Friday, March 30, 2012

Lawyers Add Net Benefit to Work Comp Claims

Yesterday I talked about how the debate in California about reform needs to focus on providing stability and predictability to business, not about costs, and that the discussion needs to include the underwriting market in addition to the benefit delivery system.

Today we're going to look at the current scapegoat in the California benefit delivery system, the high rate of litigation and the role of attorneys in the system.

I've heard it time and time again the the problem with the California system is the attorneys: there's too many making a big deal out of a non-dispute increasing costs and delays for everyone and doing no one any favor.

Do I have the argument correct?

Let's assume for the sake of debate that the "attorney problem" is accurate and that the role of attorneys in the system is an excess frictional cost.

How much of a cost are they? There is data suggesting that the participation of attorneys increase the cost of a claim significantly, but I submit that while the influence of attorney activity may inflate the cost of A claim, that the participation of lawyers overall in the benefit delivery system provides value that is not accurately measured.

First, let's understand why an attorney gets involved in the first place.

Overwhelmingly, in both my personal experience (when I was a defense attorney I would always ask an injured worker in a deposition why they sought an attorney) and in conversation with an innumerable number of both claimants and attorneys (both applicant and defense), the single most common reason someone seeks an attorney is because the system is hugely complex and frightening.

One need only look at the stack of paperwork that is generated when a workers' compensation claim is initiated with official, scary looking forms and standardized communications advising of potential loss of rights and entitlements if one does not do this or that within specified time periods.

These forms and letters use big words, lots of acronyms, and are confusing to people that don't see them day in and day out. If they don't scare a claimant to an attorney at least the prudent claimant is going to seek advise to make sure that they aren't going to be giving up some fundamental right.

The second reason an injured worker sees a lawyer is because they are not sure whether their claim is being managed correctly. The system sets up an adversarial relationship almost from the start and our culture has imbibed distrust in the insurance industry, and increasingly, in the medical profession. People on the street do not trust an insurance company to do the right thing, in particular when it is someone's health on the line.

So, first and foremost, it is the PROCESS that drives people to lawyers.

Some claimants may go to lawyers before "knowing" they are injured, but I submit that is a very small population and that the vast majority of attorneys practicing "applicant" law reject claims of retaliation.

But once a claim ends up in a lawyer's hands it is going to be managed to extract maximum financial value out of the case - that is how a lawyer gets paid. So of course a litigated claim is going to cost more, in terms of hard dollars leaving the reserve bucket, than a non-litigated claim.

This fact drives an assumption that lawyers are an unnecessary burden on the system and that they create unwanted costs.

However, I submit that lawyers, at least in today's workers' compensation environment, for the most part provide value to the system in several ways.

At least one researcher has concluded that the process of closing a workers' compensation case by Compromise and Release (C&R) in fact returns injured workers to the productive work force providing an immediate and sustained increase in labor supply. For those of you not in California a C&R is a complete settlement of a claim with no "tail" left in either indemnity or medical benefits.

Henry Hyatt of the U.S. Census Bureau - Center for Economic Studies concluded in 2010 that rather than discouraging injured workers from returning to work or otherwise wasting away in non-productive leisurely pursuits, that the conclusion of cases by C&R result in a 5% increase in the quarterly labor force re-entry rate and an 8% decline in the quarterly labor force exit rate. (The Closure Effect: Evidence from Workers Compensation Litigation, Hyatt, 2010).

Hyatt theorizes that conclusion of a workers' compensation claim by C&R provides the invaluable psychological effect of "closure" thereby relieving the injured worker of the burden of a significant life-altering event and allowing that person to start moving on with life.

Hyatt admits that, "My greatest limitation was that I lacked a method of validating that it is closure, and not some unknown other factor, that induces claimants to resume work when they reach an irreversible settlement with their insurer."

There are roughly 100,000 new litigated claims filed with the Workers' Compensation Appeals Board (WCAB) annually and roughly 360,000 open adjudicated claims in the system at any one time.

Overwhelmingly, these cases are settled and very few actually end up in trial testimony. Most of these cases settle by C&R.

If we are to extrapolate Hyatt's findings to the participation of lawyers in the California system, then they are in fact increasing the labor force reentry rate, and decreasing the labor force exit rate in a disproportionately positive manner.

So while it is easy to scapegoat attorneys in the system, there is evidence that there is a value added component to attorney participation.

Perhaps the real issue is the length of time an attorney managed case remains in the system - that is an issue of PROCESS, not of attorney participation. If a C&R'd case is providing some net economic benefit to the state, then the faster a case reaches conclusion the sooner the net economic benefit is realized and the lower the overall costs are.

Bottom line - California reform on the benefit delivery side needs to take a very close look at smoothing and simplifying the process.

Thursday, March 29, 2012

CA Reform Should Not Be Just About Benefits

With all due respect to California State Senator Ted Lieu (D-Torrance), the issue behind the next generation in workers' compensation reform is not how to hold down costs to employers while increasing benefits to injured workers.

The real issue is stability and predictability.

Yesterday the Senate Committee on Labor and Industrial Relations and the Assembly Insurance Committee held a joint hearing on the impact of Senate Bill 899.

Intended as a “launching pad” for reform discussions, the hearing took in testimony from several people about benefits, costs, market rates, ratios, and other elements that go into "fixing" workers' compensation.

I think that administrative officials understand the issue.

Division of Workers' Compensation (DWC) Administrative Director, Rosa Moran, testified that the division is working with the Commission on Health and Safety and Workers’ Compensation (CHSWC), Rand Corp., and the University of California to discern how to “carefully devise a program that will improve compensation benefits to injured workers, but at the same time not create a volatile market.”

Moran understands the issue exactly - avoiding volatility in the market is the goal.

Rand generated a report in 2009 in response to a request by CHSWC about trends in the California system with 29 recommendations ("California's Volatile Workers' Compensation Insurance Market: Problems and Recommendations for Change"; Dixon, Macdonald, Barbagallo) that, in the opinion of the study authors, would return stability to the market.

Indeed, it wasn't that prices were inflating in the 2000s that led to the monumental reform action in 2004, it was that prices inflated much too rapidly and shocked the business community.

Think of gasoline prices, a much broader market and the subject of much public concern and/or consternation.

The market does not grumble about inflating gasoline prices. As long as the inflation is gradual people hardly even notice. One might hear some comment about how much fuel costs, but that conversation is typically compared to a much longer historical reference.

But when prices inflate suddenly there is a shock to the population and a general dissatisfaction overcomes the population with disparaging remarks about oil company profits, Middle East unrest, and calls for regulatory action.

The same with workers' compensation. The issue for business in any state is not really about how much a certain service or commodity costs, but whether there is stability in the cost so that an effective business model can be drawn and relied upon for decision making in the quest for a reasonable profit.

Rand notes that since 1995, "average premium per $100 of payroll has varied by nearly a factor of three."

Here's a graph from WCIRB data put together by an insurance brokerage unrelated to the Rand study:

The point of this graph is that prior to "open rating" (i.e. SB 30 passed in 1994, effective 1995 that removed direct Department of Insurance rate regulation) there was fairly good separation of earned premium against incurred losses. Around 1999, as the folly of the reinsurance scandal (known more commonly as "Unicover") and Managing General Agents came to fruition losses increased dramatically, carriers failed, capacity dried up, forcing premiums to skyrocket.

Since 1995, Rand notes, "While it is true that the volatility and insolvencies were due to a number of factors other than price deregulation, it should also be acknowledged that price deregulation created an atmosphere that exacerbated the adverse effects of several factors."

Rand says that the market seems to have learned its lesson and that the confluence of events that led to the 1999 malaise was unique, but "memories are short" and "and many of the same incentives, institutions, and regulatory practices that led to the volatility and insolvencies remain in place."

The point of this short review is that the current talk of "reform" is all about the benefit delivery system, but there is almost no talk about the underwriting market - what we tend to forget in workers' compensation is that while costs are important, to the business owner it is not the cost of indemnity, the cost of medical treatment or rehabilitation. It is the cost of the premium that counts.

While the Rand report authors do not recommend a return to the minimum rate regulation system that was in place prior to 1995, they do recommend tighter regulatory control over the underwriting market as a part of an overall "reform" in order to bring stability back to premium costs to employers.

There is neither the time nor the space in this post to go into any great detail about increased regulatory oversight in the underwriting market.

But it is my opinion that the benefit delivery system can not be the sole purview of true "reform" and that the underwriting market must also be a part of any broad discussion.

And I believe that the discussion should not focus on "costs" as typically understood, but should focus on volatility versus predictability.

The issue is not how much the system costs, but the value of the system. In a mandatory participation system like workers' compensation, predictability is where the value lies.

Wednesday, March 28, 2012

Payroll Zero? Not a Chance When Subs Are Unlicensed!

Yesterday we examined a case in Florida demonstrating an employer's folly in failing to report an alleged industrial claim timely.

Today's news (and blog post) concerns an employer's folly in failing to adequately estimate payroll obligation when applying for workers' compensation insurance.

Georgia is one of those states without an insurer of last resort and relies upon an "assigned risk pool" to cover those employers that carriers otherwise don't want to write. To be eligible to write the good business in Georgia a carrier must submit itself to the pool. Coverage obligations are randomly assigned.

James Smith, a contractor, enlisted the help of his general agent, Norris Strickland, which submitted an application on Smith's behalf to the Georgia Workers' Compensation Assigned Risk Insurance Plan because they couldn't find insurance on the open market.

After Smith's application was processed, his policy was randomly assigned to Amtrust North America. Based on Smith's representation that his estimated employee payroll was zero, Amtrust issued a one-year policy starting in January 2007 with an initial premium of $765. The carrier renewed the policy the following year.

Since workers' compensation premiums are based on the actual amount paid to workers, Amtrust could not determine the actual policy premium due to it until after the conclusion of the 2007 policy term. Amtrust conducted an audit of Smith's payroll records and calculated that an additional premium payment of $42,653 was owed, based on wages Smith had paid to uninsured contractors in 2007.

Amtrust then cancelled the renewed policy and demanded payment of $44,457 in premium owed for the period between January and May 2008.

When Smith refused to pay the additional premiums demanded by Amtrust, the company sued for their recovery.

Smith filed a motion for summary judgment, asserting that he was not obligated to pay because he did not sign a written contract with Amtrust, he did not authorize anyone to do so on his behalf and he did not otherwise assent to the terms of Amtrust's insurance policy.

In response, Amtrust moved for partial summary judgment, arguing that Smith was liable to pay additional premiums because Norris Strickland acted as Smith's agent when it submitted an insurance application on his behalf, the parties were bound to the terms of the policy once Smith's application was approved and Smith assented to terms of the policy by accepting coverage without objection.

State Court Judge Raymond S. Gordon Jr. denied Amtrust's partial summary judgment motion and granted Smith's motion for summary judgment, deciding that Smith was not liable for the additional premiums.

Amtrust appealed, reiterating the arguments it had made at trial. The Georgia Court of Appeals ruled in the carrier's favor on Monday.

The opinion by Judge M. Yvette Miller concluded that Norris Strickland was Smith's agent, not Amtrust's.

The court also said that Smith's express consent was not required for him to be bound by the terms of the assigned risk policy provided by Amtrust because state law obligated Amtrust to participate in the risk pool and determined the amount Amtrust could charge as premium for issuing policies to pool applicants.

Since the premium amount demanded by Amtrust in 2008 was admitted based on an estimate rather than a completed audit, a triable issue remained as to the amount owed by Smith.

Lessons for employers in assigned risk states:
  1. Accurately estimate payroll;
  2. Don't hire unlicensed contractors as subcontractors.
I sort of feel sorry for Smith. This decision likely put him out of business, at least doing business in the manner that got him in trouble with Amtrust.

But at the same time, this case sends an important message: don't gamble on insurance applications by falsifying or understating facts necessary for underwriting.

Smith's attorney told WorkCompCentral news that she felt that the insurance industry in the state was usurious. The reality is that her client attempted an illegal competitive advantage and got caught.

The case is Amtrust North America v. Smith, No. A11A1645.

Tuesday, March 27, 2012

FL Court's Hard Lesson: Employer's Duty to Report

At least in Florida, an employer that fails to notify its workers' compensation insurance company of a potential claim will regret the decision later down the road when a civil case gets served.

In Ocean Reef Club v. Wilczewski et al., Nos. 3D09-2779, 3D09-2791, 03/21/2012, Cherrye Wilczewski and Laura Leon worked at a beauty salon owned by the Ocean Reef Club and claimed to have been exposed to chemical fumes which caused them to experience asthma-like symptoms, headaches and respiratory problems over a period of time for which they had to receive medical treatment and hospitalization.

Both said they notified their supervisor of their health issues, but, while they were employed, neither they nor Ocean Reef notified Ocean Reef's workers' compensation insurance carrier. Ocean Reef did not notify its carrier until after the two women filed a civil suit against the company for damages.

It is unclear from the case how long the employees worked in these conditions, whether others complained of similar symptoms or health issues, how much treatment they received etc.

The employer admits it was aware of the complainant's health issues but was hesitant to report them to the workers' compensation carrier. The facts in the case do not offer an explanation, and there could be any of a number of reasons why these potential claims were not reported.

I'm sure there is some underlying employer/employee tension underlying the basic facts - that intangible human relations factor that allows emotions to get in the way of good decision making. No doubt, the employer is getting an abject lesson in decision making.

Ocean Reef moved for summary judgment in the civil action, arguing that Wilczewski's and Leon's injuries were work-related and that, based on workers' compensation immunity, it was immune from suit as a matter of law.

The trial judge denied the motion and ruled that there was no workers' compensation immunity, as a matter of law.


The 3rd District Court of Appeal noted that the employer's delay in notifying its workers' compensation insurance carrier until after suit was filed only resulted in a denial of coverage by the carrier on the grounds that the injuries sustained by Wilczewski and Leon were not within the scope of their employment and were time barred. The carrier's denial of coverage on those grounds is imputed to the employer said the court.

"Where the employer's assertion of workers' compensation immunity is 'clearly irreconcilable' with the reason for its denial, an employer is estopped from asserting the defense of tort immunity," said the court, citing a litany of case law.

"It would be inequitable for the employer, through its insurance carrier, to take the position that there were no work-related injuries and hence no workers' compensation coverage, and then later, when the employee brings a tort action against the employer, to assert as a defense at law that there was workers' compensation coverage entitling the employer to immunity from suit," the court said, concluding that such an employer "is estopped from taking the totally inconsistent position that the injuries did not occur during the course and scope of employment and claim worker's compensation immunity when sued in tort."

If my Google'ing is correct, Ocean Reef is a not a small employer and should be relatively sophisticated when it comes to insurance matters, and in particular workers' compensation insurance matters.

Even relatively sophisticated employers are vulnerable to the legal complexities surrounding work injury claims though. As I mentioned, there likely was some personal tension between the employer-owner and employee-claimants that contributed to the failure to report the claims.

And there is no mention in the case about the ancillary employment facts - e.g. how long the two employees worked and allegedly were exposed to the fumes, how and when they received medical treatment, what their claims of disability were, whether they quit, were fired, or are still employed, etc.

All we get is the bottom line: "Where, as here, the employer fails to satisfy that duty to provide notice to the carrier of the possibility of a claim for workers' compensation benefits, the employer is estopped from asserting tort immunity as a defense in the resulting civil lawsuit for damages," the court said.

Likely the general liability carrier denied coverage too because the claims arise out of a work related issue.

Double ouch.

Monday, March 26, 2012

MT Case Demonstrates Surgically Precise Causation

I've written before about the difference between medical causation and legal causation.

Sometimes there are cases where legal causation is subject to even more granular refinement based on the placement of certain words, syntax and grammar within a statute, and perhaps because a certain result was desired.

Such is the case in Montana where that state's Supreme Court found that legislative amendments in 2005 did not eliminate the compensability for occupational diseases for which there are underlying or pre-existing causes.

Clarence Grande has been a truck driver for his entire adult life. He began working for City Service Valcon in October 2005, as a long-haul propane truck driver.

In January 2009, Grande had seen Dr. John Schumpert for an independent medical examination related to a prior back injury. Dr. Schumpert reported that Grande did not exhibit symptoms of arthritis at that time.

Dr. Bernadette Van Belois diagnosed Grande as having osteoarthritis with the possibility of an additional diagnosis of inflammatory arthritis, possibly rheumatoid arthritis, seven months later and on July 27, 2009, noted in Grande's medical chart that Grande was unable to continue working as a truck driver because of the significant swelling and pain in his right hand in particular, "that would make any occupation, including a sedentary one, difficult for him."

Let me pause in this narrative and point out the physician's subjective assignment of disability. Dr. Van Belois is rendering a disability opinion solely on the Tolerance segment of the Talmage Triage of disability, and does not address the Risk and Capability scales. I point this out only because by the statement of the facts in the case the result Grande was looking for was retirement from truck driving - but perhaps he could do other things?

Regardless, Grande resigned from his employment with Valcon, effective Aug. 7, 2009, and filed a claim for compensation with the Montana State Fund a few days later. He alleged in his claim that he suffered from an occupational disease in the form of rheumatoid arthritis and osteoarthritis as a result of his employment with Valcon.

Dr. Schumpert reviewed Grande's medical records at the State Fund's request and opined that Grande could continue to work as a truck driver. Dr. Schumpert concluded that Grande was suffering from rheumatoid arthritis, an autoimmune disorder that was unrelated to his employment as a truck driver. Dr. Schumpert also opined that Grande's osteoarthritis was not caused by truck driving and that his work did not aggravate his underlying arthritic condition.

Based on Dr. Schumpert's report, the State Fund denied Grande's claim. Grande sought review by the Workers' Compensation Commission (WCC), which concluded Grande's job duties were the major contributing cause of his arthritis and his condition was compensable.

The State Fund appealed, contending that changes the Legislature made to the laws on occupational diseases in 2005 created a requirement that a worker claiming an occupational disease establish that the damage arose out of, or was contracted in, the course and scope of his work, so that workplace events must be the major contributing cause of his condition.

While the 2005 amendments "changed the definition of occupational disease," the Supreme Court said, "the Legislature did not specify in those changes that an occupational disease is not compensable at all if the underlying cause is a pre-existing condition."

Montana law, as it existed in 2009, defined an occupational disease arising in the course and scope of employment as a condition "established by objective medical findings," for which the "major contributing cause … in relation to other factors contributing to the occupational disease" was work-related.

In fact, the court added, "there is nothing in the plain language (of these amendments) that precludes compensability of an occupational disease any time there is an underlying or pre-existing cause or disposition toward the condition."

The Supreme Court used its vocabulary scalpel to dissect the statute even further, stating state law did not "require the job to be the leading cause of the onset of the disease, but the leading cause contributing to the result, which in this case is the disease's progression to the point where Grande is unable to work."

Wow - I'm still trying to wrap my head around that one! I guess the court is saying that compensability under the statute doesn't go towards how a disease started, or progressed, but that it is determined by what happens at the end of the process - i.e. inability to work.

The reporting of Dr. Van Belois was substantial evidence so the WCC's reliance on the report was permissible the court said.

The case is Montana State Fund v. Grande, No. DA 11-0492, 03/20/2012.

Friday, March 23, 2012

CA Exports Innovation; Perhaps in Work Comp Too?

The data was clear, according to the statisticians.

A full cycle had been completed, almost perfectly on time.

And sometimes I am amazed at the accuracy of my predictions...

The basic message yesterday at the 48th annual California Workers' Compensation Institute's (CWCI) meeting was that the natural cycle of workers' compensation costs and call for "reform" had occurred, that "reform" was in the air, and that any increase in permanent disability benefits would come out of the medical component.

Mr. Bigg's plight caused me to say that two days ago and, no, I wasn't privy to CWCI's data.

The California workers' compensation system is again up for grabs, and the governor's office is ready to tackle the issues.

That is why the Department of Industrial Relations (DIR) has scheduled eight public forums, being hosted by DIR Director Christine Baker and Division of Workers' Compensation (DWC) Administrative Director Rosa Moran, starting next month where state regulators will hear public input on ways to improve the system.

Baker made it clear to the attendees that changes are going to be made, that the Brown Administration is looking for long term correction to workers' compensation to satisfy the needs of business and labor (notably excluding all other system participants!), and that interest in the public forums has been huge with some 400 people signed up to speak at some of the scheduled forums forcing her agency to add a seventh and eighth forum to the six it had originally planned on holding.

CWCI Research Director Alex Swedlow said medical costs on indemnity claims, measured nine months after injury, have increased 84% since 2004, when the Legislature passed Senate Bill 899 and instituted cost controls, including medical provider networks, medical treatment guidelines and utilization review. He said institute research shows "continuing evidence that things are becoming more expensive and less consistent from claim to claim."

Liens entered the picture for Swedlow and though he used the term generically, it was apparent from the presentation that he was talking about liens for medical services.

The number of payment disputes appears to be driving an increase in what insurers spend on medical cost containment. Preliminary research by CWCI shows cost-containment measures such as utilization review and bill review made up 6.7% of medical costs on claims one year after injury in 2004, but comprised 16.1% in 2010.

After Swedlow set up the audience with the basis of his presentation, Los Angeles County Risk Management Chief Alex Rossi took the podium and gave the public entity perspective noting that complications from co-morbidities often drive up the cost of claims. And sometimes new ailments inexplicably arrive on scene.

"I think an epidemiologist would have a field day with our workers' compensation program because until a couple of years ago we never saw sexual dysfunction and sleep apnea in the county," he said.

Dr. David C. Deitz, national medical director for Liberty Mutual, provided further statistical evidence about the nation's extraordinary cost of care and relative failure at delivering a healthy population. He also noted that around the country more and more states are in the process of adopting treatment guidelines.

And Swedlow followed that up quipping that research has shown that patients who are most satisfied with their physicians receive the most treatment and have the highest morbidity rates. Clearly the system needs to drive down patient satisfaction if it wishes to contain costs...

R. Sean Randolph, PhD, President & CEO of the Bay Area Council Economic Institute told the lunch time audience that everything is going to be alright in California and that the economy of the state is still one of the largest in the world, by itself, and moving in a positive direction again. Of course construction and housing are down, and won't recover any time soon, but the state's leading export, innovation, continues to thrive and is driving the economic recovery for the state.

So there you have it - the cycle is near complete, we should see major changes in the California system proposed this legislative session (though 2013 may actually be the year of action), and the California economy is poised to once again lead the nation, this time in the right direction.

And perhaps California will have some work comp innovation to export to the rest of the country too.

Thursday, March 22, 2012

TX Proposed Doctor Rules Confuse Causation Roles

The role of physicians and other health care professionals in workers' compensation is complex, with a fuzzy dividing line between the two major medical activities: treatment and expert opinion (aka medical-legal).

Every workers' compensation system struggles with these two roles, and each role requires specific skill sets that sometimes are under-appreciated, and at other times are grossly misinterpreted.

Texas is struggling with some new rules for "designated doctors".

A designated doctor in Texas is the equivalent of a Qualified Medical Examiner in California, or an Independent Medical Examiner in other states - i.e. an occupational injury expert whose duty is to opine on medical issues.

One of those medical issues is medical causation.

Causation is one of those areas in medicine where there is quite a bit of confusion in the medical profession about just where the physician's role is. The reason is that there is a difference between medical causation and legal causation - these areas of concern are different, but get confused often.

So it is not without good reason that some in the Texas system object to the Division of Workers' Compensation's (DWC) proposed designated doctor rules, which they say, would improperly allow designated doctors to resolve compensability issues – something the insurers say is the division’s responsibility.

The crux of the issue is that the proposed regulations provide that the division is required to give "presumptive weight" to the opinion of the designated doctor on medical issues, unless the "great weight of the other evidence" is to the contrary.

The concern is that because designated doctors aren't required to follow the procedures used in a contested case hearing for determining compensability (i.e. causation) that the great evidentiary weight given to the doctor's opinion undermines due process and delegates to physicians what should be the responsibility of the DWC.

Compensability requires a determination of causation at two levels - a medical level and a legal level. The two are different.

In medicine the practitioner is trained to rule out various factors in determining how an injury or disease occurred for the purpose of a diagnosis - the diagnosis then guides the treatment of the injury or disease. The diagnosis also determines the medical causation of an injury or disease.

In medicine an accurate diagnosis is everything. If a diagnosis is wrong, then the treatment protocol likely will be ineffective, wasting time and resources, and perhaps aggravating the injury or disease process which could lead to either a worsening condition or even perhaps death to the patient.

The diagnosis drives the medical causation determination. For example, if a patient presented with a broken leg, the diagnosis might be a fractured tibia. It would be absurd to then to say the tibia fracture was caused by asthma. That is not scientifically reasonable as there is no connection between the tibia and the asthma. Not a great example but illustrative enough.

In law, the practitioner is trained to examine all potential factors in determining how an injury or disease occurred for the purpose of ascribing blame - proscription of blame then permits allocation of liability.

In addition, medical causation generally is based upon precepts of statistical probabilities or within a scientific certainty.

In contrast, legal causation involves a lower standard of statistical probability than medical causation, usually in terms of “reasonable medical probability” or “more likely than not” which can be thought of as a balance of a little more than 50% probability or likelihood. Legal causation involves a standard of proof and the weight of evidence in favor of, or against, proving that a factor causes an injury, illness or disease process.

And that is exactly what the opposition is to the proposed Texas DWC designated doctor rules - the standards of proof and evidentiary test system would be supplanted by a single determination from a person who is trained in medical causation but not legal causation.

The DWC proposed the rules to implement House Bill 2605, the “sunset” legislation passed by the Legislature last year to continue operation of the division for another six years. The legislation included provisions for selecting doctors qualified to consider complex medical cases. The rules include proposed requirements for designated doctors who are appointed to review complex medical conditions or injuries, to ensure that a doctor with the necessary expertise is selected to perform the review.

The designated doctor system was set up by the Legislature to assist the DWC in resolving medical issues “that may arise in adjudicating a compensable workers’ compensation claim.”

DWC should take another look at the proposed regulations to make sure that expert roles are properly delineated and that contested claims retain fundamental characteristics of due process.

The public hearing on the rules is set for 9:30 a.m. Monday at the DWC's central office at 7551 Metro Center Drive in Austin.

The public comment period on the rules closes at 5 p.m. on Monday. Comments may be submitted by mailing or delivering them to the Texas Department of Insurance, Division of Workers’ Compensation, Maria Jimenez, Workers’ Compensation Counsel MS-4D, 7551 Metro Center Drive, Suite 100, Austin, Texas 78744-1645, or by email

The proposed rules can be found here.

Wednesday, March 21, 2012

Dog Bite a "Toothsayer" for Work Comp

My dog is an eleven year old Anatolian Shepard Dog (ASD).
Mr. Bigg Guarding Flock

He's 115 pounds and aptly named "Bigg Dogg", aka "Mr. Bigg".

Because of his age, he's a bit creaky now, particularly his hips. Probably didn't help at age eight when he jumped off the second floor balcony to chase some rogue canine mix with a curly tail that was off leash - ASDs are very regimented in their behavior and do not like other dogs that fail to conform to their idea of good behavior.

He's been through major surgery. At about age six he developed a twisted stomach which required a week in the doggy hospital and a good layout of cash. He was worth it. He returned to good health, and good utility - providing guardian services to his flock of four humans (now down to two due to, thankfully, the intervention of college for our children) and four cats. He nears the outer envelope of his life.

He doesn't walk as much as he used to. He certainly doesn't run ... anywhere. His bark is still loud, and his teeth are still white and sharp, but his tail doesn't curl anymore and he has a lot of grey on his muzzle.

We walked him to the groomer down the street the other day to get his nails trimmed.

Chris, the groomer, is a very nice young man, newly married, getting ready to start a family. He's trimmed Mr. Bigg's nails for several years now. Mr. Bigg likes Chris. Chris means treats.

This time though, Chris was explaining that he just started shoeing horses.

Mr. Bigg is like a horse. I guess that's what brought that topic up.

And Chris did something different this time in trimming the nails of Mr. Bigg - he pulled the right rear leg back like one would on a horse.

That was enough pain to cause Mr. Bigg to immediately and without warning clamp his very large, powerful jaws onto Chris' arm.

Yikes! Clearly two deep puncture wounds on the forearm of Chris will cause some deep bruising so that the tattooed fish near the bite marks will look like it is swimming in octopus ink.

Chris kept his cool though. He's been there before, he explained. No big deal. Dog bites are a risk factor in his line of work, and he proceeded to finish trimming Mr. Bigg's nails using the same technique he had in the past - back feet just remain on the ground.

Besides the obvious lesson in workers' compensation, Chris and Mr. Bigg portend other soothsayer qualities in the "been there before" experience.

Risk happens. Management of risk mitigates either the frequency or impact, sometimes both, but eventually risk happens.

The California Workers' Compensation Insurance Rating Bureau (WCIRB) yesterday said in its Actuarial Committee that rates are going to go up - that's really no surprise.

What is surprising is that the WCIRB said that frequency was up for the second year in a row. That is surprising to me because of the deep unemployment that continues to bedevil California.

In accident years 2010 and 2011, 15.6 claims were filed per 1,000 workers, an increase of 9% compared to the 14.3 claims per 1,000 workers filed in accident year 2009. Since 1993, the only other increase in indemnity claim frequency was a 1.3% rise from 1999 to 2000.

What is not surprising is that both medical costs and indemnity costs are up significantly since the Schwarzenegger "reforms".

The estimated cost of medical benefits per indemnity claim was $42,247 in 2010, the Rating Bureau said. That's about the same as in 2009, but 41.6% higher than the $28,449 average in 2004.

And while average wage loss benefits paid per indemnity claim dropped 1.1% to $23,248 in 2010 from $23,517 in 2009, it is about 33% higher than the $16,996 paid in 2005.

These increases will fuel new "reform" debates, no question. The Brown Administration has indicated that it wants to approve an increase in permanent disability indemnity but that it won't do so in a piecemeal fashion and that any increase in costs associated with indemnity must come out of some other piece of the pie.

There aren't many slices in that pie. If indemnity is cut into its two pieces, temporary and permanent, the only way to increase the permanent slice is to decrease the duration of the temporary slice. That risk factor has been studied and worked for some time - my feeling is that there is insufficient pie for that rearrangement. In addition that piece of the pie has an automatic inflation adjustment so it will always grow.

There is no vocational rehabilitation and the supplemental job voucher slice that took the voc rehab portion is too small for anyone to consider.

Pretty much the only pie slice left is medical - both treatment and medical-legal. And the WCIRB stats reflect the medical component as the only viable slice available for redistribution.

Work comp is 100 years old. It has some aches and pains. When you tug on an achy joint sometimes you get a warning bite.

"Reform" is coming. The medical community had its warning bite and is going to get bit again. Ouch. It's going to be a purple, painful bruise.

Those getting bit will gather their wits, mitigate the risks, and carry on with trimming the nails.

And that's how it is in workers' compensation. You might say that Mr. Bigg is a "toothsayer."

Tuesday, March 20, 2012

Just One Day of Fraud

We see it all the time, but it appears to be getting worse.

At least anecdotally.

Premium fraud - businesses attempting to skirt their responsibility to society by underpaying, or not paying, the workers' compensation obligation.

The reasons differ: competitive advantage, insufficient cash flow, start up business, greed...

The impact is the same: employees without coverage, increased costs for law abiding businesses, negative perception of workers' compensation (after all, most argue, they would pay for work comp if they could afford it...). Insurance fraud is often viewed publicly as "victimless", but we know differently.

Just one day in the news brings us four employer fraud stories from across the nation, an embarrassing statement of the moral character of some people.

Iowa: The owner of owner of Des Moines, Iowa DES Staffing Services, Dinesh Sethi, who turned in his chief financial officer for embezzling, was sentenced Friday to 57 months in federal prison for defrauding workers' compensation carriers of $778,940 in premium.

After Sethi accused Randy Stringer of embezzling $1 million from his business Stringer provided the FBI with documentation of payroll shifting Sethi directed between two shell companies, Staffing Professionals and KDM Staffing in order to take advantage of premium rates, as well as shift payroll from job classifications that had a high premium rate to job classifications which had a lower premium rate.

According to press reports, the FBI arrested Stringer in Miami after he wired $2,000 from Sethi's business to a woman in the Dominican Republic. He pleaded guilty in February 2010 and was sentenced to 15 months imprisonment, then ratted on his employer about the premium fraud.

The old adage about seeking justice with unclean hands applies - be careful who you accuse as you may put yourself in a worse position!

California: During a Dec. 8, 2011, contractor's compliance check, Francisco Barajas-Castellanos, 30, and another man were observed preparing the interior of a residence for painting in the Rancho Cucamonga area or San Bernardino County. According to senior investigatory Steve Rivera, Barajas admitted that he was the contractor and business owner and the other man was his employee. Barajas also admitted that he did not have workers’ compensation insurance, the District Attorney’s Office said.

At least he was honest about his lack of coverage.

A California statewide sting March 14-15 resulted in the arrest of 110 unlicensed contractors, with 11 contractors facing charges for failing to provide workers’ compensation coverage and one contractor accused of filing a false exemption for coverage, according to the Contractors State License Board (CSLB).

The contractor board’s Statewide Investigative Fraud Team (SWIFT) teamed up with the Employment Development Department local prosecutors and law enforcement agencies in Butte, Fresno, San Luis Obispo, Los Angeles, Riverside, San Mateo and Tulare counties to conduct the sting.

The CSLB has made it quite public in the past few years that they team up with other state agencies to identify non-compliant contractors - despite the publicity folks still try to fly under the radar.

Finally, in Pennsylvania, the Attorney Generals' on Monday office arrested an auditing supervisor at the State Workers' Insurance Find (SWIF) and his wife on charges that that they accepted more than $80,000 in bribes from employers in exchange for premium refunds between 1999 and 2011.

State Attorney General Linda Kelly said in a press release that state agents arrested James McDonnell, 53, and his 44-year-old wife, Michelle McDonnell. Both live in Scranton, Pa.

The attorney general's office said the McDonnells received more than $80,000 through a scheme in which James McDonnell promised he would reduce SWIF premiums in exchange for kickbacks.

Kelly said the businesses either paid McDonnell in cash or put Michelle McDonnell on their payroll as a "ghost employee."

James McDonnell was charged with five counts of bribery in official and political matters, six counts of conflict of interest, two counts of dealing in proceeds from an illegal activity and two counts of criminal activity.

Michelle McDonnell was charged with two counts of criminal conspiracy.

This case is particularly interesting because over the course of 12 years these criminals only managed to steal $80,000 - doesn't seem like much of a pay off for the risk incurred. Apparently auditing doesn't embue the same risk management characteristics as other insurance industry positions.

Monday, March 19, 2012

Biology IS Different in Arizona, When Driven by Politics

The American College of Occupational and Environmental Medicine (ACOEM) and the Work Loss Data Institute (WLDI) have a constant public relations campaign going on convincing states that have not yet adopted medical treatment guidelines that it is more efficient and ethical to adopt national based standards rather than drafting state specific guidelines.

Representatives for both WLDI and ACOEM told WorkCompCentral last week that states that adopt their own state-specific treatment guidelines are missing an opportunity to employ evidence-based medicine to drive good outcomes.

“Biology is not different across state lines," said Phil LeFevre, a senior account executive at WLDI.

LeFevre is correct - biology is not different. But politics are.

LeFevre said the trend of states establishing their own set of treatment guidelines, a process typically hammered out in committee, results in consensus-based, not evidence-based, medical protocols. Worse, lawmakers are relying on the testimony and recommendations of profit-minded lobbyists and health care providers to create a new model, he said.

“This is being driven by self-interest,” LeFevre said.

No kidding...

A few weeks ago I gave a presentation to a group of orthopedists at Loma Linda University Medical Center. I received a very nice (hand written I might add) thank you note from my host. He commented that he didn't realize how politicized workers' compensation was!

I don't think that most people give much thought to how workers' compensation came to exist and how it has evolved over the years. Most folks just take it for granted that if one gets hurt at work (or claims to be hurt at work) that there is insurance to take care of the injury. Folks forget that workers' compensation is solely a product of legislative fancy. There is no real history behind it, like common law, unless you're a mariner (then one need only read up on the history of pirating to understand Jones Act codification of maritime injury law).

The folks who have figured out that workers' compensation is nicely manipulated through the political process, however, are in the best position to influence the direction and control of the system to ensure that interests are protected, or at least not significantly compromised.

For instance, in Arizona where the debate over treatment guidelines is really just starting, bio-tech behemoth, Medtronic, Inc. is weighing in on the debate stating that the company would endorse the current Arizona proposal (House Bill 2365) if a proposed amendment eliminated a provision that calls for defaulting to national standards if new guidelines cannot be agreed upon by July 2014.

Rep. Karen Fann, R-Prescott, introduced House Bill 2365 earlier this year. The measure would require the Arizona Industrial Commission adopt treatment guidelines by July 1, 2014. If the commission failed to meet that deadline, then ACOEM's guidelines would automatically become presumptively correct in the state's workers' compensation system (California did this in 2004).

“Medtronic is not opposed to Arizona-specific, state-developed treatment guidelines created with local physician input that is fair and balanced,” Marybeth Thorsgaard, senior director of public relations and communications for Medtronic, said. “We believe physician input should include specialists and subspecialists who are expert in treating workers’ compensation patients and familiar with the types of therapies being reviewed and prescribed in this population.”

And, I presume, are also expert at the installation of Medtronic's spinal implant hardware and other products the company manufactures...

The House Banking and Insurance Committee did not vote on HB 2365 after hearing three hours of testimony on the measure and other workers' comp bills during a hearing on Feb. 8. The committee proposed an amendment that would delete the requirement that ACOEM become the state standard after hearing opposition from Medtronic and medical providers.

Fann said she would not oppose the amendment stating a desire to improve medical service to injured workers and adhere to her state’s tradition of self-determination.

“The people of Arizona want to have their own medical treatment guidelines that fit the needs of its workers, not the so-called medicine in a can. Arizona has always been its own state. We do things our own way,” she said.

Right. Good buzz words: medicine in a can; textbook medicine; cookbook medicine; independence - after all, that's what America is all about, independence - right?

“How do we get medical service as quickly as possible to the right doctors with the right diagnosis and proper treatment? The primary goal is to improve access to medical treatment and get everybody back to work as soon as possible,” Fann said. “Secondly, we want to increase cost-effectiveness and create jobs.”

More good buzzwords: right doctors, right diagnosis, proper treatment, back to work, cost-effectiveness and increase jobs.

So, explain to me how deviating from carefully reviewed science does that? How is it that Arizona knows more about biology than California, or Nevada, or Texas or the Federal government?

Oh, that's right - they have people there - lobbyists and special interest representatives - that know more than the rest of us.

Okay, I get it now. Biology IS different depending on which state you're in. Glad we all figured that out.

Christopher J. Wolfkiel, Ph.D., Director, ACOEM Practice Guidelines, provided this clarification of ACOEM's position.

Friday, March 16, 2012

The Fiction of Disability and the Talmage Triage; A Case Study

I gave a presentation some time ago about the legal fiction of disability.

The point of my presentation was that disability in the legal sense is simply a designation for attaching value, and that it is not synonymous with inability to work.

Most of the folks in the audience got it - they understood that just because someone is 100% disabled from a workers' compensation point of view that there is still gainful employment that could be performed.

There was one lady in the audience who challenged me constantly on that statement. Her opinion was that if someone is 100% disabled then they are essentially of vegetative state incapable of doing anything of value and can not work - period.

The concept that disability is only for the purpose of determining a number - because that's how we deal with injury and displeasure in America, by handing out money - did not settle well with her. She was a claims adjuster and from her standpoint the payment of disability indemnity precluded any other form of income.

WorkCompCentral news reported a case this morning where the notion that disability is just a fiction is painfully (sorry for the pun) made clear. What was also clear from the case was that despite one's workers' compensation adroitness, the system will push back to return to a scale of reasonableness if the rules are just followed.

In Gonia v. Robin, Carmack & Gonia et al., ADJ1925946, 02/02/2012, Gonia was injured on Jan. 4, 1996, while working as an "attorney/driver" for the firm, which represents employers.

I like that the job was listed as "attorney/driver". Defense attorneys, particularly those who are popular with their clientele, are professional drivers. When I was doing defense work it was no problem racking up 35,000-40,000 miles in one year driving from San Luis Obispo out to Riverside/San Bernardino and down to Anaheim for cases. Driving all those miles wears on the body, regardless if you are in a high end sedan. It hurts...

A workers' compensation judge awarded her 100% permanently disability for injuries to her low back, cervical spine, left hip, left lower extremity, left upper extremity and psyche, although Gonia was able to return to work full-time as an attorney.

I might note that if this were a post 2004 injury and under the AMA Guides such a rating likely would not be possible. Which is the point that I was making in my presentation - that disability is a legal fiction.

Anyhow, Gonia's doctor, Todd H. Lanman, noted in a December 2004 report that Gonia had a housekeeper "to change beds, vacuum, sweep, and mop floors," and that this was "reasonable on an industrial basis, as such activities would increase her pain level."

Let's examine this statement: activities of daily living, i.e. doing housework, "would increase her pain level", and as a consequence was reimbursable through workers' compensation insurance. I know what the law is/was, that basically if substantial evidence indicated that there is medical necessity then the cost is born by insurance.

The irony is that these activities, "change beds, vacuum, sweep, and mop floors" likely don't involve any particular physical strain that may be different from something more pleasurable, such as gardening, playing golf, earning a good living as an attorney, etc. One of my earlier columns discussed the Talmage Triage of Disability (I made that up) - the third component of that triage is Tolerance, the subjective component of pain. Changing beds, vacuuming, etc. clearly are not pleasurable activities, thus the lower tolerance for pain. Would she also need assistance with other physical activities that were more pleasurable despite pain?

Back to the case.

In March 2008, Gonia filed a petition for reimbursement for medical expenses, asking State Fund to reimburse her for housekeeping services dating back to 1996. The request asked for $40 per week for the early years after the injury, but noted that in September 2000 she had moved into a house in Studio City that was 1,000 square feet larger than her previous residence and now needed $80 per week.

The total reimbursement request was for $88,903.33. That's a tidy sum, and would cause a claims adjuster to take a second look at that request...

Gonia's doctor addressed housekeeping services in a January 2009 report, advising that Gonia "will need to have housekeeping two times a week for the next 12 weeks" following her cervical fusion surgery.

State Fund, however, conducted a utilization review. The reviewing doctor, orthopedist Emmit R. Berg, concluded housekeeping services were not a "medical necessity." State Fund denied Gonia's request.

There was no evidence Gonia ever objected to this decision.

The Workers' Compensation Judge awarded reimbursement back to December 2004 and ongoing.

On reconsideration the Workers' Compensation Appeals Board (WCAB), in a decision written by Commissioner Alfonso Moresi, reversed.

Moresi reasoned that the request for housekeeping services described in the January 2009 doctor's report should have been denied because Gonia had not challenged the utilization-review determination that such services were unnecessary. That's a pretty simple, straight forward application of the law and difficult to disagree with.

The WCAB ruled that the December 2004 report's suggestion that housekeeping services were appropriate was not substantial evidence.

"There is no statement by the physician that the additional services are a vital part of applicant's medical treatment or that her medical condition would be placed in jeopardy if the services were not provided," Moresi noted. "To the contrary, other evidence indicates that the applicant's desire for increased housekeeping services flowed in substantial part from the fact that she decided to move to a larger house."

Moresi also pointed out that the report engaged in "no discussion of any limitations on applicant's ability to perform housekeeping tasks," and concluded that due to these deficiencies, could not be substantial evidence to support the judge's award of benefits.

Commissioner Ronnie Caplane joined Moresi in his decision, but Commissioner Neil Sullivan dissented, stating, "It was only necessary that applicant show that the requested housekeeping services (were) medically necessary and reasonable." I disagree with Sullivan - the showing must still be by substantial evidence and I think Moresi got it right.

In a comment to an earlier post, an applicant attorney who "vehemently" disagreed to my opinion said that, "No one should have to work in pain. Pain should NOT be part of life and the function of the medical profession is to cure or relieve it, costs be damned." He didn't respond when I asked, "Are YOU willing to pay for that?"

We have no problem paying for the pleasures of living. But we want others to pay for the pains of living.

Indeed, opportunism is reconciled only by reasonableness enforced through the Rule of Law. Professional drivers, like defense attorneys, are subject to aches and pain during the work day. Racking up the miles driving from board to board, deposition to deposition, appearance to appearance, in tough traffic, rough roads, causes pain. I know - been there, done that.

Idealistically, pain should not be a part of life. Realistically, it is. It's all about Tolerance. Getting paid well makes pain more tolerable. Daily home chores are not pleasurable and don't produce much satisfaction, so they are not so tolerable.

Attorney work for Gonia is clearly pleasurable enough for her to tolerate pain. And frankly I applaud her for returning to work. This is a great result in my opinion - that despite her great disability this person is able to continue providing value to society.

In my opinion though, the WCAB's decision was rational, logical, and cut through the Talmage Triage of Disability to get to a result that makes sense.

Thursday, March 15, 2012

OK Opt Out Plan Moves Forward as Big Insurance Tries to Protect Its Turf

Oklahoma's historic move to become only the second state in the nation where workers' compensation becomes a voluntary participation system made huge leaps forward this past week as versions of the new law passed both the state's senate and house.

Senate Bill 1378 by Senate President Pro Tempore Brian Bingman, R-Sapulpa, passed Wednesday by a 27 to 17 margin in the Senate and was moved to the House.

House Bill 2155 by Speaker of the House Kris Steele, R-Shawnee, passed on Tuesday with bipartisan support on a 70 to 22 vote in the House and was moved to the Senate.

The two bills are both referred to as the “Oklahoma Employee Injury Benefit Act”.

Both bills began as identical measures but supporters of the bills say possible changes to them are being discussed by lawmakers. The bills were passed to meet a legislative deadline for considering measures.

Ultimately, one revised bill is expected to be drafted and sent to each chamber for a final vote.

The measures would allow qualifying employers to offer benefit plans regulated by the federal government under the Employee Retirement Income Security Act (ERISA) to provide medical and indemnity benefits to injured workers, as an alternative to workers' compensation.

The opt out provisions apply only to large employers with large incurred claims and an ex-mod greater than one.

Bill Minick, president of PartnerSource, a Dallas-based provider of services to Texas nonsubscribers, who has worked with OBIC on the legislation, told WorkCompCentral that the application to larger employers with high loss histories was to “deal with insurance carrier concerns” over “protecting their turf.”

Indeed, the primary objection to the Oklahoma voluntary bills is coming from the insurance industry according to the WorkCompCentral report.

Joe Woods, vice president and regional manager of Property Casualty Insurers Association of America (PCI) in Austin, said benefits under the opt-out plan for injured workers would be more limited than those provided through workers' compensation.

What's more, the legislation does not include an effective dispute resolution system, Woods said. "Everything would be done through arbitration," and the arbitrator could be a company employee, he said.

Woods said PCI also worries that allowing some businesses to set up alternative plans would damage future efforts to reform the system.

Under HB 2155, Oklahoma's larger employers could leave the system and lose their motivation for changing it -- while the smaller employers left in the system might "lack the political juice" needed to force changes, Woods said.

From my perspective much of what Woods claims is without foundation.

The legislation mandates that benefits be the same or greater than what is currently available under work comp - how is that limiting benefits that are more traditionally available to injured workers?

Some would argue that current dispute resolution through workers' compensation is ineffective with lengthly delays, extraneous attorney involvement and unnecessarily high costs. And I understand that the arbitration under the opt-out program is not binding, which means it can be appealed.

Finally, small businesses are nearly always left out of the bargaining process in attempts to "reform" workers' compensation - so how does the opt out provision change that?

Really, the big concern is pointed out by Bernie Hauder, a Dallas attorney who defends nonsubscribing employers in workplace injury suits.

He makes the very good point that allowing only employers with poor experience modifications to nonsubscribe creates an odd incentive for employers who don't qualify because of their good safety records.

"If you like this (alternative ERISA plan) and you're sitting there with a .95 experience modifier, what are you going to do? Do you go out and hurt someone?"

If Minick's allegation is correct, that this provision was put in to placate big insurance, then one has to wonder really who's interest big insurance really has in mind in objecting to the “Oklahoma Employee Injury Benefit Act”.

Another example of a special interest protecting its turf, except on the other side of the fence.

Wednesday, March 14, 2012

New York Demonstrates the Difficulty in Cultural Change

I talk quite often about the culture of workers' compensation in this column, and how difficult it is to change even when everyone involved in the system acknowledges the damage and inefficiency of behavior that is not beneficial to anyone other than a particular interest subset.

New York is in the middle of a culture fight, with interest groups that have been bloodied and sent home in other states 3,200 miles away clamoring to stay in the fight in order to protect their turf, even if that turf can not empirically be supported in any other manner than to say, "it's always been this way."

The New York Workers' Compensation Alliance released results from a Freedom of Information Law request filed by the New York Committee for Occupational Safety and Health (NYCOSH) showing that there were 202,643 requests for variances from the state's medical treatment guidelines filed by treating physicians, chiropractors, and physical therapists from Dec. 1, 2010 -- when the guides were implemented -- through Feb. 4, 2012.

Robert Grey, a claimants' attorney and chairman of the Alliance, told WorkCompCentral Tuesday the bulk of variances now in dispute involve treatment by chiropractors and physical therapists.

The guidelines limit chiropractic care and physical therapy to four weeks following an injury unless functional improvement can be demonstrated. If medical providers can verify improvement in a worker's function, the guides then allow an additional four weeks of treatment – up to a maximum of eight weeks.

The vast majority of requests are for injuries that are "grandfathered" into the guidelines according to Grey.

NYCOSH Executive Director Joel Shufro said his group did not ask the board to delineate between variance requests on injuries pre-dating implementation of the guides.

"But I can tell you the bulk of the injuries in these cases range anywhere from several years ago to a decade ago, "Grey said. "These are instances in which the board told workers years ago they were entitled to symptomatic treatment. The board is now saying it has changed its mind."

The Alliance said the board is receiving an average of 20,000 variance requests a month. The board has held 19,479 hearings since the guides took effect and has scheduled another 1,347 hearings.

The board denied 8,562 variances following hearings and granted another 10,857 variances at hearings, the Alliance said.

The board rejected another 50,000 variance requests without receiving a formal response from an insurer or holding a hearing. The alliance said that leaves about 130,000 variance requests that await final action.

NYCOSH, which is lobbying to pass Senate 3741, filed by Sen. George Maziarz, R-Newfane, would prohibit State Workers' Compensation Board (SWCB) from applying the guides to injuries or illnesses that occurred before the guides were implemented.

Proponents of S 3741 use the same, tired old argument that arises anytime there is a culture shock - that it is costing more presently to deal with the change than what is being saved:

"This is causing tremendous problems for workers, and it results in a flood of paperwork and litigation that creates enormous expense for employers, health care providers, injured workers and the board," Grey said.

"What the board is failing to recognize is that people are not parts of a machine, where all you care about is function. These are human beings, and this treatment is required to keep them working," he said.

This is a short sighted argument, and only perpetuates the entitlement mentality that is at the root of systemic dysfunction within workers' compensation systems.

California saw the same reaction from chiropractors and physical therapists in 2004 when reform laws limited such treatment protocol to a specific number of visits.

After a couple of years of considerable litigation, regulatory and legislative fighting, that one little aspect of culture changed. Fights have erupted in other aspects of the system, but empirically supported evidence of the value of chiropractic and physical therapy treatments, upon which the California limitations were based, prevailed. The California judicial body upheld the limitations strictly.

Sure, the "whack-a-mole" phenomenon occurred, and costs bubbled up in other medical sectors - and those sectors are now the subject of litigation, regulatory and legislative battles.

But the point is that a strong judicial body, one that upholds the law, is a key component to cultural change.

It is no surprise that SWCB is now swamped with variance requests. It is no surprise that SWCB is rejecting variance requests en masse. And it is no surprise that special interests are fighting hard to hold on to their special income sources until alternative income sources can be identified.

In the long run, this too will pass. The culture will change. Therapy solely for the purpose of symptomatic maintenance will disappear, and people's entitlement attitudes will change.

Life ain't perfect. People experience pain. Everyone experiences pain. Pain is just a part of living. If you are not feeling some pain at some point during the day you are likely horizontal and inert.

Most humans just deal with it. A small subset of our species is encouraged to perpetuate victim mentality by groups that have a vested interest in pain.

This would not even be an argument if workers' compensation were not an entitlement with no investment by the worker other than some time. But since workers' compensation requires no worker investment the alternative is to place limitations on the entitlement. In medical treatment those limitations are implemented by guidelines which, for the most part, are based on empirically derived evidence.

New York should stay the course and defeat S 3741. The state will be better off in the long run.

Tuesday, March 13, 2012

FEHA Case Involving Undocumented Worker Doesn't Smell Right

When it comes to undocumented workers and protection of employee rights I am one confused individual.

On the one hand, we have laws that are in place to level the playing field for both workers and employers - laws that mandate legal procedures be followed before one can work, or be hired for work, in the United States.

On the other hand, sometimes those laws conflict with basic human rights and their enforcement seems to be in conflict with their intended purposes.

In California we have the Fair Employment and Housing Act (FEHA) that says that an employer can not discriminate against those who claim disability on the job and must make "reasonable accommodation" for them, including a process that is vaguely described (more thoroughly by regulation) as the "interactive process."

It is the interactive process that trips up most employers that are subject to FEHA and subjects them to six digit liability and attorneys fees.

The Third District Court of Appeals (3rd DCA) in August of last year ruled for an employer, upholding summary judgment in Salas v. Sierra Chemical, because the employee did not refute evidence of illegal entry in the US - the reasoning was that if Salas was not legal to be employed in the US then any accommodation or process tied to accommodation under FEHA would be moot and essentially in violation of US immigration laws and policy.

The facts of the case are that Vicente Salas began working for Sierra Chemical in 2003. At that time he signed an employment eligibility verification form, where he wrote a Social Security number and provided a resident alien card that attested to his eligibility to work in the United States. Salas also signed a W-4 income tax statement, using the same Social Security number.

Salas hurt his back while stacking crates on Sierra's production line in 2006 and filed a claim for workers' compensation benefits. He was able to return to work, subject to medical restrictions, but was laid off that December.

In May 2007, Salas received a recall notice from Sierra, offering to reinstate him if he obtained a release authorizing him to return to full-duty status.

Salas then sued Sierra, alleging it had failed to reasonably accommodate his disability, in violation of FEHA and in retaliation for having pursued his workers' compensation claim.

During the discovery process, Sierra learned that the Social Security number Salas had provided was being used by a North Carolina man.

Based on this "after-acquired" evidence, Sierra argued Salas had obtained his job under false pretenses, and that it would not have recalled or hired him in the first place if it had been aware he had provided counterfeit Social Security information in the application process.

San Joaquin County Superior Court Judge Elizabeth Humphreys granted summary judgment in favor of Sierra, and the 3rd DCA unanimously affirmed.

The appellate court determined Salas had used a false Social Security number since he had not refuted the evidence produced by Sierra that the number belonged to a different person. This, the court reasoned, entitled Sierra to judgment as a matter of law since Salas was not eligible to hire in the first place.

The California Supreme Court granted review of the decision last November and the case is pending briefing by the parties.

WorkCompCentral interviewed the lawyers on both sides of the case.

Salas' lawyers argue that the 3rd DCA decision would give unscrupulous employers the "perverse incentive" to hire undocumented workers, so they can "do whatever they wanted" and "later say, 'Oh, they're undocumented,' and get off scot-free for discrimination."

They argue that affirming the 3rd DCA decision would be "to the detriment of all workers," since it would create a "race to the bottom," among employers. "If you have a legally exploitable class," they argue, "it lowers the floor for everybody" as to what employer conduct workers will be willing to tolerate.

The defense argues that Salas "had every opportunity to tell the trial court that he had his own Social Security number and he didn't do it," so "it's reasonable to infer from that he didn't have his own Social Security number."

They said that after Salas was laid-off from Sierra, he began working at another job "that was as heavy" as his former full-duty position. Then, "when Sierra called him up, he didn't tell them, 'Oh by the way, I have another job,'" and thereafter complained "he didn't get offered modified duty."

So where do I stand?

I don't like fibbers. Bottom line. And the fact that Salas didn't tell anyone that his SSN wasn't his, early on in both the FEHA process and in the litigation, tells me that Salas isn't an honest person. If it is correct that he got another job in the meantime and failed to tell Sierra about that is another blight on the honesty-meter.

I don't like that.

He should not be rewarded for dishonesty.

In my opinion the Supreme Court is dealing with a case of dirty facts, and if they decide to render an opinion other than a blanket denial of review then the law on FEHA rights for undocumented workers is going to be messy.

It seems to me that if one can not legally work in the United States because of immigration status then the FEHA interactive process and modified work obligations are moot - to what purpose are these provisions if the person to whom they apply can not actually utilize the benefits?

Though I have a big nose, it is unfortunately not very sensitive to smell.

But the Salas case doesn't smell right to me. That says a lot.

At least regarding this one case, I guess I'm not that confused.

Monday, March 12, 2012

Workers' Compensation In A Song

In December 2010 I began learning how to play a ukulele. My daughter came home from college with one over Thanksgiving and I was hooked. I decided that the instrument's funky sound, lack of complexity and portability was perfect for The Blues!

Just two weeks after starting my uke education (of course by obsessively going to every ukulele website on the planet and playing with it every free moment available) my assistant took a phone call from the husband of a customer.

The husband called to cancel his wife's WorkCompCentral account. She was terminally ill with cancer and was expected to die in the next couple of weeks - but she was adamant that her husband convey how much she loved WorkCompCentral and how it kept her a part of an industry that was very important to her, workers' compensation.

I was tearfully astonished! I was so moved by this story that I immediately wrote the WorkCompCentral Song. Took, like, 10 minutes at the most to pen the lyrics. I put the lyrics to a simple chord progression that I had learned. I debuted the song at our annual holiday party just a few days later.

Since then I have practiced this fine masterpiece, and at the farewell luncheon for our Legal Editor, John Kamin (who had graduated from law school and was leaving to study for the bar and become a lawyer) the WCC staff broke out into song.

Here it is - we may be the only work comp business in the nation with our own theme song!

WorkCompCentral song

This will be turned into a music video shortly by our new video department!

The departure of John also led to a quick improvisational piece based on a basic blues progression - I ran out of lyrics due to the spontaneity of the event, but it too was recorded:

Kamin song

3.25 Chiro Visits Per Week for Four Years: Cultural Illness Perpetuated

You read a case like Leca v. Workers' Compensation Appeal Board (Philadelphia School District), No. 679 C.C. 2011, 03/07/2012 and you can't help but shake your head at how some abusive professionals take advantage of workers' compensation, damaging the system for other reasonable, moral providers.

John Leca, a police officer for the Philadelphia School District, injured his back while trying to break up a fight on April 14, 2004. The employer accepted liability and issued a notice of compensation payable.

Four years and 450 treatments later (what took so long?) the employer sought utilization review (UR) of Leca's ongoing chiropractic treatments.

Four years with 450 visits of chiropractic... Really?? That's 3.25 chiropractic visits every week for four years!

The original UR was by a chiropractor who said that despite the fact that Leca wasn't improving the treatment was reasonable because it was keeping him off drugs...

The employer/carrier obtained reports from some orthopedists who opined that the ongoing chiropractic was not justified because there was no evidence that Leca was improving or stabilizing, calling the treatments "palliative".

A workers' compensation judge found the orthopedists to be more credible and granted the employer's petition. The WCAB affirmed. Leca appealed.

In its majority opinion, the Commonwealth Court noted that the claimant argued the workers' compensation judge erred by relying on medical experts who did not review the records related to chiropractic treatment. Leca based this argument on Brookside Family Practice v. WCAB, a 2006 decision by the Commonwealth Court that held a workers' compensation judge erred by relying on testimony from an employer's experts who did not offer any evidence related to the effectiveness of the use of a spinal cord stimulator, which was the specific procedure under review.

But the Brookside decision is not applicable to Leca's case, the Commonwealth Court said. Leca's treatment was repetitive and ongoing, unlike the two specific procedures that were at issue in Brookside. Moreover, the physicians who testified for the employer addressed the specific chiropractic treatment under review and "credibly and persuasively opined" that the treatment was unnecessary.

The court also rejected the claimant's argument that the workers' compensation judge should not have relied on testimony from orthopedists about treatments performed by a chiropractor. The court said it is well established in Pennsylvania law that the opinion of medical doctors may be considered, even if they are not specialists in the specific field under review.

What the court was really saying is that it wasn't going to put up with abusive practices, regardless if a peer says that it is okay.

3.25 chiropractic visits every week for four years is abusive and I don't care how good it makes one feel. There is no reasonable support for this kind of activity and you can bet that if Leca had a co-pay or some other financial obligation there would not even be an issue.

The entitlement mentality fostered by free medical care, and the willingness of professionals to abuse that entitlement for their own interests is a cultural illness that is at the root of systemic problems with workers' compensation.

Friday, March 9, 2012

A Hailstorm of Remedy May Be The Only Alternative

Here's the weather forecast for today in Kailua, Oahu, HI from the National Weather Service:

Flash Flood Warning
Flash Flood Watch
Flood Advisory
High Surf Advisory

Today: Frequent showers and possibly a thunderstorm. Some of the storms could produce heavy rainfall. High near 74. Breezy, with a east wind around 20 mph, with gusts as high as 28 mph. Chance of precipitation is 100%. New rainfall amounts between three quarters and one inch possible.

Indeed, as I write this post the lightning is constant and the banging of thunder nearly continuous. The rain hasn't started...yet.

Hawaii, which has seen more rain this winter than recent memory according to locals, is preparing for a major storm.

And that storm has the same qualities as the majority of workers' compensation storms across the nation: a sudden and meteoric rise in opioid prescriptions and abuse, out of control physician medication dispensing with some docs marking up prescriptions by 1600% (that's one thousand six hundred percent), pending legislation to dilute efforts to control these costs (and which may in fact increase costs), failures in return to work and, of course, the bogey man of all work comp systems, the threat of precipitous rate increases to account for all of this.

In talking with Hawaii administrators it becomes clear that the vast majority of excesses in the system are the result of a few "bad pineapples" taking advantage of a "soft" system for individual profiteering at the expense not only of society and the economy, but individual workers without regard to their well being.

The bigger problem with the bad pineapples is that their actions provoke legislative or regulatory action that affects all of the providers, all of the injured workers, all of the other system participants creating additional expense and burden for those who have respect for the rule of law.

This pattern is common through out all work comp systems. Nearly all states face these problems, some more acutely than others, and some, like California, in specific geographic zones.

Workers' compensation, being a product of legislative creation rather than an extension of common law, is uniquely subject to manipulation, on all sides of the table. The typical reaction to such manipulation is to attempt to refine the law with further legislation (we call that "reform") and regulation.

As we have seen, though, the legislative process is terrible at producing truly effective remedies because of the influence over lawmakers by those whose interests (bad pineapples) may be affected by the proposed refinements.

The only truly effective remedy is individualized enforcement. But doing so requires strength, commitment, resources. 

The rain has started, with golf ball sized hail, and flash flooding has started. See the graphic - red means BAD. The red is where I'm typing from!

And like the storm that is upon us as I type, hail and heavy rainfall from the maelstrom of litigation can be damaging and exhausting.

Thursday, March 8, 2012

Work Disability vs. Life Disability and Aloha Spirit

In Hawaii, on vacation, enjoying the aloha spirit!

Hawaii certainly has its workers' compensation issues and those issues certainly are no different than any other state's issues.

And though I'm on vacation, that doesn't mean that I stop working. In fact, I have found that I don't like not working.

One would think that vacation means Rest, Relaxation, and Recreation - well it does, but not in the same manner for me as it does for someone else. My mindset is different than others. For me, the three Rs include work, because that reduces my anxiety - knowing that my business continues to move forward without complication, without error, without problem, in my physical absence.

Hey, I get my Rest - instead of 5 hours of sleep I don't start squirming until after 6 hours of sleep. I get my Recreation - yesterday I got in 57 miles of beautiful Hawaiian scenery on my bicycle and another 5.5 miles of sandy beach walking with my wife. And I have had abundant Relaxation with our hosts touring the island, fine dining ... and making sure that the business is still there, serving our customers with the best that we can in workers' compensation publishing and data services.

For my college roommate though, who is now a school district superintendent, highest on the ladder of executive staff reporting to the board of trustees, the three Rs means complete isolation from work - he wants nothing to do with work. The three Rs for him are LOTS of sleep (like 10 hours), LOTS of golf (18 holes every day), and LOTS of great dining, beer, wine and spirits (okay, I like the last component too). But don't bother him at all about anything that might suggest work. Work introduces anxiety to him, the exact opposite of effect on me.

Our mindsets are completely different. I LOVE my work. My college roommate LOATHES his work.

It is the LOVE vs. LOATHE component of the work equation that determines how we approach our daily lives.

It is the LOVE vs. LOATHE component of the work equation that determines how people approach the issue of work disability (note that I said "work disability" because this is far, far different than "life disability").

The workers' compensation claims process is very complicated, very frightening, and will reflect a work disability mindset if the worker loathes his or her work.

I recently spoke with a young lady who has been off work for over 8 months now on essentially a minor injury claim. She wanted to know what to do because of union contractual provisions affecting return to work - her subsidized full pay was ending and consequently she was going to start getting regular temporary total disability indemnity which would cut her weekly income significantly (she is a union school employee) and there was a huge problem with the Qualified Medical Examiner (QME) doctor (not only was the report very late but the last 2 pages describing disability, etc. were CLEARLY the wrong claimant!) so she was waiting for a new panel and in California the QME panel process takes a very long time.

She was not represented and wanted to know if she should get an attorney. I counseled her not to get an attorney for various reasons but mostly because the Third Party Administrator (TPA) was doing a good job in my opinion (also I know the adjuster on the file, had done work for her in the past, and I know the adjuster IS very good, conscientious and does as much as possible for the worker), benefits were timely paid, she was still getting medical treatment (clearly palliative) and there really were no issues to dispute other than the fact that under her union contract her subsidized pay was ending.

This young lady didn't need an attorney, she needed the case closed so that she could move on with her life - that was absolutely clear to me in our discussion.

There is a good body of evidence suggesting that the single biggest factor affecting disability status is job satisfaction.

So in our conversation I asked probing questions about her job satisfaction - and the truth finally emerged: she did not want to go back to that job because it was an awful job.She LOATHED her job. It was better to be disabled than to do that job, for that employer, under the supervision of that manager...

She answered her own questions about disability status! She was NOT disabled enough to try something new, but she certainly was disabled enough not to go back to the old job.

I told her to get her case settled ASAP, to work with the adjuster to do that, and to go do what she really wanted to do, which was to go back to school, get an advanced degree and move on with her career and life.

Work mindset established the disability mindset and the disability mindset set up the rules for disability status.

We in workers' compensation want people to return to work. But return to work isn't enough. If the job is loathed there can be no return to work - it is better to just let that worker close the case as soon as possible to let them move on with their lives and careers.

People will find their paths in life if allowed to do so. Disability mindset interferes with self realization, self fulfillment. Without the "self" there can be no rehabilitation past the disability.

Return to work can not be forced, it can not be taught, it can not be determined. It is within the self to return to work - it is a mindset, the ability to live with Aloha.

So it is from Hawaii I bid everyone Aloha: all one needs to know to interact rightfully in the natural world.

Wednesday, March 7, 2012

The Fight Over MPNs Isn't About Treatment

I learned very early on in my workers' compensation legal career that medical control was control over the entire case.

My mentor, the legendary Rene Thomas Folse, PhD, JD, and probably the smartest man I have ever known, emphasized this lesson to me many times very early on as I was gaining experience in workers' compensation litigation - control over who engages the injured worker for medical considerations will control how the case concludes.

Indeed, it is this reality that drove the creation of Medical Provider Networks in California's "reform" law of 2004, and other states' reforms.

And it is this reality that is STILL driving intense litigation as the sides battle over medical control so that the "winning party" can get the upper hand in the cards being dealt in the determination of temporary and permanent disability indemnity, because as we all know, it is the indemnity component of a work comp case that drives its value to the parties (and in particular the injured worker and those working for him or her).

Recent California Workers' Compensation Appeals Board (WCAB) panel opinions highlight the importance, and illogical madness, of the fight for control.

In Matancias v. Milk Maid Dairy et al. WCAB Commissioners Ronnie G. Caplane and Frank M. Bass ruled that Milk Maid Dairy did not give proper notice of its MPN to employee Juan Carillo Matancias and therefore had to pay for the treatment that Mantacias obtained on his own at the San Joaquin Accident & Medical Group.

Matancias was injured on Oct. 31, 2007, when a cow giving birth to a calf pushed him through a fence. He received treatment that day from Dr. William Yale, who was part of Milk Maid's MPN.

Milk Maid sent Matancias a notice of its MPN and his rights on Nov. 15, 2007, but this notice did not identify which doctors were part of the network.

In May 2008, Dr. Yale released Matancias from his care. Matancias then began seeing Dr. Charles Lewis, who was part of the San Joaquin Accident & Medical Group, but not part of Milk Maid's network.

Milk Maid and its insurance carrier sent multiple letters to the medical group objecting to the services being provided by Dr. Lewis, which gave rise to the group's lien claim for $15,005.33.

Matancias and Milk Maid settled his workers' compensation claim for $20,000 in 2010. As part of the settlement, Milk Maid agreed to pay, adjust or litigate any liens of record.

The dispute over the San Joaquin Accident & Medical Group's lien went to trial before Workers' Compensation Administrative Law Judge Robert Norton last year, four years to the day after the date of Matancias' injury.

Norton determined Matancias had self-procured reasonable medical treatment from the medical group with a reasonable value of $6,304.87 and awarded that amount.

Milk Maid sought review by the WCAB, which denied reconsideration.

Caplane, writing for the majority, said Milk Maid had failed "to provide proper notice to applicant of his rights in the MPN," noting specifically that it never told Matancias "he could challenge his release from care by Dr. Yale as part of his rights in the MPN," and it provided no evidence showing that Matancias was notified that his later treating doctors were not part of the MPN.

"Moreover, defendant did not establish that it ever cured the defects in its notice to applicant after he began treating (out-of-network) so that he could be transferred into its MPN in conformity with applicable statutes and regulations," she added.

All of this, Caplane said, "evidence(d) a failure to provide reasonable medical treatment, such that defendant is liable for the medical treatment applicant self-procured."

Moresi, however, opined that "defendant established at trial that the initial treating physician Dr. Yale was in its MPN and he provided medical treatment for seven months before applicant chose to treat outside the MPN."

"The record also shows that defendant notified applicant of his rights in the MPN on November 15, 2007, while he was treating with Dr. Yale, and that defendant repeatedly notified lien claimant that it was not in defendant's MPN and was not authorized by defendant to provide medical treatment," Moresi contended.

He added that he did not think Milk Maid should have been obligated to prove that its MPN was authorized since the "lien claimant did not raise authorization of the MPN as an issue at the pretrial conference notwithstanding its obligation to identify all evidence and issues in dispute at that time," and " because it is reasonable to infer that the 'law has been obeyed' unless a party asserts otherwise."

Moresi pointed out that "the status of defendant's MPN may be easily determined from a reliable source by accessing the Department of Workers' Compensation website, which shows that defendant's MPN has been approved by the (Division of Workers' Compensation) administrative director since Dec. 30, 2004."

Disputes over proper MPNs have prompted a series of decisions from the WCAB, including Knight v. UPS, where a panel ruled that a payer must notify the applicant of the employer's properly-established MPN or it will be liable for the reasonable cost of medical treatment self-procured by the employee.

The WCAB also issued an en banc decision in Valdez v. Warehouse Demo Services, which held that when an employee has obtained unauthorized treatment outside of an employer's properly noticed and validly established MPN, reports from a non-MPN physician are inadmissible.

Earlier this year, the WCAB released a panel decision in Clifton v. Sears Holding Corp., which said employers may use judicial notice to show that they have a properly established MPN and satisfy the initial burden of proof that they provided valid notice of the MPN to the applicant by introducing the MPN notices that were given to the applicant into evidence.

But all of these decisions miss the reality of the situation, which is that medical control is not about delivering proper treatment - it is about driving the indemnity equation.

And wasn't that the basis for the 2004 reform laws in the first place - minimizing the amount of indemnity paid to injured workers?

Many of those who read this blog will place blame on the attorneys representing injured workers, and in my opinion that is misdirecting the argument, because attorneys are going to do what attorneys are trained to do - apply the law to specific factual situations in an attempt to drive the outcome for which the greatest motivation is rewarded, and in workers' compensation it is indemnity.

What happens with law over the years is that "holes" in the law are discovered as different fact patterns emerge that legislative authors could not anticipate (or choose to let courts figure it out…). This natural evolution of the law is derided by those objecting to the outcome as "manipulation", but the when the coin flips such evolution is celebrated.

So it is with MPNs. The assumption when the MPN law was put on the books was that certain notices would issue from the employer to the employee, but there was no consideration for HOW that was going to be accomplished.

And that is what the problem is with MPNs - the carrier community that supported the proposition does not take sufficient control over the notification process, leaving most of the process up to the employer to execute.

The employer in most cases does not have the resources, the skills, the knowledge or the motivation to do all that is necessary for the proper enforcement of an MPN.

But, if the carrier community took control over the notification process I suspect it would find that doing so would drive the costs up so high that there would be no net savings behind MPNs. Carriers would have to know who all of an employer's employees were at all times and would have to keep records of all of the notices supplied at all times through out an employer's policy history - this would be an incredibly complex, and expensive task.

So, I said it before and I'll say it again - the root of the problem isn't medical treatment, it is the motivation that drives the medical treatment.

Change the reward system and change behavior. Until then, deal with the law as it evolves.