Broker Schmoker

Insurance is a highly regulated industry because it involves lots of money exchanging hands, which influences greed, and some can't control themselves.

Workers' compensation requires even tighter regulation because, in most states, it is essentially a captive market. Where workers' compensation is compulsory, free market theory is not adequate to keep people from getting ripped off.

Deceit is particularly acute when the lexicon of insurance is bandied about in the sales and purchase phase of insurance.

I'm willing to bet that even if you are in the workers' compensation industry, you'd have a tough time with these phrases: guaranteed cost, retrospective rating, reinsurance participation, collateral agreement, reinsurance treaty, retrocession, captive facility....

These are the terms that are at the heart of the California Department of Insurance's action against Berkshire Hathaway affiliates that were ordered to stop issuing or renewing EquityComp policies.

CDI yesterday took the unusual action of issuing a cease and desist order against California Insurance Co. and Applied Underwriters Captive Risk Assurance Co. for failing to file contracts and forms related to those fancy terms a couple of paragraphs up.

The problem, according to CDI, is that contracts that aren't approved by the department modify terms of approved forms and agreements placing policy holders (i.e. employers) at great risk of subsequent substantial debt because the agreements require the employer to reimburse the insurers for claim expenses.

In other words, a guaranteed cost program, where the employer knows up front what insurance is going to cost, gets substituted for a reimbursement program where the employer not only doesn't know what the end cost is going to be, but doesn't have any control over that cost.

Applied Underwriters and California Insurance are appealing CDI's action. They say the paper they are using doesn't require department approval, because of all the fancy terms they contain...

In the meantime, and partly in response to CDI's action, the insurance industry is sponsoring AB 1922, by Assemblyman Tom Daly, D-Anaheim.

The bill would excuse carriers from filing side agreements for policies with a deductible of $250,000 or more for large employers that satisfy three of four criteria, including:

• Being represented by a broker during negotiations as well as a full-time risk manager or attorney.
• Employing 500 or more workers.
• Having annual payroll of $20 million or more.
• Having a manual standard work comp premium of more than $1 million.

Many years ago my law firm was involved in negotiating a "large deductible" policy for an employer of the size described in AB 1922. Brokers were involved. They didn't help. In fact, they hindered the process. Brokers get commissions. Commissions don't get paid to either the buying or selling broker unless there's a sale.

In other words there's great incentive for brokers on both sides to push a sale through regardless of benefit, or detriment, to the employer/customer.

Just because an employer is represented by a broker and/or risk manager and/or attorney doesn't make the employer more sophisticated or less vulnerable to greed.

Happy NY Hike

My mother taught me it is not nice to take delight in other's misfortunes, but New York's proposed 9.3% rate hike does cause a little giddiness.

Yesterday the New York Department of Financial Services took testimony both for and against the proposed increase.

The financial sector, a strong sector of that state's economy, is for it; labor says it is just a scapegoat to take more benefits away from workers.

“It’s actuarially sound,” said Lev Ginsburg, director of government affairs for the Business Council of New York State. “Therefore, as much as we’d like it to be lower, it is necessary for market stability.”

Labor put a different spin on the proposal, that it “is based on the premise that the costs of workers’ compensation are continuing to rise, and that as a result, employers must pay more as well,” said Nadia Marin-Molina, associate director of the New York Committee for Occupational Safety and Health and the Workers Protection Coalition, a premise Marin-Molina disputes.

She says more blame needs to be laid on the marginal employers mis-classifying employees as independent contractors, which costs the state's system $6 billion / year in premiums and marginalizes even further the entire system.

Part of the blame, according to rate hike proponents, is due to the 2014 dismantling of the Special Fund for Reopened Cases, which pays for non-indemnity claims where medical is left open, and require further funding. Though that fund was closed a recent appellate court ruled that doing so was unconstitutional, because it shifted $1.1 billion to $1.6 billion on carriers that not had not factored those losses into their rates or reserves.

That case has since been appealed to New York's highest court, the Court of Appeals, and is awaiting review.

New York has some unique laws that go outside workers' compensation, principally in the construction industry. Labor Law section 240, known as the scaffolding law, deals with height based injuries, and section 241 deals with non-height related construction injuries.

Both were enacted at a time when New York was bustling with construction, ergo construction related injuries and deaths, and was seen at the time as an important safety motivator for contractors and construction companies.

Today, those laws provide tort remedies that would make most any opt-out proponent cringe with surprise and indignity.

But that's the state's culture. New York is a high cost state to live in, to do business in, and in which to employ people.

While the rest of the nation, even California, is moving in the opposite direction, New York is not only proposing a rate increase, but a significant one at that.

Is it possible that New York will eclipse California as the poster child for bad a workers' compensation environment?

The Department of Financial Services is expected to rule on the proposed rate increase, or ask the rating board to amend it, by July 15. We'll find out then...

The Ignorant Aging

I'm not an AARP member ... yet. Maybe I should be - heck I'll be 60 in just over 3 more years.

AARP has a big section on their website about working at age 50 and over. It details how to find jobs, what to say in interviews, how to assess benefits, talks about unemployment, self-employment and small business.

They say nothing about getting hurt on the job.

Dad

Yet, this demographic, the "aging workforce," has been specifically catalogued by the workers' compensation underwriting and claims community as a particularly high risk due to comorbidities, fragilities, and other age related ailments that can manifest at an instant with or without physical provocation at the work place.

It is also this particular demographic that is ill prepared to NOT work - the baby boomer generation still lives pay check to pay check; in other words they MUST work...

Yet, AARP (nor most other organizations) does absolutely no education to their constituents and members about work place injuries, about workers' compensation or how the system works, leaving this demographic especially vulnerable to surprise, or worse, abuse.

I guess this isn't really a surprise. Nearly no one educates the working population about workers' compensation, or any work injury program, until it's too late, after an injury occurs (or is claimed).

Many states have laws that require the "employer" to provide workers brochures and notices about workers' compensation, but frankly, no one reads those. They are textually dense, full of words that require a dictionary, have little relevance to the "now" and besides, everyone remains in denial about work injuries until they happen.

Then it's too late.

We talk a lot about national discussions - what should workers' compensation be, how can it be improved, how do we do a better job of taking care of the industrially injured ...

Yet we do a miserable job of public outreach.

Why would anyone give a rat's arse about changing anything if they have zero idea of what is to be changed in the first place?

Gaining knowledge about workers' compensation is sort of like learning about sex as an adolescent - most parents are loath to breach that sacred topic, and if they do then it's in shrouded terms of embarrassment; so we learn by doing, sometimes with terrible consequences...

So it is with workers' compensation: expectations at time of need/desire fail to match reality.

And we shouldn't sugar coat the workers' compensation story either.

When my son began adolescence, I literally hit him in the head with a box of condoms and told him my two golden rules: don't be a dumb arse, and beware the power of female genitalia (I used more profane adjectives...).

That lesson was reinforced from time to time with similar provocative, yet effective, communications.

Talking about what work comp should be is probably a good discussion. The "Grand Bargain" has veered off course I think.

But more important is telling the story of comp, in real and frank terms, to those most affected: workers, and the employers who pay the bills.

We can start with the various organizations that communicate regularly with at risk demographics, like AARP.

Hit them in the head with the proverbial box of condoms...

**********

On Tuesday, August 25 at 11:15 ET I will moderate a panel at the WCI Conference in Orlando, FL on the topic, "The Image of Workers’ Compensation and What Industry Can Do About It." Here's my panel:

Deborah L. Michel
Executive Vice President of Major Accounts,
Liberty Mutual Insurance
President,
Helmsman Management Services, LLC
Warrenville, IL

Rebecca Shafer
President
AMAXX Risk Solutions, Inc.
Hartford, CT

Michael Grabell
Journalist
ProPublica
New York, NY

Bethany Boggess, MPH
Research Coordinator
Workers Defense Project
Austin, TX
Part of the image has to include acknowledgements by the industry of the perceptions of work comp. I hope you're able to join us.

Acute Personalities

I have an old saying.

Perhaps someone else said it. I don't recall if I acquired it elsewhere - so if this quote belongs to someone else I apologize for the copyright violation:

"People don't change; their personalities just become more acute."

This applies aptly to workers' compensation.

Here's the headline: "Companies Charged in Federal Fraud Sweep Also Dabbled in Comp."

Here's the summary:

The U.S. Justice Department said its "coordinated takedown" of 301 people alleged to have generated about $900 million in fraudulent billings was the largest in history in terms of the number of defendants and losses. Court documents allege the defendants participated in a number of schemes that included paying kickbacks to patient recruiters, beneficiaries and others so providers could submit bills to Medicare and Tricare — a federal program providing health care for members of the military — for services that were medically unnecessary or never performed.

A WorkCompCentral review found some of the companies also operate in California’s comp system.

They're all the same players we've come to know and who somehow avoid discipline.

Oh, they're all in Southern California, as mentioned Friday...

Our headline is misleading - they didn't just dabble; these people terrorized work comp by rendering unnecessary medical "treatment" (how can it be treatment if they weren't treating anything but their wallets?), paying kickbacks, falsifying billings, harming people...

Will things change when the crimes get punished?

Or will the personality of comp just become more acute?

On The Record

Medical fraud isn't restricted to workers' compensation, but work comp can be the centerpiece.

Compound medications, illegal referral fees, attempts to conceal under "advise of counsel," undercover agents, federal indictments, and an admission on tape that, “we’re a very small pimple of everything that’s going on.”

I won't go into more here because WorkCompCentral has already been threatened with a libel suit for publishing the truth. 

But if you really want to know how pervasive, extensive and profitable medical fraud is, you need to read the story, "Federal Health Care Bust Has Ties to SoCal Work Comp," about D.F., M.K., R.R. and a few other names familiar to California workers' compensation observers here:

https://www.workcompcentral.com/news/story/id/e558db203b445487a1afa755b53f55730f8e9141.

Oh yeah, it's no coincidence that it all happens in Southern California...

Ivan's Trip

Ivan is 2 years old and has retinoblastoma - cancer of the eye.

He lives with his mom, Rosa, age 25, in Santa Maria, CA.

I don't know how she's paying for Ivan's treatment, but she can't afford transportation to/from the specialized treatment necessary, which is at UCLA Medical Center.

Ivan, Rosa, Dwights

Fortunately Angel Flights West coordinates transportation for people with serious medical issues but insufficient means to get to the treatment.

I volunteered for the flight - Ivan and Rosa were perfect passengers. They'd done this before.

Volunteerism takes many different shapes and forms.

I can't change Ivan's retinoblastoma. I can't ease Rosa's fears for Ivan's future. But I do what I can, and in this case I was able to fly Ivan and Rosa from Santa Maria to Santa Monica so they could make their chemotherapy appointment.

Look at Ivan in the picture - looks like a normal 2 year old to me! And he acted like one - full of spunk, energy, and that smile... he loves flying.

We can look at others in the same way.

Rosemary helps injured workers in Australia get their dignity back first by providing sustenance, then providing, essentially, occupational therapy by getting them to "work" at her volunteer center.

She does more for the injured worker population in Australia than anybody simply by showing that there's people who care, and providing a path to return to society.

Some find fault in Rosemary's actions. She's not militant enough. She's just supplying groceries. It's just a waste of time...

Wrong - Rosemary, at once an injured worker herself, understands the deep emotional damage that a work injury can have, and how hard it is to return to dignity, to find that new path in life.

When I got back to my home airport the line guys fueling Forty One Mike asked about my Dwight Johnsons.

Dwight, as you likely know, is a double amputee, the result of two separate industrial accidents 18 months apart, who decided to give people something to look at other than his prosthesis, and has made a business out of his shoes.

The line guys were delighted to get Dwight's contact information. Maybe Dwight will make another sale, maybe not. But for sure, there's a couple more people that have a little more education about the work injured, about a return to dignity and a new path in life.

There are countless other stories of people thrown a curve in life, others stepping in to assist (volunteers or professionals) and new lines in the map of life drawn, and followed.

Sometimes it is the system. No doubt there are times when the system lets people down and there is misdirection.

But more often it is the person.

The person can't always choose the system.

But the person does have a choice how to react within the system.

One last thing - if an injured worker needs transportation, there are volunteers who will provide it, and they're only a phone call away...

Seeking Nominations

This is a shameless promotion of the WorkCompCentral Comp Laude Awards.

There are only a couple weeks left to nominate the person or entity that you think deserves recognition for doing GOOD or overcoming difficult obstacles towards the betterment of themselves or others.

It's all about The Story - who's inspiring? who's a leader?

The nomination process is super simple. There are no categories to choose. The nominating committee will take care of ensuring nominations are placed into the correct category.

All you need to do is tell us who you are so we can contact you later, who the nominee is for obvious reasons, and a couple of sentences about why that person or entity should be recognized.

If your nomination makes it to the second round then WorkCompCentral will contact you for a more complete story - that story goes to the judges.

Nominate:

1.  an employer
2.  a claims adjuster
3.  an injured worker
4.  a doctor
5.  a lawyer
6.  a researcher
7.  a broker/agent
8.  a risk manager
9.  a physical therapist
10.  a nurse
11.  or anyone else that you think is an example of GOOD.

Nominations close June 30.

Go here: https://www.workcompcentral.com/gala/nominate

California Conundrum Part 3

So what are the reasons that California is so costly to employers and their carriers, yet so stingy in benefits to system consumers - injured workers?

That's the question in part three of this series that originates from the annual meeting of the Workers' Compensation Insurance Rating Bureau last week in San Francisco.

Two different panels comprised of 13 people from different sectors of the workers' compensation industry all had opinions. Nearly thirteen different opinions.

The first panel was the Research Forum consisting of California Workers' Compensation Institute's chief, Alex Swedlow, and WCIRB researchers Ward Brooks and Tony Milano, moderated by WCIRB Chief Actuary David Bellusci.

The numbers in the data show that a driver is continuous trauma claims increasing particularly in the Los Angeles area - 14.9% of all claims in the LA area are CT compared to 7.7% for rest of the state. Those claims are also far more likely to be have attorney involvement, post termination, or involve psyche/sleep/multiple parts; so not only does the area have a higher percent of CT claims, but those cases also have more complex characteristics.

Bowzer's confused too...

One of the medical cost driver characteristics noted by the panel was comorbidities, which prompted Swedlow's comment, "physicians are very good at billing for things they are going to get paid for..."

The speed at which claims are reported and thereafter managed matters a lot relative to cost, return to work and related issues. In Los Angeles the average time for a claim to be reported is 24.2 days post "injury" (in quotes because of how that may be measured) while the state average is 15.5 days.

In addition, this panel said that the overall litigation rate is much higher in souther part of the state contributes to delay as well as when treatment actually begins. The statewide average is 23.6 days from DOI to beginning of med treatment; the fastest times are in Colusa and Humboldt counties, the slowest Lassen (37 days), Shasta, San Mateo Contra Costa and then LA (29 days). This panel said that the introduction of attorney involvement is the biggest factor in slowing down delivery of care (which is an observation supported by NoCal applicant attorney Gary Nelson - see below).

The afternoon panel was a more contentious debate. Everyone had an opinion on the conundrum; not everyone agreed.

Christine Baker, Director Department of Industrial Relations, made one of the most poignant statements of the meeting: trust in the system has been eroding. She acknowledged that in the long run the various disparate systems of delivering medical care and providing disability protection to workers may not be financially tenable to employers in California. Baker and her team are targeting fraud in a big way marrying up data from Electronic Adjudication Management System and Independent Medical Review to find the abusers, but she also acknowledged that targeting and eliminating fraud is going to take cooperation of everyone in the system.

Basil Besh, M.D. of the FORM Hand, Wrist & Elbow Institute said we have fixed the wrong problems; why do we need both Medical Provider Networks and Utilization Review? "We punish the many for the symptoms of a few," Besh said.

Ronnie Caplane, formerly chairperson of the Workers’ Compensation Appeals Board, and now working for The Zenith Insurance Co, said reform can only happen if we bring everyone to the table and discuss solutions, that we all have the same goals. But, as the system currently operates, the injured worker is seen as carrion - everyone feeds off them, and everyone goes home with a full belly except the injured worker. Currently everyone is pointing fingers at the other to place blame, rather than get together for a common solution.

Cynthia Casey, Esq, is a defense attorney from Southern California and placed blame for the CT epidemic in the LA area on workers' compensation judges - for some reason the judges don't want to go to trial on cases of post termination CTs despite the anti-post term language of the statute.

But Van Nuys district office Workers' Compensation Judge Michael Cole disputed this, saying that the statue is poorly written and provides a loophole for those cases; he said the biggest difference between the north and south are liens, no one will take a case on a lien basis in the north.

Don Marshall of the California Fraud Assessment Commission said that fraud is a small percentage of cases that has a big impact. The one difficulty he notes is that employers get upset at employees who they perceive are ripping them off because it is personal, but the reality is medical and premium fraud are the problem areas. He thinks prosecutors are finally starting to get it. Marshall held up a box of a "workers compensation drug testing" collection kit that the doctor gets before even seeing the patient. "Injured workers have become pawns that are traded between providers to generate income," Marshall noted.

Modesto applicant attorney Gary Nelson observed that he went to a continuing education class in Southern California where the topic was 36 ways to get out of an MPN. He commented that he couldn't understand why that would be necessary because in NorCal they just don't do it. Nelson is of the opinion that evidence based guidelines are there just to deny treatment, that occupational medical clinics are all about not spending money so treatment is delayed, but humans don't like to wait so injured workers want out of those clinic situations.

Mark Walls of Safety National Ins. Co. thinks California is performing exactly as designed. Other states don't have liens and CT claims, and the reason 50% of indemnity claims are litigated is because it is a system designed for attorneys by attorneys. Walls noted that group health has formularies, guidelines, networks, etc. But when those are imposed in work comp they are objectionable - why? Walls said that outcomes in work comp are by far worse than in group health and that it doesn't work better when we just let people do things they want.

Finally Bill Zachry of Vons/Safeway/Albertsons said the real problem is that the incentives are not in the right places, noting that many VPs of insurance claims departments are misincentivized too. The front line supervisor, the person to whom the injured worker reports directly to, is key - there is not enough communication from that supervisor which tells the injured worker that they don't really care. Ignoring the worker is the greatest cause of litigation said Zachry, that any delay in medical care also drives litigation so everyone has to report immediately.

So what's wrong with the California system? As you can see, everyone has their opinion. There's probably some truth to all of it.

California Conundrum Part 2

Friday was the first part of this series about the California Conundrum, the theme of the Annual Workers' Compensation Insurance Rating Bureau meeting held in San Francisco last Thursday.

This second part is about the state of the workers' compensation insurance industry in California.

Note readers - this is about the INSURANCE industry! Not the state of the system. Not self insureds. Not employers, workers, other vendors... Simply how the insurance industry sees itself performing in the biggest workers' compensation market, by far, in the United States.

The information was presented by Chief Actuary of the WCIRB, Dave Bellusci.

Here's the bottom line, if you don't wish to read the statistical information further: California is the biggest, most competitive, most costly, workers' compensation insurance market in the US.

Did I say costly?

So what else is new?

2015 marked the 6th consecutive year of $1B growth in insurance premium. Bellusci's forecast for 2016 is a $17.9B gross premium, and 13.24B net of credits.

But Bellusci thinks 2016 will be the end of premium growth as lower rates trim the cash inflow. The earlier premium growth was driven by higher rates early on, and thereafter was economically (i.e. payroll) driven. It seems, according to Bellusci's interpretation of the data, that the industry is at end of a premium growth period.

Though California has 12% of the nation's total population, it represents 29% of countrywide premium. In 2009 California was 19% of the entire country. The premium growth in California, post recession, was much quicker than rest of the country. Part of this was rate increases, payroll expansion, and now the carriers are facing rate decreases.

Also, Bellusci noted, that even though many carriers have been consolidating (buying each other and/or merging subsidiary operations) the state still is the most competitive and diverse market in the country.

70% of the state is written by national carriers, 21% are California specific only, and 9% written by State Fund.

You folks already know what I think of this situation - in my mind, while a bit better than in the past with California specific carriers climbing out of the decimation to the market created by "open rating", I see this as still a very anti-competitive market.

Domination by big money national firms with broad portfolios seeking to take advantage of the work comp market to sell other lines - to me there is nothing healthy about work comp being a "loss leader" to other lines and such behavior negatively affects the quality of claims handling.

Despite "open rating" and the illusion of competition, California rates remain considerably higher than the rest of the nation (see my argument above).

Bellusci points to 3 principal factors negatively affecting California rates: frequency, severity and the cost of benefit delivery.

Injury reports went from 1 in 5 workers in 1962 to 1 in 25 in 2012 - 83% decline. That is a fantastic safety record that mirrors the rest of the nation and is consistent with what Berkeley research Frank Neuhauser's opinion that it is more dangerous living outside the work place than in it!

But, of course, the Los Angeles area pulls California out of the national average. From a statistical standpoint the anomaly is due to the high rates of permanent partial disability claims (which drives litigation, ergo expenses) and continuous trauma claims (which are largely absent in the rest of the nation).

Indemnity loss in 2015 was nearly a $30,000 per claim average. In 2005 that number was $19,000. If there is any good news for carriers (at the expense of the medical community) medical cost severity bucks the national trend; California medical costs have been deflationary since SB 863 while the rest of the nation has see inflation.

But it's not medical severity that really drives these costs in California - it is late reporting and more importantly late treatment authorization. The late tail in medical care (i.e. delays, denials, and overall bureaucratic wedge-points) creates a super heated medical cost driver, such that the average California indemnity claim medical cost is $42,000 - second highest in the nation, and unfortunately also by a long shot...

And to the chagrin of reformers, the unintended consequence of SB 863 has been an increase in benefit delivery friction costs by 24%, making California the most expensive in loss allocated expenses, by far.

So what's the take away?

I think Mark Walls, a panelist on a separate presentation at the meeting (Conundrum Part 3), put it best: "California is performing exactly as it was designed ... this is what we signed up for in California."

California Conundrum Part 1

There are at least three stories that were told at the Annual Workers' Compensation Insurance Rating Bureau meeting in San Francisco yesterday.

The one I will relay today is the one about education and jobs, and how the workers' compensation industry, in my mind, is going to have a tough time getting new blood to replace us gray/no hairs unless something drastic changes.

Sarah Bohn

Sarah Bohn  is an economy research fellow at the research center of Public Policy Institute of California. While her presentation was about the general economy of the state so that attendees could understand where the jobs are going to be and in what risk categories (and regions), here's the bottom line: there aren't going to be enough college educated young people to meet the demands of the job market.

In other words, there's going to be a shortage of qualified people available to handle all of the tasks in the work comp industry (and other jobs that require higher education) so work comp is going to have to compete for talent.

Bohn said that job growth in California is happening mostly in the service sectors, accounting for 50% of all job growth. The sectors that are growing fastest include accommodation (hospitality) and food, health care, professional and scientific, and administrative jobs. The mix is still pretty diverse, Bohn noted, and those areas are projected to continue their growth rates through 2022, though construction in certain geographic areas is going to explode.

Side note: construction is a mainstay of the California economy and supports a huge side economy in supplies, appliances, banking, etc.

About 50% of the fastest growing jobs require little education, said Bohn, but the wage polarization will accellerate against the higher education jobs; one needs look beyond just the growth numbers to the characterizations: Overall Bohn believes more jobs will require more education than current, continuing a trend from past years.

About 1/3 of all jobs in the state require a college degree, 1/3 high school or less, and the other third in between high school graduation with some college training.

But future economic demand is going to exceed the supply of skilled workers by 2030 in the high education high skill sectors. Bohn calls this a skills gap which will result in lower economic growth and increasing economic inequality between the haves (college educated) and have nots (no college degree).

California used to be the education capital of the world because of its marvelous public university program through the UC and state college system. The model was phenomenal 50 years ago, but needs an update, according to Bohn, if the state is going to meet demand.

Compared internationally, California still has one of the highest share of bachelor degrees overall for older adults, but not for the 25-34 group which ranks about average.

But the future is more dire.

41% of California high school grads don't go to college within 1 year after graduation, and overall not enough go to college at all. California's public education plays a huge role in whether someone goes to college, accounting for 46% of all admissions.

Bohn estimates that only 35% of adults will have college degrees in 2025 which will create a shortage relative to job demands of about 1.1 million worker...

The way I took this news is that the workers' compensation industry is going to have a tough time getting skilled/educated workers, and we'll be competing against (actually, already are) all of the other economic sectors.

So we, as in work comp, will need to work harder to educate, recruit and train - oh, and pay wages that will match tech, and other more rich job sectors.

There are some executives and companies that are thinking hard about this conundrum and they're talking actively about how the industry can support trade specific (in this case insurance and workers' compensation) training into college degrees to that young people come out of school already primed for a career of helping people.

These efforts are a great start. More will need to be done though. More financial assistance, more university participation, more marketing of the industry to young people.

In particular, we need to communicate a message that workers' compensation is a good career for good people who want to do good things for humanity.

I'm not talking about a polly-anna, fantasy - but there are stories we can tell. Some people don't have good experiences, granted. We as an industry should learn from those so we can deliver work comp better in the future.

But we should also do more to acknowledge what's right, tell those stories, and do a better job of managing the image of work comp and the people that make it happen.

Part of my small effort in that regards is Comp Laude. Yep, shameless promotion here, but timely.

Nominations are open, but will cease at the end of this month. The process is simple - just tell us who you are, who the nominee is, and a short description of why the nominee should be recognized.

You don't need to figure out any categories, use any rating scales, answer any questions.

If your nominee passes the first round of selections by our nominations committee, then you'll be asked to provide a more complete narrative, i.e. tell us the story.

Stories are what people want to hear. Statistics are great, but stories engage people and help with understanding.

We'll present those stories, and the award winners, November 4 and 5 at the Burbank Airport Marriott.

Workers' compensation is going to need educated people in the future and we'll be competing against the rest of the economy for them. Sure we need to step up educational efforts, but the first part of the equation is to elevate the image of the industry.

Pulse

The mass shooting by Omar Marteen at the Orlando, FL nightclub Pulse shocked the nation, and has precipitated considerable debate about terror, guns, mental health, security, race and religion.

Increasingly reports are steering motive away from terrorism and more towards a hate crime, the product presumably of Marteen's internal conflict with his sexual identity.

The names of the 49 killed by Marteen have been published. Two were identified as employees of the club.

Kimberly Morris was a bouncer at Pulse nightclub. She was 37.

Deonka Deidra Drayton was a bartender at Pulse. She was 32.

We don't know yet who of the 53 wounded were employees of the club, if any.

Life takes a bad turn sometimes.

The mission of workers' compensation is to help when those bad turns happen at work.

I know the workers' compensation community, and in particular those in Florida, will provide to the victims and their families the best care and compassion they can.

Fulfilling our mission...

An Innovative State Fund

The California Department of Insurance lowered its advisory pure premium rate again this year, and many insurance companies writing workers' compensation in the state have followed along.

Side note for the uninitiated - the DoI's rate is not mandatory nor obligatory; insurance companies in California are free to charge a base rate but most tend to follow the advisory rate to remain competitive in the market.

The pure premium rate is not what a company actually charges either. The pure premium rate accounts only for anticipated losses for the year, and the costs of administering and settling claims. It does not account for administrative expenses or other overhead costs.

The rate is not to be confused with the actual premium charged an employer. The rate is just one factor. An employer's experience (i.e. how many claims are made over time) and the amount of payroll and job classifications account for how much an employer is actually billed.

The Workers' Compensation Insurance Rating Bureau, which gathers all of the carrier data in California for analysis and advisement on rates (among other duties) says that frequency (i.e. the number of claims) keeps going down, severity (i.e. how much is paid on each claim) keeps going down, and safety keeps improving, all of which dictate less expensive insurance for employers.

For employers, this is all good news, so long as the insurance obligations to take care of their workers injured on the job are performed (I know, there are going to be comments that the insurers aren't keeping their promises - but that's not what this post is about, so don't tap that keyboard just yet...).

The State Compensation Insurance Fund has really wicked up the pace, however, by announcing a monumental 9.5% drop in its pure premium rate.

Compare that to the average rate drop filed in California, which is about 3% for the year (give or take a few basis points).

Perhaps even more important though is the State Fund has asked the DoI to approve a new tiered rating plan, increasing the tiers from four to seven.

The purpose, says the State Fund, is to smooth out pricing fluctuations from year to year for its policyholders.

This is huge.

The State Fund, though it has been losing market share (albeit, not unintentionally), is still by far the largest workers' compensation carrier in California (and one of the largest in the nation) because it's core market is by far the biggest market: small business.

Small business is no different than small households - many generally live, essentially, paycheck to paycheck, month to month, season to season. In other words, cash flow is the biggest challenge for small business.

What drives small business owners nuts is not being able to adequately plan for cash outflow. Surges in expenses, particularly expenses that tend to be perceived as fixed, like insurance, cause panic and anxiety. The year over year double digit workers' compensation insurance inflation in the early 2000s is what created the havoc that resulted in SB 899 in 2004; it wasn't the fact of inflation, it was that inflation was so radical (40+% year over year)!

And the State Fund plans to revise how it assigns employers to tiers by taking into account the wages that an employer pays in comparison to average wages paid by similar employers in the same industry. An employer with a higher ratio between the average annual wages associated with the policy and the average annual wage for the industry would be assigned to a better tier.

In addition to this new rate plan, the State Fund is also planning a one year transition because some employers will in fact see rate increases - the transition plan is designed to ease those employers into the new tier, which officials believe will be more fair to more employers and will flatten the payment obligations.

I think we're seeing a new State Fund, one that is much more customer focused and innovative. Does the State Fund have issues and problems? Sure, we can find fault in nearly any business, particularly insurance companies. But State Fund has been stepping up its game.

It's not easy to stand out in work comp insurance. State Fund is showing the others how to do so.

Good job folks.

Are The Calderons Enough?

And another one goes down.

Former California state Sen. Ronald S. Calderon agreed Monday to plead guilty to mail fraud, after signing a plea agreement over the weekend in which he admitted to arranging $30,000 in payments to his son from Michael D. Drobot in exchange for legislation that would have allowed Drobot to make “substantial amounts of money” by performing spinal surgeries on worker's compensation applicants (using in many cases, as we now know, counterfeit hardware as well).

Calderon admitted that he pressured Drobot to hire his son as a paid summer intern in exchange for pushing legislation in Sacramento that would have benefited the man.

Under the terms of the deal, prosecutors agreed to request that U.S. District Judge Christina Snyder sentence Calderon to no more than 70 months behind bars — the low end of what sentencing guidelines suggest.

Calderon’s brother, former state Assemblyman Tom Calderon, pleaded guilty to a single count of money laundering on June 6. He admitted in the plea bargain that he and his brother hid bribe money through laundering to his company. Prosecutors have agreed to seek a prison sentence of no more than 12 months for Tom Calderon.

Regardless of what the Calderon brothers and their stories say about California politics, the tie to workers' compensation is even more unfortunate. Big money fraud is exposed once again in California comp, and we can't seem to get over it.

In 1992 KCBS-TV reporter Harvey Levin went undercover to reveal flagrant fraud in California's workers' compensation system, uncovering blatant, organized crime. Shortly thereafter some people went to jail and new rules were put in place outlawing patient solicitation and other techniques of cheating the system, employers and workers - frankly to little avail...

The cheating, on a large scale, continued, albeit in a more clandestine, but no less sinister manner, as evidenced by Drobot, Calderons, Fish, etc. etc.

It was some six or seven years ago when I was called to a meeting in Glendale, CA by a prospective purchaser of WorkCompCentral. The chief executive of the medical imaging firm that had proposed buying my company pulled me aside and said, "Look David, you know and I know that workers' compensation is dirty business...".

I was shocked and offended when I heard that and our business meeting was nearly instantly terminated.

Yes, I know that a criminal element lurks in the shadows of workers' compensation.

And I also know that the people who toil in this system are disgusted with what seems to be tolerance for the cheating of employers and their workers out of the protections and benefits of work comp.

But for too many, turning a blind eye means keeping food on the table for the family.

Or, hate to say it, just staying alive...

That workers' compensation fraud goes as deep as it does into government demonstrates that work comp is not just a political football, it is the house stacking the cards.

There are three stakeholders in work comp. Employers pay for the system. Workers benefit from the system. Government makes and enforces the rules. Anytime any one of those stakeholders abuse their positions is shameful.

But when government is abusive confidence in the system is shaken to the core.

I think most of us want workers' compensation to be seen in the Good Light. I want workers' compensation professionals, dedicated to serving and taking care of People, to be viewed as the heroes that they are. I want respect for the institution...

That can't be accomplished when government is part of the problem.

While the Calderon brothers are finally going to serve some time (albeit, too little in my opinion), my fear is that they are simply a symptom of a greater evil that lurks in the shadows of comp.

Workers' compensation isn't perfect, but the people committed to the cause do care, do good work, and want to help people.

Corruption is intolerable. It is, unfortunately as indicated above, ongoing regardless of criminal indictments and guilty pleas.

Those who don't wish to play by the rules, who seek an unfair advantage, shield themselves and their operations with powerful, influential people who are able to deflect allegations and investigations.

It's unfortunate and the public perception of workers' compensation gets inexorably tarnished.

Which means you and I have to work even harder to make workers' compensation the venerable institution it is.

It's not about protecting special interests. It's about protecting the general interest.

Don't get disheartened work comp professional. Be emboldened. Blow the whistle. Make a case. Someone, eventually, will listen and take action.

This Could Be Huge

My blog post on fraud and audits on June 7 attracted the attention of Christine Baker, Director of the Department of Industrial Relations, State of California.

She took issue with my statement that the Brown Administration was actively inhibiting audits of anti-fraud activity.

Baker explained that while an audit is a great process for keeping government in check, she has been through this process numerous times in the past and the issue is that the auditors don't understand work comp, don't understand the nature of work comp fraud, they come in and ask a bunch of questions then make budget recommendations and suggest which agencies could or should coordinate more...

In the meantime the auditors do not get to the root cause of the issue and create a huge distraction away from actually combatting the crime.

I get it. Any of us who have been in positions of accounting for where the money goes have been through audits, and for the most part, unless one is truly trying to hide something, audits are a huge expenditure and a significant distraction that take up a lot of resources for little return other than to assuage the bill payer...

In my blog I had suggested that keeping the consumer/injured worker informed via some explanation of benefits or other reporting mechanism would go a long way, not only in deterring fraud, but also towards increasing consumer engagement in their own treatment and case activity.

Baker isn't interested in another form, and another piece of paper to accompany the 30 million medical bills that get through the system every year. She is interested in a more robust solution.

What hasn't been clear to the workers' compensation public is that the administration has been using EAMS data (more specifically lien filings) and marrying it up with Independent Medical Review to see which providers are operating in the shade.

Some of those providers have already been indicted, and surprisingly continue to pursue lien collections (perhaps to fund their legal defenses?); others are in the indictment cross hairs as the administration works with the FBI and other law enforcement to build cases.

This activity is the start of something bigger, more comprehensive, and hopefully will result in not just capturing criminals but getting consumers more engaged in their own claims.

The future will bring us, Baker promises, a portal for anyone on any given case to log in and see everything that is going on, and in particular medical billing. This is the administration's answer to giving consumers/injured workers an EoB for every medical bill - instead of individual pieces of paper, the administration proposes that folks will have essentially real time access to the complete status of their cases (and I'm assuming even those that are not litigated) for more engagement, greater understanding, increased transparency.

This is a huge task.

Making all of this disparate information and complex workers' compensation metrics accessible without violating privacy, and also making it understandable to the consumer is going to be very, very difficult.

I hope that those who are planning this project engage some of the best user interface designers they can hire because while information is great, if it can not be understood by the consumer of that information then it is of no utility.

If the administration can pull this off, however, it will be a model that all other jurisdictions can, and should, adopt.

The REAL Objection to Opt Out

I have never really understood why the Property Casualty Insurers Association of America has been so vehemently against opt out.

While it seems that opt out returned to the back burner for this year with constitutional defeats in Oklahoma (also beguiling traditional OK comp) and political stalemate in other states, PCI has reignited the debate with an inflammatory paper.

The basic arguments, which PCI supports with some data, is that opt out results in costs shifting to other systems, and that a lack of standards and transparency is detrimental to consumers (i.e. injured workers).

PCI also argues that opt out is all about saving employers money to the detriment of consumers by denying more claims earlier and paying less with capitations and restrictions not found in traditional comp.

I get that alternative work injury systems need to meet certain standards and need to be more transparent to consumers - to me that’s a no brainer.

But the objections that PCI in particular raises are exactly the same complaints made against traditional work comp: inadequate benefits, unnecessary delays, cost shifting, etc.

Each statistic cited by PCI against opt out can be asserted against traditional work comp - just use another study or data source.

For instance, just a couple of years ago, Paul Leigh of University of California at Davis, and lead author of the study, Workers' Compensation Benefits and Shifting Costs for Occupational Injury and Illness, told WorkCompCentral, "We're all paying higher Medicare and income taxes to help cover (the costs not paid by workers' compensation.)"

That study, published in the April 2012 edition of the Journal of Occupational and Environmental Medicine, found almost 80% of workers' compensation costs are being covered outside of workers' compensation claims systems. That amounts to roughly $198 billion of the estimated $250 billion in annual costs for work-related injuries and illnesses in 2007. Just $51.7 billion, or 21%, of those costs were covered by workers' compensation, the study said.

Of the $250 billion price tag for work-related injury costs, the Leigh study found $67.09 billion of that came from medical care costs, while $182.54 billion was related to lost productivity.

In terms of the medical costs, $29.86 billion was paid by workers' compensation, $14.22 billion was picked up by other health insurance, $10.38 billion was covered by the injured workers and their families and Medicare and Medicaid picked up $7.16 billion and $5.47 billion of the tab, respectively.

The study drew criticism from the work comp crowd defending its practices, challenging the data, and anecdotally attempts to counter argue, with limited success.

PCI does the same thing with its study. If one digs deep enough and studies the study I'm sure one would find fault with the data and the reporting on cost shifting - because the truth is that absolutely no one has a fix on that topic. It is basically impossible to study cost shifting since the point of first medical contact determines occupational characteristics and that determination follows the claim nearly without question most of the time.

My good friend, Trey Gillespie, PCI assistant vice president of workers’ compensation, told WorkCompCentral that, "it really goes back to the fundamental tenets of workers’ compensation: protecting injured workers and their families and protecting taxpayers. The general consensus is that the way programs should work is to protect injured workers and taxpayers and avoid cost-shifting.”

Of course! All work injury protection systems should do that.

But they don't.

That's what the ProPublica and Reveal series of critical articles about workers' compensation programs across the country tell us, both anecdotally and statistically: injured workers aren't protected, costs are shifted onto other programs, and taxpayers are paying an unfair portion of what work comp should be paying.

Indeed, in October, 10 federal lawmakers asked the U.S. Department of Labor for greater oversight of the state-run workers’ compensation system, citing “a pattern of detrimental changes to state workers’ compensation laws and the resulting cost shift to public programs” as proof the oversight was needed.

Then I started thinking about the one truism that governs human behavior nearly universally until someone is about 90 years old (and even then!): every single person protects their own interests first.

And I thought of PCI’s name: Property and Casualty Insurers Association of America; “property and casualty”. Aye! There's the rub!!

There’s no room for P&C in opt out! ERISA based opt out uses only health insurance and disability insurance.

Work comp is the mainstay of the P&C industry, the single biggest commercial line, and the gateway to a whole host of much more profitable lines.

If opt out spreads beyond Texas it is hugely threatening to the interests of the PCI members because they stand to lose considerable business, particularly if opt out migrates to the bigger P&C states.

PCI is protecting its own interests (or those of its members) by objecting to opt out.

And I don't blame them. Their impression of this threat is real.

Michael Duff, a professor of workers’ compensation law at the University of Wyoming, told WorkCompCentral, “These are interested observers. They’re going to have an agenda. They represent insurers who are in the workers’ comp business.”

Bingo.

“Every commercial actor that participates in traditional workers’ compensation has an interest in seeing traditional workers’ compensation continue," Duff went on. “But,” he added, “that traditional workers’ compensation imposes costs on employers. There is now a group of employers who would like to pay less, and Bill Minick has developed a commercial product that is in competition with this other conceptual approach to handling things.”

Here's THE fact: traditional workers' compensation and ANY alternative work injury protection plan require vendors pitching wares and services to make the systems work.

Insurance companies are as much a vendor in either scenario as physicians, bill review companies, utilization review companies, attorneys, vocational counselors, etc.

Each and every single one makes a buck off work comp, and each and every one has an interest in maintaining the status quo.

All vendors have a business interest to promote and protect, otherwise they would not be in business. For property/casualty insurers, money comes in via premium, and they hope only a little goes out in claims so that shareholders get some return.

The spigot on outgoing dollars is tightly controlled by regulation (and many argue not tightly enough), and if it weren't then the interests of the insurance company would be even more weighted against those of the customer (i.e. premium paying employer) and consumer (i.e. injured worker).

That's the bottom line. Arguing that one system is better than the other without admitting one's own special interest is simply hypocrisy.

Workers' compensation is going through some pretty traumatic soul searching right now. Employers leading the debate are asking, "why stay in a system that facilitates vendors' interests ahead of employers or workers?"

THAT's the question that BOTH the P&C industry and the opt out movement need to answer. Further debate about the merits of one over the other is simply sophistry.

Polarization to Hypocrisy

That workers' compensation is a political football is well known. The system was produced by political compromise, and continues to be shaped by political dissent. This is the cycle of comp.

Kentucky is our demonstration state for this aphorism this season, with Gov Bevin trashing the Workers’ Compensation Nominating Commission for a panel more to his liking, the unions taking him to court on that move and a couple of other issues, and the judicial system intervening to slow things down, and sort them out.

Yesterday Franklin County Circuit Court Judge Phillip Shepherd issued a temporary restraining order against the governor's maneuver while his office and his opposition use the very same arguments in support of their positions - that each side wants the commission stacked in their favor to the detriment of the other side.

The seven-member panel sends the governor the names of qualified administrative law judges who, if appointed, determine the validity of workers’ compensation claims and how much money should be awarded to injured workers.

Allegations of persuasive political donations, party affiliations, and favors abound.

Bevin is a Republican. His predecessor, Steve Beshear, is a Democrat.

This type of fighting over workers' compensation is, unfortunately, commonplace. Work injury protection is either favorable or not, on or off, one or zero, yes or no.

Compromise eludes those who shape policy, and this occurs across borders.

This "us versus them" mentality pervades everything in work comp, even digestion of content. We at WorkCompCentral hear variously that we are either too favorable to injured worker positions, or too favorable to the insurance industry.

Of course, we can't be both - so this division simply tells us that we are perfectly positioned, offensive to all, agreeable to all, depending upon the topic, time, and environment.

Maybe it's just human nature to take a well defined side, rather than wallow in the obscurity of the middle ground.

The danger in such polarity is hypocrisy: what's good for me isn't good for you, regardless of logic...

In the meantime people hurt at work, and the employers paying the bills, are relegated to puppets of the power mongers. Apparently their interests don't count.

Racing Risk

I love racing, particularly motorcycle racing.

I grew up on motorcycles. Though I didn't get my first motorized two wheels until age 10, my brother, friends and I would fantasize about having a motor, riding our bicycles and making vroom sounds or using playing cards to create the noise.

Riding bikes is thrilling, but racing takes the experience to a whole new level. Close riding proximity, the test of skills against another rider, competitive adrenaline - if you've raced anything on two wheels you know exactly what I'm talking about.

Zoom...

My last race was a motocross at Piru Race Track 10 years ago. I won my age class, and got third in the age 35-40 age group. I stopped because I realized my motor skills didn't keep up with my mental agility...

But spectating is just as thrilling. Perhaps it is because I can relate from my experience, or perhaps because motorcycle racers aren't hidden from view so you can see what the riders are actually doing; to me it's just much more up close and personal than automobile racing, or any other kind of racing really.

I try to go to a race every year. Usually it's the U.S. round of the World Superbike Championship held at Laguna Seca raceway near Monterey, CA. It's the proverbial child in a candy store adventure for me.

Of course, up on two wheels eventually means going down - as in crashing. Two wheels are inherently unstable. The gyroscopic effect keeps everything in proper order so long as the laws of physics are respected.

Racing always challenges those laws, though. Anyone and everyone that races eventually will get on the wrong side of Newton's laws. Momentum becomes an enemy. Injury and death result.

This past weekend three professional motorcycle racers died.

Luis Salom was only 24, and a rising star in the World Superbike support class, Moto 2.

Just a few days later the Isle of Man, known in racing circles as the most dangerous of courses, took two riders in one day.

Last year, at Laguna Seca, a horrible crash in the last MotoAmerica race of the day claimed two lives.

Of course there are the countless injuries on a daily basis too.

Bikes are dangerous. Risk management is taken beyond science to an art level in motorcycle racing.

Curiously, I know pretty much nothing about how workers' compensation works in professional racing, particularly international racing like World Superbikes, which goes to 13 different countries.

How are racers and crews covered? Who pays for what? What jurisdiction controls? How adequate are benefits (if any)? What is the scope of medical care, both preventive and responsive? How expensive is insurance and how is it rated?

I'm sure there are brokers who specialize in covering motor racing risks, and in particular international motorcycle racing - I hope you'll chime in and educate us domestics about racing risk management and insurance, and in particular occupational risk management...

Fraud and Hypocrites

Big fraud headlines draw lots of interest.

An alleged $90 million ring in Riverside County was busted with indictments against a host of workers' compensation vendors yesterday.

Former California state assemblyman Tom Calderon pleaded guilty yesterday to a bevy of charges, including damning accusations against his brother, former state senator Ronald Calderon, in the Drobot/Pacific Hospital scam.

Kareem Ahmed and his Landmark Medical business continue to be dogged by prosecutors in new criminal filings.

Batman wouldn't tolerate this...

Michael R. Drobot, son of former Pacific Hospital owner, Michael D. Drobot, pleaded guilty a few days ago to various fraud charges, and the cases against his father are nearing conclusions as others get sucked into the vortex.

All of this has, unfortunately, a number of commonalities.

Each case involves medical vendors.

Each case arises out of the Greater Los Angeles area.

And, each case involves operations that were allowed to balloon into astronomical numbers before anyone gave a rat's ass.

That last statement is what is most troubling.

Ahmed's recorded statement that "nobody gives a f#*k" about workers' compensation fraud is, frankly, very accurate.

Until the numbers get spectacular - then taking on organized crime becomes interesting to law enforcement.

Recent general media articles about California workers' compensation fraud imply that such criminal activity is easy because no single person is in charge, so it's easy for criminals to fly under the radar until greed trips them up.

These big headlines are nothing new. These activities have been going on since I was a punk lawyer - does anyone remember Dr. Mark Kaplan and his $50 million bust in 1993?

And what about the television news stories earlier than that where an intrepid reporter went into the organized crime circuit to expose nefarious doctors and lawyers scamming work comp?

The big headlines will continue, and we may whine and cry about it, but who cares? Until the greed escalates to the tripping point, criminals know that there is little risk in trying, so it will continue.

Yet, simple efforts that would be effective get stymied.

Not only is the Brown Administration not interested in reviewing where the money goes, it actively works against any audit.

The insurance industry is just as culpable, beating down attempts to get injured workers informed about their medical care just in case they might happen to notice that services are being billed that weren't delivered...

We're all a bunch of hypocrites. No one wants to say anything lest they get targeted. No one wants to do anything lest their next job be rescinded. No one cares enough to implement simple processes because it might cost some money - after all, fifty million here, ninety million there; it pales in comparison to the state's $30 billion industry...

We all think that the injured worker should be more engaged in their medical care, but we do nothing to make that happen. Instead, everything is kept in the dark, except for medical reports, which say nothing about the actual care provided, are all word processed forms that say the same thing, and provide no information about what is actually happening.

Tell the injured worker what care is being billed, and what is being paid. It's that simple.

The pat argument against providing injured workers an Explanation of Benefits is that no one will read them. Bull - that's just an excuse not to take action. Provide an incentive, like a couple of bucks to identify activity that could be fraud and trust me, someone on disability with nothing better to do will be reviewing those EoBs with a fine tooth comb.

In the meantime, these great fraud headlines bring lots of readers to WorkCompCentral.

But I'd rather folks be reading about success stories than fraud busts...

Live Advertisement

I got this email from the RIMS organization a few days ago. Others I know received the exact same email. They want the speakers to pay for the privilege of speaking at their event.

********

Dear David,

Thank you so much for your continued support of RIMS Annual Conference & Exhibition. As a past speaker, I wanted to let you know about our new registration policy for speakers. All speakers will need to purchase a full-conference access pass for US $500, a savings of up to US $795 off the attendee rate. This pass will give you access to the entire conference, and to RIMS preferred housing.

The RIMS 2017 call for presentations will open in early June. We’ll send out more information then.

We look forward to your submission.

Sincerely,

Stuart Ruff
Vice President, Events and Education

********

Talk about alienation via blatant commercialization... I hope everyone has a good time listening to endless live advertisement.

Stuart - save the postage and effort. I don't need any information about presentation submissions.

BTW - I have never spoken at RIMS. Every single one of my prior topic submissions were rejected, I assume because they were outside the RIMS safe, risk management formula.

A New York Case

From WorkCompCentral News this morning - an example of "liberal interpretation" in favor of the injured worker:

A New York appellate court ruled that a corrections officer was eligible for duty disability retirement benefits because she established that her injuries from being struck by a gate were caused by a direct interaction with an inmate.

Case: Matter of Traxler v. DiNapoli, No. 522066, 05/19/2016, published.

Facts: Sheila Traxler worked for the state of New York as a corrections officer.

She suffered injuries at work in June 2010 when a self-closing gate struck her.

The accident happened while Traxler was escorting three inmates through a gate from the visiting room.

After Traxler instructed the inmates to line up against a wall, another corrections officer told her someone was calling for her. As Traxler turned to see who was calling for her, another inmate passed through the gate.

Traxler ordered the inmate to stop, but the inmate proceeded through the gate and let go of it. The gate then swung closed and struck Traxler, who was standing in the doorway.

Traxler later applied for performance of duty disability retirement benefits, alleging that she was permanently incapacitated due to the injuries to her neck, back and shoulders from this incident.

Procedural History: The retirement board denied her application, and a hearing officer upheld this decision. After the state comptroller upheld the board's decision as well, Traxler sought judicial review.

Analysis: The Appellate Division's 3rd Department said that it is established in New York law that a corrections officer is entitled to duty disability retirement benefits if she is incapacitated from her job because of injuries that were caused by "direct interaction with an inmate." 

The court said the record in this case provided no basis for a finding that Traxler's injuries were not caused by an inmate's act of releasing the self-closing gate while Traxler was in the doorway.

Disposition: Annulled and remitted.

To read the decision, click here.