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

February 28, 2006

The Feds and the Phantom Miners

Today the Insider looks at seemingly divergent issues which converge in a striking manner: federal involvement in mine safety (MSHA enforcement), federal prosecution for workers comp fraud, and the ongoing saga of work in the mines. It's a complex picture, but one which resolves into a single focus: the exploitation of the people who work in mines.

MSHA and the Phantom Miners
We begin with an article by Frank Thomas in USA Today. The recent disaster at the Sago mines killed 12 miners. We were all momentarily saddened by their hastily penned farewell notes to their families, but that was then, and this is now. It turns out that MSHA had found numerous violations in the Sago mine prior to this disaster. But to determine fines, MSHA uses a bizarre math: they multiply the violation by the number of miners exposed to the specific danger. In 90% of Sago's violations in 2004 and 2005, inspectors said one person was endangered. You send a crew into a mine, but MSHA comes up with a count of one! As a result of this peculiar math, the fines prior to the disaster were minimal.

Here are some specific examples cited by Thomas in the article, quoting federal inspectors:

• On Aug. 16, 2005, an inspector found a main escape path "obstructed by concrete blocks." On Nov. 8, 2005, an escapeway was "not being maintained in a safe condition to assure passage of anyone." Sago got six citations for blocking escapeways miners use to flee a fire or explosion. Each citation said one miner was endangered. The mine paid $60 fines for two violations. The amounts of the four other fines are being decided.

• On Aug. 16, 2005, an inspector found "chemical smoke" being blown toward areas where two mining teams were working. A team typically has eight to 10 miners. The citation said one miner was endangered. A fine is being determined.

• Sago was cited for 22 violations from July 2004 to December 2005 for "accumulation of combustible materials" — coal dust and coal chunks that can spread fires and explosions. All 22 violations said one miner was endangered. MSHA fined the mine a total of $1,768 for 17 violations and is deciding fines for the five others.

Thus, on the prevention side, MSHA's enforcement efforts were seriously undercut by an unwillingness to accurately count the miners. MSHA blew an opportunity to put real leverage into enforcement before the disaster occurred.

More Phantom Miners
Now the second story. Meg Fletcher has an interesting article in Business Insurance about a case of workers comp fraud in Tennessee. Once again, undercounting of miners is a key to the situation. Gary Slater ran several leasing companies that provided workers for the mines. He operated companies with deceptively similar names: for example, Carol Dale Contracting Inc and Carol-Dale Inc. He would secure workers comp for one of the entities, but not for the other. He employed over 100 miners, but only about 15 were formally covered by a workers comp policy.

When a worker was injured, Slater would either buy them off or, in the case of a more serious injury, he would move the employee from the payroll of his uninsured company to that of his similarly named insured entity. Then he would file a claim. As a result of his gross understatement of payrolls, he was able to defraud two insurance companies of over $6 million in premiums.

Unfortunately for Slater, his scheme had one fatal flaw: by absorbing the losses for over 100 people, the premium for his insured entity (with a payroll of only 15 people) was vastly understated. So his rate of injury was extremely high (even in the high risk world of mining), and his experience rating went through the roof. As a result, the insurers began to investigate.

Federal Charges
Slater was done in by his own success. As a result of avoiding comp premiums, he generated huge profits that had to be hidden. So he set up an elaborate money laundering scheme involving phony invoices for trucking services. Because his criminal activity involved both the mails (mailing key documents including fraudulant application forms for insurance) and money laundering, the investigation was able to benefit from robust federal resources. After his partners in crime pled guilty and agreed to cooperate, Slater's conviction was a slam dunk. He has been sentenced to nine years in prison and ordered to pay more than $5 million in restitution.

Ghosts of Living Workers
These two story lines converge in the hard-scrabble lives of the miners. The common theme seems to be that miners literally do not count. MSHA cannot see them, so mine owners, instead of being financially motivated to fix safety problems, avoid heavy fines. The owners in some cases don't even hire the workers - they lease them from the likes of Mr. Slater, who in turn hides the workers off the payroll and avoids paying taxes and benefits.

Every day thousands of people put on their gear and go where none of us would go. They live in constant fear. They never see the sun at work. Even if they survive from shift to shift, they face long-term health hazards. These "ghost workers" move among us, as we turn on the lights, crank up the heat, and log onto the internet. We cannot function without them, but we, in turn, are doing a very poor job of making their work safe and of rewarding them for their sacrifices.

Posted by Jon Coppelman at 10:25 AM Link to, Comment (4), or E-mail this post
February 27, 2006

News roundup: McCain guest worker bill, Rx repackaging, trench deaths, chromium exposure, and more

Peter Rousmaniere is watching the developments in the McCain guest worker bill, along with a rundown of the bill's supporters and opponents. How big is the issue of immigrant workers? Check out his recent posting on an estimate of the number of undocumented workers by state and their workforce share.

Joe Paduda covers the latest in the Ohio Bureau of Workers Compensation coingate scandal. Now Sotheby's is involved in trying to assess the value of the rare coins. Also, if you operate in California and didn't catch his recent posting on drug repackagers' margins, go read it now - there's a loophole in the fee schedule that is costing payers a lot of money.

Jordan Barab follows two important stories: First, he notes how trench deaths and near deaths are occurring at a rapid clip, despite being preventable with appropriate safety standards. Yet, all too often, companies that violate these standards get little more than a wrist-slap when workers die on the job. He also covers the rising death toll for 9/11 rescue and recovery workers - at least a dozen have succumbed to respiratory disease. They won't be the last. "... Of the roughly 70,000 people currently enrolled in Mount Sinai's World Trade Center health study, more than 60,000 suffer some kind of respiratory problem."

Today's Insurance Journal includes a story on a report that shows that the chromium industry withheld key data from the government involving the health risks of workers exposed to the carcinogenic metal in an attempt to influence OSHA's rulemaking and standards for the industry. Also of note: an update of workers compensation reform legislation in South Carolina. Among other things, the new law would abolish the state's Second Injury Fund and would address issues to reduce litigation.

The Actuarial Outpost discusses why companies hire actuaries, with a resulting mix of serious and not so serious commentary. My favorite quote: "Actuaries are the people who enter the battlefield after the battle is over and bayonet the wounded."

Hat tip to Jottings By an Employer's Lawyer for consistently excellent postings on issues of employment law. While generally not directly related to workers comp issues, they are often peripheral - or just plain interesting - workplace issues. Drop by if you've never been there. And in the HR department, another regular read George's Employment Blawg.

... and while on the HR issue, I just noticed that BusinessWeek Online has added a Working Parents blog to its growing roster of weblogs. Good idea. BW now has a baker's dozen of blogs on various topics (look in the top left of the sidebar on the Working Parents blog) - one of the mainstream business publications that seems to be successfully integrating the blog format into its regular news lineup.

Posted by Julie Ferguson at 8:26 AM Link to, Comment (2), or E-mail this post
February 24, 2006

The launch of "Health Wonk Review"

Stop by Joe Paduda's blog today to check out the first edition of Health Wonk Review, a compendium of the best of the health policy blogs with posts from health policy, infrastructure, insurance, technology and managed care bloggers, including our own Jon Coppelman. These roundups are a great way to learn about new blogs by sampling "the best of the best." A hat tip to Matthew Holt as co-founder, and and to Nick Genes, whose popular and ever-excellent Grand Rounds provided inspiration.

Posted by Julie Ferguson at 6:51 AM Link to, Comment (0), or E-mail this post
February 23, 2006

Preparing for Avian Flu

While risk managers might be tempted to ignore the potential disruption associated with a world-wide avian flu pandemic, they are paid to think about the unthinkable. So today as a public service, the Insider hopes to stimulate some disaster planning among our readers. Even with the prospect of millions dying in a few days or weeks, businesses need contingency plans, no matter how unrealistic they may seem. In an article in the New York Times (registration required), Patricia Olsen outlines the steps that small businesses can take in preparing for a possible avian flu pandemic.

"Many people plan for the worst-case scenario, but that's not the way to go about it," said Donna R. Childs, co-author of "Contingency Planning and Disaster Recovery: A Small Business Guide" (John Wiley & Sons, 2002). "Take incremental steps and build on that." The concept of incremental steps is a good one. The difficulty, of course, is determining which small steps might actually mitigate the impact of a really big disaster such as an avian flu outbreak.

Advice From the Ivory Tower
The article quotes Peter Morici, an economist and professor of business at the University of Maryland: "Besides backing up vital records and functions at a secondary location [good advice], it is a good idea for small businesses to start networking to find a source of replacement workers." To which I say, yeah, right. These days it's hard enough to have a workforce, let alone a shadow back up crew.

In addition, Morici suggests that if a business's area is quarantined, but its customers are in areas that are not, then it might pay to move to another location. Again, the professor is probably right, but I'm not sure how practical it is to pack up and move under the ominous shadow of a flu outbreak.

One immediate - and very doable - step is to secure business-interruption insurance to cover lost income during a shut down. This insurance is generally available at an incremental cost to current commercial insurance. It is also a good idea to cross-train employees and identify potential new suppliers (although finding new suppliers is akin to finding a shadow work crew: good idea, but terribly difficult under the circumstances).

We're From the Government...
The Centers for Disease Control and Prevention (CDC) has developed a handy checklist (PDF) that walks small businesses through the process for developing a pandemic preparation plan. (NOTE: The Times article has the wrong links.) Some of the suggestions are practical: stockpile paper masks, disinfectants and related hygienic supplies. Develop plans that involve less face-to-face contact: eliminate shared workstations, avoid mass meetings, encourage telecommuting.

It's when the pandemic hits that the suggestions become more problemmatic. To prevent influenza spread at the worksite, the checklist recommends policies to promote respitory hygiene, cough etiquette and "prompt exclusion of people with flu symptoms." Does this mean having guards (presumably wearing masks) escort anyone with symptoms off the premises? Will companies need "cough police" to enforce good hygiene? Will small businesses be able to differentiate between avian flu symptoms and an ordinary cold or hay fever?

I am all for being prepared. But as all risk managers know, there is much in the terrifying prospect of a flu pandemic that exceeds our abilities to plan. We can dutifully go through our checklists. We can look around for additional suppliers and even replacement employees. But it's hard to envision these "incremental steps" having a significant impact on our ability to sustain business operations. It's comparable to Katrina: you can board up the windows. You can move valuables to the attic. But if the waters rise above your roof, your preparations will not amount to much.

Posted by Jon Coppelman at 12:20 PM Link to, Comment (0), or E-mail this post
February 22, 2006

The $263 million question: Can Montana cap benefits at 65?

Montana courts are examining the issue of whether the state can terminate workers compensation benefits to workers at age 65, and if the court finds in favor of the plaintiff, the Montana State Found could be forced to retroactively pay benefits to those over 65. Grocery store worker Catherine Satterlee (PDF) has challenged the constitutionality of Montana's law on the basis that terminating benefits treats people differently based on age. In December, the Workers Compensation Court found in favor of the state, but the decision is now expected to be appealed to the state's Supreme Court.

This issue is one that demonstrates the 50 state labyrinth that is workers comp. States handle this matter differently, as evidenced by the Department of Labor's chart on benefits for permanent total disability by state statute (PDF). While most states stipulate "duration of disability" or "life" as the maximum benefits, a handful of states do cap benefits by duration, such as North Carolina at 500 weeks and Mississippi at 450 weeks. North Dakota and West Virginia also cap benefits at retirement age when Social Security and Medicare benefits would kick in.

An editorial in The Missoulian lays out some of the issues at play in this case:

"What you see in this statement is the necessary balancing of interests essential to the whole concept of workers' compensation insurance. Workers are entitled to compensation only for lost wages and medical costs. The benefits are limited not because the Legislature is mean, but because unlimited benefits create unlimited risk for employers. Unlimited liability threatens the very existence of businesses, putting everybody's job at risk. We need jobs; we need employers; workers and employers share the need for insurance covering workplace injuries. That's the reality reflected in the Legislature's “Declaration of Public Policy” for worker's compensation.
In explicitly stating that workers' compensation isn't intended to make injured workers “whole,” the Legislature is saying the benefits are for lost wages and certain fringe benefits, not for lost opportunity or quality of life, however tragic those losses sometimes are."

Essentially, this is what most laws and court challenges center around - the economic need to strike a balance between providing benefits for the employee and limiting potentially ruinous liability for the employer. Workers comp was largely intended as a stop-gap rather than a make-whole measure. That being said, Montana's practice varies from the national norm, and it will be interesting to watch the decision of the court.

Posted by Julie Ferguson at 8:33 AM Link to, Comment (0), or E-mail this post
February 21, 2006

To War and Back Again

The good news from Iraq (OK, there isn't much) involves the dramatic improvement in battle-related trauma treatment. Soldiers are surviving injuries that in prior wars would have resulted in certain death. So far, over 15,000 soldiers have been injured since the fighting began in March 2003. By the time major military operations have been completed, more than two million soliders will have been deployed in Iraq and Afghanistan. That would project to about 70,000 troops suffering physical injuries.

These wounded soldiers return to the states, go through rehabilitation and then, one hopes, they return to the workplace. When you consider that about 30 percent of the armed forces are citizen soldiers (National Guard and Reservists), you realize that many of these injured soldiers will be returning to the jobs they left behind. Their employers will be confronted with the challenges of "reasonable accommodation" - trying to adapt job functions to the capabilities of their returning workers.

As challenging as this accommodation process is likely to be, it may prove far easier than dealing with the mental health issues of returning soldiers.

The Stress of War
There's something about people trying to kill you 24/7 that gives rise to inordinate stress. This is stress of a level that few people outside of the military - or a war zone - ever experience. In a compelling article (PDF) written by Robert Hartwig for the Insurance Information Institute, we learn that nearly 30 percent of returning military personnel suffer from at least one type of mental health problem, including depression, anxiety and/or post-traumatic stress syndrome (PTSD).

Here we have a confluence of issues that bode poorly for these returning heroes. We seem to expect that people thrown into war will simply pack up their gear, change into civilian clothes and go about their business. For some, that may prove possible. But for others, the transition will be excrutiating.

Given this country's ambivalence about mental health treatment, it's not surprising to find that even soldiers with stress symptoms often resist treatment. Hartwig quotes a study in the New England Journal of Medicine that found a reluctance to use mental health services even among soldiers who met screening criteria for major depression, anxiety or PTSD:
- only 78 percent acknowledged a problem
- just 43 percent indicated an interested in receiving help
- only 40 percent had received help within the past year (and just 27 percent received help from a mental health professional)

The respondants cited a number of reasons for not seeking help, including the belief that they would be perceived as weak (65 percent), embarassment (41 percent) and difficulty getting time off for treatment (55 percent). (As for that last problem, employers would likely be obligated to provide release time for counseling under the Americans with Disabilities Act.) But tellingly, 38 percent indicated that they did not trust mental health professionals, while 25 percent believed that mental health care doesn't work at all!

There are at least three significant themes here: First, we live in a culture that continues to stigmatize mental illness. Second, the mental health profession has done a poor job of explaining itself to the general public. And third, the employers of these mentally stressed (and untreated) soldiers will be confronted with a host of problems when these former workers return from their battlefield commitments.

Hartwig points out that returning veterans with physical or mental impairments are entitled to lifetime benefits from the Veterans Administration (assuming, of course, that VA services are adequately funded). The VA also operates a Readjustment and Counseling Service to ease the transition of veterans returning to civilian life. Insurance claims adjusters would do well to take note of these resources!

Business as Unusual
As civilian soldiers return to their jobs in the months and years ahead, the workplace will be subject to new stresses and strains. Having sacrificed so much through their military service, returning workers may find themselves unable to handle the jobs that had once been routine. Employers will have to work diligently and creatively to ease the transition back to productive employment. If nothing else, employers should encourage access to counseling services for stressed-out employees (on company time, if needed).

If employers drop the ball by ignoring the transition problems of their returning workers, there could be some very big problems indeed: disruption and violence, lower productivity, unanticipated injuries and increased costs for workers compensation, to mention just a few. Many of the civilian soldiers returning to the workplace will face challenges unlike anything they experienced prior to going off to war. Employers take heed: this cannot be managed under the heading of "business as usual."

Special thanks to our colleague Joe Paduda at Managed Care Matters for pointing out this important article.

Posted by Jon Coppelman at 3:05 PM Link to, Comment (0), or E-mail this post
February 17, 2006

Shooting the Breeze at Lee's garage

H. Lee Scott Jr., the CEO of Wal-Mart, hosts an internal web site for Wal-Mart managers called Lee's Garage. He named it honor of his dad's service station, where Lee once pumped gas. Judging from the exchanges quoted in a fascinating New York Times article (registration required) by Steven Greenhouse and Michael Barbaro, Lee is still pumping gas.

The internal dialogue at Walmart mirrors the public discussion. When a manager asked why "the largest company on the planet cannot offer some type of medical retirement benefits?" Lee first argues that the cost of such benefits would leave Wal-Mart at a competitive disadvantage but then, showing his annoyance, he suggests that the store manager is disloyal and should consider quitting.

Lee goes on to write: "Quite honestly, this environment isn't for everyone. There are people who would say, "I'm sorry, but you should take the risk and take billions of dollars out of earnings and put this in retiree health benefits and let's see what happens to the company.' If you feel that way, then you as a manager should look for a company where you can do those kinds of things." Point well taken, Lee! Glad you are so receptive to an alternative viewpoint!

In defense of his position on benefits, Lee points to General Motors, whose expensive benefit package threatens their viability: "GM is no longer an automotive company. They sell cars to fund [their extravagent] benefits." While we can acknowledge that an overly-generous benefits program can create problems for the bottom line, Wal-Mart's stingy benefits hurt their employees and local communities every day.

The 10 Foot Rule
Lee urges managers to set an example by aggressively complying with the company's 10 foot rule, which requires employees to smile and ask "Can I help you?" when a shopper is less than 10 feet away. Fair enough. But I cannot help but ponder the contradictions at the heart of the Wal-Mart culture. Last year Lee earned $17 million. He hops around the globe on Wal-Mart's fleet of jets and lives in a gated community called, appropriately, Pinnacle. He chats with Steve Case, the AOL founder, about health care (unfortunately, what he said to Case about health care is not included in the posting).

It brings to mind one of the fundamental rules that Wal-Mart executives appear comfortable ignoring: the Golden Rule. Management seems ready to endorse the disconnect between Lee's globe-trotting life style and the hard-scrabble subsistence of his employees, most of whom cannot afford health insurance. There's certainly no danger that Wal-Mart will fall into GM's dilemma, where the benefits promised over the years threaten the company's survival. But eventually, Wal-Mart's lack of generosity with their own employees will probably catch up with them. If you rely on low pay, mediocre benefits and constant turnover to stay profitable, no 10 foot rule is going to save you. The forced smiles on the faces of the associates who greet you are simply not very convincing. They are not having much fun working in Lee's garage.

Posted by Jon Coppelman at 12:01 PM Link to, Comment (0), or E-mail this post
February 16, 2006

A terrible burden: the death of a coworker

Jon's post about the roofer who fell to his death stayed with me last night. Maybe because it occurred in a neighboring town, maybe because I've been made uncomfortably aware of the frequency of death by falls after regularly reading the Weekly Toll, maybe because work deaths seem more personal after having just witnessed the grief of the miners' families. Or maybe it was just this one line that spoke volumes: "The contractor, and Stacy’s two other co-workers, were too distraught to comment."

I can well imagine. A 40 year old life snuffed out in an instant, the difference between life and death likely coming down to the lack of a few straps of cloth. Think of the burden of telling the family. Think of the burden of facing the same work scene again the next day.

Often, we tend to think of work deaths as occurring someplace else, to other people, in large, impersonal companies that flagrantly violate safety standards. Bad employers. Unsafe industries. Careless workers. But the reality is that work deaths happen every day in workplaces like the one you are in today, or like the one where your next door neighbor works. Work deaths occur in small, friendly workplaces just as they do in mega-corporations; they occur in owner-operated businesses with bosses who care about their workers just as they do in companies with unscrupulous and tyrannical bosses; they occur in low-risk industries as well as high.

I've been fortunate in never having been at a worksite when a death occurred, but I have spoken to employers and coworkers who have described such devastating events. When it has been a recent event, the depth of the emotion is almost palpable: horror, grief, anger, and guilt. When it has been an event that occurred in the past, the raw emotion usually just lies below the surface, easily tapped by recall. These tragic events carry a huge emotional toll and a crushing burden of guilt. Simply think how you've felt at the loss of a valued family member, friend, or colleague - we've all been there. Loss is a terrible burden in and of itself. But now think if the death had occurred right before your eyes, perhaps in a gruesome fashion, and perhaps in a way that you might have prevented. It's terrible to contemplate. To prevent senseless work deaths, we must all be our brother's keeper.

Grief resources
Coping with the Death of a Coworker
When a coworker dies (PDF)
Recovering from the death of a co-worker - tips for employers and supervisors

Fall prevention
The myths and facts about falls
Fall protection

Posted by Julie Ferguson at 1:45 PM Link to, Comment (0), or E-mail this post
February 15, 2006

Death of an "Independent Contractor"

Here is a brief article from the Metro West Daily News, a small newspaper in Massachusetts:

MARLBOROUGH -- A Leominster man was killed yesterday after he fell nearly 40 feet from a condominium building while roofing with three other workers, authorities said.

James Stacy, 40, of 180 Johnson St., was killed instantly, police said, after falling more than three stories from the Spring Hill Condominium building at 35 High St., according to Police Sgt. Thomas Bryant.

Bryant said police received a 911 call around 9:15 a.m. reporting that a man had fallen from the building onto the concrete parking lot below.

Stacy was pronounced dead at the scene from extensive head injuries, police said.

According to one of the co-workers and witnesses, Stacy was tearing off patches of the existing roof moments before he fell, Bryant said.

Officials from the federal Occupational Safety and Health Administration were called to investigate, which is a standard procedure for workplace fatalities, police said.

Stacy was working for North Star Sheet Metal Roofing, although a representative of that company who was at the Marlborough condo unit yesterday said he was an outside contractor hired for that particular job.

The contractor, and Stacy’s two other co-workers, were too distraught to comment.

A Compensable Death
I do not know the deceased worker or the company involved. But what strikes me is how this sad event exemplifies the problems we have been tracking concerning "independent contractors." Note the statement of the roofing company. The deceased was not an employee, but "an outside contractor hired for the particular job." They will quickly learn that in Massachusetts, the deceased worker was indeed their employee and their comp carrier will almost certainly be responsible for his workers comp death benefits, including any applicable payments to dependents. (If Stacy has a number of dependents, this could be a very costly claim.) It's unlikely that the insurance company collected any premiums on Mr. Stacy. Perhaps at audit they will add his payroll, along with all the other independent contractors, to the North Star payroll. It certainly won't make up for the loss, even at the hefty manual rates for roofers. As for North Star, not only will they owe substantial additional premiums at audit for the current year, they will see their experience rating go up for the three years of the rating period.

Through the relatively new requirements of MGL 149 Section 148B, Massachusetts appears to have over-engineered a solution to a very difficult problem. The statute creates a presumption of employment for virtually any subcontractor. In doing so, the state has extended the reach of workers comp benefits deep into the workforce. That is the good news. On the other hand, the new statute has created rampant confusion, because it now appears that almost any "independent contractors" -- from part-time bookeepers to attorneys -- are actually working under someone else's control and would thus be added to the payroll for calculating workers comp premiums. The MA rules hold that because both North Star and Stacy worked in the roofing business, it is impossible to establish Stacy's independence. Any sub operating in the same trade as the GC is by definition an employee.

The Solution as the Problem
We have yet to see the ramifications of the new law in the courts. This will take some time to play out. Meanwhile, North Star's owners and workers comp carrier may be in for a shock. They are likely to own this one, pure and simple. You could certainly argue that the MA reforms have done their job in this particular situation. How well the new laws and regulations function in the overall Massachusetts workforce is another question altogether. We will continue to follow this issue with great interest.

Posted by Jon Coppelman at 3:20 PM Link to, Comment (2), or E-mail this post
February 14, 2006

Just Say Noe: The Fall of a Wheeler-Dealer in Ohio

We have been tracking the developments in "Coingate" - the Ohio workers comp scandal that has sent shock waves through that state's formidable Republican establishment. Millionaire coin dealer Thomas Noe was recently indicted for his central role in the affair. He is charged with 53 felony counts, including 11 theft, 11 money laundering, 22 forgery and 1 pattern of corruption. Once the darling of party officials noted for his generous campaign contributions, he is now a pariah, with party officials backing off as quickly as they can. As Ohio GOP Chairman Robert Bennet puts it, "Frankly, Tom Noe is irrelevant to us. He'll have a long time in prison to think about his mistakes." Unfortunately for Ohio Republicans, he has plenty of time prior to prison to think about his former friends.

No More Bordeaux for Noe
Reporter Joe Hallet of the Columbus Dispatch quotes from a speech Noe gave back in 1993 to the Young Entrepreneur's Society of Toledo. Noe said, "To me, in business today, trust is what is it all about. It's ethics and trust and if you have that, you will always succeed and if you don't, you will fail sometime in the future." While it's one thing to have someone's trust, what you do with that trust is something else altogether.

Hallett's detailed profile of Noe, published back in May of last year, shows a man of humble origins, who built a reputable coin business through hard work. He dropped out of college to pursue the coin business. Noe told his parents back in 1973 that he would get his PhD "in the street." He became very successful at coin-dealing and developed a taste for fine bordeaux. His connections led the state workers comp bureau to invest $50 million in rare coins. State officials were satisfied with the $15 million profit reported through 2004, although only $7.9 million had actually been paid.

For the state, it was all about trust. They assumed Noe was managing the funds appropriately. Had they bothered to look closely, they would have seen far-ranging and dubious investments including slum property in Toledo, autographed baseballs, presidential election buttons and paintings. Coins worth $400,000 simply disappeared and it now appears that as much as $13 million may have been misappropriated.

The "Street PhD" in Action
The ethical and trust failures that Noe talked about 13 years ago are now staring him in the face, as he is confronted with some very tough decisions. He has to navigate the choppy waters of the criminal justice system, with up to 170 years hanging over his head. He knows he can reduce his jail time by implicating powerful, well-placed individuals in the Republican party. This is very basic stuff, far below the world of fine wines and the higher-order values of trust and ethics. Now it's simply a matter of survival. And this plays to Noe's strengths. He's still a wheeler-dealer at heart. His "street PhD" will come in handy in the next few months.

Posted by Jon Coppelman at 11:14 AM Link to, Comment (0), or E-mail this post
February 13, 2006

News Roundup: AIG settlement, teen safety, odd claims, new blogs

AIG settlement: Rupal Parekh writes about AIG's $1.64 billion (that's billion with a "B") settlement in Business Insurance this week. Robert Ceniceros reports that, of that amount, $343.6 million is earmarked for workers comp to pay states for alleged underpayment of premium taxes and residual market assessments:

"According to terms of the settlement, AIG will pay $87,801 to New York and $42.3 million will be divided among the other 49 states and the District of Columbia by March 1 for underpayment of workers comp premium taxes for the years 1985 to 1996.
The insurer also will pay $301.2 million into a fund to settle residual market-related claims submitted by states, residual market pools, state funds, assigned risk plans and the National Workers' Compensation Reinsurance Pool administered by the National Council on Compensation Insurance Inc."
Doug MacLeod notes that the spotlight might turn to other insurers:
AIG was not the only insurer identified as colluding in the scheme, though: In previous court filings, Mr. Spitzer has alleged that other participants included ACE Ltd., Hartford Financial Services Group Inc., Liberty International Underwriters Inc., the Munich-American RiskPartners unit of American Re Corp. and Zurich American Insurance Co.

Fellow blogger Doug Simpson at Unintended Consequences links to some primary documents in this case.

Teens and work violence - Jordan Barab points us to a worthwhile study by Peer Leaders from MassCOSH’s Teens Lead @ Work and the Brazilian Immigrant Center’s GUMBWEB Youth Program on how teens are affected by workplace violence (PDF). Many teens start work in the retail operations, an industry with high homicide. This initiative was partly in response to this sad event:

"On February 16, 2004 18 year old Cristian Ribeiro Giambrone, who would have graduated from Boston Latin Academy in 2004, was killed by a shoplifter at a CVS in Boston. Cristian took a fatal stab wound to the neck when he and his boss pursued the robber in a chase. Cristian’s boss was also stabbed and suffered a non-fatal wound."

The report contains recommendations to keep teens safe. It would be nice to see this initiative get some mainstream press.

Unusual claims dept. - In Lackawana County, PA, two courthouse workers have filed workers comp claims related to work exposure to pigeon dung. Apparently, since the $1.8 million cleanup of pigeon droppings, at least one part of the building has "tested positive for fungus associated with pigeon dung that can cause lung disease." Commissioners disagree about health hazards during the removal of 20 tons of waste. (The mind boggles at 20 tons of pigeon dung.) This bears watching - employees generally face an uphill battle with claims based on environmental exposures.

In New Jersey, Tabitha Sells is awaiting a ruling from the state's Industrial Commission on the merits of her workers comp claim based on injruies suffered in a kidnapping and assault by her manager and his wife. Allegedly, this assault was triggered because Sells was having an affair with her manager. She was beat with a baseball bat and forced into a trunk of a car, suffering injuries when the car crashed during a police chase. The kidnappers both drew long jail terms for this assault. The victim subsequently filed for workers comp against her employer, Glass Pro, claiming she can no longer work. The insurer denied the claim on the basis that the assault was the result of personal matters (the alleged affair) and was not related to her work. As a local news story notes, not all work violence is compensable - it must be shown to be work-related. This article on compensability as it relates to violence by a Georgia law firm delves into some of the issues.

New blogs - when we first started blogging insurance, it was a lonely little niche indeed, but we are happy to see new blogs cropping up with some regularity. Check out IndemniBlog, which bills itself as "exploring the exciting world of property and casualty insurance." Heh. Insurance Scrawl, a blog by D.C. attorney Marc Mayerson, focuses on "the law of insurance, the insurance of business, and the business of insurance."

Insurance humor. Check out The Adventures of Ed the Actuary. Dilbert, be very afraid. Where did we find this gem? Where else would we find it?

Posted by Julie Ferguson at 8:20 AM Link to, Comment (1), or E-mail this post
February 10, 2006

What's the greater obscenity?

The Indiana AFL-CIO thinks that regulatory fines tell a story of what we value as a society. They note that Janet Jackson's "wardrobe malfunction" netted CBS fines of $550,000. In contrast, the total fines levied against the Sago coal mine for 276 safety violations over a two-year period was $33,600. The AFL-CIO has compiled a chart that offers a few other points of comparison – check it out. Good for them for putting this in context. (via Confined Space)

Meanwhile, the Huntington Herald-Dispatch covers the details of the sole surviving miner's long, slow path to recovery. He didn't expect to survive - a wrenching good-bye note that he had written to his family just surfaced. His recovery to date has defied medical odds, but his prognosis is still unclear. This article gives a window into the nightmare that that a serious work injury can impose on the family, as well as the worker.

There was another article this past week about the effect that a work injury can have on a family. Eric Pera of The Ledger recounts the story of Eric Guzman, whose legs were crushed and mangled in a work accident last year, from the viewpoint of the family. The emotional and financial toll of a serious work injury can be enormous. Perhaps if more work injuries were reported from the vantage of the workers' families, it would help drive home the vital importance of prevention.

Posted by Julie Ferguson at 9:36 AM Link to, Comment (0), or E-mail this post
February 8, 2006

"Stone Walls and Steel Bars" for Business Decisions

Business decisions other than outright fraud don't often lead to prison, but here are a couple of situations where this is likely to happen. The Insider has been tracking Rhode Island's Station Night Club fire, which took place three years ago. One hundred people died in a raging inferno that reached 1800 degrees in less than two minutes. The blaze was triggered by the (illegal) use of fireworks, in a club where highly flammable acoustical tile had been (inappropriately) installed. In the first criminal trial stemming from this sad event, Daniel Biechele, 29, the business agent for the rock band, Great White, pled guilty to involuntary manslaughter. He faces up to 10 years in prison. The fate of the bar's owners, Jeffrey and Michael Derderian, is still up in the air, although it seems likely that Biechele will testify against them. They, too, are likely to be headed for stone walls and steel bars.

Bus to Nowhere
You may also recall the horrendous incident during the chaotic evacuation from Hurricane Katrina, when a Texas bus caught fire and incinerated 23 nursing home residents. Global Limo, Inc., and its owner, James H. Maples, have been indicted for conspiring to falsify driver time records and failing to inspect the company's bus fleet to make sure the buses were safe.

The driver and some passengers escaped, but others were trapped when oxygen tanks on board fed the flames and exploded.

Maples and Global Limo are charged with three counts each: conspiring to falsify documents to allow drivers to go long stretches without appropriate rest, failing to inspect and maintain company buses and failing to require drivers to complete vehicle inspection reports. The conspiracy charge carries a five-year maximum prison sentence and a $250,000 fine.

The Comp Dimension
It's important to note that a previous grand jury declined to indict the driver. They apparently determined that he was not responsible for the explosion. This will raise some interesting issues from the workers comp perspective. The driver may try to sue his former employer, charging that their criminal negligence in the maintenance of the bus injured him above and beyond the type of injuries covered by workers comp. In other words, because the employer may be found criminally negligent, the driver may be able to transcend the "exclusive remedy" of comp and access tort remedies for his pain and suffering (which are not compensable under comp).

Readers may recall that in the Station Night Club fire, the Derderian brothers neglected to secure workers compensation coverage for their employees - 4 of whom died in the fire. They managed to dodge a $1 million fine by filing for bankruptcy, but the long winding road toward civil damages and prison still lies ahead of them. It's not often that business owners go to jail for their decisions, but these are two instances that appear to reach the criminal level. I don't think that these are evil people who intended to do harm, but they now face the grave consequences of their business decisions. It's enough to give any manager pause.

Posted by Jon Coppelman at 3:42 PM Link to, Comment (2), or E-mail this post
February 7, 2006

Avian Bird Flu: When Second Class Workers Meet a First Class Hazard

[Warning: This is not appropriate reading for bedtime.]
I'm not sure where the complacency about undocumented workers comes from, but I suspect that it's a combination of racism and economics. We tolerate the presence of these second class workers because it results in cheaper products and services for us, and because we don't really have to look at these struggling immigrants very often. They operate in the shadows of our culture. These undocumented workers are transient, unrepresented, and frequently unwilling to report injuries or illnesses because of real concerns about their continued employment or their immigration status. They work in substandard conditions, with few or no benefits. But that doesn't impact us directly, does it?

Well, think again. Our colleague Peter Rousmaniere, who tracks the issue of immigrant workers, has posted a truly terrifying scenario where the second class worker becomes the carrier for an unstoppable disease.

It Cannot Happen Here...Can It?
Peter links to the Occupational Health Disaster Expert Network (OHDEN), a website run by Gary Greenberg MD. The goal of this well-documented and extensively linked site is to speed up transmission of time sensitive information on high profile occupational risks.

Dr. Greenberg tells us that the danger from a new influenza will begin when its DNA combines with the ordinary "flu" we experience every winter. If (or when) this strain develops, the public health fear is of a highly transmissible virus
with frequently fatal consequences. The resulting novel germ could then spread through our species unimpeded by any prior immunity, and would kill millions before effective vaccination and antiviral therapies might bring it under control. This would no longer be an"avian" influenza, but an accidental hybrid, an intensely lethal human

A Workplace Illness
Avian influenza is an occupational disease involving poultry workers. So it is in the poultry-processing workplace that the we find the intersection of two distinct issues: undocumented immigrant workers and flu pandemic risk. Poultry workers are largely foreign-born and poorly educated. They routinely work in horrendous conditions. (Again, that's ok, as long as we can get a good price on chicken parts in the grocery store...) Even without viral dangers, Greenberg points out that these workers are exposed to intense levels of ammonia, organic dust, disinfectant, environmental cold, bird-specific fungi and bacteria, allergens, insect pathogens, and then the violent instruments and machinery required for the production of boneless filets and dressed, plucked fryers. Yikes!

I won't go into the ergonomic horrors of chicken processing jobs. Again, we all know it's bad, but no one forced these people to come here. No one made them take these jobs! And yes, we know that the pay isn't great, but it's better than these workers would find in their home countries. As for benefits, they are unlikely to be able to afford (or qualify for) health insurance, and if undocumented, they are also ineligible for Medicaid. Many are migrants, and so they have no medical records, no continuity of care, and no routine access to health monitoring. They are off the radar screen and beyond reach of our medical system. So what's the big deal?

Here's the point where the proverbial chickens may come home to roost. Greenberg tells us that the creation of a deadly new virus requires just one single transformation - a single virus in a single victim. Once this killer virus is set loose, the costs to humankind will be beyond the calculations of all but the most intrepid actuaries.

While many people apparently feel either cultural superiority or indifference toward the millions of immigrant workers in this country, our fates are inextricably joined. Their second class status, combined with marginal working conditions, may place them at greater risk for the initial development of the virus. But once developed, the virus will make no distinction between second and first class. There will be no reliable barriers to transmission. We'll all face the same, irresistible force, much like the tsunami that tore through Asia in 2004.

Greenberg recommends a few practical steps to alleviate the risk of this unprecedented catatrophe. The steps are reasonable, relatively simple, and not all that expensive:
- All poultry workers need to be vaccinated against seasonal
influenza. This recommendation should be achieved worldwide. Urgent
action will be required for workers in the northern hemisphere (with
our own flu season already here).

- Free and urgent treatment of poultry workers' respiratory illnesses
should be provided, regardless of immigration status and insurance

- Health status among these workers needs to be evaluated, monitored
and reported.

Greenberg's recommendations are prudent and doable. But there is no way they will be implemented. Our national denial of the immigrant problem fatally extends even to a situation where we are all directly at risk. Greenberg will be viewed as just another "Chicken Little," claiming that the sky is falling. Politically, it's likely to prove impossible to elevate immigrant workers to the point where they are both acknowledged and accepted, let alone routinely treated for respitory illness.

If we're really lucky, there may be few direct consequences. The pandemic might not happen. If, however, Greenberg's worst case scenario takes place, we will finally be confronted with the real cost of our current indifference. Then, of course, it will be too late.

At that point, I imagine that someone will start a new blog called "Journal of the Plague Year." Let's just hope we are all around to read it.

Posted by Jon Coppelman at 12:43 PM Link to, Comment (0), or E-mail this post
February 6, 2006

News roundup: blogs, RTW, meth users, ethics, and more

Insurance weblogs. We are featured in an article about weblogs by Therese Rutkowski that appeared in the December issue of Insurance Networking News: Online Soapboxes Get Down to Business. Several of our fellow bloggers are cited too.

Returning to Work: Overcoming Injury and Achieving Success - an article written by Kurt Schuhl and Michael McMahon the January issue of Risk Management magazine.

Meth abusers cost employers millions - A recent study determined that each meth-using employee costs his or her employer $47,500 a year in terms of lost productivity, absenteeism, higher health-care costs and higher workers' compensation costs.

Off-the-job injuries - A Stockton California police officer was denied workers comp for an off-duty injury he suffered while playing basketball. According to the court: “When an employee is injured during voluntary, off-duty participation in a recreational, social, or athletic activity, Labor Code section 3600, subdivision (a)(9) provides that the injury is not covered by workers’ compensation, unless the activity was “a reasonable expectancy of” the employment or it was “expressly or impliedly required by” the employment.”

The Weekly Toll. - Tammy at Confined Space reminds us all of the real reasons why we should be doing the work that we do - a grim reminder to redouble our efforts to keep workers safe.

Immigrant worker injuries - Our colleague Peter Rousmaniere points to a recent Massachusetts study that offers a breakdown of hospitalizations by medical diagnosis, job and ethnic orientation. The study shows a relationship between the type of job and the type of injury.

Drug dispensing by docs - Joe Paduda notes that workers comp prescription drug costs are driven by utilization and price. But are some docs compromised by a profit motive via on-site dispensaries now in vogue?

Looking out for the workers - RawblogXport reminds points to an item that paints a dismal portrait of the economic status of the American worker, who is working harder and longer for less pay. "For the first time on record, U.S. household incomes failed to increase for five straight years - and that record includes the Great Depression. And the minimum wage, adjusted for inflation, is actually worth less today than it was before the last increase was passed 10 years ago"

Is the U.S. economy strong? - In terms of wages and jobs, the U.S. economy is not as strong as it might appear, according to some recent economic studies, and as reported recently in the New York Times.

Ethics - According to a survey by theAmerican Management Association (AMA), pressure from management to meet unrealistic business objectives and deadlines is the leading factor for most unethical corporate behavior. The desire to further one’s career and to protect one's livelihood are ranked second and third, respectively, as leading factors.

Scandal watch. Speaking of ethics, Business Insurance reports that an AIG settlement with the SEC and the NY AG may be pending. Meanwhile, Judy Greenwald speculates that there may be bigger fish to fry in the wake of recent indictments of senior execs at General Re Corp. and American International Group Inc.

Posted by Julie Ferguson at 10:11 AM Link to, Comment (0), or E-mail this post
February 2, 2006

"Open House" at Business Insurance this month

Business Insurance has a free access "open house" at their site from now through February 28th. The open house allows full access to current issues as well as access to archived material since 1996. For those who aren't familiar with the publication, it's a well-respected and established industry trade issued weekly by Crain Communications. In its own words:

"Business Insurance serves business executives who are responsible for the purchase and administration of corporate insurance/self-insurance programs, encompassing both property and liability insurance and employee benefit programs, including life, health and pensions. Each week, the printed publication includes news and feature articles related to these key functions. From its Website, BI also delivers current news and information on a daily basis."

The open house is a good way to explore the site if you aren't familiar with the publication, and if you have any topics you've been meaning to research, now's the time. They are also offering a significant discount on first-time or renewal subscriptions during this time.

Posted by Julie Ferguson at 9:47 AM Link to, Comment (0), or E-mail this post
February 1, 2006

Wired for Trouble: Blackberry Thumb, Cell Phone Elbow, IPod Ear

The Insider has warned tech-savvy readers that many of our indespensable gadgets can be the source of injuries. A year ago we wrote about Blackberry Thumb, to which we now return. Perhaps this is risk management on a small and highly personal level, but it's risk management nonetheless. Despite the fact that few people seem concerned, in the interests of public awareness, we now expand our focus from the lowly thumb to include elbows, ears, and perhaps even the brain.

Thumb Troubles
People addicted to their Blackberry's - or to text messaging on other portable devices - may find themselves experiencing some pain and numbness, possible symptoms of "Blackberry Thumb." It's really just another word for tendonitis and the latest incarnation of what used to be called "Nintendonitis." Of course, if Blackberry has to shut down due to a long simmering patent dispute (the company appears to have lost out at the final level of judicial appeal), "Blackberry Thumb" will disappear as all Blackberry users inadvertantly follow the doctors's advice for treating the ailment: lay off thumb typing for a while. If the shut down is avoided, loyal users in need of a break could try one-hand operation, typing in the letters with the blunt end of a pencil or a stylus, or simply typing shorter messages.

Moving up the arm, we find that people who spend a lot of time on their phones (cellular or land based) may be susceptible to cubital tunnel syndrome, a kind of "tennis elbow" that is caused by pressure on the ulnar nerve. The symptoms are very similar to the pain that comes from hitting your funny bone, which is actually the ulnar nerve located on the inside of the elbow. The nerve runs through a passage called the cubital tunnel. When this area becomes irritated from injury or pressure, it can lead to the syndrome.

Numbness on the inside of the hand and in the ring and little fingers is an early sign of cubital tunnel syndrome. (Are you feeling these symptoms already?) The numbness may develop into pain. The numbness is often felt when the elbows are bent for long periods, such as when talking on the phone or while sleeping. The hand and thumb may also become clumsy as the muscles are impacted.

The solution is simple, but many people fail to follow it: Keep switching hands (and ears) as you talk. Or even better, get a headset.

What did you say?
Traveling further up the body, we come to the head - source of many of the world's problems, indeed! Apple's little Nano/Ipod devices have become enormously popular (over 22.5 million sold in 2005). This line of elegant, miniature products enables people to shut out the world, no matter where they are, and listen to music (or books, lectures, TV shows, whatever). The danger is the in-the-ear design of IPod earplugs: you are literally pumping sound directly into the ear drum. With the long battery life of these devices, people can place a strain on their eardrums for which evolution has not really prepared us.

Once again, the solution is relatively simple. Keep the volume at a reasonable level and take frequent breaks. You also might want to limit the heavy metal bands.

Moderation in an Immoderate World
In yesterday's State of the Union address, the president acknowledges that we are addicted to oil. (That's a bit like doctors telling us that we as a nation have a problem with prescription medications.) We are addicted to far more than oil. Omni-present devices connect us (phones and internet), disconnect us (music) and distract us (games). Our brains are on overload.

Here's a prescription that doesn't require a note from the doctor: a few times a week, leave behind your cell phone/Blackberry/Treo, IPod, portable CD player/radio, put on your sneakers and go out for a walk. As far as I can tell, walking is unambiguously good for you. It connects you the old fashion way: through the simple enjoyment of the sights, smells and sounds of the world around you. And the only energy consumed is your own.

Posted by Jon Coppelman at 1:34 PM Link to, Comment (0), or E-mail this post