California Conundrum Part 3

So what are the reasons that California is so costly to employers and their carriers, yet so stingy in benefits to system consumers - injured workers?

That's the question in part three of this series that originates from the annual meeting of the Workers' Compensation Insurance Rating Bureau last week in San Francisco.

Two different panels comprised of 13 people from different sectors of the workers' compensation industry all had opinions. Nearly thirteen different opinions.

The first panel was the Research Forum consisting of California Workers' Compensation Institute's chief, Alex Swedlow, and WCIRB researchers Ward Brooks and Tony Milano, moderated by WCIRB Chief Actuary David Bellusci.

The numbers in the data show that a driver is continuous trauma claims increasing particularly in the Los Angeles area - 14.9% of all claims in the LA area are CT compared to 7.7% for rest of the state. Those claims are also far more likely to be have attorney involvement, post termination, or involve psyche/sleep/multiple parts; so not only does the area have a higher percent of CT claims, but those cases also have more complex characteristics.

Bowzer's confused too...

One of the medical cost driver characteristics noted by the panel was comorbidities, which prompted Swedlow's comment, "physicians are very good at billing for things they are going to get paid for..."

The speed at which claims are reported and thereafter managed matters a lot relative to cost, return to work and related issues. In Los Angeles the average time for a claim to be reported is 24.2 days post "injury" (in quotes because of how that may be measured) while the state average is 15.5 days.

In addition, this panel said that the overall litigation rate is much higher in souther part of the state contributes to delay as well as when treatment actually begins. The statewide average is 23.6 days from DOI to beginning of med treatment; the fastest times are in Colusa and Humboldt counties, the slowest Lassen (37 days), Shasta, San Mateo Contra Costa and then LA (29 days). This panel said that the introduction of attorney involvement is the biggest factor in slowing down delivery of care (which is an observation supported by NoCal applicant attorney Gary Nelson - see below).

The afternoon panel was a more contentious debate. Everyone had an opinion on the conundrum; not everyone agreed.

Christine Baker, Director Department of Industrial Relations, made one of the most poignant statements of the meeting: trust in the system has been eroding. She acknowledged that in the long run the various disparate systems of delivering medical care and providing disability protection to workers may not be financially tenable to employers in California. Baker and her team are targeting fraud in a big way marrying up data from Electronic Adjudication Management System and Independent Medical Review to find the abusers, but she also acknowledged that targeting and eliminating fraud is going to take cooperation of everyone in the system.

Basil Besh, M.D. of the FORM Hand, Wrist & Elbow Institute said we have fixed the wrong problems; why do we need both Medical Provider Networks and Utilization Review? "We punish the many for the symptoms of a few," Besh said.

Ronnie Caplane, formerly chairperson of the Workers’ Compensation Appeals Board, and now working for The Zenith Insurance Co, said reform can only happen if we bring everyone to the table and discuss solutions, that we all have the same goals. But, as the system currently operates, the injured worker is seen as carrion - everyone feeds off them, and everyone goes home with a full belly except the injured worker. Currently everyone is pointing fingers at the other to place blame, rather than get together for a common solution.

Cynthia Casey, Esq, is a defense attorney from Southern California and placed blame for the CT epidemic in the LA area on workers' compensation judges - for some reason the judges don't want to go to trial on cases of post termination CTs despite the anti-post term language of the statute.

But Van Nuys district office Workers' Compensation Judge Michael Cole disputed this, saying that the statue is poorly written and provides a loophole for those cases; he said the biggest difference between the north and south are liens, no one will take a case on a lien basis in the north.

Don Marshall of the California Fraud Assessment Commission said that fraud is a small percentage of cases that has a big impact. The one difficulty he notes is that employers get upset at employees who they perceive are ripping them off because it is personal, but the reality is medical and premium fraud are the problem areas. He thinks prosecutors are finally starting to get it. Marshall held up a box of a "workers compensation drug testing" collection kit that the doctor gets before even seeing the patient. "Injured workers have become pawns that are traded between providers to generate income," Marshall noted.

Modesto applicant attorney Gary Nelson observed that he went to a continuing education class in Southern California where the topic was 36 ways to get out of an MPN. He commented that he couldn't understand why that would be necessary because in NorCal they just don't do it. Nelson is of the opinion that evidence based guidelines are there just to deny treatment, that occupational medical clinics are all about not spending money so treatment is delayed, but humans don't like to wait so injured workers want out of those clinic situations.

Mark Walls of Safety National Ins. Co. thinks California is performing exactly as designed. Other states don't have liens and CT claims, and the reason 50% of indemnity claims are litigated is because it is a system designed for attorneys by attorneys. Walls noted that group health has formularies, guidelines, networks, etc. But when those are imposed in work comp they are objectionable - why? Walls said that outcomes in work comp are by far worse than in group health and that it doesn't work better when we just let people do things they want.

Finally Bill Zachry of Vons/Safeway/Albertsons said the real problem is that the incentives are not in the right places, noting that many VPs of insurance claims departments are misincentivized too. The front line supervisor, the person to whom the injured worker reports directly to, is key - there is not enough communication from that supervisor which tells the injured worker that they don't really care. Ignoring the worker is the greatest cause of litigation said Zachry, that any delay in medical care also drives litigation so everyone has to report immediately.

So what's wrong with the California system? As you can see, everyone has their opinion. There's probably some truth to all of it.