Tuesday, June 19, 2012

If It Doesn't Fit, Use a Bigger Hammer

I said I was done with the lien issue in California.

Never say "done" I guess.

“Until we know the size of the problem, it’s difficult to come up with a solution that addresses the concerns in a more efficient way,” Carl Brakensiek, California Society of Industrial Medicine and Surgery (CSIMS) executive vice president, told WorkCompCentral. “It seems like what the WCAB did was come up with a blockbuster solution that could be enormous or could fizzle. It all depends on the size of the problem.”

Indeed, the size of the problem does not appear to be accurately understood.

My understanding is that there are 425 boxes of un-filed paper liens stockpiled and taking up department time and resources. The boxes depicted in the photo from that post are copy paper boxes. A box of copy paper, when packed by a machine with wrapping, contains 5000 sheets of paper.

If these boxes met those standards, that means 2,125,000 sheets of paper. The typical OCR lien package with a single page attachment supporting the lien (which used to be required under the "old" rules) is 8 pages (including separator sheets, cover sheet, 3-page lien form, proof of service, and invoices). That means about 265,625 un-filed liens IF these pieces of paper were packed by machine.

But the paper isn't packed by machines - people stuffed these boxes and people can't do the job as good as a machine with new, fresh paper. Some liens will have more pages, and some boxes will be packed more efficiently than others, so the number of pieces of paper in each box is probably quite a bit less than 5,000.

The Administration claims that there are close to half a million liens being filed each year -- in addition to a backlog of close to 1 million liens waiting to be scanned -- with an average value of $1,500 each.

“When you think of the 500,000 liens coming into our offices, plus 800,000 in boxes, plus the litigation over all that, that alone is a huge amount of money,” Department of Industrial Relations Director Christine Baker said in the story linked above.

Okay - so either the administration is overstating the "lien problem", someone can't count, or the "lien problem" isn't as advertised.

Shouldn’t the public get an accurate count of exactly how many boxes of un-filed liens are sitting around the state right now? We heard “close to a million” liens, but how do they know this when what they have to look at are only boxes?

All these lien rules and changes from the Administration is being done based on 500,000 liens incoming each year. But if there is only 425 boxes left un-scanned, then lien filings can’t possibly be that high.

The numbers don't add up, and I think the workers' compensation community deserves the real numbers since they are being burdened with new rules and regulations that are based on these "facts."

In the meantime lien claimants are lining up to file for hearings putting additional pressure on the District Offices. A sample review of hearing notices for "lien conferences" - the precursor to getting a lien trial - shows that dates are being set in Long Beach for MARCH 2013, in San Diego for JANUARY 2013, and in Van Nuys for DECEMBER 2012.

Dean Fryer, a spokesman for the Division of Workers’ Compensation, told WorkCompCentral that the administration anticipates an increase in the number of lien DORs being filed. The division is exploring “a multitude of possibilities” to “accommodate an increase and to ensure that lien claimants get their day in court.”

Possible solutions include expanding the calendar to allow for more lien conference settings and bringing in judges from Northern California to assist in the southern part of the state. The division is also considering a pro-tem calendar to address lien DORs and could hold “lien intensives where there would be a concentration of lien conferences for a few days,” Fryer said.

Listen - the administration is reacting to a problem it doesn't even understand, and is making things worse.

My grandfather back in his day was a Master Mechanic - that was when the trades meant something and people took pride in their trade. The key to being a good Master Mechanic is that only one problem is addressed at a time because of cascading effects of problem resolution - one needs to see what happens down the chain of events to see if the proposed resolution of a problem creates more problems than it resolves.

The original "lien problem" was the quantity of paper - at least that is what it started out as. But we don't even know just how big of a problem it is. And in the meantime we have a whole host of new problems being created by regulations that address more than the original problem.

My grandfather also facetiously said, "if it doesn't fit, use a bigger hammer."

Deal with one problem at a time. In this case, just deal with the paper. User a bigger hammer. Fit all that paper into the system. THEN determine the next problem.

In the meantime, the administration is back in defensive mode and reacting to an issue it doesn't even understand adequately.

If the problem is paper, then the administration needs to get rid of the paper.

If the goal is saving money - and it is, because the administration is tasked with ferreting out costs in the system to support an increase in permanent disability indemnity - then we should know EXACTLY how much we are saving.

We don't know, and we can't know, until there is an accurate quantification. This isn't difficult math. Someone just has to count.


  1. Great post David. I agree - 'If you can't measure it, you can't manage it.'

    I'd like you to expand on your statement, 'If the goal is saving money....'

    By that, do you mean the WCAB saving money on its administrative costs? Or, is the goal to reduce costs in the WC system by preventing the lien claimants (valid and invalid) from asserting their rights and collecting on their claims?

    Saving the WCAB some administrative costs won't have an impact on the costs of work comp.

    Using the 'lien claim' issue to deny providers payment could have a significant impact on reducing costs.

    The latter would have the effect of providing additional money to fund higher PD payments to the injured workers - just as the 2004 reduced PD schedule took money from injured workers to the financial benefits of employers (premiums) and the carriers (lower loss ratios).

    It's always a 'zero sum' game. In order for someone to benefit, someone must lose.

    1. Thank you Bill. I'm simply stating the Division of Industrial Relations Director's publicly stated goal of reducing costs in the system - now whether that means denying payment to providers or means reducing administrative costs is open to contextual interpretation. From my view point, I believe that what WAS meant was reducing administrative costs, but then the Director cites that these alleged 800,000 liens have an average value of $1,500 which to me means she wants to deny payment to providers (or at least significantly curtail them). If those numbers are right that's $120 million. That's a lot of PD.

  2. This link (http://daviddepaolo.blogspot.com/2012/06/response-to-use-bigger-hammer.html) is to a comment that was too large for the comment field, so I posted it as a separate blog post.

  3. I hope this isn't inappropriate... but everyone is in an uproar over the new lien rules, when no one really understands what the new rules mean. (Including myself.) What I did fear, and now seems to be happening, is that there would be a rush to file DOR's on every possible case, the court calendars would fill up, and it would take many months to get a hearing.

    This happened before, back a few years. I can remember when Van Nuys and Los Angeles were so backed up the wait was 18 months to get a hearing date--by which time jobs had changed, even the laws had changed. Claims examiners and defense attorneys knew the ball was in their court, and they were gleeful. We had no legal recourse to unfair claims denials, to delays in payment... and in that cramped environment we had to forget about pursuing the smaller matters such as Penalties and Interest, even when there was blatant refusal to pay PQME's for a year or longer. They knew we had absolutely no ability to pursue a remedy... and a number of my providers lost their practices during that time.

    It's only getting worse in our business, as teams of well-funded defense attorneys spar with overwhelmed hearing reps and lien negotiators--and also refuse to provide complete Discovery. But at least we could get a hearing date. No insurance carrier or "Lien Unit" is going to break a sweat or feel any urgency to resolve liens when we declare that we have an upcomming Lien Conference in 2013. Once again, the provider looses.

    1. It's not inappropriate Lori and thanks for sharing your experiences and frustration.