Tuesday, January 31, 2012

An Open Letter to North Dakota

An open letter to the press, business community and people of North Dakota:

The authors of this letter are journalists, columnists, bloggers and content publishers for the workers' compensation industry across the United States. We are a politically and professionally diverse group. We do not agree on everything, yet find ourselves of one opinion on a highly critical matter. We are competitors who are now colleagues for a common cause; to bring light to a serious injustice being committed within your state.

The prosecution of Charles (Sandy) Blunt was, in our view, an outrageous and almost farcical event. It is, in the final analysis, a travesty that has damaged the national view of your state, hampered the operation of a State agency, and ruined the life of a good man wholly undeserving of such results.

Sandy Blunt was Director of North Dakota's Workforce Safety & Insurance from May of 2004 until December of 2007. He was, as you are likely aware, prosecuted by state authorities for “misspending government funds”. Specifically, he was charged and convicted on two counts:

During his almost 4 year tenure his agency spent approximately $11,000 on employee incentive items, including flowers, trinkets, balloons, decorations and beverages for Workforce Safety and Insurance employee meetings, and on gift certificates and cards in small denominations for restaurants, stores and movie theaters. Blunt personally approved some of these expenditures. Others were made by managers as part of daily operations under his watch. Not a dime went into an employee’s pocket, nor did Blunt personally benefit from any expenditure. 

His agency paid $8,000 to an employee, David Spencer, for sick pay when he was not apparently sick, and it also failed to collect $7,000 from Spencer when he left prior to the end of his employment agreement. The $7000 was for moving expenses incurred that prosecutors felt Spencer owed the state. Blunt’s position was that the agency was not entitled to collect these funds, since Spencer’s departure was not voluntary.

All told, the state prosecuted Sandy Blunt, and he is now a convicted felon for “misspending” $26,000 of government money.

No one has ever alleged that Blunt personally benefited from any of these expenditures. Blunt was acting like other capable, ethical North Dakota executives ‐ in the best interest of customers and of the mission of his employer. In our industry it is considered a best practice to provide employees and supervisors with incentives. It is not frivolous, it's necessary, and what every employer should do.

The first of these two charges would be, to many people, laughable if it were not for the damaging consequences associated with them. The notion that buying inexpensive incentive items for your employees could result in a felony conviction is simply stunning. This would not be elevated to a criminal status in most states in the nation. The fact that it is in North Dakota should have a chilling effect on businesses looking to move there.

The second and more serious charge, involving the sick pay and moving expenses of employee Spencer, has been fatally undermined by the revelation that the prosecutor in the matter, Cynthia Feland, withheld critical evidence from the defense – evidence that largely clears Blunt in this area. A disciplinary panel for the North Dakota Supreme Court has found on November 7, 2011 that:

“Cynthia M. Feland did not disclose to Michael Hoffman, defense attorney for Charles Blunt, the Wahl memo, and other documents which were evidence or information known to the prosecutor that tended to negate the guilt of the accused or mitigate the offense.”

Withholding of evidence by prosecutors is one of the most serious acts of prosecutorial misconduct in North Dakota and all other states. In recognition of this, the panel recommended Ms Feland’s license to practice law be suspended. We urge that you read the entire report of the panel, including the penalties the board recommended be imposed on Ms. Feland. For the report, go here. 

Had the prosecutor not withheld evidence, in all likelihood the case would never have come to trial, and the reputation of Blunt and the WSI would be free of taint. The evidence in question shows that WSI’s auditor’s own findings backed Blunt’s position on payments related with Spencer. However, those findings were not made available to the defense, and the prosecutor was found to have allowed testimony to be given at the trial that directly conflicted with information she had. As we indicated, Feland, now a judge in your state, has been recommended for suspension and a fine over these findings.

Yet Sandy Blunt remains a convicted felon. His crime? Buying balloons, trinkets and $5 gift cards – for his employees, not for himself. For that, Blunt, who is married with two children, has had to spend half a decade, and untold thousands of dollars trying to clear his name.

Some of us have known Sandy for quite a while. Some have come to know him while learning of his situation. Others of us have never met Sandy, but recognize the tenuous nature of his treatment. Collectively we speak to thousands within our industry every day. Our opinions have been clear; this situation needs the light of truth shone brightly upon it. The time and resources expended prosecuting a man on such questionable grounds should be more closely examined, by the business community, workers compensation professionals and the media in North Dakota. 

Sandy Blunt is a good and decent man. He deserves better. So, it would seem, do the people of North Dakota.

Peter Rousmaniere
Consultant & Writer
Robert Wilson
President & CEO

Joseph Paduda
Principal, Health Strategy Assoc, LLC

Rebecca Shafer

Julie Ferguson
Consultant & Editor

David DePaolo

Henry Stern, LUTCF, CBC

Sandy Blunt related articles from these authors:

Monday, January 30, 2012

OK's Grand Experiment - A New Era?

Oklahoma is moving forward with is most likely one of the biggest social experiments since the invention of workers' compensation 100 years ago, with some very powerful political backing.

Senate President Pro Tempore Brian Bingman, R-Sapulpa, and Speaker of the House of Representatives Kris Steele, R-Shawnee, will take the lead on Senate Bill 1378, the “Oklahoma Employee Injury Benefit Act.”

The act 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 purchasing workers’ compensation insurance.

Not all employers would be able to participate in this optional plan.

SB 1378 would allow an employer to choose to be exempt from the Workers’ Compensation Code only if the employer has 50 or more employees, had claims greater than $50,000 in at least one of three preceding years, and establishes an alternative benefit plan that qualifies under the legislation. The bill also states only employers with an experience modification greater than 1.0 would be allowed to participate, but there is a question as to whether this was a drafting error.

A qualified benefit plan must provide for 100% of medical expenses and pay 80% of pre-injury income for temporary inability to work -- for up 156 weeks -- and 80% of pre-injury income for permanent inability to work for the later of 15 years or eligibility for 100% of Social Security retirement benefits.

Under the proposed legislation, an employer would be required to have an ERISA plan with specified benefits to become a “qualified employer.”

A qualified employer’s liability under the benefit plan would be exclusive for occupational injuries “in all cases except death,” the bill states.

Presently Texas is the only state that permits employers to not participate in workers' compensation, but there are no minimum requirements for an employer to do so - that's why in Texas "non-subscription" (i.e. not subscribing to the workers' compensation system) is sometimes also referred to as "going bare" - referring to the lack of legal and insurance protection should an employer choose not to participate in workers' compensation.

According to the WorkCompCentral News this morning the bill has the support of the Oklahoma State Chamber but labor as yet has not weighed in whether it supports or opposes the bill.

The Oklahoma Legislature will convene Feb. 6.

Will this experiment provide benefits to both employers and employees? Time will only tell obviously, but I believe that if Oklahoma's alternative plan fulfills its author's goals of providing “a fair and balanced alternative” to workers’ compensation, one that both employers and employees can embrace, a new era in socially responsible employment protection systems will blossom.

If the experiment fails - if either employers don't see savings or employees see a denigration of work place safety and injury protections - then this alternative will go no further than the state borders of Texas.workers compensation, work comp, injured worker 

Friday, January 27, 2012

CA Drs Face New Self-Referral Restrictions - Model for Other States?

California Assembly Bill 378, which was signed into law by Gov. Jerry Brown on Oct. 7, added pharmacy goods to the items listed in California Labor Code Section 139.3(a) for which physician self-referral is prohibited in workers' compensation cases.

This was a little observed addition to the bill prior to its passage and enrollment into the laws.

The definition of pharmacy goods includes compound drugs, medical foods, co-packs, physician-dispensed over-the-counter medications and durable medical equipment. Financial interest includes any ownership, interest or payment between a physician and a person or entity to whom the physician refers a patient, under the new law.

The prohibition on self-referral applies to physician-owned companies that supply spinal and orthopedic implants. Those companies are now prohibited from supplying implants for workers' compensation patients treated by physicians who also have a financial interest in the company according to experts that WorkCompCentral News talked to.

The law was inspired by a Wall Street Journal article published 2011 about a Portland, Ore., neurosurgeon who lost surgical privileges at a hospital after an investigation found he was performing spinal fusions on Medicare patients at a rate 10 times the national average. The doctor was reportedly a partner in the company that distributed the devices he was using, Omega Solutions of Fresno, and U.S. Sen. Orin Hatch, R-Utah, who released a report in June 2011 questioning surgeons who use their ability to generate referrals for hospitals to induce them to buy medical devices from the companies in which physicians have an ownership interest.

There are exceptions to the self-referral prohibitions in Labor Code Section 139.31, such as when a provider's practice is in a rural location or when there is a loan or lease between the physician and the recipient of the referral at "commercially reasonable terms" and that is unaffected by the referral.

The practice was previously legal, according to an analysis by former California Attorney General Bill Lockyear.

In 2006 Lockyear issued a formal opinion that a physician can prescribe a medical device distributed by a company in which the physician has an ownership interest, "provided that any return on investment is based upon the physician's proportional ownership share and requisite disclosures are made."

It now appears that AB 378 makes Lockyear's opinion obsolete.

Now such self-referral practices in California's workers' compensation system is a misdemeanor subject to fines of up to $5,000 for each offense. Violations are also subject to review by licensing boards and could result in disciplinary action for unprofessional conduct.

I suspect that this law, which essentially flew under the radar because most of the focus was on the bill's provisions concerning reimbursement rates for compound drugs, will have a measurable impact on the cost of medical treatment in California's work comp system. Assuming positive data by the various research institutes that watch the California system, look for similar provisions to be adopted throughout the nation in the coming years.workers compensation, work comp, injured worker 

Thursday, January 26, 2012

TX Formulary Showing Early Success, Raising Questions

Much of the discussion both in this blog and the industry in general in the past year has been about prescription drug abuse, the growing awareness of this problem and what various states are doing about it.

A study by Washington's Department of Labor & Industries shows that state's recent policies as proving effective in combating the problem.

Now a utilization review company says it's data shows that Texas' efforts, with its "closed formulary" rules, is proving effective too.

Texas' formulary uses the Official Disability Guidelines (ODG) to determine which drugs require preauthorization. Preauthorization is required for drugs designated as “N” under the ODG, meaning those drugs are considered experimental, investigational or not recognized for use in treating a particular injury or condition.

Drugs on the “N” list include potentially addictive and expensive Class II narcotics, hypnotics, and compound drugs that contain “N” ingredients. The federal Drug Enforcement Administration classifies drugs based on their medical uses and potential for addiction or dependency.

The formulary, which was mandated by the Texas Legislature through House Bill 7 in 2005, was drafted by the Division of Workers’ Compensation and became effective Sept. 1, 2011 for new claims with a date of injury on or after that date. Legacy claims come under the formulary two years later.

Mark Pew, senior vice president of business development for Atlanta, Ga.-based Prium, a utilization review company specializing in prescription drug claims, said one of Prium’s pharmacy benefit manager partners provided data on its Texas drug transactions, which he says show that since the formulary took effect last Sept. 1, “there appears to have been a significant decline in the prescribing of drugs that would qualify for…preauthorization for new claims.”

The data show 18,359 prescriptions for drugs dispensed within 90 days of the date of injury between Sept. 1, 2010 and Aug. 31, 2011. Those prescriptions included 1,355 “N” drugs, accounting for 7.38% of the total. From Sept. 1 through Dec. 22, 2011, there were 1,825 prescriptions for drugs dispensed within 90 days of injury, which included 64 for “N” drugs, representing 3.51% of the total.

That's a big drop in just one year for the limited class of claims being studied - 90 days post injury.

The next measurement will occur once legacy claims fall under the formulary, which occurs starting September 1, 2013.

Research indicates there are a lot of “N” drugs being prescribed for legacy claims.

The Texas Department of Insurance Workers’ Compensation Research and Evaluation Group published a report last October showing that legacy claim prescriptions for injury years 1991 through 2005 averaged $3,636 in 2010 compared to $266 per prescription for injury years 2006 through 2009.

Prescription drug issues are getting attention through out the nation - the states that have implemented rules and regulations all have taken different approaches, but each of them appears to be effective at least in addressing the numbers issue; i.e. reducing the number of prescriptions and/or number of people receiving large doses of potentially lethal opium-based pharmaceuticals.

There are some questions left unanswered that should be addressed in the future: 1) What is the impact on the injured worker population? Death rate? Disability and return to work statistics? Benefit impact? 2) Will some other cost component experience unnatural inflation (i.e. the whack-a-mole experience)? 3) Was one state's approach more effective than another state's approach?

And, to me, the most obvious question is one of causation - the rise and fall of the prescription drug bubble has been very rapid (relatively speaking of course). So exactly what inflated the bubble and why were the various state responses so effective in deflating the bubble (i.e. looking for the "follow the money" investigation)?workers compensation, work comp, injured worker 

Wednesday, January 25, 2012

S&P's Report: What, Me Worry?

So Standard & Poor's (S&P) says that workers' compensation is a bad line of business because it doesn't make an underwriting profit ... big deal. That's nothing new; just part of the cycle.

Siddhartha Ghosh, a credit analyst with S&P in New York, wrote a report published on Monday titled, "For the U.S. Property/Casualty Industry, Making Workers' Compensation Profitable May Be Mission Impossible."

Ghosh warns of continued years of poor profits for workers' compensation carriers and possible downgrades of ratings for some insurers with a heavy concentration in the workers' compensation line.

The industry has posted combined ratios below 100% only three times between 1991 and 2010 Ghosh notes: 1995, 1996 and 2006. The national combined ratio will reach at least 115% in 2011 and could stay there until 2013, according to Ghosh.

Workers' compensation in the private market was not designed for underwriting profit - it is a cash flow mechanism that permits profitability through investments. In most states the private market competes against quasi-governmental insurance units (aka state funds) which are designed by law to operate on the fringe of profitability.

Ghosh sort of gets the cash flow nature of comp when he notes that a stagnant economy creates additional problems because workers' compensation profitability is sensitive to payroll - that's because premiums are based on payroll. The lower the payroll, the lower the premium, the less cash coming in the door, ergo negative cash flow.

The monkey in the closet, though, is reserves. Many states allow claims to be settled by lump sum payment, which terminates future reserve liabilities for the claim and create a more certain future for a carrier's overall reserves. But many other states don't allow lump sum settlements, and this "long tail" nature of claims liabilities can create problems down the road.

Regardless, Ghosh says that industry reserves are inadequate, stating in his report that the property and casualty industry prematurely released $2.8 billion in reserves from the workers' compensation line between 2006 and 2008. He expects to see carriers reporting adverse reserve developments for accident years 2007 through 2010.

Ghosh cautioned that if some insurers strengthen their reserves, causing their operating earnings to fall below S&P's expectations, the agency would consider lowering some ratings. This may or may not be important - S&P ratings are followed by Wall Street, but business owners and risk managers (and their brokers and agents) look to ratings from A.M. Best for a carrier's financial health in paying future claims.

But even a carrier's financial health rarely trumps bottom line premium pricing for the insurance consumer.

Karen Oxman, owner of GNW-Evergreen Insurance in Encino, Calif., told WorkCompCentral that even though she advises her clients to go with the company that has the best rating, that is not always what customers are looking for.

"People get a quote and if it’s the best quote, I think they're inclined to take it," she said.

To people outside of the industry workers' compensation insurance isn't much more than a commodity. So while Wall Street may not like the profitability of the line, Main Street doesn't care ... until the line can't raise capital to finance operations or growth because of S&P ratings, and has to do so by raising rates and premiums.

That's when Main Street starts calling for reform, and the cycle starts anew.

For veterans of the industry, which means you're as old as I am or older, your culture was influenced by the irreverent comedy magazine of our teenage years, Mad Magazine, and the indomitable fictional character Alfred E. Newman's famous quote, "What, me worry?".

So it is with this latest S&P report.workers compensation, work comp, injured worker 

Tuesday, January 24, 2012

OK Fraud Battlers Could Learn From CA

An interesting dichotomy of an understanding of fraud in workers' compensation is highlighted in this morning's WorkCompCentral News.

In one story California Division of Workers' Compensation (DWC) Administrative Director, Rosa Moran, told attendees at yesterday's Employer's Fraud Task Force meeting that before the meeting she didn't understand the scope of fraudulent activities in workers' compensation.

The common perception of fraud as the injured worker participating in activities such as bungee jumping while at the same time saying he's too injured to work is just a small part of the problem, Moran told our reporter.

"I was kind of shocked to find out employee fraud is only about 10% of the problem and 90% of the problem is elsewhere," she said. "When I say elsewhere, I'm talking about employer fraud, provider fraud, attorney fraud, doctors, equipment companies."

"I have this really bad feeling that we have tens of millions of dollars flying under the radar," she said.

Moran said suggestions to help identify fraud include asking injured workers during depositions about the treatments they received and comparing that with billing records. She also said carriers should develop red flag criteria for auditing billers.

The division and its parent agency, the Department of Industrial Relations, identified red flags to conduct targeted audits of employers, and Moran said the red flags have helped identify more violations without bothering law-abiding employers.

The other story highlights that at least one politician in Oklahoma is concerned with fraud, but the implications are that the scope of concern is based on a limited understanding of the problem.

Oklahoma Lt. Gov. Todd Lamb (R) has issued a policy report to be delivered to legislators next month, calling for additional changes in the state's workers' compensation system -- including hiring more workers' comp fraud investigators at the Attorney General's Office.

And Sen. Dan Newberry, R-Tulsa, has already introduced legislation to accomplish that recommendation.

Newberry said the proposed "Workers’ Compensation Anti-Fraud Act" (SB 1174) is part of a continuing effort to reduce costs to businesses while protecting the rights of injured workers.

Newberry’s proposal would allow the attorney general to hire, or contract with, additional investigators to review workers’ compensation claims.

The bill as introduced does not focus on injured worker fraud at all. As stated above, the bill only amends existing law to permit the attorney general's office to expand its investigative service options.

But the suggestion in Lamb's interview with WorkCompCentral is that the motivation is fraud being committed by injured workers and that would be the focus of these resources.

Lamb told our reporter that SB 1174 is based on concerns expressed to him by “actual business owners” who suggested the Attorney General's Office hire additional fraud investigators or contract with investigators.

The state should lead the way by encouraging CompSource Oklahoma, which provides workers’ compensation coverage for state agencies, to beef up its fraud investigation unit, Lamb added.

Oklahoma is obviously a much smaller state than California, but that may make it even more enticing to those who don't want to play by the rules to try and "fly under the radar".

Perhaps Oklahoma could learn more about fraud by talking to colleagues in California who already have fraud-battling resources allocated to them to understand the full scope of where the fraud is occurring. And to understand the level of sophistication that enables the fraud in the first place.workers compensation, work comp, injured worker 

Monday, January 23, 2012

OH Rules Will Provide Good Comparison to WA Drug Program

Ohio is toying with a different approach to the issue of prescription drug abuse in workers' compensation.

The Ohio Bureau of Workers’ Compensation (BWC) will be reviewing at its January 27 meeting of directors a pharmacy “lock-in” rule, called the Coordinated Services Program, aimed at combating prescription drug abuse.

The program will allow BWC to require an injured worker to use a single pharmacy to dispense all non-emergency prescriptions that are reimbursed under the bureau’s prescription benefit plan.

House Bill 93, which took effect last May 20, requires that the bureau adopt such a program and rule by July 1, 2012. The legislation also provides that the bureau’s effort be developed in cooperation with the Department of Job and Family Services.

Under the proposed rule, the bureau could place an injured worker in the “lock-in” program based on the injured worker meeting one or more of the following criteria in a three-month time frame:

--Use of three or more different prescribers to obtain prescriptions of the same or comparable medications.

--Receipt of prescription drugs from more than two different pharmacies.

--Monthly receipt of three or more prescriptions, including refills for drugs identified as narcotic analgesics.

--Monthly receipt of more than two concurrent narcotic analgesics in the same therapeutic drug class.

--Monthly receipt of more than two narcotic analgesics in the same therapeutic drug class, more than one benzodiazepine, and more than one sedative-hypnotic.

The proposed rule also would allow the bureau to restrict an injured worker convicted of a drug offense to the use of a single prescribing physician, selected by the injured worker from bureau-certified physicians, in order to receive reimbursement from the agency for non-emergency prescriptions.

Ernie Boyd, executive director of the Ohio Pharmacists Association, told WorkCompCentral on Friday that he thinks the rule will help deter abuse of prescription drugs. Boyd said the only concern raised by pharmacists on the rule was that when an injured worker is required to select a single pharmacy, "it has to be the worker's choice."

Compare Ohio's plan with Washington's pharmaceutical controls.

Washington requires medical practitioners to perform a full evaluation to document a patient's health history for past treatment of pain and substance abuse problems. Practitioners must also review any available information about past prescriptions and current prescriptions through prescription drug monitoring programs before prescribing opioids.
Doctors are required to prepare a treatment plan, discuss the risks associated with opioids with patients and have the patient sign an agreement for treatment that outlines how the drugs should be taken. The contract can also include language saying the patient could be cut off from medication for violating the contract.

Other provisions in Washington's rules say whenever possible, a single prescriber and single pharmacy should dispense opioids, and that treating doctors should review the treatment plan and patient's progress at least every six months.

Doctors in Washington are required to seek a consultation for any prescription in excess of the equivalent of a 120 mg dose of orally administered morphine per day. Exceptions to the consultation requirement apply when a patient is being tapered off opioids, a patient requires only a temporary increase in dosage for acute pain, the doctor documents reasonable attempts to obtain a consultation with a pain management specialist or the doctor documents that the patient's pain and function is stable and the patient is on a non-escalating dosage of opioids.

Ohio is one of the few completely state-run systems. This allows the state to implement rules, such as the Coordinated Services Program, much more easily than a competitive open market state, because coordination of state agency services is more consolidated and streamlined.

Because Washington is also a state-run system, the effectiveness of the Coordinated Services Program can be measured directly against Washington's program for controlling prescription drugs providing the rest of the nation with valuable insight into better ways to manage this current source of abuse and concern. I assume at some point one of the workers' compensation research organizations will do this comparison and also compare against other states with, and without, adopted pharmaceutical control guidelines.workers compensation, work comp, injured worker 

Friday, January 20, 2012

CA Research Confirms - Injured Workers Need Representation

Much is going to be made of the University of California, Berkeley, researcher Frank Neuhauser's report to the Commission on Health and Safety and Workers' Compensation (CHSWC) on the effect of the 2004 reforms on permanent disability indemnity.

But will the arguments be properly focused?

According to Neuhauser, in order for permanent disability indemnity levels to match pre reform levels an additional $2.64 billion will need to be found in the system.

Don't expect that to come from employers' premiums - Governor Brown gave no indication that he was inclined to promote any indemnity increases during California's tenuous recessionary recovery unless there was a wholesale revision of the work comp system that did not negatively impact the state's employers.

And even if permanent disability indemnity was increased to meet pre 2004 levels, is that a proper measurement of what this benefit is supposed to accomplish?

The California Constitution does not give us any clue as to whether permanent disability indemnity is to perform any specific function - the best the Constitution does is state that the overall workers' compensation system is to make "adequate provisions for the comfort, health and safety and general welfare of any and all workers and those dependent upon them for support to the extent of relieving from the consequences of any injury or death incurred or sustained by workers in the course of their employment".

The California Labor Code does not define permanent disability. It tells us how to determine how much there is, but not what it is or what it is supposed to "relieve".

Case law gives us a clue as to what permanent disability indemnity is presumed to provide - as summarized by Sullivan on Comp, Chapter 10:

"Case law has understood permanent disability as the 'irreversible residual of an injury.'[1] It refers to the condition that remains after maximum recovery from the effects of the injury has been attained or the employee's condition becomes permanent and stationary.[2]Permanent disability also has been defined as 'the impairment of earning capacity, impairment of the normal use of a body member or function or a competitive handicap in the open labor market.'[3]"

Still, this case law does not give us any notion that one way of computing the adequacy of this benefit is any better or more accurate than any other method.

That job is up to the Legislature, and this legislature isn't interested in a political hot potato like permanent disability benefits, especially when increasing them to pre-reform levels would increase system costs by over 30%.

Perhaps what is most troubling about the findings of Neuhauser is that the gulf between injured workers who hire an attorney, and those who do not, is expansive - and that points to a system that does not make "adequate provision" for "any and all workers and those dependent upon them for support".

The average impairment rating for cases in which the injured worker did not hire an attorney decreased 40.1%, from an average rating of 22.2% under the 1997 rating schedule to 13.3% under the 2005 schedule. At the same time, average compensation in unrepresented cases decreased 51.7% to $12,246 from $25,363 under the new system, according to Neuhauser's study.

In cases where the claimant did have an attorney, impairment ratings dropped 28.4% on average, from 37% under the previous rating schedule to 26.5% under the current schedule. Compensation paid in represented cases decreased 37.2%, to an average of $30,804 from $49,080.

Regardless of the drop in indemnity, this study says that injured workers need representation in order to get maximum advantage of "adequate provision".

I've heard it stated in the past that one of the objectives of "reform" was to minimize attorney participation in order to reduce litigation costs in the system. It's true that immediately following SB 899 the ranks of attorneys representing injured workers (aka "applicant attorneys" in California) dropped precipitously. Figures from the Division of Workers' Compensation (DWC) in 2007 showed a 30% drop in the applicant attorney rolls.

But has this really resulted in a drop in litigation?

Overall litigation at the Workers' Compensation Appeals Board (WCAB) division offices is down if measured by the number of Applications for Adjudication of Claim forms filed with the WCAB and by quite a bit. We don't know if this is due to reform effects, the economy, or a combination of factors.

We do know that cases that do get into the WCAB system are taking longer than before to resolve - but again we don't know if this is because of the complexity of issues, litigation management issues, WCAB staffing level issues, carrier opposition, etc.

But clearly, attorney involvement is desired if the injured worker wishes to avail him or herself of all of the benefits allegedly available, but made difficult to access by "reform" and related regulations.

One of the stated purposes of the 2004 reform laws that instituted a new permanent disability rating system based on the AMA Guides 5th edition was to promote uniformity and predictability.

About the only thing that is really uniform and predictable is that if an injured worker does not have an attorney then that injured worker will get significantly less money as compensation.

Thursday, January 19, 2012

Market Basket Fine Shows Enforcement is the Only Relevant Safety Motivator

Right on the heels of my post on Monday about a study from the Rand Corporation concluding that safety plans are benign relative to improving safety, but that enforcement was the prime motivator, comes a story this morning about a significant safety enforcement action.

The U.S. Labor Department has asked the Occupational Safety and Health Review Commission to compel Tewksbury, Mass.-based DeMoulas Super Markets, owner of 60 Market Basket stores in Massachusetts and New Hampshire, to correct safety problems and pay fines of $589,200.

In 2006, after being cited by the Occupational Safety and Health Administration (OSHA), DeMoulas agreed to complete job-hazard analyses in all of its stores but failed to do so.

The Labor Department's complaint alleges that employees at the stores were exposed – or were likely to be exposed – to hazards from unguarded, open-sided work and storage areas, including storage lofts, produce coolers and freezers.

Also alleged in the complaint is that the supermarket chain failed to protect workers in the produce, deli and bakery departments from laceration hazards from knives and other cutting instruments by not conducting an analysis of job hazards.

An employee was seriously injured in April 2011 when he fell 11 feet onto a concrete floor from an inadequately guarded storage mezzanine, and an employee at a Billerica, Mass., store was seriously injured under similar conditions in 2007 according to OSHA.

Between 2008 and 2011, employees at stores in Rindge and Concord, N.H., sustained at least 40 hand lacerations.

OSHA said the DeMoulas complaint is only the second such action taken by the Labor Department, which filed a complaint against the U.S. Postal Service in July 2010, seeking the correction of electrical safety violations at 350 post offices throughout the nation.

DeMoulas is contesting the FINES according to the OSHA press release, which is silent about any action DeMoulas is taking relative to correct the safety problems.

The point is that the super market chain/employer did not take seriously the agreement to complete job-hazard analyses.

It took enforcement action to get this employer to view workers safety in a serious manner. 

That's a sad statement as to this employer's commitment to doing business in the United States in a legal, ethical and morally conscionable way, and testament to the fact that labor enforcement departments on both the federal and state level need adequate funding in order to protect the working population of this nation.workers compensation, work comp, injured worker 

Wednesday, January 18, 2012

WA, TX & FL; Same Issues, Different Solutions

The state of Washington is cited often these days as an example of what to do about the prescription drug and opioid epidemic that currently has the workers' compensation industry concerned.

According to the study, "Bending the Prescription Opioid Dosing and Mortality Curves: Impact of the Washington State Opioid Dosing Guideline," published in the Dec. 27, 2011, edition of the American Journal of Industrial Medicine, Washington's efforts are paying off with the gross total number of prescriptions for opioids down and a corresponding drop in prescription drug-related deaths.

The Washington Agency Medical Director's Group convened an advisory group in 2006 to develop dosing guidelines and in April 2007, the Medical Director's Group launched a web-based educational pilot program that included guidelines listing a "yellow-flag" warning for opioid dosages of 120 milligrams of morphine-equivalent doses per day. The guidelines recommended providers obtain a consultation with a pain-management specialist for patients with chronic non-cancer pain who were receiving dosages of opioids in excess of 120 mg per day before writing more prescriptions for the drugs at the same strength.

The number of prescriptions for Schedule II opioids increased 191% from 22,867 in 1996 to 66,544 in 2006, according to the study's authors, who include Dr. Gary Franklin, medical director for the Washington State Department of Labor and Industries, which runs the state's workers' compensation system. Prescription rates held steady from 2006 through 2008, before dropping to 54,484 in 2009 and 44,209 in 2010.

The number of prescriptions for Schedule III opioids increased from 76,935 in 1996 to 93,550 in 1999. The number of Schedule III prescriptions totaled 79,882 in 2008 and dropped to 63,808 in 2009 and 52,499 in 2010.

Expressed in terms of lost-time claims, there were 2,365 opioid prescriptions per lost-time claim in 1997 and 3,222 in 2002. That fell to 2,666 per 1,000 claims in 2009 and 2,245 in 2010.

The study found the number of deaths increased from 0 in 1996 to a 15-year high of 35 in 2009, corresponding to the increase in prescriptions and dosages. When prescriptions and dosages started dropping in 2009, the number of deaths also declined more than 50% to just 15 deaths in 2010.

Interest in Washington's results may migrate to the other side of the nation. The Workers Compensation Research Institute (WCRI) in its just released CompScope Benchmarks for Florida, 12th Edition, concludes that Florida worker's compensation costs are increasing across the board – driven largely by increases in payments for prescription drugs and outpatient hospital services.

WCRI said prescription costs per lost-time claim increased by 7% per year between October 2005 and March 2008. From 2006 through 2009, Florida ranked second – behind Louisiana – for prescription payments per lost-time claim. Florida payments averaged $500 per claim, while payments in Louisiana averaged $700.

The research group said physician-dispensing of repackaged drugs was the prime driver behind the pharmacy cost increases. WCRI reported earlier this year that physician dispensing accounted for 46% of all drug costs in the Florida workers' compensation system and noted physicians were paid more than pharmacies for most drugs.

WCRI's conclusions are supported independently by rate making agency NCCI.

In September of 2011 NCCI reported that more than half of the money spent on drugs dispensed to Florida's injured workers in 2009 went to doctors. Florida has gained the notorious reputation as the pill-mill of the South.

Former Gov. Charlie Crist vetoed legislation passed in 2010 that could have capped the price of drugs sold by repackagers at the average wholesale price (AWP) established by the drugs' original manufacturer plus a $4.18 dispensing fee.

The Florida Senate passed a similar bill last session. But the bill stalled in a House-Senate conference committee that passed a ban on physician dispensing of drugs on Schedules II and III of the U.S. Drug Enforcement Agency's controlled substances list.

But according to the NCCI report, nine of the 10 drugs dispensed by Florida doctors to injured workers in 2009 were not on the DEA's schedules. NCCI was concerned that the ban would have very little effect on workers' compensation cases.

In the middle of the country the Texas Association of Business (TAB) is organizing the Texas Alliance for Responsible Prescription Drug Use to combat what the association calls an “epidemic … sweeping across the state and nation.”

The Texas Prescription Program was created by the Legislature in 1982 to monitor Schedule II controlled substance prescriptions. Effective Sept. 1, 2008, the Texas Legislature expanded the program to include the monitoring of Schedule III through Schedule V controlled substance prescriptions. The schedules were established by the federal Drug Enforcement Administration and are based on the addictive nature of a drug and its use in medical treatment.

A report by the Texas Department of Insurance Workers’ Compensation Research and Evaluation Group released last fall on pharmacy costs in the Texas workers' compensation system shows prescription payments for 2010 exceeded $138 million, with long-standing claims of injured workers having significantly higher average costs than in more recent claims.

Payments for pharmacy services represented 13% of the medical costs in the Texas workers' compensation system for the year, a rate consistent with previous years, the researchers said. But so-called "legacy claims," which represent ongoing claims by injured workers (for injury years 1991 through 2005 in the study) had significantly higher average pharmacy costs than more recent claims. Many of those long-term claims involve potentially addictive painkillers, the report said.

The alliance could decide to take a look at prescribing practices as part of its work.

The take-away is that the issue of prescription drugs in workers' compensation is multi-faceted, ranging from education and dosing guidelines to outright bans on certain activities. The industry is tackling issues related to prescription drugs in an aggressive and dramatic fashion. I have no doubt that these efforts will pay off ... until the next crisis intervenes.workers compensation, work comp, injured worker 

Tuesday, January 17, 2012

Drugs, Whack-a-Mole and Transparency

While a National Conference of Insurance Legislators (NCOIL) committee will take "a hard look" at physician dispensing of repackaged drugs to injured workers when the organization meets in Biloxi, Miss., on Feb. 25, legislation placing limitations on restrictions on opioid prescriptions for injured workers could surface as stand-alone legislation or as part of a comprehensive bill to reform the workers' compensation system in California.

Problems associated with prescription drugs in health care, and in particular in workers' compensation, has grown to epic proportions, with many interest groups jumping in and sounding alarms about excess overdose death rates and out of control costs.

Mark Sektnan, president of the Association of California Insurance Companies (ACIC), said the increased awareness might be sufficient to attract the attention of lawmakers this year.

"Opiates are a growing concern and an issue in both workers' compensation and the prescription world," he told WorkCompCentral News. "The growing drum beat of opiate cases and stories seems to be getting to the level it needs to be to address this."

Jordan Estey, NCOIL director of legislative affairs and education, told WorkCompCentral that the committee is responding to a resolution passed at the organization's meeting last November in Santa Fe, N.M., instructing the panel to "investigate medical cost trends and related state cost-containment strategies, including state efforts on physician dispensing and drug repackaging."

NCOIL reports that "central to the issue are concerns that drugs are being repackaged using more expensive reimbursement codes than the originals - up to 300% more costly in some cases."

A number of states with some success stories are being highlighted in this national debate about prescription drugs.

Five medical boards and commissions in the state of Washington passed measures requiring a provider to perform a full assessment of a patient's health history and past treatment of pain when prescribing opioids. Doctors are required to prepare a treatment plan, and also seek a consultation for any prescription that exceeds the equivalent of a 120 mg dose of orally administered morphine per day. The Washington Department of Labor and Industries, which administers the state's monopoly workers' compensation system, is working on incorporating the new standards into its treatment guidelines.

Arizona Gov. Jan Brewer signed a bill on Feb. 29, 2011, requiring doctors to provide written justification in their reports when prescribing high dosages of painkillers or controlled-release drugs for acute pain. Additionally, a doctor must consult with the state's Controlled Substances Prescription Monitoring Program, a database of prescriptions created in 2008 to prevent patients from doctor shopping to obtain multiple prescriptions. A carrier is not required to pay for office visits if a physician fails to provide justification for a prescription or check with the drug-monitoring database.

In 2007, California approved capping the price of repackaged drugs based on the Medi-Cal schedule.

South Carolina approved price caps on repackaged drugs under a new pharmacy fee schedule in December, and Florida legislators have proposed legislation intended to curb the cost of such drugs.

But the way I see it, the bigger problem is that government's attempt at regulating this activity is like the carnival game, "Whack a Mole". Closing a loophole that allows providers to profit from one practice can lead to providers exploiting other profitable loopholes.

The bigger issue I think is that in workers' compensation and health care in general there is no transparency. The consumer of health care services and goods does not know what the cost of services or goods is, does not have statistical or empirical evidence of a provider's outcomes for comparison, nor does the consumer generally even care because the consumer (particularly in the case of workers' compensation) has no financial stake - "don't worry, it's covered by your insurance."

As a consequence there is no real market competition for medical services and goods at the consumer level. The health consumer counts on the government to regulate this activity, but as we have seen throughout the history of health care governmental regulation is in general too little too late - it takes a lot of momentum for the government to take action and by the time action is taken the profit incentive has shifted to another unforeseen medical component.

While the national debate should continue with conversations about regulating undesired behavior, the bigger conversation should be about how to bring transparency to the medical market. Good providers should see no problem with good, comparative, open-market competition. Those that desire to shelter activities for unreasonable motives will oppose efforts to institute true market reform.workers compensation, work comp, injured worker 

Monday, January 16, 2012

Safety Plans Inconsequential; Enforcement is What Reduces Injuries

Workplace safety is a good thing, and is often cited as the driver behind a continuing declination in injury frequency.

21 states mandate that businesses have some sort of "safety plan". Logic would say that this mandate is part of the reason behind work place safety improvements and that safety plans are a primary reason why injury frequency rates have improved.

As with most things that seem logical, there has never been any empirical study to determine whether such logic is valid. With many such cases of assumption, the empirical evidence suggests that such assumptions are not supported, according to a news report in WorkCompCentral this morning.

Rand Corp.'s Center for Health and Safety in the Workplace has released a preliminary draft of a study report, "An Evaluation of the California Injury and Illness Prevention Program." Rand concludes that while mandatory written safety plans have not significantly reduced workplace injury and fatality rates in California, several elements that must be included in the safety plan, such as training and hazard abatement, do appear to lead to safer workplaces.

While the elements of an injury prevention plan are "obvious ingredients" of a good safety program, there is surprisingly little research that confirms the written plans themselves are actually effective, according to the report.

"Moreover, it is not at all clear that a mandate to adopt these practices will result in the same outcomes as when they are adopted voluntarily," the study's authors wrote. "Firms may do as little as they can get away with and, depending upon the enforcement effort, that could include doing nothing at all."

California has mandated that businesses implement and maintain an "effective" injury and illness prevention plan since July 1991. Title8, California Code of Regulations Section 3203 requires the plan to identify who is responsible for implementing the safety program, ensure employees comply with safe work practices and ensure the plan is communicated to workers. The plan must also include procedures for identifying and evaluating work hazards, outline the procedure for investigating occupational injuries and provide training and instruction when the program is implemented, when new hazards arise or when new employees are hired.

Outside of the first two years following the enactment of the injury prevention plan mandate, the number of violations for not having a written plan in place has held steady. About 20% of inspections were for not having a written plan, and 16% were for specific violations, such as not documenting a hazard survey or employee training.

Whether the prevention plans reduced fatality rates compared to other states, the authors "did not find any improvement." They added that even if an improvement was noticed, it would have been difficult to determine whether the safety plan was responsible or whether other factors contributed to reducing fatalities.

What the study did find is that citations for violations for failure to provide training improved safety - in other words requiring a plan itself did nothing towards safety, but enforcement of safety training requirements greatly improved work place accident and injury rates.

"The most consistent finding for the subsections was that a citation for failing to provide appropriate training was linked both to poorer performance prior to the inspection and to improved performance (a 44% reduction) after the inspection," the report said.

In addition, passage of time introduces complacency.

"The motivational effects of a serious violation fade over time and compliance decays," the report says. "In contrast, it is plausible, but hardly guaranteed, that efforts to support the practices required by a firm’s safety and health program could have more enduring effects."

It's unfortunate that safety is subject to our old nemesis, human behavior, but when legislators start trimming safety enforcement budgets this report will surely surface to combat the red ink.workers compensation, work comp, injured worker 

Friday, January 13, 2012

Market Hardening Means "Reform" Not Far Away

The next national wave of "reform" shouldn't be too far away if workers' compensation follows historical trends.

The workers' compensation insurance market is "hardening" according to experts interviewed by WorkCompCentral news.

Robert Hartwig, , president of the Insurance Information Institute, told reporter Greg Jones that the national combined ratio is now about 118%. In California the most recent numbers reflect a combined ratio of around 130% according to the Workers' Compensation Insurance Rating Bureau.

"Eventually, the threshold for financial pain is breached," Hartwig said. "Once insurers are paying $1.15 or $1.20 for every dollar of premium, that becomes a wake-up call."

But premium increases won't be dramatic, averaging about 4 to 5 percent according to Hartwig, which means the market is in transition towards pricing discipline.

An analysis of transactions conducted through Dallas-based MarketScout's insurance exchange found workers' compensation premiums increased 3% in December 2011. Richard Kerr, chairman and chief executive officer of MarketScout, told WorkCompCentral news the increase recorded in December is the first in six years and eight months, ending an exceptionally long soft market cycle.

In a hard market, employers have few options to reduce their workers' compensation costs, Kerr said. They can turn to state funds, but state funds will probably also increase their rates. They can look at self-insurance, but many employers cannot afford the substantial deposits required.

Most employers should just resign themselves to the fact that they'll be paying more for workers' compensation insurance, Kerr said.

Reform measures that control costs, such as fee schedules, treatment guidelines and utilization review, can help diminish some of the pain that employers will feel, according to Hartwig.

And that's the start of the "reform cycle".

I've been involved in workers' compensation now for about 28 years. History repeats itself, and that is certainly true with workers' compensation.

What is interesting about this cycle though is that it is on the heels of one of the worst economic times experienced by this country since the 1930s, making this market hardening probably a little slower than what would usually occur.

Employers don't typically start screaming about premium increases until they see double digit increases.

In the early 2000s those double digit increases had numerators greater than one on an annualized basis - a market hardening precipitated mostly by a complex reinsurance scandal that flew under the radar of the general public.

That scandal laid the ground work for election of Schwarzenegger as Governor of California who made workers' compensation premiums his cause célèbre forcing reform legislation in 2004 as the market was already trending towards normalization. It was a part of Florida's historic SB 50-A and Texas' HB7.

In the past the path to "reform" agendas was much less dramatic, and that's what we're seeing in this round. Unless there is some catastrophic event that drains the industry more dramatically than inflation (of which there really is none in this economy - even medical inflation is relatively benign compared to prior policy years) we'll see piece-meal "reform" measures more strategically aimed at the surgical editing of laws and regulations rather than wholesale seismic shifts in systen components.

But those whose agendas were most affected by this last wave of reform are in a perilous place in workers' compensation history. I'm talking of the injured worker contingency.

There is no question that the mid-2000 reform wave dramatically affected benefits claimed by injured workers. That population is just now making up some ground legislatively and judicially in attempts to gain back some of what was lost, namely the size and duration of indemnity benefits, and to a lesser extent flexibility in medical attention.

The current market hardening appears to be timing with benefits hardening (read increasing) such that from a political standpoint there will be that, as one of my business partners is fond of saying as he crosses his wrists in the air forming an "X", the magical "inflection point" - that point in space and time where opposite trends converge.

The inflection point in workers' compensation "reform" is that spot where the pain of premium increases meets the popular perception that someone is getting too much, whether it is injured workers, their attorneys or the medical community.

For those on the front lines of the injured worker community, the attorneys and other injured worker representatives who provide legal advise, counsel and dispute resolution representation, care should be exercised in forming the public's opinion about the work that they do and the plight that injured workers face.

Less than one percent of the working population ever gets hurt at work or ever makes a claim for workers' compensation benefits. It's all in the numbers - that means that 99% of the working population don't really care about workers' compensation, don't really care about injured workers, don't really care about "reform" (which is why Schwarzenegger was successfully able to threaten a voter initiative when pushing his "reform" agenda) - they'll never get hurt at work. They just know that their neighbor gets disability benefits but goes to the golf course every other day...

"Reform" will cycle through again, perhaps in 3 to 5 years, but certainly will occur. How constituencies fair will be determined starting now as these groups begin to refine their marketing messages and political affiliations.

How will you communicate VALUE to the 99%?workers compensation, work comp, injured worker 

Thursday, January 12, 2012

To the CA Fraud Commission - Follow the Money

"Fraud" is defined as "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage."

The California Fraud Assessment Commission yesterday took the first steps toward creating a subcommittee charged with examining the factors that are driving the increase in Schedule II prescriptions.

Participants in the meeting, according to the WorkCompCentral news report this morning, had a healthy debate as to whether the increase in opioid abuse in the state rose to the level of fraud.

Certainly most everyone in the industry understands that there is a problem. The California Workers' Compensation Institute (CWCI) released a study last year concluding that 3% of the approximately 100,000 licensed doctors in California are responsible for 54.9% of Schedule II prescriptions.

Between 2002 and 2010, the percentage of Schedule II prescriptions for injured workers increased 383.3%. Schedule II prescriptions accounted for 1.2% of all workers' comp prescriptions and 4.3% of prescription costs in 2002. By 2010, they accounted for 5.8% of prescriptions and 19.6% of prescription payments according to CWCI.

Commissioner Don Marshall focused on injured workers engaging in deceit to gain access to drugs, but thought that perhaps that was more the purview of the U.S. Drug Enforcement Agency.

In my opinion Gary Fagan, a supervising deputy district attorney in San Bernardino County, took a standard approach to the issue on behalf of his fellow district attorneys. He said if the assessment commission starts to focus on prescription drugs, it will limit the ability of district attorneys throughout the state to focus on employer, claimant and provider fraud.

Compared to the complex world of the underground economy, focusing on employer, claimant and provider fraud is easy money for the district attorneys, and frankly as anyone in the industry knows, even then a case has to be handed to the district attorneys office on a silver platter with all of the investigation and evidence in place before they begin their "investigation".

Over-prescribing of opioid and narcotics "is not fraud and not what this grant is for," Fagan told the Commission.

Fagan and Marshall miss the point.

Drugs are BIG BUSINESS. The overall pharmaceutical industry sales is $300 BILLION dollars a year. Heck, drug companies spend over $14 billion per year just in marketing expenses, which is down 15% from five years ago!

And that's the legitimate side of the drug business. You can bet that the underground drug economy has numbers that are equally impressive since the street value of a narcotic are often 10 to 20 times that of its retail price.

Over-prescription of opioids and narcotics is not the fraud issue. The fraud issue is much, much bigger than that - it is organized crime.

Focusing on injured workers getting too many prescriptions is like focusing on pot smokers - a minuscule component of the overall drug economy.

The fact of a meteoric rise in Schedule II prescriptions in such a short period of time and the fact that just 3,000 doctors in California are responsible for over half of all Schedule II prescriptions points to a very refined business strategy - a strategy that is perpetrated for profit and to take unfair advantage of the workers' compensation system through deceit and trickery.

Commissioner Jiles Smith has the issue correctly defined. Smith said he thinks the commission is missing a "golden opportunity" if it does not attempt to drill down into the issue of opioid prescriptions. He said at the very least, it would be beneficial to put providers on notice that the commission and district attorneys are taking an interest in prescribing patterns.

"If our job is to fix problems and protect injured workers, we should say we're watching at this point," he said. "Half the battle is shining light on it."

The other half of the battle is following the money. That in itself takes a large amount of money, and a commitment by California's district attorney's offices to tackle organized crime in a concerted effort with other state and Federal agencies.

In my opinion the Fraud Commission should be a part of the solution rather than turn a blind eye, and should direct a portion of the fraud grants to be used in conjunction with other law enforcement resources to follow the money - it is a sure bet that small scale workers' compensation fraud is the gateway to a larger, and more easily prosecuted fraud - the one that takes down nearly every criminal enterprise: tax fraud.

There is no question in my mind that the evidence compellingly points to large scale criminal activity. Follow the money, find the fraud. Simple to define, more difficult to execute.workers compensation, work comp, injured worker 

Wednesday, January 11, 2012

Payor Satisfaction and Price Caps on Repackaged Drugs

Bill Herrle, executive director of the National Federation of Independent Business (NFIB), told WorkCompCentral News yesterday that Florida Insurance Commissioner Kevin McCarty has prepared an order to roll back workers' compensation rates by 2.5% if Governor Rick Scott signs a repackaged drug price cap into law this year.

Serendipitously, the Wall Street Journal (WSJ) reported that the pharmaceutical sales agenda has softened, and that sales people don't visit doctor's offices intending to do a hard sales pitch anymore.

Stating that the pharmaceutical industry is responding to "changing economic and regulatory conditions", the WSJ story explains:

"Traditionally, armies of sales reps have fanned out to 'detail' doctors with aggressive, well-rehearsed sales pitches and pressure to boost prescriptions. Multiple sales reps from one company might call on the same physician. That strategy over the past 15 years helped propel the industry to $300 billion in yearly U.S. sales today."

In part a response to government crackdowns on "aggressive, illegal marketing of drugs for unapproved uses" drug makers have been scaling back spending only $14.5 billion in marketing in 2010, down 15% from five years ago according to the WSJ.

Perhaps this is one of the reasons the repackaged drug bill might actually see a signature in a state that has rebuffed what other states found to be reasonable regulation in an attempt to put some sanity in an out of control situation.

Florida has been cited in NCCI studies as having the most expensive pharmaceutical costs in any workers' compensation system due both to narcotics overprescription and physician dispensation of repackaged drugs. The state is known to be a supplier of opioids to the underground market which then distribute the drugs to other state markets.

Schedule II & III drug prescriptions were the topic of a Florida law that was passed last year that created a drug monitoring program to curtail the opioid underground market, but capping the price of drugs has been hotly contested by the Florida Medical Association (FMA) and a company called Automated Healthcare Solutions (AHCS).

Our WorkCompCentral news story calls AHCS a software firm, but that is not an accurate representation - the company manages physician dispensing of drugs with automated systems to control inventory, repackaging, and claims management to help ensure top dollar reimbursement to the physician.

According to news reports, companies controlled by AHCS executives Dr. Paul Zimmerman and Gerald Glass gave $100,000 to a committee that supported Scott during the 2010 elections. Five companies affiliated with AHCS sent $500 checks each to Scott's campaign, according to the publication Health Care News Florida.

The AHCS website home page has the company's mission statement: "AHCS empowers health care providers and organizations by maximizing patient care through point of care medication dispensing and other ancillary services."

Another statement on the AHCS site makes clear why the company is so opposed to bills capping the price of repackaged drugs:

"By dispensing medications onsite to your patients you are saving them the frustrating and often costly trip to the pharmacy. Onsite dispensing provides your patient with additional confidence in you and your practice."

The FMA seems to be tightly integrated with AHCS. FMA spokeswoman Erin VanSickle referred questions by WorkCompCentral on FMA's stance on the bills to Alia Faraj-Johnson, an outside media consultant for AHCS.

Faraj-Johnson told WorkCompCentral that AHCS has gotten no signal from Scott's staff on whether the governor will support the measure. She said Tom Panza, an attorney for the company, testified against it during a meeting of the House Insurance and Banking Subcommittee last month.

Sam Miller, executive vice president of the Florida Insurance Council, said he expects Scott to back the bill, however he also said insurers have not yet received a clear signal from the governor.

The WSJ story includes a vignette of a recent drug sales representative encounter, and how the soft sell approach caused an attitude change in the physician regarding the manufacturer's products, even eliciting an invitation for the sales person to return to the doctor's office.

"Increasing physician satisfaction, it turns out, is a much better way to promote a pharmaceutical agent than simply telling them to write more prescriptions or what the benefits" are, David Ricks, president of Lilly's global business unit, is quoted as saying in the WSJ story.

Perhaps increasing payor satisfaction is a much better way to promote repackaged drugs and physician dispensing - until then there needs to be price caps.workers compensation, work comp, injured worker 

Tuesday, January 10, 2012

The NFL, Apportionment and Substantial Evidence

It's playoff season in the National Football League so it is only fitting that we get workers' compensation news concerning professional football claims.

In a fact pattern that I have personally defended against (unsuccessfully by the way) when I was practicing law, the Oakland Raiders may be stuck paying for the entirety of a claim that has an 11 year cumulative trauma history because of a failure of medical opinion on the issue of apportionment.

The Oakland Raiders have asked the California 4th District Court of Appeal, Division 3, to review a panel decision holding the team and its insurer, Ace USA, liable for former defensive tackle Sean Gilbert's permanent total disability claim for cumulative injuries. Gilbert played for the Raiders for only the final season in his career.

The Workers' Compensation Appeals Board (WCAB) in its panel opinion said that the Raider's Qualified Medical Examiner's (QME) opinion was not substantial evidence on the issue of apportioning Gilbert's injuries to the other teams he played for.

The Los Angeles Rams drafted Gilbert in the first round of the 1992 NFL draft, and he spent the next four seasons playing for the franchise. Gilbert joined the Washington Redskins for one season in 1996, did not play at all in 1997, and subsequently signed with the Carolina Panthers for the next five seasons. The Oakland Raiders employed Gilbert for the last season of his career in 2003, when he played six games for the Northern California franchise as a backup.

The Raiders' QME apportioned liability for Gilbert's claim based upon the percentage of time he spent playing for each team.

But two of the WCAB commissioners agreed with Gilbert's QME who said that apportionment could not be done with any reasonable medical probability because there wasn't any evidence of limitations or injury during the 11 years Gilbert was in the NFL.

The majority said that the defense could have cross-examined Gilbert's QME but didn't - no substantial evidence means you lose! And the dissenting commissioner simply said that he didn't think Gilbert's QME adequately addressed the issue either, but it sounds like he was leaning towards the majority outcome anyhow:

"Escobedo v. Marshalls (2005) requires a physician to determine what percentage of applicant's permanent disability was caused by his industrial injury and what percentage was caused by other factors," Commissioner Moresi wrote. "However, in Benson v. Permanente Medical Group (2007), the Appeals Board noted that under some circumstances it may be impossible for a physician to parcel out between successive injuries the causative factors of a current level of disability. This may have been [Gilbert's QME's] intent, but he does not adequately address this issue."

Here's my take-aways from this case:
  1. The "good old days" of "expert opinion" are gone - medical opinion must be supported by both fact and science. Just saying it is, because one is an expert, doesn't make it so. If the Raider's QME was apportioning to other exposure then there needs to be supporting evidence upon which to base that opinion and in this case just dividing up the liability without some evidence in the record that indicates an exposure is not substantial evidence. We see this all the time.
  2. When you don't have substantial evidence to support your case, and the other side has better evidence (remember that substantial evidence is evidence that is "good enough"), then there should be an attempt to challenge that evidence. In this case, either get a change in opinion that supports apportionment or disqualifies the opinion completely so you can start over.
  3. Professional football is brutal and the players come out of their careers with significant injuries and disabilities. workers compensation, work comp, injured worker 

Sunday, January 8, 2012

NM Case Makes Clear Work Comp Can't Discriminate Arbitrarily

Workers' compensation is a creature of statute. We're constantly reminded of that. But even though statutorily created, rules of fair play and application still apply - in other words the laws of any particular state must still meet constitutional standards.

In New Mexico a court ruled that a statute enacted in 1917 that excludes farm and agricultural workers from the New Mexico Workers' Compensation Act is unconstitutional.

New Mexico 2nd Judicial District Judge Valerie Huling said Dec. 27 in an opinion in Griego et al. v. New Mexico Workers' Compensation Administration that agriculture is the only industry allowed to shift the burden of injured workers onto taxpayers by not providing workers' compensation coverage.

The distinction used to define who is exempt and who is not exempt comes down to whether the worker is directly involved in harvesting crops or working with animals. For example, a worker picking onions on a farm would be excluded from coverage, but a person who is packing those same onions inside a building on the same farm would be covered by the Act.

The court found this distinction arbitrary and thus unconstitutional.

"Although the legislative intent of the farm and ranch exclusion, protection of the agricultural industry, is a legitimate goal, the exclusion is an arbitrary classification plainly at odds with the articulated purposes of the Act," Huling wrote.

This all came about when three dairy workers filed the lawsuit in 2009, after legislation failed that would have eliminated the farm and ranch workers' exemption from the Workers' Compensation Act. Similar legislation failed in 2007.

The three had worked as farm and ranch laborers for dairies and had received injuries in the course and scope of their employments. They sought workers' compensation benefits but the cases were dismissed under the 1917 law.

Judge Huling, finding the distinction between farm workers and dairy workers capricious and arbitrary, took on big ag business in the state noting in her opinion that the agricultural industry has reported average profits of $667 million over the past eight years, yet eliminating the exclusion would require coverage for about 10,000 workers, and the cost of providing workers' compensation insurance to the additional employees would be between $5 million and $7 million, less than 1% of annual profits.

Gail Evans, legal director for the New Mexico Center on Law and Poverty, filed the lawsuit on behalf of the workers and told WorkCompCentral that this conclusion was important because it stands in sharp contrast to what lobbyists for the agricultural industry told lawmakers in 2009.

"The fact that this will cost less than 1% of profits, that fact was not presented to the Legislature," she said. "The agricultural lobby presented incorrect information at the Legislature that it would cost $90 million."

The Workers' Compensation Administration argued what I consider to be an irrational point, and one that is largely moot after 100 years: that many agricultural workers are seasonal and earn varying wages working for multiple employers. The administration said it would be difficult to trace an injury to work performed for a specific employer, demonstrating that agricultural workers present challenges to the efficient administration of the system.

Lots of other states have been dealing with this issue, as I said, for nearly 100 years. New Mexico certainly has many models to choose from to comply with the court's ruling. The administration's argument lacks substance.workers compensation, work comp, injured worker 

Friday, January 6, 2012

We're Not Entirely Wacky in CA!

When I posted about the case of the Los Angeles firefighter that secured benefits for incurring an injury while trimming a wisteria plant at his home on Catalina Island the commentary was predictably negative, especially by those who love poking fun of us Californians because of our weather and free loving ways.

Well a Workers' Compensation Appeals Board (WCAB) Panel opinion that was handed down last month does show that we Californians aren't all wacky, and that sometimes logic is not impaired by our early January, clear and sunny, 80 degree days (why am I working???).

In Cubedo v. Leemar Enterprises the WCAB ruled that employers are not liable for temporary total disability benefits when an injured worker's ("applicant" in California work comp adjudication claims) immigration status is the sole reason for not being able to accept an offer of modified work.

Sarahi Cubedo, had suffered a back injury while working as a cashier for a restaurant owned by Leemar Enterprises. The employer had provided her with modified duty until a claims adjuster notified the employer that Cubedo had testified that she was an undocumented worker.

A workers' compensation judge awarded Cubedo temporary disability benefits, but a WCAB panel reversed and remanded the award.

WCAB Commissioner Frank Brass wrote that the TTD award was not consistent with the 2000 2nd District Court of Appeal decision of Del Taco v. WCAB.

In Del Taco, the court ruled that an applicant is not entitled to vocational rehabilitation benefits where the applicant's immigration status is the sole reason for being unable to return to work. The panel concluded that requiring the employer to provide vocational rehabilitation benefits would violate the equal protection clause under the 14th Amendment of the U.S. Constitution.

"With regard to temporary partial disability and pursuant to the holding in Del Taco, we believe that if defendant made a legitimate offer of modified work that applicant could not accept solely because of her residency status, defendant is not alternatively liable for temporary total disability benefits," Brass wrote. He clarified that Cubedo would be entitled to TD benefits if she could show that she was temporarily totally disabled because of medical reasons, and noted that this must be supported by substantial medical evidence. However, Brass and his fellow panelists felt that the evidentiary record was unclear at the time, and remanded for further proceedings.

The case was subsequently settled with Cubedo receiving no TTD benefits for the period of time she was unable to work because of her immigration status according to our report in WorkCompCentral news.

Cubedo is a logical result and confirms that California sunshine has not completely demented rational thought processes. Now, go back to your snow and freezing weather. I have recreation to pursue...

Thursday, January 5, 2012

NCCI Study Affirms I'm NOT Irrelevant!

DISCLAIMER - I'm 52 years old.

There, now you know that I'm part of the "aging work force".

According to NCCI's latest research, this doesn't mean a whole lot to workers' compensation other than the fact that if I get hurt I will probably cost more in indemnity than if I were 28 simply because theoretically I make more money (that's actually not true - I made more in wages at age 28 practicing law than at age 52 running a publishing company!) and will take longer to assimilate back into the work place.

NCCI found that any disparity in frequency of injury since the 1990s between age groups has largely disappeared as of 2009, that frequency for all age groups has been falling, and continues to fall. The data is based on a study of Bureau of Labor Statistics (BLS) data.

The study also concludes that occupational mix is not a factor - "Occupational mix may have changed, but all occupations are much safer."

However, severity in both medical and indemnity does tend to escalate with age: "the data shows that both indemnity and medical severity have exhibited steady increases over time with severity for older claimants costing more." So while us older folks might not have any more injuries than the young ones, when we do get hurt or ill at work we cost more because for the most part (except for me as noted above) we make more money and, because I'm likely more frail and recover less easily than the good old days, it costs more to patch me up.

But as we all likely are quite aware, regardless of age, it still costs more for medical treatment now than it did 13 years ago, by an outsized relative factor unaccountable solely by the overall rate of inflation.

What we injure or claim as illness is different between age groups. Us old farts mess up shoulders and knees. Youngsters complain about backs and ankles.

We old folks get more treatments and when our social network is paying the bills we like to rest a little longer.

Bottom line: "from a workers compensation perspective, the higher costs [associated with more indemnity and treatment] are offset at least to some extent by the higher premium due to higher wages of older workers."

I'm so happy about this study! It affirms that I'm not irrelevant to the American economy! I'm not the burden that was predicted just 10 years ago.

Geriatrics be damned - it's time for me to get ready to go to work. You can retrieve your copy of NCCI's study at https://www.ncci.com/documents/2011_Aging_Workforce_Research_Brief.pdf.workers compensation, work comp, injured worker