It's a Beautiful Morning

This is my last blog post for 2013 - time for me to sleep in a little longer than my normal 3 a.m. PT wake up time, and let my brain take in all that has gone on this past year.

I was tempted to do a summary of 2013, but that's not really necessary - all one need do is review the Blog Archive in the column to the right to get a sense of the various topics I have covered.

So no need to go through what has happened.

Besides that, I am generally an optimist. Optimists look forward. They may examine the past so as to not repeat mistakes, but there's no dwelling on the past.

But let me leave the year with some generalization.

I don't think there is any argument about what the workers' compensation industry is all about: people. Workers' compensation main mission is to take care of people. Sometimes we do a good job, sometimes we don't - but the mission doesn't change.

The only thing that changes is how we accomplish that mission.

Workers' compensation is a people business.

And it takes a lot of people with a lot of different skills, knowledge and traits to get the job done.

We require people with insurance and actuary skills; people with data analysis skills, legal skills, medical skills, and numerous other subspecialties to accomplish the main mission of making sure that when someone incurs a work injury that they are not left out in the cold.

Which brings me to my dad.

Dad hasn't died yet. I thought he would some weeks ago, but he is hanging in there. He is where I get my hyperactivity, so I understand that for him to be bed-ridden is a major life change.

Sometimes he complains, and sometimes he smiles. He is weak, he doesn't eat much, and the morphine clouds his brain. He is miserable for sure.

Most of all, though, he is grateful for the people around him: his professional caretakers, the hospice nurses and social workers, his wife...

Dad - It's a beautiful morning

I've learned a lot from my old man, that's for sure. But there is one thing that, above all else, stands out as the premium lesson from him and it is summarized in his favorite song, a song he used to sing to my brother and me when we were children in waking us every morning:

It's a beautiful morning
It's a beautiful day
The sun is shining
Everything's okay

Hear the bluebird singing
A song so true
That bluebird's singing
Good luck to you

All your troubles
Just like bubbles
Will fade away
So don't regret them
Just forget them
Today's another day!

It's a beautiful morning
It's a beautiful day
The sun is shining
Everything's okay!

This song always makes Dad smile. Still does.

And it's all about looking forward, making sure that you keep in perspective what's really important in your world.

Sure, workers' compensation plays an important role in the modern economy and society, but that role isn't really THAT important.

We argue about treatment, utilization review, indemnity, rates, premiums, medicine, law, etc.

None of that really matters.

What matters is the people. Those who call upon us to make sure their lives aren't entirely ruined by an unfortunate work event. Those who really do care about their employees and want to make sure that the system does the best it can within the confines of the law.

And those of us within the system to whom it really matters that these missions are accomplished.

I know there are bad actors out there. We deal with them as we deal with bad actors in any system. For the most part, though, we are all committed professionals dedicated to ensuring that the system that was created to protect those less fortunate than we works as well as it can.

We're not perfect. The system isn't perfect. Everyone has their own idea of how it should work, when it should work and why it should work.

But it all comes down to people.

We are a people industry with the responsibility to do well to other people.

Keep that in mind over the holidays and your 2014 will start with a beautiful morning and a beautiful day.

I'll return January 6, 2014. Happy Holidays.

Drug Formularies Good For Comp

A formulary is coming to your workers' compensation system soon.

Formularies are lists of preferred generic and brand-name drugs.

Washington and Texas use formularies to control drug use and curb inappropriate treatment practices. The formularies also reduce drug contra-indications and play a major role in lowering prescription drug costs in these states.

Prescription drug formularies will become a part of the American College of Occupational and Environmental Medicine's Practice Guidelines.

The Reed Group, publisher of the ACOEM guidelines, released the "beta," or preliminary version of its new formulary. ACOEM uses the Food and Drug Administration's National Drug Code numbering and drug-listing data, and incorporates the ACOEM Practice Guidelines' 600-plus medication-related recommendations, according to the organization.

Mark Pew, senior vice president of product development for medical management firm Prium, told WorkCompCentral that Texas' success with its closed formulary, which is Work Loss Data Institute's product, is prompting other states to begin looking at adopting forumularies.

Simplicity and clarity are two of the reasons for the success of the Work Loss Data Institute's Texas formulary, Pew said. He noted that the Work Loss Data Institute classifies drugs into categories of "Y" or "N" to indicate whether it is recommended.

"It made it very easy for pharmacists, for doctors, for utilization-review companies like us, for pharmacy benefit managers, to know what was supposed to happen and to know how to implement it because it was relatively binary," he said. "If it is 'N', Texas said you have to preauthorize it. If it was 'Y', Texas said you do not have to preauthorize it." Ergo, physicians not wanting the extra paperwork and hassle of arguing against the standard go with the standard alleviating a big chunk of treatment dispute.

While this is a competitive move for the Reed Group and ACOEM, since the the Work Loss Data Institute's Official Disability Guidelines already have a formulary that is linked directly to the ODG Treatment Guidelines, the timing could not have been more prescient because I believe the biggest workers' compensation state, California, is on the cusp of needing, reviewing, and potentially adopting, formularies to get some control over its current utilization review and Independent Medical Review issues.

I've been advised that denied requests for prescription drugs are a big driver in UR appeals to IMR.

According to the California Division of Workers' Compensation about 80% of IMR decisions that have been issued upheld the UR decision denying treatment. But one area of utilization control that is not accounted for in the current Medical Treatment Utilization Schedule, which has its origins in ACOEM, is prescription drugs. Because these are not in a formulary there is room for debate and appeal on whether or not such a treatment request will, or will not, be approved. Obviously this is going to drive UR to IMR volume.

A closed drug formulary, if as easy to use as Pew says the Texas system is to use, would go a long way towards alleviating treatment disputes because physicians, their patients and claims administrators would know well in advance what is going to fly and what isn't.

The test, of course, is whether California politics would permit adoption of a closed formulary. Opponents will argue that adopting a formulary inhibits medical treatment because then drugs can not be prescribed for off label use that may be beneficial to treatment.

Off label means that a drug has not been approved for treatment of a particular condition. Physicians are typically free to prescribe any drug for whatever condition they deem necessary - this practice has come under fire as the nation's opioid addiction reaches a crisis stage and some physicians face discipline for over-prescribing the drugs.

But workers' compensation is not about experimenting with medicine. The treatment guaranteed in workers' compensation is that which is reasonable and necessary to cure or relieve. The key is "reasonable" and there is a very good argument that off label is not reasonable since such usage does not have the scrutiny and blessing of the Food and Drug Administration's rigorous approval process.

Stay tuned - the debate on drug formularies, and particularly in California, is going to heat up and likely will be a top workers' compensation topic in the state in 2014.

Happy New Year.

Crashers Gettin' Bombed

Claim frequency is our industry's vernacular for the number of claims.

Severity talks about how bad those claims are.

The two are usually used in the same paragraph describing the amount of bad versus the amount of not-so-bad claims.

The best world is where the number of not-so-bad claims is greater than the number of bad claims and where both are less, or at least the same, as history portends.

In other words, if you're an insurance wonk, you like to see fewer claims, and of those fewer claims you like to see fewer that are bad.

We measure "severity" in terms of dollars - how much does a claim cost? It's an easier measurement than trying to say how many arms were amputated, or how many eyes were blinded, etc.

It's also a more meaningful number to employers, who are tasked with the burden of paying for these claims.

Usually there is some rationale behind these numbers, typically tied to economic trends. When more people are working then we would expect frequency to go up because there's more people that could get hurt ... and they do.

And when particularly more risky industrial segments are performing at high levels, such as construction or trucking, then severity goes up because there are more people doing more risky jobs that generate more severe injuries than, say, a desk job.

So we are all left scratching our heads when the numbers don't make sense.

The California Workers' Compensation Insurance Rating Bureau is in that quandary now - the numbers don't make sense, at least not in any historical perspective.

Yesterday the WCIRB projected a 5% increase in claim frequency during the first nine months of 2013.

The trend has been frequency dropping 3% to 4% each year since the 1960s as employers implemented better safety practices and industrial shifts led to more people working in the less-hazardous service-based sectors as opposed to manufacturing.

California frequency increased 6.7% from 2009 to 2010, following the nation and consistent with the economy as it started to come back from the recession. California frequency decreased by 1.9% from 2010 to 2011, again following the national trend.

But since then frequency has been on the rise, but it is geographically situated and in economic terms isn't making a lot of sense, at least on a cursory level.

The WCIRB is finalizing a study that will attempt to identify the factors causing the frequency increase.

The early results show that 2012 claim filings are up by 7.8% in the greater Los Angeles area – including Los Angeles, Orange, Ventura and Santa Barbara counties – while frequency is down 2.2% in the San Francisco Bay Area and down an average of 4% for all other regions of the state. The recent influx of claims also appear to be high-dollar permanent disability claims.

Claim frequency and severity are partially responsible for rate increases that have totaled 33.8% since 2009, and the increase in payrolls means that charged premiums are increasing at a faster pace. Some employers may experience a little sticker shock when renewal and/or audit time comes around.

If you're in the insurance game, though, the numbers aren't all that bad.

The higher charged rates, together with a moderate growth in wages, is driving up written premiums and bringing some improvement to insurer combined ratios.

The WCIRB says that California written premium (gross of deductible credits) for calendar year 2012 is approximately

$12.5 billion, about 16% above the written premium reported for 2011 and 42% above the written premium reported for 2009. Written premium for the first nine months of 2013 is approximately $11.2 billion, which is approximately 19% above the written premium reported for the first nine months of 2012. The WCIRB projects that total written premium for 2013 will be approximately $14.7 billion, which is the highest premium total since 2006.

With insurers collecting more in premiums, the WCIRB is projecting a combined ratio of 122% for accident year 2012, down from 141% in 2011, 142% in 2010 and 140% in 2009. The calendar year combined loss and expense ratio for 2012 reported by insurers is 114%.

Typically, when the actual numbers are released they show the State Compensation Insurance Fund skewing the combined ratio results because of its volume and its place in the industry covering all of the high risk, low payroll, small businesses that can not get coverage elsewhere. Perhaps this is indicative of what is driving frequency in the greater Los Angeles area - perhaps the economy really is recovering more robustly than thought and there are more small businesses employing more workers at the higher risk categories.

Or perhaps there are more businesses actually reporting properly their payroll and their claims.

The cynical might say that the claim mills of Los Angeles are at it again pushing claims through the system for ill begotten profit.

What I know is that, right now, we don't know.

The number people at the WCIRB will likely find what is driving these numbers, but of course by that time the impact to those who pay will have already been incurred.

Which is a big part of why workers' compensation can be so frustrating to the people who pay for the insurance - by the time we as an industry figure out what is going on, the financial damage has already occurred.

We can use "frequency" and "severity" to describe how things work, but at the end of the day it's how much the cost of the insurance is that matters to employers because it's a cost that they don't have a lot of control over other than trying to prevent claims in the first place.

I suspect the California employer community is going to be grumbling quite a bit in the coming years if projected savings from the great "reform" of 2012 don't result in lower charged premium.

The alternative rock band from the late 1970s to early 1990s, The B-52s, produced a great song (well, I think all their songs are great) called "Party Out of Bounds" in which Fred Schneider repeats, "who's to blame?" when the party gets out of bounds, when they get poorly planned:

"Who's to blame when situations degenerate? Disgusting things you'd never anticipate?"

My guess: "Bombed, crashers gettin' bombed; crashers gettin' bombed, bombed, bombed, bombed..."

OK Steals Some of The Drama

The big news in the workers' compensation world and for which I'm sure there will be plenty of opinion is that the Oklahoma Supreme Court denied, for the time being, the state constitutional challenge to SB 1062.

While this is an historic event, further challenge to the law can not be dismissed because the court's ruling is very, very limited.

Specifically the court ruled that SB 1062 does not violate the Oklahoma single-subject rule. This rule prohibits the state legislature from what is known as "log-rolling": inserting language into a bill on unrelated matters. This rule is to inhibit law makers from taking advantage of a bill's progress to gain special interest treatment from an unsuspecting legislature.

The court's opinion had concurring opinions but Justice Reif (who dissented in part) made some of the most salient points about what could be objectionable to the court if the right case with specific facts were brought to it.

1) The appeals process in the opt-out system would "work prejudice in the administration of a statutory right" forbidden by the state's constitution and would thus result in a denial of due process;

2) There can be no due process under opt out disagreements between employer and employee because "the employer has a direct pecuniary interest in the decision of a claim";

3) There is a conflict of interest in the dispute resolution system;

4) Regular workers' compensation cases in existence prior to 2/1/2014 should not be subject to the Court of Existing Claims because these cases are "cases at law" and not subject to administrative determination violating the separation of powers clause in the Oklahoma constitution;

5) Justice Reif questions the new requisite that mental injuries be the product of a physical injury and also takes issue with denial of death benefits to same-sex partners: "[T]he effect is to immunize employers for detriment sustained by employees from work place conditions beyond the control of the employees";

6) Recipients of permanent partial disability are treated differently under the new law because the employer is "authorized to subsidize the re-employment of the injured worker out of the award for the physical detriment that has been adjudicated."

For employers seeking to opt out of workers' compensation in Oklahoma, Justice Reif provided a great service by pointing out elements that may provide scrutiny later down the road, so employers now have a road map by which to design their systems to steer clear of these obstacles.

While opt-out employers have a green light so far, less certain to me are the changes made by SB 1062 to the regular work comp subscribers and the system they operate in.

The Oklahoma reform is going to be the subject of intense scrutiny for years to come as cases go up the appellate ladder challenging the law on these grounds.

Seems that, like with the outsourcing of Hollywood to other venues, not all of the drama in comp is in California...

Bothcoe, IMR and Medicine

I have a cat named Boscoe, though we add a lisp in the pronunciation of his name because it seems more appropriate to his personality - "Bothcoe."

Bothcoe is a "special needs" kitty. We adopted him as a small kitten, all white, blue eyes, and no whiskers. Seems someone cut them all off.

Special needs because it also seems that he may have been dropped on his head a couple of times in his life prior to our adoption since he never quite seemed to have the same intellectual level of other cats we've owned.

Bothcoe would be a good study in occupational risk management. He's had more than his share of nine lives.

There was the time that he got pinned by the garage door when opened because he was sleeping on top the track.

Or the time he decided to explore the possum trap and did not escape until discovered three days later.

Bothcoe also displayed an affliction towards seizures early on in his life.

Bothcoe

Poor Bothcoe - he would always have his seizure at the top of our central stairs, which would cause him to flop uncontrollably down the stairs to the landing mid-flight.

Bothcoe would then experience a period of temporary disability because his brain took a few hours to rev back up to normal Bothcoe operating temperatures, which as I mentioned, was a few scales below normal cat operations.

In order to control his seizures the veterinarian prescribed phenobarbital - 16.2 mg tablets twice per day. This is typically administered in his morning and evening feedings.

Being a cat, you can guess that sometimes medication compliance is difficult. Phenobarbital apparently has a bitter taste, and while Bothcoe doesn't have a particularly discriminating palette, he's not very fond of his food being spiked with his medication.

So we resort to all sorts of incentives like spiking his food with fish oil. Sometimes we just have to shove a pill down his throat.

I get the sense that Independent Medical Review is kind of like Bothcoe - sometimes it has to be shoved down the throat of the system for dispensation.

The message that is coming out of the Division of Workers' Compensation's Medical Unit is that while there are issues with IMR volume and the timing of issuing decisions, the majority do appear to be appropriate when reviewed.

Dr. Rupali Das, executive medical director of the DWC, said, “What appears to be a high rate of denials, or what is a high rate of denials, may in fact be appropriate medical care” when looking at the fact that about 80% of the time the UR decision to deny or modify a treatment is upheld.

Pharmaceuticals represent the most frequent issue disputed in IMR, accounting for about 1,000 decisions, she said. About 300 IMR decisions addressed the appropriateness of durable medical equipment, another 300 addressed surgery requests and another 300 determined whether physical or occupational therapy was necessary. In all of these categories, independent medical review found that the requested procedures were not medically necessary more often than not.

Das said the division is studying the criteria used to make UR and IMR decisions and trying to identify predictors of whether a request will be approved or rejected. She also said the administration is interested in tracking the outcome of injured workers who have gone through the IMR process.

The DWC is currently in the process of updating its Medical Treatment Utilization Schedule, a process Das said could ultimately reduce the number of treatment disputes going to IMR.

To address volume, Das said that the division is working on automating much of the system to eliminate as much of the paper processing as possible.

I think these are all positive developments, if in fact workers' compensation beneficiaries are getting medical treatment that is the most appropriate to their injuries or illness as defined by the current scientific literature.

But the Division must first address the timeliness of IMR decisions. The current back log is unacceptable and there does not appear to be any mechanism in the law or regulations to address this issue.

The other part of the equation - getting the patient to take the medicine - is going to be a longer process. If in fact IMR is upholding "good medicine" then the workers' compensation community will need to adjust in a radical way.

The standard of care in workers' compensation for nearly 100 years has been "anything goes." If a beneficiary wanted some treatment then he or she got it. Sometimes it took a fight, sometimes there was just a cave in after too many bruising episodes in court.

This led to all sorts of ridiculous burdens being placed on work comp: expensive special beds where there is nothing more than a doctor's "prescription", excessive opioid prescriptions, unnecessary surgeries, etc. For so very long if a beneficiary wanted something they got it.

It's a deeply rooted cultural anomaly that is changing and the "anything goes" mentality is adjusting.

IMR is the phenobarbital that is being shoved down the throat of system participants.

For all of the problems the IMR process is experiencing I have no doubt that eventually these will all work out and we will end up with a smooth process. But there is a huge adjustment period. Volume is one issue, acceptance of results is another issue.

We all can agree however that the California work comp system has occasional seizures. It's going to have to take its medication...

Fee Schedules and Value

Pricing medical services and goods is a sensitive subject and one that nearly always brings passionate debate.

The cost of medicine in this country is a big part of what has been behind the Affordable Care Act, and is a big component of what gets passed down to the employer in the pricing of workers' compensation insurance.

Because medical goods and services are so essential to the health, comfort and happiness of the entire human population and because the vast majority of people have no way of discriminating their medical purchases, most developed countries regulate what can be charged, particularly in captive systems such as any medical insurance program.

I define a captive system in the medical economics context as one where the ultimate consumer, i.e. the patient, has no direct responsibility for the payment of such goods or services and where the vast majority of decisions concerning care are outside the scope of understanding of the consumer.

In this country, Medicare is a captive system.

And so is workers' compensation.

Because there is so little choice and ability to discriminate based on cost versus quality (what is called "value" in economic terms) big systems regulate what can be charged for any given procedure or item.

And it isn't surprising that the Workers Competition Research Institute reported Thursday that states without medical fee schedules in their workers' compensation systems have seen the most rapid increases in prices for outpatient hospital and professional services, while states with fee schedules based on fixed amounts generally fared better.

"States without fee schedules saw faster price growth than states with fee schedules, and, for states with charge-based fee schedules, we saw prices for hospital outpatient services growing faster than states with fixed prices," said Rebecca Yang, the author of WCRI's 2nd Edition of its Outpatient Cost Index and the Fifth Edition of its Medical Price Index for Workers' Compensation, in a webinar yesterday.

On the other side of the nation yesterday the California Division of Workers’ Compensation held a public hearing on proposed regulations concerning the revision of its Resource-Based Relative Value Scale fee schedule rules to say any procedure for which there is no relative value unit in the U.S. Centers for Medicare and Medicaid Services National Physician Fee Schedule Relative Value File should be billed “by report.”

"By report" essentially means that the procedure or item is not covered by a fee schedule.

The DWC received critique that there were over 1,000 billing codes that would end up "by report" if the proposed revision, which would eliminate the use of federal Office of Workers’ Compensation Program relative value units, were implemented.

According to the division’s Initial Statement of Reasons for the proposed change, OWCP uses a conversion factor of $48.52 that is multiplied by the relative value unit assigned to a particular procedure. In some cases, however, OWCP uses a payment amount as the relative value and then uses a multiplier of 1.25 as the conversion factor.

“As a result of the use of a 1.25 multiplier, the data appearing in the relative value column is not truly a relative value,” the division said. “For example, use of the erroneous OWCP relative value data in the RBRVS payment methodology can result in a payment that is close to 40 times higher than the OWCP payment amount.”

The Initial Statement of Reasons says as an alternative to eliminating the OWCP value units, the division could create a formula specifically for these codes that have the 1.25 conversion factor that would be similar to the formulas used to calculate base maximum fees for procedures performed in non-facility and facility sites.

“However, this would add another layer of complexity,” the administration said. “In light of the many administrative changes needed to implement the RBRVS-based fee schedule, the acting administrative director has rejected this alternative at this time because the burdens outweigh the potential benefits.”

Suzanne Honor-Vangerov, former head of the DWC Medical Unit, an associate attorney for Floyd Skeren and Kelly and a regular instructor on medical billing for WorkCompCentral Education, said in written comments submitted on Wednesday that there are 1,012 codes in the RBRVS fee schedule that use OWCP data.

“Of these, 582 would be inappropriately priced using the original methodology adopted with the fee schedule and the rest would have been fine,” she wrote. “By making all of these codes payable ‘by report,’ you create the possibility of disputes over the value of the service, remove them from the independent bill review process and put them back in the hands of the judges who are ill-equipped to determine the value.”

In the WCRI webinar presentation, Yang said, "We do find that if you choose a (Medicare) 'cost-plus' model … the cost growth is more predictable than with charge-based fee schedules."

In any medical fee regulatory environment there are winners and losers. Policy makers have to weigh numerous considerations in the attempt to deliver value.

It's not an easy job.

IMR: DWC Get Out of the Way

What is the purpose of California's Independent Medical Review?

I have to ask myself this question in light of the most recent proposed changes to Utilization Review/IMR rules published by the Division of Workers' Compensation (a whopping 75 pages long, albeit inclusive of all changes since origin).

What causes me to pause is that the new amendments would allow a medical reviewer to, “issue a determination as to whether the disputed medical treatment is medically necessary based on both a summary of medical records listed in the utilization review determination,” and additional documents submitted by the employee or requesting physician.

In addition, the latest amendments reverse the order in which documentation is mandated - prior versions of the regulations said the claims administrator shall provide the documents. This version provides that the IMR entity shall RECEIVE documents. I don't know why this was done, but to me it seems bass-ackwards.

Finally the pending amendments would allow the DWC administrative director to determine that an IMR decision is not valid because the case should not have been deemed eligible for review in the first place. The rules would say the director can vacate an IMR determination at any point unless an appeal has been filed with the Workers' Compensation Appeals Board or the time to file an appeal has expired.

IMR was statutorily authorized by Labor Code section 4610.5, added via SB 863.

LC 4610.5 provides a list of the documents that are mandatory for an IMR to occur:

......

(l) Upon notice from the administrative director that an independent review organization has been assigned, the employer shall provide to the independent medical review organization all of the following documents within 10 days of notice of assignment:

(1) A copy of all of the employee's medical records in the possession of the employer or under the control of the employer relevant to each of the following:

(A) The employee's current medical condition.

(B) The medical treatment being provided by the employer.

(C) The disputed medical treatment requested by the employee.

(2) A copy of all information provided to the employee by the employer concerning employer and provider decisions regarding the disputed treatment.

(3) A copy of any materials the employee or the employee's provider submitted to the employer in support of the employee's request for the disputed treatment.

(4) A copy of any other relevant documents or information used by the employer or its utilization review organization in determining whether the disputed treatment should have been provided, and any statements by the employer or its utilization review organization explaining the reasons for the decision to deny, modify, or delay the recommended treatment on the basis of medical necessity. The employer shall concurrently provide a copy of the documents required by this paragraph to the employee and the requesting physician, except that documents previously provided to the employee or physician need not be provided again if a list of those documents is provided.

......

That's a lot of potential records, but let me make this easy for the reader.

The first and most important word in this entire sub-section is "SHALL," as in SHALL PROVIDE.

The second most important word is "ALL," as in "ALL OF THE FOLLOWING DOCUMENTS" and "ALL OF THE EMPLOYEE'S MEDICAL RECORDS."

There is nothing in that section that authorizes an IMR decision based upon a summary of records.

Section 4610.6 governs the conduct of an IMR.

There is nothing in that section that permits any review based solely on a summary of anything. Indeed, subsection (b) of 4610.6, while allowing review of numerous "other" documents and relevant information provided presumes that there will be a complete record in that subsection (e) requires citation to "the employee's medical condition, the relevant documents in the record, and the relevant findings associated...."

Subsection (g) of 4610.6 makes the findings of the IMR the determination of the Administrative Director, so I suppose that there is a remedy for the affected injured worker to appeal when the AD summarily denies UR based on an incomplete IMR record, or an IMR request is denied due to lack of documentation since the first reason given for appeal is "The administrative director acted without or in excess of the administrative director's powers."

But why even go there? Doing so completely defeats what I understand to be the purpose of IMR - which is to expeditiously and finally make a determination of medical necessity for a proposed treatment (for a whole year by the way, so that at least the request can then be shifted over to group/general health if that's available, or maybe MediCal... but that's another post).

If the parties are going to be required to appeal a faulty decision of the AD then it serves no one any purpose. The reason for IMR is to alleviate judicial intervention and while an appeal doesn't take the matter back to the adjudication level it does unnecessarily delay the treatment decision.

The proposed rules entertain concepts that are not part of SB 863, are not necessary to IMR functionality, and do not further the concept of expeditious review of medical decisions.

Let's stop fooling around. This really isn't a difficult proposition. The code is clear - if the employee disputes a UR determination then the employee requests IMR. At that time ALL relevant records MUST be delivered to IMR by the employer/carrier within the prescribed time frame.

Any failure in that regard is simply a matter of delay and is covered by 4610.5(i):

"(i) An employer shall not engage in any conduct that has the effect of delaying the independent review process. Engaging in that conduct or failure of the plan to promptly comply with this section is a violation of this section and, in addition to any other fines, penalties, and other remedies available to the administrative director, the employer shall be subject to an administrative penalty in an amount determined pursuant to regulations to be adopted by the administrative director, not to exceed five thousand dollars ($5,000) for each day that proper notification to the employee is delayed. The administrative penalties shall be paid to the Workers' Compensation Administration Revolving Fund."

Note that the code says "has the effect of delaying." Not that there was a delay, not that there is a complaint of delay, but that the action of the claims administrator has the EFFECT of a delay.

Boom - penalty!

It really is that simple. At least the proposed regulations do recognize these penalty issues, but with pages of various complex penalty situations.

We have a great tendency in California workers' compensation to make things as unnecessarily complex as possible. 75 pages of regulations to implement the relatively simple concept of UR and IMR is just out of control.

If you can read these without getting a headache then bravo for you. I'm going back to bed though - my head hurts...

Comp IS Complicated

Lawyers that do workers' compensation litigation are often looked down upon by their civil practicing brethren; the practice of workers' compensation law is viewed as "not real law" because of its administrative nature and limited scope of inquiry.

This is true notwithstanding that workers' compensation was the first specialty practice recognized by the California State Bar.

Of course we in the workers' compensation bar get good chuckles when our civil law kin attempt to play in our sand box as they negotiate with the rules of civil procedure ineffectively and get stymied by terms like maximum medical improvement, concepts like MPN, and the calculation of permanent disability indemnity.

So it would also come as no surprise that the civil courts likewise have difficulty understanding the principles and practice that comprise workers' compensation law.

In New York the state's highest court performed an unprecedented about face in recognizing that it had made an error in applying the doctrine of collateral estoppel from a workers' compensation case to a related civil case.

To the uninitiated, collateral estoppel stands for the concept that an issue litigated in one forum need not be re-litigated in another forum arising out of the same set of facts and circumstances. This doctrine was established for purposes of judicial economy.

Jose Verdugo was walking down a street to make a food delivery on Christmas Eve in 2003 when a four foot by eight foot sheet of plywood came dislodged from a construction site on the 50th Floor of a Manhattan skyscraper and landed on his head.

Ouch.

Verdugo received benefits for injuries to  his head, neck and back, as well as for post-traumatic stress disorder and depression.

The insurance carrier for Verdugo's employer moved to discontinue his benefits in December 2005, and an administrative law judge found that Verdugo had no disability from his accident after Jan. 24, 2006 and that he required no additional medical care after this date. 

Verdugo sought administrative review, but the Workers' Compensation Board Panel upheld the ALJ's ruling.

In the meantime, Verdugo had sued the building owner, Seven Thirty One Limited Partnership, in 2004.

Following the board's ruling in the work comp case Seven Thirty One argued that Verdugo could not recover any lost earnings or medical expenses after Jan. 24, 2006 in his personal injury action against it.

New York County Supreme Court Justice Carol R. Edmead agreed that the board's ruling provided a definitive determination that Verdugo's documented and continuing injuries were not proximately caused by the December 2003 accident.

The Appellate Division's 1st Department reversed Edmead in 2011, stating that the board's determination of the date that Verdugo's disability ended did not conclusively establish his disability for purposes of the personal injury action because the determination of the date his disability ended was a finding of "ultimate fact."

A finding of ultimate fact is a factual conclusion arrived at based upon the evidentiary facts in a case, and is imbued with policy considerations as well as the fact-finder's expertise. Under New York law, a finding of ultimate fact cannot serve as the basis for the application of the doctrine of collateral estoppel.

In February, the Court of Appeals reversed the Appellate Division.

Since the board had already evaluated Verdugo's wage loss, ability to work, and medical expenses after his injury, a majority of the high court said he could not litigate those issues anew in his personal injury action.

Judge Eugene Pigott was the lone dissent on the Court of Appeals. She said that since the comp proceedings and the civil action involved different inquiries and evidentiary standards, the outcome of Verdugo's comp case should not be controlling in the proceedings for his personal injury suit.

On rehearing the rest of the justices on the Court of Appeals agreed with Pigott.

And that makes perfect sense.

The workers' compensation hearing is very limited in its scope of review. There can be no jury trial in New York Workers' Compensation claims (and in most states), and the rules of evidence do not apply in comp in the same way as in civil proceedings.  

There are also time constraints on depositions and discovery in a workers' compensation claim that do not exist for tort actions.

Further, in comp, a worker's choice of medical providers is limited, and medical treatment guidelines dictate a provider's ability to treat a comp patient. Such restrictions are not imposed on tort plaintiffs in most cases.

The fact that the Court of Appeals reheard the case and also reversed itself is nearly unprecedented - this doesn't happen very often in any state.

And, frankly, it's a good thing as this case could have set bad precedent. 

The earlier Court of Appeals ruling could in fact jeopardize workers' compensation in New York because it would introduce a clear disincentive to file for benefits - losing the ability to seek appropriate civil redress from the ultimate tortfeasor.

The ruling is not a game changer in New York law, as the case is fact specific.

But it demonstrates that even the highest level of scholarly legal thought can get work comp wrong.

Wah, Wah, Wah

Everybody has to get their share.

At least that's the message that I got out of the latest study from researchers at National Institute for Occupational Safety and Health in their study just published by the Journal of Occupational and Environmental Medicine.

According to them, accepted workers' compensation claims that do not result in medical payments could be costing group health insurers at least $212 million a year because folks who don't get their treatment through work comp for their work injuries or illnesses do so through their group health provider.

Claims that do not result in medical payments through work comp are referred to as "zero-cost claims" in the study.

The researchers' analysis of more than 12,000 claims from 2002 through 2005 revealed that 15.9% of the claims were zero-cost claims. Claimants with zero-cost claims were more likely to use group health insurance services and incur more group health costs.

"In the three months before an occupational injury, 53.9% of workers with positive-cost workers' compensation medical claims and 61.6% of workers with zero-cost workers' compensation medical claims used the outpatient group health insurance at least once," the study says. "Within three months after an occupational injury, group health insurance utilization for outpatient services increased to 61.2% and 74.1% for workers with positive- and zero-cost workers' compensation medical claims, respectively."

In addition, one of the study's most significant findings is that group health insurance costs increased after a work-related injury, regardless of whether the workers' compensation claim resulted in any medical payments.

Claimants with zero-cost claims used group health insurance 20.3% more after their date of injury, which created 400% more group health costs. Meanwhile, claimants with positive-cost workers' compensation claims used group health services 13.5% more after their date of injury, creating a 225% cost increase.

The differences could be due to the fact that zero-cost claims have no workers' compensation medical benefits payments, whereas positive-cost claims may be creating more group health costs due to "under-compensation," the authors wrote in the study.

According to IBISWorld’s Health & Medical Insurance market research report total revenue for the health insurance market is $620 billion.

So while $212 million may seem like a lot, it is only 0.003 percent of the total revenue taken in by the health insurance industry.

In other words, a drivel.

In the meantime the health insurance industry drives workers' compensation costs up through its subrogation efforts. In California, for instance, Kaiser Health System and Anthem Blue Cross are the number 6 and 7 largest lien filers in the state system by volume.

And of course there are studies suggesting that workers' compensation takes on its unfair share of non-industrial medical care because the injured or ill don't have medical insurance or can't afford the care.

Which is why all of these "cost-shifting" studies are ridiculous and highlight the insanity of our fractured medical provision systems.

Maybe the answer isn't "24 hour care" or "universal coverage" but there has to be some way of getting over this finger pointing and cost shifting.

In the grand scheme of things the 0.003 percent of medical care that should have been the jurisdiction of work comp but is paid for by group health doesn't amount to a hill of beans - in the end it us: you, me and the rest of society that eventually pays for all of this anyhow.

To us, it really doesn't matter where the coin comes from because ultimately it's out of our pocket anyhow, whether in the form of higher premiums, higher taxes, higher medical fees, higher consumer prices, etc.

We all pay.

How that money is divided up at the back end is just more special interest pandering.

So group health pays more than it should for medical treatment.

Wah, wah, wah.

The industry should rejoice that this special interest pandering creates more jobs within the system, thereby creating more insurance premium, thus more "capacity" to handle more claims.

Want to stop cost shifting? Take down the walls between the systems - voila, no shifting...

Delay Or Deny At Your Risk

There are so many reasons why both employers and workers feel that workers' compensation is "broken" or doesn't work.

Peter Rousmaniere, who is beginning work this week for WorkCompCentral, suggests in his column reviewing two studies on perceived delays in medical treatment that delay may arise as much from indifferent doctoring skills as days elapsing on the calendar. 

An employer consultant relayed to me a factual scenario indicating another cause of this perception - standard claims administration protocol, which is defensive in nature as opposed to being aggressively pro-active.

Rousmaniere cites a couple of studies in his column. A Texas Department of Workers' Compensation survey of injured workers documents wide discrepancy in perceptions, but also notes that up to 50% of all survey respondents complained of some delay in receipt of treatment.

Another study cited by Rousmaniere conducted by Harbor Health, which specializes in designing workers’ compensation provider networks, looked for differences in claims outcome, including medical cost and litigation rates, and if surgical treatment happened early or late in the course of treatment.

Harbor Health found that early surgery in carpal tunnel cases (earlier than recommended by treatment guidelines) produced slightly more cost in medical expense but much less cost in indemnity expense.

Let's put these findings into context.

Assume a 28 year old male worker who complains of "numbness, tingling and pain in both hands for the past year or so" and that "IW states that he thinks he has carpal tunnel syndrome."

First thing that is going to come to mind for most claims administrators is, "bull!" 28 and male do not fit the normal risk demographics for carpal tunnel syndrome, and the fact that the employee said he "thinks" that he has carpal tunnel suggests that he is looking for a claim.

However we don't KNOW that! All we know is that there is a worker with a complaint. The complaint is some physical symptom presentation that doesn't make biological, anatomical or medical sense.

But a claim was made.

Do you deny? Do you delay? Do you accept and just get the ball rolling?

What do YOU do?

My guess is that most of you would say issue a delay letter and begin investigation in order to protect your legal position.

Note that you are protecting your LEGAL position - not the employment position, not the social position, not the psychological position, not the medical position.

Immediately you have postured defensively.

What is this investigation going to cost you? In terms of actual out of pocket expense, in terms of ongoing liability for indemnity and disability, in terms of potential future medical expenses?

How about lost productivity on the factory floor, or damaged morale within employee ranks? What about over time for replacement workers?

Why gate-keep? Why engage in trying to deny rather than getting the worker immediately and without question to a doctor?

Yes, there is paper work to complete, and the normal three point contact needs to be initiated as well as the normal investigatory activities - but the immediate response should be to assist that employee file the claim, immediately get that employee to a doctor (the employer should facilitate that engagement), get human resources involved (if there is an HR department) to get more information about what is REALLY going on with this employee (as noted, the risk factors don't add up) and make sure that this employee KNOWS that his needs will be met.

Overboard? Taking on a claim for which there may ultimately be no liability?

Perhaps.

But how often do denied claims really, really stay denied? The answer: Only until the worker gets himself to an attorney who knows how to work the system. And then claim costs really escalate.

The perception in delays with workers' compensation medical care is because we facilitate those delays by being on the defensive as soon as a workers says they aren't feeling good, or complain of some symptoms that they relate to their work.

The Texas and the Harbor Health studies cited by Rousmaniere suggest that we can control such perceptions by being aggressive in getting the claimant to a doctor RIGHT NOW, and just taking care of the claim.

If in fact there is industrial causation then the employer/administrator owns that claim and the earlier it is taken care of the cheaper it will be.

And if in fact there isn't industrial causation then at least the employee was shown by the employer that there is a caring attitude and the result should be a more engaged, happy employee on the line.

If that employee isn't happy, then there are other remedies for dealing with a less than satisfactory employee outside the workers' compensation system, and human resources has the tools for that.

Copy Fee Paralysis

I'm a free market believer.

In general I have faith that any given market will deliver goods or services at fair prices based upon the relationship between supply and demand.

This relationship is subject to various factors that can affect either supply, or demand, or both, but in general given any particular good or service a market, assuming sufficient competition, will find a point where value is determined by the market participants (buyer and seller).

This is because in the vast majority of markets the demand part of the equation is voluntary.

For instance, you may not really need a new car right now, but because a lot of people may be thinking the same way you are, prices for new vehicles go soft so you have more negotiating power.

Or the supply of fuel may be constricted because of refinery limitations and you need that fuel to power your new car to work or to take the kids to school so you pay a little bit more for that fuel than you would have considered last week.

When I was young I used to think that the theories of market based economics was equally applicable to workers' compensation.

What I didn't appreciate at the time was that workers' compensation itself is not a voluntary market. Workers' compensation is, in general, mandated by law (except in Texas).

Workers' compensation is what we call a regulated market. The reason it is regulated is because the requirement to maintain workers' compensation is mandatory so the consumer doesn't have a whole lot of choice.

Yes, there is some difference in pricing, but when it really comes down to the bottom line, the consumer (read employer) has no option and must purchase some sort of coverage.

As a consequence, many things in workers' compensation are the subject of micro-regulation or management.

Elements of supply in the workers' compensation industry must be artificially regulated because there is always demand - forced demand due to the mandatory nature of work comp.

Because this demand is artificial it is easy for the suppliers of goods and services to inflate pricing without market repercussion.

Within a regulated market, though, market economics still come into play, but in a different sense. Competition is defined in different ways, typically through goods or service quality, as opposed to quantity, though at certain price points quantity (read supply) may be affected too.

This is easily seen in the latest regulatory fight in California over photo-copy service fees.

SB 863 mandated the Division of Workers' Compensation come up with a fee schedule for copy shops because the perception by the drafters of the bill was that this was an area of abuse.

Never mind that copy service fees constitute less than 1% of claim costs - because it is unregulated in a regulated market the perception was (and perhaps still is) that the copy service industry was taking payers to the cleaners without delivering any value to the system.

There are essentially two kinds of copy service firms - those that cater to payers and defense attorney firms, and those that cater to applicant attorney firms. They have different cost structures because of various market dynamics and consequently their fees vary greatly.

When DWC announced that it was going to study copy service fees to develop a fee schedule the defense copy firms fully supported the idea, arguing that applicant copy firms were grossly over billing and that their fees needed to be tightly constricted.

This tune changed with the first proposal came out of the Berkeley Research Group, hired by the Commission on Health, Safety and Workers' Compensation, to study copy fees and come up with a proposal.

Turns out that BRG's proposal was also going to ding defense copy shops.

Now the two sides, defense and applicant shops, have banded together to argue that neither side can stay in business with the fee proposal.

Funny how combatants sometimes end up as bed buddies...

Anyhow, there have been meetings with the top people all involved to come up with a compromised solution that will keep copy shops in business, supply the records needed by system participants, and reduce that 1% of claims costs even further.

But it's been well over a year since SB 863 was unleashed and nearly a year since most of the law became effective.

We still don't have a copy fee schedule.

There have been conference calls, meetings, debate, proposals, solutions - and no one is telling the outside world what the deal is.

Reports indicate that there is no way any fee schedule will be in place by the end of the year, which is a shame. The resolve to get the fee schedule done is compromised by the interests of the copy service industry.

Here's where market economics can come into play: the DWC should stop listening to all of the "stakeholders" (as they describe themselves even though EVERYONE involved other than employers and injured workers are "vendors").

That's right - DWC should just act. Forget all of the arguments, the whining, the "we'll go out of business" talk. There will be survivors, and some will be buried with their copy machines.

The government issued a mandate - regulate this little tiny market.

So get the job done. DWC should stop pandering to copy shop special interests. There are plenty of proposals on the table. Pick one.

Everybody else will figure it out once they know what the rules are. There will be losers, and there will be winners.

In the meantime the system is held captive due to inaction. Payers stop paying, vendors stop vending. Paralysis is good for no one.

Football, Common Law and Disruption

Yesterday I opined that disruptive social technology would one day result in the forever changing workers' compensation as we know it. I don't know how, and I don't know when, though I suspect we're in the midst of this disruption right now.

It just takes a little longer for disruption to occur to social systems due to entrenched interests.

Since the beginning of workers' compensation there has been this tension between compensable and non-compensable. There are times when either an employer or employee wants a claim to be compensable under the comp system, and it isn't; and there are times when an employer or employee doesn't want a claim to be compensable, and it is.

All of the recent cases, settlements and legislation in the professional sports industry typifies the pressures underlying this conflict.

As you know the National Football League entered into an historic settlement with the player's union to resolve claims of traumatic head injury, finally acknowledging that perhaps the game may in fact lead to serious deterioration in brain function over time.

And the NFL has been instrumental in getting laws passed around the country to restrict recognition of trans-jurisdictional adjudication and continuing trauma claims.

So in one instance the NFL capitulated to the fact that there was no workers' compensation protection for the brain injury claims against it, and in the other instance it was worked diligently to create a web against such liability in the future.

The one thing that these actions fail to fully account for is that workers' compensation is not a natural creature; i.e. it did not get its genesis in what is known as The Common Law.

Common law, as we learn in law school, is largely based on social norms handed down through the centuries from our forefathers in a distant land. The Common Law recognized how society worked and was built upon case law - the recordation of facts in a case, application of social logic to that case, and publication of the result or decision.

In other words, case law is what created The Common Law, because there is no way to predict all of the myriad of factual scenarios that might comprise a "case" or claim.

Bringing this around the block, just because the NFL resolved claims against it for instigating a mode of employment that allegedly precipitates brain injury and pushed legislation to constrict the filing of workers' compensation claims doesn't mean that its members (i.e. the teams themselves) are in the clear.

Nor does it mean that the players aren't without remedy.

It simply takes someone with enough knowledge and skill to point this out and attorneys representing football players in Missouri are doing so.

Five former players for the Kansas City Chiefs are suing the professional football franchise for alleged brain injuries they suffered during their careers, jumping through a unique loophole in Missouri law that allows them to avoid workers' compensation exclusivity before it closes on Jan. 1.

Missouri allows employees to sue their employers directly for occupational diseases, something that was the product of legislative tinkering with the comp system some time ago at the bequest of employers who didn't think they should be paying for disease when the origin is not indisputable.

In 2005, state lawmakers amended the Missouri Workers' Compensation Act to narrow the definition of a compensable injury as being one that happens as a result of an "accident."

The state Supreme Court in 2009 construed this change as meaning that workers could recover under the common law for occupational disease claims because an occupational disease was not an "injury" under the act's newly limited definition.

Two of Missouri's three intermediate appellate courts have since issued decisions reiterating that injured workers could file civil suits for occupational diseases. The Western District Court of Appeals issued a decision in 2011 in the case of State ex rel. KCP&L Greater Missouri Operations Co. v. Cook, and the Eastern District Court of Appeals came to a similar conclusion in the case of Amesquita et al. v. Gilster Mary-Lee Corp. on Sept. 10.

The plaintiffs assert that the Chiefs, as an employer, had a duty to its players to "keep abreast of the scientific developments relating to brain trauma which its employees were regularly exposed, and "to notify, inform and educate plaintiffs and the public of any potential long-term risks of repetitive head trauma."

Fair enough.

Again, workers' compensation is not a creature of natural law, and because it isn't the obliquity of its application will be challenged time and again where either the employer or the employee feels short in the bargain.

When this happens the nature of workers' compensation changes. Loopholes and exceptions are created. This is why we have swiss cheese law in workers' compensation.

These law suits are disruptive. They challenge the status quo.

These suits do not, by themselves, constitute the disruptive social technology, but I think they are the harbinger of things to come.

Just as workers' compensation itself was a disruptive social technology 100 years ago, challenges in the professional sports world are putting pressures on the current system that are provoking change.

To read the complaint, click here (subscription to WorkCompCentral required).

Disruptive Technology

Amazon.com founder and CEO, Jeff Bezos told 60 Minutes correspondent Charlie Rose candidly that eventually the disruptive company that reinvented retail will itself, at some point in time, become the subject of some other disruptive technology.

Bezos quipped that he hoped it was after he was dead when Amazon is disrupted into the history books, but Bezos was quite clear that in his opinion every company eventually succumbs to disruptive technology, that one can not forecast when that will happen and that nearly every one can not see it coming:

Jeff Bezos: Companies have short life spans Charlie. And Amazon will be disrupted one day.

Charlie Rose: And you worry about that?

Jeff Bezos: I don’t worry about it 'cause I know it’s inevitable. Companies come and go. And the companies that are, you know, the shiniest and most important of any era, you wait a few decades and they’re gone.

Disruption occurs, and it occurs faster more than ever because technology has caused human intelligence and understanding to leapfrog all prior generations.

Indeed, disruption occurs to systems too. Systems don't die as quickly as companies do. Disruption takes more time with systems, but disruption to systems DOES occur, and generally in dramatic fashion.

Systems disruption is an area of study in military study.

Military thinkers like to interrupt social networks and physical networks - they focus on attacks to key components that integrate the facilities of social interaction.

Al Qaeda's strategy over the long term is based on systems disruption. Think 9/11 and the Twin Towers. That single event changed a number of American systems forever: travel, event attendance, banking, privacy, and on and on.

Our entire way of life was completely, and forever, disrupted - and not in any positive way other than the fact that 9/11 showed us just how vulnerable we were as a country and as a society.

So why shouldn't workers' compensation likewise become disrupted?

We are seeing signs of this disruption already with the passage of Oklahoma's reform implementing a form of voluntary work protection benefits.

This sort of disruption takes time to occur because the systems subject to attack are deeply entrenched through political and financial controls.

But eventually those who harbor that control die, as Bezos pointed out.

That's the bottom line.

Consequently such control gets divided and democratized so that others can share in the control.

When those controls are democratized, spread out from a single control unit to several control units, the power that was ensconced in that single unit gets divided, diluted, compromised.

It is this power that maintains the system, and when it is compromised the system itself dilutes, making it vulnerable to disruption.

And that is what we are seeing with workers' compensation. The power bases that were fundamental to the underlying structure and thought of workers' compensation have been compromised, diluted, and are now, more than ever, subject to disruption.

The fact that people complain about a "broken system" or that there is even any debate at all about a "broken system" is symptomatic of this state of vulnerability.

I suspect that Oklahoma's forging ahead with this disruption to the normal workers' compensation pattern won't take that long to facilitate other disruptive social technologies.

Not every state is going to implement some version of opt-out strategy. Most say, for instance, that there is no way in the world that California would succumb to any attempts to allow employers to "opt out."

But who said that opting out of workers' compensation is the ONLY socially disruptive technology that can occur?

I'm with Bezos and when I put my chips down on the table I going with the long bet - that workers' compensation itself will succumb to socially disruptive technology eventually.

I may not be around to actually witness it, but I can feel it. It is inevitable. You will either be on board during the transition, or you will be left behind to die.

Fraud Notice???

I got my annual notice from the California Division of Workers' Compensation about fraud.

This notice is mandated by Labor Code section 3822, which states:

The administrative director shall, on an annual basis, provide to every employer, claims adjuster, third party administrator, physician, and attorney who participates in the workers' compensation system, a notice that warns the recipient against committing workers' compensation fraud. The notice shall specify the penalties that are applied for committing workers' compensation fraud. The Fraud Assessment Commission, established by Section 1872.83 of the Insurance Code, shall provide the administrative director with all funds necessary to carry out this section.

Let me just get to the bottom line - this notice is a ridiculous waste of money and resources. The notice smacks of political pandering and does nothing to prevent, curtail or even limit fraud.

The notice I received focuses on Employer Fraud but also warns of all sorts of other fraud.

Employer Fraud is described in the notice as paying less for coverage by under-reporting payroll, misclassifying employees, fudging on job descriptions, paying directly for medical treatment that should otherwise go through work comp (though there are plenty I know who would prefer that to being subjected to work comp treatment!), etc.

The notice further states that it is a felony to make, or cause to be made, some misrepresentation in an attempt to deny or limit claim liability.

There are all sorts of other fraud examples in the notice, and per the Labor Code, the penalties are outlined in the notice.

Listen, I know that fraud can be a problem. We see fraud in all sorts of systems, not just work comp. If there's a system then there's someone who figures its easier to commit the fraud and risk punishment than it is to be legitimate.

Because the risk is outweighed by the reward.

It's nice that the Legislature felt it important that everyone in California know about workers' compensation fraud because, as the notice says, "it harms employees by undermining the perceived legitimacy of all workers' compensation claims."

But I get a notice from my insurance company every year about fraud. Sometimes I get a poster with nasty looking n'er-do-wells posing as the criminals.

There's a fraud notice on every Application for Adjudication of Claim.

There's constant media stories (and WorkCompCentral is not immune to these stories) about someone, somewhere committing some sort of workers' compensation fraud.

So we need ANOTHER reminder?

It's almost like the entire workers' compensation process is undermined by all of the fraud notices - I mean, fraud must really, really be bad in workers' compensation to justify all of these warnings about fraud.

It seems to me that the perceived legitimacy of all workers' compensation claims is undermined by all of these fraud notices because why would we be getting all of these warnings if nearly every claim were in some way fraudulent?

My guess is that the vast majority of these junk mail pieces (it came with some other Employment Development Department notices that are likewise junk) get thrown in the trash without any consideration whatsoever anyhow.

Maybe I'm just cranky and getting old, but I don't need to be reminded of workers' compensation fraud and my guess is that most people in California don't need to be reminded either.

Reverse Roles And Take It In

I hear two opposing arguments about workers' compensation all of the time.

One camp says that workers' compensation is broken, doesn't do what it's supposed to do, costs too much and delivers too little.

The other side says stop the whining, buck up and use the system; that it is what it is and won't get any better and works just fine if you're willing to put in the effort.

Both sides of the debate have some merit, and both are likewise erroneous - it all depends upon how one fits into the system, and what one's expectation is from the system.

The argument that an employer should just pay claims and not worry about the cost because it gets passed along to the ultimate consumer ignores that fact that there are plenty of competing business owners who are going to cheat or otherwise fudge their workers' compensation obligations for a competitive advantage.

In that sense, the cost of any claim isn't passed along to the consumer because the business that tries to do so is driven out of business by the others seeking the unfair advantage.

And for the majority of claims workers' compensation does work just fine - so long as there isn't any lengthy period of disability or medical treatment and expense that fall outside guidelines.

We pass laws and implement regulations because we need to deal with the outliers. In doing so we sweep the vast majority of the workers' compensation experience into these laws and regulations even though they really shouldn't be so constricted.

When I first started practicing workers' compensation defense law our firm required all of the attorneys to take applicant/injured worker cases where there was no conflict of interest. The purpose was to make sure the attorneys had experience dealing with the "other side."

Part of this was to ensure that the attorneys had compassion for what was going on with the injured worker. Part of this was to provide the education that can only be obtained by going through what one must go through in the system. And of course this would translate into a competitive advantage because experience allows us to have a deeper understanding of how everything fits together.

The real advantage as I look back on that experience some 25 years later is that it helps with the understanding that not every claim is bad or fraudulent, and not every claim is meritorious.

Some claims are just paid. Some claims are fought hard. Sometimes we pick the wrong battles, and other times it was obvious that the right battle was fought.

But most claims are just what they are - an injury that requires some medical attention and a couple of bucks to get through the tough time. They fit within the system and the system works just fine.

When we think of the gross volume of claims that go through workers' compensation it is a wonder things work at all, let alone as well as they do.

We make changes and adjustments to the system, and to our handling procedures, to accommodate those that aren't within the four corners of the system as we know it, and there are the claims that don't fit within those parameters either.

So not everything works as intended, and not everything is as bad as it seems. There's always room for improvement, but we don't need to improve everything all of the time.