The problem with workers' compensation being funded and managed by private interests is that there is simply too much temptation to do the wrong things for the wrong reasons - usually those reasons involve profiting at the expense of everyone else.
And so it seems in New York where an associate attorney in the State Workers' Compensation Board General Counsel's Office said in an affidavit filed in New York Supreme Court Friday that improper cost-shifting by the state's workers' compensation carriers has caused the liabilities of the state's Reopened Case Fund to "spiral exponentially," of course at the expense of employers.
After the historical reform of New York's system by then Gov. Eliot Spitzer, that imposed the state's first duration caps on permanent partial disability benefits, carriers began settling the indemnity portion of claims, leaving medical treatment open.
Three years after the indemnity payments run out, carriers can then file claims with the fund providing medical evidence that the workers' condition has changed, thereby shifting the cost of medical care for injured workers over to the Fund.
The lawsuit in which the affidavit was filed was initiated by Liberty Mutual Insurance Co. and 19 of its sister insurers to block a section of Gov. Andrew Cuomo's 2013-2014 budget the close the fund on Jan. 1, 2014.
Coumo made closing the fund part of the "Business Relief Act" included in his $141.3 billion budget and predicted that closing the fund will save New York employers about $300 million a year in assessments.
The carriers argued that doing so would leave the state's workers' compensation carriers with between $1.1 billion and $1.6 billion in unfunded liability and $62 million in unfunded retroactive liability. The suit seeks a permanent injunction against closing the fund to injuries occurring before Jan. 1, 2014.
What the carriers don't say in their suit is that reserves needed to support the fund jumped from $770.8 million in 2006 to $1.15 billion 2012, while assessments levied against carries and self-insured employers to support the fund increased from $95 million 2006 to $314.3 million last year. What they also didn't say is that they have been using the fund to pass back their expenses to employers who have already paid for those claims.
The Spitzer reforms were passed in 2006.
Michael Papa, the SWCB attorney who filed the affidavit, said "Although . . . settlements are a useful tool for resolving issues among like-minded parties, in recent years they have become a vehicle for insurance carries skirting to improperly shift their medical obligations over to the fund through execution of indemnity-only settlement agreements."
Ouch.
"Carriers have then sought to transfer liability for the medical portions of such claims to the Reopened Case Fund after the passage of three years from the date of the last indemnity payment, even though the claims had never truly been closed," he said in the affidavit.
"Far from its initial purpose of absorbing costs for a small number of cases where liability unexpectedly arises, the Reopened Case Fund has become increasingly saddled with liability for claims for medical costs that technically meet the statutory requirements but which were not expected," Papa said. "This has caused the fund's liability to spiral exponentially and uncontrollably."
No one from any of the carriers or their representative industry groups would talk to WorkCompCentral reporter Michael Whiteley - not surprising since it seems the children got caught with their hands in the cookie jar.
The SWCB seeks dismissal of the lawsuit on lack of standing.
Yeah, I know, the carriers are acting prudently within the four corners of the law and making their shareholders happier with the resulting financial results - i.e. just doing their jobs.
But this is just wrong.
It's not fraud, but it is improper.
I hear all of the time about unintended consequences from the insurance industry - usually in reference to some loophole that either claimants or vendors are exploiting.
But the insurance industry itself is just as guilty as any other interest in workers' compensation.
When it comes to greed, hypocrisy dominates and morals take a back seat.
Insurers that are parties to the lawsuit (and by association implicated in this scheme) are American Economy Insurance Co., American Fire and Casualty Co., American States Insurance Co., Employers Insurance Co. of Wausau, Excelsior Insurance Co., First Liberty Insurance Corp., General Insurance Co. of America, Liberty Insurance Corp., Liberty Mutual Fire Insurance Co., Liberty Mutual Insurance Co., LM Insurance Corp., Netherlands Insurance Co., The Ohio Casualty Insurance Co., Ohio Security Insurance Co., Peerless Indemnity Insurance Co., Peerless Insurance Co., Wausau Business Insurance Co., Wausau General Insurance Co., Wausau Underwriters Insurance Co. and West American Insurance Co.
Tuesday, October 15, 2013
Monday, October 14, 2013
Just The Facts, Ma'am
A recent case heard by the West Virginia Supreme Court found that simply assisting a co-worker lift a box of personal effects was not a task beneficial to the employer, thus denying workers' compensation benefits.
This is why many people who are not trained in the vagaries of the law hate it; how do you determine what's beneficial to the employer in those close cases, like Morton v. West Virginia Office of Insurance Commissioner, No. 11-1382?
Morton worked for Seneca Health Services, as a member of its support staff. Her job required that she provide secretarial, reception and data-entry functions necessary for accurate processing of clinical and administrative data at Seneca.
In September 2010, one of Morton's coworkers put a large box in Morton's office for Elisa Robinette, a mutual colleague, to retrieve. The box contained maternity clothes that Robinette had let the coworker borrow.
When Robinette arrived to claim the box, she was unable to lift it on her own and she asked Morton for help. Morton lost her balance while helping lift the box and fell backwards, injuring her right wrist and shoulder.
Morton filed a claim for workers' compensation benefits, but Seneca's claims administrator denied it, finding Morton's injury had not resulted from her employment.
Up the judicial ladder the claim went: Morton's argument, acknowledging the box contained personal effects, was that acquiescing to any request for assistance by another employee fell within the scope of her job duties and that her employer benefited by having employees who "work collaboratively and cooperatively with one another."
The Supreme Court majority acknowledged that there was no question that Morton's injury had occurred in the course of her employment because Morton was on Seneca's premises, during her regular work hours and ostensibly was tending to her duties at the time.
But whether Morton's injury had resulted from her employment was a closer question, the majority said, and there was no West Virginia precedent directly on point.
The majority also noted something that perhaps legislators understand when they write the laws, or perhaps they don't - that such cases are particularly fact driven.
In this case, the majority reasoned that the box of maternity clothes and the function of taking them to Robinette's car had nothing whatsoever to do with Seneca's business, aside from the fact that the box happened to have been left there for the convenience of Robinette. The majority said it could "discern no particular benefit to Seneca in petitioner’s admittedly kind, but purely gratuitous, gesture of assisting her coworker with the box."
If Morton could recover in workers' compensation, this would essentially make employers "the insurer of anyone injured on the premises, regardless of the nature of the activity giving rise to the injury, so long as an employee was assisting with the activity in an effort to be helpful and collegial," the court majority said.
In dissent Justice Davis argued that the fact the box had been left in Morton's office meant that it had a direct impact on Morton's job, and that it was "obvious that removal of the large box from the petitioner’s workspace benefited the employer by allowing the petitioner to have all the space she needed to efficiently perform the tasks she was assigned."
I don't know how Morton got her medical bills paid or whether there was any claim for time off.
This is why many people who are not trained in the vagaries of the law hate it; how do you determine what's beneficial to the employer in those close cases, like Morton v. West Virginia Office of Insurance Commissioner, No. 11-1382?
Morton worked for Seneca Health Services, as a member of its support staff. Her job required that she provide secretarial, reception and data-entry functions necessary for accurate processing of clinical and administrative data at Seneca.
In September 2010, one of Morton's coworkers put a large box in Morton's office for Elisa Robinette, a mutual colleague, to retrieve. The box contained maternity clothes that Robinette had let the coworker borrow.
When Robinette arrived to claim the box, she was unable to lift it on her own and she asked Morton for help. Morton lost her balance while helping lift the box and fell backwards, injuring her right wrist and shoulder.
Morton filed a claim for workers' compensation benefits, but Seneca's claims administrator denied it, finding Morton's injury had not resulted from her employment.
Up the judicial ladder the claim went: Morton's argument, acknowledging the box contained personal effects, was that acquiescing to any request for assistance by another employee fell within the scope of her job duties and that her employer benefited by having employees who "work collaboratively and cooperatively with one another."
The Supreme Court majority acknowledged that there was no question that Morton's injury had occurred in the course of her employment because Morton was on Seneca's premises, during her regular work hours and ostensibly was tending to her duties at the time.
But whether Morton's injury had resulted from her employment was a closer question, the majority said, and there was no West Virginia precedent directly on point.
The majority also noted something that perhaps legislators understand when they write the laws, or perhaps they don't - that such cases are particularly fact driven.
In this case, the majority reasoned that the box of maternity clothes and the function of taking them to Robinette's car had nothing whatsoever to do with Seneca's business, aside from the fact that the box happened to have been left there for the convenience of Robinette. The majority said it could "discern no particular benefit to Seneca in petitioner’s admittedly kind, but purely gratuitous, gesture of assisting her coworker with the box."
If Morton could recover in workers' compensation, this would essentially make employers "the insurer of anyone injured on the premises, regardless of the nature of the activity giving rise to the injury, so long as an employee was assisting with the activity in an effort to be helpful and collegial," the court majority said.
In dissent Justice Davis argued that the fact the box had been left in Morton's office meant that it had a direct impact on Morton's job, and that it was "obvious that removal of the large box from the petitioner’s workspace benefited the employer by allowing the petitioner to have all the space she needed to efficiently perform the tasks she was assigned."
I don't know how Morton got her medical bills paid or whether there was any claim for time off.
And I'm not saying the majority in this case was wrong, or that the dissent was right - what is interesting to me is where the line in the sand gets drawn and for what reasons.
Maybe Morton's argument is accurate and that this case will have a chilling effect on people helping others at work which would demoralize the work force thus impinging production with a deleterious result to the employer.
My guess is most workers have no clue about the Morton case and that human behavior will prevail and there will be some new Morton like case with a slightly different twist on the facts that will result in a compensable injury.
For work comp wonks, this is like Disneyland...
Maybe Morton's argument is accurate and that this case will have a chilling effect on people helping others at work which would demoralize the work force thus impinging production with a deleterious result to the employer.
My guess is most workers have no clue about the Morton case and that human behavior will prevail and there will be some new Morton like case with a slightly different twist on the facts that will result in a compensable injury.
For work comp wonks, this is like Disneyland...
Friday, October 11, 2013
Where's the New Jersey Conference?
There's going to be lots of press surrounding the latest CompScope Benchmarks Study released by the Workers' Compensation Research Institute, as there always is, and should be. After all, the WCRI is one of the top research groups in our industry and the leadership and staff there work hard to provide as complete and unbiased data as possible.
What is unique about the latest study of 16 states is one common theme - controlling costs has more to do with instituting price schedules for medical services than any other single factor.
The premier example is Illinois, which, after reducing medical fees by 30% across the board on Sept. 1, 2011, saw all medical payments for claims with seven days of lost time declined by 5% for injuries arising in 2011 and evaluated as of 2012. Prices paid for non-hospital services dropped by 24% between 2010 and 2012.
And Texas' claim costs, which ranked the highest in the nation prior to a set of reforms passed in 2005, are now typical of the states studied, according to WCRI , with medical costs per claim 17% lower than the 16-state median for 2009 claims evaluated in 2012. The Institute expects costs to decline further in Texas with the prescription drug formulary that became effective 9/1/2011.
The state's claim cost growth rate is also slowing. Claims costs in Texas grew by between 3% and 6% per year between 2006 and 2011. Costs per claim for the 2010/2012 study period were $5,829 – slightly higher than the $5,354 median.
The flip side is that imposing fee schedules on medical services increases costs on the other side of the balance sheet.
For instance in Illinois payments for medical-cost containment increased by 5% during the 2011/2012 study period after little previous change.
Pennsylvania is also seeing a steady increase in cost containment ... costs. But the state is also experiencing pressure from Business to limit indemnity durations.
Injured workers in Pennsylvania received temporary disability benefits for an average of 25 weeks, compared to 17 weeks in Michigan, 20 weeks in Virginia and 23 weeks in Massachusetts.
For the past two years, the Pennsylvania Chamber of Business and Industry has called for reforms that would require medical-treatment guidelines, mandate that doctors perform drug tests on claimants receiving opioids and require workers to use coordinated-care organizations for the duration of their injuries.
Not surprisingly if you have ever been to the WCI Annual conference in Orlando, Florida and the grand suite parties held on the upper floors of the Marriott at night, WCRI said that more than 40% of all Florida claims involved payments to defense attorneys of $500 or more. Florida ranked second in the study behind New Jersey.
I guess I'll have to check out the major conferences in New Jersey to confirm that finding...
What is unique about the latest study of 16 states is one common theme - controlling costs has more to do with instituting price schedules for medical services than any other single factor.
The premier example is Illinois, which, after reducing medical fees by 30% across the board on Sept. 1, 2011, saw all medical payments for claims with seven days of lost time declined by 5% for injuries arising in 2011 and evaluated as of 2012. Prices paid for non-hospital services dropped by 24% between 2010 and 2012.
And Texas' claim costs, which ranked the highest in the nation prior to a set of reforms passed in 2005, are now typical of the states studied, according to WCRI , with medical costs per claim 17% lower than the 16-state median for 2009 claims evaluated in 2012. The Institute expects costs to decline further in Texas with the prescription drug formulary that became effective 9/1/2011.
The state's claim cost growth rate is also slowing. Claims costs in Texas grew by between 3% and 6% per year between 2006 and 2011. Costs per claim for the 2010/2012 study period were $5,829 – slightly higher than the $5,354 median.
The flip side is that imposing fee schedules on medical services increases costs on the other side of the balance sheet.
For instance in Illinois payments for medical-cost containment increased by 5% during the 2011/2012 study period after little previous change.
Pennsylvania is also seeing a steady increase in cost containment ... costs. But the state is also experiencing pressure from Business to limit indemnity durations.
Injured workers in Pennsylvania received temporary disability benefits for an average of 25 weeks, compared to 17 weeks in Michigan, 20 weeks in Virginia and 23 weeks in Massachusetts.
For the past two years, the Pennsylvania Chamber of Business and Industry has called for reforms that would require medical-treatment guidelines, mandate that doctors perform drug tests on claimants receiving opioids and require workers to use coordinated-care organizations for the duration of their injuries.
Not surprisingly if you have ever been to the WCI Annual conference in Orlando, Florida and the grand suite parties held on the upper floors of the Marriott at night, WCRI said that more than 40% of all Florida claims involved payments to defense attorneys of $500 or more. Florida ranked second in the study behind New Jersey.
I guess I'll have to check out the major conferences in New Jersey to confirm that finding...
Thursday, October 10, 2013
AB 1309 - Told You So
There's no surprise that California Governor Jerry Brown signed the National Football League's bill largely terminating workers' compensation benefits for nearly every football player that could ever make a claim, what with its draconian eligibility requirements and jurisdictional restrictions. I had predicted this bill would pass.
And it's no surprise that nobody cares.
Except Michael Hiltzik of the Los Angeles Times, who said yesterday that the NFL, “unabashedly misrepresented its effect to the soft-headed state legislators who sponsored and passed it.”
The NFL is incredibly powerful because it is the biggest, most profitable sports franchise in the world. The NFL means jobs, means taxes, means entertainment.
But most of all, the NFL means money - lots of money. Last season's estimated revenues were reported to be $9.5 billion, about 25% more than Major League Baseball. Forbes values the average NFL franchise at $1.17 billion.
I don't know what the residual economy is swirling around the NFL - sports betting, patronization of bars, travel, workers' compensation insurance premiums, etc. - but I'm sure it's billions more.
Dr. Bennett Omalu, who was the first physician to identify accurately the incredible increase in Chronic Traumatic Encephalopathy in professional football players says in the Public Broadcasting System's documentary, "League of Denial: The NFL's Concussion Crisis":
"I wish I never met Mike Webster [Webster was a former Steelers center and was the first player where the NFL, through its retirement board, acknowledge any link between football and brain trauma]. CTE has driven me into the politics of science, the politics of the NFL. You can't go against the NFL. They will squash you."
And that is really what this new law is all about - it is the culmination of a long drive to the goal by the NFL using the hefty might of its offensive line to bully, lie, intimidate and if there's too much resistance, just plow over whoever gets in the way.
Because the NFL knows that mostly everybody doesn't care about the athletes, so why should they?
For instance, a research group from Boston University published an independent report linking CTE to football and presented their research at the 2009 Super Bowl. No one showed up.
There is no rational reason for the discrimination reflected in AB 1309 other than the well planned "settlement" the league entered into with the player's union to pay for, over time, concussive brain disorders - something the league for many, many years completely disputed, even after their own study linked player's dramatic probability of brain injury. And I argue that settlement is inadequate.
Angie Wei, legislative director of the California Labor Federation and more famous to us in the work comp industry as the person who negotiated SB 863 on the Labor side of the table, told the Los Angeles Times, "This is a terrible precedent for players and a more dangerous precedent for all workers."
I was confronted at the California Workers' Compensation and Risk Conference last week by a high level insurance executive, who did not wish to be quoted, with claims administration oversight authority of his company's professional sports exposure about my stance against AB 1309. His essential argument was that the applicant's bar had taken the liberality of California work comp too far with professional players and that carriers were paying for claims decades old made by players with little connection to California.
I can sympathize with that argument, and likely wouldn't have a problem IF a) other states took care of their own players (and in my opinion they don't) AND b) AB 1309 didn't discriminate against the entertainers - the people for whom audiences actually pay to see - and who for the most part have very little earnings from their professional careers. After all, the bill covers ALL professionals in football, baseball, hockey, basketball and hockey.
For instance, minor league professional baseball players starts their first year at a MAXIMUM salary of $850 per month. If you get up to triple-A ball, then you can get $2,150 per month. In hockey a minor league player might make up to $39,000 per year, but it is pro-rated daily over the regular season. These aren't highly paid athletes, and now they are largely left with no remedy for the injuries incurred doing their jobs.
As noted in the Times article, the average professional life of a football player is only 4 years. During those 4 years one needs to make enough money to pay for his own medical insurance since the NFL doesn't provide such coverage post retirement.
The bill would cover Arena Football players who make a whopping $500 per game, or maybe $12,000 per year if they play all 18 games with bonuses and incentives.
Athletes in the National Basketball Association's D-league, or Development league, averaged between $12,000 and $24,000 per year.
One way to get the NFL to pay for the medical care needed by its employees who are the ones responsible for the $9.5 billion/year juggernaut we see on television is through workers' compensation.
But NO - instead now the rest of the nation gets to pay, even more, for its entertainment through social security, Medicare and other social programs.
Just another way for Big Business to stick it to the Little Guy, and the Little Guys just bends over - just read the comments to the LA Times article; there's no comprehension of workers' compensation, of athlete pay, or of league profits. People just want their football.
The NFL knows that America is populated mostly by the ignorant and that it has the most powerful marketing machine known to corporate America. The league's marketers are true professionals, turning a negative (unwanted attention to head trauma) and spinning it with the Head Health Initiative suckering GE into sponsoring it with a $60 million deal.
Dr. Omalu is right. You can't go against the NFL. Even Jerry Brown, probably one of the most independent politicians to run California in a long time, is a sucker for football.
The question in my mind is how far will this go? How many other special interest industries will see what the NFL accomplished and seek the demise of certain provisions of California workers' compensation law that cover and assist the working people of this state?
Time will tell of course. The door is opened however and I don't see it getting shut any time soon. Until some really smart plaintiff's lawyer figures out how to sue a team civilly ...
And it's no surprise that nobody cares.
Except Michael Hiltzik of the Los Angeles Times, who said yesterday that the NFL, “unabashedly misrepresented its effect to the soft-headed state legislators who sponsored and passed it.”
The NFL is incredibly powerful because it is the biggest, most profitable sports franchise in the world. The NFL means jobs, means taxes, means entertainment.
But most of all, the NFL means money - lots of money. Last season's estimated revenues were reported to be $9.5 billion, about 25% more than Major League Baseball. Forbes values the average NFL franchise at $1.17 billion.
I don't know what the residual economy is swirling around the NFL - sports betting, patronization of bars, travel, workers' compensation insurance premiums, etc. - but I'm sure it's billions more.
Dr. Bennett Omalu, who was the first physician to identify accurately the incredible increase in Chronic Traumatic Encephalopathy in professional football players says in the Public Broadcasting System's documentary, "League of Denial: The NFL's Concussion Crisis":
"I wish I never met Mike Webster [Webster was a former Steelers center and was the first player where the NFL, through its retirement board, acknowledge any link between football and brain trauma]. CTE has driven me into the politics of science, the politics of the NFL. You can't go against the NFL. They will squash you."
And that is really what this new law is all about - it is the culmination of a long drive to the goal by the NFL using the hefty might of its offensive line to bully, lie, intimidate and if there's too much resistance, just plow over whoever gets in the way.
Because the NFL knows that mostly everybody doesn't care about the athletes, so why should they?
For instance, a research group from Boston University published an independent report linking CTE to football and presented their research at the 2009 Super Bowl. No one showed up.
There is no rational reason for the discrimination reflected in AB 1309 other than the well planned "settlement" the league entered into with the player's union to pay for, over time, concussive brain disorders - something the league for many, many years completely disputed, even after their own study linked player's dramatic probability of brain injury. And I argue that settlement is inadequate.
Angie Wei, legislative director of the California Labor Federation and more famous to us in the work comp industry as the person who negotiated SB 863 on the Labor side of the table, told the Los Angeles Times, "This is a terrible precedent for players and a more dangerous precedent for all workers."
I was confronted at the California Workers' Compensation and Risk Conference last week by a high level insurance executive, who did not wish to be quoted, with claims administration oversight authority of his company's professional sports exposure about my stance against AB 1309. His essential argument was that the applicant's bar had taken the liberality of California work comp too far with professional players and that carriers were paying for claims decades old made by players with little connection to California.
I can sympathize with that argument, and likely wouldn't have a problem IF a) other states took care of their own players (and in my opinion they don't) AND b) AB 1309 didn't discriminate against the entertainers - the people for whom audiences actually pay to see - and who for the most part have very little earnings from their professional careers. After all, the bill covers ALL professionals in football, baseball, hockey, basketball and hockey.
For instance, minor league professional baseball players starts their first year at a MAXIMUM salary of $850 per month. If you get up to triple-A ball, then you can get $2,150 per month. In hockey a minor league player might make up to $39,000 per year, but it is pro-rated daily over the regular season. These aren't highly paid athletes, and now they are largely left with no remedy for the injuries incurred doing their jobs.
As noted in the Times article, the average professional life of a football player is only 4 years. During those 4 years one needs to make enough money to pay for his own medical insurance since the NFL doesn't provide such coverage post retirement.
The bill would cover Arena Football players who make a whopping $500 per game, or maybe $12,000 per year if they play all 18 games with bonuses and incentives.
Athletes in the National Basketball Association's D-league, or Development league, averaged between $12,000 and $24,000 per year.
One way to get the NFL to pay for the medical care needed by its employees who are the ones responsible for the $9.5 billion/year juggernaut we see on television is through workers' compensation.
But NO - instead now the rest of the nation gets to pay, even more, for its entertainment through social security, Medicare and other social programs.
Just another way for Big Business to stick it to the Little Guy, and the Little Guys just bends over - just read the comments to the LA Times article; there's no comprehension of workers' compensation, of athlete pay, or of league profits. People just want their football.
The NFL knows that America is populated mostly by the ignorant and that it has the most powerful marketing machine known to corporate America. The league's marketers are true professionals, turning a negative (unwanted attention to head trauma) and spinning it with the Head Health Initiative suckering GE into sponsoring it with a $60 million deal.
Dr. Omalu is right. You can't go against the NFL. Even Jerry Brown, probably one of the most independent politicians to run California in a long time, is a sucker for football.
The question in my mind is how far will this go? How many other special interest industries will see what the NFL accomplished and seek the demise of certain provisions of California workers' compensation law that cover and assist the working people of this state?
Time will tell of course. The door is opened however and I don't see it getting shut any time soon. Until some really smart plaintiff's lawyer figures out how to sue a team civilly ...
Wednesday, October 9, 2013
Random Ridiculousness: Copy Fee Schedule
One of the most ridiculous fights the progenitors of SB 863 decided to pick was regarding copy service fees.
In California, and perhaps other states, there are businesses that cater to the claimant side of the litigation equation to procure records to use as evidence in support of some contested issue.
When former administrative director (now workers' compensation judge) Rosa Moran made her first speech as AD she said that one thing that particularly bothered her was applicant photo copy fees and that she was going to give the topic close scrutiny.
In California, and perhaps other states, there are businesses that cater to the claimant side of the litigation equation to procure records to use as evidence in support of some contested issue.
When former administrative director (now workers' compensation judge) Rosa Moran made her first speech as AD she said that one thing that particularly bothered her was applicant photo copy fees and that she was going to give the topic close scrutiny.
"I'm going to start with something small, because we've got to get our house in order," she said. "I randomly picked something that kind of annoys me. I picked copy services."
I couldn't help but wonder why this was so big an issue that it would raise such emotion from Moran. After all, applicant photocopy service fees amounted to about 1% of all costs, and these firms typically wait about 2 years to get paid on an invoice. Time is money so collection time is factored into the pricing. And it's not like carriers don't negotiate the final payment anyhow.
Of course, when Moran was announced as AD, SB 863 had been in the works behind closed doors for some time, likely had included the topic of copy services, and had not been publicly acknowledged by anyone outside those closed doors.
Defendant/carrier/employers use their own services which are highly competitive and driven by basic market forces (and probably some good glad handing at conferences or other social events).
Applicant copy firms are a different breed though and have several competing market forces at work.
Serving at the request of the applicant attorney, such photocopy firms have no idea what they are obtaining nor the relevancy (if any) of the records sought. And the applicant attorney doesn't much care because they are not responsible for payment of the records.
Carrier representatives have argued that there shouldn't be any difference between records, and that applicants should just accept the records that the carrier procures or obtains. That's like telling the insurance company that the only records they can have after an accident are what the applicant provides - neither side is going to trust the other to be completely forthcoming with information so there has to be independent procedures to get to the same information.
So in the dark, windowless room where SB 863 was negotiated, the authors added Labor Code Section 5307.9, requiring the administrative director to consult with the Commission on Health and Safety and Workers' Compensation and hold public hearings to adopt by Dec. 31 a schedule of reasonable maximum fees payable for copy and related services. The bill says the copy service fee schedule “shall specify the services allowed and shall require specificity in billing for these services.”
CHSWC on Friday posted on its website for public comments a report by the Berkeley Research Group recommending the flat rate of $103.55 for each copy set of up to 1,000 pages. The report, titled “Formulating a Copy Service Fee Schedule for the California Division of Workers’ Compensation,” also recommends that additional sets of copies be reimbursed at 10 cents per page if printed, or $5 if provided in an electronic format.
Researchers said they arrived at the $103.55 fee for copy service bills paid within 60 days based on an analysis of defense copy service bills that was a “useful indicator of the fair market value of copy services where payment is prompt and free of disputes.” The increased rate for bills paid late was calculated based on an analysis of applicant copy service bills that account for the “fair market value when the seller (the copy service) has to repeatedly rebill, pursue collection and risk prolonged delay or nonpayment.”
For the late payers Berkeley Research Group recommends increasing the flat rate to $251.20 for any bill that is not paid within 60 days.
Berkeley Research Group also evaluated pricing data for retrieving documents in 16 other states, including Florida, Illinois, New York and Texas and found the mean payment for reports of 1,000 pages or less was $98.13, but looking at the tables you will note that there isn't much value to the average price because of the wildly extreme differences in the study states.
Other than preparing and serving a subpoena and advancing witness fees, the report does not identify what other services would be eligible for additional payments, nor is there any recommendation as to what a reasonable rate would be for such services.
The flat fee proposed by Berkeley Research Group is even drawing criticism from defense copy firms because the rate is too low to cover the array of services necessary and provided in order to comply with California discovery laws (an interesting twist - during the entire period of "study" of the copy fee issue I'd never thought we would see the defense side with the applicant copy firms on any issue).
This whole copy fee schedule argument is ridiculous and in my opinion is just another micro-management cost control feature in the law that will result in greater expense on a different line of the balance sheet rather than save anyone any money.
I can nearly guarantee that after copy firms shutter their doors there will be a few enterprising individuals (and probably more on the criminal end of the spectrum) who will figure out how to skirt the laws and drive "annoying" profits their way.
And regardless of any "penalty" for late payments, if a defendant/employer doesn't want to pay for something, another hundred dollars isn't going to provide an incentive to drive timely payments.
This whole study is a waste of time and money and will only result in more wasted time and money.
The very simple way of dealing with the photocopy fee "crisis" (yes, I'm being sarcastic) is to make the requesting attorney responsible for the cost of the records. If an applicant attorney orders records then he or she has to pay the bill. Perhaps the attorney could recoup that cost in settlement or as part of an award, but perhaps not - let the attorney take the risk and then provide a reason why that risk should be rewarded.
Applicant attorneys will argue that doing so would stifle litigation, that they don't have the cash flow to finance a case in such manner, and that they don't have the time or resources to manage their copy requests.
Malarkey. Applicant attorneys can arrange with their copy firms better payment and finance terms so that cash flow isn't impaired. Litigation wouldn't be stifled. Instead it would get more careful management and thoughtfulness, making litigation more efficient. And applicant attorney firms already have staff that rifle through records to find the nuggets of information they seek to make their case so there's no extra expense there either.
But we're going to have a fee schedule come hell or high water. So bring it on and let's see the next micro-managed fiasco infiltrate California workers' compensation litigation bear fruit for those whose scruples aren't defined by law and regulation.
Of course, when Moran was announced as AD, SB 863 had been in the works behind closed doors for some time, likely had included the topic of copy services, and had not been publicly acknowledged by anyone outside those closed doors.
Defendant/carrier/employers use their own services which are highly competitive and driven by basic market forces (and probably some good glad handing at conferences or other social events).
Applicant copy firms are a different breed though and have several competing market forces at work.
Serving at the request of the applicant attorney, such photocopy firms have no idea what they are obtaining nor the relevancy (if any) of the records sought. And the applicant attorney doesn't much care because they are not responsible for payment of the records.
Carrier representatives have argued that there shouldn't be any difference between records, and that applicants should just accept the records that the carrier procures or obtains. That's like telling the insurance company that the only records they can have after an accident are what the applicant provides - neither side is going to trust the other to be completely forthcoming with information so there has to be independent procedures to get to the same information.
So in the dark, windowless room where SB 863 was negotiated, the authors added Labor Code Section 5307.9, requiring the administrative director to consult with the Commission on Health and Safety and Workers' Compensation and hold public hearings to adopt by Dec. 31 a schedule of reasonable maximum fees payable for copy and related services. The bill says the copy service fee schedule “shall specify the services allowed and shall require specificity in billing for these services.”
CHSWC on Friday posted on its website for public comments a report by the Berkeley Research Group recommending the flat rate of $103.55 for each copy set of up to 1,000 pages. The report, titled “Formulating a Copy Service Fee Schedule for the California Division of Workers’ Compensation,” also recommends that additional sets of copies be reimbursed at 10 cents per page if printed, or $5 if provided in an electronic format.
Researchers said they arrived at the $103.55 fee for copy service bills paid within 60 days based on an analysis of defense copy service bills that was a “useful indicator of the fair market value of copy services where payment is prompt and free of disputes.” The increased rate for bills paid late was calculated based on an analysis of applicant copy service bills that account for the “fair market value when the seller (the copy service) has to repeatedly rebill, pursue collection and risk prolonged delay or nonpayment.”
For the late payers Berkeley Research Group recommends increasing the flat rate to $251.20 for any bill that is not paid within 60 days.
Berkeley Research Group also evaluated pricing data for retrieving documents in 16 other states, including Florida, Illinois, New York and Texas and found the mean payment for reports of 1,000 pages or less was $98.13, but looking at the tables you will note that there isn't much value to the average price because of the wildly extreme differences in the study states.
Other than preparing and serving a subpoena and advancing witness fees, the report does not identify what other services would be eligible for additional payments, nor is there any recommendation as to what a reasonable rate would be for such services.
The flat fee proposed by Berkeley Research Group is even drawing criticism from defense copy firms because the rate is too low to cover the array of services necessary and provided in order to comply with California discovery laws (an interesting twist - during the entire period of "study" of the copy fee issue I'd never thought we would see the defense side with the applicant copy firms on any issue).
This whole copy fee schedule argument is ridiculous and in my opinion is just another micro-management cost control feature in the law that will result in greater expense on a different line of the balance sheet rather than save anyone any money.
I can nearly guarantee that after copy firms shutter their doors there will be a few enterprising individuals (and probably more on the criminal end of the spectrum) who will figure out how to skirt the laws and drive "annoying" profits their way.
And regardless of any "penalty" for late payments, if a defendant/employer doesn't want to pay for something, another hundred dollars isn't going to provide an incentive to drive timely payments.
This whole study is a waste of time and money and will only result in more wasted time and money.
The very simple way of dealing with the photocopy fee "crisis" (yes, I'm being sarcastic) is to make the requesting attorney responsible for the cost of the records. If an applicant attorney orders records then he or she has to pay the bill. Perhaps the attorney could recoup that cost in settlement or as part of an award, but perhaps not - let the attorney take the risk and then provide a reason why that risk should be rewarded.
Applicant attorneys will argue that doing so would stifle litigation, that they don't have the cash flow to finance a case in such manner, and that they don't have the time or resources to manage their copy requests.
Malarkey. Applicant attorneys can arrange with their copy firms better payment and finance terms so that cash flow isn't impaired. Litigation wouldn't be stifled. Instead it would get more careful management and thoughtfulness, making litigation more efficient. And applicant attorney firms already have staff that rifle through records to find the nuggets of information they seek to make their case so there's no extra expense there either.
But we're going to have a fee schedule come hell or high water. So bring it on and let's see the next micro-managed fiasco infiltrate California workers' compensation litigation bear fruit for those whose scruples aren't defined by law and regulation.
Tuesday, October 8, 2013
Jobs, Wages and Premium
I'm confused (but that's nothing shocking).
The Insurance Service Office and the Property Casualty Insurers Association of America say in a report released last week that expanding payrolls contributed new premiums written to the workers' compensation line, helping combined ratios improve to 97.9% for the first half, down from 101.9% a year ago.
But the Wall Street Journal's Ben Casselman says that the improved unemployment figures are masking a troublesome trend - workers' aren't moving up the ladder to better paying jobs but rather are holding on to whatever they have.
In "normal" economic times, employment churn (resignations, firings, replacements) create a much more robust employment condition. In 2007, according to the WSJ article, about 3 million workers churned each month. This past July, that number was just 2.3 million, barely any better than what was occurring during the depths of the last recession.
"Nobody's leaving for a better job," Jason Faberman, an economist at the Federal Reserve Bank of Chicago, is quoted as saying. "These guys aren't moving on to better jobs, which means their positions aren't opening up for the unemployed."
But this news isn't just bad for the unemployed, churn is critical to wage growth.
As explained by Toshihiko Mukoyama, a University of Virginia economist, unemployment for those under age 25 is still elevated at 15.6%, so many of those lucky enough to have jobs are playing it safe by staying put and not risking the move to higher wages.
Robert Hartwig, president of the Insurance Information Institute, noted that the increase in net written premiums, up 4.5% during the period, from a 3.7% gain recorded in the first half of 2012 and a 4.7% increase in the second quarter, was the 13th consecutive quarter of growth.
Hartwig said that, combined with modest increases in the hourly earnings of employees, payrolls expanded at an average annual pace of $216.5 billion during the first half of the year, relative to the first half of 2012.
“Indeed, workers’ compensation, hit hard during the recession by a soft market and a precipitous drop in payrolls, has within the snap of just a few years transformed itself from the fastest contracting major property-casualty line to the fastest growing, with direct premium growth in 2013 up by approximately 10%,” Hartwig said.
How this all plays out in the long run will be interesting. The interrelationship between the economy, jobs and premium health in workers' compensation makes the workers' compensation insurance market a complex study in contrast.
I have heard in several seminars over the past 12 months that while the market is hardening, it is less a reflection of market competition and more about wage recovery.
So premium growth may just be illusional at this juncture. If wages really do stagnate and there are no more jobs available to those who want to improve their employment positions, then we may see premature softening in premiums relative to the overall economy.
The Insurance Service Office and the Property Casualty Insurers Association of America say in a report released last week that expanding payrolls contributed new premiums written to the workers' compensation line, helping combined ratios improve to 97.9% for the first half, down from 101.9% a year ago.
But the Wall Street Journal's Ben Casselman says that the improved unemployment figures are masking a troublesome trend - workers' aren't moving up the ladder to better paying jobs but rather are holding on to whatever they have.
In "normal" economic times, employment churn (resignations, firings, replacements) create a much more robust employment condition. In 2007, according to the WSJ article, about 3 million workers churned each month. This past July, that number was just 2.3 million, barely any better than what was occurring during the depths of the last recession.
"Nobody's leaving for a better job," Jason Faberman, an economist at the Federal Reserve Bank of Chicago, is quoted as saying. "These guys aren't moving on to better jobs, which means their positions aren't opening up for the unemployed."
But this news isn't just bad for the unemployed, churn is critical to wage growth.
As explained by Toshihiko Mukoyama, a University of Virginia economist, unemployment for those under age 25 is still elevated at 15.6%, so many of those lucky enough to have jobs are playing it safe by staying put and not risking the move to higher wages.
Robert Hartwig, president of the Insurance Information Institute, noted that the increase in net written premiums, up 4.5% during the period, from a 3.7% gain recorded in the first half of 2012 and a 4.7% increase in the second quarter, was the 13th consecutive quarter of growth.
Hartwig said that, combined with modest increases in the hourly earnings of employees, payrolls expanded at an average annual pace of $216.5 billion during the first half of the year, relative to the first half of 2012.
“Indeed, workers’ compensation, hit hard during the recession by a soft market and a precipitous drop in payrolls, has within the snap of just a few years transformed itself from the fastest contracting major property-casualty line to the fastest growing, with direct premium growth in 2013 up by approximately 10%,” Hartwig said.
How this all plays out in the long run will be interesting. The interrelationship between the economy, jobs and premium health in workers' compensation makes the workers' compensation insurance market a complex study in contrast.
I have heard in several seminars over the past 12 months that while the market is hardening, it is less a reflection of market competition and more about wage recovery.
So premium growth may just be illusional at this juncture. If wages really do stagnate and there are no more jobs available to those who want to improve their employment positions, then we may see premature softening in premiums relative to the overall economy.
Monday, October 7, 2013
Family Makes the Difference
Mom and Dad are late in their years. Mom is 89 and has moderate dementia. Dad just turned 91 and was in excellent physical health despite a history of heart disease and bypass surgeries.
"Was" is the critical verb in the prior sentence.
Dad is the decision maker, always has been. A retired dentist who had a successful practice, he is a leader and is used to being in charge.
Also a faithful husband and family man, Dad made a personal commitment to himself years ago to take care of his wife to the end.
He will also admit that he is the world's worst planner ... except for when it came to vacations.
He didn't count on disability.
Having elderly parents, seeing their travails on a weekly basis (my commitment to them was to visit at least once a week), and watching them sunset physically and mentally, provides some awareness of the disabled state.
Dementia is a terrible disease. It progresses gradually, taking elements of memory away from daily functioning in a cruel manner. At Mom's stage, she forgets sometimes just how to walk, so she falls and then can't get back up.
Dad thought he could deal with this. He thought wrong.
Dad has sciatica and pain radiates down his leg. This started a few months ago.
A shot of cortisone every once in a while alleviates the symptoms and he goes about his days with good energy and strength. But when he has to wait because of dosing issues, or just access issues, he can't move much without a walker.
This past week was a seminal week in my father's understanding of the fragile state of his physical being when Mom's temperature sky rocketed due to infection, she fell and couldn't get up, and he couldn't get her up because of his back issues.
Finally Dad understood what I, and my siblings, had been trying to get through to him for the past 2 years - there is a time when a single person's support isn't sufficient, and in fact may further jeopardize the well being of another.
Last week I wrote about support - that an injured worker needs support from professionals, from the employer, and likely most importantly, from family, in order to truly be successful in elevating above the misfortune that was handed to him or her from an employment injury.
In my own family situation I see the same elements, though obviously without "compensation" in the way.
Dad's frustration with his physical limitations, and the vapor from pain that clouds rational thinking, were leading to bad decisions on his part. It's obvious that his thought processes were not all there - Dad's a really intelligent man, but between the trauma of seeing Mom degrade, and the depressing emotions of pain and incapacity, his logic and capacity for good judgment are compromised.
They live in a retirement community and have made many friends since they moved there nearly 2 years ago - which is not surprising. Both of my parents are gregarious and make friends easily. Even at her stage of dementia, Mom is always smiling and saying hello to the other residents. Dad is a leader and is always taking charge of something there - whether an event, getting favors for fresh spinach in the dining room, or getting folks rounded up for a trip to a local attraction.
Their friends are going through similar stages of life so the compassion and understanding of the trials and tribulations of aging are shared.
Mom & Dad also have doctors that they have great faith in. So much faith that when I suggested to Dad that he see a chiropractor a few days before his scheduled appointment in the event that a simple adjustment might ease some of the pain, his response in typically cryptic fashion was, "I have an appointment on Monday for a shot."
Fortunately my brother, a retired Navy Master Chief and currently a defense contractor at Marine Corp Air Station Miramar, lives close enough to my folks so that he can respond and help out more quickly than I can.
And also fortunately aviation allows me to traverse the 150 miles to their home in the relative blink of an eye so the demands on my most precious resource, time, is minimized and I can provide some personal support and assistance every week, and on call as necessary.
I've witnessed the frustration of Dad trying to sort through his emotions and make appropriate decisions for the care of Mom. I've also witnessed the difficulty Mom has just getting through life trying to uphold her dignity when her control over bodily functions fail.
Dad made some very difficult life decisions this past weekend - decisions he didn't want to make because there weren't any good compromises. These were black and white sort of decisions, but ones that were critical to providing the highest quality of life possible under the circumstances.
He would not have been able to make these decisions without the support of family - there is no question in my mind that while his friends and the professionals assisting them would provide some support, they don't have the influence and the weight of family.
In workers' compensation terms we call this the biopsychosocial element - where biology intersects psychology and socialization. As professionals we do the best we can with the resources we have to make things better, but the family ...
I know intuitively, and though experience, that family is a huge component to the wellness and recovery of an injured worker. Professionals and the employer play big parts too, but family support is the cornerstone.
I am not aware of any formal studies on the impact of family support to work comp outcomes and I'm not even sure how to incorporate this knowledge into the work injury recovery process.
I just know it's a big part, and injured workers with big family support systems are very fortunate.
"Was" is the critical verb in the prior sentence.
Dad is the decision maker, always has been. A retired dentist who had a successful practice, he is a leader and is used to being in charge.
Also a faithful husband and family man, Dad made a personal commitment to himself years ago to take care of his wife to the end.
He will also admit that he is the world's worst planner ... except for when it came to vacations.
He didn't count on disability.
Having elderly parents, seeing their travails on a weekly basis (my commitment to them was to visit at least once a week), and watching them sunset physically and mentally, provides some awareness of the disabled state.
Dementia is a terrible disease. It progresses gradually, taking elements of memory away from daily functioning in a cruel manner. At Mom's stage, she forgets sometimes just how to walk, so she falls and then can't get back up.
Dad thought he could deal with this. He thought wrong.
Dad has sciatica and pain radiates down his leg. This started a few months ago.
A shot of cortisone every once in a while alleviates the symptoms and he goes about his days with good energy and strength. But when he has to wait because of dosing issues, or just access issues, he can't move much without a walker.
This past week was a seminal week in my father's understanding of the fragile state of his physical being when Mom's temperature sky rocketed due to infection, she fell and couldn't get up, and he couldn't get her up because of his back issues.
Finally Dad understood what I, and my siblings, had been trying to get through to him for the past 2 years - there is a time when a single person's support isn't sufficient, and in fact may further jeopardize the well being of another.
Last week I wrote about support - that an injured worker needs support from professionals, from the employer, and likely most importantly, from family, in order to truly be successful in elevating above the misfortune that was handed to him or her from an employment injury.
In my own family situation I see the same elements, though obviously without "compensation" in the way.
Dad's frustration with his physical limitations, and the vapor from pain that clouds rational thinking, were leading to bad decisions on his part. It's obvious that his thought processes were not all there - Dad's a really intelligent man, but between the trauma of seeing Mom degrade, and the depressing emotions of pain and incapacity, his logic and capacity for good judgment are compromised.
They live in a retirement community and have made many friends since they moved there nearly 2 years ago - which is not surprising. Both of my parents are gregarious and make friends easily. Even at her stage of dementia, Mom is always smiling and saying hello to the other residents. Dad is a leader and is always taking charge of something there - whether an event, getting favors for fresh spinach in the dining room, or getting folks rounded up for a trip to a local attraction.
Their friends are going through similar stages of life so the compassion and understanding of the trials and tribulations of aging are shared.
Mom & Dad also have doctors that they have great faith in. So much faith that when I suggested to Dad that he see a chiropractor a few days before his scheduled appointment in the event that a simple adjustment might ease some of the pain, his response in typically cryptic fashion was, "I have an appointment on Monday for a shot."
Fortunately my brother, a retired Navy Master Chief and currently a defense contractor at Marine Corp Air Station Miramar, lives close enough to my folks so that he can respond and help out more quickly than I can.
And also fortunately aviation allows me to traverse the 150 miles to their home in the relative blink of an eye so the demands on my most precious resource, time, is minimized and I can provide some personal support and assistance every week, and on call as necessary.
I've witnessed the frustration of Dad trying to sort through his emotions and make appropriate decisions for the care of Mom. I've also witnessed the difficulty Mom has just getting through life trying to uphold her dignity when her control over bodily functions fail.
Dad made some very difficult life decisions this past weekend - decisions he didn't want to make because there weren't any good compromises. These were black and white sort of decisions, but ones that were critical to providing the highest quality of life possible under the circumstances.
He would not have been able to make these decisions without the support of family - there is no question in my mind that while his friends and the professionals assisting them would provide some support, they don't have the influence and the weight of family.
In workers' compensation terms we call this the biopsychosocial element - where biology intersects psychology and socialization. As professionals we do the best we can with the resources we have to make things better, but the family ...
I know intuitively, and though experience, that family is a huge component to the wellness and recovery of an injured worker. Professionals and the employer play big parts too, but family support is the cornerstone.
I am not aware of any formal studies on the impact of family support to work comp outcomes and I'm not even sure how to incorporate this knowledge into the work injury recovery process.
I just know it's a big part, and injured workers with big family support systems are very fortunate.
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