OK Non-Subscription - Start of A Trend?

Oklahoma may be the start of a new trend in work injury protection with a proposed law to permit employers to provide an option to mandatory workers' compensation through alternative ERISA plans.

The proposed “Oklahoma Injury Benefit Option” would give employers the option of establishing and managing a benefit plan that complies with the federal Employee Retirement Income Security Act (ERISA) instead of participating in the state system. Employers would be allowed to opt out of the state workers' compensation system only if their benefit plans provide benefits that meet or exceed those employees would receive under workers’ compensation.

Texas is the only state in the nation that has a voluntary work comp system. Those who don't participate in the state's work comp system are called "non-subscribers". Those who have no alternative risk mitigation system in place whatsoever for work injuries are known to "go bare".

Neighboring Oklahoma's proposed plan would not have any "bare" employers, but would allow "non-subscribers."

Becky Robinson, who chairs the Oklahoma Injury Benefit Coalition (OIBC), told WorkCompCentral Wednesday that the group also is selecting sponsors for the legislation. The bill should be ready by Dec. 9, and the sponsors should be in place by then, Robinson said.

According to Robinson many companies in the coalition also operate in Texas, and “have witnessed firsthand” how the option can provide better health outcomes for workers and reduced costs to businesses. The option “is a game-changer for Oklahoma,” she said.

Indeed, I believe that if the Oklahoma experiment is successful that other states will move along the same lines. Constructed properly, non-subscription ERISA plans in Texas have saved those employers millions of dollars over the course of the past 10 years and have much better outcomes for injured workers - namely because these ERISA systems remove the non-functional, procedure-based, trappings of mandatory work comp systems.

In addition, I believe that a competing system will actually improve workers' compensation system performance as vendors (insurance companies, brokers, medical providers, AND the state, etc.) will no longer have a captive audience - a true competitive marketplace can be established to provide employers and employees with a modern benefit system not subject to the lobbying of special interest groups bent on profiting off a compulsory program.

A key to success in Oklahoma will be more complete data gathering and analysis. Texas mandates some reporting for its non-subscribers, but it is insufficient to provide an apples to apples comparison via the normal state data analysis channels.

It will be interesting to watch how OIBC's efforts meet the political machine in Oklahoma and to see what objections are raised as the coalition's plans move through the legislature. If the proposal does make it to the governor's desk though I anticipate many more states taking a long, serious look at non-subscription ERISA models as a viable option over the next few years.workers compensation, work comp, injured worker 

Florida Looks to Curtail Presumptions to Save Money

One of the problems with establishing presumptions of causation in a workers' compensation scheme occurs when lawmakers want to revise or constrict the application of a presumption to curtail abuses.

Once a presumption has been established it is very difficult politically to take it away even though in a practical sense, assuming the medical evidence is available, provision of benefits for an industrial disease should not be affected.

Such is the case in Florida as lawmakers in that state will be asked to limit a presumption contained in the state's 22-year-old "heart/lung" law that tuberculosis, heart disease and hypertension contracted by a first responder is an illness that arose in the course and scope of employment.

R.J. Castellanos, director of the state Division of Risk Management, told the Senate Budget Committee on Nov. 16 that the presumption, which is granted to all police, firefighters, and corrections officers who pass a pre-employment physical, has cost the state employees' workers' compensation system $30 million since 2003.

Castellanos is one of eight members on the Task Force on Public Employee Disability Presumptions, which was created as part of Senate Bill 1128, a package of pension reforms signed into law by Gov. Rick Scott on June 23.

The pension reform bill called for the task force to look at statutory disability presumptions – in both the retirement and workers' compensation systems across the nation – and report back with recommendations for legislative action by Jan. 1, 2012.

Jim Tolley, a task force member and governmental affairs director for Florida Professional Firefighters, told WorkCompCentral the debate over the Heart/Lung law already has begun with the filing of bills in the House and the Senate filed by State Rep. Frederick Costello, R-Ormond Beach, and Sen. Alan Hays, R-Umatilla.

The bills would allow employers to use the medical history and personal habits of Florida's first responders to rebut the occupational presumption by providing evidence of "other medical conditions or behaviors that are associated with the disease or condition subject to the presumption"such as cholesterol, body mass, or a history of tobacco and alcohol use which could have contributed to a claimant's condition.

In addition, the bills (House Bill 365 and Senate Bill 910) would limit the presumption to first responders who have worked for their current employer for at least five years and are under the age of 37.

Employers would have to rebut the presumption in those cases by a "preponderance" of the evidence for the limited group of responders still eligible for the presumption. Current law requires employers to present "competent" evidence to rebut the presumption, which is now provided to all first responders regardless of years of service.

Predictably, the Florida Police Benevolent Association and Florida Workers' Advocates (FWA), a claimants' lawyers' group, oppose the measures. But the legislation has picked up support from the Florida League of Cities, which operates a workers' compensation pool for member cities.

Tolley told WorkCompCentral that the task force also may call for specifying certain cancers to be presumed job-related for firefighters, police and corrections officers and that the panel also is debating whether to require wellness plans for police and fire departments.

These sort of changes to presumption laws could be expected during these difficult economic times when municipalities, state agencies, and other governmental bodies are searching for every possible savings.

If you are a regular reader of this blog, you know that I'm not a big fan of presumptions. The argument in favor of causation presumptions is that it saves claimants seeking benefits for terrible diseases and illnesses time, money and aggravation to get that which should be an entitlement.

In addition, proponents of such presumptions argue that in order to recruit new members to first responder occupations such benefits are necessary.

I don't think these arguments stand the logic test. If a disease or illness truly is occupational then the medical evidence will bear that out. Sure there will be some that are questionable and that is the purpose of the dispute resolution system - to ferret those out. In fact, a presumption law such as the one under attack in Florida is not an absolute presumption. It is a rebuttable presumption, so litigation continues and is probably more prolonged than normal as the parties seek to get substantial evidence to support their positions.

I also don't think that your typical recruit is even thinking about workers' compensation presumptions when they sign up for duty. Young people don't have such things on their radar screens when they are seeking a job.

Police and firefighters have powerful lobbies, and I'm sure this will be a significant political fight. It will be interesting to observe what happens in Florida. This may be the start of a new trend as other states start looking at what they can, and can not, afford while the nation tries to dig its way out of this prolonged recession.workers compensation, work comp, injured worker 

A CT State Fund? Rate Hikes Insufficient for Change

I had lunch the other day with a friend of mine who owns a regional insurance brokerage with a large workers' compensation book of business. When we talked industry he said that his firm is experiencing increased volume and pricing, and that the "market is hardening".

"Market hardening" is insurance-speak for prices are increasing.

When prices increase so too does the word "reform" increase in conversations about work comp. This happens every seven to eight years or so. Most of the reform movement across the nation occurred in the 2003-2005 time frame, so we're right about on target for the next wave of "reform" to hit the states.

This morning's WorkCompCentral story about Connecticut emphasized this point.

The National Council on Compensation Insurance (NCCI) has filed to increase loss costs in the voluntary market by 4.5% and to boost rates in Connecticut's assigned-risk market by 2.9%, effective Jan. 1. If approved the increases would come on the heels of a 5.8% increase approved last year by acting Insurance Commissioner Barbara Spear.

The filing has prompted reformists to speak up, citing the competitive disadvantage that Connecticut has relative to its neighboring states, and the rest of the nation, because of the cost of comp.

Observers tend to rely on the Oregon Department of Consumer & Business Services biennial report on ranking of state's cost of workers' compensation to measure how one state compares to other states. It's like comparing the cost of a Toyota to a Lexus, because each state is different and the Oregon report does not account for these differences, but it's the only compendium of its kind so people use it to support arguments in favor of reform.

Connecticut was ranked as the sixth most expensive workers' compensation market in the country in the 2010 Oregon biennial report, compared to a ranking of 20th most expensive state in the 2008 Oregon report.

The reform discussions in Connecticut seem focused on two issues.

Labor wants the Legislature to create a state-chartered insurance carrier, while business interests are hoping for a statutory cap on the price of repackaged drugs.

Capping repackaged drugs likely won't get much opposition from the major lobbying groups other than the medical industry - and if other states are a model, the opposition will be more about what the caps are, rather than the fact of imposing a cap.

But creating a state fund is a different matter in Connecticut, the insurance capital east of the Rockies with many general line, national carriers based in Hartford.

Connecticut likes the insurance industry.

Legislation for a state fund in Connecticut had started making its way through the state's legislative process but died en route in March 2010 never reaching the floors of the state House or Senate for a vote. Labor is already lobbying for a refiling of the bill, which would start-up a state fund with $5 million in capital drawn from the Connecticut Labor Department and a 3% assessment on premiums.

Insurance industry organizations in the state oppose a state fund, declaring that it would drive out competitive private carriers afraid of price competition.

Connecticut has an "assigned risk pool" to provide for the coverage of risky employers that can't get coverage from traditional sources. The assigned risk pool is the coverage of last resort.

State funds primary mission is to provide coverage of last resort. State funds are traditionally non-profit, and though chartered through legislative exception, generally are free of governmental intervention, operating like any other insurance company except that "profits" are returned to policy holders in the form of dividends, if any.

The argument in Connecticut against creating a state fund is that government doesn't know what its doing, and lobbyists point to that state's Second Injury fund and pension systems, both of which ran into financial trouble with unfunded liabilities threatening their existence. This argument fails to distinguish between a pure governmental program and an independently operating state created insurance entity.

State funds provide stability to a compulsory insurance market. In addition, no state to my knowledge that has a state fund has seen an exodus of private coverage. Private carriers tend to react more to the nature and quantity of risk in a state's market rather than to competition. Indeed, a state fund may "bleed off" more of the risk leaving a richer, more appealing traditional market for carriers without having to account for potential risk in the assigned risk pool.

This should lower prices for everyone and ultimately make the line more profitable for private carriers.

But Connecticut cultivates the insurance industry. Does it like the insurance industry more than the general employer population? That will depend, I presume, on the fervor of reform and whether rate hikes are sufficient to fuel reform.

In my estimation though, the presently proposed rate hikes aren't sufficiently dramatic to give lift to the voice of reform in Connecticut.workers compensation, work comp, injured worker 

Medicare, Budgets, State Schedules & SGR

When the 12-member Joint Committee on Deficit Reduction (aka "super committee") declared an impasse last Monday and informed the Congressional Budget Office (CBO) its members could not reach an agreement on a plan to trim the deficit by cutting spending or raising revenues, automatic budget cuts to defense and domestic spending were triggered, which includes some reductions to Medicare payments by 2013.

This could lead to a 27.5% reduction in Medicare provider fees on January 1 which would have a major impact on the state's workers' compensation fee schedules.

The American Medical Association (AMA) and other doctors' groups had called on the super committee to find another $300 billion from budget cuts to implement a permanent "Doc Fix" to avoid payment reductions required by the Balanced Budget Act of 1997. The law requires the Centers for Medicare and Medicaid Services (CMS) to adjust physicians' payments each year using the Sustainable Growth Rate (SGR) – a measure of annual provider payments compared to payment targets set for the previous year.

But every year since 2002 -- the year CMS cut medical provider fees by 4.8% -- Congress has stepped in with emergency money to postpone proposed CMS reductions until the following year.

According to experts interviewed by WorkCompCentral, it is more likely than not that such stop gap funding will occur.

26 states tie their workers' compensation medical fee schedules to the Medicare reimbursement rate to some degree making them vulnerable to changes and vagaries affecting the federal system, including its budgetary issues.

One federal legislator has since submitted a bill to get rid of the SGR law until Congress can figure out how to better manage Medicare.

U.S. Rep. Allyson Schwartz, D-Pa., plans to file the Medicare Physicians Payment Innovation Act in the next few weeks after getting a budget-impact estimate from the Congressional Budget Office.

According to Schwartz's staff, her bill would:

• Permanently repeal the SGR and avoid an immediate reduction from the Balanced Budget Act with an appropriation that has not yet been quantified.
• Freeze doctors' payments at 2011 levels, effective Jan. 1, 2012. Physicians' payments would be adjusted gradually over a five-year period while Congress comes up with a new payment system.
• Implement temporary payment differentials between 2013 and 2016. That piece of the legislation would provide an increase of 2.5% for primary care services and a 0.5% increase for all other physician services each year during the period.
• Use the Center for Medicare and Medicaid Innovation (CMMI), established under the Patient Protection and Affordable Care Act of 2010, to test new payment models through a series of ongoing demonstration projects.
• Require the Government Accountability Office to analyze the CMMI models and report back to Congress by April 1, 2015.
• Require CMS to provide Congress with a "menu" of at least four new health-care delivery and payment models by Oct. 1, 2015.
• Freeze medical provider payments again -- at 2016 levels -- while Congress evaluates the new models and adopts one or more for use by Jan. 1, 2017.
• Require the Secretary of U.S. Department of Health and Human Services to update fee-for-service payments under the models adopted by Congress using the Medicare Economic Index beginning in 2022.

The impact on workers' compensation systems should Schwartz' bill be passed is unknown, but clearly would result in an unintended expenses should adoption of new reimbursement models occur because of the complexity of fee schedules. But the good news is that the Schwartz bill changes would occur over a course of several years, giving the states time to adjust their schedules (or disassociate them from Medicare) after analyzing the impact of the changes.

Regardless, as New Jersey workers' compensation lawyer and treatise author, Jon Gelman, told WorkCompCentral, "Right now, the state workers' compensation systems are 50 churches, and they all have their own choirs. They're aware of the problem, but you can't get the workers' compensation people to agree on a unified system."workers compensation, work comp, injured worker 

NY & ACOEM - IP Fight No Different Than Other Media

New York insurers are protesting a demand by the American College of Occupational and Environmental Medicine (ACOEM) that stakeholders in the workers' compensation system pay for commercial use of the state's year-old medical treatment guidelines.

ACOEM and its commercial software partner, the Reed Group, sent letters to nearly 300 New York carriers, third-party administrators and large employers earlier this month seeking $99 licensing fees for each user of the guides.

"NYIA firmly believes that carriers should be allowed to use the medical treatment guidelines without incurring any additional costs. We are hopeful the Workers’ Compensation Board will prevail in this matter," Marc Craw, vice president of the New York Insurance Association told WorkCompCentral in an interview. "The cost of doing business in New York State is already high enough without having additional fees and assessments imposed on insurers."

ACOEM released to WorkCompCentral a copy of a letter, dated April 21, 2008, from ACOEM Executive Director Barry Eisenberg to Cheryl Wood, former general counsel for the New York State Workers' Compensation Board (SWCB). The letter granted the board the right to use all or portions of the guides but prohibited SWCB from allowing use of the guides for commercial applications.

ACOEM's position is very clear - it's their intellectual property, it cost ACOEM a lot of money to research, publish and update the guidelines, and it should be fairly compensated for their use in commercial settings.

The position of industry is that since the guidelines are now the law, that equal access to the law mandates open and free publication.

Many states have already gone down this road already with other guidelines, such as the AMA Guidelines on Impairment Rating - the decision has been that if you want the guidelines you have to pay for them.

John Sciortino, president of the New York Injured Workers' Bar Association, told WorkCompCentral users should have the same access to the guidelines as they would if they went to a public library. That is already in place - SWCB has put the guidelines up on its website for research/non-commercial purposes.

My position is probably not unpredictable: I stand firmly behind ACOEM - and any other publisher - whose intellectual property may be used for commercial purposes, whether it be music, video, text and regardless of whether it is mandated by law or not.

SWCB can resolve the problem easily by paying ACOEM for all licences if it chooses to enrich for-profit stakeholders, i.e. insurance companies, attorneys, doctors, etc. Each of those interest groups is "in the business" and $99 for each licensed copy of guidelines is a cost of doing business.

When I first started practicing law, my mentor and firm partner, explained the business very succinctly to me: We live in America. In America justice costs money. If you want justice, then you have to pay for it.

That's the way it is folks. If you don't want to pay for ACOEM guidelines, then pay for the creation of your own.workers compensation, work comp, injured worker 

NV Group Closure Another Result of Economy, Competition

The Nevada Restaurant Self-Insured Group is winding down at the end of the year after deciding it is no longer financially practical to continue taking on risks, a product of the economy.

One of the oldest self-insured groups in Nevada, the decision will force more than 1,700 employers to find a new source for workers' compensation insurance, some who have been covered by the group since it was founded in 1995.

The move by the group, according to Joe Burgess, senior vice president of CHSI, which administered the group in Nevada, is to avoid the chaos that has followed groups in Oregon and California, which saw declining memberships and increasing risks, causing the groups to fail and seek legal redress for unpaid assessments.

The Nevada group's membership has declined from more than 4,500 members in 2005 to a little more than 1,700 in September 2011, reflective of the state's economy which is based almost exclusively on the hospitality and construction industries.

Bottom line, there is insufficient market upon which to spread the risk of those in the group - a basic tenet of insurance.

In addition, competition in Nevada's workers' compensation market is holding down premiums at the moment, with average premiums in 2010 of $2.13 per $100 of payroll, making self-insured groups less attractive to employers.

The closure of the group is likely a smart short term move, as this economy is such a bear that many who follow such things believe that it will be years before there is any meaningful recovery.

But word on the street is, at least anecdotally, that the regular market is hardening and rates have hit bottom and are trending upwards - at a time when payroll is down putting additional pressure on the market.

Self-insurance is always a give and take, the costs weighed against what the commercial market can provide and the relative freedom of management afforded in such programs. Smaller employers, those typically represented in self-insurance groups, are more sensitive to market shifts than larger employers because they don't have the resources to smooth out the ride.

Certainly shuttering while still operational is better than the alternative, as demonstrated by actions against group members in California and Oregon to recoup millions of dollars in unpaid assessments.

"They're going to take the existing book of claims and run them off, bringing the group to a close," Burgess told WorkCompCentral. "It's the difference between saying we're going to close because the market is not right or we're going to keep going until we have to file for bankruptcy."workers compensation, work comp, injured worker 

NY Case Illustrates Failure of RTW, When There's No Work

On Friday I commented about the need for those injured at work to get back to work - but what if there isn't work to get back to? This rhetorical question was intended to highlight a reality of return to work schemes that must be considered.

A New York case illustrates the unfortunate reality for those caught in the maelstrom of the existing economic malaise, and how our social systems fail those who do seek return to productivity.

In Leslie v. Eastman Kodak Co., No. 511741, 11/17/11, the employee (Leslie) experienced work-related injuries to both shoulders in 1999. He underwent shoulder surgery in April 2004 and September 2004.

In February 2006, a workers' compensation law judge awarded him a 55% scheduled loss of use of his left arm, and a 52.5% scheduled loss of use of his right arm, which entitled him to 355 weeks of benefits.

After these awards were exhausted, Leslie applied for additional workers' compensation benefits under Workers' Compensation Law 15(3). This law states that after a claimant exhausts a scheduled loss of use award that is 50% or greater, additional compensation is payable if the claimant can establish that their continued lack of earning capacity is solely attributable to the established injury.

In 2009, the Workers' Compensation Board ruled that Leslie was eligible for benefits, and returned the case to calendar to establish the appropriate awards. In 2010, the board rescinded that decision, concluding that the poor economy was a large cause of his lack of earning capacity.

The appellate court upheld the denial of additional benefits, stating in its opinion:

“Here, claimant testified that, after being laid off by the employer, he attempted to obtain employment in both real estate sales and tax preparation but was unable to do so because of the poor economy. Claimant further testified that he was currently employed as a security guard for 16 hours per week and was available to work more, but the employer had no additional work available. In light of such testimony, substantial evidence supports the board's decision that the impairment of claimant's earning capacity is due in part to economic factors and not solely to his established injury.”

The case opinion does not state when Leslie was laid off from his employment, whether he actually returned to his pre-employment job, or whether there was any overlap in receipt of disability indemnity and employment, etc.

It is also unclear in the opinion whether Leslie availed himself of unemployment benefits, or if he even qualified for them. New York state provides various programs for people who are down on their luck.

In a perfect world this injured worker would not be an issue, because the facts clearly reflect a desire to return to work and a productive lifestyle. The reality is that the economy isn't going to let this happen.

One of the great challenges when writing laws is designing to accommodate a specific set of circumstances, in this instance a health-related employment disruption (many thanks to Jennifer Christian, MD for that phrase), where there is overlap with another set of related but disparate circumstances - as reflected by this case, an economic-related employment disruption.

It seems that Leslie in this case ended up in the proverbial rock and hard place: between a "health-related employment disruption" and an "economic-related employment disruption".workers compensation, work comp, injured worker 

Workers' Comp Unappreciated Ties to Housing

Workers Compensation Research Institute's (WCRI) executive director, Richard Victor, correctly analyzed the single biggest issue facing the workers' compensation insurance industry in his closing remarks at the Institute's conference yesterday.

Housing.

More accurately, the country's persistent unemployment has destroyed not only the premium base for carriers, thus decreasing cash flow and creating more risk in the pricing of coverage, but with 25 million U.S. workers now chasing 3.5 million job openings, injured workers are in an increasingly precarious position, Victor said.

But that's not the whole story. Much of this economy and its malaise is tied to the housing market and all of that market's tentacles, from construction to lending to furnishing - without robust housing numbers many people will just not have jobs available.

And Victor doesn't think that this will be corrected for another 10 years.

“I think we’re now pushing on a string,” Victor said. “Nothing good will happen until the housing market is stabilized.”

The one element of the housing market that is generally ignored is the fact that there is much less of a market to sell to than when my generation, the Baby Boomers, so eagerly bought and sold property and created fancy financial contraptions to exploit the trend.

Overall the United States birth rate though the Baby Boomer generation has only been 2.3 babies per couple. Modern economics suggest that is a "break even" birth rate - meaning that there is no room for growth in the economy.

This is basic supply and demand theory in action. In order for an economy to grow there always needs to be more demand than supply - albeit the percent need only be negligible on an annual basis otherwise bubbles are created.

Part of the Baby Boomer generation's housing growth was supported by immigration. At 2.3 births per couple there should not have been much demand for new housing, but immigration bolstered those numbers and helped build the market.

Not only did the financial meltdown created by bogus mortgage selling, backing and packaging practices crimp the ability to finance a purchase, thus damping the housing market, but immigration policies have kept out qualified buyers that would otherwise have been able to take up the supply slack.

And there are far fewer Generation X, Y and Z people than in any previous generation, which means there is even less demand than ever before.

In the present though workers' compensation as a national system needs to face some very serious economic issues that will weigh on legislatures if systems are to be functional.

With a national unemployment rate of 9%, many workers find their skills, education, location and pay scales don’t line up with available opportunities.

“How will I support my family? How quickly can I find a new job? Can I hang on to my workers' comp benefits? Should I take a lower-paying job? Should I take a lump sum?”

I constantly blog about the need for those injured at work to get back to work - but what if there isn't work to get back to?workers compensation, work comp, injured worker 

CA WCAB Case Highlights Promotion of Needless Disability and Drug Pushing

A California Workers' Compensation Appeals Board (WCAB) Panel Opinion that clearly demonstrates the perversity of opioids in workers' compensation was reported this morning in WorkCompCentral and is illustrative of how the system promotes needless disability.

The case of Vilma Tentnowski v. Perotti & Carrade (SCIF) revolves around the question of whether the parties have enough evidence to decipher how the applicant's daily use of prescription painkillers is affecting her ability to work.

Two Agreed Medical Examiners (AMEs) provided the expert witness reporting on the case: Dr. Mark Shelub and Dr. Stephen S. Schneider.

Shelub, an orthopedist, recommended restrictions that led to an 86% permanent disability (PD) rating from the Disability Evaluation Unit (DEU). Schneider, a psychiatrist, diagnosed a 39% psychiatric disability. After apportionment, the workers' compensation judge concluded that Tentnowski had a 95% permanent partial disability rating.

Tentnowski challenged her PD rating and other issues. In the opinion the WCAB pointed out that Shelub's 2009 medical report describing the applicant's work restrictions did not state how Tentnowski's prescriptions affected her work restrictions. Yet, in a December 2008 report, Shelub opined that Tentnowski's high dosages of Oxycontin would bar her from working a 40-hour week.

The WCAB panel noted that Tentnowski's physicians have since increased her prescriptions to 32 milligrams of Exalgo (hydromorphone) a day, and Dilaudid every two hours!

What would Tentnowski's disability be if she weren't addicted to opioids? And why do her treating physicians permit Tentnowski to be on such high dosages of opioids for so long, and even increasing dosage? Why does the workers' compensation judge and WCAB buy into this needless disability?

And after Tentnowski's case settles or she gets her reward (no typo - this case clearly is one of rewarding the disability rather than the capability), will she continue with her "drug therapy?" Or will the employer/carrier then be required to provide detoxification services? If Tentnowski detoxes, will that lower the permanent disability rating?

At least the dissent in the panel opinion, by Commissioner Deidra Lowe, demonstrates some understanding of the perversity of this case.

Lowe's dissent stated that she disagreed that the medical record required further development, because Shelub's reports indicated that he had accounted for the amount of Oxycontin Tentnowski was regularly using at the time of the reports. Lowe also highlighted the fact that Schneider had also documented the applicant's prescription medications.

"Since Dr. Schneider's Feb. 2, 2010, report took into account all of applicant's medications, and since this is the report the workers' compensation judge relied upon to determine psychiatric disability, there is no need for further development of the medical record regarding applicant's medication usage," Lowe wrote. "In summary, Dr. Schneider did not state that the effects of applicant's medications are disabling, but he did note that when applicant took the battery of psychological tests, she never manifested concentration, attention or comprehension problems."

This case is troubling is so many respects.workers compensation, work comp, injured worker 

New Mexico Effort Demonstrates Cultural Challenges

This morning's WorkCompCentral news features an interesting story about New Mexico, a coalition of stakeholders trying to do injured workers right, and the reticence of physicians in that state to accept that work is good.

This is a story that I wasn't prepared to read!

In 2009 a group of insurers, lawyers and employers formed the New Mexico at Work Partnership to extol the virtues of programs that make light duty or modified positions available to injured workers. The coalition grew out of Dr. Jennifer Christian's 60 Summits project, an effort to teach employers how to minimize the disruptive impact of illnesses and injuries on workers and employers.


60 Summits seeks to change how people view workers' compensation and disability systems by focusing not on efficient claims processing but rather looking at the prevention of needless disability.


I know Dr. Christian well and have seen 60 Summits grow from her introduction of it to me at its infancy several years ago into a very positive tide of influence throughout America and beyond.


Dr. Christian notes that there are five basic underlying presumptions making up the claim processing model that are fundamentally flawed because of the focus on disability:

1. Work absence or disability is necessary after illness and injury.
2. Work avoidance assists in recovery from illness or injury, so it is good.
3. Duration of work absence reflects the severity of the illness or injury.
4. Most people don't need any help because they will receive appropriate medical care and support in managing their health-related employment disruption.
5. Tragic situations and "bad people" cause most loss costs.

Instead of this traditional paradigm, 60 Summits says instead that 5 presumptions should be:

1. Much of today's work disability could be foreshortened or averted entirely because work absence is not medically required for more than a few days after illness and injury.
2. Being active during convalescence speeds recovery, while extensive work avoidance and "rest" tend to delay it.
3. Prolonged absence or permanent withdrawal from work is bad for people's well-being -- mental, physical, social and economic.
4. Prolonged withdrawal from work is usually being driven by non-medical factors instead of medical ones.
5. In today's complex world, many people need pro-active instruction, advice, or even one-on-one assistance in:
     - how to navigate the healthcare system;
     - how to select doctors who will provide the most effective treatments;
     - how to cope best with a health-related employment situation.

New Mexico employers and other stakeholders are embracing this model, but the fight they are now facing is getting the state's physicians on board.

Kathy Diaz, executive director of the Food Industry Self Insurance Fund and chairwoman of the partnership, told WorkCompCentral that largely due to New Mexico's rural population, physician training has been on the old paradigm, and that they are unwilling to test a new model:

"The most recalcitrant audience is doctors, especially in our rural state where their training is if the injured worker doesn't feel good, they should have time off work for recovery," she said. "We've found employers are more amenable to working on it than the doctors."

Cultural change is a difficult process, and takes time. Constant and pervasive education and marketing is key to making a shift successful.

Diaz said the partnership will work in the New Year on setting up an educational website either through the state agency or the New Mexico Workers' Compensation Association. The online information the partnership hopes to provide will outline how to create a successful return-to-work program, Diaz said. The partnership also plans to hold several informal education workshops next year as well.

"We're trying to get the work out and give employers talking points to use with employees and doctors," she said. "We're urging everyone to consider stay at work during the healing process, and if not that, early return to work because modified duty is much better than physical therapy or being at home isolated from the employer." 

I applaud Diaz and her coalitions efforts, and the efforts of Dr. Christian, in trying to change the focus of conversation in the work injury dialogue. These are root efforts that ultimately will be the basis for changing our laws to match our modern understanding of disability science and the economy.

And on a topic that is completely different, see my Advertising Director's blog for this month. Christina every month puts together helpful information specifically on marketing to the work comp industry featuring a guest article this month from Byron Kerns on 7 rules to grow your business.workers compensation, work comp, injured worker 

How Someone Gets to Any Stage of Claims Matters More than What to Call Them

An interesting conversation has been running in the LinkedIn group, Work Comp Analysis Group, about what to call the subjects of workers' compensation claims - the people actually injured at work, or at least those who claim to have been injured.

What I observed from this conversation was that how one references THAT person depends largely upon the position one holds, for whom one works and the stage at which an injury is at any given point in time.

It seemed from the responses that when one works an insurance company litigation claim desk then they are all "claimants."

Others prefer not to use that term because it implies an entitlement mentality, so "injured worker" is the term of choice.

Still others, obviously working for a self insured employer, just call them "employees" because injured or not, they are still part of "the team."

And if one is part of the medical process then the term is "patient".

Then along comes West Palm Beach, FL claims consultant Margaret Spense who gets a first hand experience of going from injured to claimant, and tells the story on her most recent post on her blog.

If you don't know Margaret, she is the president of a claims and risk management company and has been a workers' compensation claims adjuster for many years in the past. In other words she is very experienced in matters of insurance claims and workers' compensation.

The ordeal that Margaret goes through is not work comp, but it is a claims ordeal regardless.

Following her injuries in a trip and fall on a public sidewalk that had been lifted by a nearby tree root, and sustaining serious injuries from a face first plant into the concrete, Margaret gets initial treatment and follow up care reveals that her injuries are worse that she previously thought.

Margaret is also a motivated person, stating because she is president of her company, if she doesn't work she doesn't get paid. Her interest is just to get back to work.

In her tale, she describes the uncaring initial contact, and how she went from an injured person to a claimant with a cause as various rules of good claims management get routinely broken by those responsible for providing communication and care.

She sums up the thought process thusly:

"Now, I’m feeling like I should become a represented claimant who will be out for vengeance in a nano minute. Guess what, I need to go back to the doctor. My years of experience gives me a good track record on how the body works, I need therapy to stop my hip from stiffening up and on day 7 I don’t have any idea who the insurance carrier is and I don’t know who’s going to pay my mounting medical bills. Why should my health insurance carrier pay for something they didn’t cause? Furthermore, as you all know I am a public speaker. I now have a scar on my face, a broken tooth and I look like death warmed over. Not the image that I need to project as the CEO or Keynote speaker. But no one is getting this message yet."

My guess is that someone eventually WILL get the message, but not until Margaret elevates her ordeal to the point that someone up the food chain of insurance claims takes notice - by then its too late.

Back to what we call people who get injured at work - if you're a concerned employer/carrier/TPA then regardless of an employee's current ability to provide service under your direction and assuming you have a good hire then that person is and will remain an "employee" with all the rights, title and responsibilities that entails.

If your organization lacks care, or if THAT person was not a good hire and lacks value to the organization, then status changes to claimant with all the rights, title and responsibilities that entails.

My point is that while it would be convenient to have a neutral term that could be used universally to describe the person who gets injured at work, reality defies such convention. Like all matters of life, each person's reality is different because of the experiences each brings to the table in interpreting events.

It matters how the injured person is referred to, but it matters more how THAT person gets to the reference point in shaping perceptions.workers compensation, work comp, injured worker

Shamelessly Playing on Fears

Below is a comment that looks like it was was posted by a "bot" on this blog, and is demonstrative of some of what's wrong with workers' compensation:

jaiveer56 bregg.sharma@gmail.com via blogger.bounces.google.com to me

show details 11:47 PM (9 hours ago)

jaiveer56 has left a new comment on your post "Tying Work Comp to Other Systems Can Cause Chaos":

Hello,

Have you been injured at work? Do you feel like you have no one to turn to or are fearful for the time and money you are losing? Let the attorneys at Workers' Compensation, LLC save the day by protecting your rights! We specialize on representing those who have been injured on the job and deserve prompt medical treatment and compensation for their lost wages.

Posted by jaiveer56 to DePaolo's Work Comp World at November 10, 2011 11:47 PM

If you are a regular reader of my posts you know I have no problem with attorneys in the system. In fact my position is that attorneys frequently are required either because navigating workers' compensation is way beyond the skill level of the average injured worker, or because attorneys can be quite useful in resolving disputes.

What I do have a problem with, however, is the type of activity displayed by this lawyer's shameless self-promotion by playing on the fears and misunderstandings of injured workers.

It is unfortunate that a disproportionate number of injured workers are going to be fearful and feel like they have no one to turn to - good claims management can avoid those type of situations but that doesn't happen often enough and there are other factors that intervene to complicate the feelings of the injured worker - job dissatisfaction, family issues, finances, etc.

Do I really think that the attorneys with this group are actually going to TALK to the injured worker about how they're feeling, or get them the psycho-social assistance that really would make a big difference in the injured worker's situation? If they in fact do, then bully for them and I congratulate them on doing the "right thing", but my cynical side says "I doubt it."

Protecting rights ... that's very American, and very lawyer like. But the problem with that statement is the implication of entitlement, and harks towards the television commercials on late night television that ply on the injured telling them "you deserve to be compensated for your injuries" - the sense that there is justice to be had, and since this is America justice means money.

Yep, money - "money you are losing." That's what it's all about - attracting the injured worker with no understanding of the limits of workers' compensation payment, that there are caps on maximum weekly amounts, that there are limits to a permanent disability award, and that the lawyer will take between 10 and 30 percent of whatever might be received by the injured worker, perhaps actually reducing the amount of money netted.

I don't have a problem with advertising for services. How one does that speaks volumes about the ethics and morals of the advertiser though.workers compensation, work comp, injured worker

What Politicians Could Learn at the National Conference

I'm back from the National Workers' Compensation & Disability Conference a day early - I've had enough of Las Vegas in the past 10 days! It was a very busy couple of days with many meetings and networking, and a couple of lessons in between.

The one big lesson for me was that there are many more people than I thought who share the sentiment that workers' compensation basically doesn't work any longer - at least not in the manner in which it was intended.

I talked to many diversified industry interests, and while each person's opinion on what exactly is wrong and how to fix it was different depending upon the person's particular industry participation, the overwhelming sentiment was that injured workers get the short end of the stick, and the employers are paying too much for that privilege.

This was a very heartening, and enlightening, revelation for me - that there was nearly universal recognition that something very radical needed to be done, and that the traditional "reform" efforts don't address the universal problems of how to make "the system" responsive to the modern economy.

Which brings me to one of our stories this morning in WorkCompCentral, "Employers, Insurers Say Pure Premium Rate Process Back on Track". In that story, reporter Greg Jones notes that California Insurance Commissioner David Jones (no, they're not related) commented in approving the advisory rate that more need to be done to lower system costs.

That's an unfortunate use of words, because if I understand what Jones is actually saying is now that the rate making structure has changed the focus of the process, the conversation can be moved from discussing short term incremental costs to a bigger picture overview of rate adequacy.

With all due respect to Commissioner Jones though, I think the bigger picture he is taking, while good, isn't quite enough, because he is still focusing on itemization of costs, rather than the universal picture of returning value to the primary stakeholders in the equation, which of course are the injured worker and the employer.

In his rate making order, Jones said, "Further efforts are needed to reduce frictional costs in the workers' compensation system, including a reduction in the number of liens filed over disputes on the cost of delivering benefits to injured workers. I support the current efforts of Sen. (Ted) Lieu to establish reasonable limitations on liens through the enactment of SB 863, which will revise the time period to file liens and how they will be handled."

The cursed "frictional costs" - micromanagement of a system where where each "cost driver" gets examined closely and tweaked, rather than reviewing the overall culture and making changes to impact the behavior of the people involved.

Changing culture is something that government has much experience in and has done very effectively in the past when given the incentive and leverage to do so. Government uses law, marketing, and social pressure to influence mass behavior - ergo culture.

Changes in tax laws shift spending behavior. Smoking tobacco, something that was deeply ingrained in American culture for a very long time, now carries with it negative social perceptions - even in Vegas!

Back to Vegas - it would do government officials good to stop and talk to the people on the floor at conventions such as the National show in Vegas. Everyone has their opinion about what to do, and most of these go well beyond fixing "frictional costs".

And maybe I was talking to people who just wanted to agree with me rather than debate the merits of some of my arguments (which by the way are not set in stone - I'm about as flexible in my opinion as a politician during an election year if I'm persuaded by facts or argument that I had not considered) but there was near total agreement that the culture of the work injury protection scheme needs to change.workers compensation, work comp, injured worker

Underutilized Wellness Programs & Work Comp - Great Idea!

The integration of group health benefits with workers' compensation programs is, apparently, taking off in some directions that previously weren't considered, and which indicate a trend towards rethinking the medical delivery component of workers' compensation to reduce disability.

Roberto Ceniceros, well known to those who read the publication Business Insurance, and his recent article in parent publication Workforce, "Wellness Programs Adapted for Workers' Comp" highlights this trend.

Ceniceros points out that large employers, which have the economies of scale and resources to make something like this work, see their group health wellness programs as a new risk management tool to provide injured workers with the tools and guidance needed to expedite recovery and return-to-work rates.

I have blogged in the past about co-morbidities, and about dealing with the "soft" part of workers' compensation claims - the underlying psycho-social elements that complicate treatment and recovery, and ultimately increase disability. The examples cited by Ceniceros indicate that these large employers likewise see the benefit of supplementing what would usually be outside of the sphere of workers' compensation treatment.

In addition, these employers see these wellness programs as underutilized anyhow. These are employee benefit programs that aren't well regarded by the work force mostly because the work force doesn't see a value in these programs - things like weight reduction help and smoking cessation help. The work force, reflective of most of America, doesn't put a high level of importance to self-management of health, until there is some intervening event. For some it is a diagnosis of cancer or other threatening illness. For others it is a work injury.

An unidentified global manufacturing business is cited by Ceniceros as how this integration occurred. Some forward thinking disability management person in the organization started referring injured workers to the company's wellness programs, and it took off from there with work comp claimants being referred to learn how to manage back pain and other chronic conditions.

The  most difficult part of the process, says Ceniceros, is the mechanics of implementing this integration because of the barriers created by corporate management - workers' compensation is in the risk managent category, and health is in the human resources category. So the coordination requires many meetings and understandings between the two groups for a smooth work flow transition.

But one thought process that may assist in expediting such an integration is thinking of group health and wellness programs as just a part of risk management, rather than an employee benefit from the HR side of the equation.

The single biggest risk for any employer is its work force, and maintaining a healthy, productive work force is risk management at its best.

This is a tactic used by some Texas non-subscribers who have put together interesting ERISA compliant programs that blur the line between work injury care and general health care. The simple viewpoint is that the employer doesn't care how the employee got hurt or ill, the treatment is the same and the vast array of employer tools that can be accessed via benefit programs facilitates expedited recovery. The result is healthier, happier employees who feel they are working for a company that cares about them, and an employer with extraordinary productivity experience and employee loyalty.

I am encouraged by this trend - the only reason there is a wall between the medical component of workers' compensation and group health and wellness systems is because the two systems grew up separately and independently. Resourceful employers see no distinction and make use of all the tools available to get the job done..workers compensation, work comp, injured worker

New York Represents All That is Wrong With Work Comp

This morning's top news story about the New York State Workers' Compensation Board (SWCB) epitomizes what is wrong with modern workers' compensation systems throughout the country in several respects.

1. A state agency that ignores legal mandates and when the mandates are finally dealt with are done so with out conviction or determination.

In 2007 New York passed a major piece of "reform" legislation (aka "Spitzer reforms" after former Governor Mark Spitzer). As a part of that legislation the SWCB was tasked with devising and implementing a new permanent partial disability (PPD) rating system along with payment capitations.

A task force appointed by Spitzer rolled out the first two components of the impairment guides in September 2010. The components established the method for determining medical impairment and set out criteria for considering the affect on workers' ability to function. But the task force declared an impasse on the means of translating impairment into a percentage of lost wage-earning capacity and asked the SWCB to complete the final component of the guides.

SWCB Chairman Robert Beloten released the final version of the Guidelines for Determining Permanent Impairment and Loss of Wage Earning Capacity last Thursday, but defers the most important elements of rating to the administrative law judges that oversee litigation in the system, thus denying all system participants of any stability or reliability in the outcomes of PPD awards.

Robert Grey, chairman of the New York Workers' Compensation Alliance, which represents claimants' attorneys, told out news reporter that the board tossed the issue of lost earning capacity into the worker's compensation court system by failing to provide weights for factors such as age and occupation.

"People are going to have to go into court and make their arguments. This will have to develop under the litigation process," Grey said.

This process is no different than what has been going on 3500 miles to the left in the Golden State, where a new PD rating schedule should have been implemented by state law in 2010, and here we are going into 2012 with no respect for the law because, apparently, since there is no penalty for not adhereing to the law the administrators who are tasked with the project are beholden to the executive branch, which has decided that the laws aren't in the people's best interests without any adjudication of rights, responsibilities or liabilities.

2. Litigation drives disability, pushing a class of people into a state of being that would not otherwise occur.

While the guides were in progress, the SWCB has relied on a set of New York-specific impairment guides adopted in 1996 and on board precedent. Duration caps have been slow in coming because of the board's failure to complete the impairment guides and its reliance on the 1996 guides.

Claimants' attorneys have not been complaining. "From the standpoint of a claimant's attorney, it is not in my client's interest to push a case for classification [the process of determining a workers' loss of wage-earning capacity based on impairment]. The best thing for my clients is not to be classified for as long as possible," Grey told WorkCompCentral.

So, the financial interest of the claimant attorney, and not the health (physical and mental) well being of the injured worker is paramount in the workers' compensation system, and the parties acknowledge that and do nothing to reverse what some have called the crippling of America with needless disability outcomes.

3. The government is business' worst enemy with self-serving, non-responsive agencies.

The New York Labor Department reported last December that, based on lost wage-earning capacity, duration caps were ordered for only 606 PPD claims between March 13, 2007, the day Spitzer signed the reforms, and June 30, 2009. The board typically hears tens of thousands of PPD claims each year.

What this means is that not only are injured workers' being needlessly pushed further into non-productive disability status, but employers continue to pay unreasonably high rates based on experience modification factors that are out of control due to governmental paralysis.

John Sciortino, president of the New York Injured Workers' Bar Association, and Albany defense lawyer Peter Walsh, who serves on a workers' compensation committee of the New York State Bar Association, said the board dragged its feet on completing the guides and allowed too little time for final comments.

"There has been no back-and-forth and no exchange of ideas," Sciortino said on Tuesday. "There has been no opportunity whatsoever for dialogue."

This seems to be the culture of the SWCB. Any regular reader of WorkCompCentral's coverage of New York issues will note a regular sentence in these stories: "SWCB spokesman Brian Keegan did not return a telephone call from WorkCompCentral...".

It seems that WorkCompCentral wrote a story some time ago that Mr. Keegan took issue with. Because the reporter would not retract what was written Mr. Keegan threatened, and thus far has made good on his threat, to not respond to any requests for comment by WorkCompCentral.

Some spokesperson Keegan is. His excommunicado position is simply a reflection of a state agency that does not hold its constituency in high regard, and prefers to operate in as secretive, selective manner as possible.

New York's problems won't go away with a state agency as arrogant as SWCB. Governor Mario Cuomo would do well to scrap the entire SWCB and get people in there that are going to respond to the people of New York, and not hold those people hostage to its own agenda.workers compensation, work comp, injured worker

At National - Changing the Conversation Away From Disability

Starting tomorrow the National Workers' Compensation & Disability Conference & Expo kicks off for 2 days on networking, exhibiting and education at the Las Vegas Convention Center.

This is the 20th anniversary of the conference and I have gone to most of them - particularly when it was held in Chicago ... but that's another story.

Thousands of people attend this conference and there are hundreds of exhibitors. Large entities such as big brokerage houses, insurance companies and third party administrators, to small entities such as medical equipment manufacturers, will occupy the exhibit hall plying their services or goods.

An unfortunate reality of this conference is that it is a blatant demonstration of what our conversation is about in workers' compensation.

I was a faculty member at the latest American Academy of Orthopedic Surgeons (AAOS) workers' compensation course this past weekend. My job was to pontificate on legal mumbo jumbo in language that doctors understand.

Being a faculty member also allows me to interact with really smart people - much smarter than me.

This is a group of physicians who decry unnecessary surgery and in particular back surgery where the only issue is pain without any corresponding significant objective findings. They are also very concerned with the negative ramifications of labeling people as "disabled" regardless of the percentage or temporary nature of the "disability".

Which brings me to my point - at the National Expo there are many, many vendors pitching medical services, pitching insurance services, pitching all manner of other services or goods of and concerning findings of disability. These well meaning people seek to reel business in with promises of less disability, better disability management, lower disability costs, etc.

The one common thread amongst all of these vendors, and the people that are their customers is their concern with "disability."

The conversation that circulates on the floors of the Las Vegas Convention Center is all about disability.

But maybe the conversation should be something a bit more positive. People should not be talking about "disability".

There were several presentations at the AAOS conference presenting credible scientific evidence that the mere labeling of someone as "disabled", regardless if it is in the legal or medical context, has negative implications for the injured worker, and that this labeling establishes a mind set, a self-fulfilling prophecy, that is more damaging to the injured worker than the actual consequences of the injury/illness.

A recent LinkedIn group discussion on a Georgia case where the court found a new injury when the worker was placed on alternative work that exceeded restrictions prompts this thought process. The discussion went from the legal implications of the court's holding to a discussion on maybe the "restrictions" set up the employee for the new injury by establishing a disability mindset. The established thinking was that the employer exceeded the restrictions that the physician established for the injured worker. That mindset was challenged by a physician who opined that it was not the physician's place to establish "restrictions".

I can't help but return to the lesson of James Talmage, MD, that disability is a factor of three components, one if which is completely subjective and outside anyone's scope of expertise - the injured worker's tolerance.

Really, the Georgia case analysis, if presented under this model, would be critical of the physician and the employer for not understanding the injured worker's tolerance: How much pain an individual is willing to tolerate depends on many psychosocial factors and the benefits available for doing the job.

Think about it - how many "fraud" cases are brought where the injured worker, labeled as "disabled" and unable to perform the job, is caught in surveillance performing a more pleasurable activity such as playing golf, that would otherwise belie any claim of "disability" - the tolerance for pain in a pleasurable activity, playing golf while receiving a TTD paycheck, is greater than for working at the same net pay scale.

At the National Expo Dr. Christopher Brigham will be presenting his lecture on the "Crippling of America" and how labeling people as "disabled", and treating people as "disabled", contributes to the endless cycle of non-productivity and debasement of previously healthy individuals. I think that everyone at the conference should attend this presentation.

We need to think about work injury and its consequences in a different manner, and get away from finding people "disabled". This is a cultural change, a new conversation begetting a new, more healthful viewpoint.

Perhaps the National Expo should change its name to the "National Work Injury and Recovery Conference & Expo".workers compensation, work comp, injured worker

WCAB Clarification on Messele Opens Door to Real Reform

"To avoid 'a landslide of reopenings' or other objections to panels, to which the parties had previously acquiesced, and to reports that have already been issued and may have formed the basis for settlements, we issue this notice of intention to modify our Sept. 26, 2011, decision to state that it shall apply prospectively, i.e., it shall govern all panel requests made after Sept. 26, 2011," the California Workers' Compensation Appeals Board (WCAB) said Friday in an en banc decision saying its holding in Messele v. Pitco Foods Inc. should only apply to requests made after Sept. 26, the day it issued the first en banc Messele decision.

In the first Messele decision, the WCAB said litigants must wait 10 days after rejecting an offer for an agreed medical evaluator before requesting a QME panel. The board also said Labor Code Section 4062.2(b) extends the waiting period by five days when the AME request is mailed to an address in California. The waiting period starts on the first day after the date of the first written proposal and includes the last day, the court said.

The Division of Workers' Compensation (DWC) then issued a memorandum that sent waves of concern throughout the work comp litigation community in California by stating its Medical Unit would review panel requests on file and issue panels only when the requests complied with the time frame established by the Appeals Board. The division also said it would honor requests for new panels in cases where an evaluation was already performed, as well as cases where a panel was issued but no evaluation had been done if the original requests were not in compliance with the Messele decision.

Both sides of the bar expressed concern that pandemonium would ensue if it were interpreted that the Messele time frames would apply retroactively, and medical legal report authors questioned whether they would get paid for reports issued on invalid panels because their reports would thus be inadmissible.

So it was pleasant to see the WCAB acting so quickly and with a sense of urgency to restore some calm to the system.

But honestly, the true lesson in this little story is that the process of workers' compensation litigation is completely out of control with complexity, hurting injured workers who can't escape the clutches of a system that drives disability and destroys lives, and simultaneously hurting employers by increasing costs needlessly.

Brad Chalk, current president of the California Applicant Attorneys Association told WorkCompCentral, "maybe we can use this as a stepping stone to working with the administrative director and the Department of Industrial Relations in solving some of those problems and streamlining the process of how parties are actually able to get the evidence necessary to move a case forward".

That would be a welcome first step towards "real" reform of a system that has gotten completely out of touch with the needs of society.workers compensation, work comp, injured worker

Privatization of Pinnacol Need to Account for CO's Small Businesses

Colorado's Pinnacol Assurance is back in the news with another restructuring attempt.

Pinnacol is asking the state of Colorado to approve a plan that would allow it to break ties with the state and operate as an independent entity.

The board of directors for the state-chartered carrier of last resort submitted a proposal to Gov. John Hickenlooper on Thursday that would initially convert the carrier to a mutual insurance holding company and set the stage for possible privatization at a later date.

Making Pinnacol a mutual company rather than an arm of the state would better position the carrier to continue providing competitively priced workers' compensation coverage, strengthen protections for injured workers, and provide short- and long-term economic benefits to the state without changing its role as the insurer of last resort, according to the restructuring plan.

Pinnacol cites Nevada's experiment with Employer's Holding company.

When Employers was formed the Nevada system was in a shambles and part of the solution for Nevada was the jettison of Employers from state control to cut costs, make it more competitive and efficient.

Employers history as a private company has demonstrated aggressive expansion.

In 2008 Employers merged with AmComp to get business opportunities in 28 other states, expanding its business operations seeking market share and diversification beyond Nevada's employer sector. In 2006 it entered a deal with Blue Cross to package work comp and group health to employers with fewer than 250 workers. In 2003 it bought Fremont's book of business when Fremont announced it was getting out of the work comp industry.

More recently Employers has been beholden to the rotten economy and lowering payroll based premiums as it has cut jobs and seeks savings across the board.

It does not appear that Colorado has the troubles that led to the Employers privatization, at least not presently. Indeed, much of the opposition to the Pinnacol plan is that "if it isn't broken, don't fix it."

A task force has been assembled by Gov. Hickenlooper to examine Pinnacol's proposal (which can be viewed here).

The job of the task force is not what the benefits of mutualization are, but what happens to the state's small businesses and their employees when times go bad (which eventually they do) and there is no "carrier of last resort". Bad times have happened in the past (or are happening now!) and will occur again.

A carrier of last resort is critical to small businesses, and one important aspect of a state controlled carrier is that the state can always force rates if necessary to give its businesses a break when times get rough. A state can't do that to an independent insurance company.workers compensation, work comp, injured worker

Risk, Capacity, Tolerance - A Better Indemnity Model?

A recent communication from James Talmage, MD got me thinking about (again) the entire indemnity equation in most workers' compensation systems.

If you are unfamiliar with Dr. Talmage, he is an occupational medicine practitioner and orthopedic surgeon from Tennessee and a prolific researcher, writer, lecturer on disability management. One of his contributions is as senior editor of the AMA Guides to the Evaluation of Work Ability and Return to Work (2nd edition) (full disclosure and shameless plug - I wrote Chapter 7).

Nearly all workers' compensation systems "reward" disability - the more or longer the injured worker is "disabled" the more money and benefits the injured worker, and those enabling the disability (i.e. doctors, attorneys, and yes even insurance companies) get as well.

When workers' compensation was invented not a lot was understood about disability and the social ramifications of disability. Back then a disability was fairly obvious - lost limbs were easy to see and discern from the "normal" population.

As time has progressed, and we have become more educated, experienced and sophisticated it is clear that disability as a stand alone concept is inadequate to define an indemnity scheme.

When the concept of indemnity was born the thought was that someone who lost a limb or otherwise could not function as one did prior to an injury would need some supplement to ensure an adequate life style.

Now we have so many technologies, opportunities and laws that being "disabled" is not an adequate measure of one's value to society, and consequently one's ability to generate an income. There are many, many examples of this in today's society and I won't cite them here - not enough time or space - but you have seen them on TV, giving keynote speeches, etc.

The clash between the philosophy underpinning the Americans with Disabilities Act (ADA) and work comp's return to work policies are an example.  ADA supporters say that no handicap/disability should automatically preclude a person from doing a particular job and that the reasons for excluding a disabled person from a job must be serious economic or safety reasons. 

Yet, in work comp we give automatic statutory permanent total disability status to multiple amputees or those declared blind. Is there not an inconsistency?

Talmage breaks the disability equation down into three parts: "risk", "capacity", and "tolerance".

Risk is whether harm to one's self or others is imminent (on a scale of course) - clearly the vast majority of those who are "disabled" for workers' compensation purposes would not pose a risk to either themselves or to society. "An increase in the intensity of self-reported, pre-existing symptoms like pain or fatigue may be distressing to the individual, but is not significant harm" Talmage states in Failure to Communicate: How Terminology and Forms Confuse the Work Ability/Disability Evaluation Process (J Insur Med 2007;39:192–198). Life entails risk, so "no risk" is not an option - the scale depends upon deductive reasoning. 

Risk does not include the increase in pre-existing pain, numbness, fatigue, etc. that occurs with resumption of activity (like work). That is the tolerance component.

Capacity is whether the job or task in question can be done. For example, "If a factory job requires the individual to activate a machine by simultaneously pressing one overhead mounted control button with each hand (so that the hands are not near the dangerous part of the machine when it cycles), an individual with a frozen or ankylosed shoulder would not be able to reach the control button with the ipsilateral hand. Thus, this individual could not do the job in question unless the impairment (lack of shoulder motion) can be accommodated by mounting the machine control in an alternate, but also safe, location," writes Talmage.

The last component is tolerance - symptoms during task performance that cause the individual to self-limit performance. How much pain an individual is willing to tolerate depends on many psychosocial factors and the benefits available for doing the job. This is a risk/reward analysis that can not be measured because it is an entirely subjective component.

"A relatively small amount of pain may make intolerable a physically easy minimum wage job the individual dislikes (job A). When offered employment in a physically very strenuous, but interesting and well paid job (job B), the individual may decide that the rewards of this new work are worth the cost of the increased pain symptoms from the physically challenging job. Thus, mild pain may be intolerable on job A, but severe pain may be tolerable on job B," explains Talmage.

Perhaps this line of thinking is a better method for analyzing workers' compensation's indemnity component. I have been asking for some time if it wouldn't be better to reward "ability" or "productivity" than disability in work comp systems and I think looking at disability in this three part analysis is the path to that better indemnity equation.workers compensation, work comp, injured worker