Thursday, October 30, 2014

Certain Uncertainty

One of the major cost drivers in workers' compensation, particularly in California, is uncertainty.

Each major reform bill in the past 20 years has introduced more and more uncertainty into the system, and before the dust settles and folks have adjusted some other solution is identified to resolve a problem that we didn't know about...

Which leads to court intervention, interpretation opposite legislative/regulatory intent, more adjustment, increased uncertainty, etc.

It's a vicious cycle.

One particular example is the challenge to the lien fees introduced by SB 863, and in particular the Angelotti case that calls into question the constitutionality of the lien activation fee of $100.

In short, SB 863 introduced a filing fee of $150 for new liens against cases, and an "activation" fee of $100 for liens that had already been filed in cases but had not yet been adjudicated prior to the effective date of SB863.

The plaintiffs in Angelotti v. Baker brought suit for declaratory relief in Federal District Court and about this time last year U.S. District Court Judge George H. Wu issued a stay on the enforcement of the activation fee on the grounds that it violated the parties' constitutional equal protection rights, while dismissing causes of action based on the improper takings and due process claims.

The matter was appealed to the 9th Circuit Court of Appeal and is pending a ruling.

The wheels of justice of course turn slowly so that the court system can allow as much argument as interested parties wish to provide in order to allow the justices to be as fully informed and vetted on an issue as possible.

Sometimes this leads to disagreement in and of itself, as has been the case with the 9th Circuit's allowance of various new amicus parties to the Angelotti case.

The California Chamber of Commerce, State Compensation Insurance Fund, California Workers' Compensation Institute and American Insurance Association all petitioned the court for permission to file amicus briefs in support of the state.

The chamber's brief supports Wu's decision to dismiss the takings and due process claims.

A brief filed jointly by AIA and CWCI argues there is no evidence that the medical plans exempted from paying the activation fee are involved in the "lien mischief" the fee is intended to stamp out.

And SCIF argues in its brief that a medical provider is incentivized to "take a shot at making a profit" by filing a lien. The entities exempted from paying the activation fee are already out of pocket for any amount claimed in a lien, according to SCIF.

SCIF also asked the court for permission to participate in oral briefs.

SCIF's request has drawn the rancor of the plaintiffs, who say that request skews the balance of argument before the court.

In particular, the California Society of Industrial Medicine and Surgery was the only amicus to file a brief supporting the lien claimants, but did not request oral argument participation.

The 9th Circuit on Oct. 23 granted SCIF's motion to participate in oral arguments, "subject to defendants' willingness to share their allotted time with SCIF." Similarly, the court said it would grant motions by CWCI, AIA and the Chamber of Commerce to participate in oral arguments only if the defendants are willing to share their allotted time.

Likewise, the court will grant a motion by CSIMS if the plaintiffs will share their allotted time.

Plaintiffs and defendants will each have 20 minutes to make their case during proceedings that begin at 9 a.m. on Nov. 18 in Pasadena.

In the meantime, the system is held in abeyance, uncertain as to what the outcome will be, and how to react once a decision is rendered, assuming a court decision is definitive enough to draw a clear line.

The unfortunate part of this uncertainty is that the ones that receive the least benefit, the injured workers, are harmed the most.

Here's the deal - work comp is really very, very simple: injury occurs at work, injured worker to get benefits; employer pays for that protection.

Everything else just gets in the way.

Perhaps getting rid of "exclusive remedy" for everybody else in work comp other that the actual injured worker and actual employer would help. Work comp is meant to be the 'sole remedy' for the employers and their employees - not the carriers, not the providers, not vendors...

When you get down to it, the entire lien process has evolved over time into complete nonsense. It can be all very simple: "You authorize the work, I do the work, I send you a bill. If you don't pay, I will see you in court."

Likewise the inverse is true: "You do unauthorized work, you send a bill, I don't pay, see you in court."

Trust me, you do not want to be there (small claims judge or jury of your peers), in court, in front of the injured worker, hopefully with the employer standing beside them.

Because nothing irritates a business owner more than paying for something and then not getting it.

The uncertainty of recovery in a civil court would introduce certainty in the work comp system by removing opportunists who see work comp as a guaranteed payment, even if it is only ten cents on the claimed dollar...

Wednesday, October 29, 2014

The Hedging of Work Comp

Workers' compensation, like most property and casualty lines of insurance, goes through a cycle. Work comp in particular for many states seems tied to a seven to ten year cycle of "hard" versus "soft" markets.

A "hard" market is where the insurance industry has more control and power over pricing. A "soft" market is where the consumer of insurance products has more power - i.e. there is more price competition in the market.

Some analysts have been saying that the current market is an interesting mix of the two - that there really isn't any great power in the industry to raise prices because there's plenty of capital seeking returns, but carriers have been able to get away with increasing prices to make up for the soft investment environment.

And employers aren't revolting yet.

Willis Group Holdings is an international risk advisor and insurance and reinsurance brokerage that makes annual predictions as to the insurance market, including workers' compensation.

In a press release Monday, Willis North America's Chief Placement Officer Matt Keeping said that the market might be heading for a disruption of the traditional softening and hardening cycle of property and casualty insurance rates.

And it seems that this year is an example of what Keeping is saying.

For workers' compensation insurance, the group predicted rate changes between a 5% decrease and a 5% increase, although some large state markets post likely increases.

In its semi-annual "Marketplace Realities" report, Willis says that California might see an increase of about 8%. Other states with potentials for price hardening include New York, Massachusetts and Pennsylvania.

California's independent rate-making agency, the Workers' Compensation Insurance Rating Bureau, has filed an advisory rate of $2.77 per $100 of payroll for 2015. That represents a 3.5% increase above the $2.68 advisory rate the state's insurance commissioner filed last year.
Even Bowzer can smell the money.

The Willis report does not take into account the financial chicanery that is used to sell insurance such as dividends, rebates, rate adjustments etc. But an alarming note to me is that Willis says that hedge funds find workers' compensation investments attractive.

"Despite several leading carriers moving away from the line, the hedge funds see predictability and profits, even if one of the predicable aspects of Workers’ Compensation is that 15-20% of the loss cases can last the life span of the injured employees," the report states. "Part of the hedge fund interest is in ancillary services associated with Workers’ Compensation and managing of the claims."

Indeed, the "long tail" of workers' compensation is PERFECT for a hedge fund to make money via "ancillary services" - if a case is going to last 15 years, that's 15 years worth of bill review, utilization review, copy services, interpreting services, etc. etc. etc.

Investopedia defines a hedge fund as "an aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark)."

Seems the Willis observation of hedge fund participation in workers' compensation fits this definition precisely.

Yesterday I questioned whether utilization review, and other "cost containment" programs, were nothing more than new profit centers that add no value to workers' compensation claim management - and this Willis statement should be sending strokes of chill down the backs of anyone that really cares about the health of the system.

You can't tell me there's any altruism with investment in workers' compensation "ancillary services," and certainly much of the issue with claims mismanagement is tied to pure greed actually sending capital out of the system.

If there's anything the matter with workers' compensation it's this conflict between social obligation and financial return - and this is where the government must be particularly vigilant in regulation.

Anytime there is a captive market there is plenty of room for abuse, and the trend of increasing "cost containment services" expenses (which really should be called "profit enhancement services") should be an alarm to all state insurance and industrial relations departments; particularly California which represents over 20% of the total national market with a forecast $16 billion in premium to be written in 2015 and about half of a billion dollars per year being spent on "cost containment services."

"With policyholder surplus at record levels, insurers are increasingly in a position to compete for business on price," Keeping said in the statement. "With opportunistic capital continuing to show interest in the insurance sector, we wonder if the traditional cycles of hard and soft market might be changing."

I don't think the "traditional cycles" are changing. I think they are becoming more acute, and more volatile. Hedge funds and their investments in "ancillary services" is one reason why - because profit heading outside the industry trumps people to be served within the industry.

The full report is available here.

Tuesday, October 28, 2014

Mandatory UR?

Perhaps one of the reasons that the California workers' compensation system spends so much on cost containment services is because there are no incentives not to spend so much.

In other words, the folks that benefit the most from cost containment services are the folks that are charged with overseeing such utilization - the proverbial fox in the henhouse.

I heard from one claims insider that some companies, including the one she worked at, use utilization review as a cost containment system, rather than a treatment control system.

According to this lore, the philosophy is tied to quotas; claims adjusters are told that they are measured on denial volumes, the intent that a certain percentage of treatment requests essentially will just go away after a series of UR denials, and whatever is left over now goes to independent medical review.

IMR upholds the few UR denials three quarters of the time because either the request in fact fails to meet Medical Treatment Utilization Schedule protocol, records are incomplete, or requests aren't timely.
https://ww3.workcompcentral.com/news/story/id/22b36a004a56a8f5f3823a1be1945a4429b8c94b
Again, I don't know if this is true, but this is what I'm hearing on the street.
Screenshot 2014-03-18 11.39.48.png
source WCIRB 6/26/2013

Medical providers are telling me this is happening much more than is accounted for, and that they just get frustrated, as expected in the claims management philosophy outlined above, and consequently just give up.

I spoke at a conference few weeks ago to an audience that was, by my hand count estimate, comprised of about 75% claims adjusters. The vast majority of that part of the audience were "seasoned" claims professionals - they had been working the job for longer than 10 years.

I noted in part of my presentation that it seemed to me that in many claims departments adjuster discretion had been taken away and that there were policies in place at many claims houses mandating that ALL treatment requests, except emergency requests, be sent to UR.

I thought I would get challenged on that statement.

Instead I watched all of the heads in the room nod up and down in agreement and several came up to me later and confirmed my observation.
https://ww3.workcompcentral.com/news/story/id/e5bdd727a8cbeaffddc352e7bc23a04b3692d406
I hear anecdotes all the time from injured workers and physicians about benign treatment requests going through formal UR processes prior to approval, if there is approval, sometimes for several passes (remember in California that the first UR must be appealed to UR a second time, then it can go to IMR, and then IMR again...).

I hope this isn't true, but I suspect that this kind of nefarious claims behavior is more prevalent than I want to believe. I suspect that there are indeed some bad apples in the claims world that are not only using UR as an additional profit center, but also using UR to deny reasonable treatment requests in order to control medical treatment costs, rather than curtail inappropriate medical vendor activity.

I also suspect that there are plenty of good actors out there where the claims adjuster actually is the first UR line, and takes appropriate action rather than using the system to benefit a claim company's net profit.

But here's what happens to an industry with just a few bad apples infecting the fruit bowl - the entire bowl gets cleaned up and regulated.

Cost containment, at least in California, and I suspect in many other states too, is not transparent whatsoever. We don't know who owns what UR company. We don't know what company has quotas. We don't know if there is systemic denial of reasonable treatment requests. We don't know if there are policies in place or the reasons for such policies that might be tied to net profit goals.

Remember that it wasn't until 2011 that the Workers' Compensation Insurance Rating Bureau started breaking out cost containment services from the overall medical treatment expense numbers - the first step in transparency.

Now I think such transparency needs to go further, because, unfortunately, folks just can't be trusted.

Is is fraud? I don't know. But if these anecdotes are accurate, if there are quotas, if there are goals tied to treatment denial, if there are ownership conflicts of interest, then this is behavior that is not right because it is harmful to the system overall.

I wrote before that workers' compensation is a system based on mistrust, and this mistrust runs deep. Suspicions of conflicts of interest in the approval or denial of medical treatment requests serves to deepen this mistrust and harms the entire industry.

So there are a couple things that can be done.

First, of course, is for claims houses to come clean with their policies, procedures and ownership interests. The good apples will have no problem with this request. The bad apples will fight it.

Second is regulation, hate to say it. I hate more regulation, but bad apples bring it upon an entire industry.

Third is just plain peer pressure - if one company does the right thing and becomes transparent with its UR practices, and uses that as a market advantage, other companies will do so too. The ones that won't do so will either lose business, or will be forced to comply to stay in business.

Maybe I'm right. Hopefully I'm wrong. At some point someone in the governmental chain of oversight will want to take a look at this issue though in the least to put the public's mind at ease that either things are working just fine, or that the government is taking action to make sure the system will run fine.

Monday, October 27, 2014

Don't Believe Experts

While in Austin, TX for a little bit of family and a little bit of business, I arranged some personal time, setting aside Saturday morning for a bicycle ride.

I reserved a bike at a shop near where I was staying in Lakeway, TX, just "up the hill" from downtown Austin.

Those of you who read this blog know that I like to ride my bicycle ... a lot. I am fairly successful in riding my bike every day. I admit that I'm addicted. If I don't ride, then at least I try to get in a power walk for a couple hours. I burn excess energy, clear my head, enjoy the air and (usually) sunshine, and basically feel like a kid.

I have always loved riding bicycles. I believe that I'm genetically predisposed towards cycling. My extremities are disproportionately long compared to my torso, so I have a torque advantage over most people. I can't sprint very fast because those long legs inhibit quick rotation. Think of it as the difference between a long stroke engine and a short stroke engine - the physical dynamics are the same. But I can go a long way, at a fast pace, uphill ... and downhill.

As I was growing up I rode anything that had two wheels, and usually into the ground. Somewhere around 8 years old I absconded with my dad's Raleigh racing bicycle, obviously WAY too big for me, and raced around the block. It had racing gear ratios, and was only 10 speed (which was state of the art in 1966) and was really hard for me to pedal back up the hill to home. But I did...

As a teenager the bicycle motocross scene was just starting, and my buddies and I were way ahead of that trend. We had already been jumping our Schwinns, doing huge cross-ups, sliding sideways in any corner we encountered any chance we could and always pushing each other to go higher, farther, faster.

I broke many, many bike frames during that period of my riding life. Dad got so upset he refused to buy any more bike parts for me, so I had to be enterprising and find work and used bikes to rehabilitate. I estimate that during the 2 year period between ages 13 and 15 I went through at least a dozen bikes, and many more wheels - bikes weren't designed for 40 foot long jumps and flat landings from 10 vertical feet back then...
I LIKE to ride my bicycle!

This chicanery carried on through college when I got enamored with road racing - now THAT was riding! I went to the best, professional, road shop in San Diego at the time, Adams Ave. Bicycles. The proprietor was Brian, known in San Diego as The Man for fast road bikes. I told him I wanted to race, and he underestimated my genes, and my compulsion.

He put me on a touring style Trek frame thinking I needed to train up to racing, and also figuring I was like all the other dreamers ... he was wrong. I raced the heck out of that Trek until it broke, of course, and that was replaced by a more suitable, ugly green Bianchi of tighter racing geometry, and that started the acquisition phase of a new bike nearly every year thereafter.

I raced through law school, after taking the bar exam, after getting a good base of clients, all to my parent's dismay. A few of my riding partners went professional. The only professional status I pursued however was law.

Racing the road gave way around age 28 to racing mountain bikes - another relatively new genre at the time, and I had more success - in fact because I had ridden motorcycles in the dirt since age 10 I had a great advantage over my competition because I KNEW how to handle two wheels in limited traction conditions.

Again, my buddies went pro, and my racing waned with my growing legal career.

But I still rode every day that I could, which was pretty much every day...

So at the risk of sounding arrogant and braggadocio, I'm really good on two wheels, I'm really fast on two wheels, and frankly that's why I don't do group rides much - because I hate waiting for others (another personality flaw - impatience).

I don't expect people to know this history obviously, so when I asked the shop owner who was renting me the bicycle for Saturday for a route suggestion, he summarily dismissed my statement that I "flight plan" my rides for 20 mph average. He was, after all, an "expert." He knew the local terrain, knew what riders in the area average, knew the capability of the equipment he was renting, and assumed he knew what I was capable of.

He scoffed at my "flight plan," even after I told him that I ride "real" hills (Santa Monica and Topa Topa mountain ranges with "real" ascents) and gave me a route that he thought I could complete in my time frame - adding that "all of the pros" were back in town because the season was over, so I might see some out there.

I didn't bother telling him that I already knew (and had ridden with) most of the pros...

Whatever ... the route he picked for me indeed was very fun, with lots of rolling hills, good descents and nothing steep enough to make me shift off of the outer chain ring.

The route was too short though, so I doubled it... and averaged the 66 miles at 20.7 mph. On a rental bike. Take THAT Mr. Expert, and counsel some other poseur - maybe the dozens I passed along the way!

So what does this have to do with workers' compensation? Here's what - you're an expert, I'm an expert, we're all experts ... but there's always someone who's going to put your expertise to shame and make you look like a schmuck.

You might be a professional - a doctor, a lawyer, an executive - but you don't know what you don't know, and hubris interferes with good decision making.

Professionals are trained to always be "right." This is how a professional gains the trust of the patient, the client, or whomever seeks their service.

Ask my wife: she'll say to me, "You're right," when I'm correct about a question or an outcome.

To which I, probably too often, reply, "Of course I'm right ... that's my job!"

Unfortunately, many times the attitude of "being right" masks the fact that the professional doesn't REALLY know. Consequently bad decisions are made based on incorrect assumptions - and when confronted with a potential alternative we professionals get dismissive, sometimes even rude and derogatory - after all, what would a lay person know?

Plenty it turns out...

We're all experts at something, but there's always someone MORE expert, and YOU can't tell until after you're proven wrong!

Here's another DePaolo-ism for all of us professionals: "Of course I'm right, unless I'm wrong. And if I'm wrong, I admit it ... then I'm right again!"

Remember that when a patient questions your diagnosis. Remember that when a client questions your case strategy. Remember that when a customer rebukes your recommendation. Maybe they know something you don't.

In aviation we have a saying when one gets a license to fly, that it is only a ticket to learn. That's why professional occupations are generally called a "practice" - because you're still, and always will be, learning.

In the meantime, I'm going for a ride. See you on the road!

Friday, October 24, 2014

I'm Dual Purposing!

I'm in Austin, TX, for the next couple of days.

My Aunt Gail died late last week after a protracted fight with cancer, so the extended family is here to both commiserate and celebrate - last night we drank some wine, ate some pasta, and did lots of hugging.

Today we'll attend services, probably shed some tears, and then drink more wine, eat more pasta, and do more hugging.

It's all so Italian...

In between the family activities I'll be meeting with some Texas workers' compensation industry people - Austin after all is headquarters to the state's Division of Workers' Compensation.

Which brings up the dual purpose doctrine - if I were to get injured or succumb to a disease while in Austin, there's a chance it could be "industrial" and covered by workers' compensation, though frankly I'm not sure I would want that to occur since I have good general health insurance and am largely in control of my own salary...

The Ohio Supreme Court yesterday flat out said that doctrine has no place in that state's workers' compensation system.

This is kind of big news in Ohio - while the court had never explicitly rejected the doctrine, it had never embraced it either.

The closest the Ohio Supreme Court ever came to addressing the dual-purpose was in a 1951 case called Cardwell v. Industrial Commission.
What if this were ME on the way to the airport yesterday?
The worker in that case was hit by a train while heading back to work, after running a personal errand. Ohio's 2nd District Court of Appeal had found the accident to be compensable, relying on the dual-purpose doctrine in reaching that conclusion.

The Ohio Supreme Court reversed the 2nd DCA, saying there was no causal relationship between the worker's job and the accident.

Last year, the 5th District Court of Appeals ruled in Friebel v. Visiting Nurse Association of Mid Ohio that because the injured worker had "dual intent" when the accident occurred that it was covered by workers' compensation.

Tamara Friebel, a home health care nurse, regularly used her car to drive from her home to see patients. She was paid for her mileage and her time, including transportation time, when she handled calls on weekends.

On Saturday, Jan. 22, 2011, Friebel promised her kids she'd drop them off at the Richland Mall before going to see her first patient of the day. The mall was on the way to the patient's house anyway.

While Friebel's car was stopped at a traffic light before the mall's entrance, another vehicle struck it from behind.

Friebel filed a workers' compensation claim based on her injuries from this accident. Her employer, the Visiting Nurse Association of Mid-Ohio, disputed her claim on the basis that Friebel was outside the scope of her employment when the car accident occurred.

An administrator for the Ohio Bureau of Workers' Compensation allowed Friebel's claim for a neck sprain. VNA appealed, and a district hearing officer for the Industrial Commission vacated the administrator's decision on the basis that Friebel had not yet begun her employment duties at the patient's house when she was injured.

A staff hearing officer then vacated that ruling and allowed Friebel's claim since she was paid both mileage and for her travel time from her home to the first patient's home.

After the Industrial Commission declined VNA's request for further reconsideration, VNA sought judicial review in the Richland County Court of Common Pleas.

A trial judge granted summary judgment in favor of VNA.

The judge reasoned that since there was no dispute that Friebel was on a personal errand at the time she was injured that there was no industrial causation.

The judge also opined that it was "immaterial" that Friebel was paid for travel time and mileage on the weekends because at the time of the injury, Friebel was traveling to the mall and not to work.

A divided 5th DCA panel then reversed the judge, the majority finding that Friebel had "dual-intentions" when she left home on the day of her accident.

Since Friebel had not yet made the turn into the mall, which would have deviated from the route to her patient's home before her accident, it could not be said she was on a personal errand when the crash occurred.

VNA petitioned the Supreme Court for review last December, and yesterday the court ruled in favor of VNA.

Though a strong dissent argued that the 5th DCA made a very basic AOE/COE analysis, the majority was worried that the lower court's assertion of a "dual intent" was changing the law in Ohio.

Justices Judith Ann Lanzinger, Sharon L. Kennedy and Judith L. French said they thought the doctrine influenced the appellate court's analysis. Thus, they said it was appropriate for the court to provide guidance on "the correct standards for addressing similar claims."

The Supreme Court majority said it was an "impossibility" to have a "one-size-fits-all test" for when an injury is compensable, and so a test like the dual-intent or dual-purpose doctrine "does not have a place in analyzing workers' compensation claims in Ohio."

Even when work creates the necessity for travel and the travel includes a personal purpose, the majority explained, the fact remains that "workers' compensation benefits are available only for an injury that occurs in the course of and arising out of the employment."

Sigh - trim the fat off the bone: it's all about who pays...

I'm not in Ohio, and my employment contract is in California; still, I'm not worried about whether or not I would be covered by workers' compensation if I have an injury in Austin - I'm lucky to be able to have family, industry, colleagues and a job in both Texas and California even if I just happen to be living life...
.

Thursday, October 23, 2014

Texas Plan Based Audit

Texas does a lot of things differently, and certainly when it comes to work injury protection the state is alone in a number of areas.

Texas was one of the first to introduce an Independent Medical Review process to its system, an idea that was borrowed by California. Texas' IMR system differs from California's in significant respects such as appealability and the number of IMR vendors, so they aren't really comparable. And even though there is an appeal process, a Texas IMR is, from my understanding, very rarely appealed because the system is stable and Texas practitioners have learned that challenging IMR is essentially fruitless.

Though there may be other states with similar programs, another thing that Texas does that other states might look at is auditing of peer review medical reporting. These peer reviews are admissible in workers' compensation hearings.

According to the audit proposal:

"A peer reviewer is a health care provider who performs an administrative review at the insurance carrier’s request without a physical examination of the injured employee. The peer reviewer must not have any known conflicts of interest with the injured employee or the health care provider who has proposed or rendered any health care being reviewed."  

They are used for extent-of-injury and medical-necessity disputes and are to ensure that the medical evidence meets standards, and/or to provide a level of independence and credibility to the evidence presented in a case.

The division audits these medical-necessity dispute peer reviews, and is now proposing to audit extent-of-injury reviews.

The audits are "plan-based"; they're governed by the division’s Medical Quality Review Annual Audit Plan. That includes among its review categories, “insurance carriers/peer review doctors – potentially includes the quality of peer review reports and the appropriateness of actions taken based on peer review reports.”

Peer-review reports are performed by doctors selected by the division. Only peer review reports that are entered into a hearings proceeding are subject to an audit.

The plan-based audit draft for peer reviews lists four purposes:
  • Promoting the delivery of quality health care in a cost-effective manner.
  • Ensure that peer reviewers adhere to requirements when issuing peer review reports for extent-of-injury and/or medical-necessity issues.
  • Ensure peer reviewers review and maintain records when performing peer review.
  • Ensure that peer reviewers hold the appropriate credentials when performing a review.

Peer-review requirements are governed by Rule 180.28 in Title 28, part 2, subchapter B of the Texas Administrative Code, which were adopted as part of Texas' big reform nearly 10 years ago, HB 7.

The division, in its proposed Peer Review Plan-Based Audit rules, would resolve any conflicts between the Medical Quality Review Process and the plan-based audit in favor of the audit; i.e. the audit would trump the MQRP.

I find that provision odd - how can a physician in a peer review process rely on the MQRP then? - particularly since Division Medical Advisor David Davis said in a memo to system participants that the plan-based audit “sets the scope, methodology, selection criteria and program area responsibilities as laid out in the Medical Quality Review Process.”

But these new rules are open for discussion and are still pending final edit. System participants have until 5 p.m. (CST) on Nov. 4 to submit suggestions for the Plan-Based Audit to OMA@tdi.texas.gov.

Wednesday, October 22, 2014

Occupational Codes and Ratings

One of the concepts that got me through law school was that there was always a rule, then there were exceptions to the rule.

And of course, being the academic study of law, there were always exceptions to the exceptions to the rule - but when one really examined it these exceptions to the exceptions were really just the basic rule stated another way.

So I remembered this basic concept and that minimized the amount of rote memorization I would need to get past a test - usually I didn't even need to know the name of the exception to the exception, but just needed to state the rule properly given the fact pattern presented.

One of those exceptions to the exception of the rule in workers' compensation is the "dual occupation doctrine."

The "dual occupation doctrine" says that when a worker's duties embrace two forms of occupation, the worker is entitled to be rated for the occupation that carries the highest percentage of disability. This comes up when the job classifications in the permanent disability rating schedule do not neatly match the actual duties performed by the injured worker.

The First District Court of Appeal in California is going to tackle this doctrine as applied to the modern work place where a manager was required, as part of his normal work activities, to use a compute keyboard on a regular basis, which in his case would raise his permanent disability rating if he were in an occupational code that took into account high keyboarding.

Pope Powell had been a fleet operations manager for the San Francisco Public Utilities Commission, making between $108,000 to $115,000 per year. He was responsible for the maintenance and fueling of a fleet of 1,250 vehicles, managing a $10 million budget and supervising five employees.

Powell said he relied on a computer, a mouse, a "10-key" tool for budgeting and keeping track of expenditures in his division and a calculator to get his job done.

He testified that he regularly spent 80% to 85% of his time on his computer while at work, spending at least five hours a day hunched over his terminal.
Boscoe doesn't even have one occupation, let alone a dual occupation....

In September 2011, his employer accepted his claim for an industrial injury to his arms and shoulders from his extensive computer use.

A workers' compensation judge determined that his injuries had caused him a permanent disability. The judge rated Powell's disability using the occupational variant provided by the 2005 Schedule for Rating Permanent Disabilities for occupational group 212.

That classification applies to "mostly professional and medical occupations," involving "work predominantly performed indoors."

Using the occupational variant for this group, the judge arrived at a disability rating of 62% for Powell.

Powell sought reconsideration of the judge's ruling by the Workers' Compensation Appeals Board, arguing that his rating should have been based on the variant for occupational group 112.

The Permanent Disability Rating Schedule describes occupational group 112 as "mostly clerical occupations," involving the "highest demand for use of keyboard (and) prolonged sitting." It lists "billing clerk, computer keyboard operator, (and) secretary" as examples of occupations falling within this category.

The WCJ recommended that the WCAB deny reconsideration. While the judge acknowledged that Powell's job duties "undoubtedly necessitates extensive keyboarding," the judge reasoned that this "clerical function is not at the core of his job."
A divided WCAB panel agreed.

The commissioners reasoned that Powell's heavy computer use simply "reflects the transition in the modem office environment," and that occupation code 212 contemplates use of a computer by a professional or managerial employee.

Commissioner Marguerite Sweeney dissented, stating Powell "had two different sets of job duties that were both integral to his job; his managerial duties and his clerical duties" and thus the higher rating occupational code should be used.

Sweeney also speculated that the WCAB will see more contests of this nature as the work environment for most jobs shifts to reflect the Information Age, where even some of the most basic job functions involve considerable computer usage.

The 1st DCA accepted the case last week for review.

The long standing rule in California is that, just like in assessing employer premiums, the highest rating job functions are to be used in determining final value, and I don't see this case as any different - the "dual occupation rule" is just the regular rule restated to embrace an exception to the exception...

For instance, if a WorkCompCentral inside sales person actually went on the road to visit customers on a regular basis, even though that was not his principal mode of sales work, he would be rated for premium purposes as an outside sales person, reflecting the higher risk of travel.

Likewise, that same employee should, for permanent disability rating purposes, receive the benefit of such classification if the injury sustained warranted a different rating for inside sales versus outside sales, particularly if the job required functions that are a regular part of the job but aren't reflected in the category description in the rating manual for a particular occupation.


It may be time soon (again) for the Division of Workers' Compensation to review the rating schedule (which under prior law was supposed to have been updated regularly, but never was, and that requirement was repealed with SB 863) to make sure that all job classifications reflect the New Economy and Information Age.