October 2011 Archives

October 28, 2011

 

Joe Paduda hosts The Superhero Edition of Health Wonk Review, in which he attributes superpowers to our regular health wonk contributors and cites them for doing battle with tough issues. My question is when are we going to get the costumes, Joe?

By the way, while you are at Joe's blog, don't overlook his smoking gun post Physican dispensing - boy do we have a deal for you!

Good news - DOL reports that private industry workplace injuries and illnesses declined in 2010. They fell to a rate of 3.5 cases per 100 equivalent full-time workers, down from 3.6 cases in 2009. But the more serious cases are holding constant: More than one-half of the 3.1 million private industry injury and illness cases reported nationally in 2010 were of a more serious nature that involved days away from work, job transfer, or restriction--commonly referred to as DART cases.

Wellness - Ezra Klein covers Cleveland Clinic's wellness program in Health Care's Brave New World of Compulsory Wellness. The program is not without some controversy, but it appears to be working: "Not only has the clinic cut its health-care costs, but its employees are also getting healthier in measurable ways. Workers have lost a collective 250,000 pounds since 2005. Their blood pressure is lower than it was three years ago. Smoking has declined from 15.4 percent of employees to 6.8 percent."

See you there? - we're getting close to two important industry events, and we'll be at both. From November 9 to 10, we'll be at the National Workers Compensation & Disability Conference in Las Vegas. If you are attending, why not meet up at Mark Walls' Link UP reception at 5 pm on Wednesday? We'll also be at the WCRI's 28th Annual Issues & Research Conference in Boston on November 16 and 17. We're looking forward to both. Drop us a line if you will be attending too.

Sneak peek - Business Insurance has had a redesign and is offering an "open house" through the 31st of the month. Here's the workers' comp section - if you read Workers Comp Insider regularly, you know we are a Roberto Ceniceros fan. The whole publication is worth a glance, BI has an excellent staff of reporters many of whom have been with the publication for years.

Get your fright on - In honor of Halloween weekend, we thought this feature on 8 Terrifying Robots Now Stalking Your Local Hospital was appropriate - but be warned, the feature appears on an irreverent site and if you are at work, it might trigger your company's net nanny filter. Also on a scary theme, we noted this recent study on Psychopathic bosses.

News Briefs


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October 26, 2011

 

How bad is the obesity epidemic? Bad enough that car makers are increasing the size of cars to accommodate our collective expansion - typical family cars have gained about a foot of width over than half a century ago. And in a Plump My Ride research initiative, at least one luxury automaker is researching how obesity affects mobility while driving.

A recent study by Gallup says that obesity and related conditions total $153 billion in annual productivity losses. U.S. workers who are overweight or obese and have other chronic health conditions miss an estimated 450 million additional days of work each year compared with healthy workers. The study also notes:

"The $153 billion in annual lost productivity costs linked to unhealthy workers in the United States is more than four times the cost found in the United Kingdom. The striking difference is the result of fewer unhealthy workers in the U.K. About 14% of full-time U.S. workers are of a normal weight and have no chronic illness, compared with 20% in the U.K."
Julie Liedman discusses obesity and its effects on the workplace in a recent article in Risk & Insurance. She cites a new report by Lockton Inc. that documents other costs related to obesity:
  • Some 74 percent of the adult U.S. population, aged 20 years and older, is either overweight or obese
  • Medical costs associated with obesity are estimated at $168.4 billion per year
  • The increase in obesity prevalence accounts for 12 percent of the growth in health care spending

Liedman notes that this report suggests traditional wellness programs aren't enough to tackle the issue of morbid obesity and employers should consider offering benefits that cover more dramatic interventions, such as bariatric surgery.

"A person with a BMI of 25 to 29.9 is considered overweight; a person with BMI of 30 to 39.9 is considered obese and a person with BMI of 40 or more, or a BMI of 35 or more with an obesity-related disease such as diabetes, heart disease or sleep apnea is considered morbidly obese. People with BMI of 40 or more, or 35 or more with an obesity-related disease, are considered candidates for surgery."

We've previously discussed obesity costs as they relate to workers comp based on an NCCI study. While some might think that the suggestion for employers to consider benefits to cover bariatric surgery to be a radical response, it may be a Hobson's choice of "pay for it now" or "pay for it (more) later." We've pointed to several cases that determined employers must pay for weight reduction surgery as part of recovery from a work-related injury. See Compensable weight loss surgery? A new wrinkle in obesity and New York Weighs in on Obesity.

By the way...
Do you know your own BMI? Use this BMI calculator to check your own weight or to use in your wellness communications.

Related past posts
Tip Toeing Around Obesity
The Cost of Getting Better
Injuries at the gym: compensability, incentives, and wellness
Morbid Obesity and the Essential Job Functions of a Cop
Weighty matters: the high cost of obesity in the workplace
Obesity in Workers Comp: Duke Sounds the Alarm

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October 24, 2011

 

When the category 5 hurricane hit Joplin, Missouri on May 22 this year, Mark Lindquist was perched on a mattress which covered his clients, three mentally disabled adults. Lindquist, a social worker for Community Support Services, was following the tornado protocol in a town where basements are virtually non-existent. Unfortunately, the protocol proved utterly ineffective in the wake of 200 mile per hour winds. Lindquist was plucked from his perch and hurled a block away. He was impaled on debris, with every rib broken, his shoulder destroyed and most of his teeth knocked out. He was put into a coma for about two months, nearly dying from Zyomycosis, a rare fungal infection that killed 5 other victims. And to top things off, his three clients perished in the storm.

Lindquist's survival is well beyond the expectations of his doctors. His right arm remains in a sling, but he has use of the hand. An eye that was temporarily blinded has full sight. He moves slowly and has short-term memory loss, but is able to speak clearly.

A Hole in the Safety Net?
Lindquist assumed that workers comp insurance would cover his medical costs (a whopping $2.5 million), pay for his 12 daily meds and provide indemnity for his lost wages. (As a low wage worker, Linquist could not afford health insurance.) His assumption of coverage has proved naive. He certainly was "in the course and scope of employment." However, under Missouri law, Acts of God are only covered by workers comp if work exposes the individual to unusual risk. If, on the other hand, there was no greater risk for Lindquist than that facing the general public at the time of the tornado, the injury is not compensable. Lindquist was working - heroically - but the work itself did not cause the injuries. His claim has been denied.

End of story? Not quite. Certainly a case can and will be made that by lying on top of a mattress, in that particular location, Lindquist was more exposed to harm than the general public. He will be able to show that had he not been working, he might have been able to drive his van out of harm's way. Given the high profile of his claim, he is likely to prevail at some point in the process.

It's worth noting that of 132 comp claims filed in the tornado's aftermath, only 8 have been denied. It may have been an Act of God, but somewhere along the line there will be an act of mercy to help a courageous worker rebuild his shattered life from the ground up.


Thanks to Mark Walls and his Workers Comp Analysis Group for the heads up on this story.

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October 20, 2011

 

Van R. Mayhall of Insurance Regulatory Law makes his debut as host of Cavalcade of Risk with his "Meet the Experts" edition. Mayhall is an expert himself - an attorney who practices in the areas of Business & Corporate Law and Insurance Regulatory Law. We welcome his participation!

Workers Comp Conference - Nancy Grover offers a sneak peek at highlights of the National Workers' Compensation and Disability Conference & Expo which is on the docket for November 9 and 10 in Las Vegas. You can follow more about upcoming conference events on LinkedIn's National Workers' Compensation and Disability Conference & Expo Group.

Maximizing wellness program ROI - According to a post by Preston Diamond in Risk Management Monitor, "On average, employers can see a 30% reduction in Workers' Compensation and disability claim costs, according to a review of 42 published studies involving the economic returns of wellness programs. Moreover, wellness programs will reduce the costs of absences that, according to the 2010 Kronos/Mercer Survey on the Total Financial Impact of Employee Absences, add up to 8.7% of payroll costs, more than half the cost of health care." But experts caution that all wellness programs are not equal so employers need to implement with care. See 5 Steps Companies Should Take Before Launching a Wellness Program.

Performance Standards & Disabilities - Employment law attorney Daniel Schwartz posts an FAQ on Applying Performance Standards to Employees with Disabilities. He notes that although the ADA affirms an employer's right to define jobs and to evaluate employees according to consistently applied standards governing performance and conduct, it's a case where the devil is in the details. But he links to some lesser-known EEOC guidance on the matter that helps to address some common questions.

High costs of excessive alcohol consumption - According to a new study on the costs of excessive drinking by the Centers for Disease Control and Prevention, the cost of excessive alcohol consumption in the United States in 2006 reached $223.5 billion, which translates into about $1.90 per drink or $746 per person. Researchers also pointed out that 72% or the total costs could be attributed to losses in workplace productivity.

Is Ohio drinking the tea? - Looking at some ballot issues in Ohio, Roberto Ceniceros asks if a tea party initiative could end workers' comp. He cites a Toledo Blade editorial which argues that although the intent of the measure is to thwart the health-care reform law, it may open the door to some unintended consequences.

A picture is worth a thousand words - The Geography of a Recession is an animated view of U.S. unemployment from 2007 to 2011. Hat tip to Workplace Prof Blog for the pointer.

Lift Gates - Tony Jones of the MEMIC Safety Blog offers a good overview on safety considerations related to lift gates, including equipment considerations, pre-operations, operations, and special considerations.

News briefs

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October 17, 2011

 

For over a decade, workers comp insurers have watched profit margins erode, as rates in many states continue their precipitous fall. The mismatch between premiums collected and losses paid out has reached alarming levels, with a projected combined ratio of 121.5 percent for the current year. Even in the best of times for investments, making up 21 percent against losses would be daunting, and these are hardly the best times for money to make money.

The ever-reliable Roberto Ceniceros writes in Business Insurance that the long-awaited upward trend in rates for comp insurance appears to be underway. Among the 38 states directly administered by NCCI, there are requests for modest rate increases in 19; given that the insurance cycle runs from July to June, we can expect to see more states with rate increase requests over the next 9 months. The increases are by no means dramatic (and, some would argue, hardly adequate when measured against insurer losses). The rate increases proposed by NCCI all fall within single digits.

There are a number of reasons for higher insurance losses:
- payrolls are down due to the recession, resulting in lower premiums
- frequency is up - an ominous sign, given that frequency had been declining year after year
- severity continues to increase, as injured workers stay out of work longer and access more exotic treatments
- returning injured employees to their jobs is increasingly difficult in an economy where jobs are disappearing

Insurers Behaving Badly
When contemplating the problems of insurance companies, we must never lose sight of the tendency, as my colleague Tom Lynch puts it, of "insurers eating their young" - in other words, despite the losses, insurance companies persist in offering steep premium discounts, leading state regulators to conclude that they don't really need rate reductions. Insurers continue to hope that their underwriters have a magic touch in finding the good risks and avoiding the bad. With margins as tight as they are, finding a profitable book of business becomes increasingly unlikely, no matter how skilled the underwriting.

A.M. Best projects the short term prospects for comp carriers to be "grim." That is no overstatement. State regulators tend to be slow to respond to requests for higher comp rates. Employers are already struggling in a bad economy and regulators will do everything possible to keep comp costs as low as possible. While the long-term trend of lower rates may finally be nearing an end, the upturn is likely to fall short of what is needed. These are tough times for comp carriers, with no significant relief in sight.

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October 13, 2011

 

Health Wonkery - Christopher Fleming hosts Health Wonk Review Unadorned at the Health Affairs Blog. Check out the latest from the best of the health policy bloggers. And if healthcare is of concern to you, Health Affairs should be a regular read!

Bad behavior - When it comes to bad behavior, we are equal opportunity finger pointers. We've seen fraudulent employees. We've seen terrible bosses. We've seen bad brokers, bad insurers, and quack docs. Fraud is a game everyone can play and no one has a corner on the stupidity market. Among the recent crop of losers, we start with a post from HR Web Cafe about a mean-spirited employer who got a smackdown from a labor judge for a rather unusual contest he used to "motivate" his workers to better performance. And also on the employer side of the house, we have a classic case of premium fraud by a California tree trimming business that failed to pay workers comp premiums, under-reported payroll by more than $2 million, and failed to pay taxes. On the employee side, Roberto Ceniceros tells the story of nightmare employees who let rage over a small thing turn into a tragic event.

Spying on Employees - Employment law attorney Heather Bussing offers some useful guidelines on employee privacy and what employers can monitor. This is a really good overview. We encourage reading the entire article. Here's some of her take-aways: "If the employer owns the system, hardware or both, the employer can monitor employees' use of it, including personal files and communications.
If the employee owns the system and hardware, the employer's ability to view and obtain personal files depends on the whether the employee is using it at work, whether the employer has a legitimate interest in viewing the communication, what the state's laws and employer's policies are, and what the employee's objective expectations of privacy are."

Repackaged Drugs - Joe Paduda has been in the forefront of a crusade against the practice of repackaged drugs, which has been promoted as a convenience for patients, but in practice is a costly work around for fee schedules. This is one of those under-the-radar issues that many employers may not see, but in states where the practice is allowed, it is costing big bucks. Joe first talked about the practice in 2006, and has been regularly posting updates. He brings you the latest from the eye of the storm: Is Florida finally going to fix its (repackaged) drug problem?

OSHA - OSHA has recently issued Nail Gun Safety - A Guide for Construction Contactors. OSHA says that nail gun injuries are responsible for approximately 37,000 emergency room visits annually. "These injuries occur as a result of unintended nail discharge; nails that bounce off a hard surface or miss the work piece and become airborne; and disabling the gun's safety features, among other causes. Injury prevention is possible if contractors take steps such as using full sequential trigger nail guns; establishing nail gun work procedures; and providing workers with personal protective equipment."

Child Workers - Celest Monforton gets the bureaucratic runaround when she tries to find out why child labor regulations were delayed by the White House's Office of Management and Budget. A Labor Department update to the 40-year old regulations were stalled for 9 months - meanwhile, two teens lost legs in a grain auger accident, precisely the type of event that made such an update to regulations imperative.

Excess Loss Development - NCCI had released a new research report on Workers Compensation Excess Loss Development. They note that, "Large loss and excess development is relevant to calculating excess loss factors used in retrospective rating."

News Briefs

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October 11, 2011

 

For 36 years Rodolfo Meza worked for Aerol Corporation in Rancho Diminguez CA as a metal worker making cast iron and aluminum molds. He was about 48 when he began working; he was about 84 when he was terminated while on medical leave for a knee operation. Rodolfo sued, claiming age discrimination, raising the question: how old is too old to work?

In the course of his trial and subsequent appeal, Rodolfo noted that his immediate supervisor commented frequently about his being "too old to work." Despite operations for a hernia and a knee replacement (the court rulings do not indicate whether these were covered by workers comp), Rodolfo had every intention of continuing to work. When his normal job became a bit difficult for him to perform, he requested a transfer to the engineering department, where he often had performed work. His supervisor responded "no, Rudy I can't [transfer you]. You are too old to move to engineering."

When he was terminated in 2009, his 24 year old son (conceived when Rodolfo was 60!) noted that he became sad and depressed.

Age Has Its Benefits
A jury awarded Rodolfo $100,000 for future economic loss: based upon his annual earnings, that's a little over three additional years of employment, bringing Rodolfo to age 87. In addition, they awarded $300,000 for past non-economic damages (presumably, the ongoing agist comments of his supervisor). That's a lot of money for an individual nearly 20 years past the conventional retirement age.

Aerol appealed and lost. The CA Court of Appeals found a pattern of discrimination, along with a legal technicality that prevented Aerol from contesting the award for the future earnings: Aerol failed to raise the issue in a timely manner during the initial the trial.

Expensive Lessons in Human Resource Management
Is the court saying that employers must continue to employ workers into their 80s, with no recourse available to force retirement? Can workers work as long as they like?

Not really.

Aerol - through the actions of Rodolfo's supervisor - made a number of critical mistakes in managing this situation. The supervisor made repeated comments about Rodolfo's age; the supervisor should have been warned to cease this behavior and disciplined if he continued. Rodolfo had an exemplary record of employment; there was no (written) indication that his performance had deteriorated. When Rodolfo felt less capable of doing his regular job and requested a transfer, he was denied the opportunity based solely upon his age. When he requested time off for the knee surgery, it was granted; there was no indication that his job would be eliminated during his absence, but that's exactly how Aerol proceeded.

A Word to the Wise on Aging
Savvy employers would do well to learn from Aerol's mistakes:
- Never assume that based solely upon age a worker is "too old"
- Focus on the essential job requirements: employees must be able to safely perform jobs as specified (some accommodation based upon age should be considered)
- Document any problems in performance
- Train supervisors in managing older workers (along with women, minorities, disabled workers and any other protected classes)
- Above all, keep lines of communication open.

Rodolfo gave 36 years to Aerol. He deserved consideration as he grew older, but he was not guaranteed a job. If and when any issues of his job performance arose, his supervisor should have sat down with him to discuss them openly. Ironically, there are no real winners in this situation: Aerol (or its insurer) took a big hit economically. They also lost a loyal employee who was still capable of making a positive contribution to the company. Rodolfo lost the job he loved and lived for. To be sure, he now has a nice nest egg for retirement, but that is not what he wanted most. He was one older worker who just wanted to keep on working.

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October 5, 2011

 

Risk roundup - Jay and Louise Norris of Colorado Health Insurance Insider host this week's Cavalcade of Risk - it's the Colorado nature edition. Congrats to the Norrises on their 5 year blogging anniversary and 10th issue hosting the Cavalcade.

Check the facts - At Comp Time, Roberto Ceniceros tells the story of an insurer relying on a newspaper's crime report as the basis for denying a claimant's workers comp benefits. While this situation might seem like one that wouldn't surface all that often, we'd make the case that it is a cautionary tale for anyone who is using social media as an investigative tool.

Culture of Caring - Dave DePaolo has an interesting post on how the culture of caring relates to a workplace where the turnover rates are high, like fast food joints. Is high-touch communication and an early return-to-work model as effective when turnover is 120%? We'd note that high turnover is not only an impediment to return to work, it's no doubt also a factor in the number of injuries that occur. New, untrained workers have more injuries. The Bureau of Labor Statistics data shows that more than 40% of work-related injury claims are filed by workers who have been on the job for 12 months or less, and a NIOSH study found that employees 24 years old or younger are two times more likely to suffer a nonfatal injury than their older co-workers.

Medical Costs - In our last news roundup, we linked to the Kaiser Family Foundation's recent report that average family benefits premiums are up 9%. Joe Paduda of Managed Care Matters offers his thoughts on why premiums are up so much when medical costs are flat.

Workplace Violence - Michael Fox of Jottings by an Employer's Lawyer posts about OSHA's new directive on procedures for investigating workplace violence complaints. He notes that two industry groups get singled out for particular focus: Healthcare and Social Service Settings and Late-Night Retail Settings.

Anniversary of Patel Memo - At Lexis-Nexis, Robin E. Kobayashi commemorates the 10 year anniversary of the Patel Memo. Bonus points to you if you know what the Patel memo is. Here is a clue: it launched an entire workers comp-related industry.

Case to watch - The EEOC is suing Texas-based BAE Systems for violating the ADA by firing a man who weighed 680 pounds. The man had worked at his job for 16 years and had logged good performance evaluations. The intersection of obesity and the ADA is one to watch.

When light duty runs off the rails Safety News Alert discusses a case of a worker who returned to work on light duty. While on light duty, he received partial disability benefits because the job didn't pay as much as his previous position. But the employee had trouble getting along with his supervisor and asked to be laid off - which the employer granted. The employee then applied for full work comp benefits. Check out the court's decision.

New blog Well, new to us. TexasM Mutual Insurance Company's blog has been up and running for about 15 months now, but we just discovered it via our Twitter feed. There are some good posts, particularly some good safety information. Texas Mutual Insurance Company is the state's leading provider of workers' compensation insurance, with approximately 32 percent of the market. (And remember, Texas is a state where private employers can choose whether or not to carry workers' compensation insurance coverage.)


Also of interest...

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October 4, 2011

 

Predictive modeling has long been used in personal lines, especially auto insurance. It's only in the last 8 or 9 years that we've seen it squeezing through the workers' compensation front door in the areas of underwriting and claims administration. In this period, the major risk management consultants, TPAs and insurers have been developing sophisticated models to, in consultant-speak, "use advanced statistical techniques (e.g., multivariate analyses, generalized linear models) to simultaneously evaluate numerous potential explanatory risk factors for maximum amounts of knowledge from available data sources" (from a TowersPerrin 2006 paper) (PDF).

To translate, in the claims process, the purpose of predictive modeling is to identify injured workers who are most at-risk of delayed recovery or malingering. The best time to do this, of course, is at the time of the injury. As my friend and colleague Mike Shor, of Best Doctors, puts it, "Think of it as being no different from the triage process that occurs in combat medicine or an emergency room.... the military talks about the golden hour....it's what happens in that first 60 minutes that drive outcome. In WC we believe there is a golden 24-48 hours where the claim decisions that get made determine the ultimate outcome. It is here where claims that have the potential to run off the rails actually do."

To a certain degree, predictive modeling systems can suggest which injured workers are most at risk for staying out of work longer than is medically necessary. Predictive models use advanced statistical techniques to perform multivariate analyses that suggest the degree of risk associated with any one underwriting risk or any one injured worker claim. Some predictive models use hundreds, even thousands, of univariates, but, in the claims arena, as you can probably imagine, there are a limited number, perhaps 10 to 15, that are of most value, and many of these are of the common sense variety. For example, co-morbidities such as obesity, diabetes and diseases that affect oxygen intake, all of which hinder healing. Others are demographic, such as age, education, marital status and distance from the worksite. For example, if you have a 55-year old divorced Type-2 diabetic male who lives alone more than 20 miles from the worksite and who suffers a crushing injury to the foot you more than likely have an employee at high risk for extended absence. Of course, any claims adjuster worth his or her salt intuitively knows this, but a predictive modeling system can examine all of the appropriate variables and spit out a ranking with recommendations in a nanosecond or two. Predictive modeling doesn't come cheap, and it doesn't replace the experience and judgment of a seasoned claims specialist, but, if used wisely, it offers a significantly sharp, relatively new arrow in the claims quiver.

"Used wisely" is the key phrase, because if that happens the claims adjuster can quickly link the at-risk injured worker with a clinician skilled in dealing with the bio-psychosocial risk factors associated with delayed recovery. In other words, the full-court claims press can be applied very early in the claims cycle.

Add to this mix an educated employer injury coordinator who projects a caring and compassionate approach to injured workers and who offers a well-thought-out modified duty program, and the likelihood of successful return to work is increased substantially. The goal is to remove excuses for staying out of work longer than is medically necessary. This type of approach assures that injured workers, the vast majority of whom are motivated to return to productive lives as fast as possible, do so on the fast track. Even more important, those who are not so motivated, those with other agendas, are identified almost immediately.

We recommend that you ask your insurer or TPA claims executives to explain their firm's approach to and usage of predictive modeling. Employers should know to what degree and in what way their claims adjusters are using this tool.

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