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.

Derby Lessons

I learned a lot at the 142nd running of the Kentucky Derby.

I learned that one can study and study and study the horses and still come out a loser.

I also learned that you could trust the experts, but they basically know about as much as you do, except in finer detail - and they can still be wrong.

I learned that 167,227 people can all get together and cheer a common cause, but still feel anxiety and angst for their own personal agendas.

I learned that the people of Kentucky (or at least Lexington and Louisville) are extraordinarily cheery and nice to outsiders.

I learned that there's some really good food in Kentucky, which just happens to go very well with mint juleps.

Which of course meant I learned that my wife doesn't like mint juleps.

I learned about bourbon, about distilleries, about exceptions to the law and prohibition.

I learned that Ohio (our table mates were from Ohio) has a huge concern with opioids and heroin addiction, perhaps more than most other states.

I learned that horse jockeys are in a very hazardous occupation and have their own rules, regulations and insurance programs that are workers' compensation, but take things a bit further.

I learned that there is an enormous amount of money in the horse racing business.

And I learned that all that money is because it takes a lot of people to make something like the Derby an event.

I learned that if I parlay my gambling smartly and stick with the statistics that there is a better chance of holding a winning ticket.

I also learned in that same lesson that you may not know until the very end if you made the right decision, because it can look very dire but someone, something, somehow, someplace, somewhere, could pull it off...

I learned that Dwight Johnson's shoes (and ties and hats) attract A LOT of attention and even more so when I explain that they are made by a double amputee, the result of two separate industrial injuries just 18 months apart.

I learned that the Shakers were probably some of the first to embrace equality among the genders.

I also learned that sometimes just a day or two off from the daily grind can be enormously refreshing.

Thanks to Cindy Whitehouse and her impressive team at Ascential Care in Lexington, KY for putting this all together for me.

Fixing the Culture

There seems to be some steam building behind a movement that has taken too long to get going: advocacy based claims management.

In short, advocacy based claims management (ABCM) is just doing the right thing.

The movement is spearheaded by top professionals in work comp, and in particular the Alliance of Women in Workers' Compensation, which is hosting a conference in conjunction with the Workers' Compensation Research Institute's annual meeting in Boston on March 9th, titled “Creating an Advocacy-Based Claims Model."

The promo for the related ABCM webinar that will broadcast March 15 reads:

"For years, workers’ compensation has been driven by conflict. Payers often look for ways to dispute claims rather than focusing on finding ways to provide useful benefits for the injured worker. Because of this, injured workers retain attorneys who they feel will protect their interests. This conflict drives up costs within the system and slows the delivery of benefits."

There's probably quite a few of you out there that are saying, "well, duh." Of course workers' compensation's focus on compliance rather than compassion drives up costs - that's a fact that has been well documented for decades.

So what's new now? Why all of a sudden a movement to change that culture and philosophy.

Maybe it's the negative public image of work comp. Maybe it's the threat of some federal oversight and regulation. Maybe it's simply a matter of relevance and survival.

Maybe it's just the right thing to do.

It wouldn't seem that a movement would be necessary given all we know about disputes in work comp, but the anti-claim culture is deeply rooted, and has been cultivated for decades. 

Mistrust is so pervasive in workers' compensation that too often one is guilty until ordered innocent, and by then disabilities (both physical and psychological) have manifested in a profound manner, unfortunately supporting entrenched vendor interests.

The hosts of the webinar, Mark Walls of Safety National and Kimberly George of Sedgwick (full disclosure - both friends of mine), say you'll learn what it is, how it works, what the obstacles are, how to get all of the vendors on board, and ultimately how a business model can be made to support this culture change.

Here's what it all comes down to: offer services TO the injured worker in advance of health and wellness; not services AGAINST the injured worker. Pay now, don't delay. Treat now, don't delay.

Will some people take advantage of this perceived generosity? Sure - they already do though. We punish everyone for the misdeeds of others. Rather than fix the leaking pipe, we shut down the entire water supply...

The fear of entrenched vendor interests, of course, is reduction in the relevancy of one's services. But, as I have said in the past, if you don't like the business of workers' compensation then the prudent business decision would be to take your services and goods to another industry...

Workers' compensation isn't broken and doesn't need fixing. It can work as intended. But we let the design get in the way, a design that has, over years of "reform," misconstrued the intent.

There's a lot of noise between benefits and recipients - noise created in response to design...

ABCM is really about fixing the culture that fosters all of that noise, in spite of design, to get back to intent.

Context?!

Attorney Loren M. Lambert of Arrow Legal Solutions in Utah told WorkCompCentral legal reporter, Sherri Okamoto, that over the past few years he's "been seeing a pendulum swing" in terms of the social and political climate in Utah, such that it seems "society doesn't like people who are injured or disabled" in general.

Lambert was commenting on the Utah Workers' Compensation Commission's propensity to write its own law reflecting its view of how things should be - in this situation inserting a standard that doesn't exist in statute, thereby denying an injured worker of benefits to which he otherwise is entitled.

Lambert represented Socorro Guzman, who had worked for Circle 4 Farms performing animal husbandry work. In August 2008, a large boar rammed him, causing him to fall to the cement floor of the boar pen.

He was able to continue working after this accident, eventually going to see a doctor about his back pain.

Guzman's back worsened with time, and he stopped working in July 2009.

After Guzman filed a claim for Permanent Total Disability benefits in 2011, the Administrative Law Judge referred the case to an independent medical panel.

The panel reported that Guzman had suffered a herniated disc, which limited him to lifting no more than 40 pounds on an occasional basis, and that he could not repeatedly bend, stoop, squat or perform overhead work, but he would be capable of doing light- to medium-duty work.

The vocational rehabilitation consultant on the case opined that Guzman was essentially unemployable because he was in his 70s, with a fourth-grade education, limited English proficiency and no transferrable job skills.

The ALJ awarded PTD benefits to Guzman, but a divided Labor Commission appellate panel reversed last June, writing that while the medical panel had identified a "clear set" of restrictions on Guzman's physical activities, he still retained a "reasonable amount of strength, flexibility and endurance" and so his condition did not "reasonably limit his ability to work in a broad range of jobs."

The Court of Appeals then reversed the commission because there's no "reasonable" in the law.

The governing statute, Section 34A-2-413, requires Guzman to demonstrate only that his work-related injuries "limit (his) ability to do basic work activities," the court said. Thus, by applying "the qualifying term 'reasonably' or 'reasonable' in evaluating Guzman’s limitations, the board improperly imposed a higher burden on Guzman than the statute dictates."

The court went on to say that it was "troubled" that the commission failed to assign much persuasive weight to the vocational assessment report just because the consultant did not testify during the hearing on Guzman's claim.

"This flawed reasoning implies that evidentiary reports only carry value if the author of those reports can be questioned," the court said. Such logic was also inconsistent with the commission's decision to place great weight on the independent medical panel report when there was no evidence that the panel members appeared at the hearing.

The appellate court said the commission decision was "riddled with inconsistencies that call its findings into question."

It seems the commission has been rewriting the law to suit a political agenda for some time. A couple of other cases likewise have been reversed by the Court of Appeals lately, and the employers have asked the state Supreme Court to review.

In addition to the Guzman case, the commission has been reversed on the same grounds in Oliver v. Labor Commission and Quast v. Labor Commission.

Jaceson Maughan, the deputy commissioner and general counsel for the commission, told Okimoto on Tuesday that the commission's imposition of a "reasonableness" element "was an attempt to create context," since commissioners had thought "there needs to be some sort of limitation" as to what is a "limitation" for purposes of Section 34A-2-413(1)(c).

Who asked them to do that? What "context" is missing?

The "context" seems pretty clear: A monolingual, uneducated, elderly Hispanic manual laborer in a conservative, principally white, state got hurt, and can't return to the labor market.

I don't think any further explanation is needed.

Dirty Business Fears

The single biggest threat to the health of workers' compensation in the United States is a fear of retribution that keeps those in the know about the shenanigans that go on in this "dirty industry."

It's a shame, but it's real.

I get phone calls and emails all too frequently, like the other day from a guy I'll call Mike - not his real name, but as the introduction noted, anonymity is paramount because of fear of reprisal.

But the story is not unusual and, like the others, it goes essentially like this:

Top tier executive in a large claims department puts himself between vendors and claims in exchange for payola.

In other words, extortion for a "guarantee" flow of future referrals, regardless of the quality of services or products, and regardless of outcomes, expense, etc.

Fee schedules and other cost controls are subverted by layering the bills through third party intermediaries, what we like to refer to as "networks."

"I have been in this industry for 23 years," says Mike. "Although I always knew that vendors paid for meals, vacations, and rounds of golf, I never thought that they also paid for the equivalent of vacation homes in Florida and to fund supplemental retirement slush funds for c-suite baby boomers."

"When I asked colleagues about this," he continues, "I was told to 'let it go' because 'everyone is doing it.'

"The problem with workers' compensation today is that policy is driven by people with conflicts of interest.  When 'reforms' call for the potential use of more vendor oversight then you can see what has been happening.  Look no further than the growth in CA MCCP and ALAE costs to prove my point (there are additional 'hidden' vendor costs as well).  Now, expand that same system across the country...wash, rinse, repeat.  Managed care is BIG BUSINESS.  Payers are benefiting because they sometimes own these vendors AND/OR they arbitrage the revenue AND/OR they receive revenue-sharing payments AND/OR they can lower their administrative costs AND/OR key executives are quietly receiving compensation so long as the referrals continue to flow."

This may all in fact be true, and I have no reason to doubt that it isn't. There is enough illogic going on in workers' compensation that I can't discount Mike's cynicism.

Mike suggests several steps to curb or discourage executive cheating of the system, including anonymous hotlines, criminal penalties for bribes or payola, unbundling vendor billings to see what caregivers are actually paid, and transparency disclosures for conflicts of interests.

Many states, however, already have some or all of these requirements or programs in their laws.

The problem is not with the laws or lack of them. The problem is that hardly anyone is willing to spill; without naming names of people and companies, and without willing to testify and/or provide documentation, there will be no stopping such nefarious activity.

And I don't have an answer to that one. I'm quite certain that there are elements of the work comp industry that have ties to organized crime. Most folks don't want to risk disappearing in the middle of the night...

Even if there is no connection to organized crime, work comp is essentially a small industry and word gets around. A sure way to amputate a career is to squeal, because, as Mike was told, "everyone is doing it."

"To conclude," says Mike, "99% of the people in this industry are working every day without knowledge of the corruption that I mentioned above. These are the people who would rightfully defend the integrity of their co-workers and of the system.  If the relatively few bad actors are removed and replaced with good, decent people, then perhaps the WC industry will continue to enjoy its privatization for another 100 years.  If not, a federalized future surely awaits!"

I don't think federalization would be a response to c-suite fraud because wrongful acts can and will occur regardless of who "owns" the system (just look at Medicare as an example).

The bottom line is that without names and sources it's just a story, fiction, unverified and unvalidated.

Anonymity protects the guilty, fosters the hypocrisy, and promulgates the regulatory burden that the 99% must shoulder.

Just Wave Back

A simple wave from an airliner to a little boy may change that boy's life forever.

Reported out of an Albuquerque, New Mexico, news station, KRQE, is a heart warming tale of how a simple little act can make such a huge impression.

In July, 5 year old Hudson was at the airport with his grandfather, waving at planes as they taxied by. Hudson was getting discouraged because nobody was waving back.

Southwest Airlines pilot, Mike Hickey, noticed this as he was taxing his Boeing 737 to the runway, so he pulled a little closer than normal to the fence and he and his co-pilot opened the window and waved back.

Hickey told the station that he waved because he remembers being in Hudson’s shoes, waving at planes at Dallas Love Field when he was his age.

Trisha Hughes, Hudson’s mom, took a picture and posted it on Facebook with a thank you. Southwest saw it and decided to arrange a face-to-face meeting between the boy and the pilot.

Hudson says because of the wave, he now wants to be a pilot when he grows up. Hickey took Hudson into the cockpit of the 737 to show him "the office."

There are some professionals in the workers' compensation industry who "wave" to children every once in a while, and the impact on their lives is immeasurable.

I'm talking about the Kids' Chance charity.

You have likely heard of the organization. There is a national arm, and there are 29 state and regional divisions too.

Kids’ Chance mission is to provide need-based educational scholarships to the children of workers who have been fatally or seriously injured on the job. It's a simple mission, which is why it is so worthwhile.

And I believe that some of the scholarship recipients will find their way back into workers' compensation as professionals serving the industry. Some of this industry's top executives started their paths as injured workers so I have reason to believe that some of the Kids' Chance recipients will also find their "office" in our industry.

According to the Albuquerque news report, Hudson drew a picture of "the wave" and gave it to Hickey as a present at their meeting.

“It’s for my pilot,” Hudson said. “Because he waved at me and that was really polite.”

Waving back. It's a simple, polite, act that can change a person's life.

Finance, Politics and Yoga

Photo is non-illustrative. Just me windsurfing big waves when I still could...

In an old presentation I stated, "Workers' compensation is a political construct that obfuscates medical science to achieve a financial result."

That's a pretty pessimistic viewpoint.

But a couple of stories today highlight the truth in that statement.

The State of Nevada is, for the first time in 15 years, is taking a look at the discount rate used to calculate the present value of lump sum settlements and awards.

As you know, the cost of funds, or ability to generate future returns, has been stagnant the past few years as the Federal Reserve Bank has kept the lid on monetary policy following The Great Recession.

I don't need to go into the financial wizardry that has made it so, but the bottom line is that interest rates have never been so low for so long.

That means that a dollar invested today doesn't produce much more than a dollar tomorrow.

Conversely, it also means that if an annuity (a steady stream of regular payments) is based on a higher interest rate than what is market normal, then the recipient of the annuity gets cheated out of future buying power.

A $100,000 award that would be paid out over 20 years has a present value of only $31,180.47 at the 6% rate, but is worth $55,367.58 at a 3% rate.

Las Vegas claimants' attorney Virginia Hunt, with whom I've had the privilege of working in the past, brought this to the attention of Division of Industrial Relations officials, who admit they have been negligent in following the law, which mandates that the division look at the discount rate every year.

The division hasn't reviewed the rate since 2000 and hasn't changed the rate since 1997.

The difference is significant. In September 1997, the federal funds rate was about 5.5%. On Friday, it was 0.14%.

DIR Chief Administrative Officer Chuck Verre told WorkCompCentral Friday, "We did not do what we should have done. It's as simple as that."

Bully for Mr. Verre and Mrs. Hunt for tackling an important financial component of the claims pay process.

In the meantime, the political football that is workers' compensation is being played in Illinois.

There's a budget fight going on in that state between Gov. Bruce Rauner, a Republican, and House Speaker Mike Madigan, D-Chicago; the budget deadline was June 30. Workers' compensation, which was just recently "reformed" in Illinois, is said to be the bargaining chip being used to break the stalemate.

Rauner has said he may support a spending plan that includes a tax increase if Democrats agree to a list of nonfiscal to-do items, including workers’ compensation reform.

But instead of dealing with House Bill 1287, a bill passed by the House of Representatives on June 4 that included a provision to prohibit insurers from charging "excessive rates," a provision that Rauner and his business allies found objectionable, the Senate approved its own version of workers' comp reform, SB 162, introduced by Sen. Kwame Raoul, D-Chicago.

SB 162 incorporated some of the ideas contained in Rauner’s memo, but there are numerous contentious issues in the bill on which the parties are basing fiscal compromise.

In the end, as with everything politics, “It depends who else gets a haircut,” said Raoul.

And the medical part is about yoga.

Yoga has come into vogue as a treatment modality for back pain patients in workers' compensation.

A survey by the Centers for Disease Control and Prevention released earlier this year says the number of yoga practitioners has doubled from 2002 to 2012, highlighting the popularity of this ancient Indian exercise.

One of the best remedies for generalized back pain is exercise - and yoga is exercise.

Even the Official Disability Guidelines recommends yoga for “highly motivated patients.”

The key of course is the injured worker must be "highly motivated," which in practical terms means discipline - participating in the exercise on a daily basis.

Claims payers seem to embrace yoga as "treatment."

"Treating chronic pain is a complex endeavor and in some cases involves utilizing alternative treatment options such as yoga," California State Fund Medical Director Dinesh Govindarao wrote in a statement to WorkCompCentral on Friday. "The biopsychosocial treatment model is an effective way to approach chronic pain patients. State Fund supports the use of alternative treatment options on a case-by-case basis with utilization review oversight."

A difficulty is that yoga providers and claims payers don't particularly gel on billing codes or how to reimburse for expenses tied to yoga instruction and practice.

And that's because there's no standardization of the practice, with literally dozens of different forms or disciplines.

But, regardless, yoga is cheap, it's non-invasive, and its practical effects for the "highly motivated" aren't in dispute - it's good medicine.