Tuesday, March 18, 2014

North Dakota Cold At Comp

North Dakota had one of the lowest workers' compensation rates in the country, according to a 2012 analysis by the state of Oregon. North Dakota’s premium rate was 53% of the median state rate.

Some might attribute this to the fact that North Dakota remains one of the few states left where the state is not only the insuring entity but also the claim administration entity, controlling the entire process of insuring and managing work place injuries from start to finish.

The state has been growing exponentially due to the new oil and gas boom, recently passing Alaska to become number two in oil and gas production just behind Texas.

In fact Associated Press reported today that the state is advertising "Find the Good Life In North Dakota" because it has about 25,000 jobs that need to be filled due to the oil boom there.

The state has the lowest unemployment rate of any state, at less than 3%, and its population, roughly half that of the City of Los Angeles, is swelling at a pace unknown to any state since before the Great Recession.

Oil and gas production is a high risk, high wage industry which of course translates to high premiums for the businesses doing that work.

According to the Bureau of Labor Statistics for the US Department of Labor, North Dakota experienced 64 fatal work incidents in 2012, which is 20 more than the year before, and one of the highest occupational fatality rates of any state. The Bureau reports that 39 were from transportation incidents, accounting for 61 percent of all transportation fatalities in the United States.

So allegations that there is meddling on the part of state attorneys with the system should be taken seriously since the conflicts of interest are obvious, and the health and safety of workers is at stake.

This is what the state's medical director for the North Dakota system has alleged.

According to WorkCompCentral this morning, Dr. Luis Vilella spelled out his complaints in a Jan. 14 letter to Workforce Safety & Insurance Director Bryan Klipfel, which was first obtained in heavily redacted form by the Forum News Service though an open records request.

Dr. Vilella sent the lettter to Klipfel because of an email exchange last November between Anne J. Green, a senior WSI lawyer, and Douglas W. Gigler, an outside lawyer for the Nilles Law Firm who represents WSI in hearings involving workers’ appeals of their denied claims.

“Both of the statements from Attorney Green and Attorney Gigler are distorted and demand a response from me as WSI Medical Director and the physician who testified on behalf of WSI,” Vilella wrote of the email exchange.

“The case I describe is a clear case of ‘if you can’t win on the data, impugn the integrity of the physician,’” Vilella’s letter continued. “Once again I am confronted with the corrosive attitude of individuals to control and limit the dissemination of medical information, information that is essential to the fair and impartial adjudication of claims.”

Sources interviewed by WorkCompCentral said that the state uses "doctor mills" to control costs by issuing defense favorable reports in order to keep claim costs down and limit the amount of treatment and indemnity.

Allegations of this strategy is not unknown to those of us in "private" work comp, but in a state monopolized system seriously calls into question the fiduciary responsibility an administration assumes.

Vilella has been at odds with administration in the past.

According to Prairie Business, a recent performance review of Vilella was critical of an increase in the use of outside independent medical examinations.

Prairie Business reports that the use of independent medical examiners rose 29.5 percent from 2011 to 2013, from 105 to 113, and that 120 outside medical reviews were projected for the coming year. Vilella was criticized for this since the increase came under his watch.

Vilella disputed that he was the cause of WSI’s increasing reliance on independent medical examiners stating that most requests come from claims adjusters or from WSI’s lawyers.

Vilella wrote that it was “disheartening” that “inaccurate and misleading statements” were used in his performance appraisal.

Sedgwick Claims Services has been retained to audit the state's system for state auditor Robert Peterson. Vilella wrote Klipfel that he may not have been included in the audit of medical issues had he not complained earlier.

Such an audit could vindicate Vilella, and could also lead to some serious changes at WSI.

I often point to California with its idiosyncrasies and complex nature. North Dakota is often pointed to as an efficient, simple system with a Labor Code book about one-twentieth the size of California's.

But if a monopolistic system is operated as Vilella suggests, I'll take California's complexity.

Fairness to employers, AND WORKERS, is important to the credibility of any workers' compensation system.

No comments:

Post a Comment