High Flying Work Comp Claim

When a space ship falls out of the sky and there's a surviving test pilot, and one that incurs fatal injuries, how does the workers' compensation system cope?

Are test pilots treated differently than us regular folks? Are the medical bills of the survivor strictly scrutinized for appropriate charges? Are medical decisions rendered quickly, or will there be rounds of utilization review and independent review?

It's now been preliminarily determined by the National Transportation Safety Board that SpaceShipTwo's structural failure was induced by pilot error - the swinging boom that was used to slow the spacecraft for reentry into the atmosphere was unlocked and initiated prematurely, presumably accidentally, by the right seat pilot.

The NTSB believes that mission copilot Michael Alsbury, 39, who died in the crash and was sitting in the right seat of SpaceShipTwo, prematurely flipped a switch that unlocked the boom while the craft was still traveling in excess of Mach 1.3, or 1.3 times the speed of sound.

The experimental rocket plane broke up over the Mojave Desert moments after that action. Mission pilot Peter Siebold, 43, parachuted out of the aircraft and suffered serious injuries. Investigators have not yet been able to interview Siebold, who was discharged from Antelope Valley Hospital Monday according to news reports.

Test pilot ranks high in the occupational risk category for obvious reasons - surviving a plane crash is rare.

Siebold bailed out at 50,000 feet which is nearly twice as high as Mount Everest. At that altitude there is essentially no oxygen, and the ambient air temperature is about minus 70 degrees fahrenheit. The pilots did not wear pressure suits, because the cabin of SpaceShipTwo was pressurized.

This is 6641M, not SpaceShipTwo

That Siebold had enough wits about him to get out of the craft at over 600 miles per hour, maintain sufficient situational awareness to be able to deploy his parachute at a safe altitude and speed, and in fact be able to do so despite the extreme cold, is nothing short of miraculous.

Now the recovery starts. Undoubtedly there will be long term medical consequences and potential disability. Will his condition prevent Siebold from flying again professionally? And if it doesn't will there be a position for him at his employer, Scaled Composites (a division now of Northrop Grumman Corp.)?

I don't know how Northrup's workers' compensation program is set up - the company is a global corporation with operations in many different countries, let alone states. Someone out there likely knows how the company structures its work comp compliance. But there does at least appear to be some sort of wage differential program to make up for the capitation of benefits provided by work comp.

I don't have any answers. I don't really know what will happen with Siebold, or whether the family of his copilot, Alsbury, will receive any compensation above the statutory limits for death benefits (I would assume there was a supplemental life insurance policy...).

I suspect however that, from a claims perspective, the cases of Alsbury and Siebold will be handled quite efficiently and expertly - this is after all a high profile situation. But more importantly the culture of space exploration encompasses calculated risk and a close-knit relationship between all involved in a project like SpaceShipTwo.

My guess is that Siebold will be flying again, professionally, and probably for his employer - test pilots are of that rare psychological makeup that perseveres against the most challenging situations; it's more than training, it's genetic. And Siebold has a huge amount of knowledge about the plane and the project that his employer is going to want to preserve.

A work injury recovery system, whether called workers' compensation or otherwise, requires the cooperation and coordination of many different elements to deliver as successful an outcome as possible.

The primary element is the attitude of the employer and the attitude of the injured worker. When their interests are aligned surprising things can happen.

Siebold has already demonstrated his attitude - surviving the near space breakup of an aircraft is demonstrative of his mindset.

The culture of Scaled Composites, a company that operates at the fringes of space itself and overcomes huge risks every day is also demonstrative of a mindset I suspect that is in alignment with Siebold's.

Real Questions Unanswered

Now we're in the last quarter of the year, things are winding down, and the industry is still debating the impact of SB 863.

Yesterday some new data was released by the Workers' Compensation Insurance Rating Bureau on whether, and by how much, SB 863 has had on expenses in the California system and the verdict is that gross initial projections seem accurate, but the breakdown of where those savings came from is different than expected.

The cost of liens dropped more than anticipated. WCIRB spokespeople put the reason on the filing fee and that is certainly a big component as many of the small liens, such as those from interpreting services and copy shops, aren't worth much more than the fee itself.

And while that certainly may be the case, I know by talking with some of these folks that they have been waiting on the sidelines for the fee schedules on interpreting and copy services - they weren't going to risk a $150 fee on a lien if they didn't really know the value of their services and can enforce payment; payors likewise aren't going to honor a bill for services that may not be "within fee schedule," and with no certain penalty for late or non-payment there's no reason to incur such costs.

Requests for Independent Medical Reviews continues to increase.

WCIRB reports a total of 37,083 applications were submitted for IMR in the first quarter of 2014, compared to 40,930 in the final quarter of 2012. In the second quarter of 2014, the number of applications climbed to 59,967. It increased again in the third quarter to 61,793.

Quarterly increase in IMR requests.

The WCIRB's projections that IMR would save $390 million a year were based on the assumption that, at most, 5,000 applications would be filed each month.

According to WCIRB, Maximus, the IMR review company contracted to perform the service, has a backlog of about 26,431 undecided cases at this point, but has completed more than 120,000 reviews, generating about $34 million in carrier payments so far, with the WCIRB projecting that the total amount carriers will have paid for IMR in the first two years of the program to be about $77 million.

Maximus shareholder equity past 5 years.

"The unanswered question is how much was saved by denying unnecessary medical care," the WorkCompCentral story this morning queries, stating that Greg Johnson, director of medical analytics for WCIRB, said the WCIRB simply can't answer that question.

Honestly, there's no way the WCIRB will ever be able to answer that question because it is not germane to IMR filings - we don't really know that IMR is denying unnecessary medical care. We only know that IMR is upholding Utilization Review denials, which may, or anecdotally more often than we admit, may not, be about appropriate care.

As I mentioned before, the anecdotal evidence suggests that UR is being used too often for cost containment rather than directing care. And frankly the amount of time it takes to get through a couple of UR denials and appeals, and then IMR review, denial and appeal, is incentive enough not to push for any particular treatment request - it's easier just to go to a general health doctor to get treatment for an ailment of "unknown origin."

And this is peripherally supported by current data the WCIRB reported.

The Rating Bureau projected that IMR would resolve disputes faster than going to the Workers' Compensation Appeals Board, which could reduce the average number of paid temporary disability days by 5% in 2013.

But the average number of paid TD days actually increased to 92.5 in calendar year 2013 from 88.6 in 2012.

Spokespeople for the WCIRB deflect, and state that this is due to getting the program up and running, and they expect the paid TD days to ameliorate; regardless nearly 90 days or three months is too long with or without IMR, particularly compared to nearly every other jurisdiction.

The dollar value of permanent disability indemnity is falling in line with projections - and that's understandable because the historical data on PD is robust; there's a lot of history in the data, but there are still many unanswered questions because it takes time for cases originating within the SB 863 era to get to final disposition where the information is reported.

My take away from the reporting is that uncertainty continues to dominate the California system - there just are too many components to SB 863 to say whether anything is actually working or not. Traditional analyses, in my opinion, aren't sufficient to explain the behavior patterns of system vendors because there are too many moving parts that have not settled into a business practice pattern.

In the meantime, while the insurance industry continues its narcissistic conversation about costs and expenses, the real questions are: a) are employers paying less for workers' compensation insurance now compared to before SB 863? and b) are injured workers getting better treatment, faster and more efficiently than before SB 863?

So far the answer to both is ....

no.

******************SHAMELESS PLUG******************

On December 6 at the Sheraton LAX Gateway hotel I will be presenting the WorkCompCentral Word on the Industry report, which will be followed by a debate between Department of Industrial Relations Director Christine Baker, Vons/Safeway VP of Risk Management Bill Zachry, applicant attorneys James Butler (No Cal) and Robert Rassp (So Cal) with a special motivational appearance by injured worker Dwight Johnson. We'll also be presenting the Comp Laude Awards, there will be networking, food, drink, music, dancing and all of the other year end, holiday event accoutrements. Tickets are on sale now and going fast (claims adjusters call for pricing).

Sue The Messenger

There are some cases that scream retaliation - and when a rejected suitor doesn't feel "justice" he will lash out against the next closest offender: the attorney that took the case in the first place.

Hamp v. Harrison, Patterson, O'Connor & Kinkead, No. D064453, 10/30/2014, unpublished, is one of those cases.

Richard Hamp, Sr. worked as a ready mix concrete driver for Hanson Aggregates Pacific Southwest. In July 2004, Hamp injured his back in a fall at work.

He filed a workers' compensation claim and collected benefits until his condition became permanent and stationary in November 2005. Hamp returned to work, subject to lifting and bending restrictions, but Hanson fired him two weeks later because his restrictions interfered with his usual and customary job duties - specifically regular lifting of over 50 pounds and repeated bending, stooping or crouching.

Hanson in court papers also declared that it could not accommodate Hamp's work restrictions to allow him to perform his former job.

Harrison disputed this latter statement, but not the former.

Hamp hired attorney Harry W. Harrison of Harrison Patterson O'Connor & Kinkead to represent him in a lawsuit against Hanson for wrongful termination, employment discrimination, failure to provide reasonable accommodation, harassment and intentional infliction of emotional distress.

Hanson moved for summary judgment or adjudication of Hamp's claims and won on the harassment, intentional infliction of emotional distress and punitive damages charges.

The judge denied summary adjudication of Hamp's claims for employment discrimination, failure to reasonably accommodate and wrongful termination because Hanson had not established Hamp could not perform any other available job.

After a failed settlement attempt, Harrison withdrew from representing Hamp in May 2010, and Hamp obtained new counsel.

Hanson then moved for summary judgment on Hamp's remaining claims, which was granted even though Hamp's new counsel submitted evidence showing the lifting requirement for Hamp's former job could be reduced by using alternative, lighter equipment.

Hamp then sued Harrison and Harrison's firm for malpractice and the defendants moved to strike Hamp's action under Code of Civil Procedure Section 425.16 as a strategic lawsuit against public participation.

Section 425.16, commonly referred to as the anti-SLAPP statute, allows a defendant to obtain the dismissal of an action filed to chill a valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.

The Flying None

The trial court originally granted Harrison's motion, finding Hamp's claims arose from petitioning activity and Hamp had not demonstrated a probability of prevailing on his malpractice claim.

The 4th District Court of Appeal reversed two years ago, finding the gravamen of Hamp's claims was Harrison's failure to protect Hamp's interests rather than Harrison's petitioning activity, so the anti-SLAPP statute did not apply.

After the 4th DCA remanded the matter to the San Diego Superior Court, the defendants moved for summary judgment which was granted, finding there was no way Hamp could prove his claims of malpractice and a breach of any fiduciary duty owed to him, as a matter of law.

By this time Hamp was in pro per, representing himself.

He lost at the appellate level.

The 4th DCA said an expert witness testimony is required in a professional negligence case to establish the applicable standard of care, whether that standard was met or breached by the defendant, and whether the defendant's negligence caused the plaintiff's damages. Hamp failed to present any expert testimony in this case.

It any event, the court added, Hamp's claims were unsupported by the facts in the record and the defendants did not breach any duties to him by withdrawing as his attorneys.

10 years and a lot of disappointment. I think that alone speaks volumes.

Some folks just can't let go.

To read the decision, click here.

It's Not About Them

While SB 863's introduction of the controversial lien filing and activation fees has been credited with reducing the quantity of filings, law enforcement crackdowns on allegedly fraudulent vendor practices demonstrate how the lien culture in California work comp became so pervasive and caused this legislative reaction.

Dr. Douglas J. Abeles of Castro Valley was arrested on 31 felony charges for allegedly submitting bills for the review of drug test reports under the names of various providers who have said they did not submit the bills, were not aware they had been submitted and were never paid by Abeles.

A warrant filed Oct. 22 in the Alameda County Superior Court alleges that about 30,000 bills totaling $73,545 were sent to six carriers, including State Compensation Insurance Fund, Zenith Insurance Co., Berkshire Hathaway Homestate Cos., Liberty Mutual Insurance Co., Travelers and Fireman's Fund.

WorkCompCentral reporter Greg Jones queried the Electronic Adjudication Management System and found 417 claims totaling $994,520.15 from Abeles and his companies, Redwood Laboratory Management and Physicians RX Network.

The rapid rise in Abeles' and related entity lien filing volume shows how the culture in California promotes this excessive behavior.
https://ww3.workcompcentral.com/education/course/course_pk/830
From 2009 to 2011, 13 claims were filed under the name "Douglas Abeles" with a combined value of $111,630. Six claims were filed under the name "Redwood Laboratory Management" in 2011 and 2012 with a total value of $9,231.

The remaining 398 liens, with a total value of $873,658, are in the name of "Physicians RX Network."

The EAMS data also shows a dramatic escalation in lien filing that started in 2010 and peaked in 2011.

PRXN filed just 10 liens from 2000 to 2008, according to the EAMS data. The total value of these claims was $12,550. In 2009, PRXN filed 45 liens worth a combined $90,615, while Abeles filed a single claim for $11,569.

"It's not my fault, but it is my responsibility."

In 2010, when prosecutors allege the billing scheme started, PRXN and Abeles filed 153 liens for a combined $396,353. The next year, PRXN, Abeles and Redwood filed 202 claims seeking a total of $474,768.
https://ww3.workcompcentral.com/education/course/course_pk/830
At that point, the lien filings all but stopped. Redwood filed two claims for a combined $3,488 in 2012 and PRXN filed three claims for a combined $4,473, according to EAMS data.

It seems to me that the perception of little risk in getting caught because of the veil of "no fault," and the easy road to collections via an administrative dispute resolution system that recognizes vendor "rights," is a combination that is responsible for clogging the system.

We all have been saying for a long time that workers' compensation is "broken."

I disagree. Work comp isn't broken - the system will work as designed if we allow it to.

But it won't work as we "intend" it to - those of us that aren't "essential" to the grand compromise: i.e. employer, employee, and government - get in the way with OUR intent.

Doctors are necessary to render medical treatment, but the system isn't about them.

Attorneys are necessary for dispute resolution, but the system isn't about them.

Medical equipment and pharmaceutical vendors are necessary to supply requested treatment, but the system isn't about them.

Interpreters are necessary to assist non-English language workers understand, but the system isn't about them.
https://ww3.workcompcentral.com/education/course/course_pk/830
Insurance companies are necessary to spread the risk and ensure no single employer endures financial catastrophe, but the system isn't about them.

The system is about employers, workers, and the government is to stitch it all together to keep them honest.

It's no fault of the employer (with rare exception) that an employee gets hurt.

It's no fault of the employee (with rare exception) that he or she got hurt.

It is the responsibility of the rest of us (including the government) to keep it that way.

Not Ready to Die

Regular readers of this blog know that Mom is 90, has moderate stage dementia, and lives in a very nice memory care facility.

Fortunately because I'm the boss, I get to visit Mom a couple of times per week.

And it's my duty, really, since I'm trustee and Dad entrusted me with making sure Mom is well taken care of after his death.

A few weeks ago I got a call from the lead nurse at Mom's facility seeking authorization to send Mom to the hospital. In a rapid turn of events, Mom had developed pneumonia, nearly overnight.

At 90 years of age, pneumonia is usually fatal - the frail immune system of someone that age generally is not able to overcome such an attack.

I authorized transportation to the local hospital (an excellent facility by the way, just a few miles from Mom's residence) via ambulance, where she was admitted and promptly treated.

I had visited Mom at the hospital the next day. Mom looked terrible. She was clearly weak, on oxygen, tubes and wires all over her ... but she had Mom spirit. When she saw me she raised her weak arm to wave me into the room and smiled pleasingly.

Mom - radiant!

The charge nurse gave me her status and treatment plan. She also advised that they had ALREADY begun various therapies: rehabilitative, occupational, pneumatic, etc. I was surprised at the early intervention of therapeutic modalities but the nurse explained that it was important for a quick recovery, particularly with elderly people.

She was released from the hospital after only two nights. I thought after the next visit with Mom at her residence following hospital release that The Time was near. Mom was in a wheelchair, on oxygen, coughing up phlegm, her lungs still sounding under water, eating a pureed diet.

The head nurse at Mom's residence advised that they would be particularly aggressive with therapies, and would have her walking shortly and off oxygen in a few day. I was skeptical, but hopeful.

All of this happened about a month ago.

Yesterday, however, Mom looked and sounded wonderful, back to her "normal" pre-pneumonia dementia-based life: no coughing, no phlegm, no oxygen, regular food and appetite, good color in her skin, and back up to "normal" ambulatory status (with a walker).

I was completely astounded that not only did she beat pneumonia at age 90, when most people would have died, but that her recovery was so complete and quick.

I'm convinced that this miraculous event was due mostly from prompt and proper medical response.

The staff at her residence noted immediately disease symptoms, and nearly as immediately sought and obtained medical intervention.

The hospital not only treated the pneumonia, but introduced immediately therapeutic modalities for early rehabilitation.

You know why this happened? Because I was the Utilization Review authority with the responsibility and obligation to ensure prompt medical attention within the authority provided by estate documents - the requests were not subject to secondary review, were not subject to additional layers of decision adjustment, were not part of a financial process.

There were no perverse motivations interfering with my decision making process.

Unlike workers' compensation, where the "no fault" doctrine has been perverted to "no responsibility" through years of "reform" agendas perpetrated by vendors (and I use that term broadly to include carriers, TPAs, physicians, attorneys, bill review, utilization review, etc.) rather than the only original parties to the "no fault" bargaining table: employers and their workers.

Workers' compensation CAN perform similarly to how Mom got her treatment - but all of the vendors need to get off the trough and frankly the only way to make that happen is to remove them from the "no fault" protection of comp.

Mom got well because people were responsible. She wasn't ready to die yet.

I appreciate that.

Certain Uncertainty

One of the major cost drivers in workers' compensation, particularly in California, is uncertainty.

Each major reform bill in the past 20 years has introduced more and more uncertainty into the system, and before the dust settles and folks have adjusted some other solution is identified to resolve a problem that we didn't know about...

Which leads to court intervention, interpretation opposite legislative/regulatory intent, more adjustment, increased uncertainty, etc.

It's a vicious cycle.

One particular example is the challenge to the lien fees introduced by SB 863, and in particular the Angelotti case that calls into question the constitutionality of the lien activation fee of $100.

In short, SB 863 introduced a filing fee of $150 for new liens against cases, and an "activation" fee of $100 for liens that had already been filed in cases but had not yet been adjudicated prior to the effective date of SB863.

The plaintiffs in Angelotti v. Baker brought suit for declaratory relief in Federal District Court and about this time last year U.S. District Court Judge George H. Wu issued a stay on the enforcement of the activation fee on the grounds that it violated the parties' constitutional equal protection rights, while dismissing causes of action based on the improper takings and due process claims.

The matter was appealed to the 9th Circuit Court of Appeal and is pending a ruling.

The wheels of justice of course turn slowly so that the court system can allow as much argument as interested parties wish to provide in order to allow the justices to be as fully informed and vetted on an issue as possible.

Sometimes this leads to disagreement in and of itself, as has been the case with the 9th Circuit's allowance of various new amicus parties to the Angelotti case.

The California Chamber of Commerce, State Compensation Insurance Fund, California Workers' Compensation Institute and American Insurance Association all petitioned the court for permission to file amicus briefs in support of the state.

The chamber's brief supports Wu's decision to dismiss the takings and due process claims.

A brief filed jointly by AIA and CWCI argues there is no evidence that the medical plans exempted from paying the activation fee are involved in the "lien mischief" the fee is intended to stamp out.

And SCIF argues in its brief that a medical provider is incentivized to "take a shot at making a profit" by filing a lien. The entities exempted from paying the activation fee are already out of pocket for any amount claimed in a lien, according to SCIF.

SCIF also asked the court for permission to participate in oral briefs.

SCIF's request has drawn the rancor of the plaintiffs, who say that request skews the balance of argument before the court.

In particular, the California Society of Industrial Medicine and Surgery was the only amicus to file a brief supporting the lien claimants, but did not request oral argument participation.

The 9th Circuit on Oct. 23 granted SCIF's motion to participate in oral arguments, "subject to defendants' willingness to share their allotted time with SCIF." Similarly, the court said it would grant motions by CWCI, AIA and the Chamber of Commerce to participate in oral arguments only if the defendants are willing to share their allotted time.

Likewise, the court will grant a motion by CSIMS if the plaintiffs will share their allotted time.

Plaintiffs and defendants will each have 20 minutes to make their case during proceedings that begin at 9 a.m. on Nov. 18 in Pasadena.

In the meantime, the system is held in abeyance, uncertain as to what the outcome will be, and how to react once a decision is rendered, assuming a court decision is definitive enough to draw a clear line.

The unfortunate part of this uncertainty is that the ones that receive the least benefit, the injured workers, are harmed the most.

Here's the deal - work comp is really very, very simple: injury occurs at work, injured worker to get benefits; employer pays for that protection.

Everything else just gets in the way.

Perhaps getting rid of "exclusive remedy" for everybody else in work comp other that the actual injured worker and actual employer would help. Work comp is meant to be the 'sole remedy' for the employers and their employees - not the carriers, not the providers, not vendors...

When you get down to it, the entire lien process has evolved over time into complete nonsense. It can be all very simple: "You authorize the work, I do the work, I send you a bill. If you don't pay, I will see you in court."

Likewise the inverse is true: "You do unauthorized work, you send a bill, I don't pay, see you in court."

Trust me, you do not want to be there (small claims judge or jury of your peers), in court, in front of the injured worker, hopefully with the employer standing beside them.

Because nothing irritates a business owner more than paying for something and then not getting it.

The uncertainty of recovery in a civil court would introduce certainty in the work comp system by removing opportunists who see work comp as a guaranteed payment, even if it is only ten cents on the claimed dollar...

The Hedging of Work Comp

Workers' compensation, like most property and casualty lines of insurance, goes through a cycle. Work comp in particular for many states seems tied to a seven to ten year cycle of "hard" versus "soft" markets.

A "hard" market is where the insurance industry has more control and power over pricing. A "soft" market is where the consumer of insurance products has more power - i.e. there is more price competition in the market.

Some analysts have been saying that the current market is an interesting mix of the two - that there really isn't any great power in the industry to raise prices because there's plenty of capital seeking returns, but carriers have been able to get away with increasing prices to make up for the soft investment environment.

And employers aren't revolting yet.

Willis Group Holdings is an international risk advisor and insurance and reinsurance brokerage that makes annual predictions as to the insurance market, including workers' compensation.

In a press release Monday, Willis North America's Chief Placement Officer Matt Keeping said that the market might be heading for a disruption of the traditional softening and hardening cycle of property and casualty insurance rates.

And it seems that this year is an example of what Keeping is saying.

For workers' compensation insurance, the group predicted rate changes between a 5% decrease and a 5% increase, although some large state markets post likely increases.

In its semi-annual "Marketplace Realities" report, Willis says that California might see an increase of about 8%. Other states with potentials for price hardening include New York, Massachusetts and Pennsylvania.

California's independent rate-making agency, the Workers' Compensation Insurance Rating Bureau, has filed an advisory rate of $2.77 per $100 of payroll for 2015. That represents a 3.5% increase above the $2.68 advisory rate the state's insurance commissioner filed last year.

Even Bowzer can smell the money.

The Willis report does not take into account the financial chicanery that is used to sell insurance such as dividends, rebates, rate adjustments etc. But an alarming note to me is that Willis says that hedge funds find workers' compensation investments attractive.

"Despite several leading carriers moving away from the line, the hedge funds see predictability and profits, even if one of the predicable aspects of Workers’ Compensation is that 15-20% of the loss cases can last the life span of the injured employees," the report states. "Part of the hedge fund interest is in ancillary services associated with Workers’ Compensation and managing of the claims."

Indeed, the "long tail" of workers' compensation is PERFECT for a hedge fund to make money via "ancillary services" - if a case is going to last 15 years, that's 15 years worth of bill review, utilization review, copy services, interpreting services, etc. etc. etc.

Investopedia defines a hedge fund as "an aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark)."

Seems the Willis observation of hedge fund participation in workers' compensation fits this definition precisely.

Yesterday I questioned whether utilization review, and other "cost containment" programs, were nothing more than new profit centers that add no value to workers' compensation claim management - and this Willis statement should be sending strokes of chill down the backs of anyone that really cares about the health of the system.

You can't tell me there's any altruism with investment in workers' compensation "ancillary services," and certainly much of the issue with claims mismanagement is tied to pure greed actually sending capital out of the system.

If there's anything the matter with workers' compensation it's this conflict between social obligation and financial return - and this is where the government must be particularly vigilant in regulation.

Anytime there is a captive market there is plenty of room for abuse, and the trend of increasing "cost containment services" expenses (which really should be called "profit enhancement services") should be an alarm to all state insurance and industrial relations departments; particularly California which represents over 20% of the total national market with a forecast $16 billion in premium to be written in 2015 and about half of a billion dollars per year being spent on "cost containment services."

"With policyholder surplus at record levels, insurers are increasingly in a position to compete for business on price," Keeping said in the statement. "With opportunistic capital continuing to show interest in the insurance sector, we wonder if the traditional cycles of hard and soft market might be changing."

I don't think the "traditional cycles" are changing. I think they are becoming more acute, and more volatile. Hedge funds and their investments in "ancillary services" is one reason why - because profit heading outside the industry trumps people to be served within the industry.

The full report is available here.