Tuesday, June 28, 2016

The Ignorant Aging

I'm not an AARP member ... yet. Maybe I should be - heck I'll be 60 in just over 3 more years.

AARP has a big section on their website about working at age 50 and over. It details how to find jobs, what to say in interviews, how to assess benefits, talks about unemployment, self-employment and small business.

They say nothing about getting hurt on the job.

Yet, this demographic, the "aging workforce," has been specifically catalogued by the workers' compensation underwriting and claims community as a particularly high risk due to comorbidities, fragilities, and other age related ailments that can manifest at an instant with or without physical provocation at the work place.

It is also this particular demographic that is ill prepared to NOT work - the baby boomer generation still lives pay check to pay check; in other words they MUST work...

Yet, AARP (nor most other organizations) does absolutely no education to their constituents and members about work place injuries, about workers' compensation or how the system works, leaving this demographic especially vulnerable to surprise, or worse, abuse.

I guess this isn't really a surprise. Nearly no one educates the working population about workers' compensation, or any work injury program, until it's too late, after an injury occurs (or is claimed).

Many states have laws that require the "employer" to provide workers brochures and notices about workers' compensation, but frankly, no one reads those. They are textually dense, full of words that require a dictionary, have little relevance to the "now" and besides, everyone remains in denial about work injuries until they happen.

Then it's too late.

We talk a lot about national discussions - what should workers' compensation be, how can it be improved, how do we do a better job of taking care of the industrially injured ...

Yet we do a miserable job of public outreach.

Why would anyone give a rat's arse about changing anything if they have zero idea of what is to be changed in the first place?

Gaining knowledge about workers' compensation is sort of like learning about sex as an adolescent - most parents are loath to breach that sacred topic, and if they do then it's in shrouded terms of embarrassment; so we learn by doing, sometimes with terrible consequences...

So it is with workers' compensation: expectations at time of need/desire fail to match reality.

And we shouldn't sugar coat the workers' compensation story either.

When my son began adolescence, I literally hit him in the head with a box of condoms and told him my two golden rules: don't be a dumb arse, and beware the power of female genitalia (I used more profane adjectives...).

That lesson was reinforced from time to time with similar provocative, yet effective, communications.

Talking about what work comp should be is probably a good discussion. The "Grand Bargain" has veered off course I think.

But more important is telling the story of comp, in real and frank terms, to those most affected: workers, and the employers who pay the bills.

We can start with the various organizations that communicate regularly with at risk demographics, like AARP.

Hit them in the head with the proverbial box of condoms...


On Tuesday, August 25 at 11:15 ET I will moderate a panel at the WCI Conference in Orlando, FL on the topic, "The Image of Workers’ Compensation and What Industry Can Do About It." Here's my panel:

Deborah L. Michel
Executive Vice President of Major Accounts,
Liberty Mutual Insurance
Helmsman Management Services, LLC
Warrenville, IL

Rebecca Shafer
AMAXX Risk Solutions, Inc.
Hartford, CT

Michael Grabell
New York, NY

Bethany Boggess, MPH
Research Coordinator
Workers Defense Project
Austin, TX
Part of the image has to include acknowledgements by the industry of the perceptions of work comp. I hope you're able to join us.

Monday, June 27, 2016

Acute Personalities

I have an old saying.

Perhaps someone else said it. I don't recall if I acquired it elsewhere - so if this quote belongs to someone else I apologize for the copyright violation:

"People don't change; their personalities just become more acute."

This applies aptly to workers' compensation.

Here's the headline: "Companies Charged in Federal Fraud Sweep Also Dabbled in Comp."

Here's the summary:

The U.S. Justice Department said its "coordinated takedown" of 301 people alleged to have generated about $900 million in fraudulent billings was the largest in history in terms of the number of defendants and losses. Court documents allege the defendants participated in a number of schemes that included paying kickbacks to patient recruiters, beneficiaries and others so providers could submit bills to Medicare and Tricare — a federal program providing health care for members of the military — for services that were medically unnecessary or never performed.

A WorkCompCentral review found some of the companies also operate in California’s comp system.

They're all the same players we've come to know and who somehow avoid discipline.

Oh, they're all in Southern California, as mentioned Friday...

Our headline is misleading - they didn't just dabble; these people terrorized work comp by rendering unnecessary medical "treatment" (how can it be treatment if they weren't treating anything but their wallets?), paying kickbacks, falsifying billings, harming people...

Will things change when the crimes get punished?

Or will the personality of comp just become more acute?

Friday, June 24, 2016

On The Record

Medical fraud isn't restricted to workers' compensation, but work comp can be the centerpiece.

Compound medications, illegal referral fees, attempts to conceal under "advise of counsel," undercover agents, federal indictments, and an admission on tape that, “we’re a very small pimple of everything that’s going on.”

I won't go into more here because WorkCompCentral has already been threatened with a libel suit for publishing the truth. 

But if you really want to know how pervasive, extensive and profitable medical fraud is, you need to read the story, "Federal Health Care Bust Has Ties to SoCal Work Comp," about D.F., M.K., R.R. and a few other names familiar to California workers' compensation observers here:

Oh yeah, it's no coincidence that it all happens in Southern California...

Thursday, June 23, 2016

Ivan's Trip

Ivan is 2 years old and has retinoblastoma - cancer of the eye.

He lives with his mom, Rosa, age 25, in Santa Maria, CA.

I don't know how she's paying for Ivan's treatment, but she can't afford transportation to/from the specialized treatment necessary, which is at UCLA Medical Center.
Ivan, Rosa, Dwights

Fortunately Angel Flights West coordinates transportation for people with serious medical issues but insufficient means to get to the treatment.

I volunteered for the flight - Ivan and Rosa were perfect passengers. They'd done this before.

Volunteerism takes many different shapes and forms.

I can't change Ivan's retinoblastoma. I can't ease Rosa's fears for Ivan's future. But I do what I can, and in this case I was able to fly Ivan and Rosa from Santa Maria to Santa Monica so they could make their chemotherapy appointment.

Look at Ivan in the picture - looks like a normal 2 year old to me! And he acted like one - full of spunk, energy, and that smile... he loves flying.

We can look at others in the same way.

Rosemary helps injured workers in Australia get their dignity back first by providing sustenance, then providing, essentially, occupational therapy by getting them to "work" at her volunteer center.

She does more for the injured worker population in Australia than anybody simply by showing that there's people who care, and providing a path to return to society.

Some find fault in Rosemary's actions. She's not militant enough. She's just supplying groceries. It's just a waste of time...

Wrong - Rosemary, at once an injured worker herself, understands the deep emotional damage that a work injury can have, and how hard it is to return to dignity, to find that new path in life.

When I got back to my home airport the line guys fueling Forty One Mike asked about my Dwight Johnsons.

Dwight, as you likely know, is a double amputee, the result of two separate industrial accidents 18 months apart, who decided to give people something to look at other than his prosthesis, and has made a business out of his shoes.

The line guys were delighted to get Dwight's contact information. Maybe Dwight will make another sale, maybe not. But for sure, there's a couple more people that have a little more education about the work injured, about a return to dignity and a new path in life.

There are countless other stories of people thrown a curve in life, others stepping in to assist (volunteers or professionals) and new lines in the map of life drawn, and followed.

Sometimes it is the system. No doubt there are times when the system lets people down and there is misdirection.

But more often it is the person.

The person can't always choose the system.

But the person does have a choice how to react within the system.

One last thing - if an injured worker needs transportation, there are volunteers who will provide it, and they're only a phone call away...

Wednesday, June 22, 2016

Seeking Nominations

This is a shameless promotion of the WorkCompCentral Comp Laude Awards.

There are only a couple weeks left to nominate the person or entity that you think deserves recognition for doing GOOD or overcoming difficult obstacles towards the betterment of themselves or others.

It's all about The Story - who's inspiring? who's a leader?

The nomination process is super simple. There are no categories to choose. The nominating committee will take care of ensuring nominations are placed into the correct category.

All you need to do is tell us who you are so we can contact you later, who the nominee is for obvious reasons, and a couple of sentences about why that person or entity should be recognized.

If your nomination makes it to the second round then WorkCompCentral will contact you for a more complete story - that story goes to the judges.


  1.  an employer
  2.  a claims adjuster
  3.  an injured worker
  4.  a doctor
  5.  a lawyer
  6.  a researcher
  7.  a broker/agent
  8.  a risk manager
  9.  a physical therapist
  10.  a nurse
  11.  or anyone else that you think is an example of GOOD.
Nominations close June 30.

Tuesday, June 21, 2016

California Conundrum Part 3

So what are the reasons that California is so costly to employers and their carriers, yet so stingy in benefits to system consumers - injured workers?

That's the question in part three of this series that originates from the annual meeting of the Workers' Compensation Insurance Rating Bureau last week in San Francisco.

Two different panels comprised of 13 people from different sectors of the workers' compensation industry all had opinions. Nearly thirteen different opinions.

The first panel was the Research Forum consisting of California Workers' Compensation Institute's chief, Alex Swedlow, and WCIRB researchers Ward Brooks and Tony Milano, moderated by WCIRB Chief Actuary David Bellusci.

The numbers in the data show that a driver is continuous trauma claims increasing particularly in the Los Angeles area - 14.9% of all claims in the LA area are CT compared to 7.7% for rest of the state. Those claims are also far more likely to be have attorney involvement, post termination, or involve psyche/sleep/multiple parts; so not only does the area have a higher percent of CT claims, but those cases also have more complex characteristics.
Bowzer's confused too...

One of the medical cost driver characteristics noted by the panel was comorbidities, which prompted Swedlow's comment, "physicians are very good at billing for things they are going to get paid for..."

The speed at which claims are reported and thereafter managed matters a lot relative to cost, return to work and related issues. In Los Angeles the average time for a claim to be reported is 24.2 days post "injury" (in quotes because of how that may be measured) while the state average is 15.5 days.

In addition, this panel said that the overall litigation rate is much higher in souther part of the state contributes to delay as well as when treatment actually begins. The statewide average is 23.6 days from DOI to beginning of med treatment; the fastest times are in Colusa and Humboldt counties, the slowest Lassen (37 days), Shasta, San Mateo Contra Costa and then LA (29 days). This panel said that the introduction of attorney involvement is the biggest factor in slowing down delivery of care (which is an observation supported by NoCal applicant attorney Gary Nelson - see below).

The afternoon panel was a more contentious debate. Everyone had an opinion on the conundrum; not everyone agreed.

Christine Baker, Director Department of Industrial Relations, made one of the most poignant statements of the meeting: trust in the system has been eroding. She acknowledged that in the long run the various disparate systems of delivering medical care and providing disability protection to workers may not be financially tenable to employers in California. Baker and her team are targeting fraud in a big way marrying up data from Electronic Adjudication Management System and Independent Medical Review to find the abusers, but she also acknowledged that targeting and eliminating fraud is going to take cooperation of everyone in the system.

Basil Besh, M.D. of the FORM Hand, Wrist & Elbow Institute said we have fixed the wrong problems; why do we need both Medical Provider Networks and Utilization Review? "We punish the many for the symptoms of a few," Besh said.

Ronnie Caplane, formerly chairperson of the Workers’ Compensation Appeals Board, and now working for The Zenith Insurance Co, said reform can only happen if we bring everyone to the table and discuss solutions, that we all have the same goals. But, as the system currently operates, the injured worker is seen as carrion - everyone feeds off them, and everyone goes home with a full belly except the injured worker. Currently everyone is pointing fingers at the other to place blame, rather than get together for a common solution.

Cynthia Casey, Esq, is a defense attorney from Southern California and placed blame for the CT epidemic in the LA area on workers' compensation judges - for some reason the judges don't want to go to trial on cases of post termination CTs despite the anti-post term language of the statute.

But Van Nuys district office Workers' Compensation Judge Michael Cole disputed this, saying that the statue is poorly written and provides a loophole for those cases; he said the biggest difference between the north and south are liens, no one will take a case on a lien basis in the north.

Don Marshall of the California Fraud Assessment Commission said that fraud is a small percentage of cases that has a big impact. The one difficulty he notes is that employers get upset at employees who they perceive are ripping them off because it is personal, but the reality is medical and premium fraud are the problem areas. He thinks prosecutors are finally starting to get it. Marshall held up a box of a "workers compensation drug testing" collection kit that the doctor gets before even seeing the patient. "Injured workers have become pawns that are traded between providers to generate income," Marshall noted.

Modesto applicant attorney Gary Nelson observed that he went to a continuing education class in Southern California where the topic was 36 ways to get out of an MPN. He commented that he couldn't understand why that would be necessary because in NorCal they just don't do it. Nelson is of the opinion that evidence based guidelines are there just to deny treatment, that occupational medical clinics are all about not spending money so treatment is delayed, but humans don't like to wait so injured workers want out of those clinic situations.

Mark Walls of Safety National Ins. Co. thinks California is performing exactly as designed. Other states don't have liens and CT claims, and the reason 50% of indemnity claims are litigated is because it is a system designed for attorneys by attorneys. Walls noted that group health has formularies, guidelines, networks, etc. But when those are imposed in work comp they are objectionable - why? Walls said that outcomes in work comp are by far worse than in group health and that it doesn't work better when we just let people do things they want.

Finally Bill Zachry of Vons/Safeway/Albertsons said the real problem is that the incentives are not in the right places, noting that many VPs of insurance claims departments are misincentivized too. The front line supervisor, the person to whom the injured worker reports directly to, is key - there is not enough communication from that supervisor which tells the injured worker that they don't really care. Ignoring the worker is the greatest cause of litigation said Zachry, that any delay in medical care also drives litigation so everyone has to report immediately.

So what's wrong with the California system? As you can see, everyone has their opinion. There's probably some truth to all of it.

Monday, June 20, 2016

California Conundrum Part 2

Friday was the first part of this series about the California Conundrum, the theme of the Annual Workers' Compensation Insurance Rating Bureau meeting held in San Francisco last Thursday.

This second part is about the state of the workers' compensation insurance industry in California.

Note readers - this is about the INSURANCE industry! Not the state of the system. Not self insureds. Not employers, workers, other vendors... Simply how the insurance industry sees itself performing in the biggest workers' compensation market, by far, in the United States.

The information was presented by Chief Actuary of the WCIRB, Dave Bellusci.

Here's the bottom line, if you don't wish to read the statistical information further: California is the biggest, most competitive, most costly, workers' compensation insurance market in the US.

Did I say costly?

So what else is new?

2015 marked the 6th consecutive year of $1B growth in insurance premium. Bellusci's forecast for 2016 is a $17.9B gross premium, and 13.24B net of credits.

But Bellusci thinks 2016 will be the end of premium growth as lower rates trim the cash inflow. The earlier premium growth was driven by higher rates early on, and thereafter was economically (i.e. payroll) driven. It seems, according to Bellusci's interpretation of the data, that the industry is at end of a premium growth period.

Though California has 12% of the nation's total population, it represents 29% of countrywide premium. In 2009 California was 19% of the entire country. The premium growth in California, post recession, was much quicker than rest of the country. Part of this was rate increases, payroll expansion, and now the carriers are facing rate decreases.

Also, Bellusci noted, that even though many carriers have been consolidating (buying each other and/or merging subsidiary operations) the state still is the most competitive and diverse market in the country.

70% of the state is written by national carriers, 21% are California specific only, and 9% written by State Fund.

You folks already know what I think of this situation - in my mind, while a bit better than in the past with California specific carriers climbing out of the decimation to the market created by "open rating", I see this as still a very anti-competitive market.

Domination by big money national firms with broad portfolios seeking to take advantage of the work comp market to sell other lines - to me there is nothing healthy about work comp being a "loss leader" to other lines and such behavior negatively affects the quality of claims handling.

Despite "open rating" and the illusion of competition, California rates remain considerably higher than the rest of the nation (see my argument above).

Bellusci points to 3 principal factors negatively affecting California rates: frequency, severity and the cost of benefit delivery.

Injury reports went from 1 in 5 workers in 1962 to 1 in 25 in 2012 - 83% decline. That is a fantastic safety record that mirrors the rest of the nation and is consistent with what Berkeley research Frank Neuhauser's opinion that it is more dangerous living outside the work place than in it!

But, of course, the Los Angeles area pulls California out of the national average. From a statistical standpoint the anomaly is due to the high rates of permanent partial disability claims (which drives litigation, ergo expenses) and continuous trauma claims (which are largely absent in the rest of the nation).

Indemnity loss in 2015 was nearly a $30,000 per claim average. In 2005 that number was $19,000. If there is any good news for carriers (at the expense of the medical community) medical cost severity bucks the national trend; California medical costs have been deflationary since SB 863 while the rest of the nation has see inflation.

But it's not medical severity that really drives these costs in California - it is late reporting and more importantly late treatment authorization. The late tail in medical care (i.e. delays, denials, and overall bureaucratic wedge-points) creates a super heated medical cost driver, such that the average California indemnity claim medical cost is $42,000 - second highest in the nation, and unfortunately also by a long shot...

And to the chagrin of reformers, the unintended consequence of SB 863 has been an increase in benefit delivery friction costs by 24%, making California the most expensive in loss allocated expenses, by far.

So what's the take away?

I think Mark Walls, a panelist on a separate presentation at the meeting (Conundrum Part 3), put it best: "California is performing exactly as it was designed ... this is what we signed up for in California."