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.

Poisoned Kool-Aid

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

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

They forgot to tell that to Rachel Jenkins.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Not now. It smells poisoned.

What Matters

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

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

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

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

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

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

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

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

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

It comes down to culture.

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

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

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

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

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

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

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

That is an issue with tribal gaming compacts as well.

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

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

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

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

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

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

Be Ashamed

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

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

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

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

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

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

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

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

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

1) 35 weeks - two thirds of a year, or eight months - to get authorization for treatment; are you kidding me?

2) 4 percent PD for a largely useless dominant right hand? That's insulting.

3) No communication from the physician - who's he working for, and why?

4) No communication from the claims adjuster - which part of claims adjusting 101 did that adjuster miss?

5) $125,000 incurred losses on the books, and that's because it took 35 weeks to authorize appropriate treatment, and another 65 weeks of fooling around squabbling about $15,000. Is this the insurance company built in profit plan?

6) $56,000 in reserves? All treatment is done, TTD is no longer available, and the injured worker wants $26,000 less that what is held. I know I'm only a lawyer, but even I can do that math...

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

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

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

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

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

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

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

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

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

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

We all should be ashamed.

Don't Get Comfortable

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Complacency is what destroys and kills.

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

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

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

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

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

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

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

This Ain't No Circus

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Maybe not so much for its workers.

Drugs, Formularies, Concepts

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

By all accounts, it certainly seems so.

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

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

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

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

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

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

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

The parent company to Prium, Ameritox, recently released a study, Gavin noted, that concludes:

• 4 out of 5 heroin users abused prescription drugs first
• 56% of the time, in heroin positive samples, the opioid prescribed to the patient was not found
• 66% of heroin users abused both heroin and prescription painkillers in the last month

Mark Pew, Prium's senior vice president, said that the "true success from a drug formulary would be a decrease in disability, a decrease in addiction and dependence, an increase in return to work and in increase in the use of less dangerous drugs.”

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

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

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