Thursday, April 30, 2015

Poisoned Kool-Aid

Former president George W. Bush infamously said in 2005, “See, in my line of work you got to keep repeating things over and over and over again for the truth to sink in, to kind of catapult the propaganda.”

Opt-out supporters and proponents repeat over and over again that opt-out is better for employees.

They forgot to tell that to Rachel Jenkins.

Jenkins, a 32-year-old single mother of four, was injured while working a double shift at a disabled care center in northwest Oklahoma City owned by ResCare, Inc., on March 31, 2015.

ResCase is the nation’s largest privately-owned home health care agency.

Jenkins was injured attempting to break up an assault of her disabled client by another patient. The incident was witnessed by Jenkins' supervisor.

After her shift Jenkins went to the emergency room where she was administered medication and sent home to rest. Her employer sent her to a company doctor the next day. He provided medication and ordered physical therapy.

ResCare's opt-out contract with its employees requires claimants call a designated toll free number to report accidents within 24 hours, so because Jenkins did not call until the 27th hour past the incident her claim was denied.

Three hours late on a phone call and Jenkins is on her own.

Bob Burke is her attorney and filed a case yesterday in the District Court of Southern Oklahoma seeking declaratory judgment, based on the allegations of the Jenkins case above, that the state insurance commissioner has obviated his responsibilities by approving ResCare's opt-out plan, and others, that don't give workers at least a one-year statute of limitations to report their injury, as required by Oklahoma law.

“Every opt-out plan I have seen so far has a 24-hour requirement that bars benefits if notice is not given,” Burke wrote in an op-ed published Monday in the Journal-Record newspaper. “Even though state law requires opt-out plans to have the same one-year statute of limitations as regular workers’ comp, the insurance commissioner continues to approve the plans and the Legislature, in House Bill 2205, is trying to remove the plans from public inspection under the Open Records Act.”

Recall that on Tuesday the Oklahoma Supreme Court denied original jurisdiction in Burke's other case challenging the constitutionality of opt-out and the entire state reform passed a couple years ago.

This case has more substance because it demonstrates the true intent of at least THIS opt-out participant: to stick it to the worker.

The employer cannot claim lack of notice - the injury was witnessed by her supervisor, and the Jenkins was sent by the company to their doctor!

Burke says the insurance commissioner approves the 24 hour limitation because it is a notice requirement only. Apparently that translation got lost in practice because ResCare and its administrators clearly are using the provision as a statute of limitations.

I'm sure there's another side to the story. Now, opt-out proponents will have to spin that other side in order to preserve credibility. In the meantime though, the wheel in the repetitive opt-out PR machine has a broken cog.

Opt-out had me semi-convinced that it was a valid alternative to traditional workers' compensation with its promises of less bureaucracy, better injured worker care, greater efficiency, competition and improved outcomes.

They kept repeating it over and over and over again...

The propaganda almost got catapulted and I nearly drank the Kool-Aid.

Not now. It smells poisoned.

Wednesday, April 29, 2015

What Matters

It's a tale of contrasts in this morning's WorkCompCentral News.

There's joy and elation within the "opt-out" crowd that the Oklahoma Supreme Court denied taking on original jurisdiction in the constitutional challenge to that state's recent reform law, and in particular the option employers have to provide alternatives to The System.

Those challenging the law are more circumspect, saying that the court's decision at this time wasn't not expected and that they'll be back when the case is "ripe" for review.

Plaintiffs’ attorney Bob Burke says he understands that the court didn't think the case was ready for review yet but that he was trying to fast-track it, “Because it is a question that everybody needs answered.”

Opt-out proponent and president of non-subscription specialty broker PartnerSource, Bill Minick, told WorkCompCentral that "Oklahoma’s highest court has given the green light for a truly competitive marketplace for workers’ compensation.” Minick and proponents argue that opt-out and non-subscription actually provide better protection for injured workers than state work comp systems.

That point is highly debated by the opposition, largely on the grounds that in dispute resolution the cards are stacked against workers, and that the industry isn't very transparent, if at all, with work injury and recovery data - even resisting state efforts to expand reporting and data requirements.

While the debate about non-subscription continues in Oklahoma, and is off the table for this year in Tennessee, tribal compensation pacts tied to gambling continue to be controversial starting with New Mexico's recent extension of Indian Tribe gaming.

The challenge is comparing tribal compensation to traditional state based systems because of extreme variations and, again, lack of complete transparency.

As sovereign nations, tribes can enact their own laws and employee benefits as they choose, and if they have a complete infrastructure in place, there can even be a number of tribal courts and adjudicators to resolve workers’ compensation disputes. States that permit tribal gambling tie work comp protections into those compacts, but tribes, like opt-out employers, have great latitude in defining their systems, including dispute resolution processes.

It comes down to culture.

Dave Lundgren, a Washington-based attorney who specializes in tribal law, told WorkCompCentral, “They know their people and they know their customs, where non-Indian administrative structures do not.”

For example, for some tribes creating their own workers’ compensation ordinance means allowing them to add medical treatments from tribal healers or medicine men to their list of approved vendors, something most states don’t allow.

But the difference lies in sophistication of systems, or taken another way, system complexity that has creeped into workers' compensation statutes over the past 100 years.

“Administrative entities have had a century in developing workers’ comp, whereas tribes are in their infancy,” said Lundgren. “They’re trying to eliminate what they view as too much red tape and onerous over-regulation and simplify it so that they can streamline.”

That sounds like an argument out of the non-subscription playbook: employer control. Proponents rally around the claim that opt-out systems are simpler, handle claims faster, involve fewer lawyers and are more expedient as a result.

Injured worker advocates say all that these plans do is stack the cards against them.

One of the key arguments made by the plaintiffs to the Oklahoma Supreme Court was that the dispute resolution process provided in alternative plans limit judicial or administrative review of claim denials, requiring an appeal to a committee of three members who were not involved in the original benefit determination, and who can be appointed by the employers.

That is an issue with tribal gaming compacts as well.

A few years ago a California appellate court ruled in Middletown Rancheria v. Workers' Compensation Appeals Board, that the Workers' Compensation Appeals Board lacks jurisdiction over federally recognized American Indian tribes for the purposes of enforcing workers' compensation laws.

In the Middletown case, workers of the casino that disagreed with the way their workers’ compensation claim was handled could bring a dispute only before the tribal council, which was only comprised of members of direct lineage of descendants of Middletown Rancheria, with no specialized council for workers’ compensation.

The truth, I suspect, is somewhere in between. But we don't really know, because there isn't any systematic, objective survey of all of these different systems.

Nor is there any long term study on the impact such disparate systems have on injured workers, employers or the communities affected.

What we do know is that there is a publicly growing groundswell of criticism about standard workers' compensation from employers, injured workers, providers and many others. Most of that criticism stems from one simple failure: taking care of the injured worker timely, efficiently, fairly.

To win over critics, any alternative system, including opt-out and tribal compact options, is going to have to demonstrate with real comparison data, the superiority of these plans to standard issue work comp systems in terms of the one constituency that doesn't have much say in the matter - those subjected to the systems.

Tuesday, April 28, 2015

Be Ashamed

A workers' compensation employer's consultant emailed me the other day with this scenario:

He starts by stating he had read one of the best P & S reports ever produced by a doctor. It is perfect in almost every way, he says.

The report gave a 13% Whole Body Impairment with a 70% apportionment for pre-existing conditions, or 3.9% PD. 

The claim has been open for 100 weeks and it took 35 weeks to get him surgery on his right wrist. The report clearly states the IW cannot lift or grasp anything with his right hand.

The consultant states that he called the clinic called at 8:29 am Pacific Time and got a recording that said, "Our clinic hours are from 8:00 am to 5:00 pm week days. You have called at a time when we are not open. Please call back during our normal operating hours."

He states that he has been calling the adjuster for over a month with no response. The injured worker was offered $15,000; the counter was $30,000, and no less.

The claim is now at $125,000 incurred and $56,000 in reserves. The claim is now 65 weeks post surgery. 

The employer's X-MOD got hit with 23 percentage points.

NOW let's examine what's wrong with workers' compensation:

1) 35 weeks - two thirds of a year, or eight months - to get authorization for treatment; are you kidding me?
2) 4 percent PD for a largely useless dominant right hand? That's insulting.
3) No communication from the physician - who's he working for, and why?
4) No communication from the claims adjuster - which part of claims adjusting 101 did that adjuster miss?
5) $125,000 incurred losses on the books, and that's because it took 35 weeks to authorize appropriate treatment, and another 65 weeks of fooling around squabbling about $15,000. Is this the insurance company built in profit plan?
6) $56,000 in reserves? All treatment is done, TTD is no longer available, and the injured worker wants $26,000 less that what is held. I know I'm only a lawyer, but even I can do that math...

Listen folks - this is complete claims shenanigans and demonstrates how we are our own worst enemy.

We don't need reform. We don't need law changes. We don't need to investigate fraud, or fix fee schedules, or any of the other malarky that is bandied around in the name of "fixing" the system.

Want to "fix" the system? Just authorize the treatment that a bona fide Medical Doctor says is reasonable and necessary, and execute the resolution of the claim immediately. Quit messing around with peanut settlement issues and pay the PD to close the claim.

The perpetrators of this mess should be publicly ridiculed and ultimately fired for perpetuating bad claims handling that generates poor results across the board, including the carrier that will capitalize on an X-Mod increase of 25 points.

This isn't rocket science. Workers' compensation, for all its complexities, is pretty darn simple.

Take care of the claim, and the claim takes care of itself.

And, by the way, it has always been like this, at least for the 30 or so years I've been in this industry.

We don't need to fix anything other than our own claims handling practices, which includes how physicians behave, how attorneys behave, how claims departments behave.

Good people produce good results in this industry which is why I started the Comp Laude Awards and Gala.

But we might need to start another event to recognize the absolute worst that this industry produces.

We all should be ashamed.

Monday, April 27, 2015

Don't Get Comfortable

This weekend I witnessed the graduation of my son from The California Maritime Academy.

All the pageantry that one would expect from a collegiate commencement ceremony occurred: speeches from presidents, provosts, admirals, and politicians; band music; cheering; tears; and finally the hat toss.

Gabriel Mikulich, who was graduating with a Master of Science Transportation, wasn't the best speaker, but he was the most poignant, when he wrapped up his "seven lessons."

He concluded, admittedly nervous before the audience, "be comfortable being uncomfortable."

The context, of course, was in the course of learning. Being uncomfortable is simply acknowledging challenge, persisting against the odds, knowing that the road is bumpier than we might like.

And accepting that if there is to be satisfaction, the result will be difficult to achieve.

We can talk about legal changes to workers' compensation laws and who is sponsoring which bill to get whatever perceived advantage they might think will occur.

We can denigrate those who criticize the industry and its problems, challenge the "statistics," and poo-poo the anecdotes of bad claims.

We can complain that funding to fight fraud is insufficient, or that too many employers get away with cheating on their payrolls, or that this insurance company or that claims administrator is corruptly passing the trash.

We can point the finger at the lawyers in the system for creating more disability than warranted, or at the doctors for performing unnecessary and dangerous procedures.

We can blame brokers, politicians, regulators, you and me.

There's plenty of blame to go around for everyone. We're all in this together.

Workers' compensation is not, and should not be, a comfortable industry. We deal with injury, death, disability, touchy emotions, anger, denial, frustration - every single day.

And yet the systems persist. People get hurt at work (fortunately much less so than ever before) and some people die. We're a part of the process.

Workers' compensation functions when the rest of the employment system ceases; at that point in time when the employer is exposed to the risk of financing a bad situation, and when the employee is exposed to the risk of a life style interruption.

Forget about AB this, or SB that. Forget about those special interests that are more concerned with exacting some leverage from the system for their own personal gain.

Human nature disdains uncomfortable situations. When an injured worker complains about unfair treatment or injustice in the system, it's easy to shrug it off as an angry rant. When an employer challenges the bill, it's easy to dismiss as an uneducated gripe.

Workers' compensation is a team sport. Everyone has a place, a job and a function. The primary purpose, when we peel away all of the layers of complexity that have been built into the systems, is simply to take care of the injured worker.

There is no other true focus - take care of the injured worker and everything else takes care of itself.

This doesn't mean that anything and everything that an injured worker may desire should be granted. We function within a system that has legal limitations, definitions and restrictions. Those are there for a reason: like any relationship there has to be boundaries otherwise all hell breaks loose, people run amok, others get hurt...

But when the good people of this industry work together, and "do the right thing," positive outcomes occur.

And everyone gets rewarded; financially, emotionally, spiritually, physically.

This isn't without challenge every single day. Doing the right thing may mean providing more physical therapy than the law says. It may mean authorizing psychological treatment even though there is no claim for it. You may need to pay a physician more than the schedule says to get the best care possible.

You might have to sit everyone (injured workers, employers, brokers, carriers, adjusters, providers, etc.) down at the same table, break some bread, and work together to do what needs to be done: take care of the injured worker (and don't believe for a moment that the injured worker doesn't have a role in this too).

I believe that, by far and away, the vast majority of people that have chosen workers' compensation as a career want to do good things and help people. But everyone needs to work together in uncomfortable situations. Being rote, following the guides, walking the same path - all too comfortably complacent.

Complacency is what destroys and kills.

That claim isn't going to get better by itself.

The system itself isn't bad. Workers' compensation isn't inherently flawed. The critics have complaints, but doesn't everyone about something?

Nope, workers' compensation isn't perfect, and never will be.

But it is still better than the alternative. Just ask the people of West, Texas. Just ask the families left over from the Rana Building fire in Bangladesh.

Be uncomfortable. Do something that isn't in the playbook, isn't accepted procedure, that may raise the ire of your supervisor - make it the "right thing."

By its very nature, mitigation and management of risk is about staying comfortable. That is itself, however, a risky position.

Be comfortable being uncomfortable. That's how life works and how workers' compensation is.

Friday, April 24, 2015

This Ain't No Circus

The Wall Street Journal yesterday ran a story on the plight of Cirque de Soleil performers following the death of Sarah Guillot-Guyard, who was killed while performing for the show “Kà”, said to be the most challenging of all Cirque's acts.

I won't go into how Ms. Guillot-Guyard, who was 31 with 2 small children, died in her performance - suffice to say it was in front of an audience, an unfortunate reminder of the dangers that Cirque acrobats face.

Mr. Panet-Raymond, Cirque’s safety director, told the Journal that Cirque's performers are covered by workers' compensation. In contrast, apparently most circus companies treat performers as independent contractors (called "freelance workers" in the story) with no coverage.

Cirque acts are exhilarating and exciting, combining music, dance, acrobatics and often "extreme sports." I've seen only one - "Love" which is a Beatles themed show - and it was one of the most entertaining live performances I've ever seen.

The company is a mainstay in Las Vegas with several acts ongoing simultaneously, but has shows across the nation.

The Journal reviewed the company's Florida workers' compensation records to get a "snapshot of the toll on performers."

The paper reported that of 61 Cirque acrobats listed in the cast for a 2004 video of La Nouba, a resident Cirque show in Orlando, Fla., 42 were injured seriously enough between 1999 and 2014 to require more than seven lost work days for a single injury. Of those 42, 15 performers had five or more of these time lost injuries, and nine later settled disputes with Cirque and its carrier, Liberty Mutual.

Cirque performers are more like athletes than actors, but even athletes don't face the day in, day out punishment that these acrobats endure.

“Stuntmen in Hollywood may do a fall like that eight or nine times a year, but our guy does it 465 times,” Calum Pearson, a technical director for “Kà” and Cirque’s vice president of resident shows tells the Journal.

And while the company purportedly has excellent safety measures, sometimes things just go wrong.

Just the day before the Journal reported on mysterious oil worker deaths. It turns out, over the years, that some inspectors out in the oil fields would collapse and die atop storage tanks.

Medical examiners generally attributed the workers’ deaths primarily or entirely to natural causes, often heart failure, the Journal reported. There isn't any mention of workers' compensation in the story, but if medical examiners were finding "natural causes" for these deaths, I wonder how many were actually compensated through the comp system?

According to the story, though, safety and health officials are now finding industrial causation to these oil worker deaths - it turns out that when the inspection hatch is opened an invisible hydrocarbon cloud is released that quickly leads to asphyxiation or heart failure. The question raised by the article is why the connection to industrial causation wasn't caught earlier so that appropriate safety protocol could be reviewed and implemented.

My curiosity lies more towards whether the earlier reports of "natural causes" led to denials of compensation claims...

The California Department of Industrial Relations released statistics yesterday showing an increase in worker deaths in the state.

A total of 396 people died on the job in 2013, up from 375 in 2012, and the largest increase in deaths -- almost 48% since 2012 -- among workers between 35 and 44 years old, according to data from the Census of Fatal Occupational Injuries.

Latinos are overrepresented in the survey - Latino deaths increased from 37% to 49% as a percentage of total worker deaths between 2012 and 2013. The Department attributes this increase to the economic recovery and broadening of the agricultural and manufacturing bases.

But after seeing these Journal stories, I'm left wondering how many other worker deaths aren't attributed to occupational cause, and thus left uncompensated.

With respect to the Cirque story, the Journal reports that OSHA, after investigating Ms. Guillot-Guyard’s death, issued three serious citations to Cirque, saying among other things that the performer wasn’t properly trained, and fined the company $21,000. Cirque protested, and the fine was reduced to $7,000.

The paper also said that Nevada court records show Cirque settled a "legal complaint," paying Ms. Guillot-Guyard’s children, now 7 and 10 years old, a total of $1 million.

Certainly, though, for Cirque, workers' compensation is a bargain. 

Maybe not so much for its workers.

Thursday, April 23, 2015

Drugs, Formularies, Concepts

Will California become the fifth state in the nation to adopt a prescription drug formulary for workers’ compensation?

By all accounts, it certainly seems so.

There is hardly ever a proposed legal change to California's workers' compensation system that doesn't draw out divisive, contentious battle ground lines between various interest groups, but the adoption of a drug formulary has parties that are normally fighting each other embracing the concept.

Assembly Bill 1124 (Perea, D-Fresno) drew support from representatives of employers, insurers and the medical cost containment industry during an Assembly Insurance Committee hearing yesterday. Representatives of health care providers, labor and applicants’ attorneys all expressed conceptual support but called for amendments.

Texas, Washington, Oklahoma and Ohio have already adopted formularies. The purposes are two-fold: reduce the cost of prescriptions, and expedite drug access.

Ken Eichler, a spokesman for Work Loss Data Institute, told the committee according to WorkCompCentral's account this morning, “It basically creates two buckets: a bucket of drugs which could be pre-approved for expedited authorization and a second bucket, not a bucket that denies the care but requires further investigation and specific authorization rather than pre-authorization based upon documentation of medical necessity for that specific individual.”

Besides reducing costs and increasing access, a formulary should, theoretically, also reduce the need for utilization review, independent medical review and opioid addiction. Drugs are the single largest review component in UR and IMR according to studies by the California Workers' Compensation Institute, and opioids, which would be outside the formulary, should decrease significantly.

Denying a person his opioids, though, likely will just send him to the street for substitutes. As Michael Gavin, president of Prium, recently noted in his blog, when Purdue Pharma changed the formula for OxyContin so that it could not be so easily altered for "recreational use" the incidence of heroin use rose dramatically.

Gavin says that while overall opioid prescriptions appeared to have declined 19% from projected volume, heroin overdoses increased by 23%!

The parent company to Prium, Ameritox, recently released a study, Gavin noted, that concludes:
  • 4 out of 5 heroin users abused prescription drugs first
  • 56% of the time, in heroin positive samples, the opioid prescribed to the patient was not found
  • 66% of heroin users abused both heroin and prescription painkillers in the last month
Mark Pew, Prium's senior vice president, said that the "true success from a drug formulary would be a decrease in disability, a decrease in addiction and dependence, an increase in return to work and in increase in the use of less dangerous drugs.”

Agreed - but these goals are in terms that what the workers' compensation industry can measure against it's own information. We may fix OUR problem, but not THE problem.

Don't get me wrong. I think a drug formulary is a positive supply control method that should make it easier for injured workers to get the drugs that are included in the formulary, and that likewise should reduce both direct and indirect costs.

Thinking that the health of those who are pre-disposed towards abuse will improve overall, however, is wishful thinking - that burden and cost just gets shifted onto the public sector in some other manner.

Wednesday, April 22, 2015

Enforce What Exists

The ink isn't yet dry, but a bill introduced into the California legislature would unwind a portion of three year old SB 863 to exempt certain medical treatment requests from utilization review, and thus, independent medical review.

Senate Bill 563, authored by Sen. Richard Pan, D-Sacramento, and sponsored by the California Medical Association, would establish that utilization review is prohibited for:
  • Treatments proposed solely to maintain an injured worker’s current health care regimen due to a preexisting injury.
  • Treatment requests already approved on the grounds of medical necessity.
  • Unaltered treatment requests when there has been no change in the injured worker’s condition necessitating a corresponding change in care.

According to those interviewed by WorkCompCentral for the story, the bill arose out of a survey by CMA of its members who overwhelmingly expressed frustration with UR after SB 863.

Bill language needs clarification, something that hasn't gone unnoticed by CMA.

Molly Weedn, a CMA spokesperson, told WorkCompCentral the word “preexisting” doesn’t refer to nonindustrial injuries and that the association will work with the Senate Labor and Industrial Relations Committee, where the bill was introduced, to amend the language.

The California Chamber of Commerce has labeled SB 563 a “job killer,” their tired old phrase for a proposed law that they vehemently oppose, even though they have no data or evidence that it would actually "kill jobs." It's such a worn out, over-sensational, cliche that any time the Chamber attaches that label to proposed legislation my reaction is the opposite of what they intend.

But, opponents to SB 563 have a point - this legislation could likely result in returning some of the medical treatment decision process back to the courts.

This is yet again part of the relentless "reform" cycle that grips California (and other state) workers' compensation. The ebb and flow of interests modifying the law to achieve their special desires ultimately complicates the system even more, resulting in even less efficiency and more harm to injured workers and their employers.

The real issue is enforcement.

If medical treatment that was promised as part of a settlement agreement, or ordered by an Award, is now being subject to UR post SB 863, then the Division of Workers' Compensation and/or Department of Insurance needs to step in and exact some discipline.

And not namby-pamby administrative penalty discipline either, but full scale business practices findings as warranted, where the penalty is maximum (but in my mind still a paltry $500,000 - perhaps enough to get some attention but not enough to affect the profit margin, where it would truly be felt, and consequently effective).

There are no more effective judicial sanctions available. Bad faith is trumped by exclusive remedy. The only party left that can do anything about a bad situation is the government.

We don't need more laws. We need stronger, much stronger, enforcement of the laws that exist.

Tuesday, April 21, 2015

It Wasn't For Donuts

If the mission had been to procure a donut the result may have been different.

The Appellate Court of Connecticut said in a decision released Monday that a police officer's injuries incurred from a motor vehicle accident while dropping his children off at day care before the start of his shift were compensible.

Connecticut recognizes the "portal-to-portal" rule: certain workers, principally police officers and firefighters, are statutorily deemed to be within the "course of employment" from the moment they leave home, until they return as part of a public policy recognizing that some workers are "always on duty" when they are moving among members of the public, and thus are "always exposed to the dangers of their profession."

Officer Steve McMorris had been a patrol officer for the New Haven Police Department. He lived in Hamden, a suburb of New Haven, with his girlfriend, Anais Rivera. Both worked nights, from 11 p.m. until 7 a.m.

McMorris had two children from a previous relationship, Devin and Jaiden. On nights when both he and Rivera worked, McMorris would take the children to stay overnight at a day care center on Chapel Street in New Haven.

On the evening of June 25, 2011, McMorris left his home with his children in his private vehicle, while dressed in his fully equipped service uniform. He would later testify that his plan was to drop his children off at day care, then continue on to the police station to report for duty.

He followed the normal route he took to work, and before he reached the turn where he could have had to deviate from his normal route, he was involved in an accident.

Both McMorris and Jaiden suffered injuries.

The workers' compensation commissioner for New Haven found McMorris' injuries to be compensable, and a Review Board panel upheld this decision last November.

The Police Department then sought judicial review, arguing McMorris' accident should not be compensable pursuant to General Statutes Section 31-275(1)(E)(ii).

Section 31-275(1)(E)(ii) carves out an exception to the coverage afforded to portal-to-portal workers. It provides that a personal injury will not be deemed to arise out of the employment if the injury is sustained at the portal-to-portal worker's home, and while the employee is engaged in "a preliminary act or acts in preparation for work."

The Department argued that McMorris was engaged in a "preliminary act" of dropping his children off, in preparation for coming to work.

The Appellate Court reasoned that Section 31-275(1)(E)(ii) was inapplicable to McMorris, since his accident had not happened while he was at home.

"Section 31-275(1)(E) is two-pronged and injuries are not compensable only if both prongs of the statute are met," the court said. Since the department conceded that McMorris' accident happened after he had left his home and was on his way to work, the court said this concession was fatal to its argument.

The court said it couldn't consider McMorris' plan to stop at the day care center a "significant deviation from his work route" either. The Appellate Court reasoned that McMorris' act of driving his kids to day care was "inconsequential relative to his job duties."

Those interviewed by WorkCompCentral reporter Sherri Okamoto commented that while they thought it was unusual for the Department to appeal since the law is fairly well settled in Connecticut, the decision clarifies that doing two things at once is not necessarily a deviation, but that "you have to really take yourself out of the course of action that benefits the employer" to lose the protection of the comp system.

Those interviewed also commented that these facts might not work in neighboring New Jersey.

Had McMorris "been in New Jersey, picking up some nice New Jersey bagels," then the "substantial deviation" argument might have worked, said Lawrence Morizio of Cousins, Desrosiers & Morizio, a claimants' attorney and chairman of the Connecticut Bar Association's Workers' Compensation Section.

There was no commentary about a donut deviation exception though.

The case is McMorris v. City of New Haven Police Department.

Monday, April 20, 2015

Carve It Out

This has been an exciting year in workers' compensation.

We've seen a lot of industry press about Oklahoma and the progress of its recent reforms: not just opt-out but the state's transition to a fully administrative system along with adjustments to its various schedules and benefits.

Tennessee of course was in the news with a move towards their version of opt-out. That is off the table for the year, but it will be back; it took several years for Oklahoma opt-out to become law and the Tennessee attempt made it further than Oklahoma did in the first attempt.

Many public articles have chastised workers' compensation's failures, and the Nevada Journal this past week jumped into the general media fray as well with a story critical of attempts to put more restrictions on that state's system (calling the present system "Kafkaesque").

Much of the attention is about dispute resolution in work comp. It seems that everything ends up in a dispute if you read the press, and ending up in litigation is what workers' compensation was supposed to avoid: the delays, the unpredictability, the expense and the damage to relationships.

We forget, amid all of these new "options" that are being bandied about, that there have been in existence now for some 20 years alternative dispute resolution systems that cover a wide swath of employers and their employees - known as "carve-outs."

California's carve-out is simply an alternative dispute resolution system ("ADR"). Born in 2003, Senate Bill 228 created carve-outs for nearly any unionized industry. Lightly adopted at first, there are now many employers and unions that have incorporated this ADR into their systems.

For instance, in 2013, the Division of Workers’ Compensation approved a carve-out agreement between Albertson’s/Vons and seven local grocery worker unions in Southern California. The agreement covered about 20,000 employees.

And the construction industry seems to be very accepting of carve-outs.

According to a Division of Workers' Compensation study, carve outs in the construction industry grew from 13 in 2004, to 24 by the first quarter of 2011. During that quarter, 38,968 full-time equivalent positions were covered through carve-outs.

The question is whether carve-outs work.

Obviously, for employers, carve-outs have big appeal, otherwise their adoption rate would not be so robust in spite of increased up front costs for set up, union negotiations and DWC approval.

What's less obvious is whether carve-outs are better for injured workers. In one respect, if less litigation means faster claims resolution, and ergo, faster return to work times with less disability, then that should be a positive.

And I don't think unions would accent to carve-out programs if leaders thought the programs didn't provide their membership with positive benefits.

But we don't have direct comparison data to the standard system, nor do we have direct comparison data as between carve-out programs themselves.

Elite Force Management, a Westlake Village, CA company that creates carve-out programs, released a white paper last week that tries to answer some of these questions. The company says, for instance, that the average cost of a claim in a carve-out program during the eight-year study period was $13,940.

That's significantly lower than the average cost of a standard litigated claim.

But, according to Elite, the Workers’ Compensation Insurance Rating Bureau and DWC don’t collect the same information for carve-outs that they do for other types of claims, which prevents direct comparison.

That seems to me a study well worth initiating so that consumers, i.e. Business and Labor, can make informed choices before the check out line.

Friday, April 17, 2015

No Religion For True Religion

An industry friend reminded me the other day that exclusive remedy, and indeed all of workers' compensation, came about, not to protect the injured worker, but to protect the employers. 

And that is absolutely true.

When workers' compensation was first being bandied about in the political circles of the United States, labor unions wanted nothing to do with it. They did not want to relinquish big damages for possible big injuries. In the Industrial Age, when work comp came about, the prospect of some seriously debilitating injury was more prevalent.

People didn't stop working unless they absolutely could not work, and if they absolutely could not work then it really was serious.

Remember back then there was no health or medical insurance. There were no alternative social safety systems. If a worker lost a leg he lost his job, and his life, and so did his family.

But when a worker did succeed against an employer, that employer went out of business.

This would have disastrous repercussions, not only for employer which would go out of business and the owners/shareholders would lose their investment, but the injured workers' family would still end up on the streets, desperate and destitute. Hundreds of other workers would lose their jobs, government would lose tax revenue - the implications were exponential.

Still there are business owners that don't want to participate in workers' compensation, that don't believe in social order, or the Rule of Law (and I'm not talking about Texas where participation is voluntary because that IS the law there, and consequently businesses, their employees and communities - just look at West, Texas - are subject to the aforementioned risks to business and community).

California Insurance Commissioner David Jones announced yesterday that the Department of Insurance in conjunction with the Los Angeles District Attorney's office was pursuing charges against subcontractors for True Religion Jeans who proved, once again, that it is employer fraud that is responsible for most fraudulent activity.

Sung Hyun Kim, 57, former chief executive officer of Meriko Inc., and her sister Caroline Choi, 59, CEO of SF Apparel Inc., were arrested Wednesday and charged with 18 felony counts of workers' compensation insurance fraud and tax evasion. Their certified public accountant, Jae Kim, 71, was also arrested Wednesday and is charged with 18 felonies.

The three are accused of conspiring since 2007 to underreporting $78.5 million in payroll to State Compensation Insurance Fund, Tower Insurance, Star Insurance Co., Granite State Insurance Co., Insurance Co. of the West, National Liability and Fire Insurance Co and Cypress Insurance Co.

Jones said during a press conference on Thursday that Kim and Choi employed as many as 600 workers at their factory on South Santa Fe Avenue in the Los Angeles suburb of Vernon, but reported to carriers that they had as few as 80 employees.

They got tripped up when, in 2012, State Fund identified discrepancies between payroll reports it received from Meriko and SF Apparel and payroll reports the companies filed with the Employment Development Department. An EDD investigation uncovered evidence that many employees were being paid under the table through a bank account that was never disclosed to the department or to carriers.

While True Religion was not accused of any wrong doing, this is a blow to the brand's reputation, which is based on fair employment practices and working with vendors who do the same. Jones was quick to state that True Religion was fully cooperative - sure, why wouldn't they be?

But they are hypocrites deep down - if they really did have a concern for their workers and those of their contractors they would have been much more proactive in detecting this fraud. Nope, they get no compassion from me because we all know what they REALLY were concerned about was how cheaply they could get their overpriced jeans produced.

So while workers' compensation perhaps isn't all that it's cracked up to be, it is better than what it replaced, and still there are scoundrels that abuse labor, abuse society, all for their own greed.

Frankly this is no different than the devastating Rana Plaza building fire in Bangladesh in 2013 - sure people didn't die as a consequence of this fraud, but it is just as despicable in my mind because even in this modern age there are people who don't value humans, don't value the law, don't value society.

In the end, governments in the United States are formed to "promote the General Welfare" (Preamble to the Constitution). Any act must support the public welfare. We may not agree on whether or not work comp does this well, or if it could be done better, but in the least workers' compensation accomplishes the mission if the laws are followed.

Bail is set at $700,000 for Sung Hyun Kim, who faces up to 28 years in state prison. Bail is $430,000 for Choi, who faces up to 15 years in prison. Kim faces 22 years in prison and his bail is set at $520,000. 

That's too little punishment, too late.
Here's my advice - if you, as a business owner, don't like to pay for workers' compensation, then go operate in Bangladesh. When you violate the labor laws there they just put you to death.

Thursday, April 16, 2015



I like that phrase because it makes people smile.

I got hooked on "super-d-duper" watching Sponge Bob Square Pants when my children were little. That cartoon program was revolutionary in the sense that Bugs Bunny was when I was growing up. The slap stick is decidedly childish, but adult humor is subtly interwoven. Pay attention and you'll find political satire, contemporary comedy, and just downright funny adult stuff.

Sponge Bob Square Pants did an episode about workers' compensation entitled The Splinter, and the only reason, I'm convinced, that it did not draw the ire of the industry like the article series by ProPublica, or Texas Tribune, or OSHA's report is because there is no humor in those reports - they are stark vignettes that hit nerves sharply in those professionals who really do care and who really are trying to make a positive difference in people's lives.

But Sponge Bob's "The Splinter" was just as critical, if nor more bitingly, than these more recent publication. Because the criticism is hidden in satire, though, most wouldn't see the critique.

I'm not sure Sponge Bob, or any other character in the series, ever really says "super-d-duper" but it seems like a phrase that he would utter with his characteristically goofy laugh.

Super-d-duper is an unwitting powerful phrase that uncovers the happiness that all of us want to feel.

At Mom's memory care facility I see how Alzheimer's destroys a person's sense of humor and life. The long, drawn out faces of despair reflect acknowledgment and frustration that the mind no longer works the way it used to.

These people know something of the past. They know that they used to feel. They know that there are things that would make them smile.

But they can't access those emotions anymore.

There's something about Alzheimer's that inhibits those mental capacities.

For instance, Juanita is a resident at Mom's memory care facility. She has the distinction of being a prolific world traveler, and she has a twin sister in her home town of Minneapolis. But she is alone most days in the dining room. Mom doesn't dislike her, but doesn't like to be around her either. Most people I talk to at the facility don't like her. Juanita is negative most of the time, and at times can be downright nasty - that's part of the Alzheimer's legacy.

But Juanita does have emotions and does want to feel happy; her disease gets in the way.

Except when I ask how she's doing. She'll reply curtly, "fine" and I'll tell her, in a sort of Sponge Bob sort of voice, "Well Juanita, you're looking super-d-duper to me today!"

Her smile upon hearing that is as sincere and happy as if there were no brain impairing disease.

Jim was a Navy Seal Commander, and led a very successful business executive life after retiring from the Navy. His face is mostly blank. I can't imagine the torture that must go on from time to time as he tries to communicate, or remember, or do any of the most natural mental tasks we all take for granted.

But he lights up when he's told he's looking super-d-duper.

I've written about Sargeant Major Tommy Smith before. Super-d-duper always exacted a huge toothy grin and a salute.

The phrase works wonders in nearly every setting. 

Yesterday I was traveling to Gulfport, MS for the Mississippi Workers' Compensation Educational Conference. Flying out of LAX, I give myself 3 hours to commute from my house to departure time. It's only 60 miles.

For whatever reason, all southbound arteries to LAX were jammed. Even the parking garage I use was so packed with vehicles that I ended up leaving my truck literally in the middle of the parking entrance with the gate up.

Consequently I missed my flight to Houston, which is a prerequisite to getting to Gulfport. There was another flight but I would miss my connection, and there were no later connections into Gulfport. Frustrated and exhausted I opted to stay in Houston and catch the first flight into Gulfport the next morning.

At the Houston Airport Marriott restaurant that evening, still frustrated, and hungry, the nice waitress greeted me with the inevitable, "how are you today?" Nearly out of habit I replied, "super-d-duper!"

She laughed. I felt better.

Workers' compensation is serious business. We're in an industry that is tasked with taking care of people that are down on their luck through no fault of their own (perhaps sometimes a little bit of stupidity, but when does that get in the way of humanitarianism?). There are issues of medical care, drug monitoring, changes to legal standards for compensation, reimbursement schedules, and of course exclusive remedy.

When things work well, the splinter gets removed, Sponge Bob returns to flipping burgers and Mr. Crabs is a happy employer.

Everything ends up super-d-duper.

So, when you talk to an injured worker and they're sounding down, tell them that you hope they have a "super-d-duper day." When dealing with your client and they ask how you are doing, exclaim "super-d-duper!" When a colleague tells you that they aren't feeling so happy, tell them, "well you're looking super-d-duper to me!"

It's ridiculously simplistic and of course isn't applicable all of the time. But often enough all that stands in the way of a normal day in our world and a really good day, whether its dealing with workers' compensation, traffic, travel rearrangements, or any other little frustration in life, is a simple "super-d-duper."

Wednesday, April 15, 2015

It's An Exclusive Relationship

The timing can't be better.

Tomorrow I will be in Biloxi, MS for a presentation on exclusive remedy, or more precisely whether the concept of exclusive remedy has eroded, at the Mississippi Workers' Compensation Educational Association conference.

Exclusive remedy is the linch pin concept to workers' compensation. Without exclusive remedy workers' compensation makes no sense. I dare to say it is the single most important element to the viability of work comp.

In recent years we have seen challenges to exclusive remedy come about in various permutations. In Texas that state's Supreme Court recently extended the concept to the employer's insurance company, essentially removing "bad faith" from work comp. We have legislative attempts that would allow employers to opt out of work comp in Oklahoma and Tennessee, with various alterations of the concept. Immigrant labor, without legal residency status, are still bound by work comp's exclusive remedy, but can't get subsequent employment after a work injury. In Florida a trial court found the system could no longer be exclusive because of inadequate benefits.

There are many examples of challenges to exclusive remedy.

The Oklahoma Supreme Court last week, in a narrowly divided opinion, refused to extend exclusive remedy to Wilson Paving & Excavating because Steven Broom wasn't its "employee."

Wilson contracted with temporary staffing company Labor Ready to get workers for a renovation project at Sand Springs Memorial Stadium at Charles Page High School.

Wilson's job was digging trenches and laying pipe for a storm drainage system being installed under the school's athletic field. Labor Ready sent Broom to work on this project.

Broom began laying pipe inside a trench that was approximately 5- to 6-feet deep, 4- to 5-feet wide and 50 feet long. After he had been on the job about four hours, the trench collapsed.

Broom was covered with dirt up to his waist, and then the trench collapsed a second time, burying him up to his neck.

Emergency personnel removed Broom from the trench after it was safely reinforced. He was transported to the hospital where he was treated for serious injuries, including rib fractures, collapsed lungs, pulmonary contusions, blood within the chest, fluid around the spleen and kidney, and a left kidney laceration.

Broom received workers' compensation benefits from Labor Ready for his injuries, and he filed a third-party action against Wilson in the District Court of Tulsa County.

Wilson had workers' compensation coverage through American Interstate Insurance Co. in effect at the time of Broom's accident. AIIC had obtained a declaratory judgment in 2009 establishing AIIC owed no coverage to Broom.

Thus, Wilson never paid any benefits to Broom, and it didn't participate in the comp proceedings for Broom's claim against Labor Ready.

Wilson's commercial general liability carrier, Mid-Continent Casualty Co., also sought a declaratory judgment as to whether it had a duty to defend Wilson from Broom's lawsuit.

The GCL policy that Mid-Continent provided Wilson provided that a "temporary worker" – defined as "a person who is furnished to you to substitute for a permanent 'employee' on leave or to meet seasonal or short-term workload conditions" – was not an "employee."

Broom was found to be a "temporary worker" at every stage of the litigation, so under the plain language of the policy, the exclusion for injuries to Wilson's "employees" was inapplicable.

The Supreme Court noted that Broom was a direct employee of Labor Ready and that he had recovered workers' compensation benefits through Labor Ready.

While Oklahoma law makes the workers' compensation system the exclusive remedy for an employee to recover from his direct employer for an on-the-job injury, the state Supreme Court has said civil immunity will not extend to a party standing in the position of a special master of a loaned servant if that party is not liable to the worker in comp.

Wilson had a workers' compensation insurance policy with the American Interstate Insurance Co. in effect at the time of Broom's accident, but AIIC obtained a declaratory judgment in 2009 establishing AIIC owed no coverage to Broom.

Thus, Wilson never paid any benefits to Broom, and it didn't participate in the comp proceedings for Broom's claim against Labor Ready.

In addition, as part of its contract with Labor Ready, Wilson expressly agreed to waive any immunity provided by the workers' compensation laws as a condition of using Labor Ready's services.

Mid-Continent won at the trial level and the first level of appeal, both victories based on different language and interpretations of the policy.

But the Supreme Court concluded that the policy did provide coverage because Broom met the policy definition of a "temporary worker."

Dissenting justices focused on a provision about earth movement in the policy.

"The policy's plain language excludes coverage for any movement of land, earth, or mud," they argued. As the cause of those events is not limited by the policy, they insisted the court "cannot in turn choose to limit those causes."

The case is complex because it involves insurance contract interpretation and some arcane legal concepts, and arguably is limited to the specific facts of the case, particularly the insurance contract language.

But I think the ruling supports my impression that exclusive remedy isn't dead despite all the challenges.

Exclusive remedy is based on a relationship, legally defined, between the employer and employee. Any extension of that concept is dependent on controlling law, contractual language and intent of the parties.

So long as workers' compensation exists, exclusive remedy will continue to be the single defining concept that underlies the theory of work injury protections.

Tuesday, April 14, 2015

It's Mandatory

A recent California Workers' Compensation Appeals Board panel decision may cause a bit of tumult in the already contentious forum of Independent Medical Review.

In an order granting reconsideration by applicant Diane Garibay-Jimenez, Commissioners Rick Dietrich, Deidra Lowe and Cristine Gondak found that not only is it the employer/administrator's sole responsibility to make sure that IMR is provided with all relevant medical records (in a timely fashion) but that failure to do so means that an IMR reviewer, and thus the Administrative Director under Labor Code section 4610.6, acts without or in excess its powers.

Garibay-Jimenez had an admitted injury to her cervical spine and elbows. The treating doctor sought authorization for surgery: left ulnar nerve decompression.

Utilization review denied the request and that denial was upheld by IMR.

IMR did not get a copy of reports issued by the Agreed Medical Examiner that allegedly support the treatment recommendation.

The applicant filed an appeal of the decision of the Administrative Director (IMR decisions get formally adopted by the AD as, essentially, an "order") which the Workers' Compensation Judge denied.

The WCJ held that applicant failed to establish a statutory basis for the appeal because she did not provide the Agreed Medical Examiner reports to IMR, and that it would be unreasonable to make the defendant pay for another IMR. Specifically the WCJ noted that the applicant "provided various medical records" but "inadvertently left out submitting the AME reports, notwithstanding they were in their possession at the time the other records were forwarded to IMR."

By the time applicant noted the omission and mailed the AME reports to Maximus an IMR denial had already issued.

The WCAB panel reversed noting that it is the employer's statutory, mandatory obligation to provide all relevant records under Labor Code section 4610.5(1). This is supported by Administrative Director's Rule 9792.10.5, again using the word "shall" relative to supplying records.

Consequently the WCAB said there were grounds for the appeal:

"By failing to provide the IMR reviewer with all material and relevant medical records, the determination of the IMR organization, and thus the Administrative Director, was an act without or in excess of its powers," the Board ruled. "The IMR process can only work if the parties meet their obligations to provide the necessary medical records. The WCJ's determination that it would be unfair to defendant to pay for another IMR appeal fails to recognize that it is defendant, not applicant, who is mandated to provide the medical records... unfairness to defendant is not a valid basis upon which to make a determination, where defendant has not met its statutory obligation to serve medical records."

The WCAB also chastised the WCJ for failing to formalize the record on review:

"The preparation of an adequate record is mandatory. When a case is submitted for decision to the WCJ, it is the responsibility of the parties and the WCJ to ensure that the record of the proceedings contains, at a minimum, the issues submitted for decision, the admitted evidence and the stipulations of the parties.."

The case goes back to IMR now for another bite at the apple, so to speak.

While a panel decision is not citable as binding precedence, it is demonstrative of the WCAB's current thinking on immediate issues. Certainly the WCAB has had issues with IMR in the past...

The latest issue with IMR involved the Maximus spreadsheet reflecting a lot of missing medical records. Some blame Maximus, some blame counsel, some say it's not a problem.

And the Division of Workers' Compensation is mulling electronic records submissions.

Regardless, the point is that IMR can't work unless it is procedurally sufficient. IMR can't be procedurally sufficient if mandatory statutory and regulatory processes are not followed.

I've railed against the heavy procedural burden that has overtaken California workers' compensation in the past, but if we're going to have procedures, then they have to be followed as written, particularly when procedure is mandatory (as in "shall").

Monday, April 13, 2015

Too Close for Corvalis

Flying is a constant process of learning. No two flights are the same.

I often tell others that learning to fly should be a requirement for executives and professionals because of very common elements: planning, decision making and communication. Fail at any of these elements in aviation and ... you die (and perhaps your passengers).

Review any aviation accident, and more often than not there is no single element that doomed the flight, but a combination, or series of events that, when combined, create the ultimate failure.

I came close to personal observation of these aviation truths on Friday when making a "routine" business flight to Northern California.
Above the clouds, looking for traffic.

My plane is based at Oxnard Airport (KOXR). It is a quiet airport. Camarillo just five miles east is far busier with many more operations per day than Oxnard. Usually, there is no more than one other aircraft in staging awaiting departure clearance, and more often than not it's just 41M.

Friday I arrived in the run up area and there was a Cessna Skywagon awaiting departure at the hold short line, I heard another Cessna, a 172, on ground control getting taxi clearance to the runway, there was a new Corvalis (a sexy, fast Cessna that formerly was the Columbia Aircraft line - controllers still call it a "Columbia").

And there were several aircraft in the traffic pattern doing touch-and-goes, and other practice maneuvers.

In other words, KOXR was uncharacteristically busy, particularly for a Friday morning, and there was a lot of traffic on the ground and in the air.

The Corvalis had obtained an instrument flight rules clearance for a short flight to Van Nuys (she received her clearance on ground frequency while I was still tuned in), and I was instructed to get in line behind her.

Clue number one that this was not a "routine" flight - the Oxnard controllers seemed a bit rushed, a little anxious and perhaps not quite paying attention to details, what with all of the aircraft in the air, and on the ground ready to launch.

I mentally noted this, but it did not register as anything to be alarmed about; my anxiety (at it's normally heightened level due to the fact of aviating) was not unusually elevated.

After the first couple of Cessnas were released, the Corvalis was cleared for take off. 41M was next and I received an immediate take off clearance, "no delay" as one of the planes doing touch-and-goes was on final.

I had advised Tower that my flight was west-bound. But as I was on my take off roll Tower advised, "41 Mike, right downwind departure approved."

KOXR controllers are used to me departing to the east for my bi-weekly missions to see Mom.

Clue number two that something with ATC was amiss.

As 41M left the ground and I retracted the landing gear I mic'd up KOXR Tower , in between other aircraft calls, and advised, "Tower, there may have been some confusion - I'm departing to the west today."

The controller jumped right in, "Sorry about that - 6641M cleared to depart to the west."

At 2,000 feet KOXR airspace jurisdiction ends. I was flying visual flight rules because there was no adverse weather en route (kind of like the entire California winter...). I almost always, however, get Flight Following which is when Air Traffic Control assigns a unique transponder code so they can track your flight to the destination and provide traffic alerts en-route along with other safety communications.

Just above 2,000 feet I switched radio frequencies to Point Mugu Approach on 124.7. That frequency was likewise uncharacteristically busy, and every time I tried to mic in to get Flight Following services I would get trumped by another aircraft or by the controller. Communications were occurring lightning fast and aircraft that had already established communications with ATC get priority.

The Corvalis was on an IFR plan, and I noted had been getting vector assignments by Mugu Approach, which is normal practice. I tried to keep a mental picture of where that aircraft would be in relation to 41M.

In aviation this is called "situational awareness."

6641M has a traffic "radar" system aboard, called a Ryan TCAD (Traffic and Collision Avoidance Device). It is a invaluable piece of equipment that has saved my bacon on innumerable occasions when other aircraft get too close and ATC fails to call it out. I rely on the Ryan TCAD in busy airspace, particularly when I travel around the Los Angeles basin. Traffic picked up on the TCAD is graphically displayed on 51 Mike's Garmin 530 multi-function navigation/communication computer.

During the climb out I zoomed in the display of the Garmin 530 so I could "see" traffic near me.

Sometimes, though, an aircraft may not display on the TCAD enhanced 530 even if they are "squawking" a transponder code.

As I was climbing out west-bound through 3,500 feet, trying to get a call into Mugu, I heard the Corvalis pilot exclaim, "Mugu, there's an aircraft heading straight for us!"

I knew that was me. The Corvalis was not showing on the Ryan TCAD. I did not see any aircraft at my twelve o'clock. Fortunately my habit is to keep the landing light on when climbing out and the Corvalis pilot obviously saw that bright light ... getting far bigger and brighter than she would have preferred to observe.

Keep in mind that when an aircraft is flying IFR it is ATC's job to keep other aircraft away from it.

Mugu Approached excitedly called up with rapid speech, "Columbia [tail number], traffic alert, twelve o'clock, 3,700 feet, appears to be climbing, I'm not talking to him."

Just as Mugu said "I'm not talking," I saw out of the corner of my eye the Corvalis pass right underneath 41M - WAY too close for comfort, for anyone involved.

I think the controller was stunned into silence - for the first time in those precious climb out minutes there was a break in communications on 124.7.

I chimed in: "Mugu, Bonanza 6641 Mike - I'm the aircraft the Corvalis saw."

The controller responded, "6641 Mike, did you have a visual?"

"No visual, Mugu," I responded, "and no aircraft showed on my radar."

Shortly thereafter, the Corvalis received a vector instruction from Mugu and she headed off to Van Nuys, and I got a squawk code for my trip to Chico, CA.

No harm, no foul. But it took the better part of that 2 hour, 20 minute flight for me to settle down, and I'm sure it took the Corvalis pilot's nerves some time to settle too. Likely the controller also had to take a break.

There's risk in everything we do. Life is, by definition, risky. We do everything we can to manage risk, and this requires planning, decision making and communication.

Like aviation, workers' compensation administration is a team effort. There are people that calculate the risks, and what it will take to sufficiently manage those risks. Others sell the product that the people who do the calculating come up with. Still others are responsible for dolling out money and services when a risk does occur. And there are teams of other people who deliver medical and legal services and goods, among other tasks.

The tight coordination of all team members, including the employer and injured worker, generally results in what we would consider a good outcome - good outcome of course is a relative concept depending upon the nature and severity of the risk that occurred.

Plans are created, decisions are made, and communication of those decisions to the people that need to know - all necessary elements of a successful workers' compensation program.

Sometimes, though, certain members of the team get overwhelmed, or there is too much "traffic" to manage and consequently things go awry.

And sometimes those things don't show up on our radar in time.

I recall when I was still practicing work comp law a "disaster" file that I inherited. It seemed that everything in the file resulted in the wrong result. There were mis-communications, there were no plans, and the decisions that were made were a consequence of these errors. The file had been through multiple adjusters, attorneys, doctors - you name it, seems like all team members had changed several times through the course of the file.

The file was a simple back claim that had mushroomed into a skin and contents claim - every step of the claim resulted in something worse occurring. It wasn't all the claimant's fault, nor just the adjuster's fault, or the doctors'... it was everyone's fault. Everyone of the claim had failed in at least one of the three necessary elements.

The case had been through a dozen adjusters, as many physicians and therapists, probably nearly as many attorneys, and on...

After my review the adjuster on the file at the time authorized me to come up with a plan, which I thereafter prepared and communicated to everyone that needed to know. The plan was approved, and we began the execution of the plan - everyone had a part in the decision making process, including the claimant.

And after 6 months it seemed that the plan was working. The claimant was getting the services that we all knew were necessary to bring the injured worker back to some reasonable function (and maybe even back to work!), and it was clear that we were heading toward the light in the tunnel.

Then sight of the "Corvalis" was lost ... the file changed adjusters, again, and this time the adjuster didn't have the time, or take the time, to understand this huge, disaster of a file.

Communications stopped. Ergo, decision making became paralyzed, and the plan was not followed.

Shortly thereafter I left that law firm to start WorkCompCentral.

And a few years after that I visited the old firm to catch up with my friends, and to no surprise on my part, learned that the disaster claim was still ongoing, and had run amok once again. There simply was no continuity in claim handling.

I don't know whatever happened to that claim ultimately. I'm sure by now there's been some resolutions - after all it's been over 15 years.

Or maybe not.

Like Friday's flight, the signs were there. I was fortunate to have picked up on those signals during my short tenure on the file. Unfortunately, the rest of the team didn't see that plane coming straight at them.

And it costs everyone dearly.

Friday, April 10, 2015

Money in Pills

We all know how big drugs are in workers' compensation, heck in general health drugs are big.

Really big.

The various alphabet soup organizations that spit out statistics and make policy recommendations remind us regularly that pharmaceuticals represent not only some of the single largest expenditures in health care, but that they also represent the single most inflating factor.

That the companies that are supposed to manage all of the drug dispensation in this country keep merging into billion dollar Goliaths (and with some pharmacies getting into the prescription management business themselves - sort of a fox watching the hen house type of situation) speaks volumes of the size of the market, and the profit margins.

United HealthGroup’s subsidiary, OptumRx, announced on March 30 that it would acquire PBM Catamaran Corp. in a deal worth about $12.8 billion making it the third largest PBM according to market analysts.

The deal is subject to shareholder approval and there is a pending class action lawsuit filed by a shareholder alleging that the company didn't negotiate a fair deal.

According to Vishnu Lekrah, an analyst for the financial publication Morningstar, Express Scripts processes about 1.3 billion pharmacy claims per year, while CVS Caremark processes about 1.2 billion per year. Combined, OptumRx and Catamaran process about 1 billion.

CompPharma President and prolific blogger on all things managed care, Joe Paduda, told WorkCompCentral reporter Joey Berlin that the industry has seen considerable consolidation during the past several years, which should help drive down the prices for medications.

The pace of consolidations in the PBM industry is blazingly fast too - Catamaran itself just picked up a smaller PBM, HealthCare Solutions, announcing that it had closed a deal to acquire HCS for $405 million in cash.

And pharmacy chain Rite Aid announced Feb. 11 that it had entered into an agreement to purchase the PBM EnvisionRx for $2 billion.

Whether you sell them, or regulate them, it seems no matter which way one looks at it, there's money in them pills.

Thursday, April 9, 2015

Don't Dispute - Resolve!

Bobby Stokes, a defense attorney in Texas with the Flahive, Ogden & Latson, uttered what I consider an immutable truth in his presentation Insurance Council of Texas' Spring Seminar yesterday.

Speaking to claims adjusters and defense attorneys, Stokes said, "The focus of our job, our mission, is to provide benefits to people. We can't do that unless we peel away those that aren't proper. That's what the dispute resolution process is for."

I couldn't have said it better.

When I was a young lawyer my managing partner and mentor, Rene Folse, would explain to me over and over again that we, speaking about the defense attorney, were the gate keepers. Our job was to ensure that the people that were entitled to benefits and supposed to get benefits, got them.

And those that were not supposed to get benefits, according to The Law, didn't.

Sometimes that mission gets confused and the dispute resolution process gets used to "punish" or obtain retribution. And sometimes it is used as a club, to wear down or beat up a party or position, or as an economic tool.

We've all seen cases where the injured worker seeks "justice" when he or she feels wrongly treated by the employer (not necessarily the claims administrator).

And we've seen cases where the claims administrator seeks some advantage by forcing a case into the dispute resolution system.

These things occur across all state lines and in every jurisdiction - it's part of living in a "civilized" society. We're supposed to resolve disputes via civilized procedures - we commonly call this "court" though in workers' compensation most jurisdictions use an administrative process that is loosely based on the court system, albeit with much less formality in process and procedure.

The reasons for such informality is because work comp is a benefit delivery system, as noted by Stokes. The job is to provide benefits. When benefits are not provided then the process for determining whether or not benefits are owed and due goes to the dispute resolution process.

What I have seen over the past 30 or so years that I've been involved in work comp, however, is an increase in procedures in the dispute resolution process, certainly in California but in other states as well. In fact Jane Stone, a defense attorney on the same panel as I at the ICT seminar used an illustration we often use in the Golden State, pointing out that the Texas "book" now is much more thick and dense than 10 or 15 years ago.

Back in "the good ol' days" attorneys in California were up in arms when the Division introduced the multi-page mandatory settlement conference statement that had to be completed before anyone conference with the judge.

That was nothing.

Now the procedural morass that confronts the parties seems to create more focus on form over substance. It seems the parties are more engaged today in winning on procedure than getting to the substantive issues.

There are only a handful of substantive issues in work comp - it's designed that way to eliminate disputes. So dispute resolution in work comp should not be complicated, nor should it take up much time in the life of a claim.

What we have seen over and over again, however, is that litigated claims make up the vast majority of expenses - by a wide margin - and a good part of that I believe is the increase in procedural litigation.

I'm not putting blame or fault on anyone party, constituency, demographic, etc. It is what it is - this is the system we work in, so we are obliged to play "by the rules."

But Stokes is right - the dispute resolution process in workers' compensation claims is to ensure that the people that are supposed to get the benefits of the system in accordance with the law in fact get them, and those that aren't supposed to get them don't.

It's not supposed to be used as a cost control system.

If we remember that mission then I would be quite willing to bet that overall system efficiency, and ergo expense, would be less, and there'd be more injured workers off the rolls and back to work more quickly, even with all the procedure.

Wednesday, April 8, 2015

Investments Not Costs

On my flight to Austin, Texas to participate in the Insurance Council of Texas' Spring Seminar yesterday, I read a business book that had been sitting in my "to read" pile for some time., "Hyper Sales Growth" by Jack Daly. Like most any business owner, I'm obsessed with sales, because sales drives revenue which pays the bills and hopefully generates a profit (that last part remains mysteriously ephemeral for me - but that's not the point of this post).

Daly repeats something that I think has application to workers' compensation claims handling - it is his philosophy that in business, there are no "costs." Daly considers expenditures in business "investments" - at least he counsels his readers that they should view expenditures as investments.

This makes sense. Why would anyone put money into a business just because someone presents a bill or invoice? We don't operate that way. We pay bills because we made a conscious decision to spend money on a business and a business is to generate a return, ergo these expenditures really are investments.

The biggest investment businesses spend money on usually is labor. Without labor performing work for which we can sell in the guise of either goods or services there is no business. That's a pretty simple concept.

Clearly labor, or personnel, employees, workers - however you wish to categorize the category - is an investment: Hire the right labor, have labor perform the tasks necessary to deliver the good or service economically so that customers buy it and sales happen to fuel business profits (if managed correctly).

Heres where most workers' compensation claims departments get it wrong - claims are costs to administrators. Rather than "investing" in a good outcome, administrators instead focus on the "costs" of providing benefits and consequently don't reap the rewards of good outcomes.

Which is why bad press is getting louder in criticizing the workers' compensation industry.

A case in point was broadcast yesterday evening on the NBC channel 4 Los Angeles local television news broadcast about Donovan Dixon.

Dixon was a truck driver. In October 2013, he was driving a fuel tanker on the 710 Freeway when a bus being towed in front of him lost its rear axle. The debris from the axle caused Dixon’s truck to jackknife and smash through a barrier, which left the cab dangling 100 feet in the air off an overpass.

Dixon's rig exploded and engulfed in flames he decided to jump - 70 feet to the overpass deck.

In a coma for 3 months, Dixon also had burns over 60 percent of his body, fractured sacrum and pelvis, and surgical procedures removed swaths of his intestines, he had kidney failure, among other maladies.

The carrier, AIG, has been paying for his medical care and rehabilitation. Utilization review drew the line, though, at approving an adjustable bed for Dixon.

The bed allegedly costs $4,000.

I have to imagine that Dixon's medical treatment thus far is well into the mid-six figures by now.

The one overriding treatment recommendation given by physicians in any traumatic injury recovery is ... rest. It seems fundamental that being able to sleep, and sleep well, is basic medicine. So basic that perhaps the "prescription" for an adjustable bed isn't in any treatment guideline?

In the 1980s and 90s it wasn't unusual for a litigated soft tissue back case to make a demand for a new bed, usually a specific top name brand. Often I would shake my head when the judge would order it because I knew, in my heart, that this was just taking advantage of the system which I, and many others, find offensive.

Dixon's case isn't a soft tissue back case. Dixon has burns over 60% of his body. The good physicians at Grossman Burn Center, one of the nation's leading treatment centers for burn patients, will tell you that solid, restful, sleep is the number one most important aspect of patient recovery. Heck, nearly any physician will say so...

AIG is looking at this bed as a cost, not an investment in Dixon's good outcomes. My guess is that the expense of this bed is probably about 1% of the total medical expense column in Dixon's file.

But the return on investment - getting Dixon healed more quickly and hopefully back to a job - is huge. Just a few weeks taken off of temporary disability pays for the bed...

And if AIG didn't want to purchase the bed it could be financed through a lease agreement so the expense capitates.

This is a classic case of the administrator looking at a claim "cost," not a claim "investment." I can't help but think that much of today's bad press about workers' compensation would not exist if we viewed claims expenditures as investments.