June 2010 Archives

June 29, 2010

 

Five years ago almost to the day we blogged the saga of Dr. Jayant Patel, a surgeon of staggering incompetence who wreaked havoc on the citizens of Bundaberg, Australia. After 14 weeks of testimony, more than 75 witnesses and nearly 50 hours of deliberations over six days, a jury convicted Patel of manslaughter in the deaths of four patients and causing "grievous bodily harm" to a fifth. These charges involve just a small number of the cases where Patel's doctoring skills have been called into question. There may be further trials ahead.

The most appalling aspect of this case involves institutional denial: despite Patel's obvious incompetence - nurses actually hid patients from him - and despite explicit and alarming descriptions of his shortcomings as a doctor, administrators continued to support Patel, even naming him "employee of the month" following an egregious operating error that led to the death of a patient. Only when an enterprising reporter Googled his name did his prior problems as a surgeon in America pop up, at which point his employment was finally terminated.

The maximum penalty for manslaughter in Australia is life in prison. Dr. Death, in other words, is facing life. (He is filing an appeal.) In a just world, the administrators who hired, coddled and facilitated Patel would also be held accountable. But in case you haven't noticed, this is not exactly a just world. The wheels of justice, slow though they may be, have finally put an end to Patel's bizarre career, which transformed the medical premise of "do no harm" into its opposite. We can only say that he will do no further harm - a small consolation to his victims and a savage indictment of his profession.

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June 28, 2010

 

Lawyers, investigators, policymakers and safety professionals will be wrangling over the Deepwater Horizon tragedy for years to determine what happened, where fault lay, and who will pay.

By many accounts, Deepwater Horizon was had a relatively good safety record. Its 125-member crew had no serious injuries in the seven years prior to the explosion. In a cruel irony, BP mangers were reported as being on board to recognize the Deepwater crew for its outstanding record on the very day that the explosion occurred.

The sheer magnitude of the disaster and the economic and ecological impact have taken center stage, while the deaths of 11 workers are all too often the asterisk to the story. Their surviving family members and their 156 work colleagues, who narrowly averted death themselves, are in the early stages of an arduous healing process. Coworkers lived through the harrowing and terrible event, many sustaining physical and psychological scars. At hearings and in the media, their personal survival accounts are beginning to be told.

In the first part of a 60 Minutes segment on the disaster, crew member Mike Williams talks about events leading up to the explosion. Production was off schedule by more than a month and $25 million had been lost. This put crews under even pressure to perform. A critical piece of equipment was damaged 4 weeks prior to the explosion, yet this unsettling event did not slow the inexorable push forward. Williams describes a "chest-bumping" argument that occurred on the morning of the fateful day, between a BP manager and crew manager about who would have the final word about process decisions. In his account, the BP manager won the argument and made a process decision, which preceded the explosion.

In the second part of the report, Williams relates his own struggle for survival, as well as the dramatic close call for other coworkers. He talks about being injured in the initial two explosions, the helpless feeling when crawling outside to see the extent of the damage, and the terror of jumping 90 feet into oil-slicked, fiery water and swimming until being rescued.

The dividing line between survival and death was a matter chance and of seconds. Although there had been weekly lifeboat drills, some survivors said that they had not anticipated such chaos, nor had they actually sat in lifeboats or thought through the details of a quick escape. And details could make the difference. One life raft of survivors was tethered to the rig and narrowly avoided being pulled back into the inferno simply because the company's strict "no knives" policy meant that no one had a knife to cut the rope.

Other survivors and family members shared their experiences on CNN.

Family members relate the experience from their point of view - hearing the terrible news of the explosion and the long, terrible vigil waiting to get official word of whether their loved one survived or not.

Also see: Profiles of the profiles of the Deepwater Horizon Eleven, ranging in age from the youngest at 22 to the oldest at 56 years old.

Prior posts
News update on BP
Engulfed by risks

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June 24, 2010

 

Brad Wright of Wright on Health has an excellent edition of Health Wonk Review, which shines a spotlight on research. Brad notes that, going forward, research will be incredibly important as health reform is implemented and evaluated. He offers a fine research roundup from leading healthcare bloggers - check it out!

Healthcare - According to a Commonwealth Fund report on healthcare, which assessed and compared data from patient and physician surveys in seven countries in 2007, 2008 and 2009, the U.S. scored sixth out of seven countries on quality issues, yet we spent more than double per person than any other surveyed country. See the full report How the Performance of the U.S. Health Care System Compares Internationally, 2010 Update, which includes both a snapshot chart and an interactive comparison tool. Related: Results from the National Scorecard on U.S. Health System Performance, 2008

The importance of timely reporting - In Manucy v. Joe Manucy Racing, The Louisiana Court of Appeal recently ruled that an employee who was injured during horse training was ineligible for benefits because although the injury was immediately apparent, the worker did not file for benefits until about a year and a half after the injury occurred. Louisiana law stipulates a one-year from date of injury filing deadline for injuries that are immediately evident, and two years for injuries that do not develop immediately. In this case, the injury was immediately apparent, requiring ambulance transport and surgery within two months. State law varies on statues of limitations for benefit eligibility, most commonly falling between one and three years from date of injury. Many states offer some exceptions to the statutes - such as starting the clock ticking at date of disability rather than date of injury or allowing exceptions if there is conduct that might be regarded as deceptive on the part of the employer.

Going and coming - As a rule, any injuries that happen to an employee when they are traveling to or from work - 'going and coming' - are not compensable, but there are exceptions. Fortney v. AirTran Airways, Inc. deals with one of those exceptions: service/benefit to the employer. In this case, the employee was killed in a plane crash while flying on a reciprocal arrangement with another airline. The Kentucky Supreme Court upheld benefits to the estate of the deceased. At Lexis Nexis Workers' Comp Community, Roland Legal PLLC summarizes the issues: "Whether an employer uses transportation or transportation expense as an inducement for an employee to accept or continue employment is material to supporting compensability, particularly when the journey is sizeable and when the employer pays all or substantially all of the expense." See our prior post about common exceptions to the 'going and coming' rule.

Medicare - Get your popcorn and follow along as Joe Paduda offers a guide to the status of the Medicare "fix" and looks at various scenarios for how things may play out.

Retroactive Insurance in Georgia - events continue to play out in the wake of the insolvency of Southeastern U.S. Insurance Inc (SEUS) in Georgia (a story in and of itself, and worth a read if you haven't been following along). After the SEUS demise, many employers were left holding the bag for the open claims of injured workers because they had not paid into the state's insolvency fund and were therefore ineligible for coverage. New legislation will cover employers retroactively if they pay into the state insolvency fund, but the Georgia's Insurers Insolvency Pool has filed a challenge to the new law. "The pool is placed in a position of uncertainty as to whether the legislation imposes duties and obligations on the pool retroactively in violation of the Georgia state constitution," the filing says.

Arizona judge: no raiding the compensation fund - The state of Arizona is considering an appeal to Maricopa County Superior Court Judge Larry Grant's ruling which found that Governor Brewer and legislators ignored the plain language of the law by trying to use $4.7 million from the State Compensation Fund to help balance the budget. According to the judge "The proceeds held by the special fund are insurance proceeds held in the benefit of employees and employers covered by the Workers' Compensation Act."

Safety shorts


June 23, 2010

 

We return to the beautiful state of Maine, where moose wander the woods looking for whatever interests a moose and where employers self-insured for workers comp look for a fee schedule. The moose are a lot happier than the self-insureds. As we have pointed out in prior blogs, the legislature mandated the creation of a fee schedule for medical services nearly 20 years ago. There is still no fee schedule. So while insurance carriers are free to negotiate with hospitals to determine rates, self-insureds - Bath Iron Works (BIW) the most notable and vocal - are stuck paying the exorbitant "usual and customary" fees.

BIW has sued a number of times to move this process to a conclusion. Most recently, they sued to remove Paul Dionne, chairman of the workers comp board, from heading up the fee schedule committee. Dionne is also board chairman of Central Maine Healthcare Corp., which includes Central Maine Medical Center in Lewiston. While he claims objectivity, Dionne is in an untenable situation: you do not ask a medical provider how much they want to cut their own revenues.

In deference to the "appearance" of a conflict of interest, and perhaps in an acknowledgement that after 20 years, enough is enough, Dionne has recused himself from any further involvement in the fee schedule process.

"It's a hard decision because this is a very important issue for the workers' compensation system," he said. "But I've got a lot of confidence in the board members."

So from here on Dionne will follow the debate from the sidelines: no conflict, but plenty of interest. His confidence in the other board members might give rise to anxiety for BIW. Regardless, this is surely a step in the right direction.

When it comes to the long-mandated, long-absent fee schedule, patience is wearing a bit thin in Maine. The moose may wander where they choose, but self-insureds are caught in a very expensive trap. Too bad they don't sell fee schedules at L.L. Bean.

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June 21, 2010

 

A sewer may not be the preferred place to begin the work week, but the working world calls and we must follow. About a year ago, we blogged the sad story of Shlomo and Harel Dahan, respectively the owner and heir of S. Dahan Piping and Heating company in Queens, New York. They were hired to vacuum an 18-foot-deep dry well at a plant owned by Regal Recycling. Harel went in first. When he failed to emerge, his father went in after him. When the father failed to surface, an employee of Regal, Rene Rivas, went in after them. All three were overcome by deadly fumes at the bottom of the well. All three died.

Now we read in the New York Times that Sarah Dahan, Shlomo's widow and mother of Harel, brought the remains of her husband and son to Israel for burial. She left the company in the hands of Ygal Lalush, a trusted employee. In her absence, Lalush changed the locks, stole the company's four trucks, wrote $30,000 in company checks for his personal benefit and started running the company out of his own home under a different corporate name.

Ms. Dahan discovered the problem when she returned from Israel. She first tried to resolve the issue directly with Lalush. When that failed, she went to the authorities. Lalush has been charged with fraud, grand larceny, forgery, possession of stolen property and falsifying business records.

Lessons from the Underground
We could conjecture about the frailty of human nature and the dark shadows that accompany us all as we make our way through the world. We could wonder at the transformation of a loyal employee into a pathetic crook. (Perhaps his lawyer will chalk it up to post-traumatic stress syndrome!) That aspect of this tale will remain forever hidden, like the contents of the sewers cleaned by S. Dahan Piping and Heating.

The take-away from this tale lies within the Dahan family: the father who tried in vain to save his son. The mother who fulfilled a commitment by burying her husband and son in Israel and who tried unsuccessfully to convince her wayward employee to abandon his demented plan. There is genuine dignity in these people, who deserved both a better fate and a higher class of employee.

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June 18, 2010

 

The saga of the New York self insurance trusts continues. We reported in April that justice had been served by Judge Kimberly O'Connell, who ruled that requiring solvent trusts to pay for the sins of insolvent trusts was unconstitutional. Now, according to Work Comp Central (subscription required), O'Connell herself has been overruled by a four judge panel, which has reinstated the assessments on the solvent trusts. While the justices are undoubtedly correct in their literal interpretation of the law, the ruling comes under the heading of "let no good deed go unpunished." It may be legal, but it is in no way just.

Here's the (rotten) deal: 15 self-insurance trusts are shut down by the state. They ran out of money because they under-priced their premiums, under-reserved claims and sold insurance like a ponzi scheme. Oh, they also paid themselves handsomely for their fine work as administrators. These defunct trusts are in the hole to the tune of $500-$600 million. State oversight? There wasn't any.

Who Pays?
The WCB decides to assess the remaining, solvent trusts to make up the deficit. In other words, the "joint and several liability" within a trust group now expands to include liability for all trust groups. To be sure, the enabling legislation allows the WCB to do this. After all, someone has to pay and this is New York, so deal with it. In this case, the trusts that operated by the rules, fairly pricing and fairly reserving claims, are penalized for the sins of the clowns who are no longer in business.

As we pointed out in yesterday's post, a task force has recommended that New York get out of the self insured trust business. We concur. Any state that loads the dice of "joint and several liability" to this absurd point makes a mockery of the concept. Self-insurance is based upon the ability to limit risk and contain exposures. Given New York's operating rules for self-insured trusts, conventional management tools are rendered useless. The liabilities of operating a group trust are uncontrollable and virtually infinite. Why would any company choose this path for managing risk?

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June 17, 2010

 

Two years ago, New York Governor Patterson convened a task force to examine the status of self-insured trusts for workers comp. He was forced to take action when a number of trusts failed, most notably those administered by Compensation Risk Managers (CRM). The insolvent trusts left behind a deficit of $500 million. (See our prior blogs here and here.) The task force recently presented its findings to the governor. In 189 pages of closely reasoned text, the commission recommends that New York abandon this particular model for insurance. The risks, in their view, outweigh the benefits and perhaps most important, the state lacks the resources to adequately monitor how these groups operate from day to day. You cannot trust the trusts.

The commission zeroed in on what it considers to be the (fatal) flaws in the group trust model:
: Joint and several liability, where prudent employers are held accountable for the actions of the weakest members
NOTE: it's one thing to have "joint and several" liability; as the commission points out, it's quite another to actually collect on these obligations: less than 15% of what is owed by participants in the failed trusts has been collected to date.
: potential conflicts of interest involving group administrators and TPAs, who seek to grow the business by keeping rates artificially low and by understating losses
: inability of trustees to understand what is really going on
: inability of the state to monitor and assess the true status of each operating trust

Death Spiral
Self insurance groups currently operate successfully in 18 states, but not in New York. As we pointed out in a prior blog, the NY comp board tried to assess all trust members - not just those in the insolvent trusts - to make up the $500 million deficit. The solvent trusts sued and for the moment, have prevailed. (The Held decision can be read in the appendix of the task force report).

There is a certain logic to assessing all members for the failings of a few, but this only works when you are dealing with very large numbers, so the individual assessments are relatively small. This was not the case back in 2008, when there were about 18,000 employers participating in NY trusts. After all hell broke lose, the number dwindled to 4,000.

The crippling assessments issued by the comp board to cover the trust deficit created a death spiral, with solvent trusts folding their tents and moving out of the state. Even though those assessments have been retracted by the courts, that action comes too late to save the viable trusts. New York probably has no choice but to abandon the group trust model.

Rotten Apples
The New York narrative, as written by the governor's commission, attributes the trust failures to fatal flaws in the business model. But where New York sees an insurance approach that cannot work, other states see vulnerabilities that can be addressed through prudent management. Self-insured groups still operate profitably and effectively in many states. What happened in New York was the result of rogue and perhaps felonious trust management combined with inadequate state oversight. The state failed to see the true status of the troubled trusts in a timely manner and then took exactly the wrong action to correct it. That's not a problem with trusts themselves, but with the people entrusted to run them.

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June 16, 2010

 


Workers comp is 100 years old this year and by way of Roberto Ceniceros' informative blog Comp Time, we learn that there is a Workers' Compensation Centennial Commission (WCCC), which was formed to celebrate the anniversary of the first constitutional workers' compensation law in the United States. The WCCC was organized by a bi-partisan coalition of Wisconsin-based labor and government leaders, which is reaching out to other states to commemorate the anniversary of the landmark legislation. It's pretty appropriate that this initiative is kicking off in Wisconsin because that was the state where the first state workers' compensation law was signed on May 3, 1911.

The WCCC site has collected some really interesting resources, including a photo gallery and various historical documents. And one of the centerpieces of the collection is a terrific 10-minute video that was created by students from Nimitz High in Houston Texas for the 2008 National History Day.

Great job on the film - thanks, Nimitz High students!

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June 16, 2010

 

For a biweekly risk roundup, check out this week's edition of Cavalcade of Risk over at My Wealth Builder.

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June 15, 2010

 

There are five towns in Massachusetts that do not carry workers comp insurance for their employees. Four of them - Dana, Prescott, Enfield and Greenwich - are under 412 billion gallons of water: they were submerged during the 1930s in the making of the Quabbin Reservoir, which supplies drinking water to Boston and a number of suburban cities and towns. The fifth, Tewksbury, voted to join the workers comp system way back in 1914, but a clerical error recorded the positive vote as negative, resulting in nearly 100 years of a go-it-alone, pay-as-you-go, hope-for-the-best approach to comp among the residents of the town, now nearing 30,000 people.

To date, Tewksbury has been pretty lucky. The town has paid out between $100,000 and $189,000 per year for claims in recent years. That's not bad, considering that one failed back can run upwards of $500,000. But just because Tewksbury has been lucky does not mean they are going to stay lucky. The liability to the town's tax payers is precariously open-ended. In these challenging times of reduced budgets for all municipal services, the specter of an unanticipated claim could put Tewksbury on the verge of bankruptcy. Because the town did not participate in the comp system, injured workers had the option of suing for damages unavailable in the comp system.

As we read in Insurance News Net, last month the town meeting voted to adopt workers comp coverage. (Presumably, the vote was properly recorded this time.) It will take a few years to develop an experience rating, based upon actual losses and statutory benefits. Overall the cost of insurance will run a bit higher than an average loss year, but that's price you pay for transferring the risk to a third party.Comp will finally become a set cost in the town budget. A workers comp policy comes with a comfort factor that cannot be measured simply in premium dollars: any claims, large or small, any catastrophic losses involving multiple town employees, will now be covered by insurance. That should help town residents and officials sleep a little better at night.

As for the surviving citizens of Dana, Prescott, Enfield and Greenwich, displaced long ago by the state's appetite for water, comp is not a likely component in their dreams. I imagine they welcome a nocturnal glimpse of the communities where they once lived and waken with sense of sadness and of loss.

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June 14, 2010

 

In the the following guest post, Gary Anderberg, Phd, the Practice Leader For Outcomes and Analytics at Broadspire offers his thoughts on the potential impact of healthcare reform on workers comp in the coming years.

At the moment, health care reform appears to have a number of positive and negative potential impacts on workers compensation over the next few years. The net results cannot be estimated this early in the game. We can, however, identify a few elements and their possible consequences:

  • Insuring the now uninsured: Positive -- employees who have health insurance tend to file fewer workers compensation claims. They have less incentive to cost shift. Another result will be that chronic medical conditions will be, over time, better controlled and less likely to increase the severity of work related claims.
  • Availability of care: Negative -- with a large number of people having new health coverage, doctors and facilities may be swamped in some areas. The problem will lead to (a) delays in appointments for workers compensation-related medical treatments and (b) less willingness by providers to participate in occupational medical networks and offer discounts off fee schedules.
  • Removing the pre-existing exclusion: Unknown -- in 2014 the pre-existing exclusion will disappear in group health. This cuts several ways at once. There will be less incentive for employees to claim long standing "wear and tear" conditions as work related - a positive change. There may also be much greater demand on employers for workplace and job accommodations leading to new exposures and safety issues.
  • Medicare reform: Negative -- the passage of HR 3590 was predicated on massive adjustments in Medicare reimbursement levels, which are marginal for medical providers now. This will pressure providers, especially hospitals and some specialists, to cost shift where possible and workers compensation is a soft target in most states. We could see significant increases in medical costs per claim as the Medicare changes begin to bite in a couple of years. (The recession-driven cutbacks in state Medicaid reimbursements will only amplify this effect in the near term.)
  • Libby care: Unknown -- the "Libby care" clause of HR 3590 (sec 1881A) is not intended to lead to the federalization of industrial diseases absent some very specific catastrophic circumstances comparable to those of the WR Grace disaster in Libby, MT. But we all know that ERISA was intended to address a very narrow set of union pension abuses when it was passed, but the Department of Labor, abetted by the Florida Administrators decision of the Supreme Court in 1977, expanded it greatly. The Libby care provision will bear watching.
Workers compensation was not at the table when Congress hammered out its health care reform solutions. Other than a few glancing mentions, such as the Libby care clause noted above, occupational medicine was overlooked and, by default, left to the states. This is probably a good thing, on balance. Yet, as health care reform changes begin to penetrate the enormous US health care enterprise, they will impact workers compensation in many overt and subtle ways over the next several years. Carriers, third party administrators, and managed care vendors will need to be alert to capture possible advantages and avoid potential nasty surprises.
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June 10, 2010

 

Our Boston neighbor Tinker Ready hosts this week's edition of Health Wonk Review at Boston Health News and it's a killer edition - check it out.

Awkward - Making the web circuits, many have been posting about the Bollywood safety dance video by Transocean's CEO. We encourage CEOs and senior managers to ensure that safety is top company priority - so on the one hand, we applaud the attempt. But in light of the recent explosion that resulted in 11 deaths, this video is ironic and embarrassing. This, coupled with the recent news that the company's disaster response plan was riddled with egregious errors leaves one to think that BP's risk management efforts were not as substantive as they might have appeared on the surface. The folks over at Risk Management Monitor have been posting about various aspects of the BP story. Jared Wade gives us the rundown on BP's pattern of neglect and corner cutting as well as an infographics style rundown on the spill. Also, if you haven't seen the wildly popular fake BP PR Twitter account, it might give you a chuckle if you are into black humor. BP is not amused by the parody.

Truck drivers & sleep apnea - A study on sleep apnea and truck drivers that was recently published in the Journal of Occupational and Environmental Medicine found that treatment for sleep apnea led to more than $6,000 in total health plan and disability cost savings per treated driver. "On average, researchers found that for treated drivers, health plan costs decreased an average of $2,700 in the first year and another $3,100 in the second year compared to no change for untreated drivers. The treated drivers also missed fewer workdays (average 4.4 days in the first year) and had lower short-term disability costs ($528 over two years)."

Battle of the pharma giants - Joe Paduda keeps an eye on the Caremark vs Walmart pharma fight and offers informed commentary about what's going on.

No go in Ohio for Noe - The Ohio Supreme Court has rejected Thomas Noe's request for an appeal of his convictions. You may recall that Noe got in trouble for the theft of $13 million from $50 million that he invested in rare-coins and beanie babies for the Ohio Bureau of Workers' Compensation. His capers were a contributing factor in bringing down Governor Taft and various other state officials. Stories like this don't surface often in workers comp - we have quite an archive from the early days of the scandal through conviction and the early days of the appeal.

Octomom settles WC claim - From California comes the news that Nadya Suleman (aka "Octomom") settled her workers comp lawsuit for $23,120. The injury occurred more than a decade ago. See my colleague's prior post: Comp as Enabler: The Nadya Suleman Story

Tooting our own horn - thanks to Evan Carmichael for including Workers Comp Insider in his listing of theTop 50 HR Blogs: 2010 - it's a good list and worth checking out. EvanCarmichael.com is a good resource for entrepreneurs and small businesses.

Also, our post on N.Y.'s domestic workers bill of rights was reprinted at Today's Workplace, an excellent group blog on issues of workplace rights and employment law sponsored by Workplace Fairness, a non-profit organization helping to preserve and promote employee rights. Both resources are well worth your attention.

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June 8, 2010

 

We are following the consequences of the gulf oil disaster with increasing despair. Images of oil soaked birds, dead fish, and the serene Gulf waters transformed from the customary beautiful blue-green to an appalling brown. Our thoughts also turn to the men and women laboring under very challenging conditions to contain the impact of this man-made disaster.

NIOSH has issued the following summary of the exposures facing the recovery workers:

Chemical exposures may include benzene and other volatile organic compounds, oil mist, polycyclic aromatic hydrocarbons, and diesel fumes. Physical hazards may include ergonomic hazards, excessive noise levels, sun exposure and heat stress. Injuries may occur due to slips, trips, and falls on slippery or uneven walking and working surfaces. Other safety hazards are associated with the use of tools, equipment, machinery, and vehicles. Biological hazards include possible exposure to biting or venomous insects or other animals. Psychological hazards may include witnessing traumatic injuries or death, inability to help affected wildlife, and fatigue.

You can read the CDC's 96 page opus on managing the exposures to emergency workers here. (I can't help but wonder if this particular web-available document is symbolically collecting dust on the shelf, like so many other well-intentioned but rather long-winded safety manuals - the ones risk managers point to with pride during a tour of an industrial plant.

"We're Hiring!"
BP has hired about 22,000 workers to help with the clean up. I wonder how carefully they screened the new hires. Any rapid ramp up is full of risk; the hazards of hiring on this scale for jobs full of open-ended risk is simply beyond calculation. How many of the 22,000 workers will end up with work-related illnesses and injuries? How would you project the future impact on BP's workers comp costs? (Perhaps BP is calling the new hires "independent contractors." Some may well be; most are not.)

Under regulatory scrutiny, BP has provided some form of rudimentory training and the necessary personal protective equipment (PPE) for the new workers. But how well is the work supervised? With temperatures routinely in the high 80s and the heat index over 100 degrees, how long can people function in the requisite protective suits, steel-toed boots, gloves, hard hats and safety glasses? What is the impact of raw crude on bare skin and laboring lungs?

Looming Epidemic?
There have already been reports of illnesses among these workers. Law firms have put out the word that at least one of the dispersants used in the clean up may harm workers:

OSHA representatives, Obama administration officials and others have expressed concerns that the oil dispersant chemical Corexit may be the source of the illnesses reported on May 26 by cleanup workers. In May, the EPA urged BP to stop using Corexit because of its toxicity. Corexit is manufactured by Nalco, whose board of directors has strong ties to the oil industry, including sharing at least one board member with BP.

We all feel a sense of urgency on an unprecedented scale as the pristine Gulf waters are sullied by millions of gallons of oil. A huge workforce has been mobilized to help with the clean up. Looming on the distant horizon is the cost of cleaning up the damage to those who are currently engaged in the clean up. It's something we give only passing thought to today. But the time will come when those costs are as conspicuous and nearly as disturbing as the image of an oil-soaked pelican trying to spread its soiled wings, trying and failing to launch itself into the brilliant blue skies of its Gulf home.

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June 7, 2010

 

In the 1930s, when the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA) passed, these two laws offered labor protections to workers nationwide - with the exception of two large segments of the work population: domestic workers and agricultural workers. These groups were excluded in the interests of political expediency since a large proportion of both groups were comprised of blacks and women, two populations that weren't generally afforded full rights in many public and social arenas at the time.

With the 33-28 vote passage of the New York State Domestic Workers' Bill of Rights in the Senate, New York is likely to become the first state in the union to remedy that. The Bill is not yet final law - first, the Senate bill needs to be reconciled with the bill passed by the state Assembly and then Governor Patterson must sign it.

Bill Number S2311D would "... amend the labor law, the executive law and the workers' compensation law, in relation to establishing regulations regarding employment of domestic workers including hours of labor, wages and employment contracts." The purpose of the bill is stated as being to: "... provide domestic workers with a Domestic Workers' Bill of Rights which would set out the responsibilities of employers and employees as well as rules for paid holidays, paid vacations and standard overtime."

It's estimated that there are about 200,00 domestic workers in New York, 93% of which are women and 95% of which are people of color. Because the Bill covers all domestic workers - both legal and illegal - it's been fairly controversial. Opponents decry the increase in regulation, which some say will result in fewer jobs. Many opponents also bridle against any protection for illegal workers, feeling that offers a legitimacy. Proponents say that it will go a long way to regulating an industry that has no standards or oversight and afford basic worker rights to a largely ignored worker population. Many of those in favor of the bill also think that shedding light on some of unregulated business segments which have historically been magnets for undocumented workers will be an important step in coming to grips with the hiring of illegal workers.

In a column in the New York Daily News, Albor Ruiz notes the irony that although we trust these domestic workers with our children, our elderly parents and our homes, they are among the most exploited of society's laborers. He cites a study by Domestic Workers United and DataCenter, which found that, "...26% of domestic workers make less than the poverty line or the minimum wage rate. Also, 33% say they have been abused verbally or physically, and half report working overtime but not being paid for it. Health insurance from their employer is a rare luxury - only 10% get it."

From our viewpoint, we think all employers have the responsibility to provide a fair and safe workplace for all employees, regardless of the work population involved - legal, illegal, here in the US, or offshore in other countries. It's simply the right thing to do. But for those who don't share this value, it generally makes sense from a cost perspective, too. In our experience, doing the right thing by employees is less costly in the long run.

Related:
Domestic workers and workers' compensation requirements by state

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June 3, 2010

 

As a service for Insider readers who do not follow the Flathead Beacon, we bring you the western Montana saga of Brock Hopkins, who either was or was not an employee of Great Bear Adventures when he had a great bear adventure of his own, much to his detriment. Hopkins, 23 at the time, appears to have been an occasional worker at the seasonal attraction. On November 2, 2007, he showed up at the park, took a few hits on his marijuana pipe (not prescribed by a doctor) and checked in with the park owner, Russell Kilpatrick, who was on the phone at the time.

Kilpatrick wanted Hopkins to repair a gate. After completing the task, Hopkins went to ask Kilpatrick if there was anything else that needed doing, but Kilpatrick was asleep (hibernating?). So Hopkins, after carefully placing his marijuana pipe on a storage shed outside the bear pen, mixed up some feed and entered the pen. He was attacked by a bear and sustained severe injuries to his legs. He barely managed to crawl out of the pen.

Contract of Hire
In subsequent court proceedings, Kilpatrick argued that Hopkins was a volunteer at the park. While he denies asking Hopkins to feed the bears, he admits that he did ask him to adjust the gate. And, yes, he did slip him $300 shortly after he was released from the hospital.

Judge James Jeremiah Shea, of the Montana Workers' Compensation Court, disagreed with Kilpatrick. In his written decision, Judge Shea managed to reference the (marijuana stoked) comedy, "Harold & Kumar Go to White Castle:"

"It is not as if this attack occurred when Hopkins inexplicably wandered into the grizzly pen while searching for the nearest White Castle. Hopkins was attacked while performing a job Kilpatrick had paid him to do - feeding grizzly bears."

Kilpatrick denies asking Hopkins to feed bears, who may or may not have needed feeding. And one might be inclined to raise the issue of the marijuana impeding Hopkins's judgment. Judge Shea took these factors into account and concluded that there was contradictory testimony on the issue of feeding the bears and most important, even though Hopkins smoked marijuana on the job, his being stoned was not a significant contributory factor in the injury. (If Hopkins could fix a gate while stoned, he could presumably feed the bears.)

Management's Burden
Kilpatrick is appealing the ruling. He has a high mountain to climb if he wants to prove that Hopkins was not an employee. I'm not sure he is helping his cause when he indignantly stated the following:

"I became very very angry because I then knew what had happened. In my opinion Brock could not resist one last time of harassing the bears with his habit of blowing smoke in their faces for God only knows what reason and in direct defiance of my telling him NOT to disturb them!!!"

Alas, Kilpatrick is learning a tough lesson in management: you are responsible for the (stupid) actions of people who perform work-related tasks for you, whether or not you formally hired them - and in this case, whether or not you specifically asked them to perform a given task. (If a supervisor is napping, employees are pretty much on their own.)

The fact that Hopkins was prone to blowing smoke at the bears and Kilpatrick still allowed him on the property weakens his case considerably. (As Hopkins left his pipe on the shed prior to entering the pen, it is unlikely that he provoked the bear in this particular manner on that fateful day.)

Meanwhile, the youthful Hopkins has knee problems and possibly permanent muscle damage. He may want to find himself a medical practitioner to write him a script for marijuana, which is available legally in Montana. Blowing smoke can ease the pain, as long as you don't direct it into the face of a sleepy or hungry bear.


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June 2, 2010

 

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Welcome to the June 2, 2010 edition of Cavalcade of Risk. With this issue, we mark the fourth anniversary of our biweekly risk roundup. Kudos to Hank Stern, Cavalcade's founder, keeper of the flame, and all round good blog citizen. He's the perfect person to lead the charge - as an insurance expert, he knows quite a bit about managing risk. Kudos to him and to all my fellow risk wranglers who've continued to dole out sage advice over all 106 issues of the Cavalcade - yay for us!

Risk is so random. You are enjoying the Stanley Cup playoff game between the Montreal Canadiens and the Pittsburgh Penguins when a massive sinkhole swallows you and your family whole sending you to an untimely death. No, this isn't the plot of a bad '60s sci fi flick, it was a real event that occurred in Canada just a few weeks ago. And as living proof of the Baader-Meinhof Phenomenon, right after hearing about this horrific event, we learn of the total disappearance of a six-story building in a Guatemala sinkhole.

Whether in business or in our personal lives, risk is unavoidable. Both consciously and unconsciously, we are all in a continual process of sizing up situations and activities, weighing the relative risk versus reward, and determining the maximum acceptable level of risk in going forward. The business or discipline of such assessment is called risk management; in our day-to-day lives, it's called living.

In the biweekly issues of Cavalcade of Risk, we turn to various experts who weigh in with risk management advice for assorted business and life activities. Because risk can be messy, our topics span the gamut. While there may be some ongoing themes that recur in our lineups, by the very nature of the beast, it's not always easy to sort submissions into neat little categories. Today's issue follows suit.

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June 1, 2010

 

With a population around 1.5 million and a land mass the size of New England, Idaho is probably not the first state that comes to mind in the national struggle to contain medical costs. Nonetheless, orthopedists in Idaho have managed to attract the attention of the federal government in their effort to increase rates of reimbursement for services. The feds are not happy with the Idaho docs.

The first problem came with the workers comp fee schedule. The "Resource-Based Relative Value system" set a price of $88 for most orthopedic procedures. The 65 or so orthopedists in Boise got together and decided to refuse to treat workers comp cases. As a result, the Industrial Commission raised the rates by 61 percent. Score one for the docs.

Emboldened by their success, the docs refused to accept Blue Cross patients under the prevailing fee scheme. But in taking on the conventional health care (as opposed to the state-based workers comp system), the docs crossed a line from a program run exclusively by the states into a behemoth system in which the federal government plays a big role. The feds came down hard with charges of violations of the Sherman Anti-Trust Act. Prosecutors sued five doctors, the Idaho Orthopaedic Society and the Idaho Sports Medicine Institute in Federal Court. If you think about it, it's not hard to see how a bunch of doctors agreeing to hold out for higher reimbursements might fall under the general heading of "price fixing."

As we have blogged rather frequently, Massachusetts has the lowest fee schedule in the nation. Most orthopedists have responded by refusing to accept the (ridiculously low) rates. But unlike the orthos in Idaho, the MA docs deal with the palty rates on their own. By refusing to accept them, they compel insurers to negotiate higher rates. These negotiated rates vary from doctor to doctor. There is simply no way and no need for the hundreds of orthopedic doctors in MA to agree on rates:it would be like the proverbial herding of cats.

In Idaho it's different. The state's unique characteristics - the large land mass and relatively small population - make a genuine "conspiracy" possible. The docs all know one another. So what seemed to them a fairly innocent attempt to leverage the system for higher reimbursement rates appeared to the feds as a conspiracy. In other words, their mistake was in sharing information about the rates and in uniting to take action against them. Had they acted individually, there would have been no violation of the anti-trust act.

War on Docs?
One blogger with roots in the libertarian Ludvig Von Mises movement sees in the government action a declaration of war against doctors. He believes that doctors will be "forced" to accept the government rates. Not exactly. As we have seen in Massachusetts, individual doctors can accept or reject patients as they please. What they cannot do is collude with fellow doctors to achieve a fee schedule to their liking.

With rising medical costs looming over every aspect of our economy, this little skirmish in Idaho is simply the opening salvo in what is likely to be a prolonged and painful battle to contain the costs of health care. It's no accident that the Obama health care bill punted on the cost containment issue. One person's cost containment plan is inevitably another's cut in pay.

In the coming months, the battle of Idaho will move into the great metropolitan areas of our country. Just imagine the formidable barricades to be erected by the men and women in blue scrubs! This will be an interesting brouha, to say the least.

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