December 2009 Archives

December 31, 2009

 

We conclude this bi-polar year with a risk-related story that is both a phenomenal high and a pathetic low. In what appears to be a record-breaking performance - at least for South Dakota - police found Marguerite Engel passed out behind the wheel of a stolen delivery truck. The article does not specify the contents of the vehicle, but if Engel had her Christmas wish, it was full of alcoholic beverages. Her breathalizer test revealed a blood-alcohol level of an astounding .708. That's some serious drinking: a level of .40 is fatal for about half the adult population.

You might think that Engel's dubious achievement qualifies for the Guinness Book of World Records. Not even close. According to Wickipedia, the record belongs to an unnamed Pole: in March 2009, a 45-year-old man was admitted to the hospital in Skierniewice, Poland after being struck by a car. The blood test shows blood alcohol content at 1.23%. The man survived. He did not remember either the accident or people he drank with. With that much alcohol in his system, it's a wonder that his brain can retain anything.

As we say farewell to the decade that gave us x-rays of shoes, Octomom and the I-Phone, we ring in the new year with a toast: "May the gifts of moderation be yours in abundance. Salud!"

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December 29, 2009

 

Umar Farouk Abdulmutallab was depressed and lonely, so he decided to blow up an airplane. He boarded a Northwest flight from Amsterdam to Detroit on Christmas day with explosives strapped to his underwear. (The Freudians will have a field day with that one.) As the plane prepared for landing, Umar, in seat 19A, began to detonate his deadly concoction.

One row back and several seats over, Jasper Schuringa sat in seat 20J. As soon as flames and smoke began to rise in front of him, Jasper lunged across the row and seized Umar around the neck. He disarmed the would-be terrorist and prevented the ignition of the explosives. He suffered some burns, but none as severe as Umar's.

We will probably never know the pathetic thought process that led the spoiled and privileged Umar to seek an end not only to his own life, but those of 280 innocent people. But we can certainly acknowledge the instinctual courage that motivated Schuringa. Like U.S. Airways pilot Chesley Sullenberger, Schuringa demonstrated grace under pressure. In the weeks ahead, most of the attention will be on the Umars of the world: how to find them, how to prevent them from carrying out their wretched pseudo-political vendettas against life itself. It would be reassuring to think that our risk management tools might help us identify these folks before they can act, but I doubt it. Umar has succeeded in adding underwear to the long list of items to be scrutinized before boarding a plane. What's next: explosives hidden in dental crowns?

Seen from a perspective of time, our lives are vectors: as we move in the world, our paths intersect randomly with others. There are mostly gifts in these encounters - but there are also dangers. We all try to manage risk - personal and professional - but there are risks that fall well beyond our control. It takes a lot of luck just to survive. As we welcome the New Year, let's take a moment to appreciate all the good fortune that brought us to this moment. And let's give thanks to the latent heroes among us - the Schuringas and the Sullenbergers - who are ready in a flash to do what needs to be done.


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December 23, 2009

 

In one final post before we check out for the holidays, we'd like to offer an update on Santa. Our friends at the Renaissance Group have looked at the various types of insurance it takes to cover Santa's operations in their post Protecting the big guy. We thought we'd expand on this theme by highlighting some of the risks that Santa has faced this year as noted in recent headlines:

  • Swine flu outbreak has Santa taking extra precautions. Here's a tip for your investment portfolio: buy stock in companies that produce hand sanitizers.
  • Someone is impersonating Santa to rob banks. At least, we think that's not the real Santa. Times are tough, but we don't think Santa has had to resort to theft to finance his operations yet.
  • Santas debate whether it's naughty for them to be obese: "This battle of the bulge has been raging quietly within the Santa community, which is made up of an estimated 4,000 professional Santas who congregate at annual conventions, chat year-round on Claus-centric online message boards, spend thousands on customized outfits and perform everywhere from shopping malls and military bases to homes and hospices. In some Santa circles -- typically, the ones with the largest circumferences -- the idea that Santa Claus should consider swapping sugar cookies for carrot sticks has been about as popular as vegan eggnog."
  • Santa's "naughty-nice" database may have been hacked. This could cause untold mayhem. Perhaps the hackers are the same folks that messed up Congressional databases allowing the naughty to get financial bailouts while the nice folk are left high and dry?
  • Claus in Crisis. If it's not one thing, it's another. There are rumors that some of his reindeer may be on steroids. Plus, Santa has OSHA examining him on one front and the anti-immigration people questioning the status of his workers on the other.

Bossman Santa
We know the job of being Santa is a tough one, but he still has obligations as an employer. We've been trying to keep an eye on Santa's record as an employer over the years - we don't want his workers to be forgotten up there in the North Pole. After all, they work long hours under arduous conditions. Via David Letterman, we've learned about the Top 10 Elf Complaints:

10. Bells on clothing target for jeers at truck stop
9. Need two pieces of I.D. to buy beer
8. Santa's union-busting goons killed a guy last spring
7. Black elves control weight room
6. R&R weekends in Aleutians spoiled by trigger-happy shore patrol
5. Incredible markup at North Pole 7-Eleven
4. Workmen's compensation doesn't cover "Mistletoe lung"
3. The Colonel practically runs my life (Sorry, that's an Elvis complaint)
2. Dead elves just tossed out on tundra
1. Santa only invites his favorites to join him in the Jacuzzi

In a recent interview, Santa dispels most of these charges. He says that he pays the elves a living wage and "We give full benefits, pension, 401(k), and free shoe lifts for life. Plus, the uniform is free." He offers an alternate viewpoint - apparently the elves aren't always fine, upstanding employees. After firing some leves for lying on their application, all hell broke loose. Santa says they "...Got drunk on eggnog and ginger ale and had chicken fights all over the workshop. Nothing worse than an angry, drunk elf."

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December 22, 2009

 

You probably never heard of Gilby, North Dakota, population 226. Edith Johnson, 56, worked as a teller in the town's bank, which, somewhat surprisingly, has been robbed three times. Edith was in the bank during two of the robberies. The last one was especially traumatic: she was handcuffed and placed face down on the floor with a sawed off shotgun pressed against her head. After this incident, she became too afraid to return to her job. Diagnosed with post-traumatic stress syndrome, she filed for workers comp. The claim was denied. North Dakota, like many other states, will pay a "mental" claim only if it is precipitated by a physical injury.

Edith has an attorney and is appealing the denial of her claim. Given the way the law is written, she is unlikely to prevail.

The irony, of course, is that with just a bit of coaching at the time of the incident, it would have been easy for Edith to collect comp. All she would have had to do is complain about a pain in her wrist and shoulder, caused by the handcuffs and the awkward position on the floor. Even without objective medical evidence, these physical complaints would have opened the door to her claim of post-traumatic stress.

Coming from a small town and working as a bank teller, Edith is undoubtedly the soul of rectitude. She is not about to tell a lie. Unfortunately, she is up against the letter of the law, which, in North Dakota, is very clear. Workers Safety and Insurance director Bryan Klipfel explains the denial: "A post-traumatic stress disorder that is directly related to a physical workplace injury may be compensable if it can be shown that it was primarily caused by the physical work injury, as opposed to all other contributing causes."

Letter and Spirit
Edith's dilemma reminds me of the scene in the immortal Marx Brothers movie, "A Night at the Opera." Groucho (Otis. B. Driftwood) and Chico (Fiorello) are discussing the proposed language of a contract. Every time Chico objects, Groucho tears the page from the contract.

Fiorello: Hey, wait, wait. What does this say here, this thing here?

Driftwood: Oh, that? Oh, that's the usual clause that's in every contract. That just says, uh, it says, uh, if any of the parties participating in this contract are shown not to be in their right mind, the entire agreement is automatically nullified.

Fiorello: Well, I don't know...

Driftwood: It's all right. That's, that's in every contract. That's, that's what they call a sanity clause.

Fiorello: Ha-ha-ha-ha-ha! You can't fool me. There ain't no Sanity Clause!

With that impeccable logic, the Insider wishes the beleagured Edith and the citizens of Gilby all the best and we bid our readers a splendid holiday. Every week we try to invoke the "sanity clause" in risk management and workers comp. It's not always easy. We sincerely hope that Santa - whether or not he exists - rewards you for all the good that you have done this year.

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December 21, 2009

 

It's hard to think of anyone bullying Bath Iron Works, the General Dynamics subsidiary that builds destroyers for the U.S. Navy. But they are being kicked around like the proverbial 90 pound weakling by the workers comp system in Maine. Two years ago we blogged the inability of Mainers to come up with a viable fee schedule for workers comp medical costs. The legislation authorizing the fee schedule became law in 1992. Now we approach 2010 - nearly 20 years! - and there's still no fee schedule.

Workers comp insurers are free to negotiate rates for medical services. In effect, they develop their own de facto fee schedules. Bath Iron Works (BIW) is self-insured for comp. They do not have the leverage to negotiate fees. So when a local hospital sent a bill for $107,000 for treatment of two injured workers, BIW filed a lawsuit. They lost: they had to pay the hospital's "usual and customary" fees - an ironic appelation if there ever was one. The only suckers stuck with paying the full boat (so to speak) are self-insureds and uninsureds.

So how is the fee schedule coming along? And why the inordinate delays?

The rule-making group charged with developing the fee schedule is trying to come up with something acceptable to the medical providers. That's like asking an employee how much of a pay reduction they would like. How about nothing? In the current draft, total billings of $80 million would fall by about $1 million. In other words, a drop of less than 1 percent. That's a fee schedule only a medical provider could love!

The Massachusetts Model
Maine officials are worried that low fees would drive doctors away. Paul Dionne, executive director of the Maine Workers' Compensation Board, says he heard from a group of orthopedic doctors who said if the board made the new base fee too low, "they weren't going to treat injured workers. They're private, they can do that."

That's not what happens in Massachusetts, which has the lowest fee schedule in the nation. Everyone recognizes that the fee is too low. So insurance carriers and TPAs routinely negotiate a reasonable fee with doctors on an individual basis. For example, the scheduled fee for hand surgery is only $725. The "usual and customary" fee of a skilled surgeon might be $5,000. The insurer and doctor would settle somewhere in the middle, perhaps $3,000 for the service. It sounds frictional and inefficient and to some degree it is, but overall, medical costs remain unusually low in Massachusetts, doctors continue to provide services and injured employees are satisfied with the results. The system is working despite what appear to be severely deflated medical rates.

One unusual and perhaps unintended benefit of the low fee schedule is the leverage it provides against medical providers who refuse to treat with a return-to-work focus. If "Dr. Feelgood" insists on keeping a marginally injured employee out of work, the adjuster can dig in and offer to pay only the deflated fee schedule rates. That will get the doctor's attention immediately.

Maine used to be part of Massachusetts. If they want to solve this particular problem, they might consider re-joining the Commonwealth, or at least copying Massachusett's highly successful comp model. Step one involves some tough negotiations - with or without the doctors in the room. Thus far, by trying to please everyone, Maine is punishing some of their most valued employers. Nearly twenty years into a failed process, it's time to face reality: a fee schedule is a cut in pay. If the doctors are happy, it's not an effective fee schedule.

Meanwhile, it looks like a bleak Christmas for the mighty folks at Bath Iron Works. There are undoubtedly a lot of nice goodies under their tree, but a fee schedule is not among them.

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December 18, 2009

 

How would you like a job that pays $12,000 a year, where 1 percent of the workforce is killed annually and hundreds of others are seriously maimed? I didn't think so. You would probably take a pass on working for Titan Corporation (now part of L-3) as an interpreter for the U.S. armed forces in Iraq. The L-3 website promises that "as a member of the L-3 Communications team, you will be exposed to the most exciting career adventures situated on the cutting edge of technology." Alas, it's not just the technology that is cutting edge. The roadside bombs cut pretty deeply, too.

We read in the Los Angeles Times about the sad fate of translators in Iraq. There are about 8,000 in all. Over the five year period from 2003 to 2008, 360 were killed. Those who were lucky enough to survive were often shipped to Jordan for treatment. The workers comp benefits fell under the Defense Base Act and were administered by AIG, among others. (See our previous blog here.) According to some of the wounded, they were offered a stark choice: accept a proposed settlement (which absolved the insurer of any future costs) or be shipped back to Iraq, where retaliation and death awaited former employees of the U.S.

The Times article describes the life of Malek Hadi, an Iraqi national who lost a leg and several fingers in a roadside bombing. He now struggles to survive in Arlington, Texas. At first, he was unable to collect any benefits:

Internal AIG documents indicate that a claims examiner withheld Hadi's benefits in an effort to force him to accept the lump sum. Hadi was "clearly entitled" to benefits, a different AIG examiner wrote in a memo dated August 2008. The company had not paid because the previous examiner "was trying to get the claimant to decide whether to settle his claim," the memo said.

Malik now receives the maximum monthly disability benefit - a whopping $612 per month. He has been diagnosed with post-traumatic stress syndrome, but AIG has refused to cover any treatments. Perhaps they are waiting for a second opinion from the company shrink? Meanwhile, Malik will just have to deal with it!

Former insiders at AIG describe how the game is played:

"If you're missing one piece of documentation, you got denied," said Colleen Driscoll, who oversaw the handling of interpreters' insurance claims for L-3. "These guys get murdered coming and going to work, and AIG turns them down because they don't have a letter from the insurgents."
Driscoll, a former United Nations refugee official, left L-3 in 2007. She said the cause was a dispute with company executives over treatment of injured interpreters.
She and another former L-3 official, Jennifer Armstrong, said their experience suggested that 10% to 20% of the company's Iraqi workers who should have received benefits were denied.

AIG stock is currently trading at the equivalent of about $1.40 a share. It would be nice to think that this was the market's judgment on the way things are being handled in Iraq, but that, of course, has nothing to do with it. The market, not exactly known for its humanitarian concerns, is punishing AIG for financial - not ethical - sins. Indeed, the market might well approve of the way the injured, the maimed and the dead are being squeezed in this mockery of a benefits program. After all, indemnity and medical expenditures are being kept as low as possible and that can only help support AIG's battered bottom line.

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December 17, 2009

 

Cavalcade of Risk #94 is posted at My Wealth Builder. Among the many good posts, our friend Hank Stern offers some good news for the holiday season.

Our fellow blogger Joe Paduda was recently speaking at the Casualty Actuarial Society's annual meeting on the topic of health reform and its impact on workers comp, and his remarks were covered by Insurance Journal. Paduda noted that, whether or not it gets enacted, health care reform is already having a major impact on workers' comp. On the same topic, Roberto Ceniceros has a post about how healthcare reform is stalling some return-to-work advancements.

Jon Gelman on Genetics and Workers' Compensation Claims. Also see our past posts on the topic: Brave new World and Genetic Testing And Workers Comp

Risk & Insurance has posted some interesting case law: In Michigan, a worker establishes asthma as compensable disability and in Colorado, a claim for a bad faith denial of benefits is considered to be separate and distinct from the underlying workers' compensation entitlement claim and therefore is not precluded. However, an insurer can preclude certain issues in a subsequent proceeding.

We recently touted Mark Wall's WC forum on LinkedIn as an excellent resource - but one feature that we neglected to mention is an active job board, where members can post a job or find a job. That's a natural use for LinkedIn, particularly in today's tough times - register for the Forum.

Winter safety tips from BLR Daily Advisor: Cold Weather Hazards: Are Your Workers at Risk? and Brrr-ing Down the Risk of Cold-Related Injuries

Finally, this item made us wonder if the North Pole's workers' comp coverage includes stress?

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December 15, 2009

 

In a recent decision that shouldn't be too surprising to those who follow workers' comp compensability issues, the Massachusetts Supreme Court recently upheld a decision by the Department of Industrial Accidents to grant workers compensation benefits to Karen Sikorksi, a Peabody teacher injured while chaperoning high school kids on a 2004 ski trip. The City of Peabody had contested the award on the basis that she was a volunteer engaged in a recreational activity.

We've seen many of these cases and the decision often hinges on the voluntary nature of the activity. In this case, the city of Peabody probably thought they were well within the law in denying benefits. According to Insurance Journal, the Massachusetts legislature added a little twist to the workers' comp statue in 1985, when it excluded "... any injury resulting from an employee's purely voluntary participation in any recreational activity, including but not limited to athletic events, parties, and picnics, even though the employer pays some or all of the cost thereof."

Note the adjective "purely."

When is a volunteer really not a volunteer? Usually, when an employer encourages the employees to participate in said activity. (Everybody who has ever been an employee is likely familiar with the concept of so-called voluntary recreational activities - non-participation can be a career-limiting option.) According to reports, the Peabody school administration has historically expected teachers to become involved with the school's extracurricular activities and, in this particular case, the school principal and the ski club adviser solicited teachers to serve as chaperones. In Sikorski's case, the Supreme Court justices unanimously found that she was "acting in the course of her employment" and not in a recreational activity as described in the law. The court found that her responsibilities as chaperone were "...essentially the same ones teachers must exercise while working in the school building during school hours." Chaperones were expected to supervise students both in the lodge and on the slopes.

Another common criteria that courts use is in determining whether an activity is "voluntary" is how beneficial it is to the employer and whether it furthers the employer's interests. In this case, the court found that it did: "...the ski club's trips benefited the city by furthering the school's educational mission."

Of course, nothing is ever simple with workers' comp - there are 50 different flavors, so every state law may have its own particular nooks and crannies related to these issues. Andrew G. Simpson has an excellent article on 'Forced Fun' and related workers' compensation problems, in which he discusses variations in state laws.

Other posts related to the issue of "mandatory fun":

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December 14, 2009

 

Back in June we blogged the failure of several self-insurance groups (SIGs) in New York, all run by Compensation Risk Managers (CRM). There was bad news all around: participants in CRM SIGs were suddenly without coverage; and participants in other (non-CRM) SIGs were hit with a huge surcharge to make up the deficits created by CRM's deficient management. Now the proverbial "other shoe" (presumably a Gucci) has dropped, directly on the heads of CRM managers: the company has been indicted by Attorney General Andrew Cuomo for fraud and sued by the state comp board. CRM is having what appears to be a well deserved, terrible, horrible, no good, very bad week.

In their own defense, CRM asserts that problems are industry wide:

According to the WCB's website, of the 65 self insurance workers compensation trusts authorized by the WCB and subject to its oversight and regulation, as of November 2009, 32 were either insolvent, being terminated or were underfunded, 13 had been voluntarily terminated and only 20 were operating with no fiscal issues and no regulatory restriction. Compensation Risk Managers managed 8 of these 65 trusts. The Company believes that an industry-wide problem exists and that the WCB has unfairly singled the Company out. The Company intends to defend the WCB litigation vigorously and prove that the WCB's unsubstantiated allegations are utterly without merit.

In other words: don't hold us accountable for something everyone is doing.

Well, maybe other SIGs are in bad shape, but CRM is under fire for operating the insurance equivalent of a Ponzi scheme: the indictment charges that they deliberately under-reserved claims, leading to under-stated losses. The resulting "healthy" loss ratios became the basis for under-pricing the rest of the market, which led to increased membership in their self-insurance groups. The new premiums helped CRM keep up with increasing payments. It all came crashing down when insufficient reserves ran out and payments exceeded available cash. Heck, the experts at Madoff Consulting guaranteed that it would work... right up until the moment it didn't.

Joint and Several Liability
Most people buy insurance with stand-alone policies. Each company is the master of its own fate. If the company performs well, they benefit from lower premiums. If losses are high, the experience rating process leads to higher premiums. As long as the carrier remains solvent (not a given these days), there are no big problems.

Self-insurance groups are different. They involve a much higher level of trust (and risk): not only are you accountable for your own losses; you are on the hook for the losses of other group members. A SIG is only as strong as its weakest member. Indeed, SIG participants in New York discovered that they were on the hook for losses in other SIGs, through a painful surcharge imposed by the comp board.

This brings to mind the response of the immortal Groucho Marx to an invitation to join an exclusive club: "I don't want to belong to any club that will accept me as a member." That's just the kind of thinking that might have helped the unfortunate companies who find themselves swinging in the wind at the end of CRM's tattered rope.


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December 10, 2009

 

We're honored to be hosting the holiday edition of Health Wonk Review. As we approach the holiday season waiting for a verdict on health care reform, we can take a lesson from Santa Claus, whose ordeal on this publicity shoot reminds us that good things don't always come easily:

Our wonderful wonkers don't let the holiday season slow them down. This edition offers a wide array of excellent posts on health care reform, health care quality, and health care 2.0 developments.

Sausage Making
Joe Paduda of Managed Care Matters kicks things off with a simple but powerful observation: If private health care insurance worked, we wouldn't need reform.

Over at the Health Affairs Blog, Tim Jost, the Robert L. Willett Family Professorship of Law at the Washington and Lee University School of Law, composed a series of four detailed posts analyzing the Senate health reform bill. He avoids the politics, but examines all the bill's nooks and crannies, including an overview of reforms and new programs, as well as issues ranging from mandates and constitutionality to abortion and Medicare.

Richard Elmore of HealthcareTechnologyNews summarizes a recent health care reform analysis by MIT Professor Jonathan Gruber which counters health insurance industry claims that premiums will increase and other fear, uncertainty & doubt (FUD) talking points put forth about health care reform.

Roy Poses of Health Care Renewal sees parallels between the current health care dysfunction and the global financial meltdown, but most of these parallels have gone unnoticed. Left unaddressed, he sees the potential for a burst bubble with lives and personal fortunes on the line. Don't say you weren't warned.

To put health care in some global perspective, here at Workers Comp Insider, Tom Lynch takes a world tour of the state of care in various countries in his post, the geography of health: US vs. them.

At Colorado Health Insurance Insider, Louise posts about the Chamber of Commerce's campaign to discredit proposed health care reform, but in examining their arguments further, found the Chamber offered little in the way of positive ideas or creative solutions to lower costs and expand health coverage to all Americans.

At the Robert Wood Johnson Foundation's Health Reform Galaxy Blog, Steven Findlay tells us why he thinks health reform would be a holiday gift for every consumer and Minna Jung looks at the messy doings in Congress now, reminding us that even though that first step is a doozy, it's still only the first step.

At a new blog called Healthy Debate Georgia, which focuses on on health care reform at both the state and national level, Mike King explains why Georgia may just say no and Timothy Sweeney posts about why national Medicaid expansion may be a bargain for Georgia.

Over at InsureBlog, Hank Stern says that Joe W was right, noting that the latest version of Obama's health care plan will include coverage for illegals after all and he discusses why this is important.

In another Joe-related post on the other side of the political aisle, Madeleine Kane has composed a No-Man Joe limerick at her Mad Kane's blog.

Quality & Safety
Jaan Sidorov of Disease Management Care Blog detours from legislative sausage-making to summarizing an interesting Canadian study called "EFFECT," which demonstrated that public reporting of hospitals' quality metrics can save lives. In light of this, he wonders if Medicare's much ballyhooed "Hospital Compare" web site is - in retrospect - evidence-based.

At New Health Dialogue, Tom Emswiler presents a case history of a group of Premier Hospitals that made significant progress in saving lives and saving money after participating in a year-long Quality, Efficiency, Safety, and Transparency (QUEST) initiative. He asks if seven percent can save lives and money, why can't the other 93% follow suit?

To commemorate the 10-year anniversary of the Institute Of Medicine's seminal report on patient safety, To Err Is Human, see Terri Schmitt's post, Nurses: The Crucial Link for Patient Safety from the Interdisciplinary Nursing Quality Research Initiative (INQRI) Blog. See the entire series of posts on the To Err is Human anniversary

Technology & Innovation
At The Health Care Blog, Brian Klepper and David Kibbe team up to offer an excellent review of the surprises and changes in the Electronic Health Record technology market during 2009.

HIV testing at your next dental visit? David Williams features a podcast and transcript of an interview with Dr. Catrise Austin of VIP Smiles at Health Business Blog.

David Kibbe talks about the critical importance of establishing and adopting a a core set of relevant and portable personal health records at The Health Care Blog.

At EHR Bloggers, Glenn Laffel pens an open letter to David Blumenthal asking if he is going fast enough. He lauds the work of the National Coordinator for Health Information Technology, while gently chiding him that he needs to pick up the pace on EHR deployment to providers.

Peggy Salvatore of Healthcare Talent Transformation posts about another letter to Blumenthal, this one penned by Medical Group Management Association President William F. Jessee, urging Blumenthal to get real, real fast.

Meanwhile, at Health IT Buzz, David Blumenthal weighs in to offer a progress report on technology initiatives.

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December 9, 2009

 

Imagine you work as a commercial driver for a long-established trucking firm that self-insures for workers comp. You are injured on the job. You seek benefits under the comp statute. The TPA handling the claim refers you to a company doctor. The doctor determines that the injury is not work related. The adjuster for the TPA denies the claim. End of story?

Not quite. What if you shared your story with five other employees, all of whom filed comp claims, all of whom saw the same doctor (a family practitioner), with the same result: claim denied by the same adjuster at the TPA? A coincidence or a conspiracy?

Five employees of Cassens Transport in Michigan concluded that there was a conspiracy to deny their claims. They filed suit in federal court, alleging a violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). A district court dismissed their claims, finding that their individual claims did not constitute a "pattern" of activity and that invocation of the RICO statute would violate the McCarren-Ferguson Act by interfering with state regulation of insurance.

The U.S. Court of Appeals for the 6th Circuit reviewed the case and overturned the district court's ruling. Now the U.S. Supreme Court, by declining to get involved, has upheld the Appeals Court. The Appeals ruling is a fascinating document which explores the nature and definition of racketeering, the relationship of workers comp benefits to insurance and the roles of state and federal governments. It's required reading for attorneys and highly recommended for all others.

Criminal Acts?
The district court has been ordered to reconsider the allegations. The five Cassens drivers allege that Cassens, their self-insured employer, Tina Litwiller, a claims adjuster for the TPA Crawford and Co., and Dr. Saul Margules conspired to deny their comp claims. (While you might expect Dr. Margules to be board certified in occupational medicine, he appears to be a family practitioner.) The Appeals Court does not address the substance of the allegations: it simply rules that denial of the workers comp claims might involve a violation of the RICO statute and thus is appropriate fodder for the federal courts.

Some folks are alarmed that the feds are getting involved in what is usually a state issue. That might be a problem, but let's not lose sight of the delicious prospect before us. During the course of the new hearings, plaintiff attorneys will seek access to some fascinating communication records: between Cassen and Crawford, detailing the status of individual claims; Ms. Litwiller's claim notes; and communications between Crawford and Dr. Margules, who had so much difficulty finding a connection between a given injury and work. As much as I enjoyed the Appeals Court's discussion, I am really looking forward to the nitty-gritty details of the proceedings in the district court. (You don't suppose that some of the written and electronic communications have disappeared, do you?)

At heart, this is a very serious matter. The five employees allege that they have been unlawfully denied the protection of Michigan's workers comp law through a conspiracy of company, TPA and doctor. If the allegations are proven, if the accused violated the RICO statute, they will face the consequences of a criminal conspiracy. In the Insider's burgeoning annals of fraud - employee, employer, attorney, doctor, agent, insurer - this case will surely offer one of the more compelling narratives.

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December 8, 2009

 

Usually employers try to prove that someone is not an employee, in order to avoid the workers comp liability. (Think "independent contractor.") Today we examine a truly horrific case where the employer is desperate to establish compensability under workers comp, so that a grieviously injured employee can only collect comp benefits. By using the "exclusive remedy" provision of comp, the employer wants to avoid liability for pain and suffering. Some pain, some suffering!

Sandra Herold runs a towing company out of her house in Stamford, Connecticut. The company had a mascot - a 200 pound chimpanzee named Travis, who lived with Herold. I do mean lived with her: according to reports, they shared wine at candle lit dinners and shared a bed as well (no further comment possible).

Charla Nash occasionally worked for Herold, in an unspecified capacity. In February 2009, Herold called Nash and asked her to come by, as she was having trouble controlling Travis. As soon as Nash arrived, Travis attacked her, ripping off her face (literally). She lost her eyes, nose and mouth in the horrendous attack. (While images of her ravaged face are available on the internet, I do not recommend viewing them.) Police eventually were able to shoot the chimp.

Nash somehow survived the attack and is suing Herold for $50 million; a second suit against the state of Connecticut seeks an even larger amount, alleging negligence in allowing Herold to keep the animal in her home. (It is worth noting that no criminal charges have been brought against Herold.)

Exclusive Remedy?
Herold's first line of defense is establishing workers comp as the "exclusive remedy." She claims that Nash is an employee and thus is prohibited from suing her "employer." While it may be premature to judge this particular strategy, it seems highly unlikely that Herold will prevail. Even if she can show that Nash was on the payroll, it is clear that Nash was not working on the day of the attack; Herold had called her and asked her to come over to help with Travis. And even if it can be proven that Nash occasionally helped out with Travis, it is unlikely that her job description included the duties of an animal trainer (for which she is not qualified).

In the unlikely scenario that this case is limited to workers comp, the claim will run in the multiple millions: comp will have to pay for Nash's humongous medical bills - including a face transplant - and support her astronomical living expenses. This is a permanent total injury, so the indemnity portion may also be substantial. (If I were Herold's comp carrier, I would aggressively deny this claim as not being work related.)

Herold is banking on a judicial process that finds having your face ripped off by a 200 pound beast is simply part of the job, part of the "assumption of risk" we all accept simply by showing up for work. (If that were the case, how many of us would be willing to report to work?) Herold's house-of-cards defense will collapse with the most humble of gestures: Nash revealing her destroyed face to a jury.

Exclusive remedy is an important concept, one well worth preserving, but in this situation, it has no place. Herold must be held accountable for the actions of her late companion, Travis - anything less would be a travesty.

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December 7, 2009

 

Kenya Madden was hired as a police dispatcher for the Village of Hillsboro, Illinois, in July 2007. During the 10 week training period, she informed the trainer that she had narcolepsy, a disorder which causes people to fall asleep at unplanned moments. Some weeks later, she also informed her supervisor of her condition. The supervisor reacted with alarm. He had visions of Madden falling asleep in the middle of an urgent dispatch. He asked for Madden's resignation. When she refused, he terminated her.

Madden filed suit under the ADA, alleging discrimination based upon (the perception) of a disability. This week, the case settled out of court for $10,001. Interesting number, interesting case.

There is no question that Madden's supervisor mishandled the situation. With visions of disaster spinning in his head like demonic sugarplum fairies, he hastily put an end to the employment relationship. He did not ask for any details about the condition: how long she had experienced it; the degree to which medication controlled it; the last time she had an episode. He did not request permission to speak to Madden's doctor. He reacted out of a fear totally out of proportion to the situation.

But Madden is not without fault. If her condition was under control, why did she feel obligated to disclose it twice (to the trainer and the supervisor)? If no accommodation was needed - and none was - then why did she bring up the issue?

We can read several things into the modest settlement: while the Village of Hillsboro mishandled the situation and violated the ADA, their actions appear to based upon the limited information provided by Madden: she could have attempted to reassure her supervisor by explaining the successful medical treatment she was receiving. She apparently was silent on the issue. A more gratuitous termination would have resulted in a six or seven figure settlement. Instead, Madden receives $10,000 for her trouble, with an extra dollar tossed in for good measure. That's a pretty clear indication that while Madden was wronged, she may have had some responsibility for the situation.

This case illustrates a common problem in the way people perceive disability. We tend to jump to conclusions. "Narcolepsy" in a dispatcher sounds like an invitation to catastrophe.But it ain't necessarily so. Try asking a few questions to determine just how big the risk is. Talk is cheap and talk, in situations like this, is definitely the way to go.

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December 4, 2009

 

Most Massachusetts residents will recall how their heart sank 10 years ago upon hearing TV and radio reports of the on-the-job deaths of six firefighters in the Worcester Cold Storage fire. While firefighting is a dangerous job, this was the first time that six firefighters fatalities occurred in a building where neither a collapse nor explosion had occurred. The first two firefighters became lost in the labyrinth building and the next four were lost in trying to rescue them. Firehouse.com has a Worcester 10th Anniversary Tribute and the Telegram & Gazette have devoted a special section to the remembrance: Worcester Cold Storage and Warehouse Fire: 10 Years Later.

Worcester is a community that several of us at Lynch Ryan know well - we've lived there and worked there. Given the nature of our work, we are no strangers to on-the-job fatalities - we've heard many heartbreaking stories about work-related deaths that never should have happened. But rarely does an event hit so close to home and with such force as on that day. Many locals will remember the shock of hearing about two lost firefighters - shortly followed by the almost unbelievable word that the tally was now up to six. Many locals who knew firefighters as friends, family, or neighbors waited the long, tense vigil until names of the deceased were released, and then again waited mournfully until fellow firefighters were able to pull the bodies of their colleagues from the rubble a few days later. We all became familiar with the faces of bereaved spouses, children, parents, and siblings. We all saw and hurt for the heavy burden of grief that the fellow firefighters labored under.

There was an amazing tribute for the fallen firefighters: fifteen-thousand firefighters from around the globe came for the memorial service. President Clinton and Vice President Gore spoke at the service, along with local Senators Kennedy and Kerry. Senator Ted Kennedy, a man who was no stranger to tragedy, encapsulated things by saying that "Sometimes life breaks your heart." It was fitting that Kennedy was at the ceremony for the fallen firefighters, he fought for worker safety throughout his career.

In the aftermath of the tragedy, Two major reports were issued: the U.S, Fire Administration's Abandoned Cold Storage Warehouse Multi-Firefighter Fatality Fire and a report from NIOSH.

Firefighter safety still has a long way to go. Tragically, two and a half years ago, nine firefighters lost their lives in Charleston SC. The fire was in a furniture showroom and warehouse - and again, a labyrinth building where firefighters became disoriented.

Firefighters continue to study and learn from the hard lessons of these warehouse fires. In 2001, Firefighters in Jersey City battled a warehouse fire with similar conditions to the Worcester blaze. Fire authorities credit a seminar that they took with members of the Worcester Fire Department for guiding their strategy in fighting this fire and preventing loss of life. In addition, many communities have been more vigilant about monitoring large vacant properties, and firefighter communication technologies have been improved.

The matter of firefighter disorientation is still an issue of concern and one that is under study. (See: U.S. Firefighter Disorientation Study). This has given impetus to other safety initiatives, such as advances in First Responder Locator Systems. These include a system developed at a local university, Worcester Polytechnic Institute, where engineers are nearing completion of a First Responder Locator System.

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December 3, 2009

 

William Wehnke, 51, claims to have spotted a wild turkey in his field in rural Annsville, New York (population 3,000). He took aim and fired at the turkey and managed to hit Matthew Brady, a workers comp investigator, who happened to be crouching in the field, dressed in camouflage. Brady was apparently performing surveillance on Wehnke, who is collecting workers comp benefits for an unspecified injury. Whatever his disability, Wehnke is obviously capable of operating a shotgun.

Local authorities are not buying Wehnke's story about the turkey. He's been arraigned on a three-count grand jury indictment that includes felony second-degree assault and unlawful manner of taking. He is even charged with using inappropriate ammunition for hunting turkeys. Wehnke is in a lot of trouble for his little turkey shoot.

Investigator Brady was hit in the side, back and legs. He underwent surgery and presumably filed his own workers comp claim for what is surely a work-related - if highly unusual - disability.

Images - Lasting and Otherwise
I could not help but think of the other Mathew (sic) Brady, the 19th century photographer whose iconic images of the Civil War still resonate with us. As pathetic as investigator Brady's situation is, his earlier namesake fared even worse. After the Civil War, Mathew Brady found that war-weary Americans had little interest in purchasing photographs of the bloody conflict. Having risked his fortune on his Civil War enterprise, Brady lost the gamble and fell into bankruptcy. His negatives were neglected until 1875, when Congress purchased the entire archive for $25,000, which might sound like a lot, but was not even enough to cover Brady's debts. He died in 1896, penniless and unappreciated. In his final years, Brady said, "No one will ever know what I went through to secure those negatives. The world can never appreciate it. It changed the whole course of my life."

The world may ultimately take little note of the suffering of the other Matthew Brady, wounded as he crouched in that desolate Annsville field. His life, too, has been significantly changed. But he at least will benefit from the wonders of modern medicine and the cushion of weekly indemnity, until he once again pursues his craft as a comp investigator. But the next time he is asked to don camouflage, he just might want to take a pass.

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December 2, 2009

 

Nancy Germond is hosting Cavalcade of Risk #93 - check it out. And while you're at it, check out Nancy's regular insurance column on AllBusiness.

Mark Wall's excellent WC forum on LinkedIn - While recently attending the National Workers Compensation & Disability Conference in Chicago, I had the opportunity to meet Mark Walls who is the founder of LinkedIn's excellent Workers' Compensation Forum. Mark, who is a genuinely nice person as well as a commensurate professional, has created an impressive network of more than 2,400 members, which includes employers, claims adjusters, insurance carriers, third party administrators (TPAs), brokers, attorneys, risk managers, regulators, EH&S professionals, and vendors that provide service to the workers' comp industry. The group illustrates some of the best advantages and features of social media: industry networking, active discussion boards, and news feeds to blogs and alternative media sources. Members can pose questions or topics and get feedback from other members. Plus, Mark does a great job of ensuring that posts are on-topic and he is strict about disallowing spam. To join, you need to first be a member of LinkedIn, and then you can register to join the Workers' Compensation Forum. Hope to see you there!

The soft market and AIG - if you are wondering why the soft workers comp market persists, read Joe Paduda's post on the implications of AIG's price cutting - it certainly offers some clues. Of course, AIG's pricing isn't the only factor, but when you have an elephant in the room, it certainly can't be ignored.

Fraud surveillance - Roberto Ceniceros talks about cuts in fraud surveillance in both the public and the private sector. He's looking for feedback from others who are experiencing a similar trend. We've also heard talk about cuts in safety and loss control services offered by insurers as part of work comp policies. Any feedback on these issues? It would seem shortsighted to relax on either of these important services.

RI nightclub fire settlements - Insurance Journal covers a recent report on settlement details in the 2003 Rhode Island nightclub fire that killed 100 people and injured 200 others. More than 300 survivors and victims' relatives sued after the fire. You can also follow some of our past coverage related to workers' comp, or the lack of it, in this sad case: Workers' Comp and the Station Nightclub; Avoid Comp Premiums and Pay the Price; Station Nightclub: Who Pays?; Stone Walls and Steel Bars for Business Decisions

Strip search not covered by comp - For nearly a decade, fast food chains throughout the nation were plagued by a cruel and bizarre telephonic hoax, the so-called strip search hoax. The "pranksters" who posed as detectives called fast food restaurants and retail chains and somehow convinced store managers to detain hapless employees. The managers were then guided through a series of progressively questionable and invasive actions such as strip searches of the alleged criminal employees, supposedly on behalf of the police. Sounds weird? It certainly was. In recent developments, Louise Ogborn, a McDonald's employee and the victim in one of these cases, was awarded $6 million in damages for her humiliating ordeal. McDonald's attorneys appealed the ruling, invoking the exclusive remedy of workers' compensation. The Kentucky Court of Appeals disagreed, stating that "We do not find manifest injustice in the trial court's ruling that Ogborn was not acting in the course and scope of her employment while she was held in the manager's office."

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December 1, 2009

 

Hines Ward is the epitome of the NFL tough guy. As a wide receiver for the Pittsburgh Steelers, he is known for his flamboyant personality and his ability to give and take ferocious hits. He was the most valuable player in Superbowl XL. In his pursuit of athletic excellence, he is a gambler. No, he is not betting on games. He is betting with his own life.

In the course of his football career, Ward has suffered numerous concussions. But he continues playing. He has even lied about his symptoms, so that the doctors would allow him to keep playing.

In this regard, Ward is part of the mainstream culture of professional athletics. Play today, pay (perhaps) tomorrow.

Until recently, the NFL was complicit in allowing players like Ward to gamble away their futures in the interest of the next game. The league's leading advisor on concussions, Dr. Ira Casson, routinely dismissed every outside study finding links to dementia and other cognitive decline, including three papers published by the University of North Carolina's Center for the Study of Retired Athletes.

The NFL is in the midst of a major change of policy regarding concussions. Dr. Casson has resigned. The league is requiring teams to have an independent consulting neurologist examine players with concussions. They have finally acknowledged what has been obvious for years: repeated concussions, especially when occuring over a relatively short period of time, can have a devastating effect on the brains of athletes. Well, duh!

Roethlisberger Sits, Ward Frets
Hines Ward came face to face with the new, more cautious NFL this past weekend, when star quarterback Ben Roethlisberger sat out a crucial game against the Baltimore Ravens. He suffered a concussion the prior week, when his head collided with the knee of an opposing player. Even though he practiced with the team all week, Big Ben suffered from recurring headaches toward the end of the week. At the last minute, the coach kept him from the game and substituted a relatively inexperienced quarterback. The Steelers lost.

After the game, Ward said the Steelers players were split 50-50 on whether Roethlisberger should have played. Ward added that, "these games, you don't get back."

"I understand what the league is doing," he said. "I don't judge another man."

He went on to say: "We needed him out there. We wanted him out there. This is the biggest game of the year. We lost and we kind of dug ourselves a hole. Me being a competitor, I just wish we would've had all our weapons out there. It's frustrating."

Paradigm Shift: Sudden or Gradual?
The NFL will never be for sissies. Nonetheless, the policy shift on concussions is long overdue and most welcome. However, it may not be easy to enforce. Players like Ward may soon learn to remain silent on critical symptoms (dizziness, headache). They may avoid talking to the team doctors so they can stay in the game. These old school tough guys might even call out teammates who choose a more cautious route. As the legendary coach Vince Lombardi supposedly said: "Winning isn't everything. It's the only thing."

Well, not quite. There are many things in life that are a lot more important than winning. Just ask one of the many retired NFL players with Parkinson's or dementia.

In the conventional workplace we tend to fret about people with minor injuries, who may resist returning to work even though it is safe to do so. In professional sports, it's usually the opposite: athletes will do almost anything to get back into the game, even jeapordize their future health. Just as we could use a little more of a "get me back in the game" attitude from reticent employees, we need to recognize that concussions require time to heal. Toughness is fine in its place, but let's not be stupid about it. A game is just a game, a job is just a job. Neither is worth a single life.

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