Monday, March 31, 2014

Textual Despondency

"Text neck."

This condition reportedly has been a "world wide health concern" since around 2011 when conditions associated with excessive cell phone usage for texting and other mobile communications activities other than a phone call were starting to be identified.

A couple of weeks ago I was in San Francisco for the California Workers' Compensation Institute's annual meeting.

San Francisco must be the leading city where this "condition" could be studied. I was astounded at how many people walk around that town with their necks bent towards the ground, small devices in hand, paying zero attention to where they are, where they're going, or anyone or anything around them.

The number of people with zero spatial orientation or situational awareness as a result of profound hand-held device distraction was amazing to me.

Even in the elevator of the hotel where normally cellular signals aren't strong, if existent at all, a couple of gentlemen occupied the car as I got on heading to upper floors; they both were completely immersed in their devices. They did not look up, acknowledge my presence in any way or even acknowledge each other.

We got to the seventh floor and, without even a short little glance above the screen in his hand held one fellow starts toward the open doors and says, I presume to the other guy in the elevator, "see you at dinner."

The other guy, likewise, did not take his stare off the screen of his hand held device, thumb busy scrambling about presumably entering text, and just grunted, "yep."

That scene was basically played out my entire stay in San Francisco on numerous occasions in elevators, standing in lines, walking the streets.

I experimented a bit by attempting to interrupt the myopically text bound with interjections of conversation such as "have a nice day," "what floor," or a short joke or two about whatever happened to be on my mind at the time.

Zero response. If someone was engaged in their hand held device they were not going to alter that interaction with some actual, live, human conversation - won't happen, no how, no way, at least not in San Francisco.

There are the obvious dangers of using a hand held device while operating machinery, automobiles ... trains ....

I figure that it won't be long, however, until this is condition becomes an "injury" within the meaning of workers' compensation. Certainly in states like California that recognize the continuous trauma theory of causation text neck will be a new injury trend.

There are some medical professionals already recognizing text neck and seeking to cure those afflicted with the condition, warning of dire physical consequences if left untreated: Flattening of the Spinal, Curve Onset of Early Arthritis, Spinal Degeneration Spinal Misalignment, Disc Herniation Disc Compression, Muscle Damage Nerve Damage, Loss of Lung Volume Capacity and Gastrointestinal Problems.


I'm being facetious about this, of course, because all of this just seems rather silly.

Certainly the "cure" to this "disease" is to stop texting or using a hand held device excessively.

But in the context of workers' compensation claims, nothing is silly.

In a Forbes article it was noted that some are using knowledge of the condition to get cases of neck injury claims dismissed.

Obviously though if the conditions of compensation exists - you do text your employee once in a while to check on their status or have your assistant get you something for lunch, don't you? - that strategy will back fire.

POSTSCRIPT: Oprah on texting out of social context:

Friday, March 28, 2014

Trite Financial Cliches Still True

I write sometimes about what would happen if there were no workers' compensation.

Of course I postulate in facetiousness - obviously such an occurrence would certainly teach employers who doubt the value of workers' compensation programs and insurance that it's better than the exposure to tort liability.

But then again, sometimes I'm not so facetious. Sometimes I think that employers do need a lesson every once in a while.

Some New York employers are getting some lessons.

There was a self insurance trust group called the Healthcare Industry Trust of New York. That trust shut down in 2008. That trust was marketed and managed by Compensation Risk Managers which had seven other trusts - all eight have now shut down.

CRM also had a part in five California trusts which have also shut down. WorkCompCentral covered the stories extensively.

Employers who join self-insurance trusts pay premiums, which are pooled, to cover the costs of claims against them. They receive dividends if claims remain under control, but if the group's liabilities exceed its assets, the members have to make up the difference, paying proportional assessments based on their initial premiums. All the members of a group are jointly and severally liable for the group's liabilities.

The Healthcare Industry Trust left its members with a $176.5 million shortfall.

Members are now trying to recoup that expense by suing the brokers that pitched the trust to its members, alleging that the brokers knew that the trusts were in trouble when they marketed it to the employers but that they sold the memberships anyhow.

According to the complaint filed last Monday, the defendants committed multiple related acts of mail fraud by using the U.S. Postal Service to transmit fraudulent and misleading materials to the plaintiffs and other New York employers. These alleged actions serve as the basis for plaintiff's Racketeer Influenced and Corrupt Organizations Act claim.

The trust plaintiffs assert that their brokers knew CRM "lacked the expertise and knowledge" to properly administer the Healthcare Industry Trust, but said nothing because of the generous commissions they earned.

According to the complaint, the brokers "acted in concert with CRM to increase the membership of the trust despite a mounting deficit by aggressively marketing trust membership as a relatively safe and conservative alternative to regulated insurance products, while negotiating, pursuing and accepting excessive and hidden commissions that were dramatically higher than those customary in the industry."

Defendants named are the Cool Insuring Agency, Hickey-Finn & Co., Hirsch Wolf & Co., Marshall & Sterling, Oxford Coverage, The Rampart Group, The Reis Group, Shel-Bern Associates, The Spain Agency, The Treiber Group and The Vanner Insurance Agency.

Self-insurance trusts were all the rage in New York during the mid-1990s after rule changes to make the state's workers' compensation market more competitive.

In September 2005, though, the New York State Workers' Compensation Board declared nearly half of the 62 self-insurance groups then in operation as "underfunded on a regulatory basis."

Seven trusts went dissolved between 2006 and 2007, and another 10 failed in the following year. New security requirements imposed in January 2012 took care of most of the rest.

Only three remain in operation today.

Consequently about 10,000 employers were left holding the bag for nearly $1 billion in claims.

The board reported the outstanding liability for the defaulted trusts had been reduced to $346,076,000 as of the end of 2013 by its settlements with employers and its bond program.

The bond program raised $370 million and the proceeds of the bond sales went to the board to arrange a loss-portfolio transfer that assumed the risks of the defaulted trusts.

The board sued CRM for $450 million in December 2009 but settled for $41 million in 2010 because of CRM's tenuous financial position.

The board currently has 11 pending lawsuits against various administrators, accountants and actuaries for mishandling trust assets as well. CRM is named as a defendant in two of them, although Majestic Capital, CRM's parent company, declared insolvency in April 2011.

A suit similar to the current New York broker complaint was dismissed in California.

The 3rd District Court of Appeal upheld summary judgment, explaining that the only obligation a broker owes a client is to procure legitimate coverage. Brokers have no independent duty to inquire into the financial health of the provider from which it secures coverage for a client, the court said.

But the lawyer for the California plaintiffs told WorkCompCentral that his investigation didn't discover a document that laid out the marketing agreement between CRM and the defendant brokers in his case until after discovery had closed. He thinks this document is material to the New York case.

But regardless the ultimate responsibility falls on the employers to make sure their workers are protected, and relying on another's expertise or knowledge does not delegate that responsibility.

The lesson - you can't get something for nothing. Or probably more accurately, you can pay now, or you an pay later, but eventually you will have to pay. Or, perhaps even more acute, penny-wise, pound foolish.

In other words, all of those trite cliches you learned as a child about proper financial management still apply.

Thursday, March 27, 2014

The Business of Politics - Sickening

If you pay, then you can play. But likely, not before.

That seems to be the message coming out of California politics lately.

First it was Senator Ron Calderon in connection with Pacific Hospital and Michael Drobot.

Now we learn that Senator Leland Yee has been indicted and arrested on political corruption charges and arms trafficking.

There is no allegation that anything Yee has been accused of has anything to do with workers' compensation.

But Lee does have a history in workers' compensation legislation, albeit sparse and largely without success.

When it was proposed that the Controlled Substances Utilization Review Evaluation and Management System, or CURES, be paid for by surcharges on medical licenses, it was Yee who cast the sole objection when the matter was heard in the Senate Committee on Business, Professions and Economic Development.

California physicians would have immunity from disciplinary action for prescribing and dispensing dangerous drugs to treat chronic pain under SB 410 authored by Yee, which would have made it even more difficult to control opioid issues in the state.

Yee introduced a bill in 2009 that would exempt small family owned farms from having to carry workers' compensation insurance if it was operated only by family members (the bill died amidst complaints of its complexity).

In 2007 then Gov. Arnold Schwarzenegger signed into law Senate Bill 316, authored by Yee, repealing a requirement that workers' compensation insurers deposit 65% of their written premiums into reserve accounts.

When Yee was in the Assembly he promoted a bill that would have mandated a study by the Department of Industrial Relations and the Commission on Health and Safety and Workers' Compensation into how much the Medi-Cal program pays out for medical treatment that should be paid by the workers' compensation system.

Schwarzenneger vetoed that bill because, he said, the Department of Health Services has a unit assigned to review Medi-Cal cases for cost recovery and "the state does not need yet another report."

Yee proposed letting State Compensation Insurance Fund sell group health insurance.

Granted, Yee is not being accused of any improprieties in workers' compensation legislation, but this is the second time in as many months that a prominent California politician is being indicted after an FBI investigation into political corruption.

Some may chalk all of this up to "business as usual." I can't do that. My faith in our political system has been badly shaken.

It's a shame.

Wednesday, March 26, 2014

Texas Medical Up 8%? Yawn...

I haven't written much about Texas lately because the state has been so boring.

After all, what can you say about a system that has continued to lower costs, deliver benefits, and rank as one of the most efficient systems in the United States.

All of us pundits have attributed the state's performance to various things such as competition from non-subscription, closed prescription formulary and independent medical.

But this being workers' compensation, we also can not deny cyclicality, and inherent ties to the economy and culture of a state.

The Workers Compensation Research Institute released a report Tuesday indicating that medical payments per workers' compensation injury claim in Texas grew by nearly 8% from 2010 to 2011.

Researchers attribute the rise to fee schedule increases resulting from 2005 legislation, that state's landmark reform, HB 7.

"Prior to the reforms in 2001 and 2005, Texas medical payments per claim were the highest of the study states," Ramona Tanabe, WCRI's deputy director and counsel, said in a prepared statement. "In recent years, however, they were lower than the typical state in the study."

Texas paid lower medical payments per claim than most other states, the study said, because it paid lower than typical prices for some medical care and experienced large decreases in the use of medical care.

Wonks call medical care use, "utilization." While the report says that there was lower utilization as a result of these legislative changes, particularly in the fields of chiropractic and other physical medicine fields, this can also be interpreted as more restricted access to care.

If a medical service provider does not find it financially beneficial to participate in the workers' compensation medical delivery system because a fee schedule does not compensate sufficiently to induce participation, then there is restriction to medical care access and consequently lower utilization.

Whether that utilization and access to care is supplanted by some other medical delivery system or not, or whether the providers shift to other payment models typically isn't a focus of workers' compensation specific research - there isn't a whole lot of motivation to find out because the primary focus of workers' compensation research is on system costs.

If those costs go somewhere else, well, it's not our problem...

Chiropractic care took one of the biggest hits in HB 7 as Texas followed a formula other states adopted - hard lining the number of chiropractic visits permitted.

A 71% decrease occurred in visits per claim to Texas chiropractors from 2001 to 2011, from 39 to 12.

Price increases in 2011 from 2010 were due to higher prices paid for non-hospital care, higher prices for hospital outpatient payments per service and rapid growth in hospital payments per inpatient episode, the study found.

Higher medical payments were fueled by fee schedule increases following Medicare updates required under HB 7, the study reported, and the 2011 ban on informal networks, which allowed medical service prices to be negotiated. WCRI also reported a decrease in the use of non-hospital care slightly offset the increase in prices.

But the study also found the average medical cost per claim on a 12-month average at just over $9,800 in Texas, fourth-lowest and 18% lower than the median of the 16 study states. Average cost per claim was lower only in Michigan, California and Massachusetts.

(I know you're thinking this: ... California?)

Texas remains one of the few states where carriers can make an underwriting profit in work comp with one of the lowest average combined ratios in the states. Some will say that is at the cost of injured workers, others will say it reflects good system management.

I'll just say it's what the people of Texas have - each workers' compensation system reflects in large part the culture of that state and general sentiment towards work, and working.

In other words, it is what it is - and while other states can mimic elements of Texas, the culture and attitudes of the state are much more difficult to assimilate.

Tuesday, March 25, 2014

A Real Mess

What do Oklahoma, New York, Washington, Kentucky and Florida have in common?

If it's workers' compensation, then the connection is a far reaching scheme involving millions of dollars, failed insurance companies and professional employer organizations.

A federal grand jury in New York back in October 2012 indicted Wilbur Anthony Huff, principal behind a couple of professional employer organizations, Matthew Morris, Park Avenue Bank's former senior vice  president, and Allen Reichman, the former director of investments at New York investment house Oppenheimer & Co. 

The indictment alleges that Huff and Morris engaged with former bank president and Chief Executive Officer Charles Antonucci in an elaborate conspiracy to plunder Park Avenue Property and Casualty, formerly known as Providence Property and Casualty Insurance Co., and its subsidiary, Imperial Casualty and Indemnity, and artificially inflate the bank's assets to secure funding from the federal Troubled Asset Relief Program.

U.S. Attorney Preet Bharara said in a press release that Huff, who secretly controlled South Florida PEOs O2HR and Certified HR Services, was at the "vortex of fraud" in a series of schemes involving more than $100 million and designed, in part, to keep O2HR from paying tens of millions of workers' compensation premiums owed to the Oklahoma insurers by the PEOs, and drain the assets of the insurers and help Antonucci's bank secure funding from TARP.

Antonucci pleaded guilty to charges of securities fraud, bribery, embezzlement and participating in the $37.5 million scheme to defraud Providence Property and Casualty on Oct. 8., 2010. He is expected to serve as a government witness at the trial of Huff, Morris and Reichman. 

The federal judge handling the Huff/Morris/Reichman case postponed a pre-trial conference to May to allow discovery issues to be resolved.

Starting in 2009 WorkCompCentral started following the case of the failure of Park Avenue.

It's a complex case, as many big money fraud cases tend to be, so I won't try to unravel the whole story in this blog - for that I suggest you read up on the history of the matter in WorkCompCentral.

Some highlights are in order.

Huff was previously banned from the insurance industry as an insurance agent in Kentucky in 2004 after being convicted of wire fraud.

In addition, Huff and his ex-wife, Sheri Huff were ordered to pay $17.4 million  by a federal  judge in South Florida in October  2010  based on allegations by the SEC that the Huffs used $47 million in bogus letters of credit to inflate the value of Certified HR Services.

Danny Pixler, Certified's chief executive, pleaded guilty to a criminal charge of conspiracy in connection with allegations he bilked Certified's employer/clients out $4.56 million in workers' compensation premiums for policies written on companies not licensed as insurers.

In January 2010, a U.S. District judge in Washington state upheld a $19.3 million verdict against Pixler and the Huffs in the collapse of Cascade National Insurance Co. The jury in that case ruled that Pixler and the Huffs pretended to buy the ailing insurance company in an effort to divert millions of dollars in insurance company assets to Midwest Merger Management, a Kentucky company they controlled.

The latest news reported in WorkCompCentral this morning, however, shows how such a scam in workers' compensation can escalate to a significant amount of capital being sucked out of the system to the detriment of nearly everyone else.

The losses in Oklahoma stemming from the scheme now amount to about $92 million and are expected to grow, according to the National Conference of Insurance Guaranty Funds.

Oklahoma isn't a big market in the first place. According to the National Association of Insurance Commissioners, the state's total work comp premium in 2012 was $947,021,065, so $92 million (almost 10% of the total) is a lot to absorb in that state. 

And who knows how much of the failure of Park Avenue and Imperial Casualty and Indemnity Co. contributed to that state's abysmal rate work comp insurance cost ranking leading up to last year's historic opt-out legislation.

"I know this has been a real mess," Kelly Collins, spokeswoman for Oklahoma Insurance Commissioner John Doak, told WorkCompCentral Friday.

That's an understatement.

Monday, March 24, 2014

Memory And Work Comp

After Dad died my siblings and I made arrangements for Mom at the best memory care facility we could find.

My eldest sister has worked in the elder care industry for years and has extensive education, training and experience in the field. Fortunately she knows who the players are, what their reputations are, who the owners are, care policies etc.

Placing your parent into a memory care facility is a bit alarming - as my brother observed, first visit is a scene right out of One Flew Over the Cuckoo's Nest; people wandering about with various emotions expressed on their faces clearly indicative of cognitive impairment.

Mom has moderate to advanced dementia.

I can't say that I ever really appreciated what dementia was until Mom was at the moderate stage.

For years Dad would complain about Mom's behavior - that he would have to coach her in the simplest of activities; walking for example. As her disease progressed I noticed that even eating was not simple - there was this sort of vacant look to her eyes as she tried to make the fork find her mouth.

Mom's standard response when asked to recite something of recent history would be "I don't recall" and she would complain that "my brain doesn't work like it used to."

But she could regal us in stories of the past, often several iterations in a single sitting (she would remember the past event, but forget that she already told the story ... three times already).

And she always seemed happy. If she didn't recall who you were she would at least carry on like she did, and smile.

Always smiling.

Always smiling.

At last weeks California Workers' Compensation Institute's annual meeting Terry Bogyo (pronounced "Bo-show"), an independent researcher who formerly was the Director of Corporate Planning and research for WorkSafeBC (the Workers' Compensation Board of British Columbia) gave a presentation mostly comparing California work comp to Canadian work comp.

A big part of Bogyo's talk was about demographics, and how changes to the population affect the work force and, ergo, what impact that has on work comp.

I was surprised to hear from Bogyo that Alzheimer's Disease, a subset of dementia, was the third leading cause of death.

I didn't know that any form of dementia was a direct cause of death.

The Alzheimer's Association says however that 500,000 people in America each year die directly from the disease and that it is the 6th leading cause of death, 5th if over age 65 is accounted for and the only cause of death in the top ten that can not be cured, prevented or slowed.

According to the National Institute on Aging, over 5 million people in America have Alzheimer's. The disease disproportionately affects women, though men are not impervious; and typically the disease is not apparent until after age 60, though it can begin as early as age 30.

Bogyo brought this up because the age of the work force is changing. There are more people over age 60 who continue to work past retirement age, and in surveys a majority of people say they will continue to work past retirement age regardless for various reasons.

And, I suspect, the health care industry, representing trillions of dollars in the American economy, will be disproportionately represented in the workers' compensation statistics.

For instance, according to the Alzheimer's Association, caregivers to Alzheimer's patients rack up about $9.3 billion in additional health care costs on their own in 2013 due to the physical and emotional burden of taking care of the patients. They say that caregivers rate the emotional stress as high or very high and more than one-third report symptoms of depression.

The facility where Mom lives has a very high proportion of caretakers to patients, and residents are highly engaged - Mom is woken at 7:15 every morning and typically keeps moving until bed time around 8 or 9 (in the past she would sleep in until as late as 11...).

But her facility is atypical. It costs a lot because it provides a lot. Most facilities have a much lower ratio of caretakers to patients putting additional pressure and stress on that work force.

I would expect that the facility where Mom is at does not experience the same level of changes to employee count or work place accidents as other facilities.

Nevertheless, this is just a small example of changes the economy is undergoing. More obvious are the changes we have seen in the shift from manufacturing to information.

I can't say that I fully comprehend what all these changes mean to workers' compensation, or frankly whether they are even relevant to what we all do day in and day out. Clearly the risks are different, and how we deal with those risks may take on different tones.

Friday, March 21, 2014

Los Angeles And Cost Drivers

Is there any relationship to anything in California workers' compensation?

That was a topic at the 50th annual California Workers’ Compensation Institute meeting yesterday.

I'll give you the short answer so you don't have to read this whole post if you don't want to: No, except for Los Angeles.

I'll explain below.

Richard Victor, president of the Workers' Compensation Research Institute tried to answer the question what makes California different than the rest of the nation. He poignantly answered his own question - "which California?"

The differences between Northern California and Southern California are striking, with most of the activity in So Cal centered in an tight geographic area commonly known as Greater Los Angeles.

The CWCI team of Alex Swedlow and Mark Priven told us that there was no relation between Social Security Disability and costs; that attorney involvement was only slightly correlated to costs (except in Los Angeles); there's no relationship between group health coverage and work comp costs; and while high health care premiums did relate slightly to higher rates, the relationship to severity was mixed.

Higher drug sales correlated with higher medical costs; higher tax status also correlated with higher work comp costs (which makes sense because the more affluent pay higher taxes).

The duo told us there was no relation between unemployment and frequency but that OSHA lost time reporting had an obvious relation to duration of temporary total disability, though curiously had no relation to permanent disability.

Another question was whether frequency was most affected by the characteristics within the work comp system.

Again, basically the answer was no.

There was no correlation between the largess of the bureaucracy running the system, size of the budget or staff; and fee schedules did not necessarily result in lower medical costs.

Put Los Angeles into any of these equations though, and the results are entirely different.

So what makes LA so different besides the fact that there are more attorneys doing work comp litigation there and, presumably more doctors willing to take those claims?

At present, at least, there is no known answer.

The data seems irrefutable - when isolated geographically Los Angeles is a bad boy.

What makes LA such a hot bed of work comp costs?

Part of the answer, I believe, can be found in the recent news of Calderon/Drobot/Long Beach Hospital drama.

There is plenty of research that organized crime tends to be geographically concentrated.

But it took the Federal Bureau of Investigation on political corruption allegations to bust through the Calderon/Drobot/Long Beach Hospital organization.

Want to find the driver of Los Angeles costs?

Take the money away from the local District Attorney's offices and give it to the FBI. Throw in a politician or two and I suspect an amelioration of So Cal cost drivers will occur.

Thursday, March 20, 2014

CO Pot Goes to Court

Colorado workers' compensation practitioners speculate in this morning's edition of WorkCompCentral news whether the state, being the first state in the nation to legalize the recreational use of marijuana, is going to handle pot in the workplace differently than some of the other jurisdictions that have faced similar issues.

While the case that the Colorado Supreme Court has accepted is about whether an employer can lawfully terminate a quadriplegic employee for his off-the-job medical-marijuana use, because a Colorado employer can reduce indemnity if an employee tests positive after a work place accident, there's some apprehension about what the court says will spill into work comp.

Brandon Coats, a former telephone customer service representative for DISH Network, brought a wrongful termination action against the Englewood-based direct-broadcast satellite service provider.

In Colorado an employer can administer a drug test upon the occasion of a work place accident and can immediately reduce the worker's indemnity benefits by 50% if the worker tests positive.

The worker can challenge the employer's action by arguing that the accident had no relationship to his drug use, which is the law in many states, and then the burden is on the employer to show that there was a relationship between the drug level detected and causation of the accident.

What is the "intoxication" level of the injured worker who tests positive for marijuana has not been settled and there are no standards yet. Marijuana has a very long latency period due to the fact that it binds with fat cells, as opposed to alcohol, which is water soluble, so the fact of marijuana in the blood stream is evident long after intoxication.

Some employers have a drug-free workplace policy and the law in Colorado recognizes such policy as a condition of employment.

Thus, if a Colorado worker is fired for-cause, i.e. violating the drug-free workplace policy, the worker is not entitled to temporary total disability benefits because TTD is intended to replace the worker's wage loss if an injury is the cause of the loss, and if a worker was fired for cause, then the cause of the loss was not the injury.

According to the National Institute on Drug Abuse, marijuana smokers are more likely than non-marijuana smokers to file workers' compensation claims. For example, a study among postal workers found that employees who tested positive for marijuana on a pre-employment urine drug test had 55% more industrial accidents, 85% more injuries, and a 75% increase in absenteeism compared with those who tested negative for marijuana use.

Coats is a registered medical marijuana user. He is paralyzed in over 80% of his body because of injuries from a car accident when he was 16. He claims to use marijuana to control the involuntary muscle spasms that his prescription medicine was no longer treating effectively.

According to reports, Coats was a good employee who got positive reviews from his supervisors for the three years he worked at DISH.

In May 2010, DISH asked Coats to undergo a random drug test. Coats told the test administrator that he was a medical marijuana user, but that didn't stop the company from firing him when the test came back positive for THC, the psychoactive ingredient in marijuana.

Coats then sued DISH for violating Colorado Revised Statute 24-34-402.5, which prohibits employers from discriminating or terminating employees for engaging in legal off-duty conduct.

DISH moved for summary judgment, and Arapahoe County District Court Judge Elizabeth Beebe Volz granted DISH's motion.

Volz ruled that because marijuana was still unlawful under federal law, it could not fit the definition of a "lawful activity" in a state statute.

A divided court of appeal upheld the trial level decision.

His attorney, Denver-based Michael D. Evans is arguing to the state Supreme Court that if using medical marijuana is a lawful activity under Colorado law, then employers should not be allowed to fire a worker for using marijuana outside of work.

A number of other courts have tackled the issue of drug testing in the work place brought by plaintiffs under different theories. The courts have mostly ruled that just because one has the state right to use marijuana for medicinal purposes does not mean that the employee can sue the employer for discrimination or take any other action against the employer.

If the Colorado Supreme Court wants to stay out of workers' compensation issues, then it will issue a very narrow ruling applicable only to whether this constituted a wrongful termination.

But high court rulings typically are full of explanatory theory - what we lawyers call, "dictum." Often it is the dictum in such cases that give rise to cases that involve different facts and thus new law, or refinement of previously stated law.

Whether the court wanders into workers' compensation issues is unlikely, but the case has the potential to radically redefine drug policy in Colorado, and thus, its application to workers' compensation.

Wednesday, March 19, 2014

Bad Case, Bad Case Law

It's a long standing legal axiom - bad cases make bad case law.

Such it is in Alaska where a conscientious claims adjuster likely felt she was doing a good job attempting to protect the interests of the employer/carrier while meeting the requirements of the law - but when dealing with a high profile catastrophic claim saving a few bucks here and there comes back to haunt.

Willard Harris Jr. had worked as a truck driver for M-K Rivers. In 1976, when he was 22 years old, Harris injured his spinal cord in a roll-over accident off the Richardson Highway. The accident left Harris a paraplegic.

Not long after the accident, he developed heterotopic ossification in his hips - where bone grows in abnormal places in the body. Spinal cord injuries are recognized factors that increase the likelihood of developing heterotopic ossification.

The condition caused Harris' hips to become fixed. His knees, ankles and toes are also fixed.

Because of Harris' fused hips, he is unable to transfer as easily as most paraplegics and cannot spend much time in his wheelchair because he cannot be positioned in the same way that other paraplegics can. He spends most of his time in one of several medical beds.

At the time of his deposition in 2008, Harris had two beds in his home, one for sleeping and one for use during the day, as well as one bed in a van for him to use while traveling long distances.

The type of bed Harris uses is important because he suffers from chronic bed sores, and some beds are better able to prevent formation of bed sores and promote their healing. The specialized beds Harris requires are expensive, costing more than $50,000 each.

Harris is also a diabetic and suffers from hypertension and sleep apnea. He has difficulty maintaining his body temperature, because of his spinal cord injury, and he is easily susceptible to infections.

The employer/carrier did not challenge the compensability of Harris' accident, and through the years there were multiple partial settlement agreements for housing accommodation and benefit levels.

In 1998 Harris' diabetes was accepted as compensable and the employer/carrier agreed to pay for 24-hour-a-day attendant care, a personal trainer and treatment at a non-medical fitness facility.

The adjuster on Harris' case had been on the file since 1998 - obviously very familiar with the case and Harris' extreme conditions.

In my opinion this is a very good thing - having a sole adjuster on a catastrophic claim such as this promotes uniformity in management, and I'm sure there was some personal level of involvement after time. How could one not get attached to handling a case like this? And I might note that the adjuster, I'm sure, was in a difficult position because of the extreme expense involved in the claim.

It's no fun being in the middle of a situation where the beneficiary might need a very high level of service resulting in extreme expense and the carrier's requirements to keep expenses in check.

After the adjuster noticed an increase in Harris' medical treatment in 2006, she sent Harris for an independent medical evaluation, who commented that the treatment was mostly appropriate, with some minor changes.

The case took a turn for the worse when the IME commented that she did not have the expertise to recommend one bed over another. About a week later Harris' treating physician wrote a prescription for a Clinitron bed.

The employer/carrier controverted Harris' request for the bed. Its notice of controversion gave no reason for its refusal to pay for the bed, aside from the assertion that the IME report had said Harris' current bed was "strongly recommended by his physicians."

The Alaska Workers' Compensation Board found that the controversion of the Clinitron bed was not in good faith because the claims adjuster had no evidence on which to base the controversion. The board then assessed a penalty "on the value of a Clinitron bed as of the controversion date."

There were other penalty assessments for other action take by the employer/carrier based on the IME report.

The Alaska Workers' Compensation Appeals Commission reversed the Board's imposition of penalties because the prescription for the bed was never actually filled and the request for the bed was subsequently withdrawn (and another bed substituted for it), so no compensation was owing, and thus no penalty was due.

The case went up to the Alaska Supreme Court, which opined that Alaska Statute 23.30.155(e) requires the imposition of a penalty when compensation is not paid within seven days after it becomes "due." Since there is no statutory definition of "due," the court relied on Webster's Dictionary definition of "due" as "(p)ayable immediately or on demand."

Since the comp system was designed to have employers make payments to injured workers without Board intervention, and for workers to receive indemnity and medical benefits in a timely manner, the court reasoned that it makes sense to interpret the word "due," as used in AS 23.30.155(e), as meaning "(p)ayable immediately or on demand."

The court also pointed out that it has previously construed the penalty provision in AS 23.30.155 as giving insurers "an incentive" to pay medical bills promptly.

"Without the possibility of a penalty, an insurer would be able to controvert expensive medical care for no reason and escape without sanction, even when the care is critical to an employee's health," the court said.

The Supreme Court said that medical benefits must become "due" for purposes of controversion and penalties when the employer has notice they have been prescribed by a doctor.

Since a controversion of medical benefits that is not made in good faith delays receipt of a benefit, the court said such conduct supports the imposition of a penalty if the controversion delays medical care that is reasonable and necessary.

Since such a controversion could prevent an injured worker from receiving the treatment, there might never be a bill to present for payment, the court said.

After reviewing case law in other states where bad faith penalties were recognized, the court said that if an employer can choose to controvert, without good reason, treatment that it has been providing for years, without risk of penalty, then it would have "no incentive to consider carefully whether it should controvert."

In light of these considerations, the court said the Commission erred in deciding that as a matter of law no penalty could be imposed for the bad-faith controversion of the Clinitron bed.

The court said it could not tell from the record whether Harris ever received any of the disputed treatment, and so it ordered the case remanded for the Board to figure that out. The court said Harris would be free to pursue a penalty on the controversion of the bed or other treatment items that were unpaid because of the controversion, it would be up to the Board to decide what that penalty should be. 

Tuesday, March 18, 2014

North Dakota Cold At Comp

North Dakota had one of the lowest workers' compensation rates in the country, according to a 2012 analysis by the state of Oregon. North Dakota’s premium rate was 53% of the median state rate.

Some might attribute this to the fact that North Dakota remains one of the few states left where the state is not only the insuring entity but also the claim administration entity, controlling the entire process of insuring and managing work place injuries from start to finish.

The state has been growing exponentially due to the new oil and gas boom, recently passing Alaska to become number two in oil and gas production just behind Texas.

In fact Associated Press reported today that the state is advertising "Find the Good Life In North Dakota" because it has about 25,000 jobs that need to be filled due to the oil boom there.

The state has the lowest unemployment rate of any state, at less than 3%, and its population, roughly half that of the City of Los Angeles, is swelling at a pace unknown to any state since before the Great Recession.

Oil and gas production is a high risk, high wage industry which of course translates to high premiums for the businesses doing that work.

According to the Bureau of Labor Statistics for the US Department of Labor, North Dakota experienced 64 fatal work incidents in 2012, which is 20 more than the year before, and one of the highest occupational fatality rates of any state. The Bureau reports that 39 were from transportation incidents, accounting for 61 percent of all transportation fatalities in the United States.

So allegations that there is meddling on the part of state attorneys with the system should be taken seriously since the conflicts of interest are obvious, and the health and safety of workers is at stake.

This is what the state's medical director for the North Dakota system has alleged.

According to WorkCompCentral this morning, Dr. Luis Vilella spelled out his complaints in a Jan. 14 letter to Workforce Safety & Insurance Director Bryan Klipfel, which was first obtained in heavily redacted form by the Forum News Service though an open records request.

Dr. Vilella sent the lettter to Klipfel because of an email exchange last November between Anne J. Green, a senior WSI lawyer, and Douglas W. Gigler, an outside lawyer for the Nilles Law Firm who represents WSI in hearings involving workers’ appeals of their denied claims.

“Both of the statements from Attorney Green and Attorney Gigler are distorted and demand a response from me as WSI Medical Director and the physician who testified on behalf of WSI,” Vilella wrote of the email exchange.

“The case I describe is a clear case of ‘if you can’t win on the data, impugn the integrity of the physician,’” Vilella’s letter continued. “Once again I am confronted with the corrosive attitude of individuals to control and limit the dissemination of medical information, information that is essential to the fair and impartial adjudication of claims.”

Sources interviewed by WorkCompCentral said that the state uses "doctor mills" to control costs by issuing defense favorable reports in order to keep claim costs down and limit the amount of treatment and indemnity.

Allegations of this strategy is not unknown to those of us in "private" work comp, but in a state monopolized system seriously calls into question the fiduciary responsibility an administration assumes.

Vilella has been at odds with administration in the past.

According to Prairie Business, a recent performance review of Vilella was critical of an increase in the use of outside independent medical examinations.

Prairie Business reports that the use of independent medical examiners rose 29.5 percent from 2011 to 2013, from 105 to 113, and that 120 outside medical reviews were projected for the coming year. Vilella was criticized for this since the increase came under his watch.

Vilella disputed that he was the cause of WSI’s increasing reliance on independent medical examiners stating that most requests come from claims adjusters or from WSI’s lawyers.

Vilella wrote that it was “disheartening” that “inaccurate and misleading statements” were used in his performance appraisal.

Sedgwick Claims Services has been retained to audit the state's system for state auditor Robert Peterson. Vilella wrote Klipfel that he may not have been included in the audit of medical issues had he not complained earlier.

Such an audit could vindicate Vilella, and could also lead to some serious changes at WSI.

I often point to California with its idiosyncrasies and complex nature. North Dakota is often pointed to as an efficient, simple system with a Labor Code book about one-twentieth the size of California's.

But if a monopolistic system is operated as Vilella suggests, I'll take California's complexity.

Fairness to employers, AND WORKERS, is important to the credibility of any workers' compensation system.

Monday, March 17, 2014

A Poor Man's Process

An interesting anecdote provides a glimpse into the connection between workers' compensation and immigration policy, and how workers' compensation is used as a backstop for medical care and dispute resolution.

A Northern California manufacturer told local media after filing for reorganization in bankruptcy court that its workers' compensation costs quadrupled after a U.S. Immigrations and Customs Enforcement audit forced it to lay off a third of its workers in 2011.

Pacific Steel in Berkeley, Calif., filed for Chapter 11 bankruptcy at the U.S. District Court in Oakland on March 10, according to KQED News. Many of the 200 workers who were forced to leave their jobs because of invalid Social Security numbers filed workers' compensation claims, the company told KQED, a National Public Radio affiliate.

Another media source says that the immigration enforcement action occurred in 2011, and that many of the 200 workers laid off had been at the foundry for 20 or even 30 years - obviously vested in American life, paying taxes, sending their children to local schools.

The company manufactures castings used mostly in commercial trucks and construction equipment and is described as the third largest foundry in the United States.

It listed workers' comp carrier Sentry Insurance in Milwaukee as one of its top 20 creditors, with an outstanding debt of $882,775.19, according to Pacific Steel's bankruptcy petition.

According to local news Berkeleyside, the firm's workers' compensation costs quadrupled following the immigration action and subsequent layoff.

Typically known as "plant closing" cases, a mass of workers gets laid off or displaced because of the closing of plant operations (though in this case it was lay offs due to immigration policy) and, having no re disincentive, the displaced workers seek indemnity to keep them going to the next job, and also treatment and remuneration for what ever they believe ailed them as a consequence of working at that plant.

At a foundry there are all sorts of potential exposures that could be claimed in the workers' compensation world: noise, fumes, toxic materials.

We could bemoan these filings as fraudulent - after all, why would workers wait until after they were relieved of duty to file injury claims?

Or we could criticize applicant attorneys, or physician practices, or any number of other professionals in the system for perpetuating mass filing of questionable claims.

We could criticize the United State's immigration policy as counter productive to economic growth by displacing workers that otherwise contribute to productivity.

Or we could just acknowledge that the workers' compensation system is possibly the only way an immigrant worker can get any "justice," demonstrating again how workers' compensation often ends up as the poor man's dispute resolution process.

And I wonder if that $882,775.19 owed Sentry Insurance would have been much, much less if the claimants were quickly, albeit perhaps not entirely "documented" or "legitimate," provided a settlement without the usual back and forth between attorneys and doctors.

Friday, March 14, 2014

The ACA Is Our Opportunity

As I said yesterday, one of the more exciting things to me about attending the Workers' Compensation Research Institute's annual conference was to learn more about the Affordable Care Act and what folks more well studied on the subject than I (not hard to achieve) feel the impact will be on our industry.

The morning started off full speed ahead on the ACA with a presentation by WCRI president Dr. Richard Victor followed by a panel consisting of David North (Sedgwick), Donald Hurter (AIG) and Christopher Cunniff (Liberty).

First the WARNING per Dr. Victor - what was presented was preliminary and inconclusive; as has been reiterated ad nauseum, no one really knows what the impact of the ACA is going to be, but eventually the WCRI will publish a study with more conclusive findings.

I will jump to my conclusion, which basically is a restatement of Mr. North's comments - the immediate impact of the ACA to workers' compensation is that for the first time in a very long while that workers' compensation can be included in the conversation about health care.

And I completely agree.

For most of the history of workers' compensation it has been dealt with completely separately from general health even though the basics of both systems - providing treatment to the ill and injured - is the same.

In other words, the ACA is going to cause conversations about all of the things that we care about.

"Tremendous opportunity to have a voice," Mr. North said, about how health care is delivered in this country and how we in work comp need to have new and different ways to have access to health care in the county.

When we started talking about health care costs in work comp we took the managed care model and made it so much a part of our industry that we let managed care BECOME health care and consequently we have forgotten that health care occurs at the point of treatment.

Instead we have piled on post care services to cover the fundamental fact that we didn't provide good treatment right up front.

That's a serious indictment of our industry from one of our own industry leaders. The system has taken away what matters most in the delivery of benefits because in our quest to define and measure we have lost sight of the when and where that makes the most difference.

Dr. Victor used the metaphor of a hurricane when he introduced his presentation: right now the hurricane of the ACA is out over the Eastern Caribbean and building intensity. But like an early stage hurricane we can not predict its trajectory over the long haul, and the intensity of the storm depends on the trajectory and whether it picks up more moisture by hanging out at sea before hitting land, or whether it goes more direct and does not pick up so much damaging power.

And I agree - the impact of the ACA is going to be different in different states because of numerous factors and it is also unrealistic to believe that the ACA will be successfully implemented as written without further changes in the coming years.

Remember that this is a volatile political animal and essentially anything can happen over the course of the next three to five years as this thing matures. There are so many variables that depend on psychology and human behavior that it is nearly impossible to predict that any part of the ACA will survive without some amendment.

For instance, nearly all of the experts agree that one of the reasons why US health care costs are greater than the rest of the world is because the US subsidizes the cost of innovation - the US innovates, we pay for the research and development, the testing, the practical application, and then once that's done our technology is exported to other nations without those pre-distribution costs.

The current system is rife with conflicts of interest because our system of regulating prices is seen as unfair by providers and tends to undermine values.

And I agree with Dr. Victor that the ACA has the potential to affect so many people both financially and personally that it is an order of social adjustment along the same magnitude as the Vietnam  War draft, the Great Depression, and other huge social and cultural alterations to American society.

So this is big. Really big.

Some of the perplexing questions:

Will the predicted expansion of demand create shortages on the work comp end and if so will there be delays in care which will increase costs? And if so, where are the shortages likely to occur (or not) and how will work comp adjust?

At least in the general health model, adjustments are made by increasing the use of non-physicians and increasing reliance on technology, outsourcing to other countries, and ultimately adjusting (usually increasing) prices to meter demand.

Affecting supply and demand are different state laws that, for instance, handle the licensing of different medical professionals differently.

If one were to compare to Canada, which has a single payer health care system for both general health and work comp, there is an impact on access. In the US about 6% of the patient population wait 2 months to see a specialist; in Canada that figure is 29%.

And at least in Ontario, work comp pays more to providers for expedited access but this raises questions of fairness, implying that providers in the US (where there is greater free market enterprise available) would raise prices to allow easier access since medical treatment directly affects other parts of  the work comp equation (e.g. indemnity).

Perhaps a benefit to most system participants, employers, and workers - states may have to alter their systems to alleviate the "hassle factor" physicians complain of in order to compete for access to care.

Either way, Dr. Victor opined, the ACA will increase the cost of work comp in some fashion, at least in the short term.

There were, of course, many citations to examples and studies in the past to support Dr. Victor's cursory conclusions, and since he's analytical and I'm not I'd venture to put my betting money on his outlook.

Except if Mr. North's opinion is followed and this industry is able to take advantage of this rare opportunity to educate the rest of the medical world, and in particular the politicians behind all of this, about how things work in the workers' compensation system and find ways to make the ACA and work comp exist beneficially to each other.

And we start with altering the fundamental question, because if you don't ask the right question you can not get an answer that is going to help.

We have been asking how the ACA is going to affect work comp. That is an incorrect, as Mr. North points out.

What we should be asking is how is health care going to affect work comp? Because the ACA affects health care, not work comp. Health care affects work comp...

Its not the legislation that is going to affect us, but the "conversation." Health care affects the things that we do care about - wellness and comorbidities. We complain about how we don't have access to the tools to deal with these issues: medical records, data and studies from the general health market, effecting quality care on the front end rather than Monday Quarterbacking with reviews and other cost control features built into the law.

Now we have people who have to make a judgment about something that they don't have real good information about or a good handle on, which influence the cost of what we deal with - not just medical itself, but social, economic, health and welfare, relationships, etc.

With the ACA we now have a rare opportunity to think about medicine holistically - we are on just one component. We have the opportunity to raise the conversation and participate in the dialogue and help make work comp and medical care rational to the way people live their lives.

Thursday, March 13, 2014

What I Learned About The ACA

One of the big draws for me at the Workers' Compensation Research Institute's annual meeting this year was to hear from one of the architects and authors of the Affordable Care Act, Dr. Jonathan Gruber who is a professor of economics at Massachusetts Institute of Technology.

I just needed to learn. The ACA is so complex, so huge, so broad in its scope, that anyone who is not completely versed in the health care system (the vast majority of us) would have absolutely no understanding of the law, how it plays out, who it really affects, what is to come of various provisions, etc.

In fact, I am willing to bet that virtually all lawmakers, including our president himself, have little to no true understanding of the law.

Dr. Gruber is a health economics expert - meaning he has spent virtually all of his professional life studying health care systems and the economic underpinnings of health care.

It is enormously complex because there are so many moving parts, so much is tied into human characteristics and psychology, and as a consequence there are many different unintended consequences that are just going to have to play out.

And the main point I took away from Dr. Gruber's presentation is ... unfortunately ... we are going to have to wait and see how everything plays out.

Dr. Gruber explained that the model for the ACA was then Massachusetts' Gov. Mitt Romney's health care reform. That reform took at least 3 years for it to mature and for people to understand the impact.

Dr. Gruber said the lessons learned from Romney Care (fair enough?) is that reform is a three legged stool and without all three legs the stool falls over:

1. There can not be discrimination against pre-existing or co-morbid conditions. This is what is know in the health insurance industry as "community rating" - i.e. everyone is covered regardless of current or known health conditions that may affect actuarial partiality.

2. As many people as possible need to participate, thus there must be some form of individual mandate - the population that is without health insurance is either young and healthy and not inclined to spend for insurance or is poor and unhealthy and can't afford insurance, which is why:

3. There must be some form of government subsidy for the people that are uninsured and can not feasibly participate on a financial level otherwise the second leg, individual mandate, fails.

According to Dr. Garber the results in Massachusetts was that the population went from 18% uninsured to just 3%.

But this model can not be scaled to a national level because there was one big political factor that made the state a success where others would fail - the state had "ripped off" (Dr. Gruber's description, not mine) Medicaid of $500 million and Romney went to President Bush at the time to get a concession of forgiveness in repayment if that money was used to finance the uninsured.

No other state had, or has, that luxury.

So the big question is, of course, to us in the work comp industry is what does the ACA mean to work comp?

Coincidentally The National Law Review published an article yesterday by Mark Walls that was originally published in Risk Management magazine (thanks for bringing this to my attention Jon Gelman!) that predicts that the ACA won't affect overall health of Americans (i.e. no evidence that we will have healthier workers and, ergo, fewer claims), that there will be no reduction in cost shifting and that in fact it may increase against work comp, that access to care is a real problem because there aren't enough doctors around to pick up the extra capacity, and that standards of care may actually improve.

(I'm sure Mark will correct me if I have the conclusions incorrect.)

Some of the elements Mark talks about in his article were addressed by Dr. Gruber.

For instance Dr. Gruber said that based on Massachusetts experience the access to care will not be significantly impacted. He noted that the state had in general a 47 day wait for doctor access before reform and 51 days after. Indeed, I tend to believe that the market for physicians will correct any access issues - that any shortage of American born physicians coming out of medical school will be corrected by physicians trained in other lands, and indeed we have been seeing that trend in the past few years regardless of the ACA. After all, America is the land of opportunity and immigration has always fulfilled labor supply shortages.

I agree with Mark that there won't be any change in cost shifting - there are too many variables in the way that mess with motivations and other elements that may cause one person to seek general health care or work comp care, and those variables are shared between employers, workers, physicians, and insurance companies themselves.

In fact Dr. Gruber said that the challenge with work comp to avoid cost shifting is that work comp pays better - but he doesn't understand completely that work comp also involves a much heavier paper element and pays later in general too - such that in my experience most physicians say they avoid work comp except those who have specialized in occupational medicine.

There were two immutable points that Dr. Gruber made however that will hugely impact the health care versus workers' compensation interaction as this all plays out over the next few years:

1) The vast majority of American health care consumers pay way too little attention to their health care decisions and availability of choices (indeed, workers' compensation has the lowest barrier of entry to medical care with no co-pay and the cost of the insurance hidden in the pricing of products or services produced by the employer); and

2) Politics can screw everything up regardless of who's right, who's wrong or whatever the issue is.

Wednesday, March 12, 2014

Gresh, Code and the Three Cs

I flew to Boston, MA yesterday for the Workers' Compensation Research Institute's annual conference to learn, of course, about work comp esoterica and meet up with friends, colleagues, and other notables.

Mid-flight I decided to bust open the most recent issue of Motorcyclist Magazine - one of my favorite publications about one of my favorite things to do.

Motorcyclist has nothing to do with workers' compensation but I'm so obsessed with our industry and what we do that for some reason I find something about work comp in nearly everything I read, hear, see or do - you might say I have a case of Industrial Disease (apologies to Mark Knopfler).

Joe Gresh is a columnist for Motorcyclist. I find his satire very entertaining and love his understated prose.

In this issue Gresh writes about going on a tour of the Harley Davidson engine plant, and of course being required to don safety glasses and steel toe boots.

He makes the observation that so much of the plant is automated that it seems nearly deserted: "The most amazing thing to me is how few people are needed to run the plant. The place looks empty. About the only handwork I can identify is installing cylinders and heads. The guys and gals doing that work are blazingly fast; if you blink you miss it."

In an earlier paragraph he says that a human could set bolts faster than the machine doing it but "could he do it without complaining about the coffee?"

Perhaps tongue in cheek, but Gresh made a key observation about the modern economy and workers' compensation: the nature of work today is much different than the nature of work that was done when workers' compensation was first invented.

I flipped the page and read the column by regular Keith Code.

Code is a motorcycle tutor. He teaches people how to go faster more safely and has been doing that for about 30 years. While there are physical skills involved, Code always goes back to the mental aspect of riding - it's what's in your head that is the most important motorcycle skill (or more importantly, makes riding more safe).

His column this issue was about risk, or how different people perceive risk differently.

"Often, the simple threat of danger generates images of dread and fear. Some might see themselves at risk only because another is willing to expose himself to risk, and therefore they themselves could someday yield to that same urge. Still, others see motorcycling as a potentially dangerous trend that might catch on..."

Code writes about the folks who see risk as an educational opportunity - for without acknowledging and confronting risk one can not learn what the limitations are nor the knowledge and skills to manage that risk.

He didn't know it (and may still not - I don't think he reads this blog) but Code was writing about workers' compensation. A lot of people see work comp as a dangerous trend and it can generate dread and fear. Many employers and workers face work comp with dread and fear. Those of us who have made work comp our profession embraced the risk and have learned how to manage it.

An old flight instructor I know counsels his students seeking recurring or advanced training about the three Cs: Confidence, Competency and Currency, in that order.

Confidence to take on an unfamiliar situation, to feel that one has the skills and training to handle the situation at hand or what may come of a flight.

Competency to actually be able to execute; actually having the skills, knowledge and training to take on the task or challenge facing you.

Currency - meeting the legal requirements of flight.

I look at the three Cs and I see where the work comp industry, or more accurately the work injury management system, does not in general have a good feeling of Confidence. Confidence to do "the right thing" as opposed to just going through the motions.

Though improving I don't see wholesale embracing of education to acquire new skills or polish up old ones - i.e. Competency.

I do see a whole lot of Currency though - perhaps too stringently - in everyone's efforts to make sure that they, themselves, don't run afoul of the law.

My friend the flight instructor emphasizes the order of the three Cs because without Confidence and Competence, Currency is irrelevant; just because one is legally current does not mean that one is capable of piloting an aircraft. In this metaphor, just because one complies with the law does not mean one is doing the right thing; there may be Competency lacking which inhibits the Confidence to know what IS the right thing...

Because work comp is so old, so engrained with its own infrastructure of different interests each pursuing separate agendas, we are slow to deal with the new economy. We as a society are risk averse, so we don't learn a whole lot of new things that may help us come up with better ways to manage the risk of work injury (as either professionals in the industry, employers or workers).

All is not lost. There is hope. That's why folks congregate at conferences like WCRI's - opportunity to learn something new, something that may challenge convention so that we have the Confidence to challenge the danger, improve our Competency and then face our Currency.

Folks have taken bold steps towards meeting the challenges of the new economy - Texas non-subscribers with universal care and disability plans; new Oklahoma opt-out participants who are challenging convention; other employer option participants, like California carve-out employers, seeking to improve their outcomes and those of their employees.

Sometimes things work, sometimes they don't. At least there's some who, with good intent, take on the challenge of meeting Currency through different channels to meet the risk challenges with different mind-sets. It can't all work all the time - but at least some are willing to innovate.

That's how all of us learn.

Tuesday, March 11, 2014

Mom's Working and Happy

Generally accepted psychological principal is that working is good for the head and that is why there is such an emphasis on return to work in the workers' compensation context.

Work is a huge part of one's identity.

According to a 2012 study by Abay Asfaw, Ph.D., and Kerry Souza, Ph.D., of the Centers for Disease Control and Prevention, injured workers are 45% more likely to be treated for depression than non-injured workers.

That makes some sense to me, particularly after seeing my father go through his life, essentially "working" all the way up to the end, albeit as a volunteer. Nevertheless, his identity was hugely connected to the Oceanside Police Department where he felt particular swagger in his role as administrator of the department's gang unit database.

I see this in my mother, whom we have relocated to a beautiful memory care facility. Mom has advanced dementia, but she still likes to "work"; her dementia has sharpened her obsessive/compulsive qualities and she can't help but clean up after others. She's put to good use at her new facility and I can tell it brings her joy because she has purpose in life!

And that explains one of her diagnosis of "depression" upon discharge from the last rehabilitation facility - she didn't have anything to there!

Mom getting ready to "work".

So at least in my mind there is a deep connection between work, work injury and mental health.

Some states recognize this and other states don't.

A recent case in Ohio recognizes that it is settled law in that state that a worker's suicide is compensable as long as it is "causally related" to the worker's injury; there has to be "some effect upon the mind" from the injury, because of an injury to the head or because the injury is causing chronic pain, or because it led to the development of a psychological condition, causing the worker to become depressed.

The worker in that case committed suicide 5 days before Christmas, a particularly troubling time for many people regardless of work status. Her estranged husband sought, and obtained, death benefits before it was discovered that he didn't live with her and was charged with committing fraud. The case eventually settled, and what led to the court opinion is that the husband didn't get what he thought he was going to get out of the settlement.

Be that as it may, not all states provide workers' compensation benefits for the survivors of workers who have committed suicide. Illinois, Pennsylvania, Massachusetts and Washington will provide for awards if the worker's suicide had a causal link to the employment or industrial injury, but in other states, suicide is treated as a break in the causal chain.

Earlier this year, the Montana Supreme Court denied a request to decide if, under the 2007 Workers' Compensation Act, a death from suicide is an intentional act and an independent intervening cause that breaks the chain of causation between an industrial injury and the death. The court said it saw no reason to exercise its ability to bring the dispute out of the Workers' Compensation Court, since there was no indication that the normal appeal process would be inadequate for whichever party is aggrieved by the WCC decision.

Florida's workers' compensation statute states compensation is not payable if the injury was "occasioned the willful intention of the employee to injure or kill himself, herself or another."

Alabama's comp scheme contains a similar limitation, as does the Longshore and Harbor Workers' Compensation Act. But the Benefits Review Board has recognized an exception when the suicide attempt results from an "irresistible impulse" caused by a work-related injury.

Courts in New York, Nevada and North Carolina will also award benefits for a suicide if the worker was driven to kill herself because of a mental depression and derangement directly related to and caused by her compensable injury.

The point to all of this is that there is wide disparity in the legal recognition of the importance of work to mental health - perhaps as many reasons as there are people making those claims. It is very difficult for claims administrators to ferret out legitimate claims for mental injury arising out of a work place situation.

I have argued before, and I maintain my position, that workers' compensation is not about return to work. RTW is a tool in the workers' compensation administrator's box, but it is not the end goal of the system. It might be the end goal of a worker, or claims payer, but not of the system itself.

And my guess is that there are as many different view points about the efficacy of providing mental health benefits as a part of any workers' compensation treatment scheme. Clearly this is exemplified by the different state's treatment of suicide arising out of a work injury.

I can say one thing after watching my parents go through their senior years - work IS important. How one defines "work" depends upon the circumstances, the individuals involved, the production required.

Whether one is paid in some remunerative fashion or simply gains personal satisfaction from doing a job, most people enjoy feeling productive, which is why there is such a high depression rate among those who get hurt on the job.

I'm keeping Mom working for as long as she wants...

Monday, March 10, 2014

TRIA and Party Out of Bounds

Insurance is the lubricant of our financial engine. It is what keeps the gears of industry turning and the hum of the economy constant.

Without insurance, the business world is much less inclined to take on risk, and without an appetite for risk innovation stifles. When innovation stops, economic opportunity falters, which means people run out of things to build, people to service, and jobs disappear.

I know that's a simplistic statement of the role insurance plays in our modern economy, but when distilled to the basics, it is reasonably accurate.

Which is why I don't understand why self-described conservative members of Congress would have any issue reauthorizing the Terrorism Risk Insurance Act which set to expire at year's end.

Congress enacted TRIA in 2002, in response to complaints that terrorism insurance was either becoming unavailable, or when offered, was extremely costly in the wake of oh nine eleven. The law provides a government reinsurance backstop in the case of a terrorist attack by providing mechanisms for avoiding an immediate drawdown of capital for insured losses or possibly covering the most extreme losses. Extended first in 2005 and again in 2007, it is up again for renewal.

In TRIA's current form, a single terrorist act must cause $5 million in damages to be certified for TRIA coverage. Then the aggregate insured loss from certified acts of terrorism must be $100 million in a year for the government to get involved. After that an insurer must pay a deductible of 20% of its annual premiums for the government coverage to begin.

Once those thresholds are passed, the government covers 85% of insured losses from a terrorist attack. If insured losses to terrorism do not exceed $27.5 billion, the Secretary of the Treasury is required to recoup 133% of the government coverage by 2017 through surcharges on property/casualty policies. But if losses exceed $27.5 billion, the secretary has the discretion to recoup surcharges or not.

There are three potential TRIA extension bills: HR 508, is considered the lead TRIA reauthorization bill in Congress with 84 co-sponsors. Rep. Michael Grimm, D-New York, introduced the measure on Feb. 5.

Two other House reauthorization bills were filed last May - HR 2146, authored by Rep. Michael Capuano, D-Mass., and HR 1945, by Rep. Bennie Thompson, D-Miss. They lack the backing of Grimm's bill, according to industry observers.
HR 508 is now in the Subcommittee on Insurance, which is under the House Financial Services Committee.

There are currently no Senate TRIA reauthorization bills, but solid rumor has it that Sens. Tim Johnson, (D-S.D.), who chairs the committee and Mike Crapo, (R-Idaho), ranking member of the committee, intend to propose a bi-partisan TRIA reauthorization bill.

The holdup in passing TRIA, according to observers, is that the extreme conservative faction of the Republican party (the ones that have an affinity for tea) see it as a government handout, so even Republicans that are in favor of the bill - those from states with large employers and insurance company backing - want to wait until after November elections so they don't alienate potential votes.

It seems that the overall sentiment, though, is to get an extension passed.

Failure to provide the insurance community with some level of security in the face of a huge catastrophic loss ultimately will inhibit the ability of the American economy to grow and provide the jobs that are needed for the government to collect taxes and provide the services necessary to keep the populace content.

Indeed, last week the Rand Corp. released a study cited widely by insurers that concluded that renewing TRIA would contribute to improved national security.

And the reason is obvious - the whole point of terrorism is to strike fear, and the best way to strike fear is to disrupt lives and infiltrate the financial system by setting up events that cause dislocation of resources.

If TRIA is in place then there is less incentive to commit terrorism because the net effect is minimal disruption.

Seems to me that brewing tea took the Party Out Of Bounds:

"People get sick, they play the wrong games.
Ya know, it can ruin your name!"

Friday, March 7, 2014

I Would Like To Say No Problem

At first blush you might think my little rant here has nothing to do with workers' compensation, but the residue of corporate lexicon tends to infiltrate culture, ultimately affecting our behavior towards others and how we do our jobs.

The reality is that workers' compensation is a people business in which there is a lot of communication. How we communicate directly affects the quality of service that is provided, and directly affects the perception of quality.

There are a couple of phrases in general modern American dialogue that absolutely drive me crazy.

One of them is when folks say or write that they "would like to" do this or that.

As in, "I would like to thank you for...", or "I would like to say...".

Listen, if you would like to, then just do it! Why the apologetic tone, the request for permission, the soft, fuzzy, misdirection of action?

The phrase, "I would like," intones a lack of fortitude. It tells the listener or reader that the person speaking or writing doesn't have any confidence in what they are about to say or write. It lacks authority.

Worse, it lacks genuineness - it tells the recipient that there is doubt in the communication.

Do you say to your spouse or significant other, "I would like to love you"? No! You say, "I love you."

Saying "I would like to" is negative. It implies there's something wrong, that "but if" then it would be okay. Prefacing your phrase with "I would like" communicates insincerity.

If you "would like" to do or say something, then then DO it or SAY it!

If you want something, then you only need four letters: W A N T.

If you are in the process of communicating, then there is no need for permission because you are already in the act, so you don't say "I would like to say." Just say it!

Think about how this language affects your day to day job. The mindset of asking permission delays action, defers responsibility and slows down processes. It communicates inaction or worse, apathy.

Listen to yourself carefully throughout the day as you communicate to others - try to catch yourself whenever you reach for the "I would like to" phrase, and then restate whatever you're going to say into a positive, direct communication of action: "I want," "I am," "I will."

You will be amazed at not only the authority your communication attains, but how much more ACTION you can get with direct, positive communication.

Another phrase that has crept into our culture that absolutely drives me nuts is the phrase, "no problem," in response to a "thank you."


First, you just said "No." I don't like "no." I want something, perhaps I got it, perhaps I didn't, but the phrase "no problem" is a negative communication - you just told me right off the bat, "no."

Don't tell me "no"! I praise you, give you thanks for your efforts, and then you tell me "no"?

I'm not going to return to you in the future unless it's absolutely necessary because apparently you are a negative person and you tell me "no" all of the time...

Second, apparently whatever you did for me in your quest for earning a living just put you out of the way because there must have been some sort of problem.

If it wasn't a problem then why are you creating one now?

It's not a problem, it's a job. If I thank you for doing your job I have communicated that I appreciate the effort. I am telling you that it is worthwhile for me to interact with you at least on a business level.

And then you reply that you were put out of the way for doing something that you are paid to do?

Excuse me if I interfered with your business day! Pardon my intrusion into your busy life. Sorry you have to earn a living and it's not pleasurable.


When someone says thank you, your response should be, "It was my pleasure."

Because it IS your pleasure. Without me purchasing your goods or services you would not have a job - then you really do have a problem!

People throughout the business day say "no problem" without any thought - that's how deeply ingrained into our culture that phrase has crept - and that's a shame because common language phrases shape our interactions and affect our reactions.

Try this experiment today - whenever someone says "thank you" respond with a smile and say, "it was my pleasure."

I can guarantee that you will experience an immediate positive reaction!

At WorkCompCentral headquarters we have banned the phrase, "no problem" in response to "thank you." And we deal with it just like a parent does with unacceptable language in the home - we have a quarter jar and when someone gets caught uttering the banned phrase they dispense a quarter into the jar.

There aren't too many quarters being put in that jar any longer.

And if YOU ever receive the "no problem" response from a WorkCompCentral employee or representative after saying "thank you," I want to know about it, because there's going to be a disgorgement of pocket change.

So go forth into your business day. Be assertive and take control - if you WOULD then just DO. And make it YOUR PLEASURE to provide the services for which you are being paid.