

One of the big issues with the DC is that there aren't any rules yet. Everyone is winging it. And the problem with that is that the employer in such relationships has the upper hand because the employer dictates the terms of the contractual relationship (which is why they get into trouble in the first place with those who abhor intrusion into the traditional relationship).

It seems to me that the shared economy will only get bigger, and at a much faster pace, than we can anticipate - that's the march of the Information Revolution that we are just at the beginning of. We may as well be prepared for it legally.

This has been done before, by the way, for all you naysayers: why do you think Limited Liability Companies were created? Because traditional corporate structure wasn't sufficient to enable evolved business relationships - bottom line.

If Silicone Valley wants to expedite the shared economy then its lobbyists need to get to work drafting and getting sponsors for legislation that enables the Dependent Contractor. The insurance community will love it - another product (or suite or products) to sell. The formerly un/under-employed will love it because they'll have another way to pay the gas bill at the end of the month. Employers will love it because there will be some certainty in their future business lives. And consumers make out the best of all of them because these efficiencies of scale mean better value.

So, for all of you who are having a tough time dealing with whether or not an Uber driver should be covered by work comp, etc., quit your whining and do something about it - get laws passed that create the Dependent Contractor status and let's move on with this revolution, because the revolution isn't going to wait for the law.