Tuesday, March 31, 2015

Bragging Rights

"The fish REALLY was THAT big!"

In perhaps the biggest news of the year in California workers' compensation is the real possibility that the Workers' Compensation Insurance Rating Bureau may ultimately recommend a near double digit mid-year rate decrease.

If this occurs this would be the first mid-year filing since 2012 and the first recommended decrease since 2007.

In 2012, the WCIRB recommended a 9.1% increase in the advisory pure premium rates effective July 1.

In 2007, the Rating Bureau recommended an 11.3% rate reduction in the middle of the year.

Mid-year filings are important to the insurance industry because they have been a consistent barometer of where the market is going. In most years, when the WCIRB submitted a mid-year filing the recommended change has been close to what gets recommended in the WCIRB's subsequent annual filing.

What's holding up any recommendation at this point is finalization by actuaries of certain loss adjustment expenses.

Giovanni A. Muzzarelli, a senior casualty actuary for the Insurance Department, told WorkCompCentral Monday the loss-adjustment expense methodology pointed to an approximate 5% increase in those costs.

But taken against the 13% decrease indicated by trends on benefit costs, and accounting for the fact that loss adjustment expenses are not a direct one-to-one offset against benefit trends, "it sounds like it's ending up minus 10-ish," Muzzarelli said.

Dave Bellusci, WCIRB executive vice president and chief actuary, would not speculate on how the Governing Committee would actually vote; a vote on whether to submit a mid-year filing for 2015 when members meet today at 9:30 a.m. in Oakland, CA.

So far, here's what the numbers are reflecting:

Allocated loss-adjustment expenses, costs that can be attributed to a specific claim, increased 12.1% from 2013 to 2014.

In 2014, carriers paid $886 in ALAE per indemnity claim at the 12-month valuation point, up from $790 in 2013. The WCIRB speculates that this increase experience is related to the Workers' Compensation Appeals Board decision in Dubon I, which provided an invalidation path on independent medical reviews. Dubon II closed that hole, but issued too late in 2014 to affect the numbers.

"In addition to IMR, we saw a big spike in expedited hearings and prior to Dubon II, there were challenges to the expedited hearing," Bellusci said. "So you had this dual-track, you had to go to IMR, but you're also paying lawyers to attend the expedited hearing."
The Rating Bureau is projecting from 2013 to 2014, estimated ultimate ALAE per indemnity claim will increase 12.3%, following a 5.7% increase from 2012 to 2013.

The WCIRB is projecting the ultimate ALAE per indemnity claim will account for 19.6% of losses for policies incepting on or after July 1, 2015. The Jan. 1, 2015, pure premium rate filing projected an ALAE-to-loss ratio of 15.4%.

Unallocated expenses, those costs that are not directly attributable to specific claims, such as office rent and overhead, is now projected to be 6.5% of losses for policies incepting July 1, 2015, compared to the 5.5% ratio projected in the Jan. 1 filing.

Paid medical cost containment per open indemnity claim increased 4.7% in 2013 to $1,019 from $973 in 2012, consistent with the Rating Bureau's severity trend that assumes a 5% annual increase.

Of course, California is an open market, and carriers can rate as they please, and rates don't necessarily translate to net paid premium, which has a host of other factors more personal to an employer's actual experience.

But this news certainly gives SB 863 proponents something to brag about.

Monday, March 30, 2015

Year of Awareness

This is The Year of Awareness.

Awareness by the General Public about workers' compensation issues.

There is the series by ProPublica, with 3 installments so far, and more to come. You might not like it, but Michael Grabell and his team are accurately portraying pain points in workers' compensation.

The Federal Occupation Safety and Health Administration's review of the literature over the past couple decades also fuels the fire about the inadequacy of workers' compensation, and the spill of employer obligations onto the general taxpaying population.

Last year the Texas Tribune ran a series, "Hurting for Work" that criticized that state's work injury protection system (or lack of it).
Is this the road to enlightenment?

And a Florida trial judge has taken the position that work comp is no longer of Constitutional grade.

Now, Mother Jones has published an article it says exposes the true intent of the opt-out movement: to take a model of unaccountable diminution of benefits across the nation.

Opt-out supporters contest that conclusion and say they only want employers (in this case, only Big Business can afford the resources to opt out) to be able to provide better benefits in a more consolidated manner to their workers.

They are not, however, shy in confirming that their intent is to take opt-out nationwide, to all states.

The latest test case is Tennessee, where Senator Mark Green's SB 721 has gone through several amendments in an attempt to address critics - albeit in my opinion these amendments fall far short.

There are two major issues with opt-out, and in particular with SB 721 if it is to be used as a model: 1) capping life time medical benefits; 2) no accountability to public regulators.

Most state workers' compensation systems have a limitation on both temporary disability indemnity and permanent disability indemnity.

There is, and has been for a long time, a debate as to the adequacy of indemnity benefits to keep the paycheck-to-paycheck worker sustained during recovery and those benefits differ greatly from state to state. This debate is sure to continue regardless of what "reform" ever gets passed.

This debate also applies to the adequacy of permanent disability indemnity; whether it adequately compensates for the loss of an eye, etc. Again, where one gets hurt makes a huge difference in how much money a disability is "worth," and the debate about this adequacy will never settle.

The provision of medical benefits for the lifetime of an injured worker, however, has never been on the table - that is a topic that is simply sacrosanct, for the very simple reason that it was part of the Original Grand Bargain.

State reforms have, however, over the past two decades done as much as possible to eviscerate life time medical by requiring adherence to guidelines, by scaling based on co-morbidities, by forcing third party reviews, by trimming reimbursement and/or rebalancing fee schedules, among other tactics.

These efforts have been in reaction to perceptions that employers are unfairly paying for someone else's problem, or because of abuses in the right to lifetime medical by unscrupulous providers. Broad brush attempts to correct these issues reel in unsuspecting victims, like tuna nets capture innocent dolphins.

The Mother Jones article is critical of the lobbying efforts of the Association for Responsible Alternatives to Workers' Compensation, implying that its big company sponsorships and money spend is sinful.

It's not - it's just political reality. Just because a bunch of people with resources get together on a specific mission is not a reason to castigate either the people or the mission. It's done on both sides of nearly any debate. That's how we do things in America.

Painful as it is for this industry, though, the fact is that workers' compensation is under attack - from all sides.

Employers are sick and tired of the cost of the system and how little control they have over it. They're paying for it and don't see much if any value or return on investment.

And guess what? Workers who go through workers' compensation are likewise sick and tired over the cost of the system and how little control they have over it. They are the beneficiaries of what employers buy, but don't see much value if disputes are piled on top of the trauma of injury sequelae.

Is this the fault of us, the professionals who are tasked with administering benefits?

In part, yes.

But the larger issue is what society wants and what all this attention lately is telling me is that society wants a way to provide security to both business and workers.

In a manner that is better than what workers' compensation has devolved into.

I don't view opt-out as evil. I do view it as a necessary element in the debate about the adequacy of workers' compensation to deliver on its original promise: protect employers from economic ruin when someone gets hurt, and protect the worker who is the unfortunate victim of getting hurt.

If you take ARAWC's mission at face value, what the group wants to do is laudable. They are saying that state work comp systems no longer are a viable piece of the social contract; that private industry can do it better.

Maybe it can, if there are reasonable protections that meet the essential elements of work injury protection and that means taking care of an injury for life and not stacking dispute resolution in favor of one party or the other.

But this column isn't about ARAWC, or opt-out; it's about an awareness that is developing.

Workers' compensation used to hide in the shadows of health care and disability. Ask anyone just a few years ago about work injuries and you'd get an earful about "workman's compersation" and how a neighbor is cheating the system.

Now the public is beginning to ask: What are all these businesses doing for their pay when there's all these people that are being thrown to the curb for trash pick-up day? Why are businesses paying for services that don't seem to be delivered on time or in enough quantity? How is it that an insurance company that agreed to take care of an injured person for life can delegate that obligation to public welfare?

As I see it, the public assault on workers' compensation, the trend that is developing towards opt-out systems, and the overall malaise that seems to have settled over work comp portends a much needed, long deserved, debate.

The public is asking questions. Hard questions.

Because the public isn't seeing the value in work comp that had been promised (and delivered) for so long.

We're entering into a whole new era of Business versus Labor dispute. The Haves and the Have Nots are drawing lines in the sand.

The last time this happened the Federal government threatened imposition. It could happen again.

What we rely on for work injury protection systems will be vastly different in 10 years than what exists now. It's clear to me this is what's happening.

Less clear is what will actually exist in 10 years.

Friday, March 27, 2015

It's A Digital World

If one waits long enough opportunities appear, almost magically.

Early EAMS observers will remember this scene...
Medical records reproduction companies in California have been waiting now for 2 years to get a fee schedule.

Still waiting.

In the meantime the California Division of Workers' Compensation has come up with an alternative revenue generation program for them assuming the record companies wish to adapt and change their business models: mandating electronic medical records for the review process, specifically Independent Medical Review.

Timely submission (and more to the point, receipt) of medical records has been cited as a significant problem with the IMR process.

WorkCompCentral ran a series of articles a couple weeks ago based on a spreadsheet inadvertently obtained from Maximus Federal Services, the IMR contractor for California, highlighting the records problem.

Commentators, and the Division itself, lay a big chunk of the blame on Maximus for failing to have an adequate records management system.

Based on the spreadsheet, 6,743 IMR cases were missing medical records past the 15-day time limit for administrators to submit the documents. The records had been missing for 90 days or more in the majority of those cases.

Rupali Das, the Division of Workers' Compensation's medical director, presented statistics at Thursday's Commission on Health Safety and Workers' Compensation's review of SB 863 showing that the amount of time Maximus takes to issue a final determination letter dropped from an average of about 60 days in September last year to 24 days this month – but only in cases where complete medical records have been submitted. 

The average age for an IMR, including cases where Maximus has yet to receive records, has risen from about 60 days to 91 during the same time period.

DWC is now proposing that electronic records be mandated to hopefully eliminate this records management issue.

“One of the main issues right now is the paper process that is slowing down our (system),” Das said, noting during the meeting that claims administrators can already provide medical records electronically if they choose.

“We are working with claims administrations to encourage electronic submission of medical records,” she told the commission.

CHSWC voted to endorse the proposition and voted at its Thursday meeting to ask DWC to devote staff time to the issue with an aim toward putting out regulations.

I think this is a good idea, IF done correctly - it's one thing to mandate TRANSMISSION of electronic records, and another to mandate RECEIPT of electronic records.

Remember the key issue seemed to be failure by Maximus to match records to cases, so expert technical guidance will be necessary to promulgate effective regulations on a technical level to ensure smooth, accurate and seamless digital transactions. 

The sender has to be told what to send, and Maximus has to be told how to receive what is sent.

It occurs to me that the much-maligned document copy services have this expertise in place already; perhaps in this new age of records management these companies actually have a compelling place in the system post SB 863.

Regardless, this is a positive step towards modernizing California's system. 

My only caveat - recall all of the painful lessons from the design, development, release and maintenance of the Electronic Adjudication Management System...

Thursday, March 26, 2015

Henley's Song

Yesterday fellow blogger Bob Wilson of WorkersCompensation.com wrote that Tennessee's pending opt-out bill, SB 721, was "complete and utter bullshit."

Wilson chastised the proponent's attempt to cap medical costs at $500,000, which was recently increased from the really miserly $300,000.

As Wilson states, "That means an employee with catastrophic injuries such as paralysis or Traumatic Brain Injury will be eligible for treatment up to the point where they meet the $500,000 threshold. Then their sorry asses will be rolled to the curb, waiting with the trash. Their only hope of refuge at that point will be for the Medicare/SSDI bus to roll by and pick them up."

Curiously, a big segment of the insurance industry seems to agree.

The other day the American Insurance Association has released a statement calling SB 721 “an uncommonly bad bill” because it “eliminates an entire genre of benefits.”

“Indeed, the bill’s mandated plan benefits do not provide for any permanency benefits: No permanent partial or permanent total benefits. It eliminates lifetime medical benefits, capping medical at $300,000 [at the time of the statement, since raised to $500,000], thereby jeopardizing treatment of workers with the most serious injuries,” the statement said. “Nor are there funeral benefits, nor for ancillary benefits common in workers’ compensation systems – van and home modification, custodial care, hearing aids, and artificial limbs.”

Those concerns were recently addressed by the same amendment that increased the medical cap:
  • Permanent partial disability benefits of at least 70% of the employee’s AWW, up to 110% of the state AWW, based on the criteria of the American Medical Association’s Guides to the Evaluation of Permanent Impairment that is in effect when the employee’s impairment is rated. The benefits are subject to a whole-body maximum of 405 weeks.
  • Permanent total disability benefits of at least 70% of the employee’s AWW, also capped at 110% of the state AWW, for at least 260 weeks or whenever the employee becomes eligible for Social Security benefits, whichever is later.
  • Death benefits either three times the employee’s average annualized wages or $300,000, whichever is less. If the deceased employee does not leave a surviving spouse or dependents, however, the death benefit may be reduced to no less than $20,000. The death benefit will include a funeral benefit of at least $7,500 for burial expenses. However, any other disability benefits payable to the employee may be deducted from the overall death benefit.

The worst part, AIA says, it is the employer who determines what an occupational injury is and the appeal process is limited to whom the employer pays for arbitration - i.e. the proverbial loaded gun.

Though Green's bill was recently amended to add minimum disability indemnity rates for both permanent and temporary disability, the truth of the matter is that SB 721 plays right into recent criticisms of the evolution of workers' compensation in the general media - it distinctly and intentionally pushes an employer's responsibility onto the public sector.

For instance, permanent total disability benefits are to be paid for at least 260 weeks or whenever the employee becomes eligible for Social Security benefits, whichever is later.

An employer's failure to properly manage its safety and claims management system should not be the responsibility of taxpayers.

A Tennessee employer's opt-out insurance policy, under the present SB 721, can have limits - presumably after that money runs out then there is no insurance, and, as Wilson states, the worker is put out with the trash.

Trey Gillespie, senior workers’ compensation director for the Property Casualty Insurers Association of America, told WorkCompCentral, “They created some interesting window dressing to make the bill look better. But it doesn’t change how opt-out works. And it really doesn’t give the injured worker any additional protections.”

Part 3 of the NPR/ProPublica series critical of worker's compensation as reformed over the years has been released, with vignettes of terrible things happening to good people because of the constant attack on benefits: caps on TTD, constrictions on care, blame on pre-existing conditions, revisiting previously approved treatment.

My guess is that the industry will again attack this piece of journalism for sensationalizing the worst cases, ignoring the majority of successful cases, and vilifying carriers and administrators.

Tough - these are the cases that need to be put out into the public view because there's no excuse for them. These are the cases that for which insurance is created. These are the cases where REAL help is needed, not constrictions, obstacles or obfuscations.

This is the backdrop against which opt-out plays.

As Wilson so aptly stated, "The push for opt out is, in my opinion, a reaction to failures and shortcomings within our own system."

Exactly. Will opt-out be passed in Tennessee? I think it will - the political power is in place to make that happeh. Will opt-out spread to even more states? Probably - those that back it, Big Business, have powerful lobbies everywhere they do business and opt-out is beneficial to the bottom line. Does anybody give a rat's ass? Not until their medical treatment has been delayed to the point where disability indemnity has run out so they can't afford to undergo such treatment.

Then they can be highlighted in a ProPublica article.

"Kick 'em when they're up, kick 'em when they're down." Don Henley was writing about gossip media, but he just as well may have been singing about the uninformed masses.

Don't you think the signs are there and that the message is loud? Work comp is being attacked with legislative options and public criticism because there are too many times when it doesn't work.

I love the good things that work comp accomplishes. Unfortunately, no one wants to face the truth: there are way too many times when it doesn't work.

"Dirty little secrets, dirty little lies
"We got our dirty little fingers in everybody's pie
"We love to cut you down to size, we love dirty laundry"

Yep - Henley's song IS about work comp.

Wednesday, March 25, 2015

A Family Affair

One of the interesting things about workers' compensation law is how it can differ from state to state, and how the "arm" of the law can extend to people who may, or may not, be intended to be covered.

Indeed, exclusive remedy is a tricky fellow.

For instance, recently the Texas Supreme Court extended the protection of exclusive remedy beyond the actual employer to the insurance carrier handling a claim on the employer's behalf.

And it can go the other way too.

Last week the Kentucky Court of Appeals ruled that a worker's settlement of his comp claim didn't bar his widow from seeking death benefits after he died from his injuries.

Stephen Baytos sustained a torn thoracic aorta while lifting heavy boxes at work in February 2006.

Such an injury is often fatal, however, Baytos survived.

He settled his workers' compensation claim with his employer, the Family Dollar Stores, and accepted a lump-sum payment of $100,000 in exchange for a release of future liability.

After Baytos died in December 2009, his wife, Mamie, filed a motion to reopen his claim in order to seek death benefits.

Administrative Law Judge Richard Joiner ruled that she could reopen the claim only if she could prove that her husband's death had been caused by his 2006 injury.

When Joiner retired, Mamie's claim for death benefits was transferred to ALJ Thomas Polites. He found that Stephen's death was causally related to his workplace accident three years before and awarded Mamie death benefits.

Family Dollar appealed to the Workers' Compensation Board, which reversed. The board reasoned that Stephen’s agreement with Family Dollar prohibited Mamie from seeking death benefits, as her claim was derivative of his.

The Court of Appeals disagreed and vacated the board's decision on Friday based on a state Supreme Court case from 1930, called Brashear v. Old Straight Creek Coal Corp.

Brashear established that a surviving spouse's entitlement to death benefits is a "clear and separate right" from the worker's right to seek compensation in the first place.

Since the settlement agreement between Stephen Baytos and Dollar Store was not signed by Mamie, and the agreement did not include references to any future rights that she might have, the court found that Mamie's independent rights were not compromised.

Several states – including New Jersey, Idaho, Illinois, West Virginia, Colorado and New Mexico – share this view, the court noted.

Commentators to the WorkCompCentral story on the case say that the Kentucky court reached the right decision based on the law in that state, while others criticized it stating that it creates an unreasonable burden on employers to seek the signature of every dependent on a settlement.

So while workers' compensation may be the exclusive remedy for a worker's injury or death, that remedy may create rights and obligations that extend well beyond the actual worker.

The case is Baytos v. Family Dollar, No. 2014-CA-001053-WC.

Tuesday, March 24, 2015

Should Have Happened Earlier

The industry has taken the recent NPR/ProPublica series about workers' compensation hard.

Mark Walls of Safety National blogged a strong counterpoint. Robert Hartwig of Insurance Industry Institute published a terse challenge on the statistics. Others have lit up the various LinkedIn workers' compensation topic boards.

And the State of California's Division of Workers' Compensation has taken the series as a wake up call; perhaps some payers aren't playing nice after all...

Division spokesperson Peter Melton told WorkCompCentral reporter, Ben Miller, that a newsline it put out Thursday reminding payers and claims managers that Senate Bill 863 didn’t change their obligations to provide medical care to claimants was in response to the NPR/ProPublica investigation.
My daughter: "Look at yourself first."

The article told the story of Joel Ramirez, a warehouse supervisor in Rialto who suffered a spinal injury in 2009. Travelers paid for a home health aide for Ramirez for years, until SB 863 passed and the company allegedly cut off payments without a change in the claimant’s medical condition.

In addition to the newsline, DWC announced last week that it was auditing Travelers as a result of the story.

Other investigations have also been prompted by the series.

Retrospectively challenging old, pre-SB 863, medical awards via Utilization Review and Independent Medical Review is nothing new, folks tell WorkCompCentral.

Applicant's attorney Alan Gurvey told WorkCompCentral that he has seen the defense in many of his cases argue that SB 863 constituted a “change in circumstance” in seeking a UR/IMR combination in order to change the medical award, particularly when home health care is being provided.

Gurvey said it's simply an attempt at cost control, not an attempt to improve medical care.

“We'd had four orders after the agreement for the continuing provision of the home care and the defendant had filed a petition to terminate the agreement,” Gurvey said. “We went before the judge and the judge unequivocally said that without a change of circumstances she sees no reason why the agreement for the home health care provision should be changed. She said she would entertain penalties and attorney fees for having to try the issue when the defendant did not necessarily meet its burden to show change of circumstances.”

Last year the Workers’ Compensation Appeals Board issued a significant panel decision, Patterson v. The Oaks Farm, that said an injured worker didn’t need to go through utilization review to reinstate payments for a nurse case manager after her employer unilaterally cut off reimbursements.

Some defense people are arguing that such heavy handed enforcement is going to shy carriers away from voluntarily providing benefits.

That's nonsense in my opinion. There isn't any voluntary provision of benefits. Providing medical care is the law.

Discretion is the only option, and discretion should be meted carefully - DWC has said time and again that not everything needs to be elevated to UR and that, in accordance with case law, the claims examiner is the first line of UR and can approve or disallow any medical treatment request.

I for one am glad the NPR/ProPublica series is out and am glad the industry is up in arms about them - that means attention is getting paid to what we do, and more importantly exposing our shortcomings.

Work comp can and does great things for people in need ... most of the time. And certainly perfection is not possible. But improvement is always possible, and we as a industry should be committed to a continuous process of improvement.

Without critique, however, improvement can't be achieved. Critical review is essential to improvement. Criticism is hard to take, certainly, and the natural reaction is defensive.

The outliers on the bell curve of work comp care however, either the blatantly fraudulent claims or terribly catastrophic claims, comprise a small part of the overall experience, but make up a big chunk of the complaints. There's no reason why that has to be.

So what if NPR/ProPublica focused on disaster claims? So what if the stories are skewed? So what if the statistics used aren't representative?

If this is what it takes to bring those outliers back within the bell curve, so be it.

It's been said that negative press is better than no press at all, and I for one agree, particularly in these circumstances.

Maybe the industry doesn't like seeing itself in such negative light (the purpose of the series, by the way, wasn't to point out industry actions per se, but rather to challenge the adequacy of the laws). But sometimes one needs to look one's self in the mirror to observe the truth.

I'm heartened that the California DWC is taking action and doing its job in this instance.

Should have happened earlier.

Monday, March 23, 2015

IMR Talk

It's been easy to criticize Independent Medical Review in California, due to evidence of records mismanagement, unanticipated volume, and late determinations.

But statistics reviewed last week at the California Workers' Compensation Institute's annual meeting implicate a very small percent of overall IMR requests poisoning the well.

For instance, according to Rena David, chief operating officer and chief financial officer for CWCI, almost half of the 138,000 IMR decision letters issued in 2014 were the result of treatment requests from only 134 providers.

134 physicians in the top 1% accounted for approximately 60,720 IMR decisions, while the 1,323 providers in the top 10% accounted for about 114,540 final decisions.

10 individual providers accounted for 11% of the decisions issued last year covering 15% of the disputed medical services and 14% of the claims with treatment issues that were eligible for IMR.

More than 91% of the approximately 15,180 decisions attributed to these 10 providers had determinations that the requested treatment was not necessary.

25% of IMR decisions are sent directly to the injured worker, 5% are sent to the care provider as the patient representative for the process.

Two-thirds of the decisions were sent to the injured worker's attorney.

72 attorneys, representing the top 1% of litigators measured by volume of IMR decisions, were associated with 18% of all decisions issued in 2014, David said. The top 10% of attorneys – 718 in all – accounted for 65% of the final decision letters.

And of course most of this action comes from the greater Los Angeles area, which has been identified in the past by CWCI as an anomaly in claims statistics.

Approximately 24% of workers' compensation claims in California originate in Los Angeles, but the area accounts for 36% of IMR decisions, David said. The Bay Area produces about 19% of claims and accounts for 19% of IMR decisions, while the Inland Empire and Orange County generate 18% of claims and account for 16% of IMR decisions. Counties in Northern California and in the Sierras account for about 5% of industry claims, combined, but only 3% of independent medical-review decisions.

In 91% of service request reviews, IMR upheld the UR decision, according to David, which means IMR agreed with the original UR decision that the service was not medically necessary. It also means that 8.6% of UR decisions were reversed, which means IMR felt it was medically necessary.

When put into context, that's a rather large percentage - nearly 10% of the time UR gets it wrong according to these stats, so it seems that if you aren't happy with the UR decision then it's worth the while to seek an IMR review.

About 75% of all medical treatment requests in California are approved by the claims administrator without further review, according to CWCI. Of the other 25% elevated to physician level UR, 94% of requests were approved and 6% were denied.

It is just these 6% of cases that are eligible for IMR. And even with 91% of these treatment disputes being denied through IMR, David said the vast majority of treatment requests are ultimately approved.

"Rather than a wholesale denial of care, we're estimating anywhere between 94% and 95% of treatment requests are approved," she said.

Pharmaceuticals (principally opioids and related drugs) accounted for 44.7% of services, and the UR decision was upheld on those denial of drugs 91.9% of the time. At the low end was evaluation and management services, which accounted for 1.7% of the decisions and were upheld 79.5% of the time.

So is there a problem with UR and IMR? If you're talking about timeliness and efficiency of records management (even according to anecdotes from claims administrators themselves), yes, Maximus and DWC need to do a better job.

If you're talking about gross numbers and the vast majority of service requests (typically not litigated cases, and likely medical only cases or cases with very little disputed disability claims) then the process works just fine, though there may be some issue with timeliness and efficiency.

We also know for certain that a small percentage of cases account for a large, disproportionate, share of costs to the system. It's those cases where most of the "noise" comes from.

Much of the other presentations at the CWCI meeting dealt with paying for value - perhaps paying a little more for quality medical care in return for better outcomes (which means lower disability terms).

When I compare the stats on UR and IMR as presented by CWCI, I'm not sure paying more to that small percent of providers who create most of the dispute would change things. Something tells me that those providers aren't really in the game of healing...

Friday, March 20, 2015

Assimilation Is Inevitable

The big focus at the California Workers' Compensation Institute's annual meeting yesterday in Oakland, CA was on medical treatment.

And not the cost of treatment, but what the lack of quality treatment is costing.

Dr. Gary Franklin, medical director for the Washington Department of Labor and Industries, challenged the audience of industry leaders to invest in quality medicine.

This also means providing treatment for psychosocial issues that would interfere with recovery or good outcomes.

Franklin said that he and his colleagues have developed a surprisingly accurate, but simple, six question survey that should be administered to an injured worker very early on in the treatment process to help identify whether there is an increased risk of prolonged disability.

The key then is to introduce appropriate treatment early in the game before disability progresses beyond the return point.
Bowzer Assimilated

People that are disabled for 3 months or more have a 50% chance of still being disabled at the one year mark post injury, and often long after that - thus early identification and intervention with all of the medical resources available should be implemented (within recommended guidelines, of course).

This includes providing psychological treatment, or better therapies to deal with chronic pain (which, Franklin noted, is defined as pain experience for 3 months or more - see the correlation to long term disability?).

And it's up to the administrators to take charge and provide this treatment - Franklin said most clinicians are not good at identifying patients who are at risk for long term disability.

Dr. David Deitz, former medical director for Liberty Mutual Insurance, echoed Franklin's presentation but put it into context with a comparison to general health, stating that without ensuring injured workers receive good quality care, there isn’t much more that can be done to reduce medical costs.

Both Franklin and Deitz advocate compensation for outcomes, rather than the present fee for service model currently employed in most work comp systems.

Deitz also demonstrated a general health provider that essentially advertises its outcomes via a web page. And the CWCI is releasing more tools to members and other researchers to use its vast repository of data to make more informed decisions about the who, what, when, where and how of treatment versus outcomes.

There are a couple of hurdles in this trend, some of them pretty big.

The biggest hurdle I see is the culture of workers' compensation. 100 years of doing things the same way over and over again is difficult to change. Everyone is in on it - providers, payers, patients, employers, the government - all of the players need to change their mindsets in order for such profound changes in the provision of medical care (not just to injured workers, but the overall health care delivery system) to actually work.

Transparency in outcomes is a tall order - we're talking about putting perhaps fragile egos onto the public stage; and there's the argument of privacy, and perhaps inappropriate discrimination.

Another large hurdle is education of the employee population, particularly before an injury occurs.

I'm not talking about telling an injured worker that there is no scientifically supported evidence that spinal fusion surgery is any more effective or efficient in dealing with back pain than physical therapy and exercise. There needs to be constant communication and education on the health treatment process - help identify issues early on, and then when an injury does occur (or is claimed) a constant flow of information about what will happen, when and by whom towards a certain expectation, must occur.

“Not only should we be focusing on quality from the perspective of whatever cost benefits we get, but without systematic health care improvement, we are not going to bend the cost curve at all,” Deitz said. “We are going to continue to spend money in increasingly inefficient ways and if we don’t focus on quality and outcomes, we’re lost.”

In the meantime, CWCI president Alex Swedlow in his opening presentation on the state of research at the Institute hinted at an upcoming report release expected mid-April that may challenge whether Medical Provider Networks are even working. A chart displayed to the audience suggests that the treatment model which existed in the early 1990s, the Preferred Provider Organization model, was not only less expensive than MPNs are now, but also returned better outcomes.

Peter Rousmaniere in his most recent white paper and four part web cast on Seismic Shifts argues that profound change is coming, and that industry people should be prepared to provide integrated benefits, not just workers' compensation. The good news is that the workers' compensation industry is already trained to provide medical care, return to work (or more broadly, return to lifestyle) services, and disability indemnity - expanding that expertise into a broader realm isn't that far of a stretch.

Some big health care companies are already trending towards that model.

The promise of workers' compensation when originally devised was prompt, efficient medical care in the event of a work injury. Today's promise should be prompt, efficient medical regardless of how an injury or illness occurs.

Workers' compensation medical treatment is a dribble in the overall healthcare equation (something like only two percent of the overall health care spend in this country). I still believe that assimilation is inevitable and I came away from CWCI even more convinced of this argument.

Thursday, March 19, 2015

No Guarantees, Warranties

I could write this morning about the California Workers' Compensation Rating Bureau's Actuarial Committee hearing Wednesday where preliminary data presented suggests a mid-year rate cute recommendation assuming that adjusted loss allocation expenses don't erase all of the cost reductions in the past year.

Or I could go on about the California Workers' Compensation Institute's annual meeting occurring today in Oakland, CA, and their report released yesterday that claims administrators on average scored a 97.2% in utilization-review performance ratings conducted from 2009 through 2013.

And there's the story of New Mexico's requirement that drug dispensers report information to the state prescription-monitoring database on a daily rather than weekly basis is part of a growing trend across the nation.

But what piqued my interest this morning was a Virginia ruling that a worker does not need to be physically harmed in order to get compensation for a psychological injury.

Psychological injuries are, perhaps, the most varied of all injuries in state workers' compensation systems. Some states (not many) don't recognize psyche only injuries whatsoever. Many states require that a claim of psychiatric or psychological harm be accompanied by some traumatic event or physical sequelae. Most states have some sort of qualifying standard and/or limitation on psyche claims.

The limitation on psychiatric injury claims is the product of both abuse in the past by folks making illegitimate claims (provoked perhaps by litigation advantage or unscrupulous doctors) and a lack of understanding (or perhaps compassion) of emotional trauma and functioning.

Of course, all the while we recognize pretty generally that a good head is essential to successful return to work outcomes.

In the Virginia case, Samuel Paul Jackson, a longshoreman accidentally ran over a coworker, Paula Belamy, with a forklift, causing gruesome injuries resulting in her death while unloading cargo ships at marine terminals operated by the Virginia Port Authority for their employer, stevedoring contractor Ceres.

Early on the morning of March 28, 2011, Jackson was using a forklift to move steel bins on the pier where Belamy was standing.

She was on the radio, helping guide a crane operator, and apparently didn't see the forklift coming her way.

Jackson also allegedly didn't see Belamy since the bin on the forklift obstructed his view. He would later testify that he had no idea he had run Bellamy over, until other workers on the pier waved him down to stop him.

Jackson and the other workers then tried to lift the forklift off of Belamy, whose leg was wrapped around the rear axle.

Belamy was still alive and communicative, but he said she was "pretty mangled," bleeding profusely and had visible broken bones in her arm. She also had burns, and her wrist and hand "were twisted around backwards," Jackson said.

Rescue workers rushed Belamy to the hospital, but she succumbed to her injuries within the hour. She was 38.

After the accident, Jackson saw a variety of medical professionals for mental health treatment. Doctors diagnosed him with post-traumatic stress disorder, anxiety and depression.

Jackson filed a comp claim for his PTSD, but a deputy commissioner found his condition wasn't compensable because Jackson had never been in danger of being harmed.

A divided Virginia Workers' Compensation Commission upheld the deputy's ruling, agreeing that a worker cannot get benefits for a purely psychological injury unless it was related to either a physical injury, or a sudden shock or fright caused by circumstances placing him at risk of harm.

The carrier for Ceres argued that while never been a case that expressly said that the risk of physical injury to a claimant is a necessary requirement for a psyche injury to be compensable, prior decisions "talk about fright or shock" which means, "they're talking about fright of being hurt."

Jackson argued a prior ruling in UPS v. Prince, where a parcel delivery driver who came upon the body of a murdered customer was entitled to benefits for his PTSD, had already settled the issue of need for proximity.

The Court of Appeals on Tuesday agreed that there was no precedent for the “risk of harm” requirement applied by the commission.

Does this open a Pandora's Box as argued by Cares?

Maybe, maybe not - that's why we have courts; because each case is predicated on unique facts which include not only how an injury occurs, but the particular risk factors underlying a potential claim.

In other words an employer takes the employee as is with no warranties, guarantees or other promises of fitness for a particular duty.

The Virginia case is Jackson v. Ceres Marine Terminals.

Wednesday, March 18, 2015

Flying Exclusive Remedy

Because I was in Oregon last week for a presentation to claims pros for Reinisch Wilson Weier law firm's annual claims training, a case reported this morning in WorkCompCentral news caught my eye because it involved an aviation accident in Oregon.

Actually, I remember when this accident happened.

The pilot was Jason Ketcheson, 36, of Cannon Beach, OR. He worked as a sales representative for Wyndham Resort Development Corp., a time-share company. Ketcheson held commercial pilot and instructor with instrument ratings privileges.

On the day of the accident Ketcheson rented a Cessna 172, a plane most current pilots are familiar with because they are used ubiquitously for training. Depending on the year a 172 is built the aircraft might, or might not be, certified for instrument flight conditions (i.e. where you can't see and have to rely on an aircrafts instruments for safe flight).

Frank Toohey was Ketcheson's supervisor. Toohey selected Ketcheson to assist him in a training session in Klamath Falls. The plan was for them to fly to Klamath Falls in the rented Cessna piloted by Ketcheson out of Seaside, OR.

According to a Claims Journal story on the accident, National Transportation Safety Board investigator Van McKenny wrote in the preliminary investigation report that Allen Sprague, the owner of Aviation Adventures and the Cessna 172 rented by Ketcheson, said after the crash that he had been concerned about poor decisions made by the pilot.

“Mr. Sprague said that he had some concerns about letting the pilot continue to fly the airplane after he had returned from a trip with a very low level of fuel remaining,” McKenny wrote. “He discussed with the pilot decision making and ran through some scenarios to make sure the pilot was making consistent and safe aeronautical decisions, and to make sure … ‘his head was in the right place.”’

The crash occurred in heavy fog, although Sprague said he had given “strict instructions that the plane was only to be flown out of Seaside when the weather was VFR,” or visual flight rules. That means the weather is clear enough for a pilot to see where an aircraft is going. Sprague also warned Ketcheson that passengers were prohibited.

The plane crashed after take off into a house killing Ketcheson, Toohey and three people in the house. The graphic in this post is from the NTSB electrical engineer's investigation report from data downloaded off the Garmin GPS instrument that was aboard the plane, overlaid on a Google Earth graphic. It shows the flight path of the plane.

The NTSB final report blamed disorientation on the part of the pilot while in instrument meteorological conditions (i.e. fog).

The Oregon Court of Appeals ruled on March 4 that the family of Toohey was barred by the exclusive remedy of workers' compensation from bringing a wrongful death suit against the estate of Ketcheson.

The trial judge had found that both Toohey and Ketcheson were Wyndham workers acting in the course of their employment at the time of the crash, and thus found Toohey's death arose out of his employment. As such, the judge said, the comp system provided the sole remedy for Toohey's family.

Toohey's family appealed arguing that because Ketcheson was not a pilot for Wyndham at the time of the accident that exclusive remedy did not apply.

The Court of Appeals disagreed.

The "risk of a plane crash is precisely the type of risk created by employment when an employee conducts work-related travel by plane."

The case is Toohey v. Aviation Adventures, No. 85, 03/04/2015, published.

Tuesday, March 17, 2015

Bigger Than Enforcement

Don't step in it...
Now I really don't know who or what to believe.

After the last couple of posts raising cain about the number of Independent Medical Review cases missing records for significant amounts of time, assuming that it was the fault of carriers and TPAs, then finding out that there's a records management issue at Maximus that may have been the cause of all these numbers, we find out, according to the Division of Workers' Compensation, that most of those missing records files have actually been closed.

Peter Melton, a spokesman for the Division of Workers' Compensation said in an email to WorkCompCentral that the majority of those cases with records missing for at least 90 days have been closed.

"Maximus indicates that the majority of those cases are terminations (closed), either because the treatments in dispute were authorized, the underlying case was settled by compromise and release, the IMR was moot because circumstances changed, or the injured worker or their representative withdrew the request for IMR," he said.

WorkCompCentral inquired about the cases missing records on Thursday. Melton acknowledged at that time that there were 4,900 cases on which records were at least 90 days late.

He didn't answer the question at the time of why the administration had not started the process to assess penalties or offer the explanation from Maximus that most of the cases were closed.

Honestly, now I'm confused. You probably are too.

If all of those cases are in fact closed, then why would Melton say just a few days ago that there were so many with late records?

And why would Maximus' spreadsheet, dated March 9, 2015, reflect all of those missing records numbers?

(While the spreadsheet shows as of 3/9/15 6,743 files missing records, it does say "0701 Still Open" total of 984.)

And even if most of those cases were closed, the fact remains that there is still a records management issue because there were a lot of cases that at some point, regardless of current open versus closed status, that Maximus says records are late.

Now it appears that there's also a data management and reporting issue.

At least DWC now says it is in the process of serving Orders to Show Cause on violators.

"Because this is a new dispute resolution system, and the IMR filings of an unanticipated volume, DWC wanted to work with Maximus to clear the backlog and quicken response time," Melton said. "We believe that Maximus has done that, in part by making a good faith effort to reach out to claims administrators and try to obtain documents necessary to close the cases. At the same time, we understand that each case represents an injured worker and their treatment, and we are continuing to work diligently to improve the process."

There were many claims administrators who said they are compliant with the 15 day records rule; Maximus' data says that there are 128 entities handling California workers' compensation cases that have at least one IMR case for which they have not submitted medical records in 90 days.

And the overall percentage of late records is alarmingly high with 65 entities reflecting 100% failure to submit records by the 90 day period, at least based on the Maximus spreadsheet.

There are a whole host of potential violations for which a claims administrator could be fined under Title 8, Regulation section 9792.12(c), and there's nothing there that excuses a claims administrator from a penalty if the case is "closed."

So, now there are even more unanswered questions.

At least in my mind the credibility of the IMR process, DWC and Maximus is called into question. For one reason or another we don't have the whole story, and we don't know who's really late, who's really non-compliant, who's to blame.

And likewise, I don't think I can trust either DWC or Maximus to give us straight answers, in part because I don't think they really know the answers.

Unfortunately what this really tells me is that we have a regulatory process that is out of control.

I think this is a bigger issue than just one of enforcement...

Monday, March 16, 2015

Always Right, Until Wrong

Ask my wife - I'm always right.

Except when I'm wrong.

Then I admit I'm wrong, and ... I'm right again!

So, I admit I'm wrong.

Friday I admonished the California Division of Workers' Compensation to "do your job" and fine all of the insurance companies and third party administrators (and collect those fines) that fail to adhere to statutory time limits for getting records to Maximus Federal Services for Independent Medical Review.

Based on a spreadsheet of such failures from Maximus, there are a lot of them, and not just minor delays but significant failures.

I assumed that it was the carriers and TPAs that were the cause of these delays and failures because the Maximus spreadsheet identified 5,021 cases on which records are at least 90 days late by entity, number of average days late, percent of cases that are late and the number of records requests that are late.
Bowzer admits he was wrong...

You know what they say about ass-u-me...

Turns out that many, if not most, of these issues may actually be the fault of Maximus.

Jerry Azevedo, spokesman for the Workers' Compensation Action Network, told WorkCompCentral that most claims administrators have submitted records as required, but Maximus has not been able to match them to the case.

And comments posted by claims adjusters to the original WorkCompCentral story on Friday mirrored that opinion.

Said one commentator: Our company gets about 10 notices a month from Maximus stating we did not provide the medical records that were requested. We are able to demonstrate immediately to Maximus that we have already sent them and they have just failed to match the records with the Maximus case. We ship everything via overnight so we have tracking mechanism in place to verify they received them.

And another stated: We also get notices from Maximus that the records were not received, but when we check, and re-produce the documentation, they have had to retract their letters and concede that they did, indeed get them. Another issue that we have is with Maximus telling us that we have not paid their invoices. Here again, we send proof, and never hear another word.

And another: I work for one of the biggest TPA's. I can say for CERTAIN Maximus loses many of the IMR records sent to them. Because of our size, we get huge lists of alleged non-responses to NOARFI's and of the last 50 all were complied with timely except 1-2 were missed by Examiners. Of the others, half were sent (and disappeared), or NOARFI's never received (our mail is imaged by a third party so no chance mail was "lost"). We have numerous cases where they were sent TWICE and they still claim to have not received. And the billing: we just got a list of alleged non payment of IRM billings of the 55 alleged, in 52 of those NO BILLS were ever sent! They are having serious issues and the injured workers are paying the price, not the claims admins.

Maximus tells WorkCompCentral that it has provided all information it is contractually obligated to provide to DWC and that any questions about how the company is administering IMR should be directed to DWC.

That's a ridiculous position to take - Maximus knows whether it is compliant or not; that it won't admit that is even more ridiculous. In a civil proceeding when the accused takes the 5th Amendment against self incrimination the jury is instructed that they may infer guilt...

Maximus is a multi-billion dollar company, and despite all those resources the story seems to be that they can't seem to get a pretty simple data management issue resolved. This isn't rocket science. Hell, it's not even medical science or computer science - it's pretty basic records management.

Unfortunately people contacted for the story at DWC did not comment prior to story deadline.

But here's the rub - if DWC is relying on Maximus data, and Maximus is relying on DWC data, it seems that the perpetual circle of inadequate data means that nobody really knows what's going on, or is willing to tell the truth.

That's even worse than just blaming recalcitrant carriers...

So, either there really is a blatant disregard for the system by rogue carriers and TPAs, or Maximus really is incompetent at matching records to cases, or DWC really has no clue as to what the real situation is, or a combination of some or all of these (and perhaps others that I haven't thought of yet).

Yep, I was wrong in just blaming carriers and TPAs.

I also should have been finger pointing at Maximus too.

So I admit I'm wrong, which means ...

... I'm still right about DWC - either fine carriers and TPAs (and collect) and enforce whatever contractual provisions there are against Maximus for its administrative failures; i.e. do the job so we can bring some credibility and reliability back to the system.

Perhaps it's time to reopen the bidding process to other IMR providers, or perhaps there should be more than a single provider so we can see what some competition does (Texas has about 40 IMR providers).

There are only three true stakeholders in workers' compensation: employers pay for the system, injured workers are to be provided the benefits of the system, and the government is to enforce the system.

For purposes of this vignette, the only missing element is the government.

Do the job.

Friday, March 13, 2015

Do Your Job

Bowzer senses trail skat...
It's time.

The California Division of Workers' Compensation, and the People of the State of California, deserve better treatment and respect for the law and the regulations.

The worker's compensation claims community in California obviously have a disdain for the rules, and the administration of the state needs to put on the "big boy pants" and do what it is authorized to do in order to get compliance from a rogue industry: impose and collect fines.

Based on the latest numbers accidentally leaked by Maximus, Inc. and acquired by WorkCompCentral, the contract Independent Medical Review company that is tasked with the final stages of IMR as a consequence of SB 863, claims payers don't take the system seriously.

There are 128 entities handling California workers' compensation cases that have at least one IMR case for which they have not submitted medical records in 90 days.

Ninety days.

The regulatory time limit is only fifteen days.

In the meantime there's some poor claimant at the end of that decision process waiting to find out if the treatment requested will be approved, and is likely getting indemnity benefits to sit around and wait, rot, or otherwise.

Records are still missing on 1,722 cases submitted to Maximus in December, January and February.

That's 26% of the 6,743 cases with missing records as of Monday. There are more cases with missing records from January of this year than any other period.

And while the number of cases with missing records decreased to 6,783 as of March 9, cases with records missing for 90 or more days increased to 5,021.

There are still 148 entities that have failed to submit medical records on at least one case, out of which 137 have fewer than 100 cases in which they failed to submit records, and 110 have 10 or fewer cases without records.

Seven entities have between 100 and 300 cases on which they've failed to submit records, while four entities have not submitted records on more than 500 cases.

Labor Code Section 4610.5(i) authorizes the division to assess penalties against an entity that engages in conduct that delays the IMR process.

California Code of Regulations Section 9792.12(c)(6) establishes a penalty of $500 each day IMR records are untimely, up to a maximum penalty of $5,000.

Maximum penalties of $5,000 for each of the 5,021 cases with records missing for at least 90 days would total $25.1 million.

Though the DWC said in November of last year that they're going to start fining violators, nothing has been done.

"DWC has not yet issued any Orders to Show Cause for not submitting missing medical records," Peter Melton, spokesman for DWC, told WorkCompCentral via email.

He did not answer the question of why the division has not started the process to assess penalties.

Folks, SB 863 and IMR is now over 2 years old. Frankly, this is simply unacceptable.

If the California DWC, and the system it regulates, is to have any credibility whatsoever, and if IMR really is going to work, then the bottom line is that DWC needs to fine AND COLLECT ON THOSE FINES, pursuant to its statutory authority.

The People deserve at a minimum that attention.

Stop fooling around, pull up those pants, and enforce the rules, DWC.

It's your job. That's what you're paid for.

Do your job.

Thursday, March 12, 2015

Proof In The Penalty

Last week I wrote about the Texas Supreme Court closing the door on civil actions against workers' compensation insurance companies, giving them the same protection of exclusive remedy that their insureds' enjoy.

I said:

"Making the Texas Department of Insurance and Division of Workers' Compensation administrative penalty process the only remedy is the proverbial fox in the henhouse situation. Administrative penalties are a cost of doing business.

"Sure claims payers don't like administrative penalties, but nothing gets the attention of shareholders, Wall Street and the investment community like a nice big award of punitive damages - that's when behavior changes."

This morning, WorkCompCentral journalist Joey Berlin reported that Ace American Insurance Co. was fined $250,000 for for failure to timely pay benefits and other infractions related to the death claim of the widow of Wayne Davis who was killed in a 2012 traffic-accident while working as a sales, profit and operations coach for Burger King.

The case was highlighted in the Texas Tribune series last year called “Hurting for Work” about the industry - part of a growing string of negative press concerning the workers' compensation industry and the laws and regulations that govern it.

After Wayne Davis was killed in the crash, Ace American, Burger King’s insurer, denied and delayed death benefits, arguing that Davis was not in the course and scope of his employment at the time of the crash.

Davis was driving a Burger King vehicle to a company-related appointment, and his supervisor at the time believed he was “definitely in his workday,” according to the Tribune.

Crystal Davis defeated Ace in dispute-resolution proceedings and began receiving benefits, but Ace sued Davis and her two children, ages 6 and 2 at the time, to stop the payments, dropping the action less than a week after the Tribune series first featured the Davis story.

The division’s Feb. 18 enforcement order cited Ace for failing to timely pay death benefits and accrued interest on death benefit payments, failing to timely take action on a request for burial benefits, and failing to timely and accurately notify the division of actions taken on a claim.

$250,000 sanction included:
  • A $100,000 administrative penalty.
  • Required adoption of an enhanced compliance plan and a minimum investment of $50,000 to implement that plan.
  • Establishment of a Texas branch of the charity Kids’ Chance, which provides scholarships to the children of injured workers, with an initial donation of $100,000.
  • Participation in all division audits for a three-year period.
Ace Insurance 10 year stock price
This is all super-dee-duper, but is an ineffective solution in my mind.

I'm glad that Crystal Davis and her children are NOW, finally, getting benefits that they are statutorily entitled to, particularly when the EMPLOYER said Wayne Davis was working at the time.

But they were subjected to unnecessary, humiliating action by Ace, and while I don't know their financial condition, my bet is that they are one of the many "paycheck to paycheck" families where that bi-weekly benefit check is the difference poverty and turning on the heat in the winter.

Ace American is a multi-billion dollar company that publicly trades on the New York Stock Exchange that reported record operating income of $3.3 billion in 2014, up 4.7 % per share.

It's stock price has gone from $95 per share to a close of $110 yesterday, and a high of $115, over the past year. In 10 years the stock price has grown from about $45 per share.

It's a highly diversified insurance company, with international operations.

Trust me that this little administrative fine won't even make news up to the C-suite.

And it's nice that as part of their penalty the company gets a tax deduction.

As I said in my earlier piece about Texas' Supreme Court's ruling in In Re Crawford & Co. , don't get hurt in Texas.

And invest in Texas workers' compensation carriers and administrators.

The proof is in the penalty, and the stock price...

Wednesday, March 11, 2015

Another Quake

I've been of the opinion lately that workers' compensation in 10 years is going to look much different than it does now, if it is even in existence as "workers' compensation."

A bill just introduced into the California legislature would take huge steps towards that vision by creating a "24 hour care" model for agricultural workers.

Assembly Bill 1170, by Assemblyman Luis Alejo, D-Salinas, would create the Care of Agricultural Workers Fund, financed by assessments on agricultural businesses based on the number of workers they employ and the total amount paid for workers' compensation medical costs for agricultural workers.

A primary motivation for the bill is to give agricultural employers a way to comply with the Affordable Care Act's requirements to avoid penalties.

Under the federal ACA, which became law in 2010, employers with 50 or more full-time employees, or a combination of full- and part-time employees that the Internal Revenue Service determines to be the equivalent of 50 full-time employees, can be subject to penalties for not making affordable health care available to their workers. The penalty provisions went into effect at the start of the year.

There are 2.8 million undocumented workers in the agricultural industry in California. They are not eligible for benefits under the ACA nor can they purchase health care from Covered California, the state-run health exchange established under the act.

Manuel Cunha, Jr., president of the Nisei Farmers League, the agricultural trade association that is sponsoring the bill, told WorkCompCentral the idea would be to have coverage that is at least as comprehensive as what is offered through Covered California for workers who "may have a document problem."

He said undocumented workers can't purchase coverage from a private carrier because they'd be required to provide a Social Security number and other information that could result in the carrier providing the employer with "constructive, actual knowledge" that the worker is in the country illegally, ultimately resulting in termination of the worker.

The bill does not state how to determine whether medical care is needed on an industrial basis or for other reasons. The methodology is left to the administration by the Division of Workers' Compensation.

DWC would be responsible for making assessments on agricultural businesses based on the number of workers they employ and the total amount paid for workers' compensation medical costs for agricultural workers.

DWC would then contract with one licensed health care service plan to be the exclusive provider of medical, surgical and hospital treatment for occupational and non-occupational injuries and illnesses incurred by its agricultural workers.

The bill further provides, "The health care service plan shall provide all occupational-related medical treatment coverage required by this division without any payment by the employees of deductibles, co-payments or any share of the premium."

But AB 1170 says nothing about whether the worker would be subject to a copay or deductible for non-occupational care. So there may still be an issue of "AOE/COE."

The bill would also require agricultural employers to make coverage available to workers' dependents, but would not obligate them to pay for that coverage.

Pacific Bell (before it became Verizon) ran a similar pilot program in 1996 and 1997. According to San Francisco-based Integrated Benefits Institute, the pilot reduced average medical costs by 21% and temporary disability costs by 41%.

Cunha told WorkCompCentral the plan is to provide coverage without a copay or deductible, but that will ultimately depend on how much it costs to put together a program that meets ACA requirements. There will be no cost of treatment of occupational conditions, but if the costs of the plan exceed the industry's total workers' compensation payments, the idea of deductibles or payroll deductions "might be an item of discussion."

There are many other unanswered questions for sure (not the least of which is how to deal with indemnity issues), and the success of getting the bill through the legislature and to the governor's desk is far from certain.

AB 1170 can't be scheduled for a policy committee hearing until 30 days after it was introduced. Alejo introduced the measure Feb. 27.

"24 hour care" has been explored before. There was a version that made its way through political circles during the Schwarzenegger Administration for workers enrolled in California Public Employee Retirement System, but ultimately died.

Still, the California Commission on Health and Safety and Workers' Compensation in conjunction with the University of California, Berkeley, managed that pilot project involving Service Employees International Union Local 1877, janitorial employer DMS Facility Services and Kaiser Permanente.

Their conclusion in 2008: the extent of integration is a significant factor when it comes to reducing costs and improving quality of care, but that lower medical costs and lesser disability is experienced the greater the integration.

How far will this go? I don't know.

It's estimated that the agricultural industry in California is $37 billion big, so there's some lobbying muscle available.

It's quite possible that this is a quake in the overall Seismic Shift that is going to shake the industry over time.

Tuesday, March 10, 2015

A Child's View

Rosemary McKenzie-Ferguson is the founder of Craig's Table, and created the “Bags of Love” emergency food project providing basic need resources (food) to families of injured workers in Australia. She is also instrumental in Work Injured Resource Connection Inc.

Rosemary got involved in workers' compensation many years ago after going through her own work injury ordeal. On that journey she discovered many shortcomings of workers' compensation - principally the destruction of dignity and self-respect that the system foists on the unfortunate.

So she decided to do something about it. She is not a lawyer, doctor or claims professional. She's just someone who deeply understands what happens to people living paycheck to paycheck when that paycheck is suddenly interrupted by a work injury.

I've never met Rosemary personally, but we have many common friends in the world of workers' compensation so we do correspond, and I've written about her in the past. 

What she does seems simple, but is difficult to execute for there are many formidable obstacles, not the least of which is the injured worker whose pride and disbelief discredit the reality of stark circumstances.

The other day Rosemary posted a vignette about one of her experiences at WIRC in response to a LinkedIn topic.

It moved me.

Rosemary McKenzie-Ferguson

So with her permission I am republishing it here with editing to soften the Australian accent and clean up typos, etc.


At the Centre I run here in Adelaide South Australia we see the real cost of workers compensation, a cost that has no dollar value. 

We see the human cost. And it is not always the injured worker who pays the highest of these costs.

Every time an injured workers needs a food hamper, it is not just the food that they need. They need the love and the empathy and the hope that is also packed with it.

The children need the treats that are magically slipped in to the hampers so that the children will know that life can have fun in it.

Imagine a child, a tiny little girl, her name is Ruby. She is not old enough to go to school.

Ruby's Mummy had major surgery due to her workplace injury.

No home help was offered as "family" lived close enough to help.

Money was tight but because Ruby's Mummy could stand for only so long to cook, she was ordering home delivery pizza to make sure that Ruby had something to eat.

Then the money ran out and she didn't have the ability to buy real food, so Ruby and her Mummy were back to eating what ever was left in the pantry.

The cost of living takes up the majority of the income; quality food has become a luxury item.

Now imagine it is almost 3 pm in the afternoon and Ruby's Mummy is sitting in front of you and telling you this story. The close-by family has long been estranged for reasons I don't care to explain here. 

No one has been to help.

With the help of Ruby we pack enough food for the little family; quality home made frozen meals as well as fresh bread and milk and yoghurts, enough to fill the perishable capacity.

Then we turn to the non-perishable products - tins of fruit, tins of soup, tins of fish -sugar tea coffee; all the while Ruby is chatting away telling us that she is a big girl and that one day when she can she is going to buy a food shop so that Mummy won't cry anymore.

I hand Ruby a packet of instant porridge, Ruby hugged it to her as if I had just handed her something so precious that she didn't dare drop it.

"Mummy," Ruby said, "when we get home can we have porridge for breakfast?"

It was 3 pm, long past breakfast time, but this precious little girl had not eaten since the night before because there was nothing left in the pantry to eat.

Ruby didn't just break my heart, but shattered it into millions of pieces.

I have to admit it is the one and only time I have ever picked up a child of an injured worker and cried because of the depth of pain I was in for her.

Little Ruby dried my tears.

So the next time you hear about workers compensation costs being cut and the support of injured workers being removed, take a few moments to imagine Ruby. I can tell you from experience there are millions of children such as Ruby - they are the unseen, the uncounted, the unacknowledged component of workers compensation.

These are the children who go to school without breakfast. They most likely don't have anything to eat through the day either.

Because they are hungry they are not going to be able to concentrate or study as others in their class; if they are boys they will became disruptive or totally withdraw from the school work as they will not see any hope for their own future.

To the very best of my knowledge the "Bags of Love" emergency food project that I started is the only one of its kind in the world.

We struggle to keep the power on because we have no funding to cover the costs we incur, but we also know that should the day come when the costs of running the Centre is greater than our ability to pay that is the day that far more injured workers will be failed than I care to imagine.

No you won't hear any of this at a workers compensation conference but it is time that you did hear it.

It is time to remember that injured workers are not computer generated numbers, they are people, they have families, they have a community and they have something else, they have a work ethic.


Contact details for the Centre and Rosemary:
118 Sampson Road
Elizabeth Grove
South Australia 5112
Phone number 61 08 8255 9138