Public Safety Workers Comp: Big Questions, Few Answers
Michael Forman, 39 years old, is a Suffolk County policeman with 13 years on the job. During that time, he received nine awards for exceptional police work -- and filed 12 workers comp claims. It's the last of these claims that has brought him his current notoriety. He says that he hurt his wrist in April of 2003 -- an injury of unspecifried origin, but so severe he could not drive his car, pull the trigger of a gun or even answer a telephone. He's been collecting 100% of his average weekly wage (tax free) plus his other benefits for over two years. Because the indemnity is tax free, he is actually making more money by not working. In all, he's collected about $250,000 in disability benefits since he left work with his injury. He was recently indicted for workers comp fraud (though under comp rules, he continues to collect a pay check).
During his prolonged disability, Forman continued to serve as a volunteer fireman in his hometown of Bethpage, Long Island. While disabled from police work, he responded to over 200 calls. According to prosecutors, two days after one visit to police doctors, when he told them he couldn’t drive or perform police duties, Forman was videotaped driving his fire chief’s vehicle to respond to nine emergency calls. During his two year “disability”, Forman was certified as a rescue scuba driver and was given the highest classification possible for a volunteer firefighter, which requires an annual testing to show that he was fit enough to stretch hoses, raise ladders, use heavy tools to break down a door and carry out search and rescue operations.
Forman's situation raises a number of interesting questions. I am intrigued by the response of the police docs to his claims of disability. His ability to perform strenuous (volunteer) work implies that there were few if any "objective" findings in his medical testing. If his wrist was truly dysfunctional, he could not have performed his duties as a volunteer fireman. His inability to even answer a telephone should have raised a few eyebrows. Days, weeks and months pass and he still cannot pick up a phone? I doubt that Forman's supervisors kept in contact with him during the disability. I wonder if the department paid any attention to getting him back to work. It sounds as if they simply took his word for the situation and failed to make a concerted effort to return him to productive employment. Management dropped the ball and Forman blithely ran away with it.
Public Safety Comp: The 900 Pound Gorilla
In most states, police officers and firefighters benefit from robust indemnity protections, as well they should. While disabled from work, they generally receive 100% of their wages, tax free. Given the high profile risks of the work, this seems fair and equitable. But it may also be ethically tempting to some. It certainly appears that Forman took advantage of the situation: he continued to be a hero (as a volunteer firefighter) while collecting substantial wages (as a "disabled" cop). The cost of disability for public safety employees is a crisis that plays out across the country, from one local community to the next. The really interesting part is that no one really knows how big the problem is.
When you ask states and municalities how much workers compensation costs, they are most likely to show you a line item in the current year's budget. This line item is usually a pretty big number, depending upon the size of the municipality. Unfortunately, the line item does not tell you what you need to know. It's an aggregate which includes the costs of comp in all prior years: it contains the long tail of claims that may go back decades. So this year's line item contains the indemnity and medical to be paid for all the claims in all prior years. It does not help you understand year to year trends. It does not allow you to compare results from year to year.
Here's another common problem: because they simply pay from year to year, states and municipalities usually have no idea what a given claim will ultimately cost. Unlike private insurers, they generally do not set accurate reserves on claims. More importantly, they have no incentive to settle out and close claims, because such settlements actually increase the costs in the current year -- and no politician wants to do that! It appears to be less expensive to just pay the benefits from year to year, like a snowplow pushing more and more snow straight ahead of itself. Eventually, the plow grinds to a halt.
Measuring Performance in the Public Sector
To really measure performance, municipalities and states need to disaggregate the data from one year to the next. They need to establish accurate reserves on all open claims. They need to track trends from year to year. Other than trying to settle, there's not much you can do about losses in prior years. However, you can set ambitious goals and try to contain costs going forward. You can align incentives, so that a public safety employee has more to gain by staying healthy and staying on the job than by going out on disability. (For more on this, the Public Entity Risk Institute has an interesting discussion paper here.)
Officer Forman's apparent abuse of the system is by no means typical of workers comp in the public sector. But his story does bring into focus a pervasive problem: the lack of accountability in the expenditure of public funds and the lack of management focus in returning injured employees to work. Public sector comp tends to drift from year to year, with no sense of accountability or direction. It doesn't have to be this way, but there are few incentives to change it. So it's not likely to improve any time soon.
