Friday, October 30, 2015

Fairness To Self

Monday I espoused that workers' compensation had nothing to do with return to work because the ultimate decision lied with the worker, and his or her motivations.

I followed up a couple days later with a rant that there's nothing "fair" about workers' compensation.

The Supreme Court in Kentucky in April confirmed both of those tenets in ruling that the state's laws did not permit an offset against temporary total disability indemnity benefits if an employer provided an injured worker with a job during the recovery phase and while on TTD, even if that was unfair.

The result has been that many employers have stopped with their return to work programs.

The Supreme Court in its opinion in Quad/Graphics v. Mario Holguin said the employer made a good public policy argument for allowing employers to suspend TTD if they return an injured worker to employment on light duty before full recovery.

The employer, Quad/Graphics, (in reality, likely their insurance company, but it is not identified in the court's opinion) had argued that if it does not receive an offset, the plaintiff was getting “an unfair and unnecessary windfall.” Without an offset, employers “will stop placing its injured employees on light-duty work and the result will force employees to live off of reduced TTD benefits.”

The court found there is no law in Kentucky's statute books that allows employers to offset any benefits except in very narrow circumstances and not in any case where the worker is doing a job he was not employed to do.

According to WorkCompCentral's story this morning, many employers in Kentucky now, including some municipalities, have been dropping return-to-work policies entirely, confirming Quad/Graphics' argument.

Following release of the judgment, the Kentucky League of Cities told its 380 members to “discontinue any modified-duty work program you may have to avoid paying injured workers both for modified duty and workers' compensation indemnity benefits.”

The Quad/Graphics case is an unpublished opinion, which means it does not have binding authority as general law - the ruling is only applicable to that specific case. Still, the court basically affirms: there's nothing about return to work in workers' compensation and fairness is up to the legislature - everything else is an accommodation only:

"Workers' compensation is a statutory creation," the court concluded citing earlier case law for the quote. "Thus, the proper forum for the argument is the legislative."

Does return to work make sense? Sure it does. The employee derives the benefit of belonging, having more to do than contemplate his or her work comp case, and interact socially at a meaningful level. The employer ultimately saves money by reducing disability in the long run (because back to work will shorten disability duration - there are many studies confirming this), getting back to normal production faster and improving moral.

Employers that whine it's not fair do what is being reported - wah... They are short sighted and fail "the right thing" test.

But they prove as well that return to work is not a part of work comp, it is only an accommodation. And they further prove that there's nothing fair about work comp except what the legislature says is fair.

An employer waiting for sanctification from the legislature, though, isn't fair to itself...

Thursday, October 29, 2015

You Don't Belong Here

Richard was an FBI agent.

He's a resident at Mom's memory care facility. I've known him since Mom started there.

Richard is in his mid-to-late 60s. He's over six feet tall, but hunches over on his walker so he looks more like five foot ten. He always wears an FBI hat, has at least 2 hand held radios (and gets very upset if one is missing) and, as one would expect from an FBI agent, always has a serious demeanor.

Vascular dementia is Richard's disease. According to the Alzhiemer's Association website, "Vascular dementia is a decline in thinking skills caused by conditions that block or reduce blood flow to the brain, depriving brain cells of vital oxygen and nutrients."

His wife told me that Richard was fine, a normal operating brain, when he went to bed one night. He woke up the next day severely incapacitated.

Vascular dementia can work like that, sort of like a stroke. One day you're all good, the next morning you have significant cognitive impairment, though more often than not changes are progressive, and yes, age is a factor.

Richard's dementia has attacked, in particular, his speech. He can still speak, but it is in whispered tones and he mumbles. I have to work very hard to understand what he is saying.

He also had an issue with his right arm. At first his wife thought it was a symptom of his vascular dementia, but Richard's physician determined that it was a pinched nerve because Richard was sleeping on it. A pillow between the arm and body at night resolved that, and now Richard's right arm is completely functional again.

After his right arm regained function, his wife asked Richard to write his name as a test of the progression of his disease. He didn't just sign his name, he composed a note:

"I love this place. But I don't belong here." [signature - which his wife said was true to his normal sign].

This brought tears to Richard's wife as she showed me the note. I welled up too. There is no other place for Richard to go...

Many in the California workers' compensation system, be they claimants or vendors, might love the space, but feel they don't belong and the courts are saying, essentially, love it or leave it.

Yesterday California's 1st District Court of Appeal upheld the constitutionality of independent medical review, concluding what has always been the overriding theme in workers' compensation legislative changes throughout history: the legislature can do whatever it wants.

"We conclude that [Frances Stevens'] state constitutional challenges fail because the Legislature has plenary powers over the workers’ compensation system under article XIV, section 4 of the state Constitution (Section 4)," the court said. "And we conclude that her federal due process challenge fails because California’s scheme for evaluating workers’ treatment requests is fundamentally fair and affords workers sufficient opportunities to present evidence and be heard."

U.S. District Judge Jesus G. Bernal said in a Sept. 21 ruling in the RICO case brought by first responders against Corvel and York Risk Service that, "prior to final adjudication, workers' compensation claimants do not have a sufficient property interest in their benefits to establish the injury to property required for a RICO cause of action."

Workers' compensation is seen as a right by most of the population. Get hurt at work, or at least allege an injury, and it is the right of the claimant, and those riding his or her coattails, to benefits.

The court decisions are making it clear though that there isn't any right to workers' compensation benefits, and that what the legislature giveth, the legislature can taketh away.

Yesterday I said that workers' compensation is not about justice; that the system is simply a wealth re-appropriation system with dispute resolution built in to put finality to transactions that have some level of disagreement.

I think these recent court decisions firmly support that statement. The courts have warned that workers' compensation isn't worth fighting about; disputes don't belong in the courts because workers' compensation isn't about justice.

Work comp can't be about justice is because it is not a right bestowed by a constitutional grant. The only "right" is that the legislature has constitutional authority to do what it wants regarding work comp.

Sure, there may be some disagreement about exactly how much should be paid at a given time, or whether or not an "injury" falls within the ambit of work comp, or whether a particular procedure is authorized or covered ... but if the legislature says how to do something, or who gets what specifically, then that's the way it is and there's not a whole lot anyone can do about it other than get the legislature to change the rules.

There were times when Labor ruled the California legislature, and the work comp system expanded. Now Business rules the California legislature and work comp is contracting.

The fight isn't in the courts. The courts want nothing to do with work comp because there are no rights involved. One has a right to life, liberty and pursuit of happiness, sure, but those aren't guaranteed. It's up to individuals to sew their own guarantee though.

Which is why I concluded yesterday, "injured workers should get into and out of workers' compensation as rapidly as possible. Whatever it takes to exit the system with some modicum of health for the future, and whatever indemnity the law provides, is the goal."

The legislature has spoken, the courts have affirmed: Don't fall in love with the place. You don't belong here. 

And, unfortunately, there is no other place to go.

Wednesday, October 28, 2015

Ain't No Justice

I'm probably going to get slammed by injured workers for this post, but that's okay because there's a truth that needs to be said.

There's a reality to workers' compensation that most injured workers who get wrapped up into the system, particularly in litigation, don't appreciate, much less understand:

Workers' compensation has nothing to do with justice.


If you are looking to correct wrongs done to you, or another, via the workers' compensation dispute resolution system, regardless of state or jurisdiction, you're wasting time, money, and your own health.

Here's the bottom line: Workers' compensation is simply a wealth reallocation system. That's all it is.

It was not, and never was intended to, right a wrong, bring people to justice, or provide any sort of revenge.

Justice has no place in workers’ comp. Work comp is only moves money from one pocket to another, with some deductions along the way to pay for that service.

Money comes in from a business in the form of premium. A percent is skimmed right off the top by the procuring broker or agent. Then some is allocated for investment by the insurance or holding company. Some is set aside to pay the cost of claims and the office building and staff. Other amounts are paid to various vendors. At the end of the day there may be some left to return to investors, or to pay employer dividends.

The only reason there’s a dispute resolution process in work comp is because whenever money is involved someone wants more than they are entitled to or what others think they should get, and there has to be a process to manage the dispute and put finality into a transaction.

There’s nothing “fair” about workers’ compensation. Fairness is a legislative matter. 

Legislatures determine what is "fair," and if legislatures go too far out of the "fairness" balance, then a court will intervene. There are state supreme courts reviewing the fairness equation right now, but the standard for review will be the standard espoused by the US Supreme Court in 1917 when America's highest court held compulsory work comp was constitutional.

So long as comp provided a "reasonably just substitute" to a tort claim, the US Supreme Court ruled in New York Central Railroad Co. v. White (1917), then it could be the sole means a worker had for recovering against an employer.

There's a lot of factors going into the determination of "reasonably just substitute" - not just how much money a claimant gets, or the timeliness or thoroughness of medical treatment, etc.

Certainly there are court challenges pending in various states arguing that work comp is no longer fair, that the Grand Bargain has been compromised to such an extent that it doesn't meet the Supreme Court's standard of a "reasonably just substitute," but that's not in the NOW, i.e. the present reality. Any future supreme court ruling about workers' compensation constitutionality won't help the claimant TODAY.

You or I may not make it to tomorrow. We need to deal with today...

As in any wealth reallocation system there are winners and losers. And there is plenty of friction in the system that gets in the way of an injured worker receiving benefits - there's no argument about that. 

Injured workers all too often get the short end of the stick. We have chronicled that many times in this blog and in the news.

But, there was a time not too long ago that the business sector felt they were getting the short end of the stick too, that they weren't being treated fairly and they couldn't get justice either.

Here's the real deal: Employers and their workers are in the same boat - without work to do, there is no employer, nor workers who may get injured. Likewise, without workers, there's no way business can get done.

Each needs the other. Sometimes that relationship is more balanced than at other times.

It’s not intended to be “fair.” It is simply reallocation of wealth - plain and simple. 

Everyone in the workers' compensation industry makes money off the misery of injured workers and their families.

We all profit off the injured worker in some context or other. Some, I’ll certainly agree, push the boundaries of ethics, morality, and legality.

To be clear, I'm not against an injured worker having legal representation. Most systems are complex. The concepts and terms are confusing, unfamiliar, and there are many traps for the unwary.

But a lawyer on your case is not about seeking justice. For the claimant, a lawyer's job is to maximize case value because that's how they get paid. The more the case is worth in terms of dollars, the better the pay day. For the claims payer the lawyer's job is about minimizing the expense.

And there's nothing wrong with that because, as I said, workers' compensation is about wealth reallocation and the injured worker's attorney does the job by reallocating as much as possible within the rules of the game to the injured worker. The defense lawyer checks the balance.

Sometimes wrongs occur in cases, and the lawyer will seek redress for those wrongs - again within the rules of the game. And those rules generally provide for some remuneration to compensate for those wrongs (we call such remuneration, "penalties"). The motive, again, is case value maximization - not to teach a lesson (though sometimes a lesson may in fact be taught).

An injured worker seeking justice through the workers' compensation dispute resolution system jeopardizes health, sanity, and life itself wasting years that could be spent living while trying to buck a system designed as an administrative process.

The bottom line - injured workers should get into and out of workers' compensation as rapidly as possible. Whatever it takes to exit the system with some modicum of health for the future, and whatever indemnity the law provides, is the goal.

Living the claim takes years off a life for naught. Workers' compensation litigation is a terrible place to live.

Tuesday, October 27, 2015

Threat to Market?

Disclaimer - I'm no economist. I leave that stuff up to Bob Hartwig and his team over at Insurance Information Institute.

I just know what I know, and the older I get the more I don't know.

Still, in the world of workers' compensation there are some basic, simple facts that we tend to forget as we get swallowed up in the mire of data that either supports or contradicts our theories and actions.

The single most basic fact about workers' compensation is that it doesn't exist unless there are businesses that employ workers, and there are workers at those businesses.

Bottom line - without work there's no work comp, nor an industry to support it.

This fact was last made painfully aware to us in the Great Recession, when premium dollars dried up, and 2010 saw one of the single biggest jumps in claim frequency in many, many years, producing a couple years of negative combined ratios, followed by years (and continuing) of abysmal investment returns.

Workers' compensation is particularly hurt in troubling economic times when the top tier of the risk categories are impacted: construction, manufacturing, trucking - high risk lines with corresponding high rates and, ergo, high premiums.

And just when we think things are getting better, the global economy gets challenged, which challenges the domestic economy, because in this new world everything is connected.

The Wall Street Journal yesterday ran a story about the ongoing recession (didn't we escape that a couple years ago?) - not an overall recession, but the hard times befalling the industrial sector.

“The industrial environment’s in a recession. I don’t care what anybody says,” Daniel Florness, chief financial officer of Fastenal Co., the WSJ reported he told investors and analysts earlier this month. Fastenal is a NASDAQ traded company and its stock has been trending downward over the past year.

The reason the stock has been slipping is because its customer base isn't buying the nuts, bolts and other factory and construction supplies the company makes. According to the story, Florness said that a third of Fastenal's top 100 customers have cut their spending by more than 10% and nearly a fifth by more than 25%.

That story is repeated by other big, industrial stocks. Caterpillar Inc. last week reduced its profit forecast, citing weak demand for its heavy equipment, and 3M Co., whose products range from kitchen sponges to adhesives used in automobiles, said it would lay off 1,500 employees, or 1.7% of its total, as sales growth sagged for a wide range of wares, according to WSJ.

What's going on?

Energy prices (i.e. oil) has favored fuel consumers, but has killed domestic production and the need for drilling equipment and supplies. China's troubles, including its own interest rate cuts, have stemmed that country's needs for US goods, and other emerging markets such as Brazil aren't able to take up the slack.

According to the WSJ story, profit and revenue are falling in tandem for the first time in six years (six years ago we were in the throes of The Great Recession), with a third of S&P 500 companies reporting so far. Sales are also on pace to fall 4%—the third straight quarterly decline (and we're going into retail's customarily biggest season). The last time sales and profits fell in the same quarter was in the third period of 2009 says the Journal.

Last year, outgoing NCCI president/CEO Stephen Klingel in his State of the Line address opined that the industry was stable and that the future looked promising, but he couched that forecast with some skepticism about the future, and that skepticism seems foretelling. Pricing is being challenged, rates are going down (okay, except in California), investment returns are stagnant ... but claims frequency and severity is ameliorating too.

True - there are sectors that are defying the global troubles: tech, health care, autos, air travel; and most economists don't see a meltdown or overall damage to the economy.

But even construction, which is a high rate, high premium sector for work comp may be a challenge because, believe it or not, the home-building industry is saying they can't find labor to keep up with demand, and the most recent reports show that new home sales are actually cooling off.

It seems the financial world of workers' compensation is challenged. Low interest rates on renewing bonds squeeze investment gains (if at all); high margin risk categories aren't generating the payroll to fortify premium sales; foreign investment in US assets is waning; and the strong dollar abroad is pinching the export/import markets.

Oh, and good heavens, there are economists that are now saying Americans are saving too much!

On top of all this, we are in the midst of radical changes to when, where, how and who does work (and who pays for that work).

Forbes ran a story the other day opining that, "in the 21st-century corporation, whether it’s acknowledged or not, employees own most of the assets because they are most of the assets."

That's a radical concept - it's not the machines, the land, the buildings, the inventory that's important to the 21st Century business, but the people that make that business happen.

And people is what workers' compensation is all about - it takes people to hire people to do the work that people want done to produce the goods and services that people will buy....

So wait! Maybe work comp isn't doomed - the concept of how that insurance is bought, used and/or applied is just changing.

We think of insurance as a capital intensive business, particularly workers' compensation insurance where laws dictate minimum capitalization and liquidity to meet claims needs.

Many industries in the past used to be thought of as capital intensive, which created barriers to entry: transportation, lodging, information...

What we are seeing though, is that technology is enabling the redistribution of risk, and therefore capital requirements are not so intensive any longer: Uber, AirBnB, Facebook and Google - each of these new generation businesses have in common a basic business fundamental of redistributing the risks of operation making the revenue/profit per employee (i.e. asset) much, much higher than traditional models.

The old capital intensive requirement is a part of what we like to call "friction" but as this "new economy" is showing, that friction is being reduced dramatically. Work that used to require factories, offices, commuting, and risk, is now delegated to the most competitive workers throughout the world - what is now called the "gig economy".

So maybe work comp carriers don't need that much capital other than what the law says. Maybe the industry's traditional financial thinking is looking too much at the past, rather than recasting for the future.

There's a lot more to this story than I can give credence because there are so many moving parts.

Workers' compensation is over 100 years old; and while you can't teach an old dog new tricks, you can build upon the foundation.

I think that's what is happening - and we're seeing this happen before our eyes at a pace that is relatively slow so that the disruption is not as abrupt as in other industries. Berkshire Hathaway, Insureon, Intuit, and others, are all moving towards digitization of the workers' compensation insurance market.

At the end of the day it's understanding the risk requirements, which dictates the capital requirements. Knowing what the risk requirement is at a minute, detailed level means allocation of capital to meet that risk can also occur at a minute, detailed level - i.e. greater efficiency means less capital in the traditional sense.

Short term, the traditional stalwarts of work comp will be challenged. Over time, though, as efficiencies work their way into the economy those efficiencies will be translated to the work comp insurance line. I think we're going to see some exciting, new, and radical changes in the next decade as our "old world" industry becomes imbued with new world understanding.

Monday, October 26, 2015

Stop Return to Work

Floydell, WorkCompCentral's human resources manager, looked puzzled when she came into my office the other morning for a meeting.


"You're eating a donut," she replied.

"I love donuts." Particularly what I was eating - plain cake, hmmmm.

She was confused.

"But you're so healthy, eating the right things and riding your bicycle for exercise..."

"Whoa, whoa, whoa," I interjected. "I don't ride my bicycle for exercise. I ride my bicycle because I like to ride my bicycle - it has nothing to do with health or exercise other than it keeps me from coming in here and yelling at employees. The health benefits are fortuitous, not intentional."

Floydell understood, but I don't think was quite convinced. The notion that a cyclist would eat, let alone love, donuts didn't seem to correlate. And people ride bicycles for exercise, in her mind, not just because they like to...
I like to ride.

I thought of that conversation yesterday as I was wrapping up an 83 mile ride. I had ridden down to Malibu, up Mulholland Highway near Leo Carrillo State Beach, to the crest over to Kanan Dume Road, up Latigo Canyon Road over the top and down to Pacific Coast Highway then headed back towards Ventura.

I probably should have just headed straight home from there - I was feeling a bit of "anchor syndrome" on the ride and weather was just ... weird.

But I got to Encinal Canyon Road and my obsessive driven trajectory took me back up the mountain, then reverse course down Mulholland, and finally home.

That little diversion, though, cost me time against a change in the wind direction - and sure enough, I was provided a head wind on the worst part of the ride: flat, boring, straight into the wind Hueneme Road for five miles.

I wanted to quit. I contemplated calling my wife for a wussy ride. The ball of my right foot felt hot and irritated from friction. I was dehydrated. My back hurt. And it was hotter than I anticipated.

I kept going though. It's only 5 miles of hell - I just did 78, what's the big deal? So onward I rode.

I averaged only 18 MPH. Ugh. But at least I could brag about the mileage, 7,300 feet of climbing, and 4,344 calories burned.

And I'll do it again. I'll ride this morning when this post is done, and I'll ride tomorrow, and the next day and the next day.

Yep, I like to ride my bicycle. I don't know why, except that I've always liked 2 wheels, either powered by me or an engine. Doesn't matter - give me wheels and I just go.

If my job were just to be on two wheels, there would never be any motivation problem. I can get hurt, and as soon as I am able I'm back on the bike. My recovery times after accidents and injuries are remarkably quick, and I don't think it's that I heal any faster than anyone else - I just am motivated to get back on my bike.

I really do like to ride my bicycle.

But my job isn't to be on two wheels. My job is to run a company.

I have lots of other things I have to do for my job. Fortunately, now that WorkCompCentral is a relatively mature company, I have been able to delegate most of the stuff I don't like to do for my job and can focus mostly on what I do like for work: reading, writing and speaking.

If I were a workers' compensation claimant, assuming all of my regular job duties other than reading, writing and speaking, I'm not so sure I would be that motivated to return to work. I think I would take my time getting back to the job, particularly if I didn't get along with co-workers, or despised my boss or customers.

Which is why I think that this industry's obsession with return to work as an end goal is misguided.

Return to work has nothing to do with workers' compensation or the recovery of the injured worker. Return to work is a nice outcome, but it can not be a goal because the only person who can determine whether there will be a return to work is the injured worker!

The employer has to want the employee back too.

The antonym of return to work is don't return to work.

I recall many, many instances during my defense lawyer days when I was essentially tasked with using the workers' compensation system to make sure that an undesirable employee DIDN'T return to work!

Clauses were inserted into settlement papers, extra money was paid, and other motivation was provided to keep a particular claimant from coming back to the work place.

That was, and still is, wrong. Using workers' compensation as a human resources management tool is a bastardization of the system, and sends the wrong message to the work force.

Workers' compensation is about medical treatment for an injury and indemnity for the infirmity only. It is not designed to motivate an employment decision (and every time legislatures try that, it fails...).

While return to work is nice for the employer because it lowers the experience, and is nice for employees because work is so essential to human being's identity - there has to be something other than just collecting a pay check for return to work to be successful.

And those are things that we have absolutely no control over.

Return to health is a much better, and more realistic, goal. Getting the injured worker healed up as good as we can is what the medical treatment component of workers' compensation is about.

When we can't get someone back to pre-injury health, then the indemnity component kicks in.

But there really isn't any place for return to work as a discipline in workers' compensation, because it is the employee who must have the discipline to do that. What you do, what the carrier does, what the employer does, what the physician does - none of that matters!

If the injured worker doesn't like the job, doesn't like the boss, doesn't like life ... ain't nothing you can do about that.

That's the stark reality of the world we are tasked to work in. Why is it that injured workers can perform all sorts of tasks on surveillance video that they can't do if they're asked to go back to work before they're ready after a work injury? It's not because they can't, it's because they don't want to...

I like to ride my bicycle, so I'm going for a ride as soon as I hit "publish". Then I'm going to go to work, but only because I'm not getting paid to ride my bicycle. And when I get to work I'm going to focus most of my energy on reading, writing and speaking - because those are the things I like to do.

Hopefully someone else in the organization will take care of managing employees, reviewing contracts, make sales, interface with customers, deal with the bank, take care of the accounting chores, do IT trouble shooting, etc.

And if I'm really lucky, there will be donuts in the break room with some fresh ground and brewed coffee.


Post script: Yes, there were donuts today in the break room!

Friday, October 23, 2015

IMR... Again!

Maximus, the Independent Medical Review firm for disputed California workers' compensation medical treatment requests, is in the news again, this time for not itemizing all of the records reviewed in a determination.

When the firm started three years ago, documents reviewed were titled, dated, and the author identified.

Now, according to a review by WorkCompCentral reporter Greg Jones, Maximus has reverted to listing documents in a date range, which, attorneys for injured workers say, makes it impossible to determine whether there has been a plainly erroneous review - one of the five reasons under the Labor Code in which a second bite at the apple would be provided.

While that is a problem in itself, failure to itemize with detail just costs more money because if there is doubt about whether a particularly important document was reviewed then, at no cost to the injured worker or the attorney, but at a cost of $350 to the claims payer, a second review can unnecessarily inflate that loss cost expense.
Not again!

And we know what the fastest growing cost component in California work comp is...

An important potential benefit of IMR determinations, that is currently a missed opportunity, is educating the medical community via the determinations. If there were sufficient detail in the determination letters as to why, or why not, a particular treatment consideration decision was made then the community could adjust, and perhaps the quantity of IMR requests would go down.

But that is not how the system is set up.

Division of Workers' Compensation spokesman Peter Melton told Jones Thursday he was researching questions about how Maximus is identifying medical records.

I wrote a couple of posts ago that data is good, but there is a story behind the data that will either explain it, or contrast it.

This is one of those stories - and that the issue was brought to the attention of DWC via the story is demonstration that the data is not the end, but the beginning, of understanding.

Thursday, October 22, 2015

Not Our Obituary

John Coll's bronze of Brendan Behan

The negative image of workers' compensation and it's opt-out partner painted by the general media in the past couple of years is catching the eyes of some federal lawmakers.

Though opinion as to whether there is political will for the federal government to wallow into such a sacred state issue is mottled.

10 Democratic lawmakers sent a letter Tuesday to U.S. Labor Secretary Thomas Perez asking the Department of Labor to report on how it will reinstitute oversight of state workers’ compensation programs, what areas it intends to address and whether added authorities are needed to protect the interests of injured workers and taxpayers.

The letter was signed by presidential candidate Sen. Bernie Sanders, Senators Sherrod Brown, Patty Murray, Al Franken, Ron Wyden and U.S. Reps. Frederica Wilson, Chris Van Hollen, Bobby Scott, Sander Levin and Xavier Becerra.

DOL spokeswoman Laura McGinnis said the department is reviewing the letter and looks forward to working with stakeholders on solutions.

“We share their concerns,” McGinnis said in an email to WorkCompCentral. “Every year injured workers and their families are bearing more and more of the cost of workplace injuries and illnesses. Many states have passed workers' comp laws that reduce benefits or make it harder for injured workers to qualify for benefits.”

Back in 1972, during the Nixon Administration, the National Commission on State Workmen’s Compensation Laws was formed and made 84 recommendations for improving states’ workers’ compensation programs — including 19 recommendations it deemed essential.

Federal oversight was never instituted, but the states woke up, and a wave of benefit increases for injured workers progressed throughout the nation in the seventies and eighties.

Will that happen today?

Some don't think there's the political will, particularly as we head into an election year.

Others think that looming cash shortages in the Social Security and Medicare programs will incite some action, even feigned action, that will put the threat of Big Daddy into the states.

One thing is for sure, the relatively recent trend of negative general media reports about workers' compensation has heightened awareness of workers' compensation, and I think this is a good thing.

The vast majority of people, whether they're small business owners, big business executives, blue collar or white collar workers, have absolutely no understanding of work comp, and at least the media is providing some education to them about the system and our industry.

We industry insiders might not like the conversations that are being carried on, and we might take offense at some of the mud-slinging and negative anecdotes to support the stories, but so what? What do you really care?

These articles are providing workers' compensation with some much needed attention.

Workers' compensation and its off-shoots are commendable public service industries. We don't do everything great all of the time, but our jobs are to apply the law as evenly and fairly as we can to instances of work injury within the budgets provided, and most of the time that job is done admirably albeit without much recognition (which is why Comp Laude was created).

People make money off the system - of course they do; nobody works for free.

People scam the system - of course they do; a subset of humans will always seek an unfair advantage.

Some discount surveys of quality, others cite damning statistics.

And some point to quality outcomes, good vendors, people that overcome huge obstacles and get repositioned in life, eventually carrying on.

Media attention is good. That some federal lawmakers have taken notice is good. The conversations are spilling outside the borders of our industry and that is good.

Don't take offense that some might like to see a federal review of state work comp or that there might be some heavy handed federal position taken. I don't really see that happening any time soon. The feds can't even control their own work comp systems...

But if reviews and discussions lead to better balance, more efficiency, greater understanding, then we're the beneficiaries. No other industry has people with the skills, knowledge and talent to navigate the quixotic mix of injury, disability, medical care and budgetary constriction as workers' compensation.

We're given the rules and in the vast majority of cases those of us in the industry execute that mission on a daily basis, go home, and return the next day to do the same, serving millions of people every year in the process with nary any recognition or commendation.

So bully for the feds if they want to take a look as a result of media pressure. And bully to us that we're getting some attention.

Irish writer Brendan Behan said, "There is no such thing as bad publicity except your own obituary."

I don't think we'll be reading our own obituary.

Wednesday, October 21, 2015

Times A Changin'

I buy pretty much everything over the Internet now.

Looking at my receipts over the past couple of months: there were motorcycle and bicycle parts, shoes, shirts, a leather riding suit, tires, oil and filter for Forty One Mike.

About the only thing that I don't buy over the Internet these days is groceries.

And insurance.

And even the insurance part is not entirely true - insurance for The Sewing Machine was purchased on line through Progressive.

But all of my other insurance, business and personal, general liability, homeowners, auto, umbrella, directors & officers, cyber-liability, employee practices, health, dental, and yes, workers' compensation (geez, how much insurance can one person purchase?) - all via my broker Mike and his agents.

Why is that?

Is is too complicated? I don't think so - every insurance policy I have purchased, including workers' compensation, requires only the completion of an application. Those applications may be lengthy and ask really dumb questions that don't seem to either have any relevancy or are just in-artfully drawn, but nonetheless, there's nothing magical about the application process that requires human assistance.

Are there services that a human provides in the insurance procurement process that can't be replicated by a computer? I don't think so, at least not in my case. My agent has never helped me complete an application. Once his office assisted in getting records sorted for an audit, but I could have had a staff member do that. Otherwise, I'm not really sure what value my agent brings to the table for his commissions and fees.

One thing that a human agent can do that has not been replicated on line, yet, is easily shopping multiple carriers along multiple lines to make my purchase single decision easy. But even then, that's half-assed; it's just research and I'm sure he does that all on line... And I still have to write multiple checks several times a year to different companies for all of that ridiculous over-coverage I carry.

Employers Direct Insurance, started by Jim Little over a dozen years ago, was one of the first insurance companies that was started with the consumer direct model for workers' compensation. Eventually the company went the traditional broker model.

Little told WorkCompCentral reporter Elaine Goodman that they found people were "more comfortable keeping it all together with their ‘trusted adviser.” began selling business insurance, including workers’ compensation coverage,through its website last year.

Berkshire Hathaway is in the process of getting regulatory approval for all 50 states to sell workers' compensation insurance direct to the consumer, presumably through the Internet. Berkshire owns Geico, which has been selling auto and motorcycle insurance direct to consumer through the Internet for years now.

Berkshire has formed a new company for the venture, Berkshire Hathaway Direct Insurance Co., to start selling workers' compensation insurance in all 50 states to small businesses. It has approval now in 46 states.

A 2013 insurance survey by Deloitte Center for Financial Services found that 16% of all surveyed were very likely to purchase their insurance on line. 35% said they were somewhat likely to do so. Millenials scored highest in the survey, of course.

What's different now than in 2002 when Little tried the direct experiment? Probably just the passage of time which breeds familiarity and comfort.

I originally started WorkCompCentral in 1999 to be the document intermediary for service of legal papers in workers' compensation via the Internet. That concept was way too early for adoption by the industry, so WorkCompCentral became a media outlet, publishing news and education.

But a couple of years ago it seemed that the industry had caught up to technology, so DocuCents was formed and has been growing like gangbusters since. And we know the concept has validity because there are competitors...

For the Berkshire experiment to work, they will need to offer a whole suite of business insurance, make the process simple and elegant (by storing information and pre-filling applications with that repetitive data), and of course price competitive which they should be able to do by eliminating brokerage and agent fees and commissions.

I hope it works. There's no reason why it shouldn't if it is done right, and Berkshire certainly has the resources to experiment, to use the lessons learned with its Geico branded on-line service, and try again if it isn't satisfied.

And I'm happy to save a few hundred dollars on every policy.

Sorry Mike - I like you and appreciate the candy you send every holiday season. But other than that, if I can save money going direct and on-line, then that's where I'm going.

I think, as Bob Dylan wrote, "the times they are a-changin'."

Tuesday, October 20, 2015

Learning The Lessons

The Berkeley Research Group and Rand Corp. presented results and findings from studies conducted to the California Commission on Health and Safety and Workers' Compensation on Friday with several glass half-empty, half-full conclusions.

BRG's findings:
  1. 85% of workers injured in 2013 reported being "satisfied" or "very satisfied" with access to treating physicians and the treatment they received.
  2. The number of injured workers in California increased 5% from 2012 to 2013; this compares to nationally, in which the number of injured workers increased just 1% in 2013.
  3. The number of providers increased 1.4% in 2013, following a cumulative 25.8% decrease from 2007 to 2012.
  4. The increase in providers coincides with an increase in the number of medical bills of 19.3% in 2013, again following a steady decline over the prior 5 years.
  5. The number of medical bills per injured worker also increased, atop five years of increases cumulatively 16.9%, by another 19.3% in 2013.
  6. But the average medical bill decreased 18.8% following years of increases.
  7. Not surprisingly, because of the study's time line, opioid prescription and use had increased, and drug testing also increased (the California Workers' Compensation Institute earlier this month reported urine drug testing grew from 10.2% of lab tests in 2007 to 59.1% in 2014).

Rand Corp. also presented to CHSWC more conflicting information:
  1. The average pharmacy spend per injured worker increased to more than $1,000 in 2012, up from $600 in 2007.
  2. The average number of days from injury to first non-emergency room visit decreased from 21 or 22 days in 2011 to about 20 days in 2012 for all categories of injury. 
  3. The average number of days before the first medical service is provided dropped to about 18 days for specific injuries in 2012 from 20 days in 2011. 
  4. The delay in treatment for occupational diseases and cumulative injuries remained at just under 45 days in 2011 and 2012. 
  5. Delay increased slightly for multiple injury claims to 30 days from 28 or 29 days in 2011.
  6. The median number of days between injury and first visit for all injuries remained stable at two.
  7. Medical-legal services have been increasing steadily, as has the amount paid.
  8. Return to work was better for those with low back pain, but otherwise unchanged for chronic pain reporters: only about 40% of people with chronic pain injuries remain employed two years after the accident for all years from 2007 through 2011.
The study period for both of these reports is problematic - SB 863 became law in 2012, so 2013 is a transition year where many of the elements of that reform attempt were still in the process of being rolled out, and the industry adapting.

In addition, the BRG study cohort was just one year from date of injury, so by study's construction by definition pretty much did not include chronic injury cases.

And, though there was an increase in physician participation in work comp, the net decline is still over 24% from 2007.

There's plenty of conflicting data.

Which is where the story telling becomes relevant.

The flip side to the data are the stories about the 15% that are not satisfied, or about the 24% of physicians who no longer take work comp cases, etc. 

The data has to be put into context to have meaning. The stories will either explain the data, or contrast the data.

There's a story in the 15% that are dissatisfied with work comp, and in the increase in frequency, or lackluster RTW stats - that's where we learn the lessons.

Monday, October 19, 2015

Opt Out and ProPublica

It's easy to vilify Bill Minick and Mellisa Tonn.

The latest ProPublica story on work place injury systems, "Inside Corporate America’s Campaign to Ditch Workers’ Comp", paints Minick as a singular vigilante intent on destroying workers' compensation by taking Texas-style non-subscription to other states; plans that are crafted singularly by employers with the intent of sticking it to the injured worker to send more dollars to the corporate bottom line.

And Tonn, Minick's wife, represents a conflict of interest because she is the medical director overwhelmingly selected by PartnerSource clients to manage medical networks and doctor selections.

But like most everything in life, not only is there another side to the story, there are many complex permutations that need to be considered, and there's a big lesson too.

I've know Minick and Tonn for many years now. It's no secret that I'm a Pepperdine School of Law alumni (1984), and so is Minick (1985). We met about a year after I started WorkCompCentral. He had started PartnerSource a few years earlier. And I've known Tonn through various professional medical organizations, namely the American Academy of Orthopedic Surgeons (of which I'm a faculty member) and the American Academy of Disability Evaluating Physicians.

I've dined with both. I've attended social events with them. I've met their children.

They are good people. They believe that what they do is the right thing for America. Both believe that workers' compensation can be improved upon, and both believe that an employer option is the way to accomplish that goal.

“All you can do is pray that the Lord gives you a calling where you can really do good for society,” Minick is quoted at the end of the ProPublica piece. “That’s what gets me up every day, knowing that I’m getting better employee satisfaction and generating economic development. That’s as good as it gets.”

Minick is not bullshitting - he truly believes what he says, and that opt-out is, overall, better than workers' compensation for both employers and workers; and also for workers' compensation by providing competition.

Remember? This is America, a capitalistic economy where, in general, competition fosters better everything for everyone, at least academically.

Fundamentally, Minick and Tonn are of a Libertarian bend (I don't know their actual political affiliations); freedom of choice and relief from regulatory burden is a paramount belief. Less government, they believe, in both business and personal lives, is better and everyone should have greater responsibility for themselves. That's what drives their business philosophy, and opt-out itself.

The ProPublica article highlights a few vignettes of injured workers getting the raw end of the opt-out deal: denials based on unreasonable time limits for reporting, failure to provide sufficient medical care to remediate long term effects of injury, inadequate indemnity to stave off pauperism.

Certainly, though, these anecdotes are no different than what is experienced in full-fledged state workers' compensation systems. The earlier series by ProPublica highlighted the great disparity in benefits between states, and the hardships experienced by injured workers facing significant changes to their lives under the controls of workers' compensation systems. That series also used vignettes that the work comp industry labeled as unfair and unrepresentative.

But no one in workers' compensation denied that those case stories were real. Nor that they represented a problem. In fact, those honest with themselves acknowledged that these negative cases are all too common, and are a big problem. That series even led to an investigation of Traveler's by California officials.

Critics of the opt-out movement point to lack of transparency - information and data about what injured workers actually experience and receive in benefits is not easily obtained from opt-out employers.

Anecdotes indicate that the reality is different than Minick's ideal that such plans aren't better for the workers.

Both are fair criticisms. Frankly, there's nothing wrong with those realities being told either. Opt-out proponents need to know those stories. They need to "experience" life as an opt-out employee who's life is shattered because the plan doesn't take care of them, regardless of whether it's better or worse than standard work comp.

Remember my rant on experiential adjusting? Same holds true for anyone involved in the medical/disability management industry, whether it's work comp, opt-out, general health, private disability - whatever. If you don't know the result on a personal basis, you aren't learning and the perception is a callous disregard for the welfare of others.

In sort of a paternalistic way, opt-out plans heavy-handedly encourage return to work. The penalties to an employee for not getting back to work as early as possible can be significant.

This is by philosophical design - the overwhelming evidence is that work is good for people, and that being off of work for prolonged periods dramatically, and exponentially, increases the likelihood of long term disability.

But this heavy-handed approach doesn't work all the time, and unfairly penalizes those unable to overcome the additional obstacles that a work injury throws in the way of, perhaps, an already difficult life. When a work injury protection plan throws up additional obstacles, such as denial of care or refusal to accept based on timing, the penalty is amplified.

Just like work comp itself.

Employers tout great savings, and these are good for the board room and SEC reports to investors. Heartless corporate America is the perception though: At what cost to society? To individuals? To vendors? To employees? To shareholders?

The opt-out employer mindset is a less-is-best viewpoint. Get the government out of the equation; take more control over who provides what, and when; put incentives (positive and negative) in place to drive behavior towards the corporate ideal; eliminate waste, fraud and dependency.

There's a lot of appeal to the concept of the opt-out movement. I'm no fan of government and bureaucracy. I'd just as soon not have others tell me what to do, and how to do it (which is why I've never worked at a big company I guess).

But this Libertarianism assumes a high level of personal responsibility. The more freedom one is provided, the greater the requirement of accountability. Some are mature enough to accept this. Others are not. And this is on a both personal and corporate level; just how greedy can one get before society is offended?

The public's perception of corporate greed is particularly acute when times are tough, or when the media makes examples of outsized executive compensation compared to the toiling working class. Class stratification has become a big source of public discontent. This is a reality that can't be ignored.

The opt-out movement needs to come to terms with this reality. Indeed, ALL of the work injury protection industry needs to.

Oklahoma's 2-year old reform, that introduced opt-out to the state, says that employers' plans must meet the same minimum benefit requirements that the state work comp system provides.

What it doesn't require is that plans meet the same procedural protections - and that is a fault that the opt-out movement took advantage of, and which has provided many of the negative anecdotes the media has reported.

Having an employer appointed doctor determine medical and indemnity fate, only to be reviewed by an employer appointed binding arbitrator, is perceptually bad. There is no check and balance in that type of a system. There is no perceived fairness. It's stacked against the employee. The working class gets stiffed again...

I believe that opt-out can work. But ONLY if it is a fair, and BARGAINED-FOR exchange.

Remember the Grand Bargain? There WAS a bargain 100 years ago. First there was fighting, name calling, shouting, discord... and eventually compromise was reached. That compromise has been challenged over and over again and the first set of the ProPublica series simply pointed out that perhaps the bargaining in today's environment isn't balanced or fair.

What the ProPublica opt-out story really shows is that government not only got out of the way, but completely failed to protect the public; government assumed that plan promoters would do so.

That's unrealistic, myopic thinking. Everyone, and I really mean EVERYONE, at the end of the day given any set of circumstances, will first act in their own self interest. All others take a back seat until the individual's self interests are satisfied. In Oklahoma, government has failed to protect the public.

What is missing in the creation of opt-out plans is simply the lack of a bargain. There is no employee representation negotiating these plans. Government (at least in Oklahoma) is tasked with looking out for the workers' interests, but they don't BARGAIN for the deal - they only approve what is presented: an employer-centric system designed by employers for employers.

“We’re talking about reengineering one of the pillars of social justice that has not seen significant innovation in 100 years,” Minick said.

That's not a bad thing. Nearly everyone that I have come across in the past few years criticizes workers' compensation as too complex, and too costly for too little - i.e. not delivering the value that we expect. So opt-out should provide the remedy.


"But as Minick’s opt-out movement marches across the country," the ProPublica story reads, "there has been little scrutiny of what it means for workers." This is a nicely written sentence that is wrong on several fronts.

First, opt-out isn't marching across the country. Texas originated it. Oklahoma adopted it after several years of legislative wrangling. Tennessee and the Carolinas are targeted - this is not a movement that is marching. However, trust me, that all of the states are watching and learning to see what is good, and what is bad. Opt-out is disruptive, experimental. But it is not marching.

Second, while there has been little scrutiny of what it means for workers, whose responsibility is that? Current opt-out plans have the fox guarding the hen-house. And as I mentioned, all of those plans were unilaterally created with no worker representation at the deal table.

Government has failed miserably at providing scrutiny. But part of the failure is also Labor's fault. Unions are at an all time low with their constituencies - they are just as out of touch with the working class as the executives on the 99th floor.

The disintermediation of labor has been accelerated with the digital age - Labor has been greatly disrupted and can no longer advocate for the working class.

So who's going to do that? Government won't and Labor can't. 

The story behind the ProPublica opt-out article is that business is running amok, but this will, indeed, eventually back fire. History has taught us that.

ProPublica states, "And it’s Minick’s handiwork that allows Costco to pay only $15,000 to workers who lose a finger while its rival Walmart pays $25,000."

That's bullshit. Minick didn't do that, his clients did it. Minick facilitated the process, certainly, but he doesn't control Costco nor Walmart. What REALLY happened is that neither Costco's nor Walmart's risk management executives made any attempt to include their workforce into the development of their plans, and that's why they are so lopsided.

Business has taken advantage of Labor's weakness and has run amok.

Don't get the idea that I'm anti-ProPublica. In my mind they have done an outstanding job of bringing to America's attention the lack of real protection that people have when they get hurt on the job.

What the ProPublica articles on work comp, and now opt-out, are saying is, the Grand Bargain isn't grand anymore because there's no bargaining.

I firmly believe that this country's strong economic engine is due in part to the work injury protection systems that are in place. When done right the employer is protected, the employee is taken care of, the economy is stable, society benefits.

When it is singularly focused, though, such systems create mistrust. Business can not run on mistrust, and eventually a revolution will be fostered that will work against the near-sighted.

Here's the lesson - ANY work injury protection plan or system MUST be an employee benefit, like health care, a 401K, time off, dogs at the office and a well stocked break room.

But they're not. The laws have ensured that workers' compensation be regarded as a compulsory expense, not as an employee benefit.

Opt-out plans have taken the same approach because their singular focus is reducing expense. This does not tell employees they are valued - rather it tells them they are a cost, and worse, an expendable cost.

And this is where the opt-out movement, if it really wants to grow and prosper and, as Minick says, reengineer one of the pillars of social justice, can work, can make a difference, and can lead changes in the way we think of work injury protection systems.

Opt-out needs to start with the mindset that it is an employee benefit just as valuable to employees as any other employment benefit.

Work comp likely will never get to that level of beneficence because the laws have put a tourniquet on both business and labor. 

But opt-out can be an employment benefit, and should be.

Fundamentally, there's nothing wrong with opt-out. But how it's executed is another matter.

Friday, October 16, 2015

A Side Note

Going or coming?

One rule of statutory construction is that the courts make assumptions based on prior law - that is if a legislature does, or doesn't in some cases, specifically deal with or mention a particular concept of law, such as the "going and coming rule" in workers' compensation, then the courts will assume that the law makers didn't want to mess with the "old" law.

This is particularly true when the legislature does deal with other details.

The Oklahoma Court of Civil Appeals reminded the state's work comp participants of this propensity in a recent case, Robinson Medical Group/Castlepoint Insurance vs. True (113,528 - 10/07/2015).

Tommy True worked as a registered nurse for the Robison Medical Resource Group. His job required that he work at various hospitals throughout northeast Oklahoma – mostly in Claremore, Pryor and Mayes County and occasionally other locations.

True was supposed to go to Claremore to work on March 8, 2014, but Robison asked him to go out to Grove since a sleet storm had left the hospital there short of staff.

True testified that he negotiated a higher payment at a rate of $40 per hour representing his hourly rate of $37.50 and an extra $2.50 per hour for his mileage. Castlepoint did not offer any rebuttal testimony on payment arrangement.

On his way home from work, True's car hydroplaned when he swerved to avoid a deer. He crashed into a tree, sustaining severe injuries that almost cost him his leg.

The Administrative Law Judge found True's accident to be compensable last June, and Castlepoint appealed.

The Commission upheld the ALJ.

The Court of Civil Appeals found there was substantial competent evidence to support the ALJ's finding that Robison had compensated True for his mileage in driving to and from the Grove hospital because although Castlepoint offered evidence that the payment arrangement was not standard, there was no evidence to rebut True's testimony as to the specifics of pay.

The question then became whether Robison's payment of compensation for True's travel time kept him within the course and scope of his employment, even though he had already left work and was heading home on a public roadway, the court said.

Section 2(13)(a) of the AWCA defines the "course and scope of employment" as excluding a worker's travel to and from work, the court noted. "(T)his language is substantially similar to what, under the Workers' Compensation Act, was the general rule," often referred to as the "going and coming rule," the court said. Thus, the court reasoned Section 2(13)(a) represented "an express attempt by the Legislature to adopt that general rule."

The court observed that the AWCA expressly adopted, abrogated and modified many of the formerly recognized exceptions to the going and coming rule.

Under the Workers' Compensation Act, the going and coming rule did not apply when a worker was hurt while traveling to or from his workplace to perform a special task outside of his regular work hours, at the request of his employer, for the employer's benefit, the court said.

So, since there were expressed limitations and exceptions, etc. in the Act, the legislature's failure to eliminate the special task exception meant that it still applied.

As "Legislative silence on a well-established point of law is not indicative of the abrogation of the prior law," the court said it had to find the paid-travel exception "survives intact under the AWCA and it applies to this case."

Now, a side note.

You may have noticed that I inserted the insurance company's identity in place of the employer's identity relative to the procedural decisions in this case.

I will do this in the future when possible - the reason: employer's don't make litigation decisions (unless they are self insured/administered) in the vast majority of cases (and if an employer does direct the litigation, then YOU let me know!).

Overwhelmingly, the decision to deny, defend, litigate, etc. is delegated by the employer to the insurance company via the insuring contract.

Robison's, in this instance, would not have wanted this case to fall outside the exclusive remedy of workers' compensation because of the exposure to civil liability - which, by the way, would have been denied by the general liability carrier as a work comp claim: the proverbial Catch-22.

The courts are largely responsible for confusing the responsibilities of the employer and carrier because the courts have made it a habit, either through procedural rules or just customary practice, to lump the two together.

But an employer has distinctly different interests than the carrier does. That's the nature of the insurance relationship.

So, unless an employer actually does control litigation decisions and that point is distinctly available from the record, I'm going to assume that it's the insurance company that makes those decisions - and will criticize (or praise) accordingly.

In this Robison case, it is quite obvious to me that the decisions were those of the carrier. And, by the way, the management of evidence, particularly witness rebuttal to True's pay testimony, is telling - there was no evidence to rebut True, and that should have driven Castlepoint's decision to drop the litigation and pay the claim.

But other interests got in the way - and that's a rant for another day.

Thursday, October 15, 2015

Experiential Adjusting

I've written a couple of times about experiential lawyering - this is a method that famed trial lawyer Gerry Spence teaches at his school. The premise is that you don't REALLY know the story you are to convey as a lawyer unless you actually experience what life is like for your client.

Sort of like embedding for journalists; 24 hour observation in as objective manner as possible unveils the story like no other means. The experiential experience (pun intended) means being involved as an observer without helping or partaking in the life of the subject.

The power of objective observation has a perspective altering effect, and it seems to me that those in the workers' compensation field, regardless of position, should be embedded for a day with an injured worker.

We don't think about someone like Dwight Johnson, last year's WorkCompCentral Comp Laude Award winner - what he has to go through every single day with no lower extremities.

Things that we take for granted complicate his life immeasurably. Regular day to day routines aren't so routine: showering or bathing, pooping, dressing, and even just getting around... We see Dwight come up to the podium, clean, groomed, ready to talk - what we don't see is that it takes ALL DAY to get to that stage.

I got on the industry the other day about top tier leaders of workers' compensation vending companies, carriers, TPAs, others, about not mingling with the crowds at conferences, but that's only the tip of the iceberg. Mingling with the minions shows leadership and offers an opportunity to understand the day to day of industry people, but there's more to this people business than just industry workers.

How many of you, reading this, have actually seen face to face, your injured worker, let alone experience what they go through for a whole day?

I bet very, very few of you have, or at least not very frequently.

And I'm sure that those of you who have done so have a much different perspective on life as an injured worker than you did before.

We work comp wonks love the data. Data is simple - just numbers. Data tells us things about performance, about trends, about costs and outcomes.

But data without a story behind it is a failure to humanity. It is the STORY that either explains the data, or contrasts the data.

The STORY is about the family that can't get by on temporary disability indemnity alone.

The STORY is about the man who commits suicide because of his opiate addiction leaving behind small children and a widow without adequate means.

The STORY is about the person who can't tie his own shoelaces because treatment has been delayed or denied.

The STORY is about the woman living in pain for the rest of her life because the physician used counterfeit hardware and conducted unwarranted surgery as part of a payola scheme.

There are thousands, if not millions, of these stories and while they may have similar themes, each one is as unique as each one of us are: the human condition can't hide behind data.

I'm big on training. Obviously WorkCompCentral does education and training, and all of the big claim shops have very excellent training systems in place.

But all of this training and education is lacking because it is so milquetoast. We hide behind legal issues, rules, regulations, file numbers, theories and billing codes.

Claims professionals have no time in their work days to manage their file loads, let alone actually listen to an injured worker trying to pay the rent, or applying for food stamps.

When I was a young lawyer, our defense firm required every lawyer to maintain at least one injured worker file active in inventory. This education built empathy into our lawyering. We knew what our jobs were, but we also understood the issues facing the other side of the bench.

I think this made us better lawyers.

I suggest that experiential claims handling would make for better claims adjusters, better claims supervisors, better claims executives.

Just ask the claims handlers who actually have had to go through the claims process themselves - each and everyone of them will say it opened their eyes.

Ask Jane Hays, recently in the news as the 73 year old member of the Board of Trustees of Texas Political Subdivisions, a non-profit self-insurance pool administering workers' compensation benefits for local government entities, whose claim after suffering an amputation injury was denied.

"I now understand what they feel like," Jane Hays is quoted as saying in a Texas Tribune article. "We just need to have a workers' comp system that is fair to the workers, the injured workers."

Claims folks who get on the receiving end of the system do their jobs much more compassionately as a consequence of the experience, and I might add, likely much more efficiently, because they know how shitty it is to be on the receiving end of the eternally malevolent workers' compensation system.

Experiential adjusting should be a routine part of all claims education, and continuing education.

Wednesday, October 14, 2015

Florida Takes the Lead

The Florida Supreme Court announced yesterday it has accepted jurisdiction in Stahl vs. Hialeah Hospital/Sedgwick.

"The Court accepts jurisdiction of this case as to the basis for jurisdiction under Art. V, § 3(b)(3), Florida Constitution (i.e., expressly declares valid a state statute)" says the Court's docket.

This is big.
FL Supreme Court

Florida's high court will be the first in the nation to weigh in on whether workers' compensation benefits have so eroded the Grand Bargain that it no longer meets state constitutional muster.

Daniel Stahl was injured while working for the Hialeah Hospital in 2003.

A doctor placed him at maximum medical improvement in October 2005 and assigned him a 7% impairment rating.

Stahl's case went before the 1st District Court of Appeals, which has original jurisdiction over all workers' compensation appeals, several times on various issues. His last appeal challenged the statutory imposition of a $10 copay on his doctor visits after he reached MMI as unconstitutional.

He also argued that the elimination of permanent partial disability benefits in 2003 makes the Florida Workers’ Compensation Law an inadequate exclusive replacement remedy for a tort action.

The 1st DCA said both the copay and elimination of PPD withstand rational basis review, in that the copay provision furthers the legitimate stated purpose of ensuring reasonable medical costs after the injured worker has reached a maximum state of medical improvement, and PPD benefits were supplanted by impairment income benefits.

Stahl says in his petition to the Supreme Court that the use of the "Rational Basis" test is improper since fundamental rights are impinged upon: due process of law, the inviolate right of trial by jury, the right of access to courts and the right to be rewarded for industry; arguing that the "Strict Scrutiny" test must be applied instead.

Covering the bases, Stahl says that even if the rational basis test was the correct standard, it was misapplied because work comp law is "remedial" legislation, meaning it is designed to remedy a perceived problem in society: the burden of industrial injury on the industry served.

"It was not to make Florida business competitive with businesses in Mississippi, Alabama, Georgia, Texas or any other state or country," Stahl says in his petition.

So if the rational basis test is applicable, the test must apply to the purpose for which the law was enacted, in this case using the police power of the state as its legal foundation.

With regards to indemnity, Stahl argues that the Rational Basis asserted by the 1st DCA fails to take into consideration that in the 12 years since the 2003 amendments, workers' compensation premiums have been reduced by approximately 60%. "It is no longer necessary to keep benefit reductions in place to contain costs," it is argued.

Stahl's petition is here:

Hialeah Hospital's response is here:

Here is the Court's timing of events: "Petitioner's initial brief on the merits shall be served on or before November 2, 2015; respondent's answer brief on the merits shall be served twenty days after service of petitioner's initial brief on the merits; and petitioner's reply brief on the merits shall be served twenty days after service of respondent's answer brief on the merits. The Clerk of the First District Court of Appeal shall file the record which shall be properly indexed and paginated on or before December 14, 2015."

The parties will be noticed of the scheduling of oral arguments 60 days beforehand. 2016 is going to be very, very interesting.

Tuesday, October 13, 2015

Leading At The Top

Holy moly was it warm this weekend in Southern California.

We don't have air conditioning at the beach because it would be useful, maybe, a dozen days a year.

So, like most reasonable people, Anne and I used someone else's air conditioning by going to the movies. Everest was the choice: cool (cold) climate, breathtaking scenery, tragic drama...

I'd read about the 1996 expedition tragedy in Ed Viesturs' book, "No Shortcuts to the Top: Climbing the World's 14 Highest Mountains" (2006). The movie, Everest, was taken from Outside Magazine's Jon Krakauer's recount in the book, "Into Thin Air" (1998). Krakauer was on the fateful expedition, and had been embedded to recount an Everest summit attempt, though not a tragedy. Viestur was a consultant to the film, and is a small role too.

The protagonist in Everest is Rob Hall, a New Zealand mountaineer who, like Viesturs, had climbed many of the world's 8,000 meter peaks. He started a company to take adventurers to the summit of Everest, and this is the origin of the story.

Mountaineers have their own community. There just aren't that many people that scale 8,000 meter peaks, and those that do have a special bond because they have similar backgrounds experiencing the risks, the hardships, and survival at jet liner cruise altitudes.

1996 was a popular Everest year and too many people that didn't belong on that mountain, with some 20 teams crowding base camp all at once, attempting to hit a narrow window of opportunity between weather systems.

There were too many on the mountain crowding the pathway to the top. Though Hall tried to get all of the teams to work together, a contingency wanted no part of the community. And even though two teams did end up cooperating, their fate was determined by the more selfish climbers, who, it has to be assumed, had some part in removing key ropes to the top and using stored oxygen bottles, which meant the other teams had to spend valuable time, energy and resources reconstructing the path, and obtaining more oxygen.

And a big mistake was made on the mountain by Hall. Viesturs laments this in his book - ignoring the hard time limit of summiting Everest: if not on top by 2 p.m. then there is no summit. Viesturs' working motto, “Reaching the summit is optional. Getting down is mandatory,” was fatefully ignored by Hall to get a climber, Doug Hansen, for whom this would be his third and final attempt summiting Everest, to the top, exposing the team to one of the worst storms in Nepal history.

People died. Others terribly injured; Because team cooperation was disdained, and rules not followed. 

The examples set by most of the expedition leaders led to chaos and tragedy. The mountain climbers, though perhaps experienced and skilled in mountaineering, still require strong leadership, particularly in the extreme climate of 8,000 meter peaks, and team member cooperation is vital.

Even Rob Hall failed in leadership, succumbing to Doug Hansen's pleas to summit despite the late hour, Hansen's failing health, and the "hard" time of 2 p.m.

The leadership failure is not unlike the workers' compensation industry.

An industry friend asked me, "Where are the company execs at these big work comp conferences? I see Dave North (CEO, Sedgwick) at the big ones. He even attends sessions. I never see other execs from big carriers, TPAs or service providers at these unless they are speaking. Then they show up for their session and leave.

"What message does it send to the industry when our industry leaders are invisible and always behind the scenes? How do these people stay connected to an industry when they never get out and mingle with the masses. Playing golf and meeting with other execs is not enough...."

My friend has a point.

An executive's primary job is to lead. Leadership happens best by example, and sometimes against personal desires or wishes.

We talk about workers' compensation being a "people business." Our mission and goal is to deliver the assistance of the workers' compensation system to people. It takes, of course, people to do this. Teams of people. And teams need leadership.

But if the leaders of this industry aren't out there leading, then how can we expect the troops to follow the same old worn and trite communications?

Mr. North attended the Blogger's Panel session in Dana Point a couple of weeks ago, and specifically took me to task about my posts on internal industry fraud.

As he should. He defended the industry against the accusations that I communicated via sources who wished to remain anonymous (and again, how can anything be done about alleged fraud when those purportedly in the know stay anonymous?).

And good for him - he's doing his job as a leader in the industry, tackling the issues, seeing what is going on around him, understanding the competitive, regulatory, legal and compliance landscape.

He's not hiding.

Bill Zachry, Group Vice President Risk Management at Albertson's is another leader who doesn't shy away from conferences, attending sessions, scouting the exhibit hall to see, as he puts it, where the money is going.

But there frankly aren't a whole lot of other top tier executives that you'll see at any big conference.

Why is this? What is so ponderous about cavorting with the minions that do the day to day duty of ensuring the workers' compensation system operates?

We talk about the declining talent in this industry, how we have failed to attract new blood and retain them, how we have failed to train people to replace out own aging workforce - and this all comes down to leadership.

Leadership to commit the resources necessary to make this industry attractive, to get good people in so that good work is done, to challenge the status quo and use imagination, engineering and above all else, commitment to make workers' compensation operate as well as it can given the laws, regulations and limitations of the system.

Like mountaineering, workers' compensation has its own community of people who have the knowledge and skills to manage the intersection of medicine and compensation.

Workers' compensation is changing. What we have today is vastly different than what existed 20 years ago, and will be vastly different in the next 20 years - it's happening all around us: mergers, assimilations, options, convergence of health and comp...

In other words, we have all these people in this industry that are going in all sorts of directions, but there's a lack of demonstrable cooperative leadership near the top of the mountain and a storm is coming.

There's your challenge top tier, C-suite, executives. Don't just glad hand at shows and play golf with colleagues. Go to sessions, talk to your vendors, talk to your customers, absorb what is happening with the weather on the mountain.

“Leaders don’t create followers, they create more leaders.” — Tom Peters (and go to Comp Laude Gala...).