Opt Out and ProPublica

It's easy to vilify Bill Minick and Mellisa Tonn.

The latest ProPublica story on work place injury systems, "Inside Corporate America’s Campaign to Ditch Workers’ Comp", paints Minick as a singular vigilante intent on destroying workers' compensation by taking Texas-style non-subscription to other states; plans that are crafted singularly by employers with the intent of sticking it to the injured worker to send more dollars to the corporate bottom line.

And Tonn, Minick's wife, represents a conflict of interest because she is the medical director overwhelmingly selected by PartnerSource clients to manage medical networks and doctor selections.

But like most everything in life, not only is there another side to the story, there are many complex permutations that need to be considered, and there's a big lesson too.

I've know Minick and Tonn for many years now. It's no secret that I'm a Pepperdine School of Law alumni (1984), and so is Minick (1985). We met about a year after I started WorkCompCentral. He had started PartnerSource a few years earlier. And I've known Tonn through various professional medical organizations, namely the American Academy of Orthopedic Surgeons (of which I'm a faculty member) and the American Academy of Disability Evaluating Physicians.

I've dined with both. I've attended social events with them. I've met their children.

They are good people. They believe that what they do is the right thing for America. Both believe that workers' compensation can be improved upon, and both believe that an employer option is the way to accomplish that goal.

“All you can do is pray that the Lord gives you a calling where you can really do good for society,” Minick is quoted at the end of the ProPublica piece. “That’s what gets me up every day, knowing that I’m getting better employee satisfaction and generating economic development. That’s as good as it gets.”

Minick is not bullshitting - he truly believes what he says, and that opt-out is, overall, better than workers' compensation for both employers and workers; and also for workers' compensation by providing competition.

Remember? This is America, a capitalistic economy where, in general, competition fosters better everything for everyone, at least academically.

Fundamentally, Minick and Tonn are of a Libertarian bend (I don't know their actual political affiliations); freedom of choice and relief from regulatory burden is a paramount belief. Less government, they believe, in both business and personal lives, is better and everyone should have greater responsibility for themselves. That's what drives their business philosophy, and opt-out itself.

The ProPublica article highlights a few vignettes of injured workers getting the raw end of the opt-out deal: denials based on unreasonable time limits for reporting, failure to provide sufficient medical care to remediate long term effects of injury, inadequate indemnity to stave off pauperism.

Certainly, though, these anecdotes are no different than what is experienced in full-fledged state workers' compensation systems. The earlier series by ProPublica highlighted the great disparity in benefits between states, and the hardships experienced by injured workers facing significant changes to their lives under the controls of workers' compensation systems. That series also used vignettes that the work comp industry labeled as unfair and unrepresentative.

But no one in workers' compensation denied that those case stories were real. Nor that they represented a problem. In fact, those honest with themselves acknowledged that these negative cases are all too common, and are a big problem. That series even led to an investigation of Traveler's by California officials.

Critics of the opt-out movement point to lack of transparency - information and data about what injured workers actually experience and receive in benefits is not easily obtained from opt-out employers.

Anecdotes indicate that the reality is different than Minick's ideal that such plans aren't better for the workers.

Both are fair criticisms. Frankly, there's nothing wrong with those realities being told either. Opt-out proponents need to know those stories. They need to "experience" life as an opt-out employee who's life is shattered because the plan doesn't take care of them, regardless of whether it's better or worse than standard work comp.

Remember my rant on experiential adjusting? Same holds true for anyone involved in the medical/disability management industry, whether it's work comp, opt-out, general health, private disability - whatever. If you don't know the result on a personal basis, you aren't learning and the perception is a callous disregard for the welfare of others.

In sort of a paternalistic way, opt-out plans heavy-handedly encourage return to work. The penalties to an employee for not getting back to work as early as possible can be significant.

This is by philosophical design - the overwhelming evidence is that work is good for people, and that being off of work for prolonged periods dramatically, and exponentially, increases the likelihood of long term disability.

But this heavy-handed approach doesn't work all the time, and unfairly penalizes those unable to overcome the additional obstacles that a work injury throws in the way of, perhaps, an already difficult life. When a work injury protection plan throws up additional obstacles, such as denial of care or refusal to accept based on timing, the penalty is amplified.

Just like work comp itself.

Employers tout great savings, and these are good for the board room and SEC reports to investors. Heartless corporate America is the perception though: At what cost to society? To individuals? To vendors? To employees? To shareholders?

The opt-out employer mindset is a less-is-best viewpoint. Get the government out of the equation; take more control over who provides what, and when; put incentives (positive and negative) in place to drive behavior towards the corporate ideal; eliminate waste, fraud and dependency.

There's a lot of appeal to the concept of the opt-out movement. I'm no fan of government and bureaucracy. I'd just as soon not have others tell me what to do, and how to do it (which is why I've never worked at a big company I guess).

But this Libertarianism assumes a high level of personal responsibility. The more freedom one is provided, the greater the requirement of accountability. Some are mature enough to accept this. Others are not. And this is on a both personal and corporate level; just how greedy can one get before society is offended?

The public's perception of corporate greed is particularly acute when times are tough, or when the media makes examples of outsized executive compensation compared to the toiling working class. Class stratification has become a big source of public discontent. This is a reality that can't be ignored.

The opt-out movement needs to come to terms with this reality. Indeed, ALL of the work injury protection industry needs to.

Oklahoma's 2-year old reform, that introduced opt-out to the state, says that employers' plans must meet the same minimum benefit requirements that the state work comp system provides.

What it doesn't require is that plans meet the same procedural protections - and that is a fault that the opt-out movement took advantage of, and which has provided many of the negative anecdotes the media has reported.

Having an employer appointed doctor determine medical and indemnity fate, only to be reviewed by an employer appointed binding arbitrator, is perceptually bad. There is no check and balance in that type of a system. There is no perceived fairness. It's stacked against the employee. The working class gets stiffed again...

I believe that opt-out can work. But ONLY if it is a fair, and BARGAINED-FOR exchange.

Remember the Grand Bargain? There WAS a bargain 100 years ago. First there was fighting, name calling, shouting, discord... and eventually compromise was reached. That compromise has been challenged over and over again and the first set of the ProPublica series simply pointed out that perhaps the bargaining in today's environment isn't balanced or fair.

What the ProPublica opt-out story really shows is that government not only got out of the way, but completely failed to protect the public; government assumed that plan promoters would do so.

That's unrealistic, myopic thinking. Everyone, and I really mean EVERYONE, at the end of the day given any set of circumstances, will first act in their own self interest. All others take a back seat until the individual's self interests are satisfied. In Oklahoma, government has failed to protect the public.

What is missing in the creation of opt-out plans is simply the lack of a bargain. There is no employee representation negotiating these plans. Government (at least in Oklahoma) is tasked with looking out for the workers' interests, but they don't BARGAIN for the deal - they only approve what is presented: an employer-centric system designed by employers for employers.

“We’re talking about reengineering one of the pillars of social justice that has not seen significant innovation in 100 years,” Minick said.

That's not a bad thing. Nearly everyone that I have come across in the past few years criticizes workers' compensation as too complex, and too costly for too little - i.e. not delivering the value that we expect. So opt-out should provide the remedy.

Should...

"But as Minick’s opt-out movement marches across the country," the ProPublica story reads, "there has been little scrutiny of what it means for workers." This is a nicely written sentence that is wrong on several fronts.

First, opt-out isn't marching across the country. Texas originated it. Oklahoma adopted it after several years of legislative wrangling. Tennessee and the Carolinas are targeted - this is not a movement that is marching. However, trust me, that all of the states are watching and learning to see what is good, and what is bad. Opt-out is disruptive, experimental. But it is not marching.

Second, while there has been little scrutiny of what it means for workers, whose responsibility is that? Current opt-out plans have the fox guarding the hen-house. And as I mentioned, all of those plans were unilaterally created with no worker representation at the deal table.

Government has failed miserably at providing scrutiny. But part of the failure is also Labor's fault. Unions are at an all time low with their constituencies - they are just as out of touch with the working class as the executives on the 99th floor.

The disintermediation of labor has been accelerated with the digital age - Labor has been greatly disrupted and can no longer advocate for the working class.

So who's going to do that? Government won't and Labor can't. 

The story behind the ProPublica opt-out article is that business is running amok, but this will, indeed, eventually back fire. History has taught us that.

ProPublica states, "And it’s Minick’s handiwork that allows Costco to pay only $15,000 to workers who lose a finger while its rival Walmart pays $25,000."

That's bullshit. Minick didn't do that, his clients did it. Minick facilitated the process, certainly, but he doesn't control Costco nor Walmart. What REALLY happened is that neither Costco's nor Walmart's risk management executives made any attempt to include their workforce into the development of their plans, and that's why they are so lopsided.

Business has taken advantage of Labor's weakness and has run amok.

Don't get the idea that I'm anti-ProPublica. In my mind they have done an outstanding job of bringing to America's attention the lack of real protection that people have when they get hurt on the job.

What the ProPublica articles on work comp, and now opt-out, are saying is, the Grand Bargain isn't grand anymore because there's no bargaining.

I firmly believe that this country's strong economic engine is due in part to the work injury protection systems that are in place. When done right the employer is protected, the employee is taken care of, the economy is stable, society benefits.

When it is singularly focused, though, such systems create mistrust. Business can not run on mistrust, and eventually a revolution will be fostered that will work against the near-sighted.

Here's the lesson - ANY work injury protection plan or system MUST be an employee benefit, like health care, a 401K, time off, dogs at the office and a well stocked break room.

But they're not. The laws have ensured that workers' compensation be regarded as a compulsory expense, not as an employee benefit.

Opt-out plans have taken the same approach because their singular focus is reducing expense. This does not tell employees they are valued - rather it tells them they are a cost, and worse, an expendable cost.

And this is where the opt-out movement, if it really wants to grow and prosper and, as Minick says, reengineer one of the pillars of social justice, can work, can make a difference, and can lead changes in the way we think of work injury protection systems.

Opt-out needs to start with the mindset that it is an employee benefit just as valuable to employees as any other employment benefit.

Work comp likely will never get to that level of beneficence because the laws have put a tourniquet on both business and labor. 

But opt-out can be an employment benefit, and should be.

Fundamentally, there's nothing wrong with opt-out. But how it's executed is another matter.