May 2011 Archives

May 31, 2011

 

The brinksmanship continues in Illinois. A moderately effective reform bill passed the senate but has been defeated in the house by Republicans, who seek stronger ways to limit compensability. As a result, the Dems are moving forward with the Doomsday option: a bill to abolish workers comp and send each and every claim into the court system. Wow, that's one way to make everyone miserable, above all, injured workers looking for a reliable safety net.

Among other things, the defeated reform bill would have reduced the medical fee schedule by 30 percent, thereby saving (theoretically) $500m to $700m per year. The reduction sounds harsh, but in practice, fee schedules are fluid. For top specialists, the fees are almost always negotiated upward; for run-of-the-mill practitioners - or the Dr. Feelgoods with their pockets full of pills - they can take it or leave it. Lowered fee schedules provide payers with leverage to find the best available doctors - not necessarily a bad thing.

Who Blinks?
At the moment, legislators are playing a classic game of chicken: if we can't reach agreement on reforms, we'll blow the whole thing up. Given that Democrats are behind the Doomsday option, I doubt they will allow things to reach that point, as it would be a disaster for workers. But they are running out of time.

The potential good news for Illinois employers (and there isn't much when it comes to comp) is that even the modest changes in the reform bill will begin to reduce the cost of workers comp, currently the third highest in the nation. The bad news is that further reforms will be needed, most of all, perhaps, involving the de-politicizing of comp in a hyper-political state. My advice to the legislators is simple: take it incrementally. Pass the reform bill pretty much as is and revisit the issue in the next session. In this precarious situation, half a loaf is better than none.

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May 26, 2011

 

Chris Fleming hosts a substantive Memorial Day issue of Health Wonk Review at Health Affairs Blog - there are a lot of good submissions on a variety of topics, from Medicare and the Affordable Care Act to quality and healthcare IT.

If you have an interest in health care - and with medical costs comprising a bigger and bigger portion of the claims dollar every year, you probably do - Health Affairs Blog is a good candidate for your regular reading list. The Blog is an offshoot of the publication of the same name, a peer-reviewed health policy journal that has held a premier place in the health policy arena for the last 30 years. The blog is a welcome adjunct to the journal. According to their "About" page: "The Blog features posts from noted health policy experts on both sides of the political aisle as well as regular Health Affairs contributors and staff. Recent bloggers have included Former Bush HHS Secretary Tommy Thompson, economists Uwe Reinhardt and Gail Wilensky, California HealthCare Foundation President and CEO Mark Smith, and Congressman James Cooper (D-TN)."

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May 25, 2011

 

Henry C. Becker Custom Building Limited was doing some construction work in Newburyport MA. They hired the Great Green Barrier Company to do some waterproofing. They apparently did not ask for a certificate of insurance; Great Green Barrier did not carry workers comp for their employees. There was an explosion on the jobsite. Timothy Wentworth, an employee of Great Green Barrier, was killed; his son, Ezekiel, was severely injured. As the employees of an uninsured subcontractor, the Wentworths collected workers comp through Becker's insurance company, which paid out substantial lump sum settlements to each.

Then the Wentworths sued Becker as a third party. Becker objected: comp, after all, is an exclusive remedy. Once the Wentworths collected comp benefits, they should be precluded from any other remedies. Becker sought and won a summary judgment dismissing the lawsuit.

The case wended its way to the MA Supreme Judicial Court, where the justices determined that the summary judgment was improper: the exclusive remedy provision of the comp statute applies only to employees. The Wentworths were not employees of Becker, but of Great Green Barrier. Becker, in other words, was a third party and thus, despite the payment of comp benefits, was not immune from lawsuit.

Compounded Liabilties
Becker is going to pay and pay again: first, under their workers comp policy, the payroll for Great Green Barrier employees will have been added to the Becker payroll in the premium audit; that's the chump change. Then, the substantial losses for the Wentworths - each likely exceeding the state rating point limit of $175,000 - will be added to the experience modification calculation for Becker over a three year period. That's serious bucks (but nowhere near the financial hit taken by Becker's comp carrier).

Then, given this ruling, the Becker company is vulnerable to a lawsuit, which is likely to result in additional payments to the Wentworth family. The MA Supreme Court has made it crystal clear: general contractors are liable for the comp costs of uninsured subs, but the acceptance of comp benefits does not preclude a third party lawsuit.

The lesson for GCs should be clear: proper risk transfer must be a fundamental part of the operation. Make sure subcontractors carry workers comp: require that any and all subs produce a certificate of insurance, with the GC named as an additional insured. Track the expiration dates on the certificates and do not allow subs on the job site unless they have shown that comp (and liability) policies are in place.

Henry C. Becker Custom Building has learned about risk transfer the hard way, an expensive lesson indeed. May a word to the wise be sufficient.


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May 24, 2011

 

Our highways are increasingly being populated with an array of new vehicles, from hybrids to electric cars and variety of lesser known technologies. And every time the cost of gas spikes, more and more consumers consider the options. A newly released J.D. Power and Associates study indicates major growth in consumer interest in green cars. The firm expects as much as 10 percent of sales to come from fuel-efficient vehicles by 2016, which would be a four-fold increase in green car sales over 2010. The Chevy Volt, a plug-in hybrid electric vehicle (EV), has been on sale in the U.S. market since mid-December 2010. By next year, GM believes it can sell as many as 60,000 Volts and Amperas. And other EVs have also made a recent debut: the Nissan Leaf and the Ford Focus, to name but a few.

New technologies pose new challenges. When firefighters, police and other emergency personnel respond to a vehicle collision, they need to be up to speed about these new technologies and any hazards they may pose during extrication and resue. These include risks related to electric shock, unintended vehicle movement due to multiple energy sources, new types of vehicle batteries, fire extinguishment/overhaul, and vehicle charging stations and infrastructure associated with electric vehicles.

The National Fire Protection Association (NFPA) has geared up for the challenge. Funded by $4.4 million grant from the U.S. Department of Energy and working in partnership with several vehicle manufactureres, the NFPA has launched an Electric Vehicle Safety Training program to help firefighters, police, and emergency medical technicians to prepare for the growing number of electric vehicles on the road in the United States. Training will encompass videos, classroom-training courses, self-paced online programs, and simulations to help first responders navigate the science and components of EVs, plug-in EVs, and hybrids. Training programs will help first responders ascertain whether the car is disabled or not, provide information about how to power down vehicles, demonstrate how to safely disconnect the high-voltage system, and show safe cut points for extrication.

An NFPA Journal article entitled Taking Charge offers more details about the program. According to a spokesperson, there are about 185 different makes and models of electric vehicles on the road today. The evsafetytraining.org site "...will also serve as a central repository for all EV-related training materials, and General Motors, Ford, Nissan, Tesla, and others will provide content to the program's e-learning component. Another website highlight will be the Emergency Field Guide Database, which will list details of every EV produced since 2008. First responders will be able to identify badging, no-cut zones, airbag locations, and power-down procedures specific to each vehicle."

Bonus: Firehouse.com offers a behind the scene look at the filming of the program's video staring N.H. and Nev. firefighters.

Other resources

The National Alternative Fuels Training Consortium (NAFTC) is an alternative fuel vehicle and advanced technology vehicle training organization. It is headquartered at West Virginia University and consists of National Training Centers (NTCs) located nationwide from Maine to California. NAFTC develops curricula and disseminates training about alternative fuel vehicles and advanced technology vehicles. Over 1,000 organizations such as Walt Disney World, U.S. Air Force, and NASA have participated in the NAFTC's training, education, and outreach activities. NAFTC educates consumers about AFVs and advanced technology vehicles. In addition, the NAFTA curricula offers First Responder Safety Training in Hybrid Electric Vehicles and Hydrogen Vehicles.

Alternative Fuels and Advanced Vehicles Data Center (AFDC) is an offshoot of the US Department of Energy providing a wide range of information and resources to enable the use of alternative fuels (as defined by the Energy Policy Act of 1992), in addition to other petroleum reduction options such as advanced vehicles, fuel blends, idle reduction, and fuel economy. It offers resources on alternative and advanced vehicles

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May 23, 2011

 

With yesterday's catastrophic tornadoes in Joplin, Missouri, the most recent in a long line of 2011 disasters, the cost of re-insurance is going up. Prior to yesterday, the reinsurance bill for 2011 stood in the vicinity of $50 billion, leaving virtually no room for additional losses through the end of the year. Alas, we now have Missouri, and the year is not even half over, with hurricane season yet to begin.

Risk & Insurance magazine highlights the problems facing reinsurers:

Yvette Essen, an analyst for A.M. Best, said that the catastrophic first quarter means that many reinsurers will struggle to record any full-year underwriting profit for 2011.

"The industry faces further challenges in achieving profitability as the hurricane season approaches and investment yields remain low," she commented.

"While reinsurers continue to maintain sound capital positions, the excess capacity that existed at the prior year-end has clearly been diminished," he said.

Richard Ward, CEO Of Lloyd's of London, warns that the relatively inexpensive cost of insurance is really an illusion: "Prices are dangerously low at present," he told an industry conference. "Clients may think they are getting a bargain. But the fact is that they are buying security. The insurers who write unprofitable business are inevitably the first to collapse when disaster strikes."

Beyond Risk Transfer
It appears we are entering a period of steadily increasing instability in nature. Ferocious storms and floods in the US, the Japan earthquake and tsunami, the volcano in Iceland, the fires in Australia - all flitter across our computer screens and raise the specter of inconceivable loss. Insurance - where it's available - merely provides capital for rebuilding. Much of what is lost cannot be insured and even where there is insurance, what is lost on a personal, family-to-family level cannot be replaced. Yet we see selfless efforts to help survivors, most of whom will demonstrate a remarkable ability to endure. So much of what is precious to these people has been lost, but they will move on. That's human nature at its best.

Meanwhile, the reinsurance market, long in the soft-market doldrums, will finally begin to harden. We will all pay a little more for insurance - and we will complain about it. That, too, is human nature, not at its best, perhaps, but a reflection of these tumultuous times.

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May 19, 2011

 

Last year 29 coal miners died in an explosion at Massey Energy's Upper Big Branch Mine in West Virginia. Don Blankenship, Massey CEO, blamed the explosion on federal interference and a gigantic methane bubble that percolated up from below the mine shafts. The bubble has burst, but not in the way Blankenship would have you believe.

An independent team appointed by the former West Virginia governor, Joe Manchin, and led by the former federal mine safety chief Davitt McAteer, has issued its findings, which are both unambiguous and scathing. There was no methane bubble. There was, instead, a pattern of negligence by management that led directly to the deaths of the miners.

As summarized in the New York Times, the report is a searing indictment of Massey's management style:

"The story of Upper Big Branch is a cautionary tale of hubris," the report concluded. "A company that was a towering presence in the Appalachian coalfields operated its mines in a profoundly reckless manner, and 29 coal miners paid with their lives for the corporate risk-taking."
The report goes on to say that a "perfect storm" was brewing inside the mine, combining poor ventilation, equipment whose safety mechanisms were not functioning and coal dust, which, contrary to industry rules, had been allowed to accumulate, "behaving like a line of gunpowder carrying the blast forward in multiple directions."

Given the uncompromising language of the report, Massey management may not enjoy the "exclusive remedy" protections of the workers comp statute. They are now vulnerable to charges of criminal negligence. I suspect that attorneys for the widows and children of the miners will look rather closely at the assets of Massey's (now former) CEO.

Farewell, My Ugly
Don Blankenship resigned from his CEO post in December of last year. Don't bother putting up a collection to buy this ethically-challenged titan of business a gold watch. In 2009 he earned $17.8 million, which does not include deferred compensation of an additional $27.2 million. There is no question that Blankenship's leadership created profits for the company. Unfortunately, these profits came at the expense of the environment and of the men who extracted the coal from the West Virginia mountains.

The anecdote that tells you a lot about Blankenship involves his personal water supply. When Massey Energy activity poisoned the water reaching his own home, Blankenship ran a private pipeline to the next town, where clean water was readily available. His neighbors, lacking Blankenship's resources, have to make do with the local, polluted water.

It will be interesting to see what happens next. In a just world, Blankenship would be held accountable for his actions as Massey's CEO. But we do not live in a world where justice prevails very often. Blankenship will likely continue to enjoy his retirement years, drinking clean mountain waters, railing about government interference, buying a few politicians and generally living the good life. We can only hope that each and every night his dreams are haunted by visions of the 29 miners and their struggling families. That would be one form of justice indeed.

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May 18, 2011

 

Cavalcade of Risk - Emily Holbrook is hosting the 131st edition of Cavalcade of Risk at one of our favorite risk-related blogs, Risk Management Monitor. Check it out!

Compensability issues - In disputes as to whether an employee's injury or illness is eligible for benefits, courts look at the issues of whether the injury arose in the course and scope of employment. Roberto Ceniceros posts that while course and scope have generally been regarded as a single doctrine, that may be changing with the challenges posed by an increasingly mobile work force. See his blog post: "Course and scope" separated.

Safety for the solitary worker - Speaking of a mobile work force, do you have workers who work alone? Solitary work poses unique safety challenges. See Safety Daily Advisor's tips for keeping solo workers safe.

Claims IT systems webinar - Health Strategy Associates has an upcoming webinar that may be of interest to some of our readers: the results of HSA's First Annual Survey of Workers Comp Claims IT Systems. If the sponsoring organization's name isn't familiar to you, it's our fellow blogger and friend Joe Paduda's firm - he's sponsoring the seminar in conjunction with colleague Sandy Blunt. If this interests you, act now - the webinar is scheduled for tomorrow!

Mining safety, one year later - On last week's anniversary of the West Virginia Big Branch mine disaster that claimed 29 lives, the latimes.com looks at progress - or lack of progress - in enhancing miner safety: Families of dead miners feel let down by Washington. The story reports that in the past year, a safety bill has failed and the backlog of safety cases has grown.

Top HR issues - Workforce covers the top 10 HR concerns as reported by the Employers Resource Association. These issues are compiled from the more than 8,000 hotline calls made by the organization's membership of 1,300 companies in Ohio, Kentucky and Indiana.

Mousing elbow - As we incorporate more and more devices in our work-world, technology-related maladies seem to multiply. Greg LaRochelle of the MEMIC Safety Blog talks about Mousing Elbow and how to prevent it. See also Blackberry Thumb, Cell Phone Elbow, IPod Ear. Also, see our ergo tips for setting up a workstation.

Medical costs - Can making physicians aware of the costs for procedures help to curtail costs? Katherine Hobson of WSJ's Health Blog reports on an interesting research project that showed a decrease in expenditures for routine lab tests when physicians were made aware of the overall costs for such procedures: "Cosimi tells the Health Blog the study represents "a good first step, just to show that there's a problem, and a potential solution." The goal would be to establish guidelines for proper testing. And he says it's not just blood work that could benefit from this kind of approach. At his own transplant unit, he noticed changes in prescribing behavior simply by posting the very different costs of two similar antibiotics."

Hidden costs - We all know the health risks of smoking and that smoking can contribute to comorbidities that hinder worker recovery. But there are lesser known risks that can contribute to claim costs, In PropertyCasualty360, Zack Craft of Total Medical Solutions talks about how smoking can damage sensitive medical equipment too, and a factor that adjusters should consider.

Wage & hour violations? There's an app for that - If you feel like your employees are tracking you, they may well be. Employment attorney Michael Fox posts about the Department of Labor's new timesheet i-phone app, which is intended to help employees track the hours they work and the wages they are owed. The DOL says that, "This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records."


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May 17, 2011

 

Illinois is struggling mightily with its bloated workers comp system. Currently ranked 3rd highest for overall cost in the Oregon study, the governor and legislature are under intense pressure from the business community to lower the cost of comp insurance. Aiming its powerful bulldozers at the state capital, the Caterpiller Company has threatened to move their business somewhere else if reforms are not implemented immediately. In exploring all options, the legislature has gone so far as to think the unthinkable: abolishing workers comp.

In looking for ways to save money, Illinois does what all states do: first, identify the cost drivers and then try to change the statute to bring down costs. Among the hot issues on the table are the medical fee schedule (too generous), employee choice of doctor (too flexible), duration of benefits (too long), causation (too vague). Ah, behind every cost driver is a vested interest (perhaps literally vested, with many of the lobbyists wearing three piece suits). The common denominator among all states struggling with high comp costs is the omni-present stakeholder, who is deeply committed to the status quo.

Governor Quinn would like to see a number of reforms, including the capping of carpal tunnel benefits, denying claims where employee intoxication is a significant factor, attacking fraud (see our blog on Illinois's dubious arbitration services), capping wage differential benefits at age 67 or five years after an injury, and implementing utilization review for physical therapy, chiropractic and occupational therapy services.

Going Nuclear
The Illinois legislature is so frustrated with the slow progress and with stakeholder resistance to change, they are now threatening to blow up the entire system. Interesting to note, this pressure is coming from the Democrats. John Bradley (D-Marion) has filed House 1032, a bill to repeal the workers comp act and send all workplace-injury issues into the court system. Should this happen, Illinois will find itself in the world prior to 1912, when injured workers had to sue their employers and could collect benefits only if their injuries were caused by someone other than themselves. They would collect no benefits while awaiting adjudication of their claims. They would be out of work and out of luck.

In all likelihood, repeal of workers comp is not a serious option in Illinois; it's a political strategy for getting the attention of inertia-bound legislators. But the prospect of abolition does raise an interesting issue. Workers comp came to America 100 years ago. By the end of the World War II, every state had implemented the program.

What if there were no workers comp programs today? What if each state were starting from the beginning and tackling the issue of protection for injured workers? I find it hard to imagine that state legislatures would be willing to implement a program, totally funded by employers, that provides indemnity for lost wages and 100 percent medical benefits for injured workers. Why so generous? Why so inclusive? It's too expensive. It will create disincentives for working. The cost will drive employers out of business or out of state.

With today's acrimonious, ideology-driven debates, workers comp would be a hard sell. That's too bad, for despite its problems and inequities, despite the wide variations in benefits and costs from state to state, comp is a compelling example of effective social engineering. In Illinois, cooler heads will likely avoid the meltdown option. To be sure, Illinois comp is a mess, but the alternative - a workplace without workers comp - would be far worse.

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May 16, 2011

 

Did you miss your biweekly dose of heath wonkery last week? Grab a cup of Monday morning coffee and catch up now with news from the best of the health blog pundits - Hank Stern hosted a concise compendium in his Health Wonk Review Spring Renewal edition at InsureBlog. Thanks, Hank!

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May 12, 2011

 

A couple of days ago my colleague Julie Ferguson blogged OSHA's new focus on farm safety. We all share the concern for the safety of farm workers. But OSHA is upping the ante in a way that requires the immediate attention of both insurance companies and their clients. As part of their investigation into the deaths of two teenage workers in a silo operated by Haasbach LLC, OSHA issued subpoenas for documents from Haasbach's insurer, Grinnell Mutual Reinsurance Co. OSHA wanted to review safety inspection reports and any follow up documentation from Haasbach. The insurer refused, arguing that the subpoena would discourage businesses from allowing insurers to conduct safety inspections if the material contained in the inspection reports can be used against a business during later litigation or OSHA enforcement proceedings.

The U.S. district court has ordered that the records be given to OSHA.OSHA Assistant Secretary Dr. David Michaels praised the decision. "The court affirmed OSHA's authority to obtain relevant information from an employer's workers' compensation insurance company. This is not surprising legally, but it does illustrate that workers' compensation and OSHA are not separate worlds divorced from each other," he said. "Workers' compensation loss control activities overlap with OSHA's efforts to bring about safe and healthful workplaces, and in order to achieve a safe and healthful working environment for all Americans, all efforts of business, insurance, labor and government must move forward together."

The court ruled that OSHA has jurisdiction to investigate the workplace fatalities, and further has the authority to require the production of relevant evidence and the ability to issue a subpoena to obtain that evidence. The requested documents, which included copies of site safety inspections, applications for insurance coverage for the site, and correspondence between Grinnell and Haasbach concerning the site, were found to "reasonably relate to the investigation of the incident and the question of OSHA jurisdiction," according to the decision.

A Tighter Safety Net
The court's ruling has important implications for both insurers and their clients.

Insurers are required to provide safety services, including site inspections with the findings documented in written reports. Usually, the safety inspector asks for a written response within a set time period. With OSHA potentially accessing these reports, there is liability for insurers: did they identify safety problems? Did they follow up to ensure that the problems were fixed within a reasonable period of time? It's another version of the great liability question: what did you know and when did you know it?

Similarly, the documents put insureds at risk. Safety issues have been identified. How did the business respond? Did they fix the problem? Did they perform the necessary training? Did they document their activities to show good faith in correcting identified concerns?

In all of this activity, candor is essential. The last thing anyone wants - and that anyone certainly includes OSHA - is for this court's ruling to have a chilling effect on the routine inspections performed by insurance companies. The concern is that inspectors, sensing OSHA reading over their shoulders, might hedge the findings just a bit - enough, perhaps, to create an ambiguity in the finding that results in an ineffective and unfocused response by the insured, which, in turn, perpetuates the hazard and leads, perhaps, to a serious injury or even death. That would be an unintended consequence of tragic dimension.

Focus on Safety
As always when OSHA becomes involved, there is a lot of money on the table. Following the fatalities, Haasbach was issued 25 citations with a penalty of $555,000. This was in response to the situation where three (untrained) workers became entrapped in corn more than 30 feet deep. At the time of the incident, the workers were "walking down the corn" to make it flow while machinery used for evacuating the grain was running: all in a day's work on the farm, and extremely hazardous.

It is certainly not in the best interests of insurance companies and their clients to build defenses against potential OSHA involvement. If we all share a commitment to safety - and we must - then an open and candid dialogue is essential. To be sure, both insurers and their clients are "on the hook" once problems have been identified. But surely it is in their combined interests to fix those problems as quickly as possible. Insurers and their clients must keep the focus where it belongs: not on OSHA, but on the moment-to-moment, day-to-day safety of workers on farms, in factories and in every American workplace.

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May 11, 2011

 

New York continues to deal with the failure of the self insurance groups (SIGs) managed by CRM. As is so often the case, the question is who pays? Who assumes the debts incurred by the failed management company? When a conventional insurance company fails, the state usually covers the benefits for the injured workers and then passes some of the costs on to insurance companies and their clients, in the form of assessments. Given the large number of insurers and their clients, these assessments are relatively small for any individual company. In the CRM failure, unfortunately, the financial implications for all SIG participants are enormous.

The New York approach to SIG failures has been to expand the concept of "joint and several liability" to include not just the companies in a given (failed) SIG, but any and all companies who participate in SIGs. In other words, when NY companies join a SIG, they are responsible for their own losses, the losses of other companies in their group, and the losses of all companies involved in SIGs. Such open-ended parameters for exposure should raise red flags for any risk manager thinking about joining an Empire State SIG.

In April 2010, Justice Kimberly O'Connor ruled that the assessments on healthy SIGs were unconstitutional. She appeared to strike a blow for fairness. Alas, she has been over-ruled by the state supreme court, which has determined that the comp statute allows the state to seek reimbursement from all SIGs. The sins of the few are to be borne by those who played by the rules.

Misplaced Trust
CRM, which has filed for bankruptcy, apparently managed SIGs like a Ponzi scheme: they under-priced the insurance to attract new customers; they under-reserved claims to give the appearance of profitability; and they charged exorbitant management fees every step of the way. Like all Ponzi schemes, tt worked beautifully until it collapsed. By the time the state uncovered the problem (therein lies a tale), CRM was on the ropes. The state settled CRM's liabilities for about 10 cents on the dollar. Where does the rest of the money come from? The state is reaching into the pockets of all SIG participants, those who participated in CRM SIGs and everyone else, thus including companies that paid fair rates for insurance, focused on managing their losses and, in general, played by the rules.

Well, as they say, let no good deed go unpunished. The comp statute protects the interests of the state. The law is quite clear. Members of the solvent SIGs share the liabilities incurred by SIGs that failed to live up to their responsibilities. Is it legal? Apparently, yes. Is it fair? Well, no.

The state legislature is tinkering with the assessment plan, trying to come up with ways to ease the pain of the current assessments and insure the solvency of SIGs going forward. Don't hold your breath.

The Nature of Trust
Trust is defined as having belief or confidence in the honesty, goodness, skill or safety of a person, organization or thing. The saga of CRM has shown that trust can be misplaced, and that when it comes to participating in SIGs in NY, any and all trust is misplaced.

My advice to NY companies is simple: forget about SIGs. Find yourself a nice, guaranteed cost plan from a conventional insurance carrier, then go to sleep knowing that your premiums will reflect two things, one good, one bad: the good? The premium you pay will be based upon your own losses; you are not responsible for anyone else. The bad? You operate in a state where, despite inadequate benefits paid to injured workers, the cost of comp insurance is way too high. But that's a tale for another day.

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May 10, 2011

 

Suffocation in a manure slurry pit. Being attacked and crushed by a bull. Being crushed by an 1800 pound bale of hay. Being run over by heavy farm equipment. These aren't the things you think of when you drive by a pastoral, picture-postcard scene of a herd of grazing dairy cows. Yet dairy farms are among the most hazardous and deadly work environments in the nation.

In this month's Risk & Insurance, Cyril Tuohy discusses how OSHA is ramping up inspections at Wisconsin dairy farms - partly in response to the death of a migrant worker last spring in a manure pit - and in response to an overall high industry fatality rate.

Of the industry's lethality, Tuohy reports:

The labor statistical category for dairy farming, which includes all agriculture, forestry, fishing and hunting, reported 26 fatal work-related injuries per 100,000 full-time equivalent workers in 2009, the latest year for which numbers are available. That gives this occupational category the highest ratio among all categories.
Its fatality rate is more than double the No. 2 deadliest category, the mining sector with its 12.7 fatal work-related injuries per 100,000 full-time equivalent workers, the BLS statistics reveal. Transportation and warehousing (12.1 fatal injuries), construction (9.7 fatal injuries) and wholesale trade (4.9 fatal injuries) round out the top five deadliest occupations.
There were a total of 551 deaths reported in 2009 in agriculture, forestry, fishing and hunting, up from 286 fatalities reported in 2008. A total of 4,340 workers died in 2009 in all sectors, down 17 percent from 5,214 in 2008.

In his paper Dairy Farm Safety and OSHA - Approaches for effective management and worker training David Douphrate discusses the most common safety hazards in dairy farms:

One of the most common causes of death and serious injury on farms is related to the heavy equipment required to run a dairy farm. A high number of farming fatalities are due to tractor turnovers. Other causes of fatalities include silage bunker collapse, manure pits, tractor power take offs (PTO) and large animals such as dairy bulls.
Recent research studies show that the two main causes of workers' injuries (fatal and non-fatal) are incidents with machinery and animals [Mitloehner and Calvo 2008]. Machine-related accidents include tractor rollovers, being run over by tractors and being entangled in rotating shafts. Animal-related injuries include kicks, bites, and workers being pinned between animals and fixed objects. Other causes of injuries include chemical hazards, confined spaces, manure lagoons, use of power tools, and improper use or lack of personal protective equipment [Mitloehner and Calvo 2008].

Douphrate's paper also documents the most common citations that resulted from 736 diary inspections between 2000 to 2010:

* Lack of proper injury and illness prevention program.
* Lack of work injury recording and reporting.
* Lack of mounting or proper tagging of portable fire extinguishers.
* Inadequate communication program about hazardous chemicals.
* Inadequate process safety management of highly hazardous chemicals.
* Inadequate hazardous waste operation management and emergency response.
* Inadequate respiratory protection.
* Lack of roll-over protective structures (ROPS).
* Inadequate guarding floor and wall openings and holes.
* Inadequate eye and face protection.
* Inadequate medical services and first aid.
* Inadequate guarding of field and farmstead equipment.

An industry fueled by immigrant workers
As damning as some of the injury and death statistics are, the reality might be even worse. Many farm workers may be reluctant to report injuries due to their illegal, undocumented status - a fact that makes these workers an easy population to exploit. A 2009 article in High Country News documented this Dark Side of Dairies, portraying a broken system that leaves immigrant workers invisible - and in danger. According to the article:

The majority of the West's nearly 50,000 dairy workers are immigrants, according to U.S. Department of Agriculture sociologist William Kandel. Many of them are undocumented, monolingual Spanish speakers like Gustavo. Such workers are unlikely to report injuries or file claims with the state for money to recover medical bills and missed pay for fear of getting fired or deported.

To make matters worse, agricultural workers are not afforded most of the federal labor law protections that are extended to workers in other industries.

Other dangerous industries, such as meatpacking, logging and construction, have specific safety standards mandated by state or federal labor agencies. While dairies fall under the general agricultural safety regulations for tractors and heavy machinery, there are no specific standards for how workers should be protected while milking or moving cows. Dairy workers in Washington, Nevada, Oregon and California are entitled to lunch and rest breaks, but legal aid organizations in these states say the laws are rarely enforced.

What dairy operations can expect from OSHA
An article in Hoard's Dairyman discusses OSHA's dairy initiative and talks about what dairy farms might expect:

As OSHA begins to take a closer look at dairy farms, there are a number of areas they will be evaluating. "If you have grain bins, and many dairies do, they will look at procedures for the confined space entry," says Carter. "Perhaps a bigger concern will be manure pit guarding. The State of Wisconsin requires guarding per your manure pit application. Many states may have similar rules," he notes.

The article also offers advice to farmers for what to do if OSHA makes a visit, and what the range of fines are for violations.

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May 9, 2011

 

NCCI has released two reports that are essential reading for risk managers and anyone else who enjoys the Big - albeit somewhat gloomy - Picture.

The first report is a summary of workers comp performance through 2010: while many indicators are positive or at least neutral, the major concern is overall performance. The combined ratio for insurers (losses plus expense) is creeping steadily upward: 101 percent in 2008, 110 percent in 2009, 115 percent in 2010. In other words, in 2010 carriers spent 15 percent more than they earned through premiums. Even with improved returns on investments, insurers are caught in the zone where many are losing money, especially those whose combined ratios have drifted above the average.

The troubled economy has complicated matters: as payrolls go down, premiums go down with them. Comp premium peaked in 2005 at $47.8B; in 2010, premium totaled $33.8B. To be sure, fewer people are working, but that often results in increased stresses - and risks - for those who still have jobs.

Finally, there is the highly politicized issue of rates for comp insurance. No state wants to be the first raise the rates, as this increases the cost of doing business and makes the state less competitive in attracting new business. So states hold the line or even force reductions, making all businesses - except insurance related - happy.

The Really Big Picture
For those of you who seek perspectives beyond comp, into the broadest possible, world-wide view of risk transfer, Robert Hartwig of the Insurance Information Institute offers slides that are compelling viewing. He examines the dual specters of terrorism and natural catastrophe. Bin Laden's unlamented death may increase the risk of attack in the coming months, resulting in open-ended exposures for workers comp and property insurance. As for natural disasters, with the spate of earthquakes, tsunamis, and tornadoes, any actuary who is paying attention is having trouble sleeping these days.

Japan's earthquake, tsunami and nuclear plant meltdown appears to be the most expensive natural disaster in history. The total losses are expected to run between $100-300B, of which only a relatively small portion ($45B) is insured. (Government will bear the brunt.)

Tornadoes tearing through mid-America thus far have avoided major population areas, but the recent event at the St. Louis airport raises the specter of urban disaster.

Who Pays?
When calamity strikes, the impact is greatest on reinsurance, which kicks in when limits are reached in-front line policies. With the unprecedented scale of recent events, the cost of reinsurance must go up, and as it does, the cost of insurance for the consumer (business and personal) goes up with it. We live in risky times and the increasing costs of risk transfer reflect our darkening world.

One final note: Hartwig reveals that the 9/11 attacks added 1.9 percent to the combined ratio for 2001, which totaled a robust 121.7 percent. That's a sobering thought for this beautiful spring morning. My advice? Slap on some sunscreen and get out for a stroll. There's no better cure for gloomy data than a walk in the sunshine.

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May 5, 2011

 

The latest edition of Cavalcade of Risk is up, hosted by David Williams of MedPharma Partners LLC. If you have any interest in liability for dog bites, insuring exotic animals (kangaroo, anyone?) or the percentage of drivers who admit to driving without insurance (about 10% - yikes!) - among other interesting items - check it out. It's brief and very much on point.

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May 4, 2011

 

Last month we blogged the suicide of Dave Duerson, a former NFL star who killed himself at the age of 50. In order to preserve his brain for study, he took the unusual step of shooting himself in the chest. He suspected - and the subsequent autopsy confirmed - that he suffered from chronic traumatic encephalopathy, a degenerative and incurable disease that is linked to memory loss, depression and dementia. A definitive diagnosis is available only through an autopsy.

Among the many ironies surrounding this sad tale is the fact that Duerson sat on the six person NFL committee that reviewed claims for medical benefits submitted by retired players. Duerson was known for his harsh line on these claims, apparently voting to deny benefits in many cases (the votes of individual committee members were not recorded). He even testified before a Senate subcommittee in 2007, supporting the NFL's position that there was no definitive relationship between repeated concussions and subsequent dementia.

The days of denial appear to be over. Dr. Ira Casson, who represented the "prove it" mentality of the NFL, is no longer actively involved. The medical evidence is accumulating; while some refuse to connect the dots, it's increasingly clear that repeated brain trauma (concussion) is often directly related to a precipitous decline in brain function in the post-gridiron years.

Old Game, New Order
The NFL is trying to improve the safety of its players. The new rules limiting return to the playing field after a concussion are taking root. Helmet to helmet hits are being penalized with increasing financial severity. But even as the league tries to limit future exposures, the fate of retired players looms large. There will be increasing numbers of claims for disability, including workers comp where applicable, by players who face a substantially diminished burden of proof to connect dementia to playing field ("workplace") exposures.

It is painful to contemplate the agony of Dave Duerson's final days. Confronted with the incontrovertible evidence of his own demise, he must have realized how wrong he had been in taking the company line on dementia. He knew what his own autopsy would reveal: a brain damaged by chronic traumatic encephalopathy, caused by repeated trauma. His choosing to shoot himself in the chest was a farewell gesture, not only to his own life, but to the beliefs that had led him to take a hard line with his former colleagues. A loyal member of the "old guard," he ended his life with the unmistakable and moving embrace of the new order.

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May 3, 2011

 

In honor of NAOSH week, we thought it might be nice to feature a sampling of safety tips from the next crop of safety engineers. It's nice to see these kids are learning such important lessons early. Good job, kids!

Camille-D-Soto.jpg

Camille D. Soto, 6, FL: Make sure you wear safety glasses...

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Tamaya Olivia Bush, 8, SC; Come Join the Crew

Damoreon-Travis.jpg

Da'moreon Travis, 10, KY, Make Safety First or You Won't Last

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Sai Pravallika Velicheti, 12, Kuwait; Confined Spaces Can Kill

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Robin Newman, 14, AL; Don't be the sender to cause a fender bender

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