Tuesday, May 7, 2013

The Pendulum And Success Neurosis

I know that Mark Walls, senior vice-president and market research leader with Marsh's Workers' Comp Center of Excellence and founder of the LinkedIn group Work Comp Analysis, was hoping to provoke me into debate with his most recent editorial for Risk & Insurance Magazine, "Has the Pendulum Swung Too Far?".

It worked, but probably not as expected.

Because I agree with Mark, at least in part.

Mark argues that the pendulum in the workers' compensation bargain has swung too far against employers.

And perhaps it has. But, I add, likewise for workers too.

In my opinion Mark accurately observes, regarding at least the big work comp systems:

"The complexity of the workers' comp system is also out of control and is significantly increasing the costs. Consider for a moment that workers' comp is supposed to be a benefit delivery system designed to treat the injury and return the injured worker to employment. Sounds simple right? It should be, but it takes more like an army to do this -- doctors, lawyers, companies that review the bills of doctors and lawyers, companies that schedule exams with doctors, companies that dispense pills, companies that test to make sure the pills are being taken. The list goes on and on. And lest we forget, the states also require mountains and mountains of paperwork (in multiple languages) to document each and every transaction of this benefit delivery process.

"All this complexity does not enhance the benefit delivery process, but it does cost money. Lots and lots of money. Who pays for it? Employers. Are you starting to understand why employers are feeling like this 'grand bargain' is not such a great idea?"

The complexity of modern workers' compensation costs lots of money and creates huge friction in the relationship for which the "grand bargain" was supposed to lubricate: that of the employer and employee. Evidence of this is that loss control costs in California (and other large systems) has grown faster than any single costs component - it seems we spend more trying to keep the money that it would cost just to pay it out.

Yesterday I posted about the $240 million judgment against Hill Country Farms, and juxtaposed that against the lack of financial fear held by Sedgwick Claims Services for, essentially, killing a man in the name of money.

Both situations are no less troublesome than the Hill, Texas fertilizer plant explosion that killed 14 people, injured over 200 people and essentially leveled an entire town last month.

I searched the TXCOMP system for coverage information for West Fertilizer Co. There was no listing. That doesn't mean that there wasn't coverage, but based on research by the Los Angeles Times on the incident, likely there wasn't any since the plant only had $1 million in total property & casualty insurance.

The only reference I found to Donald Adair, owner of the West Fertilizer Co. (and Adair Grain, Inc.), was that he said in a statement that he would never forget the "selfless sacrifice of first responders who died trying to protect all of us," adding that a plant employee was also killed responding to the fire.

A plant employee for which there is no recourse because there was no workers' compensation insurance.

And likely Adair's finances are well protected...

Adair's press statement hypocritically professes religious atonement, but certainly says nothing about making his employees, or those innocently injured or dead, or the devastated town, whole.

What does Adair and the West Fertlizer Co. have to do with comp? Money - or rather the lack of accountability, lack of enforcement power or motivation to ensure safe practices and protection of the public at large.

Mark argues that we need to get back to the grand bargain - the employer and the worker, making the workplace safer, and providing medical treatment and wage replacement for injuries sustained at work.

I can't disagree with that statement at all.

Mark argues that the grand bargain doesn't include workers who push their daily aches and pains onto the comp system, doesn't include employers abusing their workers, doesn't include claims administrators shirking their legal and moral responsibilities, doesn't include doctors, lawyers, bill reviewers, underwriters, executives or anyone else that has carved out a business interest in workers' compensation in response to some special interest.

Every single one of these actors push responsibilities, and consequently costs, onto other systems and other people. The Sedgwick/Romano case, for example, cost the taxpayers of California at least $275,439 in Medi-Cal hospital payments because the adjuster denied responsibility for the expenses despite a judge's order. Yeah, Sedgwick will reimburse the state, but probably not without negotiating down to fee schedule...

There is no accounting for personal behavior. There is no remorse for harmful acts. There is no respect for the human condition once that condition has been compromised by some monetary value.

Mark says that there are many who doubt that Oklahoma's new opt-out law will be successful because the employers that could qualify to do so are limited.

But that doesn't mean that opt-out won't expand either in Oklahoma, or to other states, where political pressure is on to improve the living conditions for the people and the businesses that make jobs which turn into tax revenues.

We have to come to terms with the fact that there are a lot of people in workers' compensation with no value to add to anything.

Mark - the pendulum has not swung too far against the employer. The pendulum has not swung too far against the employee either.

The pendulum hasn't swung at all - it has been pushed right off its fulcrum.

The pendulum can't swing. It's broken and can't be fixed.

The many attempts over the years to re-center the pendulum has created, what they call in engineering circles, resonance frequency - harmonic oscillations that tap into the internal "music" of a structure increasing the internal harmonics as the frequency range broadens to eventually destroy the structure from within.

Think of the Tacoma Narrows bridge failure.

So many narrow interests have introduced so much complexity that the value to employers and employees is questionable. Hill Country Farms, Sedgwick, West Fertilizer - these are just symptoms of a much larger, more idiopathic problem.

"What's mine is mine, and what's yours is mine too, if I can figure out a way to get it."

This is what is known as the "Success Neurosis": "if success remains - the apparent cultural evidence of value or goodness - this process like any 'good neurotic process' must be repeated endlessly." (Jerome Schulte, MD; The Immortality Complex.)

Workers' compensation has become less about a swinging pendulum and more about the success of the interests that have created an industry around a privatized social support system.

Success in workers' compensation has become synonymous with costs, or controlling costs. Not about delivering on the social promise to either the employer or the employee.

And as Dr. Schulte says, this must be repeated endlessly because of the neurotic character of success as we have come to define it.

THAT's the threat of the opt-out movement. That's the threat to workers' compensation, else we all face a West Fertilizer in our backyard.

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