Texas Audits

Texas looks good to the industry with low average combined ratios and good profitability.

That's not good for injured workers, though, if it comes at the expense of failing to provide mandated benefits.

The latest audit took only 64 cases to uncover $511,000 in underpayments of lifetime income and death benefit payments.

Workers’ Compensation Commissioner Ryan Brannan said in a press release that he is "concerned there may be other deserving claimants in the same situation. These results indicate that we need to continue these types of performance audits.”

I would be concerned too.

That's an average of nearly $8,000 per claim that wasn't paid. To the common working person at the lower end of the economic scale that's a significant amount of money.

Carriers selected for the audits were those for which the division either detected compliance issues, or carriers who were identified as poor performers in the Performance-Based Oversight program.

The division said in the release that the common compliance errors discovered during the performance audits included:

• Failure to pay 75% of the average weekly wage.
• Failure to obtain a complete wage statement from the employer.
• Failure to properly calculate Average Weekly Wages.
• Failure to include non-pecuniary wages in the AWW.

Trey Gillespie, senior workers’ compensation director for the Property Casualty Insurers Association of America, told WorkCompCentral that part of the issue may be in the fact that the wage statements submitted by employers covers only 13 weeks preceding injury or death and the AWW is calculated on that.

Bowzer is embarrassed and promises to do better.

And wage statements often only include wage benefits, without reporting the value of other benefits – which is also required as part of the calculation of the AWW.

But that explanation means only that carriers aren't doing a good job of ensuring accurate information from the employer - after all, part of the insurance premium that an employer pays is for the service of making sure that a claim is handled properly, which includes ensuring that the insured employer is passing along the right information.

John Pringle, an Austin attorney who does both claimant and defense work, seemed to agree, in his interview with reporter Joey Berlin, "what I see is adjusters will contact the employer, ask for a wage statement. And then when they get it, they’ll use it even though it may be obviously flawed on its face. They’ll still use it, because that’s what they got … until somebody makes an issue of it.”

Gillespie at least believes that scaring carriers into compliance is a good tactic:

“But it’s good to have these press releases and good to have these performance audits so that basically, insurance carriers, as they’re self-auditing themselves, are sure to have this on the checklist of things to look at.”

Budgets and Flying IMC

Flying IMC

Sunday was a great flight to go see Mom.

The second of two troughs of low pressure was making its way through Southern California bringing steady rain, low overcast, mist, low visibility, no icing threat below 9,000 feet, no forecast turbulence - all the makings for a great Instrument Meteorological Conditions instrument flight.

In Southern California, IMC flight is a rarity, so I relish every chance I can get to go do "actual" instrument flight. Not the fake stuff where you have a safety pilot or an instructor, but the real deal where you really can't see, and really must pay attention, and really must be "on your game" because the consequences of failure are catastrophic.

In congested air space, such as Southern California with a couple of Class Bravo sectors, numerous Class Charlie zones and untold Class Delta spaces, the Federal Aviation Administration has established Terminal En-route Clearances. These are basically pre-approved instrument flight plans. All a pilot need do is call up Air Traffic Control on the ground to get a clearance - no filing of plans an hour before take off - and the route is well established and published.

The TEC system is custom made for missions such as mine: getting down south to see Mom on a day when the weather keeps most pilots on the ground.

And so off I went, into the wild grey yonder!

It was an impeccably precise flight. Everything was perfect: my on course tracking, altitude assignments, standard rate turns, engine cylinder head temperatures, speed - everything!

But the one thing I have learned about aviation over the years is that nothing is ever perfect - something ALWAYS comes up to challenge piloting skills, decision making, or situational awareness.

Sunday was to be no different.

As I approached the airport I dialed in the Automated Weather Observation Station - the wind was mildly offshore at 050 degrees, 5 knots. That would favor runway 6, but was not so much of a tailwind as to make landing runway 24 out of the question.

So I requested from ATC my preferred instrument approach to the airport - the GPS 24 approach. As you would guess, this means I was planning on landing runway 24.

This particular approach is a "non-precision" approach. That means that there is no vertical guidance; all altitude indications are by waypoints along the flight path to the airport.

I had flown this particular approach in IMC dozens of times before so I was very familiar with it - and frankly everything went smoothly as soon as I was cleared for the approach, including the 90 degree turn onto final, which takes some forethought to complete successfully because of the size of the turn.

On final I was tracking my altitude waypoints - a few miles from the airport the controller calls me up and says, "6641M, do you have terrain in sight?"

I look out the window - right in front of me are clouds, but I know there's nothing higher than I am along my path and altitude, so I look down and I see the ground through a hole in the clouds. Pfft! Of course I see terrain, so I affirm with ATC.

But that got my mind thinking: why would ATC say that? Is my altitude off? Am I too low on the approach? Or is there some hazard that I'm not aware of?

This was enough of a disruption to interfere with my situational awareness; where the hell was I in relation to everything going on around me?

In other words, that little query from ATC made me doubt myself.

I double checked the approach plate. Hmmm, Fogva intersection says 1200 feet. I better hold that altitude.

I had already left the radio frequency of ATC for the local unicom and had announced my position and intentions, waiting to pass the Fogva intersection so I could descend again.

And as I got close to Fogva I looked down and saw airplanes. Parked. On the ground. And a big "24" at the end of a runway.

"Hey," I said out loud to myself, "that's my airport!"

I looked again at the approach plate - dumbass, the 1200 feet position was 3.5 miles from Fogva. Fogva is the approach end of runway 24.

But the clouds had parted for my arrival! The AWOS had broadcast that there were "few clouds at 800." The broken and overcast layers were higher than pattern altitude. Sure enough, those few clouds were not enough to inhibit visual flight.

So I called up ATC again, told them I had decided to circle to land runway 6, had the airport in sight and to cancel IFR services.

I circled, and made a text book, greased landing on 6. My dumbass maneuver actually turned out to be beneficial to the flight, put me on a better runway heading, and actually was kind of fun since runway 6 is very rarely used.

Kind of like California Governor Brown's proposed budget for the Division of Workers' Compensation - a budget that would increase employer assessments 134% to pay for additional DWC services and fund the as yet untapped $120 million Super Disabled Slush
Fund (aka, supplemental disability fund created by Senate Bill 863).

SB 863 was, and for a big part, still is, an IMC flight. Lots of clouds, rain and mist. Visibility, if any, is limited. But for us IFR pilots, those who have been in the workers' compensation system for years and have experience with such conditions, SB 863 is just a different challenge. We've trained endlessly for such "weather," and just like IMC in Southern California, we don't get to practice "actual" all that often (albeit probably more often in the past 20 years than in any other historical segment).

Brown's budget plan would increase assessments for the Revolving Fund by $177 million in the fiscal year that begins July 1 and runs to June 30, 2016, compared to $131.4 million collected for the current fiscal year.

Honestly on a pro rata share spread amongst all the employers in the state, that's not that much of a dollar increase.

But the distribution is a little troubling to me - it seems that the governor's budget proposal is going to cause us to miss Fogva, to lose situational awareness.

And this is why: Assessments account for more than 96% of all revolving fund revenue. Administrative penalties of about $3 million a year are the next largest component, representing between 1% and 2% of all revenue.

There's no $3M here...

Then there's license and permit fees that are planned to generate about $1.1 million, and some investment income of about $250,000.

There was a time not too long ago when most of the DIR budget came from the General Fund. In the budget pressure years of the Schwarzenegger Administration it was decided that since DWC is in place to benefit employers (and, by association, workers) that employers should pay for its operations, so the bulk of funding was established by an increased tax on policy premiums the employer pays; i.e. assessments to go to the "revolving fund."

Revolving, I suppose, because money goes in, and money goes out, with out as much oversight as if under the watch of the State Controller...

A couple of blog posts ago I essentially railed on DWC for its lack of juevos assessing, and collecting, fines and penalties against wayward and recalcitrant claims processing houses. In fact, I believe I called the audit process "a joke."

I just checked - yep, that's what I said.

$3 million a year in administrative penalties? The governor must mean "assessed" penalties, because that much is not collected. In fact, not even half of that is collected.

In my post, "Stop Whining and Do Something," I basically excoriate the administration for letting claims houses get away with near murder. The extrapolation on what the Audit Unit actually collected in penalties (albeit that extrapolation is based on conjecture - but it is illustrative) highlights why compliance in California is, in my mind, pathetic.

When it really comes down to the numbers, there is no motivation, no urgency, no FEAR, that the mishandling of a claim will result in anything more than just another injured worker dumped into some other social safety net system, such as Social Security.

Here we are, flying around in the system, and the governor gives DWC a TEC route clearance. But DWC seems to mis-read the approach plate, perhaps because of some disruptive query, and flies right over Fogva.

The good news is that DWC can cancel its IFR clearance and land on the favored runway - make the governor proud by actually collecting $3 million in penalties.

In fact, if audit results were really enforced, there would be much more than $3 million in penalties. And that money could go to further fund the Audit Unit so that it could actually do its job of making sure that benefits are delivered as required by law.

California work comp administration keeps passing by the airport. The target is right under our wing. We just need to cancel IFR and circle to land; but our situational awareness keeps getting interrupted by misdirected inquiries.

Employer assessments fund DWC. Employers expect some return on that operational investment - which means taking care of the people that seek benefits, and that in turn means making sure that benefits reach injured workers timely, efficiently, accurately, and per plan (i.e. the law).

Collect those penalties, fund the Audit Unit, meet or exceed budget expectations.

And then grease the landing.

Oh, by the way, Mom was doing great - that a post for another day.

The ADA and Work Recovery Liability

Jennifer Christian, MD, President, Webility Corporation and Chair, Work Fitness & Disability Section, American College of Occupational & Environmental Medicine, and Aaron Konopasky, JD, PhD, Senior Attorney Advisor ADA/GINA Policy Division for the Equal Employment Opportunity Commission, recently released an announcement about the broad reach of amendments to the Americans with Disabilities Act.

The bottom line - if an employer is waiting for injured workers to reach Maximum Medical Improvement before attempting an accommodation, then the employer is exposed to ADA penalties and liabilities; i.e., if an injury or illness is so bad that a person misses time from work then the veil of the ADA rises and it could be considered a disability under the ADA.

“Once you get into a place where you're talking about medical conditions that are so bad they actually prevent you from going to work in the first place, to me that says … we've already jumped the hurdle of (defining disability),” Konopasky said.

This doesn't apply to minor injuries or illnesses; a laceration that will heal in 7 days or a head cold.

“The person's not covered by the ADA if they have a laceration that's going to heal in seven days because that's essentially a trivial interruption in the person's ability to work,” Christian said. “But if on day one the person has a chronic condition they haven't revealed about themselves, that person probably is covered on day one.”

Dwight obviously would qualify.

And if there is some reasonable accommodation the employer can make to help that person get back to work, the ADA requires the employer to do it.

Flexible leave policies count as reasonable accommodations for employees with disabilities, Konopasky said. However, according to Christian, employers also need to understand that the ADA is a protection of the right to work – therefore, businesses still need to try to find a way to bring a person back to his job if possible.

There are two common myths:

1. FALSE: In workers’ compensation, the time to think about the ADA is at MMI; MMI is late among several points in the post-injury timeline when the ADA needs to be considered.

2. FALSE: The ADA's requirement for an interactive process doesn't apply in decision-making about transitional work assignments; In fact injured workers do need to be active participants in the workers’ comp stay-at-work and return-to-work process.

The ADA is about civil rights for people with disabilities, not financial benefits of one kind or another, say Christian and Konopasky. The fundamental purpose of the ADA's employment provisions is to help people with disabilities get and keep jobs, as long as they are qualified to do the work and can meet productivity standards. The cause of the disability is irrelevant. It does not matter what other types of policies or programs are also involved -- whether workers' compensation, FMLA, sick pay, or disability insurance programs.

A disability can be newly acquired, transitory, fluctuating, progressive, or longstanding and stable. It can be the result of injuries, illnesses, congenital conditions, or the natural aging process. The only relevant question is whether the disability is now or is perceived as potentially having a significant impact on someone’s ability to perform their job, take home their regular paycheck, and stay employed.

Christian and Konopasky highlight 5 practical implications for management of ALL types of health-related employment situations:

1. As the Federal agency that enforces the employment provisions of the ADA, EEOC's biggest concern in situations involving disability leaves of any type will be that someone with a disability is being forced to take leave even though he or she could do the essential functions of the job with a reasonable accommodation. Everyone involved in the decision to keep someone out of work -- doctors, third-party benefit administrators, managed care companies, workplace supervisors and employee program managers -- should keep that fact firmly in mind, so that people with disabilities are not needlessly forced out of the workplace.

2. Only the employer is accountable for complying with the employment provisions of the ADA. However, treating physicians and the employer's vendors (benefits claims administrators, managed care companies) who fail to communicate with the employer during the stay-at-work and return-to-work process may be exposing the employer to increased risk/liability. When a vendor or a doctor (especially one who has been selected by the employer) fails to notify the employer that an employee described difficulty working or an adjustment that might allow them to work, the employer could be held liable for failing to provide that accommodation -- even though the information was never properly passed along. Doctors and vendors also can help educate employees and small or unsophisticated employers to ensure that the law is followed.

3. Some employees may express the desire to remain on leave, rather than return to work with a reasonable accommodation. Of course, employees with disabilities must be allowed to use accumulated sick or annual leave, just like any other employee. And they may have a legal right to insist on leave if, for example, they qualify for FMLA. But if an individual with a disability has no discretionary leave, and a reasonable accommodation would allow performance of job functions in a manner that is safe and consistent with his or her medical needs, then the employee may be required to return to work with the accommodation.

4. Paying people money to sit home who are well enough to do something productive does not count as a reasonable accommodation under the ADA, especially when they were not part of the decision-making process that has put them out of work. The employee must be actively involved in arranging any temporary or long-lasting adjustments to their usual jobs in order for the employer to meet the interactive process obligation. With respect to specific cash payments made under workers' compensation--

A. Temporary Total Disability (TTD) Benefits - There is little difference between cash payments under workers' comp TTD and disability benefit programs for personal health conditions except how the amounts are calculated. Employees are usually receiving them for one of four reasons:

1. The doctor wrote "no work" because their patient's medical condition is so severe or unstable that it is unsafe for them to do anything except try to get better; 

2. The doctor wrote "no work" because of a perception that the employer cannot or will not provide safe and suitably modified work on a temporary or long-term basis; 

3. The doctor released their patient to work with restrictions, but state or federal law, or a union contract means that the employee cannot work until fully able to do the essential functions of their job, so the employee is put out of work temporarily. 

4. The doctor released their patient to work with restrictions, but the employer said they cannot meet those restrictions (cannot find appropriate work to assign them within their current work capacity) so the employee is put out of work. 

In all but # 1 above, the ADA may apply. However, the employee is often not consulted as these decisions are being made. As stated above, giving the employee money is not a reasonable accommodation, and the ADA requires that the employer interact with the employee in looking for a solution that will enable the employee to stay at work.

B. Other types of cash benefits: Temporary Partial Benefits, Permanent Partial Benefits and Permanent Total Benefits - These cash awards help compensate employees for economic loss as a result of their injuries. However, as stated above, giving people money is not a reasonable accommodation, and does not accomplish the public purpose of the ADA.

5. Employers sometimes limit the length of transitional work assignments (TWA) in order to avoid them turning into required permanent accommodations or becoming subject to union job bid rules. To avoid ADA liability, a "usual" 90 day limitation policy that provides for an individualized assessment of the individual's situation and possible extension is more appropriate. If there is a specific reason why extending a particular employee's TWA or granting extra (paid or unpaid) time off to heal more completely will allow them to keep their job, that might be a reasonable accommodation. Some temporary adjustments are reasonable accommodations (including, for example, temporary use of adaptive equipment or temporary relocation of a workstation to the ground floor) and may need to be extended unless doing so would involve significant difficulty or expense. However, TWAs may have other aspects that can be discontinued without fear of ADA liability, including temporary reductions in productivity requirements and elimination of essential job functions. These measures go beyond what the ADA requires.

Determining whether a person has a disability can be a time-consuming process by itself, Konopasky said. Because of that, he suggested it might be easier for employers to treat every employee missing work due to an injury as though the ADA applies to them.

“Practically speaking, you may not want to go through that because it's such a weighty exercise and so many things are disabilities now; why not just assume that it's a disability?” he said.

We Don't Hire In New York

Today the check goes out in the mail to the New York State Workers' Compensation Board.

It's a half payment towards WorkCompCentral's fine for not having workers' compensation insurance on a New York state reporter for one hundred ten days.

We had a Human Resources consultant at the time who didn't get "compensation" arranged. The SWCB of course got wind through the tax reporting structure there and quickly fined WorkCompCentral pursuant to Labor Law 52(5).

This is the same issue that got various celebrities caught up in the workers' compensation mess so inscrutably reported by various gossip and celebrity news outlets, such as Jim Carey, Jay-Z or Al Franken.

As soon as the error was reported WorkCompCentral of course secured coverage retroactive to date of hire.

Bowzer's not hiring from NY again...

But that's not good enough for New York. It appears that the New York system is not intended to urge compliance and ensure coverage of employees, but rather is executed as a revenue generation source.

This is why. From the SWCB's website:

"Section 52 [5] of the Workers' Compensation Law provides that the Chair, upon finding that an employer has failed for a period of not less than ten consecutive days to make the provision for payment of compensation may impose upon such employer, in addition to all other penalties, fines or assessments, a penalty of up to $2,000 dollars for each ten day period of non-compliance or a sum not in excess of two times the cost of compensation for its payroll for the period of such failure, which sum shall be paid into the uninsured employers' fund."
Fortunately for WorkCompCentral, "the Chair" showed some leniency and fined the company only $500 per each 10 day period, so it's "only" a penalty of $5,500 total.

But the law also provides for discretion in "the Chair" and while there was some discretion exercised, it is still excessive in comparison to the alternative of "two times the cost of compensation for its payroll for the period of such failure...".

By my estimate, that's probably closer to $100.

Five thousand five hundred dollars versus one hundred dollars. That's a spread of fifty-five times.

Okay - in the grand scheme of things we're not talking about a whole lot of money, but $5,500 is a couple of full time employees in New York (or nearly any state), or if we're talking Manhattan, one REALLY good reporter.

And the real question is, what is the SWCB trying to accomplish? Do they want me to cover employees in that state? Do they want me to hire people in that state? Or are they trying to fill the coffers?

Because if WorkCompCentral had been fined "two times the cost of compensation for its payroll for the period of such failure" the money goes into the uninsured employer's fund.

But if the discretion is otherwise it appears that the penalty payment is directed to the Board itself.

Business complains all the time about workers' compensation. I understand why - the law is applied and enforced unreasonably.

While most of the time we focus on claims, and how it seems illogical that even an iota of causation brings work comp into the mix, it is equally maddening to the business owner when policies meant to ensure compliance are used instead to punish otherwise conforming employers.

It's not the cost of workers' compensation that drives business away from a state - it's the unreasonable implementation and enforcement of the law and policies that do.

Since this whole fiasco started and has played out, our New York reporter has given notice so that he can take care of his ailing parents.

WorkCompCentral is hiring - but we're not interested in anyone within the state of New York.

Sometimes It's A Draw

There is an old workers' compensation maxim as it relates to the employer - employee relationship: The employer takes the employee as he/she is.

An extreme case in Louisiana recently demonstrated this maxim when a 600 pound warehouse clerk sustained an injury and failed a weight loss program that was prescribed by his treating physician, but the employer was denied any reduction in benefits because the employee's failure was not an intentional disregard for the treatment program.

The Louisiana Court of Appeals upheld a workers' compensation judge's finding that William Jones had been cooperative and compliant with the weight-loss rehabilitation offered to him after his 2010 back injury, so his employer could not cut his benefits pursuant to Louisiana Revised Statute 23:1226(B)(3).

In Amerisure Insurance Co. v. Jones, No. 2012 CA 1267, Jones injured his back in December 2010 while lifting some pallets. His doctor prescribed medication and physical therapy, but neither course of treatment alleviated his back pain.

The doctor then issued him a prescription to join Weight Watchers.

The facts of the case indicate that Jones followed the Weight Watchers program – regularly attending meetings, eating foods with less than the allotted number of "points" he was supposed to consume each day, and even taking his iPhone to the grocery store to scan items with a Weight Watchers app to make sure they were appropriate for his diet.

Still, after eight months, Jones remained the same weight as before.

Amerisure then filed a motion seeking to have his indemnity benefits reduced, retroactive to the date his doctor told him to sign up for Weight Watchers, contending that Jones had failed to comply with the rehabilitation prescribed. In the alternative, Amerisure requested that any future benefits be conditioned on Jones' participation with the recommended rehabilitation of weight loss.

Louisiana Revised Statute 23:1226(B)(3) allows an employer to seek a 50% reduction in a claimant's weekly compensation based on a claimant's refusal to accept rehabilitation that has been deemed necessary by a workers' compensation judge.

The Workers' Compensation Judge (WCJ) denied Amerisure's motion, finding Jones had not refused to cooperate with the rehabilitation services offered.

The Louisiana 1st Circuit Court of Appeals found no error in the WCJ's findings.

It explained that the statutory reduction in weekly compensation for a claimant's refusal to accept rehabilitation "is penal in nature and should be strictly construed."

As "the statute expressly states that the penalty of reducing the claimant's benefits by 50% can only be invoked in the event the claimant refuses to accept rehabilitation that the WCJ has deemed necessary," and the workers' compensation judge had made no finding that weight-loss rehabilitation was necessary, the court said, "we find the WCJ did not err in refusing to reduce the claimant's indemnity benefits pursuant to the statutory provision."

The fact that a prescription for weight loss was issued was not enough to show that the weight loss was "necessary," the court said, especially since the Weight Watchers prescription was Jones' idea.

The court acknowledged that there was medical evidence that Jones' injury should have resolved within a few months of the accident and that his pain symptoms persisted due to his morbid obesity, but the court said this was no indication that Jones had willfully refused to avail himself of the means for his recovery furnished by his employer prolonging his disability.

Quoting from a 1957 decision by the 1st Circuit called Guillory v. Reimers-Schneider Company, the court observed that "'the Lord who created some of mankind fat and some lean, also created men with unequal abilities to gain or lose weight, through different metabolisms, degrees of will-power, practical opportunities to follow different diets,'" and so a worker's failure to lose weight cannot, in itself, be regarded as a willful failure to cooperate with a medical treatment plan.

Amerisure's intentions may have been altruistic - seeking to return to good health, and good employment, a worker with a life long obesity issue by financial motivation. Or maybe it was just an issue of fairness - not wanting to pay for a condition over which there was no control and for which the employer did not cause.

And maybe Jones really has no conscious control over his weight so any motivation, financial or otherwise, is going to be ineffective.

Here's some lessons from this case:

1) each claim is different because each claimant is different, so what motivates one claimant may not motivate another claimant for treatment and return to work;

2) a treatment plan is only as good as the execution of the plan - there is no assurance other than the claimant's word that the Weight Watcher's regimen was followed and if the claimant's word is the only evidence then there is not much else a trier of fact can do; and

3) speaking of evidence, as the court noted, just because one doesn't lose weight when on a weight loss plan doesn't mean one wasn't following the plan.

Those in claims need to pick their battles. A person does not become morbidly obese overnight, and is not going to lose weight overnight either, or even over the course of eight months as with Jones.

Jones tried but couldn't do it. Amerisure tried but couldn't do it. Perhaps this case should not have been contested, but at least it seems that both sides tried.

Sometimes you win, sometimes you lose, and sometimes its a draw. That's just the way it goes.

How a Claim Goes Catastrophic

Yesterday I wrote about Martha, an emotionally trying case that warranted the most expeditious claims handling that could be mustered, and was successfully jettisoned from the claims process to the betterment of her, the employer, my client and the system in general.

About 12 years after that I was doing defense work at another young law firm that was growing rapidly and aggressively. Those qualities fit my legal style too, so I fit right in to the culture for my short duration there.

Early on I was assigned a "catastrophic" case file.

Those of you in who are in claims know what a catastrophic file is - where certain qualities denote very high expenses and very high indemnity values, typically where there is a very real possibility of a 100% award.

This particular file had been around the block several times. The file itself was about 3 feet thick, literally, and the claim had, from my point of view, been mismanaged from day one.

Over the five year life of this claim, prior to my arrival, there had been no less that ten claims adjusters.

My initial review of the file astounded me as I saw a very basic soft tissue back injury claim morph beyond all reason to include nearly every part of the body imaginable, with surgery to something or the other nearly every 6 months.

The claimant himself was described as a nice man who was not fraudulently taking the system for a ride, but who experienced complications at every turn of treatment - nothing went right for this gentleman.

Obviously this raised my eyebrows - in my mind we weren't dealing with someone who actually had physical maladies, but for the malfeasance exacted upon him by non-caring physicians interested only in using this man as a billing statement.

No, we were dealing with someone who would be more appropriately be categorized with a mental health issue.

It was clear to me that we were dealing with some sort of a somatoform disorder and why no physician dealt with this head-on (pun intended) was akin, in my mind, to malpractice.

Regardless, it became my job to deal with this mess.

The claimant didn't start out all that injured or all that disabled. But after surgery upon surgery, and disability upon disability, this claimant truly was physically disabled. Now the issue became how to extract this individual from the workers' compensation system that had done him so much harm, in as expedient manner as possible.

And, I might add, at whatever short-term cost. At least in my mind. Because it was clear to me that whatever the closing price of this case was going to be, it would be a whole lot cheaper than maintaining this gentleman on the disability roles and subjecting him to more medical treatment.

Fortunately the claims adjuster that was on the file at the time I was assigned the matter had the good sense to put a nurse case manager on the file, and the nurse case manager had the good sense to coordinate all of the physicians so that they were actually cooperating towards some reasonable medical goal for this guy.

A good start.

I got that nurse case manager and the claims adjuster on the phone for a strategy talk and we came up with a game plan that incorporated the medical and the legal aspects. I then prepared for my client, in order for her to run the matter up the bureaucratic flag pole for approval, a very lengthy and detailed litigation plan, including estimated costs and a return on investment profile.

Honestly, this far down memory lane, I don't remember what that plan entailed, but I do recall that it received approval from as far up the totem pole as was necessary for such expenditures.

I had the nurse case manager behind the plan and I had the adjuster behind the plan. Ultimately I would start to get the cooperation of the applicant attorney and his client behind the plan too (though of course the plan they received did not contain sensitive attorney work product or attorney-client communication).

For the first time in the history of this claim it appeared that we had some control over the situation - the applicant was actually starting to get better! We targeted towards a permanent and stationary date and it looked like that was going to happen.

I worked that file religiously, making sure everything that needed to get done happened - whether it was medical reporting, timely payment of bills, communication with the treating physicians - I had that claim under control and I could smell file closure getting close.

Then one day I made a call to the adjuster for some authorization for something or the other. Gone. Reassigned. Never to be heard from again.

I asked for a supervisor - tough luck. Even the supervisor's supervisor couldn't (or wouldn't) help me.

The case floundered for a couple of weeks - the worst thing that could happen to a case like this in my mind. This was the type of case that required constant attention because any little excuse for this claimant to get to a doctor for more treatment would result in catastrophic consequences.

The somatic personality is not one to mess with!

Eventually a new claims adjuster made it on the file. The last thing this adjuster wanted to do was pour through a 3 foot thick file.

And, as I came to find out, apparently didn't want to even read my claim management plan.

Suffice to say, after getting this claim under control over the course of about 5 months, and seeing the light at the end of the tunnel, the entire claim blew up.

I had lost control.

It reminded me in my early bicycle racing days at the Manhattan Grand Prix - circa 1984 or so. The peloton was 130 strong, but I was at the peak of my skills, strength and endurance. I was CONTROLLING that race. Every preme sprint, every block, every move was mine. The race was in the bag.

Until with about 10 laps to go I found myself mid peloton on the inside of a right hand sweeper thinking to myself, "this is a bad position and I need to move out of ..." BAM! CRASH! OUCH! followed by lots of bodies and bicycles on the ground and on top of each other - me included.

My bike was bent. I was bloodied. And I was out of the race and of couse mad at myself because I KNEW I was in a bad position and I had let myself get there.

Bicycle racing is an odd combination of cooperation and competition. Everyone relies on the other to conserve energy and build speed, and this requires everyone to work together and also to be alert to conditions to minimize the risk of disaster. But everyone is competing against each other too.

On the bicycle on that day at the Manhattan Grand Prix from my point of view it was my error, my fault, for being in a position of disaster.

But in the world of claims administration, there was nothing I could do. I managed the case as best I could, but it required the cooperation, and coordination, of several other people and if they weren't interested in maintaining safety then there was going to be a crash - and indeed, that is what happened.

I left that firm shortly after to start WorkCompCentral but remained in communication with the attorney who took over the case. Four or five years after I left I asked that attorney what was going on with the case.

It was still ongoing, and had been through another three or four adjusters - all just as complacent and disinterested as the one that took over after I got on the case.

The billings must have been tremendous...

Anecdotes and Extrapolations Paint Troublesome Picture

The workers' compensation system is obsessed with costs. Reform legislation around the country is nearly uniformly about controlling costs.

The driving mantra behind California's last monster reform bill was costs were out of control.

High medical costs are blamed on unscrupulous profiteers. High indemnity costs are blamed on litigation and the claimant attorneys milking the system.

Ancillary vendors, such as interpreters and copy services, receive the heat as much as the more major cost contributors.

We read, hear and watch numerous reports every day about some claimant fraud, vendor fraud, employer fraud and once in a while some insurance company fraud. None of this compares, even cumulatively, to what I would characterize as outright system manipulation - intentional or not - by claims payers, which include the now publicly confirmed rumors about claims payers yanking the chains of lien claimants over filing fees.

Here are a couple of anecdotal vignettes recently posted in the WorkCompCentral Forums - they may not be typical (though as you will read below I believe that this is more representative than not) but they demonstrate some BIG issues. I have edited them for readability, but otherwise the factual contentions are as posted by the original authors.

After these short vignettes, employer consultant Bill Cobb gives us some real food for thought that demonstrates the enormity of the issue - and of course this would not be MY blog if I didn't opine one way or the other.

First Anecdotal Post:

Topic: Unrep PQME - Inappropriate Authoization Denial (California)

An unrepresented  applicant sets a Panel Qualified Medical Examiner (PQME) appointment and the cover letter is sent by the adjuster. The PQME sees the applicant and asks for a "consultation" from a specialist to help determine severity of damage and recommendations for further care. The PQME sends out the initial report explaining the need for the consult - not for treatment.

The insurance company adjuster does not respond to the requests for authorization for a consult - the one time he does answers his phone we explain the need for consultation arising from the PQME. The conversation goes like this:

Adjuster wants to know why we are treating...

We say we are not treating, need consult for PQME.

Adjuster states you cannot treat, you are not in the MPN...

We say we are not treating, we need authorization to consult for the PQME.

Adjuster states the consulting doctor is not in the MPN...

We say we are not treating, we need authorization to consult for the PQME.

Adjuster asks why does the doctor need a consult?? 

We say see his report.

Adjuster says, NO you explain to me why the doc needs a consult...

We say we cannot due to exparte communication rules -- please see report and send your questions to the PQME in writing.

Adjuster faxes note to us stating: Not authorized due to not in the MPN and UR did not approve.

Applicant was seen by the PQME in 11/2012 - adjuster has been delaying as above since then.

Second Anecdotal Post:

Topic: UR Timeframes vs. IMR (California)

Patient burned, had treatment elsewhere, then was referred to us by an occupational medical group where he was treating. We contacted adjuster at the TPA, who authorized the consult. Burn needs grafting. We sent a detailed narrative PR-2 with a Request For Authorization, but now, two weeks later, we have no response. [emphasis original] After the first week, I called and spoke with the adjuster, who said that because it's going to cost so much they have to think about it!!!!!  

Now it's been two weeks, and the poor guy is still doing dressing changes.  This is not life-threatening, but he will have a much higher risk of scarring and need for scar revision down the road, and in the meantime, he cannot return to work because of risk of infection, which grows every day.  That has all been explained to the adjuster.  Patient so far is not represented.

****************************

Now that you've read, in my opinion, two alarming anecdotes about egregious claims behavior (and there's plenty more in the WorkCompCentral Forums), Bill Cobb comes along with some troubling conclusions based on extrapolations from actual Workers' Compensation Insurance Rating Bureau (WCIRB) and Division of Workers' Compensation (DWC) data.

By Bill Cobb:

Every year the DWC does an audit of the entities that do claims handling (self-administered carriers, self-insured employers and third party administrators). The results of the 2011 audit are published on the DWC web site. I’ve been following the results of the audits since 2003. It has always been a major shame and disgrace on the work comp carriers and their agents. But, for some reason, no one has given it much attention.

At the heart of the results (as you will see) is one of the primary reasons why injured workers litigate their claims. [Editor's note - from the data analytics standpoint; anecdotally see the two examples above.] 

Based on figures published by the WCIRB:

·        California has approximately 550,000 employers.

·        There are approximately 16.5 million workers.

·        Each year there are over 500,000 workplace injuries.

·        Med-Only claims account for 79%.

·        Indemnity Claims account for the other 21%.

·        The average Med-Only claim costs $713.

·        The average Indemnity claim costs $6,728 – UNLESS it litigates, then it costs $62,700.

·        Litigated claims make up 43% of all indemnity claims.

·        Litigated claims account for only 9% of all claims, yet they take up 82% of the costs.

The outcome is a main driver that causes the cost of work comp for employers to go up.

Let’s go over the figures:

·        The DWC audited 3,410 files – out of 200,000+ open files.

·        Of these, 444 (13.02%) had compensation that was owed to the injured worker, but was not paid.

·        The average amount owed was $1,468.87. That represents 3 – 4 weeks of indemnity payments not paid on each of those claims.

I’m assuming the DWC chose only 3,410 files to audit because their statisticians thought it was representative of the entire population of claims.  [Editor's note - the process of selecting audit subjects is found in Title 8, Regulation 10106.1 and the actual procedure is in Regulation 10107.1.] If we extrapolate those figures out over the entire indemnity realm, here’s what we would find:

·        Total indemnity paid in 2011 was $2,957,000,000 – that’s accrued, not actually paid.

·        That would leave $176,264,400 (yes, millions) in owed, but unpaid, benefits in the files of the carriers and TPA’s.

This is money that is owed to the injured worker, but the payer is sitting on it. This causes a tremendous hardship on injured workers that are living from paycheck to paycheck. [Editor's note - also may be vendors seeking payment on legitimately owed bills but are being ignored or delayed as in the example anecdotes.]

So, let’s take a look at what the enforcement arm of the DWC did to punish the offenders:

·        The 444 files produced 4,465 violations.

·        The total dollar value of the violations cited was $1,411,128.

·        Of that figure, $1,209,325 was deemed ‘Not Subject to Assessment’.

·        The violators paid $201,803.

As you (or anyone for that matter) can see – it pays to cheat. They will get their hands slapped with only a small financial penalty and reporting in an obscure DWC filing.

Bill's idea is to:

·        Beef up the Audit Department so that EVERY file gets audited once a year.

·        It would be a ‘self-funding’ program based on a small premium surcharge to fund the initial startup.

·        Make EVERY violation subject to assessment and make them pay – or shut them down!

·        That should bring in $50 million to $100 million in assessments which can be used to fund the program.

·        Over the years, not only would the violations and assessments gradually reduce, so would litigation and, ergo, the amount of indemnity associated with litigation. The size of the audit unit could be reduced accordingly.

****************************

Radical? Yes. Objectionable by the claims community? Certainly. Effective? Beyond anyone's imagination, would be my guess.

As suggested by Bill's data, the two anecdotes above are certainly more representative than not.

So what have you Industry? Ready to put your money where your mouth is? 

***********

 Table of data:

	Total Audited - 2011			All Indemnity Paid - 2011
Total Files	3410	100%		Total Indemnity	$  2,957,000,000
Files with unpaid Indemnity	444	13.02%
Total Unpaid	$        652,178			Total Unpaid	$      176,264,400
Average Unpaid	$      1,468.87
Unpaid TTD	622.36	42.37%		Unpaid TTD	74,683,226
Unpaid PD	693.60	47.22%		Unpaid PD	83,232,050
Penalties	152.47	10.38%		Penalties	18,296,245

Employers In Denial; Wages & Exemptions

The extent to which business owners will try to skirt workers' compensation obligations never ceases to amaze me.

In California, nurse staffing agency ReadyLink is fighting a half million dollar retroactive premium charge from a State Compensation Fund audit that determined the company was improperly classifying wages as per diem reimbursements.

In Minnesota the Amish are seeking a religious exemption from mandatory workers' compensation obligations.

Both of these arguments have been tried in the past by other employers with predictable results, but for some reason employers always seem to think they have some way out of their duties.

First the California example, which I have written about previously.

ReadyLink Healthcare Inc. sued the Department of Insurance (DOI) and the Workers' Compensation Insurance Rating Bureau (WCIRB) after an administrative law judge ordered that it pay State Compensation Insurance Fund (SCIF) an additional $555,327.53 in premium.

ReadyLink was insured by SCIF from 2000 until 2007. State Fund conducted a final audit of ReadyLink in 2007 for its September 2005 through September 2006 policy period. A senior auditor noted that ReadyLink was paying its nurses $6.75 an hour, plus a much higher "per diem" amount.

The auditor had experience with other nurse staffing agencies insured by State Fund and knew of none where traveling nurses received more than half their reimbursement as per diem payments.

ReadyLink's competitors in the same geographic region typically pay their nurses $20 to $50 an hour.

The company lost an appeal to the Insurance Commissioner, Steven Poizner. Poizner issued a precedential ruling and decided that the employer's per diem payments were actually wages for the purposes of premium assessments because there was such a great disparity between the wages actually paid and how it's competitors accounted for per diem.

Readylink has maintained that Poizner's decision conflicts with IRS "safe harbor" regulations, which ease per diem recordkeeping requirements and do not classify per diem payments as wages.

"In accordance with IRS regulations, Readylink's per diem payments were excluded from wages for federal tax purposes," attorney Seth A. Rafkin wrote to the 9th Circuit on behalf of Readylink. "Similarly, California’s own guide for determining workers’ compensation premiums, the Uniform Statistical Reporting Plan, also excludes per diem payments from 'wages' for premium purposes."

ReadyLink thus far has lost all the way up the judicial appeal chain and now it is asking the California Supreme Court and the U.S. 9th Circuit Court of Appeals to rule that the California Insurance Commissioner contradicted federal tax regulations in its ruling, apparently unable to fathom that tax law and workers' compensation law are two different things or just so completely stubborn that the company's executives can not accept the reality that they owe more than a half million dollars in premium (likely much more now after accruing interest and late pay penalties from over 6 years of wrangling).

The 2nd District Court of Appeal had put the issue quite succinctly in its opinion last November:

"The IRS collects tax revenue from employers and employees to fund a variety of federal programs, whereas the purpose of the USRP is to accurately recognize the amount of an employee’s real wages to ensure that the SCIF has sufficient reserves to pay a worker his or her wages if injured on the job."

As I said at the time, "Workers' compensation has NOTHING TO DO with tax law. This has been restated so many times since the beginning of work comp that it is unbelievable that any employer would attempt to raise this argument. Usually the attempt to relating tax law to work comp is in relation to employee classification - independent contractor vs. employee. Been there, done that so many times it still puzzles me that any attorney representing an employer would even attempt that argument; likely a professional that is not versed in the special character of work comp law."

Still applicable. ReadyLink is pushing an untenable argument.

By the way, visit ReadyLink's website and you'll see that the company lures its nurses with a promise of "highest take home" and "per diem to offset expenses". 

The company also creatively boasts that it provides insurance coverage to its nurses, including "Workers' Comp coverage" which it says is "free." The company tag line is "$ it's not what you make, it's what you keep $."

I don't think ReadyLink is going to keep about a half million dollars...

In the meantime, Members of the Old Order Amish have asked the Minnesota Department of Labor and Industry to support legislation to change current law to allow members of an established religious sect to be exempted from carrying workers' compensation coverage − if the sect conscientiously opposes receiving governmental payments or assistance.

Bloomington, Minn., attorney Philip Villaume who represents the Old Order Amish told WorkCompCentral the current system in Minnesota requires members of the Amish community to participate in a system of insurance that violates their religious beliefs. And forcing them to pay into a system from which they will never draw benefits creates an unfair economic burden.

Villaume said the Amish pay into their own system that covers the costs related to workers injured on the job. All Amish employers and workers are willing to participate in that system as an alternative to workers' compensation, according to Villaume.

Maybe the Amish should move to Texas.

There are several states that have created exemptions for both Amish and Mennonite religious groups, generally on the grounds that these groups require that "employers" pay into their own systems to cover work injuries, and there are some reporting requirements to ensure that no shenanigans are occurring that would give these groups unfair advantages when competing against similar non-exempt businesses.

Other states have rejected the conscientious objector argument.

Just last Dec. 31, the Montana Supreme Court ruled in a 4-3 decision that a Hutterite community must comply with the state’s workers’ compensation law.
The Hutterites are Anabaptist Protestants who center their lives on their religion and share a common ancestry with the Amish and the Mennonites.

The Hutterites are primarily farmers, but in recent years have also begun competing with private companies in the areas of construction and manufacturing.

The Montana court rejected arguments that the law violated religious protections.

When California was going through its workers' compensation premium hemorrhaging in the early 2000s there were broker groups placing employers under Indian reservation systems claiming exemption from state workers' compensation laws.

That didn't work. The employers were cited and fined. The brokers fought fraud charges and lost.

You know that I think that alternative work injury protection systems are a good idea if properly implemented and in conformance with laws to ensure minimal levels of protection so long as the interests of injured workers are fully accounted for. I think that properly constructed "non-subscription" systems can be very robust and more efficient than traditional workers' compensation but that there need to be minimal standards ensuring benefits to workers are no less than traditional work comp.

A pure exemption based on a religion, however, doesn't meet that test.

What happens when a member no longer subscribes to the religion? What happens when a religious sect is no longer financially capable of taking care of claims? What about "premiums" (or donations, tithing, or whatever the religion wishes to call it) are unrealistically low thus actually giving the sect a commercial advantage?

There are some things where everyone has to play by the same rules and workers' compensation is one of them.

Either this society follows work comp or it doesn't. So long as there is a level playing field and all employers and all employees are subject to the same basic requirements, whether it is called workers' compensation, work injury protection or universal care doesn't matter.

We all want a competitive advantage. But over 100 years ago society decided to compromise on the issue of expense versus protection and those same basic tenets are still applicable today.

Employers - report wages accurately. Save money by making sure your employees don't get hurt on the job and if they do take care of them quickly and responsibly. If you're going to compete for business then focus on operational efficiencies rather than risk management through accounting.

Human nature what it is, though, there will continue to be employers in denial about their social, and legal, obligations; keeps the headlines fresh...

Legitimate Claims Delayed Are The Cost Drivers

"The seminal moment in the life of any claim is when pay day should have happened and it didn't," Tom Lynch, the founder of the Massachusetts-based cost-containment firm Lynch Ryan & Associates told WorkCompCentral when interviewed about findings by the Workers Compensation Research Institute (WCRI) that Massachusetts total claim costs have declined the most sharply compared to 15 other study states.

WCRI credits much of the decline to the speed at which carriers in the state make their first payment of indemnity.

"What drives injured workers into the arms of attorneys is not getting paid on time," Lynch said. "They have families to support and mortgages to pay, and most of them are living paycheck to paycheck.

I have heard many times in the past from many different system participants that attorneys are to blame for increased costs in workers' compensation and that they need to be removed from the system.

Of course, being an attorney myself, I respond with irrefutable competing logic - accountants and tax preparation specialists add significantly to the cost of paying taxes, yet no one calls for their removal.

And that is because attorneys are not the CAUSE of increased costs in the system. Lawyer participation is simply a symptom.

Sure, there are some lawyers that are going to take advantage of a situation such as a work injury and prey on the uninformed or those seeking redress for a perceived wrong. Heck, you see them advertise right on this blog through their Google Ads accounts.

But for the most part, injured workers get drawn to lawyer participation due to one of two simple reasons: 1) the system and accompanying paperwork is complex and frightening (how many state forms have you seen that warn the injured worker of "losing rights" if they don't do something by a certain time?); 2) someone didn't get paid on time when they felt they should have and, as Lynch noted, there's a mortgage or rent payment coming up.

In yesterday's news, it was reported that Peggy Sugarman, former chief deputy administrative director of the California Division of Workers’ Compensation, has taken over as the director of workers’ compensation for the City and County of San Francisco.

Sugarman said she believes one key to running a successful workers’ compensation program is good communications with injured workers. Employers have the ability to create their own notification letters, provided they include information that is required by the state, and in doing so can better explain how the claim process works.

“There are a lot of opportunities to improve communications, and I think as a result, litigation goes down and claims go faster,” she said.

I agree with Sugarman.

In "the good old days" (not) when I was a practicing defense attorney assigned to an injured worker's deposition I would always ask what drove them to see an attorney.

More often than not the answer was that the person got these frightening notices in the mail from the carrier/administrator that warned of dire consequences if they didn't do something - even though these notices stressed that they didn't need an attorney to represent them.

Nevertheless, these unfortunate folks would be attracted to see an attorney either because of poor reading and language skills, or because the information these forms communicated was difficult and complex (and, I might add, voluminous).

These folks, living on the edge of financial ruin - as Lynch noted, paycheck to paycheck - can't afford to pay an attorney for advice, and indeed, many state laws prohibit an attorney from charging an injured worker directly for representation or advise in work comp cases.

In order for an injured worker to get information satisfaction, they see the attorney. In order for the attorney to get paid, the attorney takes the case, takes on representation, and the litigation cycle starts.

The counter argument is that many states offer ombudsman-like services. In California it is the Information and Assistance Officer. In Texas its the Office of Injured Employee Counsel. These are great services, don't cost the injured worker anything and provide information services that the worker can not get anywhere without some cost.

But there are two problems - these services can not enter into representation of the injured worker, and a lot of folks just don't trust the government to steer them in the right direction. So the value of these services gets discounted by the injured worker and they seek the services of attorneys.

To be sure there is a delicate balance between just paying a claim and making sure that the claim is legitimate. There's no question that it is a difficult job to ensure that claim dollars aren't being thrown down the receptacle.

At the same time it may be more cost effective in the big picture to expedite delivery of indemnity dollars without penalty to the carrier/administrator until a clear investigation points to either acceptance or denial.

WCRI credits some of the cost control success in Massachusetts to expeditious claim payments and claims processing.

"The Massachusetts process of speeding dispute resolution through conciliations and conferences and fast initial indemnity payments might have played a significant role in reducing incentives for attorneys and the need for attorney involvement," WCRI said in the study.

Massachusetts law permits the carrier/administrator to make claim payments for 180 days without admitting to liability.

I think this kind of "amnesty" provision goes a long towards encouraging expeditious indemnity payments in order to curtail a negative reaction on the part of the injured worker (i.e. seeking attorney advise/representation).

California law has a similar provision, but applicable only to medical treatment for the first 90 days and subject to a $10,000 cap. This doesn't prove as effective because while medical treatment is a necessary part of an injured worker's concern, like Lynch noted, the lynch-pin (pun intended) is when that first regularly scheduled big monthly bill comes in the mailbox and there isn't cash to make the payment.

While there are those who are going to perpetrate a fraud regardless of whether a payment is early or late, in my opinion, from the Big Picture perspective, it is more cost effective to pay now, investigate later - those who are not legitimate will be prosecuted and those who would otherwise seek attorney services won't.

There is no doubt that when an attorney is involved the case value (or cost, depending upon your perspective) increases dramatically - sometimes double or triple what the claim would otherwise have cost (or been valued at). In the meantime, the typical fraud case reflects about ten or fifteen thousand dollars in payments before the fraud is stopped.

I submit there are many, many more legitimate cases where indemnity is slow in coming or denied initially, than there are fraud cases.

Those are the cost drivers.

Those claims need a) clear, easy to understand communication about the process and b) expeditious indemnity payments without penalty to the carrier/administrator in the event a mistake was made.

What's Wrong with Comp? It's Not the System

There is no question that workers' compensation can be an emotionally charged issue for both injured workers and employers. When emotions run a claim no one wins, and the losses spread beyond the employer and employee.

Evelyn Fletcher sustained a low back injury in 2000 while she was working for Adventist Health. She underwent an unsuccessful surgery in 2004 and has been unable to work due to her pain since that time.

In the ensuing decade, several treatment disputes erupted between Fletcher, who acted as her own attorney, and Adventist, which was self-insured. The disputes were further complicated after Fletcher moved to Maryland to care for her elderly mother.

In an effort to help Fletcher live with the physical and psychological pain caused by her industrial injury and the ongoing litigation, as well as the frustrations of trying to secure treatment for her in Maryland, the Workers' Compensation Judge (WCJ) ordered that Adventist provide her with counseling and a nurse case manager.

On Adventist's petition for reconsideration the Workers' Compensation Appeals Board (WCAB) reversed.

Fletcher saw Dr. Atif Malik, a pain medicine specialist, for treatment after she moved to Maryland. She conceded that Malik failed to comply with California's reporting requirements for a treating physician and acquiesced to Adventist's demand that she select a new doctor.

Though Adventist gave her a list of five pain medicine specialists to pick from, none of the doctors would agree to treat Fletcher.

Fletcher went through several doctors, mostly acrimonious experiences. Medical reports during this period were "most unflattering" and in general not timely filed with Adventist in accordance with California law. Fletcher described the visits as a "nightmare."

Fletcher was on opioids, taking more, becoming tolerant of the medication, and developing withdrawal symptoms.

Eventually Fletcher incurred self-procured costs and sought reimbursement of $2,000 which Adventist opposed. The WCJ ordered reimbursement.

In addition, at the hearing where reimbursement was ordered, the WCJ ordered that the "unflattering" reports be excluded from the medical record that would go to the next treating physician so that the next doctor would not develop a negative influence based on the record.

"I think it would be counterproductive to send [the doctor's] report to whichever the selected physician is, and so I’m going to specifically order that they not be sent," the WCJ said.

The order was upheld by the WCAB on Adventist's petition for reconsideration.

On appeal the 3rd District Court of Appeals (3d DCA) reversed.

"That is not to say the WCAB's decision was unreasonable or unjust," the court said, but "no matter how well intentioned" the ruling may have been, the WCAB was without authority to uphold the WCJ's order compelling Adventist to pay for Fletcher's treatment and medications.

The court also determined that the WCAB was without authority to uphold the WCJ's order excising medical reports from Fletcher’s medical history.

"Despite the judge's desire to insulate the next primary treating physician from the dispute between Fletcher and [the doctor], the physician's reports contain important diagnostic assessments and a treatment plan that should remain a part of Fletcher's medical history for all succeeding medical providers to review and evaluate," the court said.

Workers' compensation is "the great compromise." It's not perfect. It isn't even just or right. It just is.

There aren't supposed to be winners and losers. Just a reallocation of capital. Sometimes allocations are de minimus. Sometimes there are cases that require great allocations - and sometimes those allocations seem either disproportionate or unreasonable.

That Fletcher remained in pro per for the entirety of this case tells me that her claim went well beyond the basic issues in workers' compensation. This claim became a cause, a reason to live. Fletcher obviously was seeking justice. The case took on a character well beyond a workers' compensation claim.

Adventist too, despite its resources and legal counsel, also took this case beyond claim status. There obviously was much tied up emotion in the case. The case also became a matter of principal for Adventist.

In my prior life as a defense attorney representing self-insureds, there were many cases where I was instructed to take a position to "make a statement" despite my advise to cut losses and close the claim. In my experience, self-insureds, because of their direct financial tie to claims, have a much more personal attachment to cases, hence much more emotional perspective.

At the upcoming National Workers' Compensation and Disability Conference in Vegas at 3 p.m. on Thursday 11/8, the panel of speakers of which I am a part will talk about "what's wrong with workers' compensation."

I'll give you a hint as to my position: There isn't anything wrong with workers' compensation. What's wrong is how people use the system - both injured workers and employer/carriers.

To read the court's decision in Adventist Heath v. WCAB (Fletcher), No. C069906, click here.

Work Comp Is Simple When Distilled to Basics

In most instances, the employer is synonymous with the insurance carrier when it comes to matters of workers' compensation, particularly when notice issues are involved.

An interesting case came down out of Florida the other day involving an injured worker who also happened to be an officer of the employer - in this instance the carrier tried to disassociate itself from the employer because the employer's notice of injury wasn't communicated to the carrier.

The 1st District Court of Appeals (DCA) didn't buy it.

Eugenio and Angela Gomez co-owned Gomez Lawn Service, which provided landscaping work to various condominium complexes in the Naples area.

The company had three employees, consisting of Eugenio Gomez, his wife, and his brother. Gomez and his brother performed the yard work services offered by the company and both were paid as employees of Gomez Lawn Service.

Eugenio Gomez also served as president of the company, and his wife was the chief operating officer and corporate secretary.

The company had a workers' compensation insurance policy with The Hartford, and Gomez did not exempt himself from coverage as a corporate officer, as was allowable under Florida law.

On July 13, 2010, Gomez was injured in a motor vehicle accident while traveling in a company-owned car from one job site to another. He informed his wife of the accident and she reported it to the company's motor vehicle insurance carrier.

By November of that year, as the cost of Gomez's treatment was approaching the $10,000 coverage limit of the company's motor vehicle policy, Angela Gomez consulted with a personal injury attorney, who advised her to report her husband's accident to The Hartford.

She did so, but The Hartford declined coverage, contending her notice of the accident had come too late under Section 440.185.

Section 440.185 requires that any employee with a work-related injury "advise his or her employer of the injury within 30 days after the date of or initial manifestation of the injury." The failure to do so will bar that worker from obtaining benefits. Failure of the employer to communicate the injury claim to the carrier in a timely manner subjects the employer to a $1,000 penalty.

The trial judge reasoned that Gomez and his company were effectively the same party, and that based upon the "nature, seriousness and probable compensable character" of Gomez's car accident, the failure of his company to provide notice to The Hartford until after 90 days had passed was not reasonable.

The DCA reversed stating that once Gomez informed his wife of his accident, Lewis said, he "fully satisfied the notice requirement imposed by Section 440.185" since the plain language of Section 440.185 "required (Gomez) to report his injury to his employer within 30 days of its occurrence, and nothing more."

Indeed - nothing more. The employer had notice of injury and that is all that is required under Florida law to provide benefits. The remedy against the employer is the penalty.

The DCA came to the correct conclusion in this case. Hartford had no reason to deny the claim based on the facts reported in the case. There was clear separation of employer and employee ... and carrier. Each has their duties under the law, and each has separate remedies under the law.

The Hartford tried to jump the distinction between employer and employee which would have afforded a bit of cost shifting - something that statisticians have reported to be on the increase and which I have been critical of in the past.

The facts of this case are very, very simple and if one distills this case to its basics the conclusion is quite obvious: An employer bought coverage. An employee got injured. Carrier pays.

That's how it's supposed to work.

The case is Gomez Lawn Service Inc. v. The Hartford, No. 1D12-0302.

Can More Paper Protect MA Temp Workers?

A while back I posited that most workers probably don't know what workers' compensation was, or cared, until they have an injury at work or unless they know someone who is "on comp".

Massachusetts is going to try to keep workers for temporary staffing firms informed about who the coverage provider with House Bill 4304, sponsored by Rep. Linda Dorcena Forry, D-Dorchester, called the "Temporary Worker Right to Know Act."

Proponents say the bill will help ensure that the more than 40,000 day laborers in Massachusetts are protected from injuries.

HB 4304 also requires temporary staffing firms to tell workers what safety equipment and training are required for the job.

The Workplace Safety Task Force of the Massachusetts Bar Association and the Massachusetts Coalition for Occupational Safety and Health (MassCOSH) has been pushing for passage of versions of HB 4304 for the past two years.

They argue that day laborers – primarily in the construction industry – are working without protection and often without knowing the identities of staffing company clients.

The bill exempts professional workers, secretaries and administrative assistants.

The bill requires staffing companies to provide a written job order that includes:

• The name, address and telephone number of the staffing agency, its workers' compensation carrier, the employer at the worksite and contact information for the state Department of Labor Standards.
• The type of job and any requirements for training, equipment or licenses.
• The designated pay day, hourly rate and anticipated start and end times for the job.
• Any meals or transportation provided by the staffing company or the worksite employer and associated fees charged workers.
• A multilingual notice that the job order contains important information and should be translated.
• The bill also prohibits staffing companies from charging workers for registering with the state or for procuring the job.

The opposition to HB 4304, the National Federation of Independent Business (NFIB) and the Massachusetts Staffing Association argue that the law may be unenforceable and will bury legitimate staffing companies in paperwork. They also argue that the bill would drive unscrupulous staffing companies underground.

"There's definitely a day laborer issue. These are the folks who are picked up for some job at 6 a.m. and don't know where they are going. They get hurt on the job and find out there's no workers' compensation," Bill Vernon, Massachusetts director of NFIB, said. "But what (lawmakers) have done is sucked in legitimate companies, and the bill may create a real problem with compliance."

I tend to agree with NFIB. I'm not sure employees really care about workers' compensation, safety or training. They might care about safety if the engage in an activity that they believe might not be safe, but most of the time those workers are too worried about getting paid and putting food on the table than whether a particular job is safe.

Likewise whether training is required, equipment, licenses - not particularly important when each and every hour worked means another step away from poverty.

I hope that the Massachusetts law accomplishes its intended purpose - to help protect the state's temporary workers from injury and ensure access to care and benefits if the unfortunate happens.

I'm just not convinced that another couple of required pieces of paper are going to make a difference.

North Carolina, Hardware Stores, and Compliance

North Carolina is working with a new law that it hopes will help the state deal with illegally uninsured employers more effectively.

House Bill 237 was widely supported after its introduction this year and was signed into law by Gov. Bev Purdue last weekend. But the measure became controversial as some state lawmakers and news outlets realized in the 11th hour the bill would close public access to the kind of information that allowed the Raleigh News & Observer to expose the problem of uninsured employers, which led to the bill's introduction in the first place.

The bill amends the state's workers' compensation laws to require the North Carolina Rate Bureau, which maintains policy data for insured employers in the state, to provide workers' compensation coverage information to the Industrial Commission, which enforces the state law requiring employers to be insured. It exempted information shared between the Rate Bureau and Industrial Commission from public record laws.

The intent of the exemption was not to close access but to prevent "orphans" in the system, as was the case before, when the Industrial Commission often learned a company was uninsured only after a worker was hurt on the job, according to Rep. Dale Folwell, R-Winston-Salem. A new bill was passed out of the legislature on July 3, Senate Bill 847, comprised of technical amendments to various laws, including the newly adopted workers' compensation bill, which allows for certain public access.

Sue Taylor, director of insurance operations for the rate bureau, said the technical amendment will keep employers' policy effective dates, cancellation dates and reinstatement dates public information. However, other information shared between the two agencies, such as companies' proprietary information, Social Security numbers, payroll information, names and addresses, will be exempted from public disclosure under the new law.

The draft regulations propose new requirements for employers to submit proof of insurance to the Industrial Commission and post workers' compensation insurance carrier information at work sites. There are other requirements intended to keep workers informed about their employer's compliance.

A statement by a workers' compensation attorney in that state though highlights the disconnect between us in the industry and those on the street, and why our our hopes that new laws to deal with industry issues may not have the impact that is intended.

Larry Baker, attorney for Cranfill Sumner & Harzog law firm and president of the North Carolina Association of Defense Attorneys (NCADA), said, "As an employee, I think you want to know your employer is covered. But most workers probably don't look up their company's insurance information in the Industrial Commission's website."

Actually, my guess is that most workers don't even think about workers' compensation until after they are injured and even then may not realize that there is supposed to be coverage.

I certainly didn't as a young college student working in a hardware store in Lemon Grove, CA.

The best job I ever had (well, not monetarily...) was my introduction to workers' compensation. Working as a retail clerk selling hardware included fixing things that people brought into the store. Lots of fun.

Part of fixing things was repairing screen doors - basically installing new screen material. I had installed new screening material on a door and was trimming the excess when I missed and inflicted a nice clean laceration on my hand with a box knife.

Ouch. There was blood all over the place. My employer was very concerned. It was a decent sized cut. He shuttled me to the store's vehicle to take me to the hospital to get me sewn up.

I didn't have my medical insurance card, nor cash to cover the deductible and expressed that to my boss. He gave me that "Mr. Crabbs" look and said the bill would be covered by workers' compensation. Being the good employee that I was, I didn't understand the whole complex arrangement and didn't want to cause any problems for the store - after all this was the best job in the world!

I got repaired, I assume the hospital got paid, and likely there wasn't much impact on my boss' workers' compensation premium since it was a minor medical only claim - but I suspect at the age of 20 that I was like most workers are today: completely oblivious to workers' compensation insurance and laws.

So with all due respect to Mr. Baker - as an employee, not only did I not care that my employer was covered, I didn't even know what workers' compensation was, and still didn't understand anything even after I was treated.

All I knew was that I got hurt, everything was paid for and taken care of without any money out of my pocket, and I thought that was pretty cool because my employer took care of me.

I suppose the lesson is that we can all wish for better compliance and put into place laws that we hope will accomplish that, but unfortunately employees will not have an appreciation for workers' compensation until an injury occurs, and then it might be too late.