Lynch Ryan's weblog about workers' compensation, risk management, business insurance, workplace health & safety, occupational medicine, injured workers, insurance webtools & technology and related topics

May 27, 2004

Business blog news roundup

Workers comp case law - Go visit Judge Robert Vonada at PAWC - he's been posting some interesting case law this month. His May 25 post is a reversed finding for a claim of mental/mental disability arising from homosexual advances by a supervisor. The disability allegedly was triggered by post traumatic stress disorder from service in Vietnam.

Working Poor - Thanks to Business Pundit who points us to a special section in Business Week on the working poor.

Indoor Mold - Does indoor mold cause illness? Thanks to The Health Show for pointing us to a release from the National Academies on the relation between indoor mold and building dampness to illnesses.

NIOSH reorganization - A must-read post from Jordan Barab analyzes the potential fallout from the recent CDC announcement about a reorganization of NIOSH (the National Institute for Occupational Safety and Health).

Employers Reducing Benefits and Bracing for Litigation - B. Janell Grenier at Benefitsblog reports on The Chubb 2004 Private Company Risk Survey.

Overtime Pay Rules - Kudos to George Lenard for a spiffy new look at his always excellent Employment Blawg. In his usual comprehensive style, he is on the overtime pay rules issue with a lengthy post linking to various viewpoints.

Doctor's ties pose health risk - Eliot Gelwan at Follow Me Here points to a report in New Scientist about disease-causing germs lurking in your doctor's tie.

Posted by Julie Ferguson at 1:11 PM Link to, Comment (0), or E-mail this post

The workers' compensation crisis: a labor viewpoint

Labor Research Association (LRA) is "a non-profit research and advocacy organization that provides research and educational services for trade unions." We'll be adding it to the tools in our sidebar - we try to strike a good balance of resources from both management and labor perspectives, as well as from the bell jar that is the insurance industry itself.

We were particularly interested in Workers’ Compensation Crisis Revisited, an LRA Online article that ran last October. The author states that the crisis was largely brought on by insurers who engaged in a price war to gain market share. When investment income fell and reserves were depleted, prices began climbing. With rates inevitably soaring, employers clamor for reform, and employee benefits are often the target for reform efforts. The author points out:

"But in most states, benefits remain at the same inadequate levels that have marked workers’ compensation for decades, and the disparities in benefit payments between states have reached absurd proportions.

Under the patchwork of state laws, the protections and benefits provided to injured workers vary significantly. Maximum weekly benefits for temporary total disability range from more than $1,000 a week in Iowa, an amount that equals 200 percent of the state’s average wage, to $400 in New York, or less than half of the state’s average wage. Ohio caps benefits for permanent partial disability at 200 weeks; some states provide benefits for the duration of the disability."

Also, note the following cited statistics:

Workers’ Compensation Costs 2002-2003, Private Industry
Per hour worked
Q1 02 ..... .35
Q2 02 ..... .37
Q3 02 ..... .38
Q4 02 ..... .38
Q1 03 ..... .40
Q2 03 ..... .41

As a percent of payroll
Q1 02 ..... 1.6
Q2 02 ..... 1.7
Q3 02 ..... 1.7
Q4 02 ..... 1.7
Q1 03 ..... 1.8
Q2 03 ..... 1.8

Source: Bureau of Labor Statistics

The author suggests that:

"The only lasting solution is to regulate workers’ compensation rates so that premiums bear a direct relationship to the actual level of anticipated claims and investment income, and benefits follow uniform guidelines. Without regulation, insurers will continue to engage in the destructive boom-and-bust cycle that incites wage and benefit cuts by employers, provokes bad legislation, and leaves workers with inadequate benefits."

We would agree with many points raised in this article. This crisis was largely one that the industry brought on itself by inadequate pricing. Decimating worker benefits would be knee-jerk at best, a response that is neither a fair nor a wise reaction to the current employer pain. It breaks faith with the exclusive remedy "pact" forged in the original enactment of workers comp: employers provide medical and indemnity benefits to injured workers, and in exchange, workers forego access to the tort system. Workers comp was designed to protect both worker and employer interests.

Clearly, there have been and will be some state systems that are broken, that have built-in negative incentives, or that scream out for major reform - California, Florida, or Texas come to mind. But even in those states that have had successful reforms, such as Massachusetts, market fluctuations continue to bedevil employers.

Wise employers that do not want to be whipsawed by market vagaries take the reins in their own hands: the best way to control your experience and your costs is to ensure that no injuries occur; the second best way to control your costs is to treat injured workers well and fairly, provide excellent medical care, and help workers to recover and get back to work as soon as possible; that, and taking the trouble to become an educate, savvy, and active consumer of the administrative services that your insurer provides. At an average 1.8% of payroll, managing your workers compensation experience must become a core corporate competency.

Posted by Julie Ferguson at 12:28 AM Link to, Comment (0), or E-mail this post
May 25, 2004

Return-to-work programs benefit by ergonomics

Ergonomics Today features an article on how ergonomics is an important tool in a successful return-to-work program.

"According to Sheryl Ulin, Ph. D., CPE, Senior Research Associate Engineer at The University of Michigan's Center for Ergonomics, applying ergonomics principals to return-to-work can help the injured worker return to a more productive state more quickly. The key, she says, is starting with an analysis that takes into account both worker and workplace. ... Ulin's experience shows that a successful return-to-work program incorporates worker, doctor and ergonomist. "If the medical professional writes specific restrictions, we may be able to look at other available positions and determine that [a different job] doesn't have the [restricted] work-related risk factors," she says. Even in situations where returning the worker to his or her former position is impractical, "we can still accommodate the worker," says Ulin.

The article goes on to reference the experience of Dr. Barton Margoshes, Chief Medical Officer of CIGNA:

"Margoshes likes to try to get an injured worker back into his or her old job if at all possible. To do this, ergonomics is not only the key to workspace assessment, it also becomes an important factor in redesigning the workspace. "It's not so easy to put people into another job," says Margoshes. "In our case management, we do everything we can to help individuals return to their old jobs at their same employer. Unfortunately employers on their own don't always think about how to modify the workplace ergonomically. We work with employer and employee to try to figure out how to adapt the workplace to make it fit," he says.

Additional resources:
Cigna's Return to Work programs
The University of Michigan's Center for Ergonomics
Essentials of an Occupational Ergonomics Program

Posted by Julie Ferguson at 1:48 AM Link to, Comment (0), or E-mail this post
May 23, 2004

May is labor history month

To commemorate labor history month, take a tour of Labor Arts, a virtual museum that gathers, identifies, and displays historic images of working people and their organizations. The site states that its mission is "to present powerful images that help us understand the past and present lives of working people."

Some of the many fascinating exhibits and collections include:

Labor Sings - songs from the 20s and 30s, including Old Paint, Beltiline Girl, and the Soup Song.

Ordinary People, Extraordinary Lives - a collection of photos, stories, and songs from pre-World War I to the present.

Buttons and Badges, cartoon art, leaflets and pamphlets and a vast collection of photos and artifacts from the early 20th century to the present.

Thanks to rawblogXport for pointing us to this great site.

Posted by Julie Ferguson at 11:11 PM Link to, Comment (0), or E-mail this post
May 19, 2004

Estimate your company's turnover costs, absence costs

OK, I admit it. I have a penchant for benchmarking tools and calculators. Here are two cost estimating tools from AON:

The Turnover Cost Estimator (TM) calculates your direct and indirect costs of turnover to determine the magnitude of the problem and provide a baseline for addressing turnover problems.

The Absence Cost Estimator (TM) calculate both your direct and indirect costs of absence to determine the extent of the problem and establish a baseline for addressing absence problems.

Want more benchmarking tools? Here are a few we've featured before:
BizStats - "Benchmark your business in 5 seconds!"
Compare your workers' compensation losses with others in your industry.

Posted by Julie Ferguson at 11:15 AM Link to, Comment (0), or E-mail this post
May 17, 2004

Great American Business Leaders

Harvard Business School has compiled a database of 20th century American business leaders searchable by name, birthplace, industry, era, gender, ethnicity, and education. Many are the obvious names you might expect to see on such a list...but there are some lesser known names that are interesting to explore.

The creators spent more than two years compiling the database. It's a project of the Harvard Business School Leadership Initiative, and the impetus was "the desire to better understand how business leadership legacies are developed and nurtured over time. Understanding what we can learn from the past will undoubtedly assist us in better preparing leaders for tomorrow."
Thanks to Fresh Inc. for the pointer.

Posted by Julie Ferguson at 11:40 PM Link to, Comment (0), or E-mail this post
May 13, 2004

Workers Comp and Terror: The Long Shadow

An article by Anthony DePalma in today's New York Times (registration required) outlines the onging saga of workers' compensation claims stemming from the attacks on 9/11. In the immediate aftermath of the attacks, most of the approximately 3,000 fatalities probably involved workers comp: these people were working. They died at work. (Death benefits in New York are capped at a relatively paltry $50,000.) But what about the survivors? What about the first responders? And in ever-widening circles, what about people who suffered post traumatic stress simply by their proximity to the horrifying events?

In the 9/11 aftermath there have been nearly 8,000 claims filed with the New York State Workers' Compensation Board. While the events themselves were unique, when it comes to workers compensation, it's business as usual. Claimants must be able to prove a causal relationship between the 9/11 disaster and their disabilities. A number of the claimants with respitory problems are offended that insurers are not forthcoming with benefits. They tried to help after the horrendous events. They breathed the chemical-laden air. Over time, they developed chronic breathing problems, what is now referred to as "World Trade Center cough." They believe their injuries -- and the link between the injuries and their permanent disabilities -- is obvious. But in the world of workers comp, one person's "obvious" is another's "ambiguous."

DePalma describes the Brooklyn courtroom where the compensability of claims stemming from 9/11 is determined. He provides the example of a former subway conductor who handed out bottled water immediately following the collapse of the towers and then worked at the 34th street station, keeping order on the platform. Despite wearing a mask, he breathed in the dust and debris brought into the station by incoming trains. In the following months, his breathing became more labored. In August 2002 he suffered a massive heart attack and was unable to return to work.

Should he collect workers compensation? Company lawyers have brought up his long-time smoking habit as a potential factor in the heart attack. How can you distinguish between the work and non-work related factors in this situation? A lot of money is at stake. Ultimately, it will have nothing to do with the iconic stature of the 9/11 events. It's simply a matter of the judge determining whether or not there is a disability, and whether the disability is work related.

Post-Traumatic Stress
One of the fundamental lessons of workers comp is that people respond to adversity in different ways. Two people witness the same event: one moves on with life, the other suffers from lingering post-traumatic stress and is unable to function in any work environment. The former continues to earn a living; the latter may collect disability payments for being unable to work. And the "one size fits all" workers comp system has to make sense of it all.

What is striking about the 9/11 situation is the scale of the event. It does indeed cast a long shadow. It has been described as the "largest acute environmental disaster" in New York history. Despite the magnitude, workers compensation will play out as it usually does: in a court of law, with the presentation of evidence on both sides. Workers comp may be "no fault," but it is by no means "no friction." It is a constant drama of human suffering, of medical interpretation, of "expert" testimony, of point and counterpoint. What is taking place in the Brooklyn courtroom plays out in a similar manner every day across America.

Posted by Jon Coppelman at 2:52 PM Link to, Comment (2), or E-mail this post

Cover the Uninsured Week

Thanks to Ross at The Bloviator for informing us that we are midway into the Cover the Uninsured Week, and that more than 20 million workers lack health insurance.

Ross provides a link to a 57-page state-by-state analysis of Americans without health insurance (PDF) commissioned by The Robert Wood Johnson Foundation (RWJF) and conducted by the State Health Access Data Assistance Center located at the University of Minnesota School of Public Health. It uses data from the CDC's 2002 Behavioral Risk Factor Surveillance System. Pages 23 through 36 provide state-by-state tables on uninsured rates for adults, comparisons of the uninsured by ethnicity, rates of both insured and uninsured who do not have a personal doctor or health care provider, and other important data. Texas has the dubious distinction of leading the nation with 27% uninsured working adults.

In conjunction with the week's activities, the Kaiser Family Foundation issued a study that examines the cost of medical care for the uninsured and how much care they receive compared to fully insured people. The study reports:

"Uninsured Americans could incur nearly $41 billion in uncompensated health care treatment in 2004, with federal, state and local governments paying as much as 85 percent of the care, according to a new Kaiser Commission on Medicaid and the Uninsured (KCMU) study. Even with uncompensated care, the study shows that people uninsured for the entire year can expect to receive about half as much care as people fully insured.

"Another major finding of the study, authored by Urban Institute researchers Jack Hadley and John Holahan, is that if the country provided coverage to all the uninsured, the cost of additional medical care provided to the newly insured would be $48 billion - an increase of 0.4 percent in health spending’s share of the gross domestic product.

"Leaving 44 million Americans uninsured exacts a substantial price on society as well as individuals, while covering the uninsured would improve their health care without generating large increases in overall health spending," said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured."

Posted by Julie Ferguson at 9:59 AM Link to, Comment (0), or E-mail this post
May 11, 2004

Workers' Compensation Industry Results For 2003

The National Council on Compensation Insurance today announced 2003 workers' compensation results. In "The State of the Line: Analysis of Workers Compensation Results," the NCCI struck a cautionary note.

Frankly, we find the data are both interesting and confounding. For the sixth straight year, claim frequency, the total number of claims, has declined. Many industry people take great comfort in this. Safety efforts seem to be bearing real fruit. However, the declines in the past few years have mostly been in the less severe injury types. Moreover, BLS data show that frequency has declined in 6 of the last 7 recessions. Perhaps there's more going on here than successful safety. Maybe more workers than usual who suffer minor injuries are choosing to tough it out in the workplace, rather than go out on workers' compensation and risk being replaced. Something to think about.

But we think that the real story lies in the industry's indemnity and medical costs, the claim severity. Consider these facts. First, in 2003 the average total cost of a claim increased to $34,600, up from $32,400 in 2002. Second, the average indemnity cost of a claim, the wage replacement portion, at $16,800, rose for the tenth straight year, this year by 4.5%. Third, the medical portion of the average claim, at $17,800, rose 9% and, for the second year in a row, exceeded the cost of indemnity.

At $42 billion, workers' compensation is big money in America. It's a lot to comprehend. Every 1% is $420 million. In 2003, the industry scored a combined ratio of 108%. Seventy percent of that went to losses, alone. The rest, to various expenses. That 70% is what employers can impact by their actions, their behaviors. In future posts we'll discuss how.

Posted by Tom Lynch at 12:38 AM Link to, Comment (0), or E-mail this post
May 10, 2004

Workplace "freak accidents" as a media myth

In a recent post, Jordan Barab at Confined Space takes issue with the way the media often portrays work fatalities as "freak events." Jordan says that as far as he's concerned, a freak accident is "when you're sitting at your desk, minding your own business and a runaway satellite crashes through the roof over your head."

He was reacting to the reportage on a recent on-the-job death of a steelworker who was killed after being struck in the head by material suspended from a crane. Those of us who make safety our business know that, sadly enough, there is nothing unusual about such a death. One of the reasons we so often use the term "injury" on Workers Comp Insider rather than "accident" or "incident" is to emphasize that these are human events that take a toll on flesh and blood people like you and me.

His point was that portraying work deaths as "freak," "acts of God," "bad luck," or any other events triggered by the fickle finger of fate absolves everyone from responsibility. Far more often than not, work deaths are predictable and preventable. In another post on the language used to report work deaths, he states:

Don't let the media or employers ever get away with dismissing a preventable workplace tragedy as "freak." Don't let them leave the impression that there was nothing that could have been done, or the worker's luck had just run out. What to do? Reporters need to be educated about how such tragedies can be prevented. And employers need to be challenged when they assert that no one could have forseen what happened. That's almost never the case and it certainly wasn't the case in the incident mentioned above. Don't let them get away with it.

Posted by Julie Ferguson at 10:25 PM Link to, Comment (0), or E-mail this post
May 6, 2004

Business and technology tools

What? You mean there's a world beyond insurance?! Here are a few good general business and technology tools and resources we've discovered recently.

QuickMBA is an online knowledge resource for business administration operated by the Internet Center for Management and Business Administration, Inc. "Topics are presented as frameworks and summaries in the various subjects of business administration, as taught in the world's top MBA programs." (via Noise Between Stations)

Want to see how you compare to others in your industry? Bizstats is a handy business planning tool that presents a collection of useful financial ratios, business statistics & benchmarks, and an effective and understandable online analysis of businesses & industries.

Flummoxed by tech jargon? Held hostage by your technology department? WhatIs? provides definitions for thousands of technology and Web-related terms. Check out the Fast Reference section for some popular tools and topics.

Tech Support Alert offers a hand-picked guide to The 46 Best-ever Freeware Utilities.

Posted by Julie Ferguson at 8:07 AM Link to, Comment (0), or E-mail this post
May 4, 2004

Work force issues for the next decade

Will the offshore outsourcing trend continue? How will the work force of the future differ from the work force of today? In 25 Trends That Will Change the Way You Do Business, Workforce forecasts the way that work force management might differ 10 years from now. It's an interesting read, and some of the issues will have an impact on workers compensation:

24/7 operations - to service global constituencies, companies are increasingly moving to 24 hour-a-day, 7 day-a-week operations. The article suggests that "Employers also will have a trickier time dealing with disability claims, since some mental health conditions may be exacerbated by a shift to nighttime work." We would also see safety and training issues as factors - these often get less attention on weekends and at night.

Work force loyalty - downsizing, outsourcing, and reduced benefits have taken a toll on employee loyalty. "Only 25 percent of workers feel a strong attachment to their employers, and 4 in 10 feel trapped in their jobs, according to Walker Information, an Indianapolis-based research firm. Walker vice president Marc Drizin says employee loyalty was on the decline even before the economy stalled, and that pattern is likely to continue." This is a dangerous and disturbing trend. An attenuation of the good-faith bond between employer and employee has enormous productivity and quality implications. Our experience leads us to believe that employers with disaffected workers and workers who feel abused have more workers compensation problems than employers who foster loyalty and trust.

Telecommuting - more and more workers are spending part or all of their time working from home. "By the year 2010, more than half of American wage earners will spend more than two days a week working outside the office, reports the Sulzer Infrastructure Services firm in London. Today, 28 million people "telework" under formal company policies--a leap from 4 million in 1990--and millions more work informally out of the office one or more days a week." Increasing numbers of workers who spend time outside the "four walls" will pose new challenges to compensability as "course and scope of employment issues" emerge.

Wellness incentives - companies have been increasingly moving to workplace wellness programs to enhance employee health and productivity. Will there now be a trend towards cash incentives for participation in wellness programs? According to Tom Lerche, senior vice president of Aon Consulting, we are likely to see a move in this direction through a reduction in insurance costs for particpating in health risk reduction programs.

Changing work force demographics - "The convergence of several trends--declining births, retiring baby boomers, and expected business growth--will create more jobs than there will be workers to fill them by 2010, experts predict. The math is relatively simple. The civilian labor force will increase by 17 million, reaching 158 million in 2010, reports the Bureau of Labor Statistics. But by then, the BLS says, the number of jobs will reach 168 million." The article suggests we will see a trend to an older work force as baby boomers are actively recruited. Although it is not specifically mentioned, we also think that immigrant workers will be an increasing work force demographic. These changing demographics will have safety and training implications that must be addressed.

Posted by Julie Ferguson at 9:45 AM Link to, Comment (0), or E-mail this post