Thursday, May 21, 2015

Motorcycles, Italy and Comp

This is my last blog post until after June 3.

I'm going on vacation. Leaving on a jet plane with my son to ride motorcycles in the Tuscany region of Italy.

Interestingly enough, there was an article in Business Insider the other day on how teenagers can convince their fathers (and they were adamant to ask Dad, not Mom...) to permit motorcycle ownership.

My motorcycle affliction started early. I was 10 years old when a neighborhood kid got one of those hard tailed, Tecumsah lawn mower engine powered mini bikes.

I'm sure you've seen The Simpsons, and when Bart and Lisa want something they engage in an endless verbal assault on the parents until they get what they want.
I don't think it gets better....
That was my brother and me. Mom of course was sure that we were either going to kill ourselves, get maimed and disabled in the process, or get tattoos and join the Hell's Angels.

Dad was more circumspect. Since I had, for example, already attempted parachuting with a bed sheet from the second story roof of our home (along with many other death defying antics), he figured I was going to get killed, maimed and disabled and/or get a tattoo even without a motorcycle.

And besides, "you meet the nicest people on a Honda."

So he came home with Honda's answer to the mini-bike, a much more refined solution, the Trail 50. Hard tail, three speed centrifugal clutch transmission and folding handlebars.

45 years later, and of course many injuries and, yes, trips to the emergency room, and I'm proud to say that the same lessons I learned riding and owning motorcycles have been passed along to my children (though my daughter doesn't presently own or ride, but she's busy guiding tourists in Alaska rock climbing, zip-lining and trail hiking).

The Business Insider article lists 8 things a teenager can do to convince Dad to permit motorcycle ownership - these of course are applicable to workers' compensation (you knew that!):

1. Preface your argument with accomplishments. Much has been made lately about the general media attack on workers' compensation. If we are being honest with ourselves, a lot of these articles have enough truth to them to make us hurt - we don't like that reality. But the opposite reality is true as well: this industry does a lot of good too. We need to be more verbal about our accomplishments, but also acknowledge (and seek to rectify) our shortcomings.

2. Point to your responsibilities. We accomplish good things, and we have responsibility for millions of people and billions of dollars. It's not an easy job and it takes maturity and professionalism to carry out the mission.

3. Remind him of his younger self. We go there often enough, but that time was several generations ago, and the history isn't appreciated. What can be more scary, however, as a business owner than facing a jury of your peers about to determine just how much money you are going to have to pay, without limitation? Hmmm, all of a sudden the set financial limits of workers' compensation seem like a bargain.

4. Register for a [motorcycle safety] class before talking to him. Work comp is complex. We do lots of things and navigate conflicting laws to get to an outcome that hopefully is positive. The only way to do this is to stay educated and up to date on the ever changing subtleties of workers' compensation law and how it intertwines with other medical and disability laws.

5. Involve him in the decision. Once a claim gets into our collective hands, communications with both the employer and injured worker tend to get stifled. There are lots of required legal notices that go out, for sure, but no lay person can understand them. Frequent telephone calls and personal meetings informing of status, and inviting comment or participation in the decision making process go a very long way towards smooth claim management (and hugely reduced litigation rates).

6. Have the gear already picked. In other words, be prepared to demonstrate that you are ready to take on the responsibility and be safe. Show the employer and the injured worker that you have the necessary "gear" to manage the claim efficiently, safely, expertly, to a desired outcome.

7. Deploy the male bonding argument. This is about riding with Dad. And its about riding with the employer and the claimant - we're in this all together. This is a shared adventure that will build us in many ways to be better people.

8. Learn the details. Study as much as you can about what you are engaging in and present as many options as possible. Read. Learn. Connect.

Yes, pitching workers' compensation to the employer grumbling about the expense, or the injured worker frightened by the process, is much like convincing Dad to allow you to get a motorcycle. The perceptions can be overridden by cogent and responsible evidence.

WorkCompCentral does this every first Saturday of December - this year, 12/05/2015 - with our Comp Laude Awards and Gala. This year it's national in scope and we're going to tell the rest of the world that workers' compensation can work and do good things when executed properly. Be part of the solution, not part of the problem.

I discussed some of this with Alan Gurvey, managing partner of applicant law firm Rowen, Gurvey & Win, last night which was recorded for his radio show, Gurvey's Law, on Los Angeles a.m. frequency 790 (KABC Talk Radio). It will air Saturday afternoon at 2 p.m. It will also be posted as a podcast here.

I'll be back in a few weeks to tell you, likely, that there really isn't much better than riding Ducati Multistrada motorcycles around Italy with your son.

I'm sure there isn't ... but I do need to confirm this. Type at you in a couple weeks.

Wednesday, May 20, 2015

Back of the Bus

Cesar Chavez
Our own government, by its actions, discriminates against Hispanics.

Speaking Spanish is less valuable than any other language, according to the California Division of Workers' Compensation in its latest release of SB 863's mandated interpreter fee schedule and regulations.

Karla Navarro, a certified medical interpreter, argued that paying less for Spanish interpretation will create a shortages.

“According to the U.S. Census, by 2050 the Hispanic population will be double what it is today,” she wrote in comment. “Many of these Spanish speaking people will take labor based jobs in which they will most likely be hurt and file a workers’ comp claim. This will lead to needing interpretation for medical appointments and with the proposed changes for regulations and fees, there is very little chance that the work force will be able to meet these needs.”

“We know of no other government fee schedule that singles out Spanish for sub-standard remuneration,” wrote Carl Brakensiek, executive director of the California Society of Industrial Medicine and Surgery.

What DWC is thinking, I'm sure, is that there are so many hispanic workers in the work comp system, and so many that interpret Spanish to English and visa-versa, that they are nearly a majority, and ergo, should be subject to the same expectations that English speaking workers are subject to - i.e. virtually no interpretation.

It's almost as if the government is saying that Spanish is now just a dialect of American English...

Or perhaps the thinking is that market forces will solve the pricing differential and only those truly dedicated to Spanish/English interpretation will stay in the game.

The message that is conveyed, unfortunately, is that discrimination is alive and well in 2015.

Ironically, California state government, including DWC, recognizes with a day of rest the efforts of the late, great Cesar Chavez, who fought long and hard for Hispanic immigrant rights.

As a lawyer, I had been through many depositions and court proceedings where the claimant was mono-lingual Spanish. Not only is there limitation in the native language, but nuances between regions and dialects can result in many different interpretations; subtle differences can result in substantial interpretation challenges.

What's spoken in the fields of the Central Valley is not Castilian Spanish. What's spoken in the court room, or the medical examining room, isn't the Queen's English.

I've argued before that the proposed regulations are overly complicated and invite work arounds and abuse. The resolution can be very simple...

In the meantime, if you speak Spanish, sit in the back of the bus.

Tuesday, May 19, 2015

Share This

The key note speaker at the NCCI Annual Issues Symposium last week was Salim Ismail. He's a technology guru, having served previously as a vice president at Yahoo.

Ismail spoke eloquently about how fast technology is evolving, and how the hockey stick growth curve of services like Uber and other "shared economy" companies is going to radically change the way America works.

Truthfully, the law has always been, and always will be, behind technology - because The Law is reactive. The law doesn't come into action until it is requested, or required.

Ismail also noted that the laws and regulations that govern America can not keep pace with the Information Revolution - even though he opined that this revolution is only about 1 percent underway.

What Ismail foresees is a radical, and fundamental challenge to work, the work place, and ultimately workers' compensation, and society is going to have to ask itself if people are really, really ready to take care of themselves.

Because that's what the "shared economy" is all about.

In the shared economy, goods and services that used to be the province of organized business are distributed by individuals who have no commitment, obligation or allegiance to any legal business entity.

Nor does any legal business entity owe those individuals providing those goods and services any promise beyond a commission check. Or at least that's the way they see it.

People that subscribe to the shared economy ideal, value the freedom, independence and virtually unlimited earning capacity of "micropreneurs."

All good and well until something bad happens, and something bad always happens eventually.

Then the micropreneurs find out what a lot of us real entrepreneurs already know - the world is a cruel place and there's no one to fall back on except one's self (and a whole lot of credit cards) when the proverbial excrement hits the fan.

And this is perfectly find and dandy IF society is willing to tolerate a whole new class of workers that don't have the skills, education, fortitude, determination, discipline, ability, and, ultimately, financing, to stand alone with out the structure and formality of traditional employment and its suite of legal protections.

Uber, with its multi-billion dollar valuation (and I "get it" - that hockey stick growth curve of explosive acceptance by the purchasing public) can't wait for driverless cars - then they can substantially limit the attendant liability of drivers, wrecks, passenger abuse, and of course workers' compensation.

Right now, the shared economy business model relies on dislocating employment liabilities onto the employed.

I suspect that the shared economy is just starting. It will grow. Very large.

Critics of the shared economy say that it will create a larger class of "have nots" - have no insurance, have no health care, have no work comp, have no protections.

Advocates argue the shared economy didn't create this disparity, that it has existed in cycles forever - that the cycle of technological innovation has always outpaced the law, and society's ability to deal with the entrails.

According to Rachel Botsman in an opinion piece published by the Wall Street Journal, organizations are already dealing with disparity outside the government: TaskRabbit has introduced a wage floor, making it impossible for workers to earn less than $12.80 an hour; and Freelancers Union are creating ways for independent contractors to pool bargaining power to access discounted health insurance and telecom plans.; still others are working on how to share equity.

Botsman points to a recent survey of Lyft drivers who were asked if they would prefer to join a traditionally structured company - only 25% said yes. The rest, presumably, enjoy their independence and control over schedules, rates, etc.

The opposing argument by Andrew Keen is that the companies that create shared economy technology do great, but the workers get the shaft; i.e. these are "jobs" that have no legal protection.

Keen says that the shared economy is, in reality, a "very selfish economy."

Having been around for some 55 plus years, I can say quite confidently that the vast majority of people don't belong in a "shared economy." Most people don't have the stomach, the discipline, the fortitude, the chutzpah of an entrepreneur, and are grossly incapable of taking care of their own lives, let alone their own business.

There is a huge population for which the traditional employment model is not only beneficial, but necessary.

Will traditional employment succumb to the shared economy? I don't think so.

What will happen is that a lot of people will find supplemental income via the shared economy, just like E-Bay has become a new retail storefront for many.

So the "shared economy" may supplement traditional employment.

But these new micropreneurs will become disenfranchised once something bad happens - like a work accident - and they have no recourse or remedy.

Perhaps the laws don't need to change. Perhaps they are structured the way they are because we learned a hundred years ago as this country evolved through the Industrial Age that we have this pretty much figured out.

An independent contractor is an independent contractor until a court says otherwise - then the business that "shared" itself with that (now) employee takes a hit and perhaps goes out of business.

Isn't that why work comp came about in the first place

The more things change, the old saying goes, the more things stay the same.

Sure, "shared economy" is a neat buzz phrase that's been marketed by Silicon Valley. 

It doesn't mean anything to The Law.

Monday, May 18, 2015

The Dog Will Bite

There is one element of human behavior that is not very well appreciated by most people - for the most part, socialized humans follow the law.

However, people in completely rational behavior, will also take advantage of the law in order to achieve whatever their mission is. They will not break the law, but nearly all of us will push the boundaries if it suits us in order to accomplish our  missions.

We do this every day driving our cars. We exceed the speed limit all over the place - maybe not by much, and as we know most police officers are rather tolerant of someone going 5 miles per hour over the limit, and much less tolerant of someone going ten over.

Part of this behavior stems from the fact that, with very little exception, laws, rules and regulations are restrictive in nature - they tell us what we CAN'T do, but don't tell us what we can do. For the most part this is because it is really very hard to determine what will be allowed - it's much easier to describe what won't be allowed.

So when we combine good law abiding people who want to get their job done along with restrictive laws we end up with what is commonly known as "loopholes."

Loopholes in the law exist because someone who needs to get something accomplished found a way to do so regardless of some proscription against it.

Take for instance California's Independent Medical Review process. IMR was conceived for the purpose of expediting medical decisions outside of the legal context. Whether this in fact occurs, and whether or not this mission is accomplished, is the subject of much debate - and is not the subject of this post.

Rather, IMR has produced an unintended consequence that arises from people doing their jobs, and doing the job well, within the constricts of the law.

There is a faction of the workers' compensation industry whose job it is to minimize ultimate claims costs. These are good, law abiding, citizens. They follow the law ... carefully and considerately. And they have a job to do, within the bounds of the law.

What they have discovered is that an IMR denial of treatment is a final determination on that procedure.

As a consequence, when it comes time to deal with Medicare, a final denial of treatment within the workers' compensation context means that item can be removed from a Workers' Compensation Medicare Set-Aside trust.

In other words, something that a workers' compensation payer WOULD have been liable for prior to IMR means that there is no ongoing liability to either the injured worker, or to the federal government.

This also means that the cost of that care is shifted to Medicare.

While this may be perfectly legal, and certainly even prudent from the workers' compensation payor's view point, my bet is that this was not intended by the authors of SB 863, nor any other medical treatment limitation law in any other state.

I recently opined that time limitations on temporary disability indemnity unfairly burdened the Social Security system - to the tune of about $12 billion per year (based on my calculations - and remember I'm a dopey lawyer with no right brain skills, which means my math is highly suspect).

Several years ago a c-suite insurance executive described to me her strategy for taking advantage of the Affordable Care Act's leave-no-person-without-health-insurance mandate by drafting settlement documents that would provide a claimant with sufficient health insurance for several years in order to close out the workers' compensation claim.

Certainly legal, and certainly she was doing her job - minimizing the impact of claims expense against her company's ledger.

And we could argue day and night about whether this is right, ethical, or even reasonable - to me there's nothing wrong with this strategy because it is legal.

But the unintended consequence challenges the future of workers' compensation.

The purpose of workers' compensation, as we have said time and time again, is to make it affordable for an employer to take care of injured workers.

We all get that.

But I think we forget a fundamental concept: it's the employer's obligation.

We don't fulfill this mission when we make it the responsibility of someone else, such as the federal government via Medicare or Social Security.

Doing so, regardless of legality, invites scrutiny. And when there's enough scrutiny there's inquisition. And when there's enough inquisition, there's interference.

We're on the cusp of that now. The public image of workers' compensation couldn't be lower. There are many talking about skimpy benefits, of wrongfully denied medical treatment, of passing the buck and otherwise shirking responsibility.

These are acts that are, for the most part, the product of people working within the law to accomplish their missions and jobs without regard or even an idea of negative consequences.

This is now playing out with California IMR.

California IMR has been under attack since inception. The California Third District Court of Appeals, in Ramirez v. WCAB (SCIF), No. C078440, has granted review to test its constitutionality.

Ramirez joins a case already pending at the 1st DCA, Stevens v. WCAB (Outspoken Entertainment), No. A143043, which also seeks to have IMR declared invalid.

The basis of these cases is that fundamental rights of due process are violated because there is no legal review process and the determinations by the IMR physician are to be deemed final.

California's Constitution, in relevant part, states:

"The Legislature is hereby expressly vested with plenary power, unlimited by any provision of this Constitution, to create,and enforce a complete system of workers' compensation, by appropriate legislation, and in that behalf to create and enforce a liability on the part of any or all persons to compensate any or all of their workers for injury or disability, and their dependents for death incurred or sustained by the said workers in the course of their employment, irrespective of the fault of any party. A complete system of workers' compensation includes ... full provision for such medical, surgical, hospital and other remedial treatment as is requisite to cure and relieve from the effects of such injury.

"The Legislature is vested with plenary powers, to provide for the settlement of any disputes arising under such legislation by arbitration, or by an industrial accident commission, by the courts, or by either, any, or all of these agencies, either separately or in combination, and may fix and control the method and manner of trial of any such dispute, the rules of evidence and the manner of review of decisions rendered by the tribunal or tribunals designated by it; provided, that all decisions of any such tribunal shall be subject to review by the appellate courts of this State."

Perhaps those challenging IMR have an argument.

Even more so, though, it occurs to me that the courts of California may not let the burden of providing medical treatment "as is requisite to cure and relieve from the effects of" injury leave the jurisdiction of California. Foisting the burden onto the federal government jeopardizes state independence ultimately.

Just because someone is acting within the bounds of the law doesn't make that action right, correct or good policy.

When OSHA released its recapitulation of prior research on the adequacy of workers' compensation it was seen by many as overreaching based on faulty research.

Maybe, but this industry should be fearful, because OSHA's report is, in reality, the dog barking because someone is intruding on its property and territory. It may not be trespassing, and there may be invitation, but the dog doesn't know that and doesn't care.

Eventually, the dog will bite. The states won't like that at all.

Friday, May 15, 2015

As Much As We Can

The NCCI Annual Issues Symposium in Orlando is the insurance industry's annual physical examination.

It's about the business of workers' compensation insurance, very simply, and its relative health in comparison to other insurance lines, and other industries.

Lots of numbers are thrown about because that's what insurance people look at.

And that's important. Because without insurance companies then the whole premise of workers' compensation, spreading the risks through some financially viable means (i.e. the cost of risk) doesn't work.

So having a vital insurance industry backing the system is hugely critical to the concept of work injury protection.

This past year the industry wrote $44.2 billion total net premium - the 4th year of premium growth , which NCCI president and CEO, Stephen Klingel said was, "great news."

The private carrier industry posted a 98 combined ratio, which was the first time since 2006 that it was under 100.

Very simply, a combined ratio of 98 means that for every dollar of premium taken in during the measuring period, 98 cents goes out the door as costs and expenses. I believe that the combined ratio is a misleading indicator of insurance line health, but it is commonly and widely used by the investment industry so it gets a lot of attention.

But Klingel advised that this "great news" won't last long, that the industry has seen these trends before and that the path ahead is "turbulent."

There's a lot of variables that impact what the risk of work injury protection costs, but here's the bottom line - it's going to cost more and more over the next couple of years.

There are several factors that come into play, but the most important factor is a continuing trend of low interest rates, which the actuaries and economists at NCCI don't see rising anytime soon despite what the Federal Reserve says.

These low interest rates mean that the insurance industry, which invests largely in conservative vehicles such as Treasury bonds, won't reap the same profit margins from investments as they had with previous investments that are now maturing.

The money has to come from somewhere to keep investors happy, so the only other income avenue - selling the product - needs price increases.

Other challenges facing the insurance industry include the uneven economic recovery; not only has the United States economy been slow to recover from the Great Recession of 2008, but different sectors are growing at different paces for various reasons.

Sectors that are most important to worker's compensation, because of payroll growth and risk categories, such as trucking and construction, are seeing tepid growth, and in certain cases are seeing big changes due to technology.

In fact, manufacturing, which once was a staple underwriting class for work comp carriers, won't ever recover, at least not from a payroll perspective, because many of the jobs that were jettisoned in the recession are being replaced by robotics.

Outsider Salim Ismail, a former vice president at Yahoo and an extraordinarily smart guy, gave attendees an exciting, but at the same time frightening, perspective on how fast technology is growing, and how quickly this world is changing as a result of the Information Revolution.

Ismail showed the exponential curves associated with disruption, and believes (very convincingly so) that we've only just begun; the legal and regulatory frameworks are reactive rather than proactive, largely due to entrenched interests, and are going to remain far behind where this world is going.

I believe that.

Robert Hartwig, president of the Insurance Information Institute, showed how jobs are being replaced by automation, and the implication is that those jobs will disappear forever, which means that payroll will disappear forever, which means that carriers will have less premium, which means that prices are going to rise, etc.

Vicious circle.

I came away believing that while there is going to be an employment shift, that shift will be towards more technical jobs requiring more skills and paying more money - and there will be a lot of those jobs coming on line providing plenty of job opportunities for the displaced.

There is going to be, however, a population that won't, or can't, make that move and what I fear is really going to happen is that the gulf between the "haves" and the "have nots" will widen.

The bottom line in my opinion is that there is going to be a huge demographic that is going to be left behind for one reason or another and it's going to be society's big job to figure out what to do, and how to support, that population.

And it isn't going to be pretty.

Much was made about the "on demand economy" and how the Ubers of this world are redefining the work place.

We've heard this before at the beginning of the dot com cycle, and actually that argument has preceded virtually every economic shift. 

In the dot com world, the argument was that the typical office-based worker has new freedoms to work wherever, whenever and however they feel, and that this will be empowering greater productivity and satisfaction.

What we have learned (and what I have experienced first hand) is that for some people and jobs, that is true. But the fundamental "pack animal" instinct of humans still favor an office where people gather, collaborate face to face, and leave their work when they're done for the day so there's some sanity at home...

I'm a simple, liberal arts kind of guy - that's why I became a lawyer. All of these numbers are confounding, confusing, and challenge my underdeveloped left brain. 

It's difficult to reconcile the business of workers' compensation with the mission of workers' compensation.

And maybe they can't be reconciled. These are left brain versus right brain concepts. Different people are good at different things. 

Regardless, the check up at the Annual Issues Symposium is important because The Money has to know that it is in good hands. We are stewards of a very complex system. Sometimes we get it right. Sometimes we get it wrong.

I think most of us try as hard as we can to get it right as much as we can.

Thursday, May 14, 2015


"I don't need someone to advocate for me. I need someone to empower me."

Becky Curtis was in a frightening roll over accident in Montana in 2005 when she fell asleep at the wheel. She was working and suffered a spinal cord injury resulting in partial paraplegia and intensive, prolonged (chronic) pain.

Ask her about workers' compensation, and she has nothing but positive things to say about the team that took care of her, and still is helping her.
Becky Curtis' car

Through vocational retraining Curtis became a pain management coach, and founded Take Courage Coaching to help chronic pain patients, those for whom pain management modalities have done the most any third party intervention could, enjoy life in spite of the pain.

Pain management, as Curtis explained to the audience at the Self Insurance Institute of America's annual Workers' Compensation Executive Forum yesterday in New Orleans, requires the patient ultimately be active in their own recovery, not a passive patient.

There is a psycho-physiological reality to chronic pain, that was explained by Michael Coupland, CPsych, RPsych, CRC. Coupland said that at the point where pain becomes chronic, which is when third party remedies no longer have an impact, cognitive behavioral therapy (CBT) is highly effective.

CBT is about remapping the brain to redirect the signals sent by the nervous system and involves a concept called neuroplasticity - the brain is flexible enough that it can be, essentially, trained to feel differently.

There was an overall theme to the forum that underscored a key difference between self-insured workers' compensation programs, and traditional insurance models: focus on the employee.

Though there were sessions on marijuana, the changes in health care insurance, and other technical sessions, the overall tone was, take care of the claim and the benefits will follow. Other than the debate about self-insurance groups versus captives, there was very little talk about cost and expense; most of the talk was about how to better serve the injured worker.

I expected this from a self-insurance oriented forum. The mindset is much different from the traditional insurance model, because the self-insured employer has a much tighter, more involved interest: that injured worker is THEIR employee and they're working with THEIR money.

The insurance covered employer typically doesn't react that way because the insurance company is an intermediary with its own financial objectives.

Self-insured employers get it: the best way to lower your workers' compensation expenses is to treat the injured worker quickly, efficiently, thoroughly and with the best treatment (including CBT) available.

Notice I did NOT says the MOST treatment - that is a vendor/provider desire.

The BEST treatment means sometimes having to pay more than fee schedule. It means sometimes authorizing a couple of extra physical therapy sessions even though the law says you've done enough. It means having claims adjuster case loads of not much more, if at all, than 100, so adjusters can actually make a difference rather than spend so much time entering data and completing paperwork.

It means providing the tools to the injured worker that will empower her to overcome chronic pain.

These remedies are available to traditionally insured employers, by the way - they just don't know it.

Wednesday, May 13, 2015


I was flying along at 37,000 feet, using United Airline's GoGo Internet service in flight to New Orleans for the Self Insurance Institute's Workers' Compensation Executive Forum.

A month ago I wasn't scheduled for this conference, but our Marketing Director talked me into attending since I was going to NCCI's Annual Issues Symposium in Orlando that week - New Orleans is on the way....

As I was staring at a Google Drive spreadsheet trying to figure out the formulas I would need to model a new business process an email from Mark Walls, VP Communications & Strategic Analysis for Safety National arrived: "Did you change your flight tomorrow?  If you did, I want to pull you into the Issues to Watch session tomorrow from 2-3pm."

Nope. Principally because I'm cheap, and I didn't want to lose the money I had already spent for a non-refundable flight from New Orleans to Orlando.

And I didn't bring a coat or tie...

That wasn't an objection to Mark.

An email to the WorkCompCentral worldwide headquarter's travel department generated a change of flight schedules. That was easier than I had anticipated.

For some reason that prompted a recollection of a philosophical article I read a while back by Oliver Emberton. He describes himself as, "Founder of Silktide, writer, pianist, programmer, artist and general busy bee."
His observations are acutely accurate, and sometimes painful.

He writes, life isn't unfair, we just don't play by the rules.

In short his observations are based on three principals.

1. Life IS a competition: My staff knows about this. Just ask them what I think about AYSO mentality. That email was brash and offensive, and in a big company would have gotten me into A LOT of trouble - fortunately my staff knows me well. They got the message hidden within my emotions and forgave  my stupidity.

2. You're judged by what you do, not what you think: I'm in an odd position, because a lot of what I do entails what I think. I write and I speak. Sometimes that gets me into trouble. Most of the time I, quite honestly, am baffled that folks find value in what I write and speak - but that's what I do.

3. Our idea of fairness is self-interest: This one REALLY applies to us in the workers' compensation field and is most poignant - we all hold ideas about what workers' compensation SHOULD be, but those ideas principally originate from what we want out of workers' compensation, not what is best globally for society.

A friend of mine, who consults employers about workers' compensation, is a big Atlas Shrugged, by Ayn Rand, fan. He comments that he first read it in 1973 and reads it at least every couple years since.

He says that at first he was taking on a world mission to "bring the message," but that as he got older, more mature, more experienced in life, he realized that Rand was just a shaman - telling stories and scaring people with tales of the "boogey man."

"She sets up straw men so she can knock them down."

But the one thing my friend says he did hang on to was the simple advise, when the world pressed down harder, was to tell Atlas to "shrug his shoulders."

Thus, the title of the novel - 'Atlas Shrugged'.

I had been whining to my friend about all of my life's complications, the pressures, the expectations (mine and others), and other matters largely irrelevant (in hindsight) to life.

"You THINK you have 30 employees, independent contractors, and bills to pay. No, you don't. You have yourself to be true to," my friend advised. 

"All you have to do is to BE you - and everyone else will have to be okay with that. If you think what you're doing now is important then keep doing it," he said. "If not, go do what you think is really important. It's never going to get any better than putting on jeans and a T-shirt and hanging out with your friends and family."

The panel presentation today is "Workers' Compensation Issues to Watch."

"Just be you," Walls said.

Okay - I have no idea what is going to come out of my mouth this afternoon. But likely it will entail this theme: workers' compensation isn't fair, and we don't play by the rules. Life is a competition, get over it. We ARE judged by what we do - ProPublica, OSHA, the Texas Tribune, L.A. Times and countless others have painfully pointed this out.

And our idea of fairness is all about self-interest.

I didn't pack a coat or tie, but fortunately I did bring some WorkCompCentral logo'd tropical print shirts.

Oh, I apparently also had Southwest credits, so the change in flights didn't really cost that much more money...

Tuesday, May 12, 2015


These are radically different conferences because the audiences are different. Self insureds might be interested in the data that NCCI will present, but the focus of NCCI is insurance company operational profit (or loss); not of much concern to self-insured employers who are more concerned with financing their own claims operations.

Though different, both have to do with workers' compensation, and both will emphasize the cost of delivering benefits.

And both deal with what I think is a popular misconception: that employers' work comp premiums (or other related expenses) come directly out of the bottom line and profits.

That's not accurate.

The obligation of taking care of the working force is just one element of many costs that go into production of goods or services.

When I went to business school, the economists called this COGSS - ‘Cost of Goods or Services Sold’. Every company deals with the COGSS of their particular goods or services. They mark them up based on two constraints – the profit they want to make and what the market will bear.

Sometimes those two constraints have no relation to each other.

In the economic world, ‘the Market’ is the most brutal. It is the most relentless task master of all. For every business, the rules are the same. You either figure out how to produce a product or service that customers will buy and for which will pay a reasonable price, or you go out of business.

Regardless of the size of the business, be it Russell's Donut Shop in Ventura, CA, or WalMart International, all have the same task and the same challenge – make a profit or go out of business.

We know that, on average, workers' compensation coverage costs (insurance or self-insured) are less than 3% of Payroll. Payroll (on average) is less than 50% of COGSS. Raw materials and overhead expenses are the major costs. So, the burden work comp places on COGSS is 1 ½ percent or less.

So, the worst that can happen in work comp is it is a slight bump in the road in the overall analysis of COGSS.

Get into big business, and the numbers seem very large indeed, but that has to be taken into context. It's all relative.

And while business pays for  work comp premiums, the fact is that this cost is passed along to the consumer, to the extent that the Market will bear. 

The cost of providing work injury protection is wrapped up into the COGSS and then passed on to the consumer. 

In other words, business simply fronts the cost of workers' compensation.

No business that I know has ever gone out of business solely because of paying for work comp insurance. The premiums, the rates, or any other measure of the cost of workers' compensation are exactly the same for all the competition; the difference is management, and show me a company with excessively high workers' compensation costs and I'll show you a company that has dismal profitability due to poor overall management. 

Somehow competitors deal with the premiums and still manage to make a profit. A business that has excessively high work comp premiums is a business that has excessively poor management skills.

Workers' compensation was designed to spread the risk. The risk of having people hurt and off work being non-productive is a social risk. The risk of a business shutting down due to a huge jury award against it is a social risk.

One is more personal because it could be you or me. The other is more global because it could affect a whole swath of workers and taxpayers if a whole lot of people are out of work, not paying taxes, etc.

Workers' compensation is, when viewed from this perspective, a broad based and indirect tax on consumers.

Exclusive Remedy and the whole work comp system came about, not to protect the injured worker, but to protect the employers. Historical records show that, before work comp, injured workers were successful in suing their employers only about 15% of the time. But, when the injured worker did prevail, the consequences were disastrous for the employer, and for all dependent on that employer.

So I'll go to SIIA's Executive Forum on workers' compensation and will experience talks on medical marijuana, big data, excess coverage, regulator issues and trends. And I'll go to NCCI to hear about carrier profitability, challenges to those profits, and of course Stephen Klingel's famed sole word descriptor.

It's all good workers' compensation wonky stuff and I love it.

But let's not get distracted. At the end of the day, what we really need to understand is that workers' compensation makes the best of a bad situation - without it people and businesses run big risks; with it those risks are absorbed by all of society.

It's not us, it's not them - it's WE.

In the end, Governments are formed to, ‘promote the General Welfare’ (Preamble to the Constitution). Any act must support the Public at large. Whether it is workers' compensation, or any flavor of the month alternative, the goal must be of a globally social nature.

Fail society and you have an untenable, unworkable situation.

Monday, May 11, 2015

One Sole At A Time

Moms always have a lesson for us, even when they're almost 91 years old.

A couple of weeks ago the memory care facility where Mom resides had a "wine and art" engagement program. Residents that wanted could do some art, drink some wine, and select art pieces would then be chosen to be auctioned off in a fund raiser for the Alzheimer's Foundation.

I was visiting Mom the day of that program and left her at the conference table with a dozen other residents and the instructor. It looked like she would have a good time.

And apparently she did - I was subsequently told by the Resident Director that Mom DID have a good time, and that her painting was chosen as a finalist to be entered into the auction.

I didn't put two and two together - a few days after the "wine and art" program I visited Mom and she repeated comments about school, whether it was out yet, what classes I had taken, when I was graduating, etc. I thought the comments about school were out of left field. That she repeated the comments wasn't unusual though, because that's what dementia patients do - they repeat the same thing over and over.

But my wife is wiser than me, and she figured it out. Mom was an accomplished artist before dementia took over. In fact we have many pieces of her art adorning our house, from large abstract relief sculptures to page sized paintings.

Mom received her Masters in Fine Art from Loyola Marymount University in Los Angeles when my brother and I were bucking adolescence and generally getting into teen-age trouble. Much of the art in my house is from that era.

Mom's engagement in "art class" triggered a memory of Loyola Marymount and the pursuit of her Master's Degree. That's where the "school" reference came from!

The auction for the Alzheimer's Foundation occurred last week.

Visiting Mom yesterday for Mother's Day, the Resident Director pulled us aside and advised that not only did Mom's work solicit the highest bid at the auction, but that in fact there was a bidding war for the piece.

I was curious.

Then I saw a picture of what Mom painted.

by Eileen DePaolo

I was stunned. Her favorite tree - she and I admire that tree frequently when I visit and we sit outside enjoying the afternoon together.

How could a 91 year old, moderate-to-severe dementia patient do THIS?!

Something deep down inside the lost synapses of the demented brain circuit a connection was made - the talent, the skills, the vision that had resided and honed over 45 years ago surfaced and was still producing; not something one would expect from a person with severe memory issues, but a fantastic work of art.

It seems that regardless of the Disability, that there are also many levels of Ability!

I've written about Dwight Johnson before.

He's the double amputee, suffering the loss of both legs at the knees from two separate work injuries.

The cosmos didn't look kindly on Johnson for a few years...

But Johnson worked hard at maintaining a positive attitude, ultimately coining his signature sign-off, "Have a Kick Ass Day."

His travels along the workers' compensation circuit were typical: fraught with delays, fright and fear, depression, uncertainty, misinformation and non-information.

And he got to do it twice. You would think that he'd become expert at navigating the claims process after the first one, but the second injury simply opened up the whirlpool of doubt, dismay and depression even further.

Still, Johnson persevered, testament to his personality and inner strength. He worked hard against depression, learned to walk again with protheses because sitting in a wheel chair was unappealing and constrictive.

I can't say his life is back on track now; Johnson still lives with daily pain and ghost limbs. He works hard to keep a straight head, but sees life now for all it's worth.

He is quick to thank his attorney, Keith More of Santa Ana, CA. for getting him through his travails. He jokes that he told his surgeons and therapists that he's given them two times to "get it right." He is ever grateful that the folks that managed his claims did so professionally, compassionately and quickly, though he's not so sure about the investigator who showed up at his door with a box full of papers and an accusatory tone to his questions...

And Johnson can't do his "job" anymore of inspecting skyscrapers - it's tough to climb construction sites with two prosthetic legs.

But Johnson dug down deep, discarded his Disability and turned to his Ability, starting a custom shoe company, Soule Innovations.

Johnson paints shoes. He got the idea after so many questions about his protheses - rather than have people stare at the metal attached to his knees he figured he'd give folks something better to stare at: wildly painted shoes.

Tag lines for his work reflect his Ability: Walk Creatively, Changing the World One Sole at a Time, etc.

Last week the charity group Kids' Chance (California division) awarded one of Johnson's sons, Trent, a $10,000 scholarship towards college.

There are many others like Johnson. For instance, in pro per claimants, the injured workers who can not obtain legal representation for one reason or another, taking on their own cases: I see cognition and creativity despite brain injuries; I see writing and cogent argument without formal training.

Skills and Abilities where previously there was no training and only Disability.

One sole at a time...

Friday, May 8, 2015

Claim Commodity

Access to medical care is usually debated in terms of geography or process approval - injured workers in more rural areas have greater difficulty getting to a physician because of geographical limitations, or a particular treatment request has to go through the approval/denial process before a physician will execute a treatment plan.

But applicant attorney and radio talk show host Alan Gurvey, in a recent WorkCompCentral opinion piece, points out a much more sinister and debilitating access issue: California Medical Provider Networks in accepted cases are themselves an access to care issue.

MPNs were invented a dozen years ago to allegedly bring efficiency into workers' compensation medical treatment by consolidating physician practices into a managed care setting, but as recently observed by the California Workers' Compensation Institute, their effectiveness is questionable, if not outright negative.

CWCI, at its annual meeting in March, disclosed that it is looking at three different eras: the preferred provider organization period prior to the 2004 reforms, with dates of injury between 2000 and 2002; the transition period from PPOs to MPNs with dates of injuries in 2003 through 2008; and finally the pure MPN era with dates of injury from 2009 through 2011.

Though the report hasn't been released yet, CWCI president Alex Swedlow did provide some preliminary conclusions.

In the PPO era, Swedlow observed, the average cost per claim was about $9,321 for services provided by a network provider, compared to $11,065 for non-network provider services, a difference of about 16%. During the transition period, the cost of in-network services increased to about $9,843 per claim while out-of-network costs decreased to $10,290, a difference of about 4%, Swedlow said.

In the current era of MPNs, the difference between network and non-network costs is down to about 3%. The average cost per claim is now about $13,654 when services are provided in-network and $14,061 for non-network services.

So much for "savings."

Part of the reason "for that collapse in savings" could be attributed to the growing number of claims that are being treated in the networks, Swedlow said; MPN administrators are "finding it somewhat difficult to scale the size of the network to have the same kind of superior results among a wider list of physicians."

Or maybe, as anecdotally alleged by Gurvey, it's a communication issue that starts at the claims administration office - he says that it is nearly universally impossible, in his experience, to get authorization for treatment within an MPN on an accepted case without going through weeks of failed communications until a proverbial gun is held to the head of the administrator by way of expedited hearing to get approval.

And there is still the issue of having a physician within an MPN who actually will take a work comp case, and then know what to do with it given the Byzantine complexities of treatment rules, regulations and guidelines.

Gurvey says, "it seems that the MPN system is set up as an intentional way to cause confusion, unresponsiveness, inappropriate treatment, unreasonable delays, and cost containment, without concern for the injured worker," and that the MPN structure needs reexamination.

If CWCI's preliminary indications are correct, then frankly MPNs don't make any sense. It was an experiment that failed the practicality test.

And this is supported by the Workers' Compensation Research Institute's recent findings that medical fee schedule scrimping exacerbates alternative billing - in other words, whack-a-mole.

“When (providers) lose revenue because of the … reforms, they would really have added incentive to try to find a way to retain the revenue that they used to get. So they keep playing with the system, playing with the rules,” WCRI researcher Dongchun Wang said during a webinar presentation yesterday. “I just want to emphasize how important it is to evaluate the impact of reforms and to try to identify those unintended consequences and address them promptly.”

So not only is there a shortage of physicians that are willing to operate within California's preferred method of medical delivery, those that do so are motivated to operate at fuzzy borders because of perverse payment rules and obstacles.

What's happened is that the industry's obsession with micro-management has backfired (as do most attempts at micro-management). The micro-management is a consequence of trying to save a penny on a wholesale basis.

The reality is that a workers' claim for compensation isn't a commodity, isn't something that can be dealt with on a wholesale basis - though administrator executives would like that.

Claims administration is a laborious, skill-intensive manual process that requires human decision making on a case by case basis.

The failure of MPNs is not a result of MPNs. The failure of fee schedules is not the failure of fee schedules.

These are symptoms of failing to take care of the claim - correctly from the outset, by skilled, knowledgeable, educated, compassionate and empathetic humans.

Which by the way is another "shortage," but that's a post for another day.

Thursday, May 7, 2015

Who's Got Big Balls?

"My breasts are worth less than your testicles."

With that observation, California Assemblywoman Lorena Gonzalez, D-San Diego, convinced the Insurance Committee on Wednesday to pass Assembly Bill 305, which she introduced as part of the "overall fight for equality in the workplace."

Under the AMA Guides 5th edition, which California uses as the basis for rating permanent disability, the maximum permanent disability rating for losing a breast is 5%, according to Gonzalez. If a woman is beyond "child-bearing age," the rating drops to zero. Meanwhile, the maximum rating for removing a prostate is 16%, Gonzalez said.

AB 305 would amend the Labor Code to declare the impairment rating for breast cancer can't be lower than the comparable rating for prostate cancer.

The bill would also prohibit apportionment of permanent disability for a physical injury from being based on pregnancy, menopause or osteoporosis "if the condition is contemporaneous with the claimed physical injury. For psychiatric injuries, the bill would prohibit apportionment of permanent disability based on sexual harassment, pregnancy, menopause or osteoporosis.

The "fight for equality" in impairment ratings has been going on for a few years, but it really started about 10 years ago as a consequence of the government's failure to follow its own laws.

SB 899, which was the momentous "reform" law under Governor Schwarzenegger's administration back in 2004, introduced the AMA Guides 5th as the default impairment schedule. 

That law was widely criticized for decimating the permanent disability indemnity benefit.

But SB 899 also mandated that the Division of Workers' Compensation amend and update the Permanent Disability Rating Schedule every 2 years, after empirical study, to account for inequalities that arose from the changes.

That never happened. The mandate was ignored. The government violated its own laws and requirements.

SB 863 came along a couple of years ago, and raised the indemnity rate, but did not change the PDRS.

The mandate that the PDRS be revised mysteriously disappeared from the Labor Code.

So, because the government can't do the job the law required it to do, the People see a need to do it for them with piece-meal legislation that will no doubt invite dispute, cause more "friction" and create more costs, while injured workers sit, again, on the sideline waiting for something to happen so they can move on with their lives.

This point was acknowledged by Mark Rakich, chief consultant to the Assembly Insurance Committee.

Rakich said whether a condition and an injury are contemporaneous is likely going to have to be a "fact-based determination" made case by case.

We never learn.

Wednesday, May 6, 2015

Interpreters, Fees and Fingers

The showdown on interpreter fees in California typifies why workers' compensation ends up with convoluted rules, ineffective enforcement, and diverts attention away from the main task of taking care of injured workers at a reasonable cost.

DWC proposed late last month, and two years past SB 863's mandate, an interpreter fee schedule.

The rules would create separate reimbursement rates depending on whether the services are provided in a medical or judicial setting, the language being interpreted and whether the interpreter is certified.

Proposed payments for medical appointments are:
  • $52.50 for Spanish language certified interpreters and $82.50 for certified interpreters in all other languages.
  • $25.75 for provisionally certified Spanish language interpreters and $33.25 for interpreters provisionally certified in any other language.
  • An interpreter at a medical-legal exam would be entitled to payment for a minimum of two hours for each exam.
  • An interpreter at a medical treatment appointment would be entitled to a minimum of one hour for each appointment.
The fee schedule rates for hearings and depositions are:

  • $210 for each half day of service – defined as 3.5 hours – and $388 for a full day of service for certified Spanish interpreters.
  • $240 for each half day and $418 for each full day of service for all other certified interpreters.
  • $103 for each half day and $187 for a full day of service for provisionally certified Spanish interpreters.
  • $133 for each half day and $217 for each full day of service for interpreters provisionally certified for any other language.
The rules would define an interpreter provisionally certified for hearings and depositions as an individual who a hearing officer determined is qualified to perform interpreter services. Provisional certification for medical appointments would require the physician to determine the person is qualified to perform interpreter services.

At least based on WorkCompCentral's story this morning, nobody is happy with the proposal. Some say it is discriminatory against Hispanic workers because Spanish is compensated at a lower rate than other languages. Some say there are still loopholes for interpreters to over bill for multiple appearances at a hearing. Still others say the schedule hasn't kept up with inflation, causing in reality a 50% pay cut for interpreters.

And nobody seems happy with workers' compensation judges declaring who is, and who isn't, "certified."

Everybody misses the point.

Fee schedules don't arise out of thin air - nearly universally, fee schedules are the aftermath of perceived abuse. In the case of interpreters, there are likely a couple that indeed abused the freedom of no schedule and loose rules that created an "issue" with certain folks; and perception is a powerful policy driver.

So the response is to create even more rules, more technicalities, more issues.


Guess what will happen? There will still be those who abuse whatever is put out there, and there will be those who don't want to pay.

Nothing will really change.

The solution is very simple: wrap everything into one package at a single price.

What I mean by that is that interpreters should just be paid by the day for whatever service they provide; half day if they can't show that services were tendered on a certain minimum of cases.

For instance, set the daily interpreter rate at $500, regardless of whether the context is medical, legal or both, and regardless of the language required. Assume that in a single day an interpreter should have provided services on six cases - the interpreter would need to note those cases by name, claim number and case number, on the bill. If there's six of them, or more, then the interpreter gets $500. If there's fewer than the interpreter gets the half day rate, or $250. 

And if only one case is serviced, but that case lasts a whole day ... oh well, it all works out in the end and maybe that interpreter won't be available in the afternoon, or a judge could order an override because the interpreter was in fact present all day. There are simple solutions.

Sure, some will fraudulently inflate bills by listing more cases than they tendered services on. That's no different than any other sort of abusive behavior that less scrupulous professionals are going to engage in anyhow.

That's a cost of business, and an enforcement issue for the government.

We're spending all this time, all this money, all this energy arguing and debating about a very small expense. In the meantime people are getting hurt, but not getting the treatment or indemnity mandated by the law which costs the employer more money than it should.

In other words, stop looking at the finger when pointing to the moon....

The DWC will continue to accept comments on the draft fee schedule until Thursday at 5 p.m. Comments can be sent by email to The DWC will review comments and consider whether to make change to the interpreter fee schedule proposal before initiating the formal rulemaking process.

The proposed rules are here.

Tuesday, May 5, 2015

Marketing Value

My blog post, Poisoned Kool-Aid generated polarized, partisan sentiments.

There were two camps - those who were offended by the alleged behavior of the opt-out employer, ResCare, and opt-out fans who derided Bob Burke (Rachel Jenkins' attorney and Oklahoma state constitutional challenger) and/or said that the "facts aren't as alleged."

I even had a broker/consultant offer to sponsor me for a couple of days to talk to Texas and Oklahoma employers, and in particular their employees, about their opt-out experiences.

I said that there likely was another side to the story.

Everyone missed the point, though, and that is the case is a public relations mess, even if the facts as alleged are not accurate, because the rally cry of opt-out proponents has always been that its better for the injured worker.

Maybe it is, maybe it isn't. I don't have the data and the facts to either substantiate that claim or challenge it. Opt-out employers are notoriously secret about their programs, and since opt-out can not succinctly claim the exemption from the Health Insurance Portability and Privacy Act that workers' compensation enjoys, privacy is a concern to those employers notwithstanding any need to prove themselves.

I waffle on whether opt-out is good or bad. It grows out of business' desire to have more control over the money spent for work injury protection. But it also clearly divides Business and Labor because of that desire for control.

And the opt-out movement is spreading in the South, as forecast, with attempts in Tennessee (on the legislative back-burner now until next session) and South Carolina, in sights for 2016.

According to WorkCompCentral correspondent, Mike Whiteley, the Association for Responsible Alternatives to Workers' Compensation met in March with a group of South Carolina employers, Workers' Compensation Commission Chairman Scott Beck and commission Executive Director Gary Cannon to discuss opt-out legislation.

ARAWC is well funded, with sponsors such as Wal-Mart Stores, Nordstrom, Safeway, Lowe's, Macy's, Kohl's, Sysco Food Services and several insurance companies. The group has the connections to move rather aggressively in the Southern states.

ARAWC Communications Director Brent Buchanan told WorkCompCentral that a bill in South Carolina should be filed before lawmakers adjourn the 2015 session to be ready for 2016.

A big argument of opt-out opponents is that the bills that get proposed lack "transparency," apparently referring to an inability for state regulators to monitor and measure these systems.

Trey Gillespie, senior workers' compensation director for the Property Casualty Insurers Association of America, told WorkCompCentral that the organization opposes the Tennessee and other bills because they lack transparency and don't provide levels of worker protection provided by workers' compensation laws.

"These proposals follow the Texas model, which lacks the transparency," Gillespie said.

We can all go back and forth as to the relative merits of an opt-out system versus traditional workers' compensation, but that is all irrelevant.

The issue is not whether opt-out should or shouldn't be offered. The issue is that traditional workers' compensation is under attack, for many reasons, and this industry should be concerned.

Traditional workers' compensation is under attack for two very basic reasons, all of this own industry's making: it costs more than employers think it should, and those who are to be benefited by such systems don't get the protections needed.

Lest anyone think differently, that simply the message that the ProPublica series, the OSHA report, and several other major newspapers have been postulating.

In other words, workers' compensation has a tough time convincing its stakeholders, employers and their workers, that it has any value.

Value is a perception call - to the consumer value means that the service or product is worth the cost or expense.

To the bottom line consumers of workers' compensation, the cost of providing what the law says must be provided doesn't match expectations.

Opt-out has a big chance to change that equation, to prove value, to show that it can take care of injured workers much better than traditional systems at a lower cost to employers.

But sending a denial letter to an injured worker based on a timeliness technicality greatly challenges the credibility of opt-out in a very big way.

To win over Labor only two promises need to be kept: that timely, effective medical treatment be provided without delay or interference; and that sufficient money flow to the injured worker to meet bills while mending, and to provide some offset for loss of earnings where full recovery failed.

I don't think that those who represent working people really care that much about WHO directs medical care, so long as it is provided quickly, and the treatment is effective. The managed care model can work very well, but Payers need to get out of the way when a treatment plan doesn't meet their desires.

Work Injury Protection, my euphemism for anything that provides medical coverage and indemnity to those injured while working, can be provided in many different forms. Opt-out is not necessarily a bad thing; it is an option.

But to prove that it is not a bad option, it needs to show that it IS good, which means data, anecdotes, testimonials (and not just from employers and their brokers).

The mission is very simple - take care of the worker. Do that without the interference of every snake-oil salesperson that shows up along the benefit delivery trail with a "solution" for a problem that doesn't exist.

In work comp parlance, those "solutions" are called "friction points."

Want to reduce disputes? Stop disputing. Want to reduce indemnity severity? Provide more treatment faster. Want to reduce medical costs? Treat the doctors fairly without micro-management.

And close the claim without leaving unnecessarily high reserves on the books for treatment that will never be requested...

Sure, this is a Polly-Anna, simplistic view. There are many challenges and exceptions. But we don't use common sense anymore.

Opt-out will continue to be a threat to the traditional workers' compensation model. And the opt-out industry will expand, aggressively, to other states, particularly if it consents to inspection, measurement and management.

Don't think for a moment that proponents haven't learned a valuable marketing message in the ResCare/Jenkins debacle.

Monday, May 4, 2015

Finger At The Moon

The Workers' Compensation Research Institute out of Boston, MA, last week released another of its CompScope Benchmarks reports (requires purchase), focusing on California.

There's lots of data and information about the cost of California's system, comparing it to other benchmark states (the others being Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Texas, Virginia and Wisconsin) and if you're an analyst or other work comp wonk, the numbers are interesting.

For instance, California experienced a 5% decrease in medical payments per claim during 2013 and 2014, post SB 863.

And California logged a larger share of claims with more than seven days of lost time than most of the other states – 28% – and reported average indemnity benefits per claim of $19,422 – 10% higher than the $17,670 median reported for the 17 states in the study.

Average benefit delivery expenses per claim in California, at $8,957, was 71% more than the median for the study. California also reported a larger share of claims with medical-legal expenses than other study states at 27.2%.

David Bellusci, executive vice president and chief actuary for the California Workers' Compensation Insurance Rating Bureau, told WorkCompCentral that while these costs are going down, "we're not seeing the frictional costs go out of the system."

The California Applicants' Attorneys Association said those frictional costs are being used to deny care, rather than control expenses.

"UR and IMR are being used to bring down costs, but not improve health care and certainly not to provide care in a timely manner," CAAA President Bernardo de la Torre said in a statement to WorkCompCentral.

This is all good for debate within the industry, but this debate about costs, expenses, friction, etc. misses the salient point and misdirects the conversation: the reason for frictional costs is because the claims decision making process, in my opinion, now has too many cooks in the kitchen.

Claims adjusters defer to utilization review, defer to bill review, defer to this, that and the other.

Communication with the injured worker is hampered by state regulatory requirements of mandatory language and procedures, which are very bureaucratic and, frankly, scary much of the time - driving attorney involvement, and once an injured worker consults an attorney that attorney gets hired...

Relations with medical providers has deteriorated to the point where the physicians that are still accepting workers' compensation patients do so under huge volume pressures; treatment hardly involves any "bed" time, which studies have shown to be hugely therapeutic, but does correspond with more pill pushing.

Employers remain largely apathetic to the claims administration process, relying on the "expertise" of professionals without understanding that they have a say in the claim and, consequently, a voice in how their experience rating is affected.

There's plenty more friction to go around, and as I have said before, it is our own doing, and up to us as team members that may have disparate interests to work together to reduce that friction.

Otherwise we truly do risk the demise of an otherwise beneficial system and important economic tool.

So we can look at all the costs and expenses and determine what to trim, but this is looking at the finger pointing at the moon, rather than the moon.

"Emotional content, not anger. Don't think ... feel. It is like a finger pointing away to the moon. Don't concentrate on the finger or you will miss all that heavenly glory." Bruce Lee, Enter the Dragon.

We too often engage in workers' compensation with anger. We think, and don't feel, and miss the heavenly glory.

It's not about costs and expenses, it's about taking care of the claim.

Friday, May 1, 2015

Sticking It To SSA

Last month the Research, Evaluation, and Statistics unit at the Social Security Administration (SSA), published its Annual Statistical Supplement to the Social Security Bulletin, 2014.

The Supplement concludes in part that, “about 10.2 million persons received benefits based on disability, including 8,940,950 disabled workers, [and] 156,672 spouses and 1,771,155 minor and student children of disabled workers received benefits.”

The “average monthly benefits in December 2013, including the 1.5% cost-of-living adjustment, were ... $1,146 for disabled workers," and, when based on gender, averaged $1,271 for men and $1,011 for women.

I have a problem with this.

Many states now limit temporary disability payments by time, pretty much arbitrarily.

For example, with rare exception, California limits TTD payments to 104 weeks, cumulatively, post injury.

How many of those 1.8 million on the SSD roles are the sequelae of workers' compensation benefits that were cancelled as a consequence of TTD duration limits under a state's law?

I suspect a large portion...

Which means that the Federal government, through Social Security, is doing the job that private and state workers' compensation programs should be doing.

And it costs you, me and your neighbor.

I'm surprised, frankly, that the Social Security Administration has not sued states, such as California, for reimbursement and/or to declare the artificial capitation on benefits illegal under federal law. Or at least hasn't been more aggressive in seeking reimbursement like Medicare has done - it does have the power to do so...

Based on the numbers that SSA published, it seems that SSA is owed about $12.2 BILLION each year from workers' compensation programs that pass the buck onto the Social Security system.

According to Social Security expert, Rafael Gonzalez, vice president of strategic solutions at Helios Settlement Solutions in Tampa, Fla. , the Social Security Act and the Internal Revenue Act have been amended over time to now permit the offset of Social Security Disability Benefits against workers' compensation disability indemnity until full retirement age.

But this only applies up to a certain age and how it is accounted for is different depending on the state.

"In 35 states around the country, it is the SSA that is statutorily permitted to reduce Social Security benefits when the claimant or disabled worker is also receiving workers’ compensation benefits," Gonzalez recently posted. "However, in 15 states (states that already had an offset or reduction law on their books prior to the federal law creating such an offset in 1981), it is the employer or carrier paying state workers’ compensation benefits that enjoys the reduction or offset. The 15 states with such reduction rights are: Alaska, California, Colorado, Florida, Louisiana, Minnesota, Montana, Nevada, New Jersey, New York, North Dakota, Ohio, Oregon, Washington, and Wisconsin."

So while these laws affect persons who reach retirement age and are still receiving disability indemnity benefits (likely more often than not, permanent disability), there likely remains a big chunk of money that the federal government is giving away to the carriers and employers that have shifted their responsibilities, via state law artificial constriction on the duration of temporary total disability indemnity, onto the over-burdened Social Security system.

Maybe I'm wrong about this because I'm no expert on Social Security, and perhaps Rafael will correct me if I am in error, but it seems to me that Loretta Lynch will eventually assign this matter out to a deputy to instigate litigation and bring responsibility back to where it belongs.

At some point in time the SSA is going to wake up, and we know the legend of waking sleeping giants. It won't be pretty.