January 2006 Archives

January 31, 2006


News is just now breaking about a Californial postal worker who shot and killed 6 colleagues and then turned the gun on herself. While details of this particular event are still emerging, post office shootings are - sadly enough - an all-too-familiar story. One fairly unusual aspect of this story is that the shooter was a woman. I can't recall another incident of mass murder at the workplace perpetrated by a woman, but maybe our readers can.

Meanwhile, a proposed law in Florida would allow employees to keep loaded guns in their cars on company premises. Any employer attempts to curtail guns in company parking lots could result in third-degree felony charges with penalties of up to 5 years in prison or a $5,000 fine. Let me repeat that. If this law passes, Florida employers that ban loaded guns in their parking lots would be committing a felony.

Similar laws allowing guns in company parking lots have recently been passed in Alaska, Kentucky, Minnesota, and Oklahoma , except none of those laws have the felony provision for employers. We previously discussed Oklahoma's gun law and ConocoPhilips' challenge to the law, a move that brought down the full wrath of the NRA. According to Workforce Management, the Florida law is intended as a template for other states.

The National Rifle Association, a major sponsor of the Florida bill, says it plans to get the legislation introduced in all 50 states. In states like Utah, where the measure has been tabled, the group is figuring out ways to reintroduce it.
"We have employers violating the constitutional rights of their employees," says Marion Hammer, a former NRA president who is now the group’s Florida spokeswoman. By having policies that ban employees from keeping guns locked in their cars on company grounds, employers are denying their workers’ right to bear arms, Hammer says.
The NRA contends that employers are hiding behind "this sham of protecting their employees," when really these companies are forcing their anti-gun politics on their employees, Hammer says. If companies really wanted to protect their workers, they would allow them to keep guns in their cars, she says.

Many employers and employer groups are concerned about their ability to keep workers safe in the face of such legislation. Forbes reported on a study published in the American Journal of Public Health finding that murders are three times more likely to occur in workplaces that permit employees to carry weapons than in workplaces that prohibit all weapons. In addition, opponents worry about potential employer liability. Although some laws include provisions that shield employers from liability, there could be challenges on other grounds, such as negligent hiring. Some opponents predict this will lead to an increase in pre-hire background checks and an increased use of metal detectors and surveillance cameras.

In our last post, we had a lively discussion about these issues and we would be interested in hearing more comments from employers, attorneys, employees … should employers be able to ban guns on their premises? Does the absence of guns make for a safer workplace? Will employer legal challenges to these laws prevail?

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January 30, 2006


Back in August the Insider blogged one of the most dangerous professions in America: horse racing. We found that only five states included jockeys in the workers comp system: New York, New Jersey, Maryland, Colorado and California. In the other states, jockeys are either excluded from the comp system or considered to be independent contractors. While states struggle to come up with an equitable and affordable solution, jockeys assumed that they were covered by a disability policy that came with their membership in the Jockey's Guild. Unfortunately, this turned out to be a bad assumption.

In a scandal that brings to mind the Coingate caper in Ohio, the Jockey's Guild recently terminated its entire front office staff. An investigation revealed colossal fiscal problems, including non-payment of premiums for a disability policy that protected jockeys in the event of catastophic injuries. Gary Birzer, a young jockey who was totally paralyzed in a 2004 spill, had paid his hefty dues ($64,000 over a six year period) and assumed he had $1 million in disability coverage. The Guild, however, neglected to pay the bills for the insurance, so there was in fact no coverage. Birzer's medical bills already exceed $600,000. Needless to add, he is suing the Guild -- for $10 million.

On his way out the door, the terminated director of the Guild, Dr. L. Wayne Gertmenian, made out checks totalling $217,000 to himself and other employees of his management company. I have a feeling we will be reading more about the good doctor in the coming months (and not in the society pages).

Covering Jockeys
We came across a very comprehensive white paper (PDF) written by two professors at the University of Arizona, Price Fishback and Samuel Allen. They provide an excellent overview of jockeys in the workers comp system, with a state by state anaylsis of the costs. Not surprisingly, Florida and California lead the nation in the cost of insuring jockeys (as much as $43 per hundred of payroll in CA!). Although written in 2002, much of the information still holds true.

In addition to the problem of when and how to include jockeys in the comp system, any reforms need to take into account the other employees at racetracks: trainers, exercise riders and stablemen. (The handicappers, touts and hangers-on will have to fend for themselves.) Racetracks attract a very transient population, moving from state to state, with no certified training and not much in the way of safety equipment. If states do find a way to bring the racing community into the comp system, I expect that most of the risk will end up in a state fund or in the assigned risk pool. The potential for catastrophic injury is always high, the payrolls are erratic, and the hiring practices could best be described as marginal. It's a colorful world, fun to read about, but when it comes to risk transfer, the prudent underwriter will take a pass.

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January 27, 2006


From time to time the Insider has focused on the many compelling issues relating to undocumented workers. If you enter the words "immigrant workers"in our blog's search engine, about 30 responses pop up. There are probably 10 million undocumented workers throughout the country, performing some of the most hazardous and least desirable jobs. They usually work without the protection of any training, personal protective equipment or the fundamental rights and benefits accorded to most people who work. It's a dangerous situation that requires constant monitoring. In fact, the issue calls for a blog of its own.

We are pleased to see that our colleague, Peter Rousmaniere, has undertaken responsibility for just such a blog. His immigrant worker blog was launched earlier this week and promises to provide a steady focus on the myriad issues confronting undocument workers. While the Insider will continue to track immigrant workers occasionally, for readers in need of a daily dose, Peter's site will prove indispensable.

Day Labor
Peter guides us to a recent national study of day labor: On the Corner: Day Labor in the United States. This is a detailed survey of 2,600 day workers from across the country, written by scholars from UCLA and the University of Illinois. It's not surprising to find that among the day laborers surveyed, fully three quarters are undocumented workers. The workers report wide-spread harassment and abuse, including non-payment and underpayment of wages and frequent injuries that go both untreated and unreported.

According to the study, most day laborers are hired by contractors (43 per cent) and by "homeowners" (49 per cent) - but the homeowner category probably includes the ad hoc crew pulled together by an unincorporated, uninsured and in all likelihood, equally undocumented supervisor. What are these people doing? Landscaping, house cleaning, roofing, carpentry, painting, demolishing buildings and cleaning up debris from hurricane Katrina. Although they are invisible and below the radar screen in most conventional respects, they are working everywhere.

The study points to a number of solutions for improving the plight of these workers:
- better enforcement of existing labor laws, including fair labor standards and workers comp
- better education and advocacy for immigrant workers through worker centers such as the Brazilian immigrant center highlighted in Peter's blog
- improvement in the immigration laws - not from the enforcement side but in finding ways to legitimize undocumented workers.

I suspect that the prevailing "head in the sand" approach to undocumented workers derives from a combination of racism and blunt economics: heck, many of these workers cannot speak English and anyway, it saves money. To be sure, it's cheaper for the consumer when the worker is paid in cash, does not receive any benefits and is on his own when it comes to injuries. Cheaper, but unconscionable. The first step toward solving this huge problem is paying proper attention to it. Peter's new blog will help us do just that.

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January 26, 2006


One plaintive plea we often hear from employers is "help me get out of the pool!" If you're wondering what the heck a pool is and why being in one is viewed as a negative, you aren't alone. Workers comp is rife with nooks and crannies. Unless you're an insurance wonk or you suddenly find yourself in one, pools may be of little interest. But for the employers that are assigned to the residual market or "the pool" - some 13% of insureds in the states administered by NCCI in 2004 - it can be an eye-opening experience, particularly since it is an occurrence that is usually marked by a steep increase in costs.

Most employers are insured for workers comp through the voluntary market. In other words, an insurer affirmatively agrees to write the employer's policy. But there are some organizations that are unable to obtain coverage in the voluntary market. There are many reasons why an employer may be unattractive to insurers: perhaps the company is in a high-risk industry, such as roofing; perhaps the company has a poor loss experience, with a history of frequent or expensive claims; or perhaps it's just because a company is too new or too small to be a good risk.

Because workers comp is a mandatory coverage (for almost all employers in almost every state), some type of market of last resort or "residual market" mechanism must exist to ensure coverage for any employers that aren't able to secure coverage in the open market. The way the residual market is handled can vary from state to state. Some states administer assigned risk pools; in other cases, NCCI administers these pools. Christine Fuge offers a good overview of the different mechanisms in her article Navigating the Workers Compensation Residual Market. (While some details may have changed since 2002 when the article first appeared, the concepts remain largely unchanged.)

Market conditions are a factor
The pool population ebbs and flows with general market conditions. In any given state, when a market is healthy and rates adequate, insurers flock to the state to write business. This creates a competitive environment for employers and the pool is generally at its lowest ebb. When market conditions are troubled due to inadequate rates, scarce reinsurance, or other factors, insurers tighten up their underwriting criteria and become more selective. Availability constricts and the pool fills up.

If the pool gets large enough, the market can be dangerously destabilized. This was the case in Massachusetts in the late 1980s when the residual market burgeoned to $800 million, more than 65% of the entire premium in the Commonwealth, and more than 80% of all employers. Our CEO, Tom Lynch, was instrumental in crafting an innovative credit program, the Qualified Loss Management Program (QLMP), designed to de-populate the pool by offering a credit to employers who learned to control losses. Through the QLMP, thousands of employers improved their loss experience and were able to exit the pool.

All pay, no play
When a buyer is in a competitive market, there is some leverage in terms of price and service. Employers in the residual market enjoy no such advantages. There is one certainty, however - coverage will be costly. Employers that find themselves in the pool may be:

  • subject to costly surcharges and significantly higher rates
  • ineligible for premium discounts or scheduled credits
  • limited in terms of available services
  • facing little or no choice in insurer

Are you a good risk? Getting out of the pool
If you are in the pool and you want to get out, there are no shortcuts - it all comes down to controlling losses. And because all losses are pooled, there may be little in the way of incentives or disincentives for your insurer to help in controlling losses, so it's all up to you. First and foremost, prevent any injuries from occurring; but if injuries do occur, ensure that you have a caring, responsive management system in place to help your employees recover and return to work. Provide excellent, high quality medical care. Communicate with employees frequently throughout the recovery process. Let employees know their rights and responsibilities. Be fair and consistent. Provide early return to work programs.

For more information, see Jon Coppleman's article entitled Are You a Good Risk? (PDF). NCCI also offers some excellent articles about the rights and responsibilites of a residual market policyholder, along with an array of resources for residual market employers, brokers and insurers. It is also important to check your individual state's workers compensation authority for state-specific regulations.

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January 25, 2006


As part of the Insider's relentless effort to understand what goes on inside a doctor's brain, today we examine the choice of hardware for spinal implants. When a doctor does an implant, which product does he or she use? Is the decision based upon the merits of the product, or are there extraneous factors such as financial incentives (i.e., bribes)? How can you be sure that the doctor about to operate on your spine has made an objective choice?

In the past we have blogged the decision-making process that leads a doctor to prescribe designer drugs (Oxycontin or Vioxx), as opposed to cheaper generics. Drug companies appeal to the doc's stomach (free meals) and to the lower regions (cheerleaders as drug salespeople). Today our colleague Joe Paduda points us toward a lawsuit involving Medtronic, a manufacturer of medical devices. A company whistle blower alleges payments to doctors in the hundreds of thousands of dollars, as incentives ("bribes") to use Medtronic devices.

Reed Abelson writes in the New York Times (registration required) that a variety of techniques have been used to get doctors to choose one brand of devices over another. Hire the doctor as a consultant. (One doc, Thomas Zdeblick, a Wisconsin surgeon, was paid $400,000 a year for eight days of consulting.) Invite the doctors to a resort. (Medtronics commonly paid for doctors to attend professional meetings and picked up the tab for snorkeling or golf.)

My favorite example of entertaining doctors involves a Memphis strip club called PlatinumPlus. When Medtronics brought doctors to the club, they disguised the expenses as an evening at the ballet. La Fille mal Gardee, for sure! Perhaps they should have been more upfront (so to speak) about the strip club. After all, the entertainment provided unobstructed views of flexible and presumably healthy spinal cords in action. You could count the ribs, if you were so inclined. That's work-related for a surgeon, isn't it?

Ethical Dilemmas
While paying doctors for legitimate consulting is above board, the payments become illegal when they are linked to a doctor's use of a particular device and violate the federal law against kickbacks. But even if the payments are within the law - and Medtronic has not been found guilty of any illegal activity - the increasing amounts being given to doctors distort their judgment, said Arthur Caplan, a medical ethicist at the University of Pennsylvania, who said such industry payments were "too damn lucrative to believe anyone can resist." Too damn lucrative, indeed. The path to the brain might not always be through the wallet, but you'd be hard pressed to prove otherwise with these amounts of money changing hands.

Invasion of the Tissue Snatchers!
Medtronics took another hit on its credibility when a subsidiary apparently harvested tissue from corpses, undocumented and authorized, and recycled it into the bodies of living people. The process involves allografts (defined here).The FDA has advised doctors of the potential problems - they want recipients tested for a number of communicable diseases including HIV-1 and 2 (the viruses that cause AIDS), hepatitis B virus, hepatitis C virus, and syphilis.

Medtronics put out a Q & A for tissue recipients here, but confined their comments to the living. As one tissue recipient put it, "It's very unsettling and nerve racking because I don't know who it came from. I don't know about their medical history..." There is one thing you do know about the donors: they're all dead.

Ethical Cleansing
Medtronics has taken steps to clarify their ethical standards. You can read their impressive Code of Conduct here (PDF). They are denying any wrong-doing and taking aggressive action to clean up their image. But this is not just an image problem. There is no doubt that surgeons have a role to play in the improvement of medical devices. But how and when to pay them, how to encourage them to use your products without resorting to bribes or dubious entertainment, that can be a tough line to draw. I may not be able to tell one implant device from another, but I think I know the difference between a ballet and a strip club. Let's hope that the Medtronic sales force can figure it out as well.

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January 23, 2006


Kentucky: Miner's Family Wins Increased Death Benefits
Insurance Times reports on a recent Supreme Court ruling that awarded the surviving family members of a deceased Kentucky miner an increased 15% in workers compensation benefits because the company he worked for had violated safety rules. Legal advocates for miners are optimistic that this ruling will set a precedent for this and other industries. Meanwhile, responding to the series of tragedies in West Virginia, calls for increased mining safety are gathering momentum.

New York : Ranks of the dying and disabled 9/11 responders continue to grow
A story in Newsday this week discusses the growing problem of disabled and dying 9/11 first responders. At least 23 former Ground Zero responders have died from diseases related to their exposure to toxic chemicals there, and thousands more are sick and no longer able to work. Many are looking to the federal government to pay for medical treatment and some NY legislators are looking to restore $125 million that had been earmarked for workers' compensation claims related to Sept. 11 that was later cut from the federal budget.

Ohio: Workers comp bureau tries to recoup losses, restore credibility
A story in the Cleveland Plain Dealer updates us on the beleaguered Ohio Bureau of Workers Compensation. The story reports that the Bureau's surplus is about $850 million, a huge drop from about $6.6 billion five years ago. If no changes are made, the surplus could vanish within the next few years. The Toledo Blade also covers the story, discussing plans to save $425 million by reducing costs and increasing revenue.

South Carolina: Workers' compensation bills under scrutiny
Governor Mark Sanford has been lobbying support for workers comp reform bills that were recently introduced. An article in The State.com discusses some of the proposed law changes and an article in Insurance Times adds more detail, including the support for the changes by the Property Casualty Insurers Association of America.

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January 19, 2006


Back in December fellow Insider blogger Julie Ferguson wrote about a Harvard Medical School newsletter that finds no relationship between keyboarding and carpal tunnel syndrome. This information has been out there for a while, based upon a 2003 study of 5,600 Danish workers. But for those of us who track workers compensation, these findings raise significant issues. If carpal tunnel is usually not work related, why are workers comp carriers routinely paying for all those surgeries?

What is Carpal Tunnel
According to The Harvard newsletter, carpal tunnel syndrome occurs when the median nerve (one of the three main nerves that pass through the wrist to the fingers) is compressed or pinched. This usually occurs as the nerve passes through a tunnel of tough fibers that runs between small bones in the wrist - the carpal tunnel.

Carpal tunnel syndrome is a relatively new phenomenon. You may remember the informational videos that came out in the early 1990s, which dramatically presented the classic symptoms of carpal tunnel: pain, weakness and tingling in the thumb, index finger, middle finger and half of the ring finger. Many people viewed the videos and immediately started feeling the symptoms! In any event, only 2 percent to 3 percent of the general population has carpal tunnel syndrome.

As anyone working in the comp system knows, women are twice as likely to develop carpal tunnel syndrome as men - and the risks increase with age. It's thought to arise from a combination of factors that increase pressure on the median nerve and surrounding tendons. The contributing factors are not work related: having a small carpal tunnel to begin with; having a history of certain diseases such as diabetes or rheumatoid arthritis; or having a previous bone dislocation or fracture. Being overweight or obese increases the risk; so does pregnancy. Keeping your wrists bent while sleeping, reading or driving also appears to increase the risk.

The newsletter points out that certain jobs involving assembly-line work - for instance, manufacturing, sewing, cleaning and meat-packing - can also make people more prone to carpal tunnel syndrome. (In other words, for workers performing these jobs, carpal tunnel may well be work related and compensable.) But using a computer does not appear to increase the risk for carpal tunnel syndrome. The Danish study, published in the Journal of the American Medical Association in 2003, found that workplace computer use does not pose a risk of developing carpal tunnel syndrome. And a 2001 study in Neurology of computer users at a medical facility found that heavy computer use (up to seven hours a day) did not increase a person's risk of developing carpal tunnel syndrome.

Carpal Tunnel vs. Repetitive Stress
So here is the crux of the matter: a typist who develops carpal tunnel syndrome probably does not have a work-related condition. But a typist who develops repetitive stress problems does. Repetitive stress involves the neck, shoulders, arms and hands and includes hand and wrist pain caused by repetitive finger motions and contracting the forearm and wrist muscles for long periods of time. Contributing factors in repetitive stress injuries include incorrect positioning of the keyboard and computer mouse, remaining in a seated posture, and gripping a computer mouse for long time periods - all of which can certainly be work-related. However, no matter how long you type, or what position you type in, you will not develop carpal tunnel syndrome, unless you have a prediliction for it.

As a result, if the diagnosis for an office worker is carpal tunnel syndrome, the comp carrier could actually deny the claim. On the other hand, if the diagnosis is repetitive stress syndrome, it's probably work related. So why is this such a big deal?

Carpal Tunnel in the Comp System
In a major study published by NCCI (PDF) in April of 2005, we learn that carpal tunnel in the comp system ranks second among major lost time diagnoses - second only to lower back strain. Sixty per cent of carpal tunnel claims lead to lost time - compared to only 34 per cent for lower back strains. The older people get, the more likely that their carpal tunnel will be treated with surgery - and where surgery is the treatment, the costs are three times higher. It's interesting to note that the average cost per carpal tunnel claim without attorney involvement is $16,000. When an attorney is involved, the average cost jumps to $29,000. That's a high average cost by any measure. Overall, carpal tunnel is nearly a billion dollar line item in the comp system.

We have seen that carpal tunnel claims among industrial workers truly belong in the comp system, because work is a contributing factor. But when NCCI examined the occupational classes involved in workers comp carpal tunnel claims, they found that among both male and female workers, the number one occupation is office and clerical. In other words, the comp system is routinely accepting the claims that are least likely to be work related!

Who Pays?
Thus we find that the workers comp system is paying for what appears to be a non-work-related condition. Insurers front the substantial costs of treatment and the employer subsequently gets hammered through the experience rating process, paying higher premiums for three full years. We are not aware of any insurers attempting to deny coverage based upon the emerging literature on the causes of carpal tunnel. (If any such carriers are reading this blog, please respond! We will keep your identity anonymous, if you wish.)

Who should pay?
When office workers develop carpal tunnel, it should probably be covered by conventional health insurance, not workers comp. But don't look for a paradigm shift any time soon. Insurers, always slow to change, are probably waiting for more information. Their lawyers would like to see a bullet proof study. It will take more than a few thousand Danes to sway administrative law judges in comp courts around the country. Nevertheless, this will prove to be yet another fascinating component in the health care debate. Carpal tunnel might not be work related, but it is likely to remain compensable in the workers comp system for the foreseeable future.

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January 18, 2006


In the face of rising health care costs, employers are getting more and more aggressive about targeting employee lifestyle issues. Last week we linked to an item about Weyco, a company that is fast becoming the poster child for companies that are implementing behavior modification programs to reduce health risks. Last year, Michigan-based Weyco raised a hue and cry by implementing tests for smoking and firing those who either fail the tests or refuse to take the tests. This year, the company is mandating medical tests and physical examinations for employees, and raising health insurance rates for those who don't comply.

What's next, mandating that covered spouses and family members take screening tests too? Yes, according to an article this week in Forbes. The article discusses various ways that employers are using rewards and penalties to try to shape employee health behaviors to minimize risks and the associated costs.

"At some companies, employees who meet specified health targets can qualify for lower insurance premiums.
Beginning this month, employees of King County, Wash., and their covered spouses or domestic partners will be asked to take an annual wellness assessment. It's voluntary, but those who refuse to participate will pay the highest level of out-of-pocket expenses under a new three-tier benefit design. Those who take the assessment and begin taking steps to improve their health are eligible for the lowest level of out-of-pocket expenses.
A few employers are taking a punitive approach, typically by tacking on a surcharge for smoking. At least four states -- Alabama, Georgia, Kentucky and West Virginia -- now charge higher premiums to state employees who smoke and lower premiums to non-smokers, according to the National Conference of State Legislatures."

The surcharge for smoking issue that has been implemented in several states is often based on self-disclosure, and has led to a few unexpected turns. In New Jersey, for example, some state employees were snitching on fellow employees, but when the state began disallowing anonymous accusations, the snitching decreased.

It's clear we haven't seen the end of these issues. What do you think? Give your opinion in our brief Lifestyle Choices survey. (View results)

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January 17, 2006


In today's ferociously competitive marketplace, it's all too easy to drive bids to a rock bottom level. We've blogged Walmart's"big squeeze" strategy that forces cost-cutting deep into the subcontractor level. But everyone - not just Walmart - loves a bargain. Sometimes the penny wise strategy to cut costs leads to the pound foolish result of a cherished building in ruins. Today we read a fascinating article by Antonio Olivo and Ron Grossman in the Chicago Tribune of a simple repair that ended up destroying an historic landmark.

The Pilgrim Baptist Church on the southside of Chicago was an architectural masterpiece designed by Louis H. Sullivan. It's known as the birthplace of gospel music. When new gutters were needed, the congregation first received a bid of $365,000. Having already spent a half million on renovations, they were able to find a much lower bid from Conrad Roofing and Construction - a mere $125,000. The temptation of a bid 60 per cent lower than the initial offer proved irresistable, even after Conrad revealed that a subcontractor would do the work. In retrospect, the congregation might well see that temptation as the work of the devil.

Up in Smoke
The installation of the gleaming copper gutters was nearly completed when two roofers discovered that they had started a small fire. After their ineffective effort to put the fire out failed, they gathered their tools and went home! The workers paused only long enough to alert their boss by cell phone. On the way out, as a Pilgrim deacon frantically sought to learn the source of a burning smell in the building, one of the roofers, his face singed, replied, "No speak English" and drove off.

The workers later told police that they went home because they were scared. (I wonder if their fear related to the damage they had caused or, possibly, their immigration status...) They also told police that they had been using a propane torch, which led directly to the fire. Torches in the hands of roofers have been known to produce hot slag and sparks, which can ignite a building.

Faith vs. Due Diligence
This sad situation raises many questions that should resonate not just with large church congregations, but with homeowners renovating a kitchen or small, expanding businesses needing to hire subcontractors. How do you find quality people? How can you be sure that the person bidding on the job has the competence, experience and know- how to complete the work to your standards?

The answer lies in the dogged due diligence that we've all been taught, but which the prospect of saving a few dollars all-too-often trumps. We need to ask the right questions, not just of the general contractor, but of any proposed subcontractors:
- What experience do you have in doing this type of work?
- Have you ever been sued? (Conrad Construction was involved in a lawsuit where one of their subs had burned down a building, using torches)
- Do you have up-to-date certificates of insurance with adequate coverage? (Show me!)
- What kind of training do you provide your workers?
- How are you able to complete the work for the stated amount? (If the bid is artificially low, the work and the workers inevitably suffer.)
- How much do you pay your workers?
- What standards, controls and accountability are built into your subcontracting procedures?

A Pilgrim Church trustee was interviewed inside a drab church center across the street from a blackened pile of rubble that used to be an historic sanctuary. "All I knew was he was going to get the job done for X amount of money." He regretted being too naive and not having investigated whether the subcontractor was qualified and competent. This is one area where an act of faith just doesn't suffice. Faith has its place, but it's no substitute for due diligence.

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January 13, 2006


Workplace health & safety is good for business (PDF). So says the Ontario's Ministry of Labour, which has established the goal of "reducing workplace injuries by 20 per cent by 2008. That would translate to 60,000 fewer injuries a year. The ultimate goal is to eliminate all workplace injuries and deaths." To back up this commitment, 200 inspectors are being added. I'd like to see us establish a goal like that here in the U.S. - we will have to keep an eye on Ontario's progress. Via Michael Fitzgibbon's Thoughts from a Management Lawyer

Are 15 percent of your workers under the influence of alcohol? - rawblogXport points to a study by the University of Buffalo Research Institute on Addictions, along with some resources for creating an alcohol and drug free workplace.

Weyco Demands Healthy Workers - a post at Workplace Prof Blog discusses the aggressive approach that Weyco is taking in mandating healthy lifestyles for its employees, and whether these measures violate the ADA. We previously discussed Weyco's policy of terminating employees who smoke.

U. S. Health spending is up 7.9% - Joe Paduda at Managed Care Matters discusses the whats and whys in health care cost trends. And in another post, he discusses the impact of TRIA extension provisions.

15 Internet legal research tips - good search tips that aren't just for lawyers. Via Boley Blogs.

Insurance Agents Compensation Disclosure Guide - Specialty Insurance Blog points to resources developed by the Insurance Brokers & Agents of the West that offers a resource to agents and brokers about disclosing compensation practices. Self policing might be better than having Eliot Spitzer knocking on the door.

Tom Peters "Top 41" Quotes (PDF) - business guru Tom Peters offers words to live by.

Pfadenhauer's List of Top Workplace Events of 2005 from Diane Pfadenhauer of Strategic HR Lawyer.

Homeshoring and its impact on small business - we're all familiar with offshoring. Homeshoring is the trend of moving work to home-based workers. Anita Campbell at Small Business Trends discusses the growth of this employment trend.

Grand Rounds - this week's summary of the best posts in the medical blogosphere is hosted at Clinical Cases and Images.

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January 10, 2006


Today the Insider focuses on one of the biggest challenges facing state regulators: ensuring that every employer carries workers compensation insurance for their employees. It might sound simple, but it isn't.

Premium Avoidance = Fraud
There are many ways to avoid paying workers comp premiums. (Washington State has a list of red flags for employer fraud.) Some employers keep the entire operation off the books. They pay their workers in cash. They do not pay any taxes. If an employee is hurt, they instruct the individual to tell the doctor it happened at home. These operations are exposed when a laid off worker tries to collect unemployment, or when a worker suffers a relatively serious injury and it becomes clear that the injury occurred at work. This type of operation can occur in any small business and is especially prevalent among the employers of undocumented workers.

Other employers are more sophisticated. They carry some workers on the regular payroll, deducting taxes and providing workers comp coverage. Another tier of employees are called "independent contractors" and are paid through 1099 forms or in cash. These people, while excluded from the regular payroll, may well show up on workers comp loss runs when they suffer serious injuries.

Finally, in a practice very common in home construction, a general contractor may hire a crew and call them all "independent" -- even though the GC controls the work and the workers fail to meet accepted standards for independence. Again, construction is a preferred field for undocumented workers (a shift from their prior primary involvement in agricultural harvesting). When these people get hurt, the costs of treatment are ultimately absorbed by legitimately insured businesses. For example, the Trust Fund in Massachusetts provides the medical care and indemnity for uninsured workers; the fund itself is underwritten through a surcharge on every comp policy written in the state.

We have already written about state efforts to crack down on the abuse of "independent contractors." Premium auditors are routinely adding the costs of uninsured subcontractors to the payroll of fully insured GCs. In doing so, they increase the cost of doing business for employers with insurance. By contrast, employers who forego coverage in the first place avoid premium payments altogether. In running seminars for small employers, I often hear them say that this is not fair. The playing field is not level. They are absolutely right.

Leveling the Playing Field
The Insider recently spoke to regulators in Massachusetts, where Commissioner John Chapman has spearheaded a concerted effort to identify uninsured employers and force them into the system. The state has undertaken a public awareness campaign to get out the message: workers comp is not an option, but a requirement for anyone with one or more employees doing business in the state. The multi-lingual campaign targets the industries prone to abuse: construction, landscaping and restaurants. The state has set up a hotline (1-877-MASS SAFE), which is currently pulling in 2,000 calls a month. When legitimate businesses become aware of uninsured competitors, they can call this "tip line" anonymously. State investigators winnow the tips down to about 20 stop work orders a month, which may in turn lead to criminal complaints. (For more background on this enforcement program, check out General Counsel Gregory White's article.)

The Commonwealth would like to expand the arsenal in the fight against premium fraud to include the ability to revoke drivers licenses and vehicle registrations for non-compliant employers. While there are a number of effective ways to get the attention of employers who refuse to buy insurance, I imagine that keeping them (and their commercial fleets) off the road would be quite effective. There is pending legislation to provide this kind of authority to the state.

Premium Fraud in the Immigrant Community
It's pretty obvious that workers comp coverage will be rare among the employers of undocumented workers. There are powerful and contradictory forces at work here: on the one hand, fearing deportation, illegal workers may prefer to be paid in cash and are unlikely focus on their entitlement to workers comp or unemployment benefits until they are injured or laid off. On the other hand, courts have ruled that even undocumented workers are entitled to comp benefits. So what can states do to drive coverage deeper into the employers within immigrant communities? Is it feasible for the state to reach out to advocates in immigrant communities to garner support for their enforcement effort? Or will the deep-rooted suspicion of all government agencies doom such outreach to failure? Community activists currently encourage injured workers to secure workers comp benefits. Will they put the same energy into reporting local employers who are avoiding the system? Will the activists be willing to drop a dime on abusive employers?

The unlevel playing field is unfair to legitimate businesses, which not only bear the costs of their own insurance, but those of the uninsured as well. It's hard to compete with companies that avoid insurance premiums and thus lower their overhead by as much as 40%. State regulators owe legitimate businesses a credible and full scale effort to ensure that all employers carry workers comp coverage. As we can see in the Massachusetts model, it's not easy, but it can be done.

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January 9, 2006


For many years, West Virginia was one of a handful of monopolistic states in which all workers compensation was handled by a state compensation fund. After years of punishing losses, the state legislature moved to privatize the fund. The first phase of this privatization began on January 1 when the state compensation fund passed the baton to BrickStreet Mutual Insurance Co., a newly formed mutual insurance company. On January 2, the Sago mine explosion occurred, resulting in the deaths of 12 workers, and catastrophic injuries to the one survivor.

CNN reports:

“The mutual company -- which is owned by the 42,000 employers in West Virginia -- will be the sole provider of workers' compensation policies to businesses that operate in the state until July 2008, when the market fully opens to other private companies. Businesses in the state are required by law to provide workers' compensation insurance.
"This is a very difficult beginning for the transition," said Robert Hartwig, chief economist at the Insurance Information Institute, an industry group. "But BrickStreet is fully capable of handling this type of event financially."

Benefits available for McLoy, families of deceased

Because the deaths and injuries from this mining disaster were work-related, workers compensation benefits will be available to Robert McLoy, the surviving miner, for medical costs and wage replacement. The families of the deceased miners will also be eligible for benefits. Insurance Journal reports

" ... the families of the miners who died in the accident will receive a workers' compensation benefits of up to $5,000 paid to the funeral home for its services. He said there is a workers' compensation family dependent benefit which would be two-thirds of the average weekly wage of the worker for the proceeding 12 months, up to a maximum of $568.78 per week, and that is for as long as the dependency lasts or until the worker would have reached age 70.
In the case of a dependent spouse Wessels said the benefits would continue until the deceased would have been 70. The benefits for dependents continue until the dependent reaches 18, or if they stay in school, until 25 and there are some provisions about incapacitated independent children. He pointed out that none of the benefits are subject to state or federal income taxes."

It is possible that workers compensation may not be the exclusive remedy in this instance. Business Insurance notes:

"ICG, which began operating the mine in November 2005, may face claims beyond those falling under workers comp, though, especially if survivors of those killed are able to use safety-related issues as a basis for suing the company outside of workers compensation system, observers note.
Several questions already have been raised about the significance of the mine's poorer-than-average safety record, including 208 safety violations in 2005. In addition, miscommunications that occurred while miners' families awaited the outcome of rescue efforts resulted in anger at company officials."

Confined Space offers more information about safety issues related to the Sago events and to coal mining in general in yesterday's post, Sago Mine Disaster: Just the facts, Ma'am.

Additional reports:
Boston Globe: Sago Mine safety declined sharply
USA Today: Latest coal tragedy reveals lax safety enforcement
Charlston Gazette: ’05 Sago safety record worse than most

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January 6, 2006


The deaths of 12 men in the Sago mine began the year on a somber note, adding another sad page to the roster of West Virginia mining deaths. Yesterday's news that several of the miners wrote notes in the last few minutes of life to reassure family was heart wrenching. And now the inevitable stories are emerging that the mine had hundreds of safety violations.

While mining safety has improved since the days when hundreds of lives were claimed in a year - or even in a single terrible event such as the Mononagh disaster that killed 362 men and boys in 1907 - mining is still among the most high-risk professions, with one of the highest fatality rates. The weblog Mine Safety Watch notes that "a coal miner was more than 6 times as likely to get killed on the job as the average U.S. worker in 2004."

As is the case with most important safety stories, Jordan Barab at Confined Space has been posting prodigiously on this matter. In a series of recent posts, he takes the administration and the Mining Health & Safety Administration (MHSA) to task for cutbacks in worker protections, and also notes the AFL-CIO rollback of safety and health resources right at a time when federal protections are being cut back.

Meanwhile, the Wrongful Death Accountability Act lingers somewhere in legislative limbo. Until there are meaningful penalties for deaths resulting from willful failure to comply with safety regulations, needless worker deaths will continue to occur.

More on this topic:

Whistleblower Warns the Bush Administration Is Cutting Back Mining Safety Regulations

U.S. Mining Under Scrutiny
Mining deaths - and exhibition by U.S. DOL
West Virginia Coal Mining
Coal Mining Disasters from Roots Web

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January 4, 2006


Our colleague Peter Rousmaniere has been traveling the country, researching the intersection of undocumented workers and the workers comp system. In an editorial appearing in today's Boston Globe (free registration required), he explores one of the most compelling problems associated with undocumented workers, the dramatic erosion of long-standing safety standards. Undocumented workers tend to take on the least desirable and the most dangerous jobs. They lack basic education and training. And they are unlikely to benefit from conventional safety and post-injury management programs. Taken together, these factors place undocumented workers at higher risk for serious injury and fatalities. Rousmaniere asserts that the individual states have a vested interest - and a moral obligation - to tackle this problem head on.

Tough Jobs
Rousmaniere writes that in Massachusetts as elsewhere, employers are outsourcing cleanup, construction, and other risky work to small firms, which can operate outside of the usual safety nets with relative ease. By hiring undocumented workers, these companies have an intimidated workforce that is undereducated, unable to speak English and in constant fear of deportation.

While no one really knows how big the problem is, Rousmaniere estimates that one fifth of all in-state jobs designed for less than a high school degree are filled by undocumented workers. He believes that in some sectors this percentage is over 50 percent. In construction, there are entire crews of painters, roofers, framers and masons who are paid in cash and are thus "off the books." The companies employing these undocumented workers are able to provide services at rates substantially lower than their properly insured competitors.

What Can Be Done?
Rousmaniere has a number of recommendations for the states dealing with large scale problems of undocumented workers. These include:

Launching a gubernatorial task force to explore the full extent of the problem (although some governors would probably rather pretend that the problem does not exist)

Creating a computer database of employers and their workers' compensation coverage (why not require every employer to post a certificate of insurance listing the total number of employees?)

Engaging doctors to report suspicious cases

Training community activists on what to look for and how to report cases of abuse.

Perhaps most important, strengthening enforcement activities. This includes raising employer penalties for repeated safety violations and workers' comp insurance fraud. (Until the enforcement effort is credible, the risks of exposure for non-compliant employers will remain minimal. For Florida's take on enforcement, check out this article from the Insurance Journal.)

Rousmaniere frames the problem as one of worker safety. This is a productive way of looking at undocumented workers. While one can argue about whether these people should be working at all, there should be no argument about the need for safe working conditions. To be sure, some accountability falls to the people who are working illegally. But the brunt of accountability should lie with those who profit most from the sweat of these disenfranchised workers. Until employers are held accountable, the unsafe working conditions and the exploitation of the most vulnerable workers will continue to grow exponentially. This is a crisis, even if we are all acting as if it's just business as usual.

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January 3, 2006


What's in store for the coming year? Here are the Herman Group's 2006 Workforce Trends, courtesy of Anita Campbell's Small Business Trends. They strike us as right on the money:

1. Intensifying competition for qualified workers.
2. Gradually increasing attention to employee retention.
3. Increasing investment in older workers.
4. Shift in retirement plans to lifetime lifestyle funding.
5. Continued off-shoring of some work, coupled with return of other work.
6. Larger investment in corporate training.
7. Growth in telecommuting.
8. Expansion of staffing industry.
9. Heightened flexibility in work arrangements.
10. Employer dissatisfaction with product of schools.

Some other trends and predictions that we found interesting:

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