Wednesday, May 25, 2011

Rewarding Bad Behavior versus Social Engineering

California Commission on Health, Safety & Workers' Compensation (CHSWC) researcher, Lach Taylor, was on a panel of experts yesterday at the Northern California Workers' Comp Forum at the San Francisco Airport Marriott addressing what could be done to turn things around at the Division of Workers' Compensation.

Taylor said the problems within the workers' compensation system are the consequence of legislative and regulatory actions that reward bad actors. 

"If we see a behavior that we don't like, it's because we've created a system that rewards that behavior. Whether it be underpaying or over-billing, denying needed treatment or rendering unnecessary treatment, it's all because we've created a system that is paying someone and incentivizing them to do that."

Taylor has been a proponent of filing fees for liens (in California a provider can "lien" a case when any part of a payment has been disputed or not paid and thus the "lien claimant" becomes empowered with independent judicial rights) - a concept with which I disagree - but his overall reflection upon cause and effect in workers' compensation is dead on.

In California the workers' compensation system has become so complex and convoluted that anyone seeking an unfair advantage or wishing to abuse the system can do so with virtual impunity. Sure there are some penalties, but too many - injured workers, employers, carriers, medical vendors, etc. - take advantage of the numerous loopholes to game the system.

"Reform" doesn't work because the political machine waters down any true overhaul, and the piecemeal style of legislative corrective action creates the aforementioned loopholes as a product of unintended consequences.

For instance, a bill currently working through the California Legislature would prohibit filing liens more than 18 months after the date of injury. SB 863 by Sen. Ted Lieu, D-Los Angeles, would also require that all liens be in writing.

Liens are already required to be in writing by regulation so this provision would add nothing. Prohibiting liens 18 months post injury means all vendors will pile liens on to a case prior to expiration of the limitation date, exacerbating the "lien problem". And what happens with provider bills for a long term claim that goes beyond 18  months? What then prevents carriers from denying payment since there would be no alternative enforceable rights by the provider?

My wish list - proposed legislative activity should be vetted by social engineers to identify unintended consequences that end up rewarding bad behavior before going to committee. Maybe that way we could identify bad policy before it becomes law.

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