Thursday, October 31, 2013

This Ain't Gonna Work

I'm not sure what to expect from the Rand report on earnings losses that was prepared for the California Commission on Health Safety and Workers' Compensation as directed by the legislature in SB 863 to determine the handling of the $120 million slush fund.

The idea of the slush fund was suspect from the start - it was a last minute compromise with no boundaries, no rules established, to get SB 863 passed.

It's purpose was to provide additional indemnity to injured workers with disproportionate earnings losses.

The problem from what Rand is reporting is that nearly all injured workers - at least the demographic studied - have disproportionate earnings losses.

The report says the average decline in post-injury earnings for permanently disabled workers is 42.1%.

But it's shocking that the report finds that workers with impairment ratings of 1% to 4% have an average decline in earnings of 30.9%.

And for workers with impairment ratings of 95% to 99%, the loss in earnings is 93.6%.

Either something is seriously wrong overall with workers' compensation, or something is seriously wrong with this study.

The report states, "Even uninjured workers, on average, show a 15% decline in earnings when observed during a similar period of time. This highlights the primary limitation of using actual earnings to estimate the impact of an injury – individual earnings could decline for many reasons, some of which have nothing to do with the injury."

Frankly, drawing any meaningful conclusion from this study relative to policy implementation is going to be very difficult if the Average Joe Worker over the course of the study time table has a 15% decline in earnings. This conclusion seems

The report authors assume 60,000 workers will be permanently disabled each year. I just don't see buy that - I think the number is much, much higher than that. Over 350,000 applications for adjudication of claim are filed every year with the workers' compensation appeals board district offices and most of those settle with some payment of permanent partial disability indemnity.

The authors also state that 34,380 of those workers −57.3% − will not return to their at-injury employer within two years after the injury and that 84.9% of workers who do not return to their at-injury employer, or about 29,000 employees, will experience above-average earnings losses.

Something is amiss.

The authors believe that this demonstrated decline is due primarily to attrition of workers from the EDD database over time (e.g., because of retirement, exiting the labor force, moving, etc.).

One of the premises of the study is to provide a definition of what is "disproportionately low in comparison to their earnings loss" within the meaning of section 139.48 of the CA Labor Code.

The study authors acknowledge three inherent, and big, limitations in their study:

"One is a lack of post-injury income other than earnings reported to the EDD. An individual’s actual post-injury income will include many sources that are not reported to the EDD (e.g., retirement or disability benefits). Because these are ignored in this work, it is likely that the estimates here overstate the post-injury decline in earnings and overstate the number of potential beneficiaries. Another source of uncertainty is the potential behavioral response by workers as a result of the new payment. We used a very wide range – double – of potential beneficiaries to capture this effect, but it could be improved over time as the use of the SJDB is monitored. Finally, while the aggregate benefit level is fixed
in the statute ($120 million), key factors such as the number of injured workers and economic conditions vary over time. Without knowing how many injuries there will be, and how many of those injuries will be significant enough to lead to economic losses large enough to make someone eligible for this program, it is impossible to predict exactly what the aggregate program cost will be."

Honestly - back to the drawing board on this. The Rand study is incomplete, error prone and should not be the basis at this time for such a huge change in policy. The premise behind the study is flawed.

The authors are focused on defining "disproportionately low" empirically, but the empirical evidence itself is flawed.

Rather, it seems to me that the "director" (as used in LC 139.48) should dictate FIRST what the eligibility framework is going to be - e.g. only 70% or greater PD ratings such as required to qualify for the inflation adjusted "life pension" payments.

As proposed by Rand, this program is doomed to failure. CHSWC should reject the proposals by Rand, the director should redefine the limitations of the program as authorized by the law, and Rand should go back to the drawing board for a new proposal.

Wednesday, October 30, 2013

Trucks, WBV and Cancer

You just never know what the next big risk category is going to be in workers' compensation.

I had been persuaded by an argument offered by Charlie Kingdollar, Vice President emerging issues unit for General Re Corp., that nanomaterials would be the next asbestos.

OSHA has been particularly concerned with silica in the past couple of years.

The more recent concern trends have been obesity (in particular now that the American Medical Association suggests that it is a disease), opioids, and a little bit earlier it seems the claims trends were carpal tunnel syndrome and fibromyalgia.

Hearing loss seems to crop up from time to time, though not as an ongoing trend since that process is easily remedied through safe practices.

But it's more often than not something much less spectacular that really drives frequency and severity in simultaneous fashion, and a 2012 study published in the Annals of Occupational Hygiene may have identified "the next big thing:"

Prostate cancer in truck drivers.

There seem to be two competing theories: 1) long-term exposure to the kind of “whole-body vibration” experienced by truck drivers and other heavy equipment operators prompts the body to produce more testosterone, which is a known risk factor for prostate cancer; 2) the vibration can lead to prostatitis, or inflammation of the prostate gland, which may also be linked to prostate cancer.

The researchers found that those who drove a truck more than doing anything else were nearly four times more likely than educators to be diagnosed with a prostate cancer considered highly aggressive. (Educators were used as the baseline group because they were deemed to have very little to no exposure to whole-body vibration.)

Obviously truck driving isn't the only occupation that can induce "whole-body vibration" but it had the strongest link according to the study.

So does this mean that we can expect to start seeing profuse amounts of claims for prostate cancer coming in to workers' compensation? Perhaps.

The science of the study will be challenged. The application of the science to the individual claimant still needs the support of a reporting physician who has reviewed such studies and has some oncological expertise. And many states don't recognize occupational disease theories.

Still, sometimes the most innocuous sounding research leads to some significant shifts in the distribution medical care and indemnity.

Pennsylvania is already dealing with an epidemic of prostate cancer among its firefighters.

The National Institute for Occupational Safety and Health has adopted a final rule that adds prostate cancer to the list of more than 50 cancers that are compensable under the James Zadroga 911 Health and Compensation Act of 2010.

Carnac The Magnificent I am not, but I would not be surprised to see more prostate cancer cases going through the work comp system in the next five years or so, first from truckers, then other occupations that can prove up WBV.

Whether this turns into a trend remains to be seen. Cancer is one of our most prolific diseases and the cost of treatment and attendant social costs are enormous, so it would make sense that there is going to be some shift in ultimate financial responsibility.

Tuesday, October 29, 2013

How To Make A Study Good Reading

That opioid prescriptions have a correlation to higher indemnity rates, prolonged disability and greater failure to return to work is not unexpected.

The California Workers' Compensation Institute and Axiomedics Research revisited and updated a 2008 study on the relationship between the number of opioid prescriptions and other claims characteristics titled, "Pain Management and the Use of Opioids in the Treatment of Back Conditions in the California Workers’ Compensation System."

According to report co-author Dr. Laura Gardner 40% of applicants with one opioid prescription during their first post-injury year filed indemnity claims.

67% of injured workers with three opioid prescriptions during their first post-injury year had filed indemnity claims. Claimants with six or more opioid prescriptions during their first post-injury year had the highest rate of indemnity claims, with 85% to 92% of their claims resulting in indemnity claims.

Likewise, that there is a link between higher opioid prescriptions and attorney involvement isn't surprising - data already shows that increased potential for indemnity is related to increased attorney participation.

Because applicants with more opioid prescriptions are more likely to file an indemnity claim, they could also be more likely to hire an attorney to represent them.

The data also revealed a strong correlation between the amount of medical benefits paid on a claim, and the number of opioid prescriptions an applicant received, the study finds.

And of course these cases are harder to settle or get closed.

If there's only one opioid prescription the claims closure rate averaged 87%. Applicants with three opioid prescriptions had a closure rate of 76%, workers with six opioid prescriptions had a closure rate of 67% and applicants with nine opioid prescriptions had a closure rate of 62%.

What IS surprising to me is that, 5 years after that original study, we are still working towards some "solution" to this issue.

The overall majority of all claims presented involve back sprains and strains.

A 2012 CWCI study concluded that workers with these types of injuries accounted for 10.6% of California's job injury claims, but only 1 in 7 of these injuries involved a permanent disability payment, they had a relatively low attorney involvement rate, and those that resulted in lost-time closed more quickly than other types of claims, so they accounted for only 7.8% of California workers' compensation benefit payments.

This means that opioids disproportionately affect a small percentage of claims.

The American College of Occupational and Environmental Medicine guidelines do not recommend opioids for patients with simple back sprains and strains. So it would seem that if utilization review (now backed up by independent medical review) were effective then we should see some declination in these numbers over time.

I'm not sure that's happening - such cases are not increasing based on the statistics I've recently seen, but they are not decreasing either.

Which brings me to the point that I was making yesterday: we have lots of numbers that paint a big picture. But those numbers don't do us any good unless we get to the number "one" - the individual that is the tree in the forest.

How do we use this information to make sure that "one" doesn't end up in the high percentage cohort? The only way that happens is with focused attention.

We make grand policy changes through legal and regulatory mandates. These are all well intentioned, but unless we take the time to deal with "one" then the claim is lost to the big statistical group.

This is not an easy task in our current, process oriented, managed benefit system. The efficiencies realized with systematic treatment of claims masks the difficulty each "one" presents - every claim, despite similarities, is different.

I think that most of us in this business want to do the very best we can for claimants whose files come across our desks, but it takes a lot of stamina and fortitude.

For those professionals who are able to sustain the incredible energy day in and day out paying attention to "one," hats off to you! May the rest of us learn from your hard work and dedication. By dealing with "one" we can over time make these studies more joyous reading.

Monday, October 28, 2013

The Number One

We do a lot of measuring in workers' compensation.

In claims we measure costs and time, and we break these measurements down into industry nomenclature that is puzzling to most such as "frequency" and "severity."

We measure "loss costs" and we can determine "combined ratios." Numbers are good because they make it easy to quantify our actions, or inactions. Anytime something happens in workers' compensation our deeply rooted nature is to give it a number.

We have file numbers, claim numbers, policy numbers, statute and regulation numbers.

Numbers help define workers' compensation.

Numbers make it relatively easy to understand how much a given claim is going to cost (that's called "reserving" in the claims department). And it's not that difficult to estimate how many injuries are going to occur over any given period of time for any particular occupation or industry.

People are trained to put together all sorts of numbers to determine how much a law change is going to affect the financials of the industry.

Still other people are trained in "data analytics", which is basically big number crunching to determine what sort of trends these numbers portend.

Knowing this information helps professionals determine if something is amiss because historical trends provide some basis upon which to determine future action.

But a lot of times these measurements get in the way of understanding what is really going on.

When we really get down to it though the only number that matter is the number "one."

Friday I closed out the 11th Annual California Workers' Comp Forum in San Diego with my presentation on National Trends in Workers' Compensation.

I threw around a lot of numbers, and was surprised I didn't see many glazed eyes as these numbers got supplanted with even more numbers in my race to get everything I wanted to say out in an hour.

But I failed to conclude with the most important number - "one."

When I arrived at Los Angeles International Airport last Tuesday evening from South Carolina, I walked behind a man and a woman making their way methodically down to baggage claim. Since I was behind them, there didn't appear to be anything extraordinary about them though I did notice that the woman seemed to be guiding the man.

I took this initially as just a couple paying special attention to each other.

Then we got to an escalator and the woman was instructing the man when to step onto the moving steps and that's when I realized that the man was blind.

He didn't have the white cane with a red tip, and he wasn't wearing black glasses - there were no clues other than the fact that the woman was helping him navigate.

And frankly I didn't think much of it at the time. They went their way and I went my way, until we ran into each other at the men's room in the baggage claim area.

Obviously the woman was not going to go into the men's room and she let the man go there on his own.

Except he didn't know where he was going - it was very, very obvious that he needed some assistance.

So I grasped his left elbow, told him I would guide him to the urinal and helped him feel where the porcelain and flush unit were. And as I was next to him also performing the necessary biological function - we shared some small chatter. I told him I would wait to help him find the sink to wash up, and then help him back out.

He was a number "one."

As you can imagine, there were a lot of people in the airport at the time, and it seemed that no one paid any attention to the blind man and his friend except to visually express some irritation that they weren't moving along as quickly as the rest.

I sort of see these other people as all of the numbers that get measured - all sorts of demographics and other information can be derived from these numbers.

But "one" - that's where the rubber meets the road, so to speak.

It's a challenge remembering that "one." We don't have much time because all of the other numbers take up a lot of space in our brains, our calendars, our emotions and intellect.

When we work a file, there is a "one" at the center of that file. Sometimes we ascribe a greater value to that "one" and sometimes less.

Sometimes a lot of "ones" are grouped together, and that's when we get statistics.

When we look at our industry and see the numbers, remember that all of those numbers started with "one."

Friday, October 25, 2013

IMR: Frontal Lobe Required

What's interesting about the discussion regarding the unexpectedly large number of Independent Medical Review requests is that it is so singular; that the vendors/providers need to learn a lesson.

Alex Swedlow, president of the California Workers' Compensation Institute, said at the California Workers' Compensation Forum in San Diego (where I'll be presenting this afternoon on national trends) that there could be an average of 150,000 IMR requests a year if the current trend continues.

At $500 per IMR (not accounting for administrative costs, delay costs, etc.), that's $75 million per year...

Swedlow said that 26.9% of magnetic resonance imaging scans and computed tomography scans that were denied in utilization review are being challenged at IMR, and that the cost of denying these MRIs and CT scans through utilization review and defending them in IMR is beginning to outweigh the cost of simply paying for them.

He commented that the cost of IMR has many claims administrators hoping that there will be a "learning curve" among providers that would cause the number of IMR requests to decline.

And Christine Baker, director of the California Department of Industrial Relations, said the agency does not know whether the initial spike in IMR requests is the result of an intentional effort, but will attempt to find out.

As I commented earlier, of course all of these IMR requests are intentional - in litigated cases applicant attorneys are not going to risk malpractice by blowing a statutory deadline when the cost of the appeals process is entirely born by the defense.

It's a no-brainer. This is called malpractice protection.

Baker noted that some IMR requests are for unusually small amounts, which she attributed to overaggressive adjusters who were too quick to deny treatment.

"We had some cases of Salonpas pads rejected that were $15, go onto IMR for $500," she said. "In that sense, we really need to be careful and provide the care and request when needed."

Likely that is not overaggressive adjusters too quick to deny treatment, but simply the product of some automated processes that have not been tuned yet to account for smaller bills.

See - it's not just the providers that have to learn a new system. Those who approve the requests and pay the bills also have to go through a "learning curve."

People would like workers' compensation to be self executing with no frontal lobe activity necessary for the system to work. That isn't going to happen.

Real live people need to use their knowledge, experience and training to make qualified decisions about treatment requests at some point in time.

Sure, most people would rather defer the decision or delegate the responsibility so they are not to blame, but someone along the life of a request must actually compare the cost versus the benefit, and make a decision accordingly.

It's less expensive if this occurs on the "front end" - when the request first gets to the actual claim administrator.

The cost of IMR will cause a "learning curve" among claims administrators who ultimately will just pay such bills which will help cause the number of IMR requests to decline.

And vendors/providers will need to go through the "learning curve" to better understand what will, and what won't make it to IMR and/or ultimate approval.

In other words, both will work together to reduce IMR requests as both sides of the equation go through the "learning curve."

The reality of all of these exercises is that at some point there will be procedures that won't warrant IMR, and the payers will just wholesale approve those items.

And guess what, the providers will start wholesale requesting those items.

Because the IMR process inadvertently has generated motivations due to the cost and time frames applicable.

In a year or so I would expect the workers' compensation think tanks to tell us what procedures are costing more as a consequence of IMR, and what procedures have declined and/or costing less.

In the end I wouldn't expect IMR to save any net money. IMR's behavior modification rules will simply result in an internal cost shift mechanism.

Mark Webb, vice president and general counsel of the Pacific Compensation Insurance Company, said that group health insurers overcame their initial struggles with IMR to allow doctors to advocate for their patients, saying that UR practices will need to change.

"To me, that is a different dynamic that over time, could frustrate IMR if . . . we continue to do utilization review the way we have done it before," Webb said. "It should be sobering that in August there were 15,000 requests for independent medical review. That suggests that there is an issue on both sides of that dynamic."

I've said it before, and I'll say it again: The ONLY way to avoid the cost of IMR is to avoid UR in the first place.

Webb has it right - utilization review processes will need to change if IMR is actually going to work.

***********POST SCRIPT***********

Alex Swedlow offered this correction to the statements attributed to him:

I want to point out that your blog entry on my statement during the presentation, "Initial data shows that 26.9% of magnetic resonance imaging scans and computed tomography scans that were denied in utilization review are being challenged at IMR, he said."  was not what I had said nor was it what the accompanying graphic depicted. (I've attached the IMR slides from my presentation for your review.)  Our pending study looks at the distribution of types of services that went through pre-863 UR and post 863 IMR, not the hand off between cases that have moved through UR into IMR.  We won't be able to develop a critical mass of that kind of data for another 6 months.  Our UR database is for 2010-11 decisions.  My comment is that our IMR database (from 2013 decisions) shows that 26.9% of decisions are for MRI/CT scans. Our UR database shows MRI/CT scans make up 9.1% of reviews. So MRI's are taking up a much larger proportion of IMR review time than general UR reviews.

Thursday, October 24, 2013

Why Equity Likes Comp

The common thinking when big money private equity moves into workers' compensation is that they are either trying to diversify portfolios to minimize risk exposure to other health care related investments or that they see profit in being able to deliver more efficiency to service delivery.

But these altruistic notions ignore the basic premise behind PE investment in my experience: short term profit regardless of obstacles.

Pharmacy benefit managers Progressive Medical and PMSI announced Wednesday that they have finalized their merger.

The deal will see H.I.G. Capital, a private equity firm, sell its interest in PMSI to private equity funds managed by Kelso & Co. and StoneRiver Group, the controlling shareholder of Progressive Medical.

According to Joe Paduda, managed care consultant and industry observer, this merger will create the largest pharmacy benefit management company in the industry with a market share of 30% to 35%.

Paduda had also blogged that MedRisk, a managed-care organization, purchased MDIA, a medical-imaging company. Paduda said that the move will allow the new entity to challenge industry leader One Call Care Management for market dominance in their sector.

In addition to these deals, other acquisitions and mergers have been happening in the past 12 months that indicate interest in workers' compensation by Big Private Equity.

KKR & Co bought Mitchell International's software business on Sept. 5. In 2012. Healthcare Solutions acquired ScripNet. One Call Care Management last year announced a deal that Reuters reported to be worth$1.5 billion to buy MSC Care Management. Harren Equity Partners closed a deal to buy MedLegal copy services earlier this year.

Some believe that these moves presage a fear in private equity firms who are vested in the health care space to diversify portfolios because of the uncertainty of the impact of the Affordable Care Act as it comes into play.

Some think that the profit motive of these companies is that based on taking advantage of basically archaic industries, reformulating the delivery of services to wring out efficiencies and profit as a consequence.

Still others believe that this money is chasing new opportunities in the consolidation of services across similar product/service lines in health care and workers' compensation.

I think that all of these arguments, while perhaps having some scintilla of accuracy, largely miss the big picture because there is a misunderstanding of private equity motivation:

Short Term Profit.

I am not a student of private equity, nor of Wall Street's ways, other than reading the Wall Street Journal every day and successfully acquiring an MBA some 17 years ago (and my interest area was marketing; finance was flummoxing to me).

And there is one theme that has constantly withstood the test of time whenever I have gone back to look at what private equity does and how they accomplish it.

There is a general formula and a short term time frame for BPE. The formula is to "purchase" a firm for an astoundingly high value, but that purchase is highly leveraged, and much of the purchase price gets tied up in an escrow account pending certain conditions and covenants.

The conditions and covenants that are contained in the purchase contracts usually are very difficult to fulfill which causes the escrow money to default back to the purchaser.

So a deal that would be worth, say, $100M on paper, after all is said and done may be worth net only half of that.

In the meantime there is management shake up, employee turn over, service interruption, and destruction of the base value upon which the business was built.

The pressure to continue with short term profit on a gutted platform is intense, and there typically is no new investment in the core of the purchased business.

I'm not saying this is the deal with the companies cited above, only that this is how money moves through The Street.

I don't believe that there is any altruism whatsoever by these firms to create a better system, or a better model or a better anything. There is no allegiance to workers' compensation or the social and economic benefits the system delivers.

And I'm not saying this is either bad or good for workers' compensation.

But it is validation that workers' compensation has a profit value to Big Money. It takes BM to move things and get action in work comp. At the same time BM can be debilitating by taking the focus away from the primary mission of the system.

Efficiency, diversification - these are just empty terms to describe another way in which people profit off of workers' compensation.

Let's just call these investment moves what they really are - complex deals calculated to derive short term profits by interests with no commitment to the long term health of the industry. Again, I'm not saying this is good or bad - it is just reality.

Wednesday, October 23, 2013

Safety of Flight

The best laid plans with the most inscrutable strategy can still fail.

That maxim came to haunt me on my return from South Carolina after our jet had pushed away from the gate. I thought we were sitting a bit too long with out further action and sure enough the captain's voice announced over the intercom that maintenance would have to be called.

No big deal, I thought. That's aviation - things happen with machines and they'll get 'er fixed and we'll be off in no time; perhaps a bit late for the connecting flight to cause some stress but we'll get there.

Then we sat a bit too long, long enough for me to think that perhaps this was a maintenance issue that could not be resolved so easily or quickly.

Just about then the captain came over the intercom again to announce that we would have to go back to the gate - seems a generator in one of the engines decided to quit.

Generators quit all the time in airplanes. I know, I've had them quit on me! When that spinning little electrical master quits it's only a few moments before the batteries drain, threatening the safety of flight because then there's no electricity.

Of course this was at 7 a.m. ET, so there was no mechanic on the field, and the qualified mechanic was going to be another hour, and perhaps another hour after that before the plane was repaired, assuming the correct part was available, which, because this is aviation, it would not be so available - that's how things go.

So back to the terminal we all went to find alternative flights which is not very easy out of Myrtle Beach in the off season!

Ultimately I got booked onto a United regional flight to Newark, NJ where I would catch a big Boeing 757 to cross the country in and arrive in Los Angeles four hours after I had planned just in time for rush hour traffic (and this was the best of the alternatives, the others putting me eight and ten hours later).

The California Workers' Compensation Insurance Rating Bureau dealt some of that sort of bad news to the industry the other day announcing that average pure premium rates were heading up another 8.7% because SB 853 was not having its intended effects - and that was assuming that lien armageddon withstood the injunctive challenge scheduled to be heard later this month.

The culprits were many, just like aviation gremlins: RVRBS, increased indemnity, lower investment returns - all sorts of issues conspiring to deny those who had hoped for some magical savings to occur.

But what's the true downside?

We still have a semblance of a workers' compensation system working. It's more complicated than when I started out - just like my flight from Myrtle Beach. And it's more expensive than originally planned (like my trip, turns out the wacky air fare structure we fly under turned my first class seat into coach class assuming there were any first class seats available, which there weren't).

But I eventually made it to LA, and I think eventually the journey under this massive reform will make it too, but not in the route planned or in the time planned.

We have seen this before and we'll see it again.

What is going to derail effectual workers' compensation is not whether there are "savings" in costs as a consequence of new law and regulation or new fee schedules or new anything.

What will derail this latest reform effort (and any reform effort) is the consistent imagination of those with inscrutable minds conning the system into unnecessary, unfounded and illogical services that are overpriced and don't deliver any value whatsoever.

On Monday I wrote about genetic testing that is creeping into our system. We know how this game works and it's just a matter of time before someone proves this up. Perpetrators behind the scheme find willing participants to refer unknowing patients in exchange for some payments. And generally it's not the doctors who are masterminds behind such nonsense but some under-world figure who will remain as anonymous as possible to escape the long arm of the law in order to perpetrate another scheme at some other time.

Every person who gets referred to these testing clinics likely don't even know why they are there - all they know is that a saliva sample gets taken, they see some "doctor" or some other figure head for a couple of minutes, and it doesn't cost them anything.

Attorneys get payola, doctors get payola, sometimes even claims adjusters will get payola.

The corruption can run deep.

The threat to the system is not that these likely illegal actions occur - the threat is that we then go about drafting more laws, more regulations, more paper to try and halt this activity.

And that never works.

Criminals love that sort of complexity because it helps them hide better. The more defined the rules are, the easier it is to plot and execute around them.

Yep, I made it home safely. Yep, I didn't arrive at the doorsteps until 8 hours after I had planned.

I did my job by sticking to the big plan. I had a deviation. It cost me some time but not much more money. And the travel day was more exhausting than it should have been. In the meantime I met some very interesting characters in my travels.

So it is with SB 863. It is what we have to work with. The key is that we don't get distracted by the noise of such folderol such as genetic testing. We have a job to do and that is to take care of those injured at work, get them real medical care and back to work, with a little money in their pockets for the inconvenience.

Of course this analogy is flawed - workers' compensation is not like the airline industry. But the point is that there is a destination and that things get in the way of comfortable travel. We make the best of what we are given to work with and hopefully safety of flight is not compromised while we deal with the elements that don't have society's best interests in mind.

Tuesday, October 22, 2013

It's All About Expectations

A theme emerged at the South Carolina Workers' Compensation Educational Association Conference that I just attended in Myrtle Beach, and it is a universal theme that we in the industry deal with daily with mixed results - the job of managing expectations.

Various people from different walks of the industry randomly commented without conscious coordination of their presentations on how much education needs to be a part of the workers' compensation claims process.

And not just education for the injured worker - who of course needs a lot of hand holding through the entire ordeal as that person is thrust into the vast unknown with little say or control over the course of his or her claim life.

Employers need to be educated on how the process deals with the work injury, how important their participation is relative to the injured worker, the physician, the claims administrator and the impact of all of this on their premiums.

The commissioners talked about how expectations of carriers and administrators need to be managed, admitting that what goes on behind closed doors can be mysterious but is really for greater efficiency and management of the litigation.

Vendors providing services need their expectations managed so they can better understand why depositions might be set, or why their bills are going to be challenged.

Politicians think they're implementing one thing but get something different - we seem to see this in every reform that gets to the books.

Even governmental entities contracting with large consulting firms for new computing systems don't get what they think they're paying for.

When it comes to comp, everyone has some expectation which may or may not match reality, and may not match each other's expectations, which creates a whole lot of friction.

These expectations can be exacerbated by the laws that are passed, by the regulations that are promulgated, by the complaints of special interests, by economic factors and ultimately by the social order (and I've been thinking a lot about THAT too).

Communication takes a lot of effort. There are language differences, culture differences, family differences, education differences and many, many more complicating factors that make managing expectations a lot of work.

But that's why we're in this industry - it is our job to educate, communicate and above all manage the expectations of those who we service, be they employer, worker, administrator, judge - whomever.

There's an old saying to which I have no attribution but it is relevant nevertheless: Don't be disappointed with the results you didn't get by the work you didn't do.

Next time you're frustrated with a claim, think about how well you have managed the expectations of the person causing you grief - likely not very well. By the time the frustration arises however, it's a bit too late to manage the expectation, and all you're left with is attempting to manage the outcome, which is decidedly even more difficult.

Monday, October 21, 2013

Genetic Testing?!

The reason lawmakers and regulators create rules that seem onerous and ponderous to the vast majority of us is because there are "outliers" that ruin it for everyone else because of indescribably selfish behavior.

There's always someone taking a new angle to take advantage of the liberal rules of workers' compensation for their own profit regardless of the social consequences. This seems particularly acute in California, but nevertheless occurs in other jurisdictions too.

Recently posted in the WorkCompCentral Forums was an inquiry as to whether anyone else in the community is starting to see bills for unsolicited services related to genetic testing for drug addition predisposition.

The author of the post, an attorney for the employer/carrier, says that the case in question had been settled. In preparing the settlement documents a review of California's Electronic Adjudication Management System database was conducted to identify all parties. Nearly all lien claims had been settled, but one remained stubbornly immovable (and I'm not even clear that the parties were ever properly served and/or noticed of this particular vendor until the end of the case).

For this one particular lien the claim file notes apparently show a request for billing and report after discovery of the vendor in the EAMS search. The carrier got fax copies of a bill and report with a demand for payment.

The bill was for $3,626.00 for the genetic testing.

According to the post, the initial report, based on an exam 5 months post injury, is silent about any request. There was nothing about the injured worker previously having any problem with any type of medication which might make a doctor want to see if a predisposition existed.

The reason given in the report for the genetic testing was the patient "presenting with clinically-validated, and established risk factors."

I wonder if the injured worker actually knew that he had presented "clinically-validated, and established risk factors" of drug addiction...

The forum post further says that buried in the documents including the Explanation of Benefits is an unsigned form by the doctor, quoting ACOEM without citation stating genetic testing is supported "when it is clear that the genetic trait directly affects job performance, when the trait being screened for predisposes a worker to significant, constant adverse outcome following an otherwise acceptable workplace exposure. Clearly, opioid abuse is such a significant consistent adverse outcome following acceptable exposure to prescribed pain medication."

Apparently the lien claimant also forwarded to the defense attorney an EOB from some company in Wisconsin claiming a value of $2,352.00.

Here's the really sad part - the attorney admits that it is a real possibility that the carrier will just settle rather than take the issue to trial.

This testing in my opinion is just another new attempt to milk a comp claim by an unscrupulous provider. There is no reason, no justification whatsoever, for genetic testing to determine predisposition to addiction. Please... there is no valid medical science that can justify this.

It's a shame if the carrier settles. Doing so just provokes more of this BS, and frankly it would show that the carrier doesn't really care about the employer, or about the work comp system in general because the cost just gets passed through to the employer via x-mod. My guess is if this were a vigilant self-insured there would be no question about a challenge and putting an end to such madness before it escalates.

This is the kind of crap that absolutely should not be tolerated in work comp. I'm all for treating an injured worker with the benefit of a doubt and providing medical TREATMENT and benefits that are reasonable, necessary, and supported by valid science.

Genetic testing for pre-disposition to addiction is silly, unwarranted, with no valid basis whatsoever. If the physician is concerned about addiction then the remedies are already available: ACOEM, ODG and the others all have guidelines for the APPROPRIATE prescription of pain medication, including opioids; OR just don't make such prescriptions!

Maybe I'm wrong. Maybe there really is some valid, justifiable reason for over $3,000 of genetic testing ... beyond someone's shameless, unconscionable profiteering off the backs of injured workers and their employers.

I try to keep an open mind. But I just can't in this case.

Postscript: The case number involved is ADJ8124670, and I understand the vendor is SALUGEN MEDICAL GROUP - the case is set for a lien conference on 10/23.

Friday, October 18, 2013

FEHA Ain't Work Comp

Whether one is an employee is always an interesting question in workers' compensation.

Many employers, and workers for that matter, erroneously believe that if they are designated as an independent contractor for tax purposes, receiving a 1099 report on their wages, that they are not employees for workers' compensation matters. This is a relatively common occurrence.

But the issue can arise in other contexts, and a recent California case highlights this paradox.

Sierra Madre is a small city in the north-east sector of Los Angeles County.

Kailyn Enriquez applied for a position as a firefighter for the Sierra Madre Fire Department in October 2007. The city selected her to work as a probationary volunteer firefighter the following January.

The city hires and fires volunteer firefighters, sets the rules and regulations for their work, requires them to work specific shifts and to arrive on time and requires them to report to supervisors and to work within the framework of the SMFD. Volunteer firefighters also receive training and workers' compensation coverage.

The city pays volunteer firefighters a stipend of $1 per day, every 90 days, and also pays the volunteers $33 per day if they are "hired out" to other agencies.

On April 10, 2008, Enriquez began the background check procedure required for employment by the Sierra Madre Police Department.

Four months later, the SMFD issued her a disciplinary notice stating that she was "[d]ishonest," "[d]isobedient" and had taken actions that "adversely affect the safety of employees or others" and harassed her SMFD colleagues (she allegedly discussed private personnel matters with others not approved to receive such information).

The SMPD then withdrew its offer of employment to Enriquez, citing this disciplinary notice as the reason.

At the end of 2009, the SMFD informed Enriquez that she was being placed on leave from her position as a volunteer firefighter because she had not yet obtained her Emergency Medical Technician certification. The city sent her a letter in March warning her that if she did not get certified, she would be fired effective June 1.

Meanwhile, Enriquez learned she was pregnant. Her doctor imposed severe movement restrictions on her because she had placenta previa.

Enriquez contacted the SMFD on June 6, 2010, to request a leave until the spring of 2011 due to her pregnancy.

The SMFD responded that she had been terminated as of June 1, because she had not obtained her EMT certification.

The actual factual contentions in the appellate opinion are a bit more complex, and give the case a flavor of long-standing malcontent between Enriquez and the city's departments. There obviously is more to this story than the recited facts.

Regardless, Enriquez then filed a charge of discrimination with the U.S. Equal Employment Opportunity Commission asserting that the SMFD had wrongfully terminated her because of her gender, her pregnancy and her temporary disability.

She asserted similar allegations in a complaint to the California Department of Fair Employment and Housing.

The EEOC dismissed Enriquez's charge on the ground that there was no employer-employee relationship between Enriquez and the city, but the DFEH issued her a right to sue letter.

Enriquez lost at the law and motion level in superior court on the City's demurrer.

The Second District Court of Appeal affirmed.

The facts stated in the court's opinion don't go into the when, why or how regarding workers' compensation benefits, but the court acknowledge's Enriquez' statement that she received workers' compensation benefits. Enriquez thus argued that her receipt of work comp made her an employee under the law.

The court rejected this analysis noting that different laws have different impacts on employment status under different factual settings and in this case the fact of receipt of work comp benefits did not convey on Enriquez employee status for purposes of the Fair Employment and Housing Act.

The Second District quoted the recent case of Estrada v. City of Los Angeles (2013) 218 Cal.App.4th 143:

"The fact the City provides volunteer reserve officers with workers’ compensation benefits if they sustain industrial injuries does not change the fact they serve without remuneration. The City’s workers’ compensation benefits, similar to the recurring $50 reimbursement for a volunteer’s out-of-pocket expenses, simply serve to make a volunteer whole in the event the volunteer were to sustain injury while performing his or her duties. Irrespective of the significant value of workers’ compensation benefits, the purpose of workers’ compensation is ‘to compensate for losses resulting from the risks to which the fact of employment in the industry exposes the employee.’ [Citation.] The fact the City ensures that unpaid volunteers such as [the plaintiff] are compensated for industrial injuries does not mean that such persons are deemed employees for purposes of the FEHA.”

The case is Enriquez v. City of Sierra Madre, No. B240916, 10/16/2013, unpublished.

Thursday, October 17, 2013

The Cleanest Dirty Shirt

I'm an unabashed Howard Stern fan and have been listening since he came to Los Angeles terrestrial radio back in July of 1991 on KLSX. And of course I have migrated with him to Sirius satellite radio.

When Stern isn't broadcasting live in the morning on Sirius channel 100, or when I have already caught up on replays, I will explore his other Sirius channel, 101. One of my favorite programs on 101 is the Dr. Harry Fisch show.

Driving home from a meeting yesterday I was tuned into the Dr. Harry Fisch show, laughing hysterically as usual, while the good doctor, and his co-host, Shuli Egar, make humor out of the various men's health maladies that are presented while also giving medical advise.

Then one caller who apparently had called in previously sounded concerned. He said that he went to a urologist as Dr. Fisch had recommended but the doctor seemed to have dismissed his complaints rather summarily, and sent the patient packing without much confidence or discussion about his condition. In the meantime, the caller said, his symptoms seemed to have increased in frequency and magnitude.

Dr. Fisch then commented on the state of medicine in this country - that too many physicians spend too little time with their patients: they just don't listen.

Remember the stereotype of the "good old days" when doctors made house calls, and at least on television, were mild mannered, patient listeners who always had the right answer full of wisdom and knowledge? I'm sure that stereotype wasn't accurate, but at least it is an ideal that most people hold on to.

I was a source of repetitive medical attention as a child. Seems I was always doing something to risk life and limb, and about every six months some limb succumbed to my inaccurate risk assessment.

I was on a first name basis with the local orthopedist, Dr. Ed Wiater in San Pedro, CA. I was just a kid so my memories are probably clouded with sentimental optimism. Needless to say, I was fitted with quite a bit of plaster as a kid, but Dr. Wiater always seemed to have some time to talk to me about whatever was going on in my youthful mind.

I don't know how Dr. Wiater got paid - I'm sure we had some insurance. I don't know how many patients he saw daily, what his hospital rounds were like, how much he had on his social calendar, etc. I just know that when I broke something on my body Dr. Wiater spent some time with me, asking about my life, school, sports, etc. before directing the nurse to wet the plaster strips.

The motivations behind physician payment don't foster that kind of attention to patient interaction any longer it seems, and Dr. Fisch said as much yesterday. He commented that the business of the practice of medicine makes it very difficult for physicians to spend much time beyond diagnosis and treatment with the patient.

But it is the listening part that is most particularly healing to people. Some doctors are really good at this part of the job, and others not so good. I have to believe that physicians intuitively know whether they have the bedside manners to be a listener or not, and then choose their career paths accordingly.

Still, the bottom line is that doctors need to make a living, and since these are highly motivated, disciplined people (how else does one get through the grueling training to become an MD?) they are generally going to execute their jobs in the most financially efficient manner possible - which means seeing as many patients as possible within any given time period.

And patient interaction - i.e. listening - takes a hit.

I don't fault the medical profession for this at all. This is just a recognition of the reality of the business of medicine.

In workers' compensation, I often hear how the injured worker just needs someone to listen to him or her. It's not just the complaints of the injury, but the doubt, the questions, the unfamiliarity with processes, the scary forms and publications, tales of abandonment, and other discouraging or frightening ordeals.

The physician is the first line of communication for these concerns - but it seems that the path to such medical nirvana steers away from these primary needs.

Starting January 1, 2014 California moves to the Resource Based Relative Value Scale. This has been a long time in the making and isn't without controversy for sure.

But one of the key elements of the RBRVS is that there is greater reimbursement schedules for listening. The primary treating doctor is given higher regard under this schedule and specialists are relegated a back seat.

So specialists aren't too happy about moving to the RBRVS, and California employers aren't too happy because the initial costs are estimated to actually be higher than the current medical fee schedule.

But proponents argue that overall costs will decline over time, or at least the growth will slow down, because primary care physicians will be motivated to listen and perhaps better understand what is actually going on with the patient.

I don't know who to believe just yet. It's a complicated formula, and it's a reality. California is moving to the RBRVS and only time will tell whether sufficient numbers of physicians will participate in the system to meet the needs of the injured and their employers; and whether there is any impact on clinical quality and outcomes.

I think that what Don Schinske, a lobbyist for the Western Occupational and Environmental Medical Association, told WorkCompCentral is probably the best analysis - it’s not a perfect process, but it’s “the cleanest dirty shirt that’s out there.”

Wednesday, October 16, 2013

Budget Stalemate and Work Comp

The federal government is on hold: services are denied, properties shuttered, and federal workers are either furloughed or working without regular pay.

The current budget fiasco in Washington DC is headline news, though most of us working the daily trenches aren't all that impacted by Congress' impasse. After all, we're in workers' compensation and generally on a state level.

But we forget that there are federal workers' compensation programs too and those most in the line of hazardous duty and thus susceptible to work injuries are in the proverbial rock and hard place.

The Federal Bureau of Investigation Agents Association is calling on Congress and President Obama to end the furlough of federal workers because agents are expected to work through the furlough and get paid when the government reopens.

The issue is that FBI agents injured during the furlough cannot get sick leave and must wait for benefits through the Federal Employees' Compensation Act which they say creates an unnecessary delay and hardship for these workers.

Paul Nathanson, the association's spokesman, said agents who were in the middle of recovery from injuries prior to the shutdown are considered furloughed until the shutdown ends. Agents who are injured during the furlough will not get paid for the days they cannot show up for work.

Joshua Zive, outside counsel to the association, said in an interview with WorkCompCentral Tuesday that the group has been unable to confirm with the federal Office of Workers' Claims whether Continuation-Of-Pay benefits will be paid during the government furlough.

FECA provides COP benefits at a worker's full salary for the first 45 days following an injury.

Most of the FBI's agents have been designated as exempt from the U.S. Antideficiency Act, which prevents the federal government from spending money that has not been appropriated.

The exemption allows agents to work during the government shutdown but delays payment of wages until the government reopens.

FBI Agents Association President Reynaldo Tariche said in the press release that agents injured on the job during the shutdown will be placed on immediate non-paid furlough status and will not be eligible for sick leave if they don't report for duty.

Tariche said agents hurt on the job during the shutdown will be able to collect FECA benefits but face a "long and arduous process."

The Office of Workers' Compensation Programs posted a bulletin early this month advising that injured federal workers should receive COP benefits during the shutdown but warned, that in the event that an agency lacks the funds to pay COP benefits, workers will have to file for regular FECA wage-loss compensation during the period.

The agency said that no COP benefits will be paid to those not scheduled to work because of the furlough.

The FBI employs about 36,000 people. About 14,000 are special agents and the balance are technical support personnel.

Tuesday, October 15, 2013

Too Much Temptation To Do the Wrong Thing

The problem with workers' compensation being funded and managed by private interests is that there is simply too much temptation to do the wrong things for the wrong reasons - usually those reasons involve profiting at the expense of everyone else.

And so it seems in New York where an associate attorney in the State Workers' Compensation Board General Counsel's Office said in an affidavit filed in New York Supreme Court Friday that improper cost-shifting by the state's workers' compensation carriers has caused the liabilities of the state's Reopened Case Fund to "spiral exponentially," of course at the expense of employers.

After the historical reform of New York's system by then Gov. Eliot Spitzer, that imposed the state's first duration caps on permanent partial disability benefits, carriers began settling the indemnity portion of claims, leaving medical treatment open.

Three years after the indemnity payments run out, carriers can then file claims with the fund providing medical evidence that the workers' condition has changed, thereby shifting the cost of medical care for injured workers over to the Fund.

The lawsuit in which the affidavit was filed was initiated by Liberty Mutual Insurance Co. and 19 of its sister insurers to block a section of Gov. Andrew Cuomo's 2013-2014 budget the close the fund on Jan. 1, 2014.

Coumo made closing the fund part of the "Business Relief Act" included in his $141.3 billion budget and predicted that closing the fund will save New York employers about $300 million a year in assessments.

The carriers argued that doing so would leave the state's workers' compensation carriers with between $1.1 billion and $1.6 billion in unfunded liability and $62 million in unfunded retroactive liability. The suit seeks a permanent injunction against closing the fund to injuries occurring before Jan. 1, 2014.

What the carriers don't say in their suit is that reserves needed to support the fund jumped from $770.8 million in 2006 to $1.15 billion 2012, while assessments levied against carries and self-insured employers to support the fund increased from $95 million 2006 to $314.3 million last year. What they also didn't say is that they have been using the fund to pass back their expenses to employers who have already paid for those claims.

The Spitzer reforms were passed in 2006.

Michael Papa, the SWCB attorney who filed the affidavit, said "Although . . . settlements are a useful tool for resolving issues among like-minded parties, in recent years they have become a vehicle for insurance carries skirting to improperly shift their medical obligations over to the fund through execution of indemnity-only settlement agreements."


"Carriers have then sought to transfer liability for the medical portions of such claims to the Reopened Case Fund after the passage of three years from the date of the last indemnity payment, even though the claims had never truly been closed," he said in the affidavit.

"Far from its initial purpose of absorbing costs for a small number of cases where liability unexpectedly arises, the Reopened Case Fund has become increasingly saddled with liability for claims for medical costs that technically meet the statutory requirements but which were not expected," Papa said. "This has caused the fund's liability to spiral exponentially and uncontrollably."

No one from any of the carriers or their representative industry groups would talk to WorkCompCentral reporter Michael Whiteley - not surprising since it seems the children got caught with their hands in the cookie jar.

The SWCB seeks dismissal of the lawsuit on lack of standing.

Yeah, I know, the carriers are acting prudently within the four corners of the law and making their shareholders happier with the resulting financial results - i.e. just doing their jobs.

But this is just wrong.

It's not fraud, but it is improper.

I hear all of the time about unintended consequences from the insurance industry - usually in reference to some loophole that either claimants or vendors are exploiting.

But the insurance industry itself is just as guilty as any other interest in workers' compensation.

When it comes to greed, hypocrisy dominates and morals take a back seat.

Insurers that are parties to the lawsuit (and by association implicated in this scheme) are American Economy Insurance Co., American Fire and Casualty Co., American States Insurance Co., Employers Insurance Co. of Wausau, Excelsior Insurance Co., First Liberty Insurance Corp., General Insurance Co. of America, Liberty Insurance Corp., Liberty Mutual Fire Insurance Co., Liberty Mutual Insurance Co., LM Insurance Corp., Netherlands Insurance Co., The Ohio Casualty Insurance Co., Ohio Security Insurance Co., Peerless Indemnity Insurance Co., Peerless Insurance Co., Wausau Business Insurance Co., Wausau General Insurance Co., Wausau Underwriters Insurance Co. and West American Insurance Co.

Monday, October 14, 2013

Just The Facts, Ma'am

A recent case heard by the West Virginia Supreme Court found that simply assisting a co-worker lift a box of personal effects was not a task beneficial to the employer, thus denying workers' compensation benefits.

This is why many people who are not trained in the vagaries of the law hate it; how do you determine what's beneficial to the employer in those close cases, like Morton v. West Virginia Office of Insurance Commissioner, No. 11-1382?

Morton worked for Seneca Health Services, as a member of its support staff. Her job required that she provide secretarial, reception and data-entry functions necessary for accurate processing of clinical and administrative data at Seneca.

In September 2010, one of Morton's coworkers put a large box in Morton's office for Elisa Robinette, a mutual colleague, to retrieve. The box contained maternity clothes that Robinette had let the coworker borrow.

When Robinette arrived to claim the box, she was unable to lift it on her own and she asked Morton for help. Morton lost her balance while helping lift the box and fell backwards, injuring her right wrist and shoulder.

Morton filed a claim for workers' compensation benefits, but Seneca's claims administrator denied it, finding Morton's injury had not resulted from her employment.

Up the judicial ladder the claim went: Morton's argument, acknowledging the box contained personal effects, was that acquiescing to any request for assistance by another employee fell within the scope of her job duties and that her employer benefited by having employees who "work collaboratively and cooperatively with one another."

The Supreme Court majority acknowledged that there was no question that Morton's injury had occurred in the course of her employment because Morton was on Seneca's premises, during her regular work hours and ostensibly was tending to her duties at the time.

But whether Morton's injury had resulted from her employment was a closer question, the majority said, and there was no West Virginia precedent directly on point.

The majority also noted something that perhaps legislators understand when they write the laws, or perhaps they don't - that such cases are particularly fact driven.

In this case, the majority reasoned that the box of maternity clothes and the function of taking them to Robinette's car had nothing whatsoever to do with Seneca's business, aside from the fact that the box happened to have been left there for the convenience of Robinette. The majority said it could "discern no particular benefit to Seneca in petitioner’s admittedly kind, but purely gratuitous, gesture of assisting her co­worker with the box."

If Morton could recover in workers' compensation, this would essentially make employers "the insurer of anyone injured on the premises, regardless of the nature of the activity giving rise to the injury, so long as an employee was assisting with the activity in an effort to be helpful and collegial," the court majority said.

In dissent Justice Davis argued that the fact the box had been left in Morton's office meant that it had a direct impact on Morton's job, and that it was "obvious that removal of the large box from the petitioner’s workspace benefited the employer by allowing the petitioner to have all the space she needed to efficiently perform the tasks she was assigned."

I don't know how Morton got her medical bills paid or whether there was any claim for time off.

And I'm not saying the majority in this case was wrong, or that the dissent was right - what is interesting to me is where the line in the sand gets drawn and for what reasons.

Maybe Morton's argument is accurate and that this case will have a chilling effect on people helping others at work which would demoralize the work force thus impinging production with a deleterious result to the employer.

My guess is most workers have no clue about the Morton case and that human behavior will prevail and there will be some new Morton like case with a slightly different twist on the facts that will result in a compensable injury.

For work comp wonks, this is like Disneyland...

Friday, October 11, 2013

Where's the New Jersey Conference?

There's going to be lots of press surrounding the latest CompScope Benchmarks Study released by the Workers' Compensation Research Institute, as there always is, and should be. After all, the WCRI is one of the top research groups in our industry and the leadership and staff there work hard to provide as complete and unbiased data as possible.

What is unique about the latest study of 16 states is one common theme - controlling costs has more to do with instituting price schedules for medical services than any other single factor.

The premier example is Illinois, which, after reducing medical fees by 30% across the board on Sept. 1, 2011, saw all medical payments for claims with seven days of lost time declined by 5% for injuries arising in 2011 and evaluated as of 2012. Prices paid for non-hospital services dropped by 24% between 2010 and 2012.

And Texas' claim costs, which ranked the highest in the nation prior to a set of reforms passed in 2005, are now typical of the states studied, according to WCRI , with medical costs per claim 17% lower than the 16-state median for 2009 claims evaluated in 2012. The Institute expects costs to decline further in Texas with the prescription drug formulary that became effective 9/1/2011.

The state's claim cost growth rate is also slowing. Claims costs in Texas grew by between 3% and 6% per year between 2006 and 2011. Costs per claim for the 2010/2012 study period were $5,829 – slightly higher than the $5,354 median.

The flip side is that imposing fee schedules on medical services increases costs on the other side of the balance sheet.

For instance in Illinois payments for medical-cost containment increased by 5% during the 2011/2012 study period after little previous change.

Pennsylvania is also seeing a steady increase in cost containment ... costs. But the state is also experiencing pressure from Business to limit indemnity durations.

Injured workers in Pennsylvania received temporary disability benefits for an average of 25 weeks, compared to 17 weeks in Michigan, 20 weeks in Virginia and 23 weeks in Massachusetts.

For the past two years, the Pennsylvania Chamber of Business and Industry has called for reforms that would require medical-treatment guidelines, mandate that doctors perform drug tests on claimants receiving opioids and require workers to use coordinated-care organizations for the duration of their injuries.

Not surprisingly if you have ever been to the WCI Annual conference in Orlando, Florida and the grand suite parties held on the upper floors of the Marriott at night, WCRI said that more than 40% of all Florida claims involved payments to defense attorneys of $500 or more. Florida ranked second in the study behind New Jersey.

I guess I'll have to check out the major conferences in New Jersey to confirm that finding...

Thursday, October 10, 2013

AB 1309 - Told You So

There's no surprise that California Governor Jerry Brown signed the National Football League's bill largely terminating workers' compensation benefits for nearly every football player that could ever make a claim, what with its draconian eligibility requirements and jurisdictional restrictions. I had predicted this bill would pass.

And it's no surprise that nobody cares.

Except Michael Hiltzik of the Los Angeles Times, who said yesterday that the NFL, “unabashedly misrepresented its effect to the soft-headed state legislators who sponsored and passed it.”

The NFL is incredibly powerful because it is the biggest, most profitable sports franchise in the world. The NFL means jobs, means taxes, means entertainment.

But most of all, the NFL means money - lots of money. Last season's estimated revenues were reported to be $9.5 billion, about 25% more than Major League Baseball. Forbes values the average NFL franchise at $1.17 billion.

I don't know what the residual economy is swirling around the NFL - sports betting, patronization of bars, travel, workers' compensation insurance premiums, etc. - but I'm sure it's billions more.

Dr. Bennett Omalu, who was the first physician to identify accurately the incredible increase in Chronic Traumatic Encephalopathy in professional football players says in the Public Broadcasting System's documentary, "League of Denial: The NFL's Concussion Crisis":

"I wish I never met Mike Webster [Webster was a former Steelers center and was the first player where the NFL, through its retirement board, acknowledge any link between football and brain trauma]. CTE has driven me into the politics of science, the politics of the NFL. You can't go against the NFL. They will squash you."

And that is really what this new law is all about - it is the culmination of a long drive to the goal by the NFL using the hefty might of its offensive line to bully, lie, intimidate and if there's too much resistance, just plow over whoever gets in the way.

Because the NFL knows that mostly everybody doesn't care about the athletes, so why should they?

For instance, a research group from Boston University published an independent report linking CTE to football and presented their research at the 2009 Super Bowl. No one showed up.

There is no rational reason for the discrimination reflected in AB 1309 other than the well planned "settlement" the league entered into with the player's union to pay for, over time, concussive brain disorders - something the league for many, many years completely disputed, even after their own study linked player's dramatic probability of brain injury. And I argue that settlement is inadequate.

Angie Wei, legislative director of the California Labor Federation and more famous to us in the work comp industry as the person who negotiated SB 863 on the Labor side of the table, told the Los Angeles Times, "This is a terrible precedent for players and a more dangerous precedent for all workers."

I was confronted at the California Workers' Compensation and Risk Conference last week by a high level insurance executive, who did not wish to be quoted, with claims administration oversight authority of his company's professional sports exposure about my stance against AB 1309. His essential argument was that the applicant's bar had taken the liberality of California work comp too far with professional players and that carriers were paying for claims decades old made by players with little connection to California.

I can sympathize with that argument, and likely wouldn't have a problem IF a) other states took care of their own players (and in my opinion they don't) AND b) AB 1309 didn't discriminate against the entertainers - the people for whom audiences actually pay to see - and who for the most part have very little earnings from their professional careers. After all, the bill covers ALL professionals in football, baseball, hockey, basketball and hockey.

For instance, minor league professional baseball players starts their first year at a MAXIMUM salary of $850 per month. If you get up to triple-A ball, then you can get $2,150 per month. In hockey a minor league player might make up to $39,000 per year, but it is pro-rated daily over the regular season. These aren't highly paid athletes, and now they are largely left with no remedy for the injuries incurred doing their jobs.

As noted in the Times article, the average professional life of a football player is only 4 years. During those 4 years one needs to make enough money to pay for his own medical insurance since the NFL doesn't provide such coverage post retirement.

The bill would cover Arena Football players who make a whopping $500 per game, or maybe $12,000 per year if they play all 18 games with bonuses and incentives.

Athletes in the National Basketball Association's D-league, or Development league, averaged between $12,000 and $24,000 per year.

One way to get the NFL to pay for the medical care needed by its employees who are the ones responsible for the $9.5 billion/year juggernaut we see on television is through workers' compensation.

But NO - instead now the rest of the nation gets to pay, even more, for its entertainment through social security, Medicare and other social programs.

Just another way for Big Business to stick it to the Little Guy, and the Little Guys just bends over - just read the comments to the LA Times article; there's no comprehension of workers' compensation, of athlete pay, or of league profits. People just want their football.

The NFL knows that America is populated mostly by the ignorant and that it has the most powerful marketing machine known to corporate America. The league's marketers are true professionals, turning a negative (unwanted attention to head trauma) and spinning it with the Head Health Initiative suckering GE into sponsoring it with a $60 million deal.

Dr. Omalu is right. You can't go against the NFL. Even Jerry Brown, probably one of the most independent politicians to run California in a long time, is a sucker for football.

The question in my mind is how far will this go? How many other special interest industries will see what the NFL accomplished and seek the demise of certain provisions of California workers' compensation law that cover and assist the working people of this state?

Time will tell of course. The door is opened however and I don't see it getting shut any time soon. Until some really smart plaintiff's lawyer figures out how to sue a team civilly ...

Wednesday, October 9, 2013

Random Ridiculousness: Copy Fee Schedule

One of the most ridiculous fights the progenitors of SB 863 decided to pick was regarding copy service fees.

In California, and perhaps other states, there are businesses that cater to the claimant side of the litigation equation to procure records to use as evidence in support of some contested issue.

When former administrative director (now workers' compensation judge) Rosa Moran made her first speech as AD she said that one thing that particularly bothered her was applicant photo copy fees and that she was going to give the topic close scrutiny.

"I'm going to start with something small, because we've got to get our house in order," she said. "I randomly picked something that kind of annoys me. I picked copy services."

I couldn't help but wonder why this was so big an issue that it would raise such emotion from Moran. After all, applicant photocopy service fees amounted to about 1% of all costs, and these firms typically wait about 2 years to get paid on an invoice. Time is money so collection time is factored into the pricing. And it's not like carriers don't negotiate the final payment anyhow.

Of course, when Moran was announced as AD, SB 863 had been in the works behind closed doors for some time, likely had included the topic of copy services, and had not been publicly acknowledged by anyone outside those closed doors.

Defendant/carrier/employers use their own services which are highly competitive and driven by basic market forces (and probably some good glad handing at conferences or other social events).

Applicant copy firms are a different breed though and have several competing market forces at work.

Serving at the request of the applicant attorney, such photocopy firms have no idea what they are obtaining nor the relevancy (if any) of the records sought. And the applicant attorney doesn't much care because they are not responsible for payment of the records.

Carrier representatives have argued that there shouldn't be any difference between records, and that applicants should just accept the records that the carrier procures or obtains. That's like telling the insurance company that the only records they can have after an accident are what the applicant provides - neither side is going to trust the other to be completely forthcoming with information so there has to be independent procedures to get to the same information.

So in the dark, windowless room where SB 863 was negotiated, the authors added Labor Code Section 5307.9, requiring the administrative director to consult with the Commission on Health and Safety and Workers' Compensation and hold public hearings to adopt by Dec. 31 a schedule of reasonable maximum fees payable for copy and related services. The bill says the copy service fee schedule “shall specify the services allowed and shall require specificity in billing for these services.”

CHSWC on Friday posted on its website for public comments a report by the Berkeley Research Group recommending the flat rate of $103.55 for each copy set of up to 1,000 pages. The report, titled “Formulating a Copy Service Fee Schedule for the California Division of Workers’ Compensation,” also recommends that additional sets of copies be reimbursed at 10 cents per page if printed, or $5 if provided in an electronic format.

Researchers said they arrived at the $103.55 fee for copy service bills paid within 60 days based on an analysis of defense copy service bills that was a “useful indicator of the fair market value of copy services where payment is prompt and free of disputes.” The increased rate for bills paid late was calculated based on an analysis of applicant copy service bills that account for the “fair market value when the seller (the copy service) has to repeatedly rebill, pursue collection and risk prolonged delay or nonpayment.”

For the late payers Berkeley Research Group recommends increasing the flat rate to $251.20 for any bill that is not paid within 60 days.

Berkeley Research Group also evaluated pricing data for retrieving documents in 16 other states, including Florida, Illinois, New York and Texas and found the mean payment for reports of 1,000 pages or less was $98.13, but looking at the tables you will note that there isn't much value to the average price because of the wildly extreme differences in the study states.

Other than preparing and serving a subpoena and advancing witness fees, the report does not identify what other services would be eligible for additional payments, nor is there any recommendation as to what a reasonable rate would be for such services.

The flat fee proposed by Berkeley Research Group is even drawing criticism from defense copy firms because the rate is too low to cover the array of services necessary and provided in order to comply with California discovery laws (an interesting twist - during the entire period of "study" of the copy fee issue I'd never thought we would see the defense side with the applicant copy firms on any issue).

This whole copy fee schedule argument is ridiculous and in my opinion is just another micro-management cost control feature in the law that will result in greater expense on a different line of the balance sheet rather than save anyone any money.

I can nearly guarantee that after copy firms shutter their doors there will be a few enterprising individuals (and probably more on the criminal end of the spectrum) who will figure out how to skirt the laws and drive "annoying" profits their way.

And regardless of any "penalty" for late payments, if a defendant/employer doesn't want to pay for something, another hundred dollars isn't going to provide an incentive to drive timely payments.

This whole study is a waste of time and money and will only result in more wasted time and money.

The very simple way of dealing with the photocopy fee "crisis" (yes, I'm being sarcastic) is to make the requesting attorney responsible for the cost of the records. If an applicant attorney orders records then he or she has to pay the bill. Perhaps the attorney could recoup that cost in settlement or as part of an award, but perhaps not - let the attorney take the risk and then provide a reason why that risk should be rewarded.

Applicant attorneys will argue that doing so would stifle litigation, that they don't have the cash flow to finance a case in such manner, and that they don't have the time or resources to manage their copy requests.

Malarkey. Applicant attorneys can arrange with their copy firms better payment and finance terms so that cash flow isn't impaired. Litigation wouldn't be stifled. Instead it would get more careful management and thoughtfulness, making litigation more efficient. And applicant attorney firms already have staff that rifle through records to find the nuggets of information they seek to make their case so there's no extra expense there either.

But we're going to have a fee schedule come hell or high water. So bring it on and let's see the next micro-managed fiasco infiltrate California workers' compensation litigation bear fruit for those whose scruples aren't defined by law and regulation.

Tuesday, October 8, 2013

Jobs, Wages and Premium

I'm confused (but that's nothing shocking).

The Insurance Service Office and the Property Casualty Insurers Association of America say in a report released last week that expanding payrolls contributed new premiums written to the workers' compensation line, helping combined ratios improve to 97.9% for the first half, down from 101.9% a year ago.

But the Wall Street Journal's Ben Casselman says that the improved unemployment figures are masking a troublesome trend - workers' aren't moving up the ladder to better paying jobs but rather are holding on to whatever they have.

In "normal" economic times, employment churn (resignations, firings, replacements) create a much more robust employment condition. In 2007, according to the WSJ article, about 3 million workers churned each month. This past July, that number was just 2.3 million, barely any better than what was occurring during the depths of the last recession.

"Nobody's leaving for a better job," Jason Faberman, an economist at the Federal Reserve Bank of Chicago, is quoted as saying. "These guys aren't moving on to better jobs, which means their positions aren't opening up for the unemployed."

But this news isn't just bad for the unemployed, churn is critical to wage growth.

As explained by Toshihiko Mukoyama, a University of Virginia economist, unemployment for those under age 25 is still elevated at 15.6%, so many of those lucky enough to have jobs are playing it safe by staying put and not risking the move to higher wages.

Robert Hartwig, president of the Insurance Information Institute, noted that the increase in net written premiums, up 4.5% during the period, from a 3.7% gain recorded in the first half of 2012 and a 4.7% increase in the second quarter, was the 13th consecutive quarter of growth.

Hartwig said that, combined with modest increases in the hourly earnings of employees, payrolls expanded at an average annual pace of $216.5 billion during the first half of the year, relative to the first half of 2012.

“Indeed, workers’ compensation, hit hard during the recession by a soft market and a precipitous drop in payrolls, has within the snap of just a few years transformed itself from the fastest contracting major property-casualty line to the fastest growing, with direct premium growth in 2013 up by approximately 10%,” Hartwig said.

How this all plays out in the long run will be interesting. The interrelationship between the economy, jobs and premium health in workers' compensation makes the workers' compensation insurance market a complex study in contrast.

I have heard in several seminars over the past 12 months that while the market is hardening, it is less a reflection of market competition and more about wage recovery.

So premium growth may just be illusional at this juncture. If wages really do stagnate and there are no more jobs available to those who want to improve their employment positions, then we may see premature softening in premiums relative to the overall economy.

Monday, October 7, 2013

Family Makes the Difference

Mom and Dad are late in their years. Mom is 89 and has moderate dementia. Dad just turned 91 and was in excellent physical health despite a history of heart disease and bypass surgeries.

"Was" is the critical verb in the prior sentence.

Dad is the decision maker, always has been. A retired dentist who had a successful practice, he is a leader and is used to being in charge.

Also a faithful husband and family man, Dad made a personal commitment to himself years ago to take care of his wife to the end.

He will also admit that he is the world's worst planner ... except for when it came to vacations.

He didn't count on disability.

Having elderly parents, seeing their travails on a weekly basis (my commitment to them was to visit at least once a week), and watching them sunset physically and mentally, provides some awareness of the disabled state.

Dementia is a terrible disease. It progresses gradually, taking elements of memory away from daily functioning in a cruel manner. At Mom's stage, she forgets sometimes just how to walk, so she falls and then can't get back up.

Dad thought he could deal with this. He thought wrong.

Dad has sciatica and pain radiates down his leg. This started a few months ago.

A shot of cortisone every once in a while alleviates the symptoms and he goes about his days with good energy and strength. But when he has to wait because of dosing issues, or just access issues, he can't move much without a walker.

This past week was a seminal week in my father's understanding of the fragile state of his physical being when Mom's temperature sky rocketed due to infection, she fell and couldn't get up, and he couldn't get her up because of his back issues.

Finally Dad understood what I, and my siblings, had been trying to get through to him for the past 2 years - there is a time when a single person's support isn't sufficient, and in fact may further jeopardize the well being of another.

Last week I wrote about support - that an injured worker needs support from professionals, from the employer, and likely most importantly, from family, in order to truly be successful in elevating above the misfortune that was handed to him or her from an employment injury.

In my own family situation I see the same elements, though obviously without "compensation" in the way.

Dad's frustration with his physical limitations, and the vapor from pain that clouds rational thinking, were leading to bad decisions on his part. It's obvious that his thought processes were not all there - Dad's a really intelligent man, but between the trauma of seeing Mom degrade, and the depressing emotions of pain and incapacity, his logic and capacity for good judgment are compromised.

They live in a retirement community and have made many friends since they moved there nearly 2 years ago - which is not surprising. Both of my parents are gregarious and make friends easily. Even at her stage of dementia, Mom is always smiling and saying hello to the other residents. Dad is a leader and is always taking charge of something there - whether an event, getting favors for fresh spinach in the dining room, or getting folks rounded up for a trip to a local attraction.

Their friends are going through similar stages of life so the compassion and understanding of the trials and tribulations of aging are shared.

Mom & Dad also have doctors that they have great faith in. So much faith that when I suggested to Dad that he see a chiropractor a few days before his scheduled appointment in the event that a simple adjustment might ease some of the pain, his response in typically cryptic fashion was, "I have an appointment on Monday for a shot."

Fortunately my brother, a retired Navy Master Chief and currently a defense contractor at Marine Corp Air Station Miramar, lives close enough to my folks so that he can respond and help out more quickly than I can.

And also fortunately aviation allows me to traverse the 150 miles to their home in the relative blink of an eye so the demands on my most precious resource, time, is minimized and I can provide some personal support and assistance every week, and on call as necessary.

I've witnessed the frustration of Dad trying to sort through his emotions and make appropriate decisions for the care of Mom. I've also witnessed the difficulty Mom has just getting through life trying to uphold her dignity when her control over bodily functions fail.

Dad made some very difficult life decisions this past weekend - decisions he didn't want to make because there weren't any good compromises. These were black and white sort of decisions, but ones that were critical to providing the highest quality of life possible under the circumstances.

He would not have been able to make these decisions without the support of family - there is no question in my mind that while his friends and the professionals assisting them would provide some support, they don't have the influence and the weight of family.

In workers' compensation terms we call this the biopsychosocial element - where biology intersects psychology and socialization. As professionals we do the best we can with the resources we have to make things better, but the family ...

I know intuitively, and though experience, that family is a huge component to the wellness and recovery of an injured worker. Professionals and the employer play big parts too, but family support is the cornerstone.

I am not aware of any formal studies on the impact of family support to work comp outcomes and I'm not even sure how to incorporate this knowledge into the work injury recovery process.

I just know it's a big part, and injured workers with big family support systems are very fortunate.