"Reform" Should Not be Defined by Financial Outcomes

In a webinar presentation yesterday, advocacy groups representing California employers indicated that they are looking for a new "reform" or overhaul of the state's workers' compensation system.


There seems to be consensus from the group in yesterday's presentation that permanent disability indemnity benefits need to be increased.


But the group is unwilling to concede to increases without taking something away from some other cost driver.


Sensible enough given that workers' compensation operates within a defined set of financial parameters - there is only so much money to go around so increasing one thing will require decreasing another.


Jason Schmelzer, chief lobbyist for the California Coalition on Workers' Compensation (CCWC), said in the webinar that business agrees it is necessary to adjust permanent disability (PD) benefits, but there are a lot of questions about how it should be done citing that fact that PD is not defined specifically in either statute or regulation creating the problem of court opinions interfering with the reforms.

"The Almaraz/Guzman and Ogilvie decisions are a testament to the creativity of the Appeals Board," he said. "Most observers think the reforms were pretty clear, but the reflection looking back on the system is when we do the next reform, we need to make it iron-clad."


I disagree with Schmelzer - history is replete with "reforms" being interpreted by the courts and escaping the "intent" of the reformists - there is no possible way to make any law "iron-clad". Laws get written, then cases with specific facts applying those laws are argued by attorneys who are trained to advocate for their clients, be they injured workers or employers/carriers so whatever "reform" is instituted will be challenged and case law will be made. That is how our system works.


I agree with Schmelzer on an important point. He told the webinar audience, "There is no reason for as much to be going in front of the Workers' Compensation Appeals Board as there is. We need to bring down the tension level."


The problem with the thinking of these advocacy groups in my opinion is that they are intent on repeating history - expecting different results with the same inputs. In other words, rather than tackling the underlying raison d'êtree, "reform" is being defined by changing the surface level. 


The discussion needs to be about the culture of workers' compensation. The question needs to be about what the ultimate outcome should be.

Do we want to compensate people for being disabled, or do we want to provide incentive that changes the expectations of people that end up in the system?

Do we want to control medical costs on a piecemeal basis, or do we want to reward physicians for returning value to workers' compensation?

Do we want to continue putting money into investigations of employers committing payroll fraud or who provide unsafe working conditions, or do we want to create a culture of mutually shared responsibility and reward?

Creative employers are working within existing systems and are experiencing extraordinary results because they are not using the same old inputs.

Just yesterday I blogged about Safeway experimenting with biopsychosocial treatment, a fancy way of saying they are dealing with the WHOLE injured worker and not just the "injury", and experiencing positive results beyond their wildest imaginations.

I have blogged in the past about employers paying more for medical care during the early parts of a claim and experiencing greatly reduced litigation rates, disability rates and payroll replacement costs.

These are just examples of piece meal solutions working within an existing "broken" system to obtain superior results for both injured workers and employers.

The lesson is that these people thought outside the box, examined the CULTURE of what was going on and created INCENTIVES to drive the culture. They defined what the expected SOCIAL outcome was first. They did NOT define financial outcomes first. These creative people then instituted changes that would drive the social outcomes and then measured the results on a global basis examining costs beyond the incremental, special costs, of just the workers' compensation program.

So, my simple message to the well meaning advocates of "reform" - step back and think first about what the desired social outcome is first, then think of ways to motivate people towards those outcomes. And while the financial issues should be addressed, they should not define "reform".
workers compensation, work comp, injured worker