May 2007 Archives

May 31, 2007


Richard Eskow of The Sentinel Effect is hosting this week's edition of Health Wonk Review and he's seeing double. It's a 24-issue post, so dig in for some good reading. Health Wonk Review is truly becoming a force in the health care policy arena - I'd be surprised if there were any other nook or cranny on the web with a savvier grouping of health care folks who represent all aspects of the industry.

Our host of the week, Richard Eskow, is a case in point. He's CEO of Health Knowledge Systems (HKS) in Los Angeles and a consultant specializing in health care and insurance administration, IT, strategic planning, medical management, health policy, marketing, finance, and communications. You may even have seen or heard him on the news - he's been interviewed on MSNBC, Fox News Radio, and Air America Radio. His blog is definitely one to add to your regular roster for health care reading. He takes the title The Sentinel Effect from "the theory that productivity and outcomes can be improved through the process of observation and measurement."

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May 30, 2007


As if the link between obesity and adverse health effects weren't substantial enough, three new studies add to the growing body of evidence that employers pay a steep cost for overweight employees.

Joanne Wojcik of Business Insurance reports on two studies linking obesity to increased employer costs for health care and workers compensation. One, conducted by the Medstat Group Inc. showed that moderate and severe obesity were linked to annual health care cost increases of 21% and 75%, respectively. Moderate obesity was associated with a $670 increase in costs, and severe obesity resulted in a $2,441 increase in costs.

Another study examining records of nearly 12 thousand workers by Duke University Medical Center linked obesity to higher medical costs and 13 times the number of lost work days than non-obese workers. Also:

" ...the study found that obese workers averaged 11.65 workers compensation claims per 100 workers, while non-obese employees filed an average of 5.8 claims per 100 workers. As a result, obese employees had medical costs seven times higher, for an average of $51,019 per 100 employees. The most common causes of injury among obese workers were slips, falls and attempts to lift something."
In a third study, CCH reports that researchers at the Johns Hopkins Bloomberg School of Public Health Center for Injury Research and Policy recently published a study in the American Journal of Epidemiology showing that obesity increases the risk of traumatic workplace injury. Rsearchers studied medical and injury data on employees in eight separate locations of a large aluminum manufacturer.
"Employees were grouped into five categories: underweight, normal, overweight, obesity levels I and II and obesity level III.

Of the 7,690 workers included in the study, 29 percent were injured at least once between January 2, 2002, and December 31, 2004. Approximately 85 percent of the injured workers were classified as overweight or obese. More than 28 percent of injuries occurred among employees classified as overweight, 30 percent in the obese I and II category and almost 34 percent in the obese III category.

The severely obese group who had a BMI of greater than 40 also had the most injuries to the hand/wrist/finger (22 percent) when compared to the same injuries in the other weight categories. Almost 10 percent of all injuries in the obese III group were to the leg/knee, compared to 7 percent of workers classified as overweight, which was the next highest injury rate."

Braun Consulting, experts in labor, employee, and human resources issues, has gathered some additional facts and statistics on the obesity problem:
  • The number of Americans considered obese by the CDC in 2001 was 44 million - or approximately one in five. This is a 74 percent increase since 1991.
  • Obesity is growing at two or three times GDP!
  • The percentage of U.S. adults classified as obese doubled between 1980 and 2000, from 15% to 31%. (1999 National Health and Nutrition Examination Survey, CDC National Center for Health Statistics).
  • On average one out of every three people you know and work with could be considered obese.
  • According to the Centers for Disease Control. obesity has roughly the same association with chronic health conditions as 20 years of aging.
  • The Surgeon General reports that more than 9 percent of the nation's health care expenditures are directly related to obesity and physical inactivity. They calculate that to cost out at about $117 billion annually and relate to 300,000 deaths per year.
  • UnumProvident, a provider of disability income protection insurance, reports a tenfold increase over the past decade in short-term disability claims attributed to obesity, based on research using their disability database.
The same article includes additional statistics about health costs of obesity and offers concrete suggestions for employers to add to wellness programs. These include:
  • Making on-site wight loss programs available at work.
  • Sponsoring or subsidizing health club memberships
  • Working with group health vendors to develop programs targeting obese populations.
  • Implementing a healthy eating campaign, including healthy options in cafeterias and vending machines.
  • Encouraging employees to walk outside during their lunch hour
  • Seeking employee educations materials and disease management programs from health care vendors.
  • Providing EAPs for private counseling or community-based weight management programs.
  • Offering incentives, such as a discount on health care premiums.

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May 29, 2007


Felicia Dunn-Jones was a civil rights lawyer who worked one block away from the World Trade Center. She fled the office on 9/11, inhaling dust from the falling towers. She was covered with ash laced with asbestos and other hazardous material as she ran for safety. Now, nearly six years later, over five years after her death, New York City Medical Examiner Dr. Charles Hirsch has determined that Dunn-Jones's death was related to the 9/11 attack. In the days and months following the attact, Dunn-Jones developed a serious cough and had trouble breathing. She died five months later.

Dr. Hirsch has amended Dunn-Jones's death certificate to indicate that exposure to trade center dust "was contributory to her death." The manner of death thus changes from natural causes to homicide.

The medical examiner still has some doubts as to whether the trade center dust caused the sarcoidosis that killed Ms. Dunn-Jones. He suspects it was a pre-existing condition, nonetheless clearly and significantly aggravated by the exposure on 9/11.

Who Pays?
The issue for Dunn-Jones's family is not one of payment. They have already received $2.6 million from the Victim Compensation Fund. But it does raise an interesting question relative to workers compensation: was Dunn-Jones's illness work-related?

In the moments following the attack, Dunn-Jones fled her office. Technically, once she reached the streets, she was no longer at work...She was commuting, heading away from work. She eventually made her way home to Staten Island.

An administrative law judge could reasonably conclude that this is not a work-related illness. Dunn-Jones happened to be at work, which happened to be near the World Trade Center, which happened to be attacked. Once she fled the building, she was a commuter (a commuter suffering from terror, but a commuter nonetheless). On the other hand, an equally reasonable judge might lean toward compensability, based upon the fact that Dunn-Jones was at work when the attack took place - and it was physically impossible for her to remain there. She was not engaged in an ordinary commute, but a horrific flight from immanent danger.

Perhaps these are morbid distinctions that most of us would prefer to ignore. But the center attack is certainly not the last incident of its kind. Millions of employers are paying for workers comp policies, under the assumption that employees are covered for work-related injury and illness. If and when the next attack comes, the issue of compensability will quickly become paramount. It is no exaggeration to state that the future of the insurance industry as a whole might be at stake.

In the meantime, we would do well to return to the Book of Common Prayer for consolation. Sure, we are inclined in this country to translate tragedy into dollars. Someone must pay for all the pain, suffering and loss. But beyond the issue of jackpot settlements lies the simple fact of our mortality. "Earth to earth, ashes to ashes, dust to dust."

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May 25, 2007


We are making a few guest posts at Working Immigrants while Peter Rousmaniere is traveling. Today's post - Edgar Velázquez: Maimed at work, then deported - involves workers compensation (and the lack of it) in the case of an undocumented worker who was severely injured by a chainsaw while working for a Rhode Island company, Billy G’s Tree Care. To add insult to injury, literally, when Velázquez showed up at court for his workers compensation hearing, he was met by immigration officers who arrested him and sped him back to Mexico. His employer denies having made the call to immigration authorities. In fact, his employer denies any knowledge of Velázquez entirely. This is just the broad brush outline - it's a disturbing case and the reporting from The Providence Journal is worth reading.

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May 24, 2007


Cavalcade of Risk #26 is freshly posted. Kudos to Jay Norris of Colorado Health Insurance Insider for a substantive issue. The excellent blog that Jay and his wife Louise maintain is the expert source for Colorado health care matters.

If I'm not mistaken, issue #26 marks the one year anniversary for Cavalcade - kudos to founder and chief cheerleader, Hank Stern of InsureBlog. We'll be hosting an upcoming issue here in June.

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May 22, 2007


NCCI has recently released its its annual State of the Line workers compensation market analysis which is really what all the numbers geeks in our industry wait for with some anticipation. You can read the summary in the press release - NCCI Reiterates “Optimistic but Cautious” Outlook for Workers Compensation Insurance Market - or read the full report (PDF). There's also a PDF of the PowerPoint and a video version of the presentation if you you're a true insurance nerd.

Here's the long and the short of things: the market looks good, better than it has in a number of years. Thirty years, to be exact.

At 96.5%, the combined ratio, which is one of the industry's primary barometers for assessing market health, is the lowest that it has been in three decades and incredible drop since its 2001 peak of 122%. The combined ratio reflects an insurer's loss experience plus expenses. In non-jargony terms, the combined ratio essentially reflects how much an insurer pays out for each dollar it takes in. In most business scenarios, the cost of goods or services would tally under 100% with the remainder being the profit margin. Insurance presents an unusual scenario because investment income allows carriers to realize a profit up to about the 110% range, or even higher. So anything under 100 is quite good.

There are other positives, too. The frequency of injuries continues to drop, reserves have been strengthened significantly, and the residual market (or "markets of last resort") continue to shrink.

But put away the champagne, confetti. and noise makers because there are a few mitigating factors. One is that California's improved scenario is responsible for about 10 percentage points in those results, so if you take that away, things aren't quite so rosy. Throw in pallid investment returns, and while still a good year, you essentially have what the actuaries have termed "cautious optimism." Whee.

See - you can never really relax when you work in a business with actuaries because they are always raining on today's parade by warning you about the future. Here are a few things that could bedevil us going forward, according to the the experts:

  • Medical costs continue to escalate. The medical portion of the claims dollar is now topping 59%. Fifteen years ago when I got in this business, it was about 48%, with more than half going to wage replacement. That's a seismic shift, and it doesn't look like there are any brakes on escalating medical costs in the future.
  • The market may have crested. Workers comp premiums are decreasing and in competitive or buyer's markets, insurers have historically been their own worst enemies by being too aggressive in discounting price to gain market share. So far so good, but we may be at a point where the rubber meets the road. Joe Paduda has more on the dynamics of pricing and hard and soft markets.
  • The Terrorism Risk Insurance Extension Act - the federal backstop - is scheduled to expire at the end of the year and it's uncertain if it will be renewed. While some other lines of insurance can exclude coverage or price to include the risk, the regulatory nature of workers comp precludes this, leaving insurers rather exposed.
  • Bad things in other lines could have a spillover impact. Again, I turn to my colleague Joe Paduda for his view of scary things that could affect the property casualty industry performance as a whole.
  • The work force is getting older and fatter. And it isn't just the older people who are getting fatter, diabetes is reaching what some health care observers have characterized as epidemic. Both these factors - age and weight - increase the risk for new injuries and could add to the severity (read: medical costs) of any injuries that occur.
Here are some other discussions on the work comp numbers:
Joe Paduda - Work Comp Financials
Workers Comp Executive - California Buoys National Workers' Comp Results
Business Insurance - Comp underwriting results improved in 2006: NCCI
Insurance Journal - NCCI Reiterates "Optimistic but Cautious" Outlook for Workers Comp

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May 21, 2007


Massachusetts recently announced yet another reduction in workers comp rates, this time a double digit 16.9 percent. Since 1990, when the state implemented wide-reaching reforms, the rates have come down well over 60 percent. Employers are paying about the same rates that were in effect in the early 1980s. It's the greatest comp success story among the industrial states. Indeed, with this pending reduction, the cost of workers comp in MA is likely to be among the bottom five states across the entire country.

This impressive performance is even more remarkable when you consider that the state offers some of the highest benefits available to injured workers. It seems paradoxical: very low costs for businesses, very high benefits for injured employees. So the question becomes: who pays? Who bears the burden of the "Massachusetts miracle"?

Any analysis of shifting burdens should focus on comp's key constituencies: injured workers, medical providers, insurance companies and attorneys. Let's take them one at a time:

Injured employees: while MA offers one of the highest indemnity wages in the country, it also has a relatively low rate of reimbursement: injured workers collect just 60 percent of their average weekly wages, tax free. Most states offer at least 66 2/3 and some over 70 percent. You will hear complaints from organized labor in MA that the rate is unacceptably low. To qualify for the maximum indemnity, a worker would have to make over $1,600 a week. With the exception of the skilled trades, most people on workers comp collect nowhere near the maximum amount.

Medical providers: In most states, medical costs in the comp system are soaring, reaching 60 percent of total costs and more. In MA, by contrast, medical costs are still only about 35 percent. Why? The state may be blessed with as good a medical infrastructure as you can find anywhere in the world, but the providers in this system are squeezed to the max by very low rates of reimbursement in the comp system. The rate schedule runs about 20 percent below Medicare. By any standard, that is just unacceptable.

To be sure, when you get beyond primary and emergency care, few self-respecting doctors will accept the deflated rates. To get injured workers into specialty care, insurance adjusters routinely negotiate higher rates. (Try to find a hand surgeon willing to work for a flat fee of $750. If you found one, you would not trust him or her to do the work.)

Insurance carriers: a number of insurers have fled the state, complaining that the rates are just too low. (If the rates were inadequate last year, how will they look after an additional 16.9 percent reduction is tacked on?) The state's remaining carriers are understandably nervous. With the state's aging workforce, the shadow of terrorism and workers comp the potential retirement system of choice for those with no choices, carriers are sweating at the prospect of another rate reduction. As carriers hone their underwriting criteria, we are likely to see a growth in the assigned risk pool (currently running about 15 percent of the market). Add to this mix the fact that data from the state's largest comp carrier, AIG, was not factored into the rate setting, and you have a potential witches brew for a troubled future.

Attorneys: Prior to the reforms, Massachusetts routinely cut settlement checks for injured workers who could not (or would not) return to their jobs. There were about 20,000 such settlements a year. Now we are seeing about 8,000 settlements a year. Settlements are the bread and butter of attorneys, who rarely counsel their clients to go back to work. It's safe to say that attorneys, along with medical providers, are bearing the brunt of the Massachusetts reforms.

Lessons from the Bay State
Is Massachusetts the gold standard for workers comp reform? In many respects it is. We should keep in mind, however, that the world of comp, like everything else in life, is constantly changing. Reform comes at a price. We need to re-evaluate periodically, to work toward an ideal balance. So the lessons learned from the Commonwealth should include some underlying realities:
Injured employees: it's great to set a high ceiling for indemnity and encourage return to work, but the reduced rate for indemnity is unfair and a burden for disabled workers.
Medical providers: Pay a fair rate for services rendered, lest other payers be made to subsidize the real costs of treatment. The rate schedule needs to be revisited.
Insurance companies: as long as carriers continue to offer significant premium discounts (and they do), they undercut their argument that rates are too low. When the premium discounts disappear, the rates will stabilize - and might even go up.
Attorneys: I respect the role of attorneys in the comp system - and I'm confident in their collective abilities to find opportunities in the ever-evolving system.

Finally, let's not forget the unprecedented employer education project that anchored the reforms in Massachusetts. The Qualified Loss Management Program (QLMP) offered signficant premium discounts to employers in the assigned risk pool who agreed to learn how to manage the costs of workers compensation. With over 60 percent of the state's employers in the pool during the early 1990s, the QLMP program transformed the way employers viewed workers comp. They began to perceive comp as a manageable aspect of business. They understood the relationship between their losses and their future costs. They learned that loss prevention was worth every reasonable effort. And they also recognized that by using temporary modified duty to speed recovery, they were helping their workers and helping themselves by lowering the future cost of insurance. This unprecedented education project is the heart and soul of the state's comp success story.

Any state wishing to duplicate the wildly successful reforms in Massachusetts should keep the QLMP employer education component firmly in mind. Employers are key players in the workers comp system. If you really want to improve your results, employers must be the centerpiece of your effort.

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May 18, 2007


The recent passing of Jerry Falwell reminds us that family values are definitely in the eye of the beholder. One's man's family values are quickly transformed into fear and loathing for others with different values. For too many people, it's not enough to develop and embrace your own values: you have to convince others to join you - or persecute/diminish/destroy them in the process. We are social creatures, but the socialization process itself is not always a pretty sight. Which leads us to the ever-divisive issue of immigration reform.

As one who has been critical of Congress for its inability to do anything about the immigration mess, I am happy to see some progress. We finally have on the table proposed legislation that would legitimize (to some degree) 12 millon or so undocumented immigrants and set up a structure for admitting an additional 400,000 per year. But with the print on the 300+ page bill barely dry, the attacks have already begun.

"This is amnesty for criminals!" cries the right.

"Unfair to families and labor!" cries the left.

The bill attempts to be pragmatic. No ideologue will embrace it. You could argue that in trying to stake out the shaky middle ground, the bill makes everyone unhappy. Indeed, this is such a volatile issue, there may not be a viable middle ground.

Unintended Consequences
Whatever the final shape of the legislation - assuming something is ultimately passed and signed into law - there are going to be unintended consequences of substantial magnitude.

The left fears that the bill will reduce wages. But wages are already suppressed by this huge, undocumented workforce. Once these people are credentialed, their wages and benefits are going to go up. Undocumented workers live in constant fear of discovery. They are willing to work for less, forego benefits to which they are entitled, and generally live beneath society's radar, in order to avoid arrest and deportation. Once they have the new "Z" visas, their working conditions should improve. And as this change takes root, we will all feel the result in the form of higher prices.

As for outrage on the right - that we are rewarding criminal behavior - the intent of the bill is to decriminalize an essential component of the workforce. It would be logistically impossible and economically disastrous to deport 12 million people. They are performing vital jobs, often in abominable working conditions. They are here because we need them. Thus it is no great concession for Congress to legitimize these people: realistically, we have little choice.

We have already commented on another goal of the bill, to stop the influx of illegal immigrants through enhanced border vigilance. I personally am looking forward to the construction of America's Great Wall. It will cost billions. It will prove remarkably ineffective. And the only people willing to build it will be the people it is meant to keep out. Under the family values of American labor, the working conditions in the deserts of Arizona, New Mexico and Texas are unacceptable. Only the truly desperate would accept these jobs...and we all know who they are. So we'd best build the wall before we hand out the new Z visas. Once immigrant workers have their visas, they won't want the jobs either.

So let's get going. I can already envision Vladimir Putin, Russia's ethically challenged ruler, standing on the Mexican side of the wall and calling out: "Mr. President, tear down this wall!"

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May 17, 2007


A new issue of Health Wonk Review is posted at Health Care and Marketplace Review and is awaiting your perusal. The host blog's author, Robert Laszewski, is a welcome addition to the health blogosphere. Our friend Joe Paduda calls him "one of the most intelligent, insightful, and articulate observers and critics of the US health care system" and since Joe is no slouch himself, we are inclined to believe him. When you are done sampling the wonk world, be sure to stop back and poke around the nooks and crannies of Robert's blog.

As usual, Health Wonk Review has a variety of interesting posts from the health care policy crowd. Among the roster of posts, I was surprised to see one from Pioneering Ideas, a blog from the Robert Wood Johnson Foundation. It seems they have had an active blog since about last October. Another welcome addition to the blogosphere.

And speaking of new blogs, we are also happy to see the debut of Dr. J's Jottings from Dr. Jennifer Christian, a friend and respected colleague of Lynch Ryan. We've talked about her work before, most recently in citing her leadership role in the American College of Occupational and Environmental Medicine's important new guideline on the topic of Stay at Work / Return to Work. She's not a stranger to the online world by any means - she hosts the lively and active Work Fitness and Disability Roundtable.

We're delighted to see all these smart people adding their voices to the collective discussions in the blog world.

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May 16, 2007


Unhealthy worker lifestyles and an aging work force may portend trouble on the horizon for the nation's employers. A recent article in The Wall Street Journal points to the disturbing trend of long-term worker disabilities that are accelerating at a rapid pace. This comes at a time when employers may be facing labor shortages with the impending retirement of the large boomer population.

The WSJ article uses data from The 2006 CDA Long-Term Disability Claims Review (PDF), an annual study issued by the Council for Disability Awareness. Some of the salient points from the study:

  • More than 500,000 individuals received long-term disability insurance payments from CDA member companies in 2006 - 4.4% more than 2005.
    CDA member companies paid in excess of $7.2 billion in long-term disability insurance claims in 2006, a 7.5% increase over benefits paid in 2005.
  • 33% of individuals receiving long-term disability insurance benefits did not qualify for Social Security Disability Insurance, and 95% of reported disabilities were not work-related.
  • 6.8 million disabled workers received payments through SSDI in 2006, 4.4% more than in 2005 and 51% more than the 4.5 million disabled workers receiving payments in 1997.
  • The rate of disability for women workers is growing faster than that of their male counterparts. Since 1997 the number of women covered under SSDI has grown from 16% to 47% of covered workers compared to a 9.9% growth rate for men, while the rate of disability for women workers has grown more than 60% compared to 32% for male.
For the last two decades, there have been numerous attempts to cobble the various disability programs together and serve them under one roof: 24-hour coverage, disability management, and absence management, to name a few. Often, for all but the largest self-insured employers, these attempts have been less than successful due to complex state-by-state regulatory environments, in-house management silos that administer programs differently (risk management vs human resources), and differences in program incentives, disincentives, and benefit structures. One area where workers comp has made huge progress and serves as a model for non-work related disability programs is in the area of return-to-work programs. For many, migrating RTW to disability has been slow going - often because it is a voluntary employee financed benefit, so the urgency hasn't always been there. But with the converging forces of aging workers, a less healthy population (increased obesity, diabetes), and a tight labor pool, the sense of urgency may be growing.

The WSJ article discusses the ways that many large employers are making workplace accommodations to retain workers:

"American Express says it has altered the company cafeteria at its Greensboro, N.C., call center to accommodate wheelchair-bound workers, enabling them to access microwaves and bus their trays on carts. Company employees who rely on public transportation because of medical reasons, such as paratransit transportation, can get flexible work schedules to accommodate their needs.

At General Motors Corp., a joint program with the United Auto Workers union helps disabled workers find new positions within the company that are more amenable to a worker's ailment. Under this so-called Adapt program, disabled workers meet with company doctors, ergonomic representatives and others who review the employee's disability and try to match that to available jobs. Workers who install windshields, for instance, but who develop problems that restrict how high they can raise their arm, could be moved to door installation instead, since that job doesn't require workers lift their arms above their shoulders, GM says."

These types of creative programs are always easier for the big guys to effect than the smaller employers, given the law of large numbers, but the large employers can also serve as laboratories for what works well and what doesn't. And the climate may be right for moving the needle a little further in terms of a unified approach to disability management and stay at work/return to work programs.

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May 15, 2007


Three executives of Purdue Pharma have agreed to pay fines totalling $635 million to resolve charges relating to the marketing of Oxycontin. The company admits to understating the risks involved with this potent drug and to deliberately misleading doctors and the public about its addictive qualities. From 1996 to 2001 the company claimed that Oxycontin was a "miracle" drug, safer than rival medications. Alas, it turns out that the drug was subject to abuse and led rapidly to addiction. And the company apparently knew this all along.

The pleas involved Michael Friedman, CEO, Howard Udel, the chief legal officer, and Dr. Paul Goldenheim, the former head of research. While claiming to have taken steps to prevent misstatements in the promotion of the drug, Mike, Howie and Paul pled guilty under the legal principle that holds high-level executives accountable for the improper acts of others. I'm sure that they privately berated their marketing department for the lies and deceptions, even as the dollars began to roll in.

Company revenues associated with OxyContin between 2000 and 2006 approached $10 billion. So the $635 million fine, while appearing hefty, is about six per cent of revenues. As a tax on criminal negligence, that isn't bad. Even Al Capone would have approved.

You don't achieve overwhelming market share by sitting around and waiting for doctors to discover you. It takes very aggressive marketing and, in this case, pretty dramatic misreprentation to dominate the market for pain killers. The company told two fundamental lies in their drive to sell their product:
1. That OxyContin was less addictive than other opiates. It's not.
2. That the drug was less readily subject to abuse. Not true.

It turns out that OxyContin is highly addictive and the company knew it. In addition, they put a warning right on the label not to crush the pill and ingest/inject it. You might get stoned. You might, indeed. By crushing the pill, users circumvent the "time release" characteristic and access the full power in one overwhelming (and highly addicting) moment.

Purdue Pharma did a great job of pushing (that is the operative word) OxyContin deep into the medical system. Originally intended for treatment of extreme pain in cancer patients, the company's marketers successfully presented it as the drug of choice for common ailments such as routine back pain. That's why it rose to prominence in the workers comp system. (See our post here.)

The Great American Success Story?
In the ideal world, when a drug is created, it will be prescribed prudently and carefully, and only for the purposes for which it was intended. When you develop an effective product to manage extreme pain, you would limit its use to cases of extreme pain. That's in the ideal system - not exactly how you would describe the current status of health care in America.

The real American way is achieving market saturation, market dominance, even if your product is best used by a limited population. And to dominate the market, you tell people what they want to hear: the product is extremely safe and effective. It works better than anything else. And heck, if you have a workers comp claim, the prescription won't cost the employee a dime! We'll even give them 50 tabs, 40 more than they really need for their little back strain, so they can generate some income on the side.

This country has locked up more people for using and abusing drugs than any country in history. We have a real problem with people getting stoned. Nonetheless, when a legitimate company becomes a pusher, when their misrepresentations and outright lies lead to addiction and death, nothing much happens. If Mike, Howie and Paul sold a few ounces of marijuana or crack cocaine, or even a few tabs of OxyContin, to an undercover agent, they'd be going to jail for a long, long time.

But after their enterprise made billions, Purdue Pharma hired Rudy Giuliani Partners LLC to work out a deal with the prosecutors. In case you're wondering, Giuliani Partners is "dedicated to helping leaders solve critical strategic issues, accelerate growth, and enhance the reputation and brand of their organizations in the context of strongly held values."

Hmm. This drug scandal certainly became an embarassing "strategic issue" for Purdue Pharma. As for "enhancing the reputation and the context of strongly held values" - I'm still trying to figure out what the company's core values are. Your guess is as good as mine. In any event, Guiliani Partners undoubtedly earned a hefty fee. Once you get beyond a few days of bad press, Mike, Howie and Paul are still very free and very rich. Overall, you'd have to say that Rudy's boys cut them a pretty good deal, one that even the bootlegger Capone would appreciate.

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May 14, 2007


We've learned about a few free seminars that we thought we would pass along to you. We don't have any connection with either of these groups, but they are both sponsored by reputable organizations and sound interesting.

Standard/Universal Precautions: Compliance, Beliefs, and Barriers - Wednesday, May 16
The North Carolina Occupational Safety and Health Education and Research Center is sponsoring a free NORA Interdisciplinary webcast on Wednesday, May 16 from 1:00 - 2:30 pm EST. Kathy Kirkland, Executive Director, Association of Occupational and Environmental Clinics in Washington, DC, will present "Standard/Universal Precautions: Compliance, Beliefs, and Barriers." The seminar can be viewed live via webcast, or an archive link will be available a few days after May 16 for viewing at your convenience.

Access the seminar here at 1 pm EST on May 16, and log in as a guest. Type in your first and last name and click the "Enter" button to launch the OSHERC meeting space. You may need to download the meeting plug-in (Flashplayer). There will be an interactive question and answer session. Slides and an evaluation form are available.

The seminar topic has been approved for 1.5 contact hours or 0.15 CEUs through the University of North Carolina. To receive the CE credit, you must complete a registration form (hard copy available only) and send a $4.00 check payable to *Friday Center for Continuing Education* to Susan Randolph by *May 25, 2007*; you must also complete an evaluation form after the seminar.

More info: Susan A. Randolph, FAAOHN Clinical Instructor Occupational Health Nursing Program University of North Carolina at Chapel Hill 1700 Airport Road, CB #7502 Room #337 Chapel Hill, NC 27599-7502 - Phone: 919-966-0979

Improving Communication with Spanish Speaking Employees - May 24
Benefits Management Online Forum & Expo is sponsoring this free online forum on Thursday May 24 at 2:00pm EST. Register for attendance here

The notice for this forum states:
If you are an employer with Spanish-speaking employees, an HR director responsible for the success of Spanish-speaking teammates, or a benefits specialist who must communicate plans to Spanish-speakers, this online forum is for you.

Spend an hour with Melissa Burkhart, founder and president of the consulting firm Futuro Solido USA, as she shows why developing Spanish straight talk es muy importante. Melissa will explain the different workplace behaviors and values held by English-speaking and Spanish-speaking workers and reveal the secrets to successful trouble-shooting and team-building with Spanish-speaking employees.

In this presentation, you will learn about:
* Culturally rooted beliefs
* Common pitfalls and employer frustrations
* Strategic solutions for optimizing communication and building more effective teams

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May 11, 2007


Carnival time - Cavalcade of Risk #25 is posted at Getting Green. Among other fine entries, we note there are two posts about data security. In one case, the Transportion Security Office lost the records of 100,000 workers - great, that speaks well to their ability to protect us! And in another item, we learn that Chase is careless in disposing of sensitive client materials - and they are obviously not the only ones. Not good. Is your agent, insurer or TPA properly disposing of any claim-related data and records for your organization? You may want to add this item to things you check for in renewals or RFPs.

WC networks - Joe Paduda has some thoughts on the future of workers compensation networks. After meeting with several network executives at the recent RIMS meeting, he sees a definite continuation of the trend away from the national broad-based, discount-oriented networks to regional hybrid networks. Not sure what a Hybrid network is? Joe offers a good explanation in his post. His expert analysis on these matters is worth your attention.

Docs & Drugs - Those free drug samples that physicians hand out may not be such a good idea after all, or so says a recent article in the New York Times. Critics see these as just another example of the close ties between physicians and drug companies, and say that " ... they may actually drive up the cost of health care in the long run, because the drugs being promoted are the most expensive brand-name medications." We've talked about docs and drugs a few times before. (Thanks to HealthLawProf Blog for the pointer to the article)

Scandal watch - We've written quite a bit about the Ohio Bureau of Workers Compensation Coingate scandal. Today we learn that the BWC's former CFO faces 5 years in prison. His sentence was reduced based on cooperation with authorities, so there is the potential for further shoes to drop. There have been 16 public officials and money managers convicted of various offenses thus far. In other state news, trouble is brewing in the North Dakota workers comp system too.

Geek safety - 25 Free health Tips for Computer nerds This blog may focus on work-related risks, but play can be dangerous too - In 2005, a 28-year-old South Korean man who played computer games for straight 50 hours died of heart failure. Pass this article on to your IT folks and the bloggers in your life. Via Ergonomics In the News

Notes from the Blogosphere - Congratulations to Michael Fitzgibbon at Thoughts from a Management Lawyer ob his 4-year Blogiversary. Michael is a Toronto-base attorney and professor who keeps us informed about the employment-related goings on in our neighbor to the North. And speaking of Canadian bloggers, we told you that rawblogXport had announced the blog was winding down, but we are happy to note that items are still being posted daily.

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May 10, 2007


Let's get down and funky. Valerie Scroggins is a drummer for ESG, a group she founded in the South Bronx with her sisters some 25 years ago. According to Wikipedia, ESG has been influential in a wide range of musical genres, including hip hop, post punk, disco, and dance-punk. Not exactly my taste in music, but who cares. Let's get down!

We read in the New York Times that Valerie, in her working life, drives a bus for the New York City Transit Authority. Or at least she did until last September, when she hurt her shoulder and went out on workers comp. Then the band went to Europe on tour - and Valerie went with them. An investigator for the self-insured Transit Authority drew the lucky straw and followed the band to Amsterdam and Dublin, where he filmed Valerie happily playing her drums.

"She's pretty good," remarked Charles Hynes, the District Attorney. Alas, the party-pooping Hynes has indicted Scroggins on charges of grand larceny and insurance fraud.

Ms. Scroggins lawyer, Stacey Richman, points out that Valerie had been put out of work by two doctors. As for the drum playing, Ms. Richman responded with a classic line that belongs in a Bartlett's for Attorneys: "I don't believe there's any movement that conflicts with the medical diagnosis." Heck, banging the skins just might be what the physical therapist ordered!

This slightly sordid tale brings to mind the original quote from Henry David Thoreau:

If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. Let him step to the music which he hears, however measured or far away.

Which we paraphrase:

If a chick gets tired of driving the bus, perhaps she really is a drummer. Let her boogie to the music she makes with her sisters, very loud and very far away indeed.

At least until she's indicted. Makes me want to turn up the volume and play a couple of tracks from an old ESG album: "I can't tell you what to do" and "Crash."

Which brings to mind another Thoreau quote: Go confidently in the direction of your dreams. Live the life you have imagined. With one caveat: try to do it within the law.

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May 9, 2007


Fleece on Earth (FOE) makes clothing for babies and children. Pretty cute stuff, if you're into knit caps with lobsters on them. This is a small, Vermont-based business, relying in part on knitters working from their homes. FOE provides the patterns and the yarn. The knitters work at their own pace, with their own tools, and are even free (to some extent) to make changes in the patterns. They are paid for each finished product. So are these home knitters employees of the company or independent contractors? Yes, it's "independent contractor versus employee" - the issue that simply won't go away.

The Vermont Department of Labor stumbled upon this situation when one of the knitters was laid off from an unrelated job (in respite care). In questioning her about her employment, they learned of her work for FOE. She was not seeking unemployment from FOE, but the state bureaucrats included FOE in their analysis. They found that the knitter, along with 3 fellow knitters and one sewer, were indeed employees of FOE. As a result, they sent a bill for unemployment insurance to the company. The company appealed and the case went all the way to the Vermont Supreme Court.

It's interesting to note that this ruling has nothing to do with the wishes of the knitters themselves. They don't want to be employees. They prefer being independent.

An amicus brief was filed on behalf of the employer by the National Foundation of Independent Businesses. NFIB argues that the knitters are truly independent. In their extensive brief, they cite among many other things the 1921 case of Kelley's Dependents v. Hoosac Lumber:

If the employer may specify the result only, and the worker may adopt such means and methods as he (sic) chooses to accomplish that result, then the latter is not an employee, but an independent contractor.

A divided Vermont Supreme Court found that the knitters are indeed employees of the company. (Can FedEx be far behind?) Three justices in the majority ruled, with two additional justices dissenting. The split verdict probably indicates that there will be additional litigation in the Green Mountain state.

Repetitive Motion?
Having opened the door to unemployment insurance, the court has not specifically addressed the possibility of workers compensation coverage for the knitters. (Knitting, I hardly need add, is highly repetitive work.) Erin Gallivan, the company's attorney, believes that workers comp is calculated under a different criterion. I'm not so sure. The Department of Labor has determined that the workers are employees. The knitters could (but most likely won't) seek protections and benefits under Fair Labor Standards, workers compensation and discrimination laws. It will be very interesting to see what happens when the comp insurer completes its audit at the end of the policy year: my guess is that the auditor will add the 1099 forms for the knitters to the company payroll, thus retroactively increasing comp premiums.

These knitters are caught up in a very big and very broad net, one that seeks to eliminate long-standing practices for avoiding payment of insurance premiums on workers who really do not meet the criteria for independence. I am sympathetic to the argument that these knitters are really independent, but such disputes do not occur in a vaccuum. The solution for the bigger problem has overwhelmed these home-based workers in Vermont and it is likely to do the same for thousands of small artisans across the country. In the warp and weave of employment, you can probably make the case that most of us are employees at least part of the time.

We'll keep you posted.

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May 8, 2007


U.S. Steel - female workersThe website for National Archives is a national treasure. The National Archives and Records Administration (NARA) is the Government agency that preserves and maintains important historical materials and makes them available for research or public access. Many records have been digitized and the site has an extensive array of exhibits that range from the educational to the entertaining.

One that we chanced on recently that may be of some interest to readers of this blog is The Way We Worked. This is an extensive exhibit, primarily photographic, that offers a glimpse of American workplaces spanning the mid 19th to the late 20th centuries. The exhibit graphically depicts how the nature of the work that we do has changed and offers this commentary:

" ... In 1870 only a handful of factories employed over 500 workers. By 1900, 1,063 factories employed between 500 and 1,000 people. During the first half of the 20th century, many African American women worked as domestics in private homes, but during World War II, they took advantage of new opportunities at shipyards and factories.

By the end of the 20th century, a dramatic shift took place, sending individuals who had worked in factories, plants, and mills into jobs in offices, stores, and restaurants."

The site has exhibits on what people wore to work and what tools they used. Also, in a section about "conflict at work" there are photos focusing on labor issues. The section that attracted our attention is a compilation of photos on dangerous or unhealthful work. Each of the photos are captioned and offer interesting commentary. The photo of the women that we've used in this post depicts workers at U.S. Steel's Gary, Indiana Works, taken sometime between 1941 and 1945. The caption refers to the workers as "top women" and states that, "Their job is to clean up at regular intervals around the tops of twelve blast furnaces. As a safety precaution, the girls wear oxygen masks while they are doing the clean-up job."

The photos are also available for purchase in book form and can be viewed at the following locations in a traveling exhibit:

  • Morrow, GA., March 10 - May 20, 2007
    --National Archives and Records Administration - Southeast Regional Archives
  • Kansas City, MO. , June 9 - August 19, 2007
    --Kansas City Public Library
  • Ocala, FL., September 8 - December 18, 2007
    --Central Florida Community College
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May 7, 2007


The plaintiff bar in California is very unhappy with the state's (long overdue) reforms of 2004. One blogger calls for the abolition of comp and a return to the pre-comp days when employees sued their employers for work-related injuries. I would call that a bit emotional, counselor. To be sure, there are real problems in determining permanency benefits, and some adjustments in the current system are undoubtedly needed, but the issues are not so big that the solution is doing away with the entire system. Do you really want to go back to the days of the fellow servant rule, contributory negligence and the assumption of risk - the potent defenses that resulted in an 80 percent win rate for employers? I don't think so!

While criticizing the payouts for permanent partial injuries, the plaintiff attorneys point to unusually high profits for comp insurers. These profits are the inevitable result of the delay between implementing reforms and adjusting the premiums. They are also the result of long overdue reforms that have significantly reduced losses in the state's humongous comp system. Eventually, the bottom is going to fall out of the currently inflated premiums. Meanwhile, it's a great time to write comp insurance in the California (see our prior blog here). And perhaps not such a great time to be a member of the plaintiff bar.

Addition by Subtraction
The state Supreme Court recently issued a ruling on a number of related cases involving the apportionment of permanency benefits. The court addressed this issue: when an employee who received a prior permanency rating and benefits for a work-related injury is subsequently re-injured, how do you determine the benefits?

Let's take a specific case - emotionally charged, to say the least - involving Ken Welcher's amputation. In 1990 Welcher was pulled into a conveyer belt, injuring his knee. He was awarded a 62.5 percent disability rating. Under CA law, he received a cash payment of four weeks of benefits for every point of disability: you multiply 4 times 62.5, plug in the wage, and you arrive at a settlement number.

Welcher eventually returned to work as a laborer. He suffered a work-related injury to the same right knee. This time the damaged leg had to be amputated. Under the state schedule, an amputation is calculated as a 71 percent permanent disability.

So how should Welcher be paid? Should you treat the injury as something new, by using the full 71 percent factor? Or should you subtract the original payment (62.5 percent) from the 71 percent, resulting in a new payment of about 8 percent? The court, citing precedent under the pre-2004 reforms, opted for the subtraction method. In terms of dollars, Welcher receives only $3,360 for his amputated leg. Yes, it sounds like chump change for an amputation, but the payment has to be viewed in the context of his substantial prior benefit.

The court cited a compelling argument for using the subtraction approach: if the most recent employer becomes liable for the full disability rating, employers would be very reluctant to hire anyone with a handicap. In effect, the court has limited the exposure of the most recent employer to the increment in disability. No double dipping. No multiple big-cash pay outs. (And no repeat pay days for the plaintiff attorneys.)

So the formula becomes a kind of addition by subtraction: by limiting the exposure of the current employer, the court opens the door to employment for thousands of workers who might otherwise be rejected. The dollar numbers of Welcher's most recent settlement do seem trivial compared to his suffering, but the reduced amount may ultimately serve the greater good. Ironically, some future employer might look at the disabled Welcher not as unemployable, but as a worker carrying a 71 percent warranty.

Workers comp isn't perfect, it may not be completely fair, but on the whole there is no better system for balancing the interests of employers and injured workers. Comp may always be in need of reform, but there is no reason at all to abolish it.

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May 3, 2007


HG Stern has a refreshing edition of Health Wonk Review up at InsureBlog and the post sports a jaunty look in keeping with Kentucky Derby week. Stop by to sample the fare - there are a few submissions from blogs that appear to be newcomers to HWR, as well as numerous posts from "the usual suspects."

InsureBlog is one of the mainstay blogs in the insurance world, having been around for two and a half years. It features posts and contributions from insurance dudes from various parts of the country: OH, CA, GA, CT. Founder HG Stern and Bob Vineyard are the blog's two most frequent contributors. Prof Stern is also noted in the blogosphere for having launched Cavalcade of Risk, our other favorite biweekly carnival. Just to give you a flavor of InsureBlog, here's a sampling of a few recent posts that we found interesting:

One Woman's story
Scammers and Fools
The Flipside of Empowerment...

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May 2, 2007


The Risk and Insurance Management Society's annual meeting - the insurance industry's equivalent of Woodstock - is currently in progress in New Orleans. For those of you who are sidelining things this year, our colleague Joe Paduda is blogging the event, so you might tune in to Managed Care Matters this week to get his perspective on things. And if you have a subscription to Business Insurance, you can follow along with daily video coverage of RIMS. You can keep up with some related headlines that hit the media by running a Google news search on RIMS, although this will also return some unrelated news on non-related "rims" matters, like things pertaining to tires.

You can also follow any media releases that RIMS issues. One of the more interesting releases to date is the 2006 Annual Benchmark Survey which notes that "the commercial insurance industry continued to experience an overall decline in total cost of risk in 2006." According to the 1200 survey participants, although there was significant variation by industry segments, the average total cost of risk fell by 9.2 percent for all survey participants.

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May 1, 2007


A jury in Alexandria VA recently found Dr. William Hurwitz guilty of 16 counts of drug trafficking, determining that he prescribed massive quantities of medicine to patients in chronic pain. The 12-member jury acquitted Hurwitz on 17 other trafficking counts, but Hurwitz faces up to 20 years in prison for each count on which he was convicted. He will be sentenced July 13.

This was the second trial for Dr. Hurwitz. In the first, the judge improperly told jurors that they could not consider whether Hurwitz acted in "good faith" when he prescribed the large doses of medicine. So whether he acted in good faith or not, the good doctor is going where drugs are readily available, but prescriptions are never needed.

Hurwitz is a trusting soul who has become a lightening rod for the issue of pain management. He defines pain in a very simple manner: "Ultimately, pain is what the patient says it is..." In other words, as a doctor, he does not put himself in a position to question his patients. If they say they are in pain, he provides the strongest available medications. In large quantities. Repeatedly. If his patient "loses" the prescription, he immediately provides another.

During the four-week retrial, prosecutors argued that Hurwitz was a common drug dealer whose McLean waiting room was filled with sleeping and incoherent patients with track marks on their arms. The prosecution presented 41 witnesses, including 12 former patients who had been convicted of drug crimes.

"He crossed the line from a healer to a dealer," Assistant U.S. Attorney Gene Rossi told the jury in closing arguments April 18.

Dealer as Healer
In an article by New York Times reporter John Tierney, we read of a compelling incident in support of Dr. Hurwitz:

It occurred...during the appearance of a hostile witness, Dr. Robin Hamill-Ruth, one of the experts who was paid by the federal prosecutors to analyze Dr. Hurwitz’s prescriptions for OxyContin and other opioids.

Dr. Hamill-Ruth, who noted that she never prescribed the highest-strength OxyContin tablet, said some of Dr. Hurwitz’s actions were “illegal and immoral” because he prescribed high doses despite warning signs in patient behavior that the opioids were being resold or misused.

Then, during cross-examination by the defense, Dr. Hamill-Ruth was shown records of a patient who had switched to Dr. Hurwitz after being under her care at the University of Virginia Pain Management Center. This patient, Kathleen Lohrey, an occupational therapist living in Charlottesville, Va., complained of migraine headaches so severe that she stayed in bed most days.

Mrs. Lohrey had frequently gone to emergency rooms and had once been taken in handcuffs to a mental-health facility because she was suicidal. In 2001, after five years of headaches and an assortment of doctors, tests, therapies and medicines, she went to Dr. Hamill-Ruth’s clinic and said that the only relief she had ever gotten was by taking Percocet and Vicodin, which contain opioids.

Mrs. Lohrey was informed that the clinic’s philosophy “includes avoidance of all opioids in chronic headache management,” according to the clinic’s record. The clinic offered an injection to anesthetize a nerve in her forehead, but noted that “the patient is not eager to pursue this option.” Mrs. Lohrey was referred to a psychologist and given a prescription for BuSpar, a drug to treat anxiety, not pain.

“You gave her BuSpar and told her to come back in two and a half months?” Richard Sauber, Dr. Hurwitz’s lawyer, asked Dr. Hamill-Ruth. Dr. Hamill-Ruth replied that unfortunately, the clinic was too short-staffed at that point to see Mrs. Lohrey sooner. Under further questioning Dr. Hamill-Ruth said that she was not aware that BuSpar’s side effects included headaches.

Mrs. Lohrey looked elsewhere for help. Having seen Dr. Hurwitz on television _ — “60 Minutes” and other programs had featured his controversial high-dose opioid treatments — she sent him a letter describing her pain and the accompanying nausea and vertigo.

“I have lost hope of retrieving my life as it was,” she wrote, because she could find no doctor to take her seriously. “I currently have a physician who has said that I am psychologically manufacturing my headaches, and that I am addicted to narcotic pain relief. This of course is not the first time that I have been treated as a ‘nut’ or a ‘junkie.’ "

While I normally would lean toward Dr. Hamill-Ruth's approach to pain management - minimizing the use of opiates - she clearly was no help to Mrs. Lohrey and may have exacerbated her condition (by prescribing a medication with a headache side-effect). Her cavalier approach may have been even less helpful than Dr. Hurwitz's.

What is Pain?
There are no objective tests to validate or measure pain. It's a very complicated issue, with extraordinary ramifications in the workers comp system (where Oxycontin is all-too-frequently prescribed - see our prior post here).

As Dr. Hurwitz says, pain is what the patient says it is. Ah, but patients can lie, especially those who are addicts, who will do anything and say anything to secure their next dose. Hurwitz, if nothing else, was phenominally naive. His "good faith" was trumped by his poor judgment. If pain is what the patient says it is, then we'd best have a very close look at the patient. That's where good Dr. Hurwitz morphed into Dr. Feelgood. He was so focused on making the pain go away, he routinely prescribed pain relievers that all-too-quickly become problems unto themselves. And now he pays a price well out of proportion to his crime. In the matter of pain and pain management, there is very little middle ground.

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