June 2006 Archives

June 30, 2006


Maybe it's because we've seen so little sun this summer, or maybe because Josh, my lawyer friend, was stuck in upstate New York when 100 miles of interstate near Syracuse was closed due to flooding, or more likely it's because I saw Al Gore's compelling lecture/movie "An Inconvenient Truth." But as I prepare with everyone else to celebrate this July 4th, I'm feeling a little pessimistic about the weather. Call it "global warming" or just the usual climate cycles, the consequences for risk managers and property insurers are profound.

For a primer on the insurance aspects of the crisis, check out Doug Simpson's excellent blog, unintended consequences (great title for a blog!). He'll link you to some startling information about coastal property insurance. He also links to the Environmental Protection Agency (EPA), which is one government agency that at least acknowledges the possibility of global warming, rising oceans and changing weather patterns. However, the EPA posts have not been updated since 2000. Perhaps we haven't learned anything new in the past six years.

Actuarial Weatherpeople
These are difficult times for insurance actuaries. Even if you predicted last year's record-breaking hurricane season, how could you have foreseen the amazing rain this spring and summer, inundating the northeast and Atlantic central states. Property damage has been nothing less than astounding. And the Gulf Coast is nowhere near fully recovered from Katrina, last year's "storm of the century."

Ah, there's the rub. Was Katrina truly an outlyer, a once in a lifetime event, or a portent of things to come? How would you price property and business disruption insurance along the gulf coast? I'm not sure whether academic programs are combining actuarial studies with climatology, but that's surely where the action is going to be for the foreseeable future. Wanted: actuarial climatologists. The only problem is that actuaries tend to predict the future by looking backwards and the scale of recent weather events appears unprecedented.

I suspect that the alarming graphs and charts in the Gore movie are still flashing in my head. Or maybe it's just the relentless cloud cover that hangs over the weekend. It brings to mind a quote from Mark Twain: "Climate is what we expect; weather is what we get." With all the recent turmoil in the weather, our expectations for climate are turned inside out. These days, climate and weather are the same: equally unpredictable. We no longer have any idea what to expect.

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June 29, 2006


Let's say someone offers to pay you to do some research about their product. You set up a non-profit research entity and deposit their hefty check. What would your goal be: to prove the product ineffective? to discourage people from using it? Not likely. But how would you determine the extent to which the source of your funds contaminates the research? Would it help clarify matters if the donor gave you some stock in the company and paid you to educate other doctors about their product?

If you like murky waters, you'll love big pharma's contributions to the charitable trusts set up by docs around the country. In a fascinating article by New York Times reporter Reed Abelson (registration required), we read that charities established by doctors are the recipients of money to fund research: not research in the abstract, but research pertaining to the use of products manufactured by the donors themselves. This arrangement, while not inherently illegal, is loaded with potential conflicts of interest. Call it business as usual in the world of medicine.

When Charity and Profits Intersect
Abelson writes about Dr. Maria Rosa Costanzo, who made a presentation to cardiologists at a conference in March. She touted a $14,000 blood filtering device, which her research demonstrated was more effective (albeit more expensive) than intravenous diuretic drugs at removing excess fluid from patients with heart failure.

Although outside researchers raised questions about the study's conclusions, the doctor was convinced. "We believe these results challenge current medical practice and recommendations." She predicted many patients might benefit. Dr. Costanzo did disclose to the audience that she was a paid consultant with stock in the device's maker, a Minnesota company called CHF Solutions. But she omitted another potentially important detail: CHF Solutions was also one of the largest donors to the nonprofit research foundation that had overseen the study. The company contributed about $180,000 in 2004.

In addition, Dr. Costanzo did not bother informing her listeners that the nonprofit entity conducting the research, the Midwest Heart Foundation, was in turn an arm of the for-profit medical group outside of Chicago where Dr. Costanzo and more than 50 of her fellow doctors treat heart patients -- in many cases using products and drugs made by CHF Solutions and other big donors to their charity. Although the CHF Solutions filter has not yet won wide acceptance across the country, for physicians at Dr. Costanzo's medical group, it is the device of choice.

If you check out the foundation's website, you'll see that they promote their ability to "offer our patients access to the most progressive cardiovascular treatments and preventative strategies, giving them the same opportunities as patients at university hospitals." In other words, patients can access the latest technologies, even before they have been formally approved by the FDA. As good as this sounds, I would be surprised if the doctors disclose their financial interests to their patients. These patients might have second thoughts if they knew that the research is potentially biased from the outset.

Contaminated Thinking?
The more the Insider probes the decision-making process in medicine, the more questions we have. Why do doctors prescribe some drugs more than others? Why has oxycontin proved so popular among doctors treating workplace injuries? Why do drug companies hire ex-cheerleaders (with no background in science) to sell drugs to doctors? Do doctors think about the potential conflict between their own financial interests and the products they recommend to their patients? The ultimate question, of course, is whether patients are getting the best possible treatment, with the most effective medications, or whether the interests of the patients are subordinated to the financial interests of the doctors.

There are no easy answers. We like to think of charity and good medicine as matters of the heart. But in the world of American medical care, when you scan the doctor's chest, you just might see something that looks less like a heart and more like a wallet.

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June 29, 2006


Emily Goodson and Jack Mason at HealthNex have done a great job hosting Health Wonk Review #10, which is now up and ready for your perusal. HealthNex, if you are not familiar with it, is a blog " ... by IBMers and Friends on Networked, Patient-Centric Healthcare," covering such interesting topics as electronic health records, health information exchange, clinical transformation, biobanking, etc.

As with past issues, HWR is a great way to sample the creme de la creme of the health-care policy blogs. The cost of health care is of increasing importance to those of us who are interested in workers comp. When I first began working in this field, medical expenditures were about 45 percent of the claims dollar, and now medical costs represent a whopping 57 percent of total claim costs. Despite this, we don't have a lot of clout in the overall health-care marketplace. Workers compensation represents a fairly modest part of the health care market - somewhere around 2 percent, according to our friend Joe Paduda. Our collective fate is inextricably linked to the larger health-care market so the trends certainly do bear watching.

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June 27, 2006


When is an employee benefit not a benefit? When it's workers comp.

Andrew Simpson, Jr outlines in the Insurance Journal a recent case before the US Supreme Court, which ruled in June that premiums for workers comp insurance, unlike those for health insurance, are not bargained benefits and therefore, comp insurers are out of luck when a company goes bankrupt. While health insurers have priority for payment out of bankruptcy filings, comp insurers do not.

The case is Howard Delivery Service, Inc., et al v. Zurich American Insurance Co. Howard contracted with Zurich to provide workers' compensation coverage for its operations in 10 states. After Howard filed a Chapter 11 bankruptcy petition, Zurich filed an unsecured creditor's claim for some $400,000 in premiums.

The high court reversed the Court of Appeals for the Fourth Circuit, which had held that payments for workers' compensation coverage were "contributions to an employee benefit plan ... arising from services rendered" and thus subject to the bankruptcy priority provision. The high court ruled instead that workers compensation premiums are more like liability premiums than employee benefit costs and as such do not fall under the section of bankruptcy code (11 U.S.C. section 507(a)(5)), which assigns priorities to unsecured creditors' claims for unpaid contributions to an employee benefit plan. In other words, comp is the benefit that is not really a benefit.

The court found it significant that comp is mandatory while other fringe benefits are not. But this distiction itself is changing, with some states moving aggressively toward mandating that employers provide health coverage for their employees (MA recently passed just such a law). I wonder if the court's thinking will change when health insurance is no longer optional.

Strange Bedfellows
Justice Ginsburg was joined in her majority opinion by Chief Justice John Roberts and Justices John Paul Stevens, Antonin Scalia, Clarence Thomas and Stephen Breyer. This has to be one of the more bizarre aggregations of concurring justices in recent court history, bringing together bits and pieces of the left and the far right wings. Similarly, the dissenters are an unlikely grouping of right, left and center, encompassing Justices Anthony Kennedy, David Souter and Samuel Alito.

Unrequited Claims
I hardly need add that the insurance industry is not happy with this ruling. In this particular case, Zurich American must cover all the Howard comp claims, even though they will not collect all the premium. Bruce Wood, an industry spokesman, says: "The court simply got it wrong. The majority's narrow focus on the priority provisions of the bankruptcy code overlooked that workers' compensation coverage is mandatory." [Actually, they didn't overlook the mandatory aspect - they concluded that because comp is mandatory, it's not a bargained benefit.]

"This decision means that an employer trying to reorganize its business will no longer be required to pay its workers' compensation premiums. This result will jeopardize continued coverage, because an insurer now has no legal authority to compel payment of premiums and doubtful incentive to continue coverage." [They may lack incentive to continue coverage, but they will have to provide it anyway.]

Wood also warns that self-insured employers will face similar problems. "Even though a self-insured employer is paying an on-going claim for a past injury, after a bankruptcy filing, ongoing medical treatment and cash benefits may stop because the lack of explicit priority for workers' compensation dumps injured workers into the same category as other unsecured creditors." [I would be surprised if a bankruptcy court allows a self-insured company to stop paying these benefits.]

Change that Law!
This court ruling places comp carriers at the end of the line for payment, not exactly where they are used to standing. The Court's goal is "equal distribution" - they see the need to severely limit the list of priority creditors and they have explicitly dropped comp carriers from this select list. As soon as the ruling hit the streets, the phones of industry lobbyists started ringing, the Gucci shoes were polished and the reservations were made at the finest restaurants in Washington. It will take a change in the bankruptcy law to re-arrange the creditor priorities established by this ruling of the Court. By any reasonable measure, that's a long shot, but I wouldn't underestimate the ability of the insurance lobby to mobilize Congress. The public might not have much sympathy for insurers, but your local Congressman knows a chunk of change when he or she sees it.

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June 27, 2006


How does your organization's hourly wage and benefit expenditure stack up to the national average? You can find out by comparing your costs to the most recent Employer Costs for Employee Compensation report (March 2006) from the U.S. Department of Labor’s Bureau of Labor Statistics, the hourly compensation cost per civilian nonfarm worker averaged $26.86, with salaries accounting for just over 70 percent of the total, and benefits accounting for just under 30 percent. Workers compensation represented 1.8 percent of the hourly expenditure, a rate that has held steady since at least 1998. Health benefits have increased significantly. According to the report, "the average cost for health benefits was $1.72 per hour worked in private industry (6.9 percent of total compensation) in March 2006. In March 2001, employer costs for health benefits averaged $1.16, or 5.6 percent of total compensation."

The following breaks down the hourly cost for a civilian worker by the dollar amount and percent of each specific cost component.

Component ... Cost ... Percent
Total compensation ... 26.86 ... 100.0
Wages and salaries ... 18.82 ... 70.1
Total benefits ... 8.04 ... 29.9

Paid leave ... 1.88 ... 7.0
- Vacation ... 0.88 ... 3.3
- Holiday ... 0.62 ... 2.3
- Sick ... 0.29 ... 1.1
- Other ... 0.10 ... 0.4

Supplemental pay ... 0.67 ... 2.5
- Overtime and premium ... 0.24 ... 0.9
- Shift differentials ... 0.06 ... 0.2
- Nonproduction bonuses ... 0.37 ... 1.4

Insurance ... 2.18 ... 8.1
- Life ... 0.05 ... 0.2
- Health ... 2.05 ... 7.6
- Short-term disability ... 0.05 ... 0.2
- Long-term disability ... 0.04 ... 0.1

Retirement and savings ... 1.15 ... 4.3
- Defined benefit ... 0.72 ... 2.7
- Defined contribution ... 0.44 ... 1.6

Legally required benefits ... 2.16 ... 8.0
- Social Security and Medicare ... 1.51 ... 5.6
- Federal unemployment insurance ... 0.03 ... 0.1
- State unemployment insurance ...0.15 ... 0.5
- Workers’ compensation ... 0.47 ... 1.8

The report includes detailed breakdowns for specific industry segments. Other related reports and custom reports are available at National Compensation Survey - Compensation Cost Trends.

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June 23, 2006


Octavio Godinez, 27, had been working as a trim carpenter with his father-in-law at a home in Coosaw Creek, South Carolina. He was shaping a shim for a door when something happened - it appears that his hand slipped and he cut himself. Normally, his father-in-law would have been there to help, but the latter had gone off for supplies. Godinez was working by himself.

He wrapped the wound as best he could, got into his truck and headed toward Summerville Medical Center, a nearby hospital. He called his father-in-law and told him about the injury. They planned to meet up at the hospital.

Godinez didn't make it. The truck went off the road and hit a tree. There were no skid marks or other indications that Godinez had tried to brake before the crash, so in all likelihood, he had passed out from a loss of blood. The cut had severed an artery. He might have been dead before the truck hit the tree.

Working Alone
This tale raises a set of issues that many safety plans do not contemplate: the worker who is totally alone, all by himself, in a job setting brimming with hazards. Under normal circumstances, trim carpentry is not at the high end of the risk spectrum. Nonetheless, plenty of things can go wrong. The work can involve heights, lifting, and the use of power and sharp cutting tools. Cuts, strains, slips and falls are normal occurrences. Working alone substantially magnifies every risk. Conventional safety protocals require that injured employees report immediately to a supervisor. But what if there is no supervisor? Normally, Godinez had a partner, but as it happened, his partner was not there when the injury occurred.

I wonder if Godinez knew exactly where the hospital was - he was from out of state (Indiana) and was visiting with his in-laws to earn some money for his wife and son. I wonder if he had any training in emergency first aid. I wonder what kind of medical supplies were available at the jobsite. I wonder why he decided to drive himself, as opposed to calling for an ambulance. Did he have any insurance or was he an "independent contractor," side by side with his father-in-law, another "independent contractor." What went through his mind as he tried to figure out what to do?

It's tempting to pass this death off as circumstantial, simply result of bad luck and bad timing. That may be true. But in the world of risk management, we pride ourselves on being able to anticipate almost every possibility. We believe that any risk can be mitigated through careful planning. I'm not sure what specific steps were needed to prevent this death, but it reminds me that solitary workers need to have a plan. I wonder how many of them actually do.

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June 22, 2006


Risk roundup - The second issue of Cavalcade of Risk is posted over at It's Just Money. LA Money Guy is the host, and he's assembled an eclectic array of posts ranging from drug caps to hurricane insurance. Check it out!

Comments - Our apologies if you've ever left a comment that didn't get published here. When emptying several thousand spams from our spam trap this past weekend, we were dismayed to find about a dozen legitimate comments from you, our readers, that had been automatically routed to the spam file. Part of the reason we re-designed the site a few months ago was to incorporate a better comment filter - we get hundreds of trash comments each week, some quite vile. We thought things were working out quite nicely, but realize now that it's been a little more aggressive than we intended. Our sincere apologies - we look forward to and appreciate your comments! We rescued about a dozen comments and rightfully restored them to the posts where they belong. We made further adjustments to the filter and hope that will do it, but we'll be checking more carefully going forward so that we don't lose any of your comments.

Lunch breaks - Are your employees covered by workers compensation when they are out of the office on a lunch break? Yes, according to a new ruling by the Maine Supreme Court as reported by Mark Hoffman in Business Insurance. In this case, the employee slipped on icy steps as she entered the building. The insurer contested the case on the basis of the going and coming rule, which holds that employees aren't usually covered on their routes to and from work. However, courts often award compensation to workers who are injured in company parking lots or other areas in or around the workplace. (See our prior post on Exception to the "going and coming" rule: operating premises.) In this case, there was an additional twist: the employer was renting the office, and part of the rental contract stipulated that the landlord would keep the walkways clear of ice. Regardless, the employee's injury would still be compensable. If the employer or insurer would like to try to recoup the costs from the third party through subrogation, that's another matter. (Read the full court decision: Robyn D. Fournier v. Aetna, Inc., et al.)

Meatpacking hell - Confined Space brings our attention to a recent series by Bob Herbert in the New York Times reporting on the brutal and dangerous working conditions at Smithfield Packing Company in Tar Heel, North Carolina. Because these are subscription only articles, we'll link to Jordan's two posts: Where the workers come last and Walking Into The Pit Of Hell. (See also: Blood, Sweat, and Fear: Workers Rights in U.S. Meat and Poultry Plants). Now the workers are taking their case for safety and basic worker rights the public.

Medical blogs - If you enjoy learning about emerging medical technologies, then Medgadget is the blog for you. There's always some fascinating matter to be found. And for another interesting blog by a medical professional, check out the always fresh Emergiblog, a blog we found when Kim, a nurse who runs the blog, left a comment in one of our posts. Today, she kicks off the first edition of Change of Shift, a nursing blog carnival.

Quick takes

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June 20, 2006


Rosamond, California is a sleepy town in the Mojave Desert, with a population around 15,000. It's hot, flat and quiet, except perhaps for the sonic booms originating at Edwards Air Force Base, which lies 23 miles to the east. But in a scenario right out of pulp fiction, Rosamond is the scene for an elaborate case of workers comp fraud.

Until 1995 Rosemary Bunch was a payroll clerk for the Methodist Church, when she was disabled by carpal tunnel syndrome. Her husband, Robert, suffered an elbow injury at a cement plant in 1999. By 2005, both were still collecting comp. Bob was on temporary total, while Rosemary was on permanent total disability with fibromyalgia, which caused chronic pain that put her on crutches and in a wheelchair. In adition to her indemnity and medical benefits, Rosemary was awarded a full time housekeeper (40 hours a week) to handle chores, do the laundry and cleaning. And to get around town, she had the (comp-paid) services of a limo driver.

Bob and Rosemary collected over $1 million in benefits until someone apparently dropped a dime on them. Video surveillance revealed that Rosemary walked about comfortably whenever she wanted to and only used her crutches and wheelchair when dealing with the comp system. Bob took advantage of his time off on disability to climb ladders, work on the roof of a tall metal storage building and maintain their property.

When they were indicted last year, they faced up to 8 years in prison and fines of $500K apiece. They copped a plea and will be sentenced to just 90 days, along with some hefty fines.

Opportunity Knocks
This was essentially a crime of opportunity. We can safely assume that in the beginning both Rosemary and Bob had legitimate injuries. But at some point they decided that make-believe disability was a lot easier than working for a living. Who wouldn't want a housekeeper and chauffeur to manage the annoying little details of daily existence?

I wonder whether their employers stayed in touch with them, especially in the early days and weeks of their physical problems. I wonder if the employers made any attempt at getting Rosemary and Bob back to work. (I also wonder if the Methodist Church, knowing what they know now, bothered to audit the payroll once managed by Rosemary.) Supported by workers comp, the Bunches settled into a comfortable routine, out there in the desert. If you don't mind the heat, it's not a bad place to live. And unlike the big cities on the coast, there isn't much crime. At least, crime that you can readily see.

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June 15, 2006


We're honored to host Health Wonk Review #9 here at Workers' Comp Insider. Health wonkery is part of a long, fine tradition of social commentary on medicine, medical providers, and health care delivery systems. Witness the entertaining online exhibit from the University of Virginia Health System, Very Ill: The Many Faces of Medical Caricature in Nineteenth-Century England & France, which demonstrates that pointed social commentary on both the suffering masses and the physicians who treat them has been a popular topic through the ages.

Satire by George Cruikshank, James Gillray, Thomas Rowlandson and many others show us that health care and politics have long been intertwined, and a favored subject of complaint with the teeming masses. Since the early days of medicine, medical providers have been experimenting with various payment and compensation schemes; complaints about the high cost of medicine are nothing new.

Today, blogs are the favored podium for those who would comment on the state of medicine, medical costs, and health care systems. Blogs afford the widespread dissemination of ideas from providers, critics, and policy makers alike. And thus, following in this fine tradition, I give you Health Wonk Review #9:

Roy Poses of Health Care Renewal submits the post Resistant Strain Indeed: Research Chief Stirs Up Merck, which discusses the recent shake up in the leadership of the firm's drug development research team, posing the question as to whether the shake-up will help or hurt. Although the new bosses seem put out about the supposed inefficiency of Merck scientists, particularly at all the efforts they spent to "check and recheck" their work, the Vioxx affair would suggest that the problems at Merck were not due to inefficiency or excessive effort spent looking for erroneous work.

Marcus Newberry of Fixing Healthcare explores the medicalization of prevention, and expresses concern about the danger of bringing prevention under the medical care system. In his post The Lifestyle Chronicles - Prevention, Where Fore Art Thou?", he suggests that prevention is a separate branch of health care with a different mind-set, different goals, different procedures and tools from medical care.

Fard Johnmar of Envisioning 2.0 has launched a new series exploring the relationship between the FDA and the pharmaceutical industry. In the latest post in this series, he examines whether the FDA is a "paper tiger" or "overzealous regulator." (Access his entire series here).

David Williams of Health Business Blog posts about OPB or "Other post employment benefits," a seemingly minor accounting rule change that may hasten the demise of employer-funded retirement health benefits, in turn increasing the burden on Medicare.

Joe Paduda of Managed Care Matters reports on more reimbursement nastiness going on in California. Wellpoint has decided to pay docs less for performing procedures in hospitals than in outpatient settings; hospitals are crying foul, arguing that health plans shouldn't be encouraging physicians to consider cost when planning treatment. Joe argues that it is well-known that hospitals use over-payments by private insurers to cover indigent care costs, a practice that is unfair to health plans and employers. He calls for both parties to stop acting like children and focus on the real issue - adequate coverage for the uninsured and universal access.

Jason Shafrin of Healthcare Economist discusses the Deficit Reduction Act (DRA) and the ways that it will contribute to reshaping Medicaid. Since the President signed the DRA in February of this year, states have been afforded more freedom in designing their Medicaid programs. His post gives a variety of examples of how some states decided to overhaul their Medicaid system under the auspice of the DRA.

Henry Stern of InsureBlog reports that Vermont is the latest state to take a whack at universal health coverage. Check out his surprising take on this attempt in his post on the big doin's in the Green Mountain State.

Rita Schwab of MSSPNexus Blog profiles Kay Brown a Medical Staff Service Professional (MSSP) from Florida in her fourth in an ongoing series of interviews with interesting people in health care. Ms. Brown assisted her hospital in dealing with Hurricane Francis in 2004. Her interesting perspective on lessons learned during the crisis are most timely with this year's hurricane season bearing down on Florida as we post.

Rod Ward of Informaticopia reports in from on the road. He's been participating in blogging from the 9th International Congress on Nursing Informatics in Seoul Korea that ran from June 11-14. The Congress offered eclectic news and views on health informatics and elearning; the blog offers a day-by-day window into the activities at the conference through posts and podcasts.

And finally, here at Workers Comp Insider, my colleague Jon Coppelman explores the intersection of the ADA and OSHA standards, which are in potential conflict with the new diagnosis of intermittent explosive disorder. While managers may feel some pressure to accommodate employees with violent tempers, Jon advises employers to concentrate on the need for maintaining a safe workplace. In most cases, that means firing violent employees, regardless of their medically-based diagnosis.

Visit Health Wonk Review to review archives of past editions or to keep track of upcoming schedules and hosts. Or, if you prefer, sign up to be notified when new editions are posted.

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June 14, 2006


Earlier this week, our colleague Julie Ferguson blogged a new diagnosis for people with uncontrollable tempers: intermittant explosive disorder. Some call it "road rage.' (Here in the Boston area, we call it "ordinary driver" syndrome.) Call it what you will, with an estimated 7% of the population suffering from the disorder, this scary phenomenon is an all-too-frequent presence in the American workplace. (We have blogged workplace violence a number of times, as you will see if you try the search engine on the right side of this blog.)

Which brings us to another management conundrum: you have a policy prohibiting workplace violence. You do not tolerate any employee who threatens other employees. But do you have an obligation to "reasonably accommodate" an employee who is diagnosed with intermittant explosive disorder? Are they protected by the ADA?

ADA versus OSHA
As usual with ADA issues, there is no across-the-board eligibility. It's certainly conceivable that you might have an employee fly off the handle, then ask for "reasonable accommodation" when you move toward termination. There can be an explicit tension between the ADA's "need to accommodate" and OSHA's general duty clause, which mandates a safe and healthy workplace.

While a case can be made that "intermittant explosive disorder" is a disability that impacts one or more major life activities, it's hard to lose sight of the fact that it also impacts the lives of others: not just spouses and children (the most common victims of the rage), but coworkers and supervisors as well. People diagnosed with this disorder most likely present a threat of "immediate harm" to others, and thus are likely to fall outside of ADA protection.

As a general rule, any employee requesting accommodation should be taken seriously. But as you read the profiles of those most likely to suffer from "intermittant explosive disorder," you conclude that they will rarely request any such accommodation. They are often narcissistic. They tend to blame others for their problems. They avoid responsibility for their actions. And their remorse, while often acute, does not prevent them from repeating bad behaviors in the future. It is comparable to the husband who gets drunk, beats his wife, and then assures her it will never happen again. My advice to wives in that situation is get out immediately and don't look back. My advice to employers is essentially the same. Violent or threatening employees should be terminated immediately. If you're going to err, lean toward the OSHA side, not toward the ADA.

On the other hand, you just might encounter an employee who loses his temper and then makes a sincere effort to get help. He might even bring a note from a doctor! These borderline situations are the most difficult for managers to judge. If you decide to give the employee a second chance, make sure you coordinate closely with the treating professionals, train and support your supervisors, and establish a short leash for the employee, with clearly defined parameters and boundaries. It's not easy, but that's why managers make the big bucks.

A good resource on workplace violence can be found here (PDF). Published by Mississippi Attorney General Jim Hood, this document outlines an approach that is both comprehensive and reasonable, with useful checklists and detailed procedures for managing potentially violent employees. Although published before the promulgation of the new diagnosis for uncontrollable rage, the document is still quite useful. Just because we have a fancy new name for workers with ungoverned tempers, that doesn't mean we now have to sit back and passively accept their abuse.

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June 13, 2006


Earl Weaver, the eminently quotable Baltimore Oriole Hall of Fame Manager and World Series winner, once said of the young Carl Yastremski, my boyhood idol, "He's the best player in baseball - from the neck down."

Weaver's quote came to mind this morning when I learned that, while riding his Suzuki Hayabusa motorcycle (the fastest "street-legal" bike on the market, according to Susuki), Ben Roethlisberger, of the reigning Super Bowl champion Pittsburgh Steelers, had been seriously injured when he drove into the side of a Chrysler New Yorker that was making a left turn in front of him in downtown Pittsburgh.

Following surgery to repair his injuries, which were mainly to his head and face, the Pro-Bowl quarterback was listed in serious, but stable, condition.

Harken back to Newton's first law of inertia, the one about a body in motion remaining in motion until something stops it. In this case, although the the fastest street-legal motorcycle on the market stopped nearly instantaneously when it hit the New Yorker, Roethlisberger kept going until he also plowed into the side of the car (somewhere in America someone is going to refer to this as the "mother of all sacks").

Unlike Sunday afternoons in the fall and against the advice of his coach, Bill Cowher, the quarterback was not wearing a helmet.

I've been planning to write about motorcycle helmets for nearly a week ever since learning that the Michigan House of Representatives, by a vote of 66-37, had voted to repeal the state's 37 year old helmet law. But Big Ben going belly up yesterday has gotten me off the mark.

One could write for hours, days even, about the psychology involved in deciding to leave the helmet behind, but I won't, because the science and the medicine and the logic here seem so simple. Even most of the people who don't wear helmets will admit that they save lives, but, as an otherwise intelligent Massachusetts Representative told me a few days ago when we were debating this motorized russian roulette, "Citizens should have the 'freedom of choice' to decide for themselves."

One could also write about the millions of dollars it takes to treat and care for even one victim of a serious head injury, but I won't do that either, because the numbers have been trumpeted for decades and they don't seem to resonate with the audience that needs to hear them.

And one could write about the statistically significant increase in motorcycle fatalities in the 20 states that have totally repealed their helmet laws and in the 26 others that only require helmets for young operators. In fact, since 1967, motorcycle deaths and serious injuries have been directly proportional to the on-again, off-again efforts of congress to either reward or penalize states regarding helmet laws. Since late 1995, it's been off-again, and fatalities have risen 89%. The Insurance Institute for Highway Safety has an excellent summary of the history of helmet laws in the US.

In 2004 alone, more than 4,000 people died in motorcycle accidents - an 8% increase over 2003, according to the National Highway Traffic Safety Administration. And NHTSA also reports that the per capita rate of motorcycle fatalities was 41% higher in states without helmet laws.

But none of this doom and gloom stuff penetrates what must be the really thick cranial tissue of the people who count - the ones who, above all else, want to feel the wind moving through their hair (and the bugs through their teeth) at 65 mph.

As a diehard New England Patriot fan, I really want to see Ben Roethlisberger on the field challenging my team for all he's worth. So, I hope he makes a miraculously speedy recovery and is his old self by the start of training camp. But what would be really great, better than any football game, is if Big Ben, as soon as he's sitting up and able to mouth coherent speech, were to make a big-time television public service announcement. A TV spot in which he would tell every kid and every football fan in America that he was wrong, that he was stupid, that he is not immortal and that he will never, ever again ride a motorcycle without wearing the best helmet made in the universe.

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June 12, 2006


PBMs - By declining to review an Appeals decision, Maine's Supreme Court let a decision affirming a law that regulates Pharmacy Benefit Managers (PBMs) stand. The PBM industry's lobbying group had been challenging a law that requires disclosure of rebates, conflicts of interest and discounts from drug manufacturers. The law is an attempt to create more transparency for consumers and to ensure that discounts are passed on to payers (employers) rather than being retained by the PBM as is current practice. The District of Columbia has a similar law that is in litigation.

Safety resources - OSHA has a variety of free resources on summer safety issues, including a series of QuickCards on seasonal topics, available in both English and Spanish. And from across the pond, Britain's Health & Safety Commission publishes a variety of employer case studies on the business benefits of health & safety.

Flu Pandemic - Public Entity Risk Institute (PERI) is hosting a Virtual Symposium on June 19-23 on preparing for a local flu pandemic. This is one of a series of free online seminars that are open to the public. Here's a list of past topics.

Mine Safety - Commenting on the recent overhaul of mine safety rules that Congress approved last week, Jordan Barab wryly notes that our values are a bit skewed. The maximum civil penalty for violations of mine-safety regulations that could result in deaths? $220,000, up from $60,000. The maximum penalty for a "wardrobe malfunction" or other matter deemed indecent on the air by the FCC? $325,000, up from $32,500.

Euphemism of the week - In case you missed it, last week's news was that road rage has been repackaged as intermittent explosive disorder in a study funded by the National Institute of Mental Health. According to the study, IED may affect as many as 7 percent of American adults who have a tendency to " ... overreact to certain situations with uncontrollable rage, experience a sense of relief during the angry outburst, and then feel remorse about their actions."

Vacation deprivation - are your employees turning surly lately? Well, first check to see if they have IED, and if not, it may simply be because they are feeling deprived. A recent study shows that not only do American workers have fewer total vacation days than their European counterparts, they also aren't using all the time they have, leaving an average of 4 days on the table last year. Here's how vacation time stacks up: U.S - 14 days; Australia - 17; Canada - 19; Great Britain - 24; Germany - 27; and France - 39. More info.

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June 9, 2006


Last July we blogged the story of Michael Forman, a suffolk County policeman who had been indicted for workers comp fraud. He was charged with illegally collecting $250,000 in worker's compensation while climbing the ranks of the Bethpage Volunteer Fire Department. Disabled by "excruciating pain" in his wrist, he nonetheless was able to respond to hundreds of fire calls. In a stark demonstration that the wheels of justice can turn in unexpected ways, Forman was recently acquitted of all charges by a jury that deliberated for just three hours. When we examine the details, as provided by Julia Mead in the New York Times, perhaps the acquittal is not so surprising.

Forman had told police doctors that he was in so much pain that he could not drive or pick up objects. A surveillance video taken by police and played for the jury showed Forman trimming a tree in his back yard and using the injured hand to open doors, drive his fire department vehicle and talk on a cell phone.

However, Mead's article points out that the videos were taken before Mr. Forman's injury worsened and before he had surgery in April 2004. According to his attorney, the surgery to repair his wrist with a metal plate held in place by seven screws has caused his client to suffer from complex regional pain syndrome, a chronic condition requiring pain medication. Experts in the syndrome testified that Mr. Forman's condition is "permanent and life-altering."

One anonymous juror said that ultimately "the evidence did not prove beyond a reasonable doubt" Forman's guilt.

Perhaps the jury was swayed by the fact that Forman was performing community service in a volunteer capacity, so on some level he wasn't really "working." (It's not clear whether he was paid for his fire department work.) As we pointed out in our original blog, as a public safety officer, Forman collected 100 per cent of his average weekly wage, tax free. He makes more per hour on workers comp than he does working as a cop.

Management Drops the Ball
It's interesting to note that at one point in this saga Forman's doctors recommended he return to light duty with the police. Because light duty was apparently never offered, management dropped the ball in their one clear opportunity to bring this situation to a reasonable conclusion. Now Forman is applying for retirement disability, which, once granted, should free him up to do whatever he wants in his spare time. In retrospect, there was a brief window of opportunity to keep Forman active in the police department, but for unknown reasons, the opportunity was missed. Too bad for the police department and too bad for Officer Forman.

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June 7, 2006


New York's workers' compensation system is expensive, adversarial, administratively cumbersome and, in many ways, harmful to the very people it is supposed to serve, employers and injured employees. Now, the Professional Insurance Agents of New York State (PIANY) have authored an insightful, forward-thinking and very intelligent Legislative Position paper that addresses the state's serious workers' compensation problems. It should be widely read and discussed.

To quote from the document:

"The present workers' compensation system acts as a detriment to New York's economic development and fails to function well for the benefit of workers. PIANY supports a comprehensive reform of the workers' compensation system in New York to preserve and enhance worker benefits, prevent work-related disability and reduce inefficiency and fraud."

PIANY's proposals (a pdf can be found here) are refreshing, because not only do they address predictable issues such as fraud and rate setting procedures, but also because they shine a bright light on the state's problematic benefit levels and the way it delivers them, as well as the lack of a fee schedule for prescription drugs and a slowness "to allow and encourage the workers' compensation system to benefit from the application of managed medical care."

Perhaps the most employer-helpful recommendation is the first one the agents make. Straight from the top they focus on workplace safety, pointing out that two major credit programs were approved by the legislature in its reform of the statute in 1996, but never implemented. The agents ask, "Why?" Pretty good question.

The PIANY has issued a clarion call for reform. Good for them.

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June 7, 2006


A new blog carnival - Cavalcade of Risk - makes it illustrious debut today - check it out. Kudos to HG Stern at InsureBlog who is the founder of this risk roundup. Here's how he describes it:

"The purpose of the C of R is to offer insights into the world of risk management; generally, this will be insurance-related, but that’s not a requirement. Our goal is to help folks understand what risk is, and how to manage it. It's about business and finance, of course, but it's also about risks in our everyday lives and personal relationships."
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June 6, 2006


The U.S. House and Senate have each passed a bill relating to immigration. The Bills are so far apart, it's hard to imagine the conferees finding much common ground, other than tightening up border security. The House wants to criminalize all illegals and those who support them; the Senate wants a worker amnesty program that gradually offers illegals who have been in the country for a few years the opportunity to become citizens. As House conferee James Sensenbrenner (R- Wisconsin) says,"This is the toughest thing that I have ever been asked to do in 27 1/2 years in Congress and 10 years prior to that in the Wisconsin Legislature."

Section 202 of the House bill may be at the center of the debate. It criminalizes a number of activities that are routinely performed by religious leaders, social service workers, health workers, and community activists. It makes criminal any act that "assists…encourages…directs or induces a person to reside in or remain in the United States…knowing or in reckless disregard of the fact that such person is an alien."

While I have little use for the hard-headed, rigid standards embodied in this House bill, I was surpised to find that Sensenbrenner seems to understand the economic implications of any change in the status quo. He is among the first public figures to address what ultimately is a fundamental problem with the Senate's solution. It's going to cost a lot of money.

Sensenbrenner is quoted as saying: I do not support anything that is an amnesty. The real problem with the Senate bill is that the people who would apply for amnesty would end up pricing themselves out of the market in many of the jobs that they currently hold. Amnesty is not going to be as successful as its supporters think because if someone legalizes themselves and then they end up paying Social Security taxes and state and federal securities, and increase their cost to their employer. If there are more illegal immigrants out there, they are simply going to fire the person who has been legalized and hire the illegal immigrant.

Sensenbrenner is correct. A worker in a certified amnesty program becomes a more expensive worker. Not just in the taxes paid, but more importantly in the health benefits, safety programs and workers comp insurance that provide the standard (and expensive) safety net for most workers in this country. Amnesty will drive up the cost of labor. And Sensenbrenner points out that the many illegal who are not eligible for amnesty will continue to operate as the second class workers who provide needed services for less-than-market rates.

Sensenbrenner does not envision a mass deportation of illegal immigrants. He thinks they will deport themselves: If we shut off the jobs by enforcing employer sanctions, many of the illegal immigrants will simply decide to go home because they cannot make money in the United States. And you will see an attrition. This sounds intentionally naive. Perhaps more likely, a punitive law will drive illegal workers deeper into the underground economy, where working conditions will become even worse than they are now.

Bush Speaks
Contrary to many of his policies, which shift hard to the right, President Bush has outlined a position on the immigration bill which adheres to the middle ground. Here's a quote from a recent speech:

Some members of Congress argue that no one who came to this country illegally should be allowed to continue living and working in our country, and that any plan that allows them to stay equals amnesty, no matter how many conditions we impose. Listen, I appreciate the members are acting on deeply felt principles. I understand that. Yet I also believe that the approach they suggest is wrong and unrealistic. There's a rational middle ground between granting an automatic path to citizenship for every illegal immigrant and a program that requires every illegal immigrant to leave. The middle ground recognizes there are differences between an illegal immigrant who crossed the border recently, and someone who has worked here for many years who's got a home, a family, and a clean record. [Bush's conservative critics are likely to find the time frame differential a "distinction without a difference."]

My position is clear: I believe that illegal immigrants who have roots in our country and who want to stay should have to pay a meaningful penalty for breaking the law, to pay their taxes, to learn English, and to work in a job for a number of years. People who meet these conditions should be eventually permitted to apply for citizenship like other foreign workers. But approval would not be automatic. They would have to wait in line behind those who played by the rules and followed the law. This isn't amnesty. It is a practical and reasonable way for those who have broken the law to pay their debt to society and demonstrate the character that makes a good citizen.

Slavery, Revisited
The fault lines on this issue are very deep and enormously divisive. There are no easy answers. The Chamber of Commerce, which supports most of the Senate bill, wants some form of guest worker program, but they will not be happy with any increases in the cost of labor. The sentiments for shutting the borders and tossing out the illegals will continue to percolate. What's likely to happen? We're betting on a continuation of the "wink wink" status quo. Despite the increasing carnage among illegal workers in our most dangerous industries, despite the rampant abuse of vulnerable workers, doing nothing may prove more practical than changing the nation's laws.

We are facing a paradox similar to that of our slave-owning founding fathers. They were enlightenment thinkers of the highest order. They saw clearly the problems and paradoxes inherent in slavery, the blatant contradiction to the values embodied in new nation's brilliant constitution. Nonetheless, they were unable to end the abominable institution themselves. They left that task to future generations. They were hopelessly addicted to cheap labor.

Well, folks, so are we. That's why it's so hard to envision any comprehensive solution that addresses the disparities of our second class, immigrant workforce. It's the right thing to do, but it will hurt where we as a nation are most sensitive: in our wallets and purses.

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June 5, 2006


West Virginia - Employers will be facing some confusion - and likely some change in rates - as BrickStreet Mutual Insurance, the entity that has replaced the prior state fund, switches over to the NCCI system of employee classification and rating. Under the prior state system, there were only 94 employee classifications, and under the new system there will be more than 470. Employee classifications all have different rates based on the risk of the work performed.

WTC Workers - Another sad story about the difficulty that Ground Zero clean-up workers are facing in securing workers compensation benefits. Many disabilities are surfacing now, but the statute of limitations was only for two years following 9/11. Mayor Bloomberg recently interceded to get benefits for a former deputy mayor who is suffering from debilitating respiratory illness.

Health care - Joe Paduda at Managed Care Matters tells us to expect national health care within about five years.

New blog - Check out our newest addition to the blogroll - InsureBlog, written by H.G. Stern, LUTCF and Bob Vineyard, CLU. It's new to our blogroll, but not new to the Web - it's been up for 18 months. They are launching a new blog carnival called "Cavalcade of Risk" - we'll keep you posted.

Ohio Coingate - More developments late last week - Terrance Gasper, the former CFO of the Ohio Bureau of Workers Compensation, is now facing federal and state racketeering charges for violating RICO by accepting bribes and laundering money. Thomas Noe gave Gasper $25,000 in exchange for Gasper's funneling BWC investments to Noe's rare coin company. Apparently, Gasper's interest in investing public funds didn't stop at the state border - he has also been named in an influence-peddling scheme associated with the New Hampshire Retirement System, activity that occurred after leaving the BWC. You might think he would have been treading a bit more carefully after the Ohio experience began making waves, but apparently not. If the New Hampshire allegations prove true, then perhaps Mr. Gasper should be nominated to this illustrious organization.

Meanwhile, things are heating up considerably for Thomas Noe. In addition to facing both federal and state charges for stealing millions in BWC monies, he is now facing serious violations of campaign finance law by using 24 friends and associates as conduits to illegally funnel more than $45,000 to the Bush presidential campaign. Both Noe and his wife Bernadette are former Lucas County Republican Party Chairs and Bernadette Noe was Chair of the Board of Lucas County Elections. The vote tally for Lucas County was hotly disputed in the last election - it's not particularly reassuring to know we had this dubious crew minding the store, heh?

Ohio's Coingate is a topic we have covered several times and will no doubt discuss again. Part of the shame in this whole sorry mess is the burden and stress that this puts on all the diligent workers who are innocent of any wrong doing. The Ohio BWC had a solid reputation and embarked on many progressive initiatives prior to this scandal. It must be difficult for all the good workers to see their place of employment subject to such unflattering and harsh public scrutiny. As the Enron workers learned, when the so-called leaders fail to lead, it's often the workers who pay the steepest price.

Misc. Insurance news
The billion dollar derriere. Thanks to RiskProf for pointing us to an fascinating article in Slate on specialty insurance for celebrity body parts. Ah, the scintillating world of insurance!

Catastrophic events. Hurricane season is here, and Specialty Insurance Blog covers an recently released AM Best Hurricane Study - if there were a $100 billion plus catastrophic event, 20 to 50 insurers would be vulnerable to failure.

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June 2, 2006


Health Wonk Review #8 - the trailblazing issue - is posted at The Medical Blog Network. Check it out - many interesting posts from some of the best and the brightest in the health wonk blogosphere. Kudos to Dmitriy Kruglyak who has done a superb job hosting. Note that he has introduced a new format and process for submitting entries for HWR and other medical blog carnivals that will make things easier for both hosts and contributors.

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