Thursday, April 12, 2012

Work Comp and Dirt - Do They Have to be Synonymous?

“There’s almost no business that is doing workers’ compensation that’s clean,” he said. “It’s a dirty business from start to finish. It’s dirty all the way around. Dirty, dirty, dirty.”

That's a quote straight out of this morning's lead story on WorkCompCentral from Paul Randall, a former consultant for Tri-City Regional Medical Center in Hawaiian Gardens, California, before the hospital fired the chief executive officer who hired him, and who was featured in a Wall Street Journal article in February about an alleged conspiracy to inflate the cost of spinal surgery hardware and use the proceeds to pay kickbacks to doctors (the U.S. Attorney’s Office in Los Angeles prepared, but did not file, a criminal charge).

"Dirty" is an adjective that I've personally heard used to describe the workers' compensation industry way too many times in the past couple of years for it to be coincidence.

A couple of years ago, when in a meeting with some executives from a medical imaging company about doing some business with WorkCompCentral, the CEO of that company, in a moment of frank discussion, said, "David, you know and I know that workers' compensation is a dirty business. Very dirty."

At a lunch meeting several months ago with a medical executive/physician, talk about the industry inevitably led the executive to declare that our industry was "dirty" from top to bottom.

A former workers' compensation judge that I know well describes some of the business antics and characters that would come before her in the courtroom as "dirty".

And most recently in an email exchange with yet another industry executive the businesses in our industry were described nearly universally as "dirty".

When you Google "workers' compensation dirty" (don't use the quotes, just input those search terms) you come up with many interesting web sites that declare various dirty elements or tactics in the industry, and not just medical providers or attorneys.

Contractors Insurance, which appears to be either an agency or brokerage, itemizes 7 "dirty secrets of workers' compensation insurance" pointing out elements of work comp insurance that an employer wouldn't necessarily understand but which have huge impact on premiums.

Another brokerage has a presentation on the experience modification system which it calls "Workers' Compensation: Dirty Little Secrets".

And there's a host of attorney sites using the term "dirty" in their marketing.

Why is workers' compensation so "dirty"? What is it about this industry that elicits such negative images from system vendors? Is doing business in workers' compensation nearly always on the edge of legality, morality, ethics?

Then there's the stories of recent that really challenge one's misconceptions of public safety personnel - the last people one would think would be taking advantage of the work comp system: L.A. Firefighter, and Part-Time Martial Arts Fighter, Arrested for Fraud; Disabled Police Officer's Drug Sales Nixed his Entitlement to Benefits; Former Deputy Fire Chief Surrenders on Comp Fraud Charges - there's plenty more.

Where do we go from here? How do we "clean" up the "dirt" in our industry?

Yesterday I went on a rant about education, or the lack thereof, in our industry. I got a lot of agreement on that post. Is part of the issue degradation in professional training? Maybe we've gotten to the point where most people just don't care anymore - that the "dirty" in workers' compensation is just accepted as a part of doing business.

If you're like me, you don't buy that.

Workers' compensation (in whatever form it is delivered, be it standard issue insurance or some form of ERISA opt-out program) is one of the basic tenets of a globally competitive economy. The concept of work injury insurance is that the work force must have some protection against injury or disease to stay productive and produce a standard of living that is the mainstay of modern first world economies.

It's not the best way to get things done, and yes the industry has evolved over the last 100 years, perhaps beyond what the original provocateurs intended (I use the term "provocateurs" intentionally because the idea of work comp when first derived was NOT a popular program). But it does serve a vital purpose that has largely enabled this country, and others, to move beyond agrarian living.

As a dozen or so states this year contemplate "reform" and push around various measures to try and reconcile the disparate goals of increasing benefits while reducing costs, I can't help but think how much of this debate arises out of our dirty house.

This makes me sad. Are we all really that dirty? Is there no soap that can wash away the filth?


One element that I did not write about in the blog post originally (mostly because when I write it's 3 a.m. and I haven't entirely derived the benefit of caffeine) is the dirt on the insurance side too - and there has been plenty of that in the headlines in the past few years too: AIG's use of credit default swaps and captive offshore reinsurance to avoid state premium taxes; contingent commission programs causing brokers to steer business away from lower premium quoted underwriters without disclosure to the employer/client; Unicover partners; etc. The "dirt" does go full circle, and while most are clean, it's the dirty ones that take up most of the resources and cause most of the problems.


  1. In my experience 99.9 % of injured workers are on the up and up. They get treated poorly. Moreover the benefit system in Ohio is not that much. Each of these clients would rather have not been hurt on the job, than have to deal with the workers compensation system

  2. Thanks Anthony. I was really talking about all the vendors that use the injured worker as a cash register. I believe that most injured workers are as you describe them. I also think OH is unique among the states.

  3. I did have the wonderful experience of going to a local Chiropractor years ago when living on Cape Cod. The intake person/receptionist/wife of the Dr. asked first thing it this was related to a work related injury or car accident. I remember it vividly in my mind and my response was to tell her that I was employed in an industry that provided RTW vocational and medical management services. Yes! I did feel like I was ready to be used as an influx of cash into their register.