Thursday, November 26, 2015

Thanksgiving Letter

Good morning and Happy Thanksgiving Children - 

It sure seems weird calling you two adults “children.”

The funny thing, though, is no matter how old you two get, and how old Anne and I get, you’re still both our “children.”

Which is why this holiday, the first without the “children” at home, seems so different.

Yes, the birds have feathered, matured, and flown the coop - but the coop is still in place, ready for the flock to return!

I slept in today, have had a cup of coffee, it’s 40 degrees outside (bragging, Nichole) so I’ll wait for the sun to arise before alighting on my bicycle to put in the day’s miles - and along the way I shall think of all that I have and am grateful for.

Not the bicycle, not the airplane, motorcycle, cars, house, business, and properties - but my wife, my children, and the future children that will come into my life.

Anne and I were doing the old person’t thing last night - recalling all the people that we have known, and who are no longer with us. It’s astounding, when we took the time to think about it, to realize how many people we have known that have died, and most of them prematurely so (at least by Census Bureau statistics).

I got home early yesterday to lunch with Anne - delicious BLTA sandwiches (the only thing missing were fries) - and then a little motorcycle maintenance (change the oil) and then a little motorcycle ride. Not far, maybe 45 miles up Deer Creek and down Yerba Buena, then home. 

The tires are worn, so handling was a little squirrelly, and there was more traffic than I was used to in the canyons, but it was as fun a ride as ever. It was clear, and chilly, and the wind whipped me around a bit on Pacific Coast Highway.

Did a couple of wheelies (I can almost get from first gear to second gear with the front wheel in the air - but I have a lot more work to do on that!), burned through a couple of turns, skidded the rear wheel a couple times into bumpy corners like a motocrosser; it’s amazing how such a simple little relatively inexpensive toy (remember, I got The Sewing Machine for less than three grand) can bring such timeless happiness.

And that’s what I want you to remember.

We give thanks for all the wrong reasons. Sure, we’re happy to be alive when so many of our friends and family can’t experience Thanksgiving Day, 2015. Sure it’s nice to have a job, and hopefully it’s a meaningful job that gives us purpose rather than just a paycheck. And it’s great to have all the things I worked hard for that complete my physical being.

But what I’m really thankful for is that I have the ABILITY to be happy. Happiness is an individual CHOICE. We can choose to be happy, or we can choose to be miserable and intolerant.

I went for the short motorcycle ride yesterday afternoon because I knew it would make me happy. It did!

Anne makes me happy.

Usually you children make me happy, but sometimes, admittedly, you make me frustrated.

And that’s all good - because at the end of the day, whether I’m frustrated or happy is a matter of MY CHOICE.

So when you sit down at your Thanksgiving Day meal today, give thanks that you have the CHOICE to be happy or not.

We love you (and your future children).

Happy Thanksgiving Kids!


Wednesday, November 25, 2015

Contrasting Fault and Value

A case out of Pennsylvania demonstrates that nobody wants to pay for an "injury", which is why there is "fault" in workers' compensation, even though it is supposed to be a no-fault, administrative system.

But a Texas case shows why workers' compensation is a huge bargain compared to the alternative - a jury verdict.

Jamie Gahring's had a history of back problems before he became a line cook at the Stoudt’s pub in Adamstown, stemming from a 1997 industrial injury while he was working for R & R Builders.

In October 2012, Stoudt’s upped Gahring's hours at work from 40-hours to 55 hours per week.

Gahring told his supervisor that the additional hours he was spending on his feet as a line cook at Stoudt’s Brewing Co. were “making his back worse.”

After a few weeks of this schedule, Gahring said, he started having back pain that grew progressively worse with time.

In November orthopedic surgeon Marc P. Oliveri performed a sacroiliac fusion on Gahring.

Dr. Oliveri released him to return to work in January 2013, but Stoudt’s was unable to accommodate Gahring's medical restrictions so they terminated him, and of course Gahring sought compensation.

Gahring filed a claim petition alleging R & R Builders, the 1997 injury, was responsible for the cost of his surgery and his wage-loss during his recovery.

R & R countered that Gahring's back condition was caused by his employment with the pub, and it filed a petition to join Stoudt's to the case.

At the hearing, Gahring testified that he had suffered from ongoing back pain since at least 2002, but it got worse when he started working longer hours at Stoudt's. The complaint to Gahring's supervisor at Stoudt's was corroborated.

The workers' compensation judge found Gahring's back problems were wholly attributable to his employment with Stoudt's, and dismissed Gahring's claim against R & R.

But, the WCJ determined that Gahring had not given Soudt's adequate notice of the claim in accordance with Section 311 of the Pennsylvania Workers' Compensation Act.

Up the appellate chain the case went.

The Commonwealth Court on Monday ruled that Gahring's statement that the additional hours he was spending on his feet as a line cook at Stoudt’s Brewing Co. were “making his back worse” was good enough to forewarn his employer that the aggravation of his pre-existing back problems was work-related, upholding the trial court's findings against the pub.

The case was Gahring v. WCAB (R & R Builders and Stoudt's Building Co.), No. 534 CD 2015.

In the meantime, a Texas jury schooled Tyson foods about being a non-subscriber by awarding an injured worker about $2.2 million.

Asa Ferrell claimed that he twice suffered injuries to his neck and shoulders when coworkers pulled overhead doors down onto him. Ferrell said he also severely injured his back when Tyson put him to work moving heavy boxes in a confined space that didn't allow him to use proper lifting techniques.

The jury found Tyson's negligence wasn't to blame for either of the door mishaps, but it said Tyson's negligence had led to Ferrell's back injury.

The jury awarded him $498,382 for his physical impairment from this injury plus $774,478 for his pain and suffering.

He also got $127,752 for his mental anguish and emotional distress, $358,600 for his medical expenses, and $505,936 for his lost earning capacity.

I'm sure Tyson no longer thinks workers' compensation lacks value. And the carrier for Stoudt's got a lesson in workers' compensation's no fault architecture.

So, while an employer may not be happy with the "liberal interpretation" of workers' compensation laws, including notice provisions, in favor of the injured worker, it still beats a civil jury verdict nearly any day.

Lessons learned: work comp DOES have value; and, pick your fights carefully...

Tuesday, November 24, 2015

Return To Trust

Even more so than most other systems or industries, trust is paramount to the credibility of workers' compensation.

There are so many different moving parts to workers' compensation - from funding to administration to execution, enforcement and delivery - the big circular revolution of the system from origination to repatriation back into the economy requires a high level of trust between a lot of parties with disparate interests to make it work.

Government plays a big part in the trust circle. Government sets the rules. Government is to enforce the rules, and make sure everyone plays fairly. And government has to be particularly careful about conflicts of interest, or appearances of impropriety, since it is in such a central, and powerful, position.

Trust in government can be shaken to the core when allegations of wrong doing are tossed around.

Part of the turmoil that has surrounded Oklahoma's two-year old reform law is due to lack of trust.

Not only did the state completely upend its workers' compensation system by moving to a fully administrative process, including for dispute resolution, but a new sector was carved out for employers wishing to provide an alternative to the system.

There are a couple of components that Oklahoma will need to move through as its new laws mature: allegations against the Department of Insurance that it "rubber stamps" alternative plans presented for approval with dubious analysis of equivalency to the state's work comp system; and allegations of inappropriate behavior by former executive director Rick Farmer.

Most recently, State Auditor and Inspector Gary Jones issued an audit report released Nov. 18 concluding the agency's “internal controls do not provide reasonable assurances that revenues, expenditures or inventory were accurately reported in the accounting records.”

Jones says this allowed for the potential for the misappropriation of funds, illegitimate claims for payment, fictitious payroll payments or improper changes, and the mislaying of inventory.

Current executive director Kim Bailey says, “There has been no evidence of misappropriation of funds at any time," and that “there have been no allegations of misappropriation of funds with payroll.”

Most of the problems with the internal controls cited by the state auditor related to the failure to segregate posts with the same person given the job of both approving and reviewing expenditures, Bailey told WorkCompCentral.

According to Jones' audit, there are problems over the primary self-insurers guaranty and the credit letter funds. The funds pay for loss of earnings and treatment when a self insured employer is unable to pay and must contain more than $1 million.

Through picking random samples, the agency “was not able to provide supporting documentation” in six out of 16 claims from the credit letter fund and in eight of 16 claims from the self-insurers guaranty fund.

Bailey said those issues have been addressed.

A recent lawsuit filed by former employees of the agency, whom Farmer laid off in July 2014, accuse him of religious discrimination among other indiscretions.

The plaintiffs allege Farmer hired 13 people, many of them members of the Church of Nazrene, following his appointment and that they were given higher salaries than existing employees, which the filing claims Farmer referred to as the “Nazarene bump.”

The four former employees had worked at the agency for between 10 and 20 years prior to their lay offs.

Also named in the suit are the commission, the Court of Existing Claims, and the present and former chairmen of the commission, Robert Gilliland and Troy Wilson.

The complaint alleges that a “lack of funding” was given as the reason the commission laid off 16 employees late last year. Farmer, however, hired approximately 13 new employees following the commission's creation on Feb. 1, 2014 (just over four months before the firings),” the complaint says.

None of the newly-hired employees were terminated as a result of this alleged lack of funding, the plaintiffs state.

The state Office of the Attorney General is defending the commission against the court.

There's an old saying: trust takes years to build, seconds to break and forever to repair. Bailey, the commission and the state of Oklahoma have a lot of work to do in the trust department now, making implementation of their reform even more difficult.

The distraction is unfortunate, but they'll get through it though because, "The people when rightly and fully trusted will return the trust." --Abraham Lincoln.

Monday, November 23, 2015

Reasonably Just Substitute

Jacob White was a night watchman for the New York Central & Hudson River Railroad Company. White's job was to guard the tools and materials intended to be used in the construction of a new station and new tracks upon a line of interstate railroad.

He died on the job. The courts found that his job did not involve interstate commerce and thus his death was covered by New York's workers' compensation system (as opposed to the Federal Employers' Liability Act) and awarded benefits to his widow accordingly.

A constitutional challenge to New York's workers' compensation law was raised by both the railroad and the widow:

(a) that the employer's property is taken without due process of law, because he is subjected to a liability for compensation without regard to any neglect or default on his part or on the part of any other person for whom he is responsible, and in spite of the fact that the injury may be solely attributable to the fault of the employee;

(b) that the employee's rights are interfered with in that he is prevented from having compensation for injuries arising from the employer's fault commensurate with the damages actually sustained, and is limited to the measure of compensation prescribed by the act, and;

(c) that both employer and employee are deprived of their liberty to acquire property by being prevented from making such agreement as they choose respecting the terms of the employment.

And nearly a hundred years ago the United States Supreme Court found that compulsory workers' compensation passed muster.

The Court's dialogue is eerily prescient of today's environment:

"In support of the legislation, it is said that the whole common law doctrine of employer's liability for negligence, with its defenses of contributory negligence, fellow servant's negligence, and assumption of risk, is based upon fictions, and is inapplicable to modern conditions of employment; that, in the highly organized and hazardous industries of the present day, the causes of accident are often so obscure and complex that in a material proportion of cases it is impossible by any method correctly to ascertain the facts necessary to form an accurate judgment, and in a still larger proportion, the expense and delay required for such ascertainment amount in effect to a defeat of justice; that, under the present system, the injured workman is left to bear the greater part of industrial accident loss, which, because of his limited income, he is unable to sustain, so that he and those dependent upon him are overcome by poverty and frequently become a burden upon public or private charity, and that litigation is unduly costly and tedious, encouraging corrupt practices and arousing antagonisms between employers and employees." [emphasis added.]

A standard was espoused by the court - a compulsory workers' compensation system must be a "reasonably just substitute" for common law tort rights:

"The statute under consideration sets aside one body of rules only to establish another system in its place. If the employee is no longer able to recover as much as before in case of being injured through the employer's negligence, he is entitled to moderate compensation in all cases of injury, and has a certain and speedy remedy without the difficulty and expense of establishing negligence or proving the amount of the damages. Instead of assuming the entire consequences of all ordinary risks of the occupation, he assumes the consequences, in excess of the scheduled compensation, of risks ordinary and extraordinary. On the other hand, if the employer is left without defense respecting the question of fault, he at the same time is assured that the recovery is limited, and that it goes directly to the relief of the designated beneficiary. And just as the employee's assumption of ordinary risks at common law presumably was taken into account in fixing the rate of wages, so the fixed responsibility of the employer, and the modified assumption of risk by the employee under the new system, presumably will be reflected in the wage scale. The act evidently is intended as a just settlement of a difficult problem, affecting one of the most important of social relations, and it is to be judged in its entirety." [emphasis added.]

But the Court warns:

"This, of course, is not to say that any scale of compensation, however insignificant, on the one hand, or onerous, on the other, would be supportable. In this case, no criticism is made on the ground that the compensation prescribed by the statute in question is unreasonable in amount, either in general or in the particular case. Any question of that kind may be met when it arises."

One hundred years ago, and the intellect, and great wisdom of justices White, Van Devanter, Holmes, McReynolds, Brandeis, Day, Clark, Pitney and McKenna saw that there had to be a balance, that in order for both the employer and the employee to be forced into a structured program for work injuries that each had to give up rights in order to achieve fairness.

I had opined in the past that workers' compensation has nothing to do with fairness or justice, and that such determinations are in the hands of the legislatures that pass the laws creating and maintaining work comp.

I still maintain that position, so long as the system created or maintained meets the standards espoused in 1917:

1) There must be certainty;
2) It must be speedy;
3) There must not be any protracted disputes about fault or damages;
4) The employer's obligation must be limited and fixed;
5) The entire program must be viewed as a whole; i.e. no one facet takes precedence over any other.

There are constitutional challenges going on in state courts around the nation. Florida, Oklahoma, California ... each of the challenges to the state programs focus on singular, specific areas of workers' compensation law.

Are things any different now, in 2015, than they were when White died in 1914?

-"the expense and delay required for such ascertainment [of AOE/COE or disability] amount in effect to a defeat of justice"-
-"the injured workman is left to bear the greater part of industrial accident loss, which, because of his limited income, he is unable to sustain"-
-"frequently become a burden upon public or private charity"-
-"and that litigation is unduly costly and tedious, encouraging corrupt practices and arousing antagonisms between employers and employees"-

A common topic of discussion in workers' compensation circles these days is whether the federal government will weigh in and mandate certain standards, or even take over all of workers' compensation.

I don't think so. There is neither the political will, interest or fortitude for Congress to do so.

But the right case to the US Supreme Court, asking it to revisit the standards espoused 100 years ago could change everything.

Are modern workers' compensation systems (or an employer's opt out program) a "reasonably just substitute"? [Page 243 U. S. 201] There's good argument that we have strayed from that standard, and it will be both an employer and it's injured worker who will make that challenge together when the employer feels it is paying too much for too little, and the employee feels he is getting too little after suffering too much.

Friday, November 20, 2015

Trees and Forests

It makes sense that the cost of medical services is less in states with fee schedules, and that costs grow slower, than in states without fee schedules.

A recent study by the Workers' Compensation Research Institute confirmed that in a comparison of 31 states.
chart courtesy WCRI, 2015

Prices paid for a similar set of professional services varied significantly across states, ranging from 33% below the 31-state median in Florida to 124% above the 31-state median in Wisconsin in 2013, the study found.

There was also “tremendous variation across states” in price changes from 2008 to 2014, ranging from a 20% reduction in Illinois to a 28% increase in Wisconsin.

States with fee schedules experienced slower growth in prices paid for professional services compared with most states with no fee schedules. The median growth rate among the fee schedule states was 6% from 2008 to 2014, compared with the median growth rate of 17% among the non-fee schedule states.

Also affecting the delivery cost of medical services are networks - network states have lower costs and likewise experience slower cost inflation.

Presumably these findings are good.

Or are they?

Looking at just a small slice of the workers' compensation pie doesn't tell the whole story.

For instance, what is the correlation between lower medical cost states and disability rates, duration and severity?

How quickly are medical services delivered in lower cost states versus higher cost states?

Are premiums affected by medical costs? Or do employers see greater premium impact via other case management techniques, such as imposition of nurse case managers?

How long do medical providers and vendors wait to get paid in low cost states versus higher cost states? Is there any correlation with litigation?

In lower cost states, is more of the pie paid to claimants for wage replacement? Or are cost containment expenses eating up a greater proportion of the pie?

Lots of additional questions, indeed - because at the end of the day there are only two things that matter: does the injured worker get benefits timely and adequately; and does the employer realize good value for its premium dollar?

Studies like this WCRI comparison are good for understanding at a micro-level how certain elements affect performance, but they need to be married up to the macro-view to see if we're really doing our jobs well.

Controlling costs means nothing if those paying into the system, employers, and the intended beneficiaries of the system, injured workers, don't get the value proposed in The Grand Bargain.

Trees make up a forest. Forests make up an eco-system. Lots of things live in that eco-system. Cut down trees and an unknown toll is exacted upon those things.

Thursday, November 19, 2015

The Nonsense of Pot in Comp

Marijuana for medicinal purposes is like prescribing alcohol for treatment.

It's just bullshit.

The real bottom line is that there are absolutely no scientifically controlled, peer reviewed, high quality studies that confirm pot is good at treating anything.

There just isn't.

There's anecdotal evidence of course.

Sure, it might make the "patient" feel better in the short term, but so does alcohol. Both have limitations on efficacy, both were illegal at some point, both gave rise to significant underground economies, both are highly susceptible to abuse, neither are controlled as to dosage, and both come in a wide variety of strengths.

New Mexico's experimentation with marijuana in the workers' compensation setting is providing a valuable lesson for the other states - write the laws now declaring pot un-reimbursable.

I'm all in favor of just legalizing pot for recreational purposes. The same scientific void as to efficacy for treatment also fails to show there is any risk to health greater than alcohol or tobacco, and the tax revenue potential could be enormous.

While New Mexico is going so far as to set up a reimbursement schedule, the fact is that none of the treatment guidelines that are widely followed in state work comp systems recognize weed as a valid treatment option.

New Mexico law is decades behind other states in describing what is "reasonable and necessary" medical treatment, which is how the courts surmised that if the patient says pot works then it must be paid for.

Which of course is ludicrous.

The same courts would not condone abusive dosages of opioids under that same theory.

New Mexico regulators figured they had better nip the issue at the bud (all pun intended) by coming up with a reimbursement schedule, which also includes an ad hominy dosage schedule (an allocation which, by the way, is unbelievably liberal - that much pot means someone's stoned 24/7/365...).

General health doesn't have this problem because there is no law out there that says a health insurance company has to pay for pot. The relationship is nearly completely contractually controlled, and in most cases those contracts provide for treatment per recognized guidelines.

Workers' compensation does not have that luxury. Workers' compensation is statutorily controlled, and there is no room for contractual restriction or modification on a personal basis with the consumer.

Consequently, when the law is interpreted by the courts, particularly New Mexico courts, the conclusion is that if the injured worker says it works, and nothing else does, then it must be paid for.

New Mexico will have to statutorily define the role of pot in workers' compensation if the state wishes to put some boundaries around the issue.

All of the other states should do so now before they end up in the same vortex of insanity that New Mexico is going through.

Declaring pot unwelcome in workers' compensation will probably draw the ire of pot advocates, and they are a growing and vocal segment of society with some votes (and a lot of money) behind them.

But work comp, for better or worse, is a political football used to make deals in unrelated matters. The deal should be centered around the legalization of pot for recreational purposes, but also declaring that it is not a part of the workers' compensation system.

There's no place for pot in work comp and states need to declare that policy now before the issue finds a slippery slope in court rooms.

Wednesday, November 18, 2015

Getting Along

Show me a business that complains about workers' compensation, and I'll show you a business that's mismanaged with a whole lot more problems than just workers' compensation.

I was at a lunch with some adjusters the other day. One of them had a great comparison story about two mining companies (this was in Nevada) which accounts she worked. 

One was actively involved in their workers' compensation claims, to the point where the CEO took the time to visit injured workers, and they liberally provided their injured everything under the law. They did not dispute much of anything, and if there was a question about compensability, they erred in favor of the employee. They brought injured workers back as soon as possible, even if the usual and customary couldn't be performed, and even if there was no particular position - just get back to the work place. They didn't use work comp to cull their labor force; if an employee wasn’t good for the company then they just let them go. Their experience was very low, and ergo their premiums were very low. 

But the other mining company treated their people like the dirt they were digging, disputed everything (she said EVERYTHING), didn’t communicate with the workers, didn't communicate with the adjuster other than to complain about paying something, and ergo, their experience was sky high and of course they were upset about their workers' compensation program.

I always go back to the experience and great wisdom of Bill Zachry, Albertson/Vons/Safeway's chief risk officer who has managed that business' work comp experience to 40% below industry average, and feels he can trim it another 30% - all without cheating injured workers out of compensation and ensuring that good vendors are paid and utilized. His rules of operation - err on the side of the employee; go beyond the law to provide what is necessary to return an employee to health; deal with all of the issues, not just the work-related/caused issues, and never forget that there is a person at the center of a claim. He holds everyone along the injured worker interaction chain accountable.

It comes down to a very simple algorithm: call everyone to task to follow the rules. Hold them accountable.

Do that and the injured worker will receive the best treatment, and if the best treatment is rendered (including allowance for dealing with psychosocial issues - i.e. treat the "whole" person) outcomes are better, faster and more complete. 

And the great news is, if the employer does this, it will cost the employer less (in premiums) in the long run, AND the employer will experience greater productivity with less lost time for employees which means others don't have to be paid overtime to fill the labor gaps.

There is nothing wrong with the ‘System’. It doesn’t need to be fixed – it needs to heal itself. It is not going to be healed by those who make their living sucking the life blood from both the injured worker and the employer. 

There's no magic here. Carriers don’t pay for benefits. They collect the basis for benefits in the form of dollars via premiums from the employers. Employers collect that money, built into their goods and services, from consumers (except for the recalcitrant cheaters who deservedly should be put behind bars). 

The carriers are gate keepers, and dole the benefits out to everyone else – least of whom is the injured worker. In the process, they keep an amount for themselves to return to investors/shareholders.

Insurers collect capital and deploy it with the intent of earning a return on investment. They even take on a bit of risk – although not exactly with their money (remember, "their" money is actually the employer's, entrusted to the insurance company for reallocation upon the occurrence of certain events).

The answer to the problem isn’t in getting the Department of Insurance, the Workers' Compensation Insurance Rating Bureau, the carriers, the brokers, the providers, and the laws and regulations to do better. 

The answer is to educate the employers that they are the ones in charge. They are paying for a service - mandated, yes, but they are the ones paying.

If you paid for a car repair and it wasn’t fixed, you’d go on a tear and demand it be corrected immediately – OR ELSE! Legal action would pursue vendor inaction. 

Everyone in the chain is responsible – carriers, adjusters, providers, etc. - and should be held accountable.

And everyone already knows that. Carriers, government, defense attorneys, claimant attorneys, medical providers, ancillary vendors: everyone in this industry is well aware of where the money comes from and to whom the obligations are owed. 

When employers press that point to those in the chain of supply (as Zachry does), everyone seems to get along much better. The injured worker and the employer get what they need and are entitled to.

In California we have Section 3762 of the Labor Code. There are two very important mandates in that section: 1) disclose everything that affects the employer’s premium, and 2) provide the employer with sufficient information to design a Return to Work program for the injured worker.

Other states have similar provisions in their laws.

That's all an educated employer needs: did you make that call today and what did you say; did you not make that call; did you authorize a treatment or did you delay/deny it; did you pay benefits on time; did you use stress and duress to extort an injured worker into taking a lesser settlement, etc.?

When the employer knows and understands what is supposed to happen, when its supposed to happen, and why, then accountability follows and everyone gets along just fine.

And the employer can go about expertly managing the rest of its business.