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

November 30, 2009

Workers' Compensation Metrics: Creating a One-Page Scorecard

Lately, there has been discussion in the blogoshere about workers’ compensation metrics, what do you measure, how often, do you focus on accidents or injuries, lost time or lost dollars, how deep do you drill down in management reporting, and the list goes on and on.

Because performance measurement is such a serious issue, I’d like to offer a perspective gleaned from working with national account and middle market employers, as well as insurers, for more than 25 years.

Performance measurement should have four characteristics: It should be simple, it should be meaningful, it should be consistent and it should be continuous.

By simple, I mean easily and quickly understood by senior management. Meaningful means that it should sit in senior management’s sweet spot; it should be something that is anticipated and valued by leaders. It should be consistent, because those leaders, once trained to view performance in one way, do not appreciate abrupt course changes. And to be effective over the long term, it has to be a continuous and routine process. The mantra should be: What is consistently well-measured is highly valued.

With this framework in mind, I usually recommend that monthly reports to senior management measure two things religiously: Incurred losses per full time equivalent employee (and this should be done by department, division and company) and incurred losses per every hundred dollars of payroll (again, split out by department, division and company). Before any measurement occurs, however, management should settle on targets, which should be a bit of a stretch, but attainable. And target selections should be set against actual performance in the prior three or four years. For instance, if costs per FTE have been in the $200 to $300 range in the last few years, a good target would be a reduction of 30% to 40% in the current year.

Senior managers have finite attention spans. Therefore, workers’ compensation performance measurement should fit on one page, a Scorecard that senior management can assimilate in no more than a few minutes. If the information is pithy enough, that’s as long as it should take, but it should also lead to fruitful discussion about management actions to enhance performance, discussion that comes out of knowledge.

There are many other solid and valuable workers’ compensation metrics, but, in Lynch Ryan’s experience, these two are the ones that senior managers appreciate the most.

All of this assumes, of course, that a serious and ongoing safety, workers’ compensation and injury management program is humming along, and that all parts of the organization have been trained in how to keep it that way. To quote the Bard, “Ay, there’s the rub.”

Posted by Tom Lynch at 10:02 AM Link to, Comment (5), or E-mail this post
November 24, 2009

Another Turkey in Ohio

The state of Ohio has attained considerable notoriety for its workers comp program. Unfortunately, the fame derives from a scandal, dubbed Coingate, in which high level officials were implicated in the diversion and theft of comp funds. There are a number of political operatives spending this Thanksgiving in jail. Now we read of a state senator who has proposed legislation to explicitly exclude undocumented workers from the Ohio comp system. It appears that one bad turn in Ohio deserves another.

We all recognize the ambiguous state of undocumented workers in the American workforce. But virtually all states - with the exception of sparsely populated Wyoming - have provided comp coverage to illegal workers once they are injured. It's a matter of common sense and fundamental decency: we may question how these workers came here, but once hired and in the workforce, they must be afforded the same protections given to other workers. Otherwise, we create a second-class workforce subject to exploitation and substandard working conditions - not exactly the American way.

Turkey of a Bill
Enter one Bill Seitz, a state senator who graduated summa cum laude from the University of Cincinnati and from the University of Cincinnati School of Law, where he was Law Review and Order of the Coif. I have no idea what "Order of the Coif" is, but you can see Bill having a reasonably good hair day here.

Seitz says he was shocked to learn that the Ohio Bureau of Workers Comp does not require injured workers to document their status before receiving benefits. (Why is he shocked? No state has any such requirement.)

According the AP:

Seitz's bill would place the burden of proof on the injured worker to demonstrate he or she is a legal worker by showing documentation such as a birth certificate or a visa. It would establish immunity from civil lawsuits for businesses in cases in which their workers' claims are denied by the bureau because the worker is illegal, except in cases in which the business knew the worker was illegal or if it intentionally hurt the worker.

I particulary like the immunity from civil suits. This bill would not just eliminate the "exclusive remedy" of comp - it would strip away any remedy for injured, undocumented workers. It's an invitation to employers to actively recruit illegal workers: they won't be held responsible for hiring them, they won't have any responsibility for workplace injuries that occur and they can avoid other forms of liability, provided, of course, that they did not "intentionally hurt" the worker. Seitz has stacked the deck against an already vulnerable population.

David Leopold, a Cleveland attorney and president-elect of the American Immigration Lawyers Association, thinks Seitz is engaged in a publicity stunt. "It seems to me to be a waste of time to even be talking about this. Beyond being cruel, it's senseless because it's not going to address the problem. If he has no statistics to back this up, he hasn't shown a problem exists."

Thanksgiving
As all of us gather for this most generous of our holidays, let's give thanks for our many blessings. Let's say a prayer for all of the families - native born, immigrant, legal and undocumented - struggling to make ends meet in this most difficult of times. And let's hope that the good people of Ohio focus on fixing the real problems in their comp system, not the imaginary ones that trouble the waking hours of the well-dressed, well-coifed Mr. Seitz.

Posted by Jon Coppelman at 2:08 PM Link to, Comment (9), or E-mail this post
November 23, 2009

Massachusetts Premium Rates Redux

My blog post of last Thursday (19 November 2009) addressing why workers’ compensation costs in Massachusetts are the lowest in the nation, while benefits are among the highest drew a mild pushback from Mark Walls, who manages the excellent LinkedIn Workers’ Compensation Forum. Mark wrote:

"Working for an excess carrier, I would never have expected Massachusetts to be considered a "low cost" state. In Massachusetts you cannot settle medical, and there are COLA's on the lifetime benefits. In my world, it's a high cost state.

I guess it's all about your perspective."

And he’s right- it is all about perspective. Mark also wrote, “I’m a claims guy,” and the blog post in question was all about premium rates. Sometimes, what appears logical when looking at claims can appear illogical when viewed through the prism of premium rates.

I can certainly understand why claims professionals in Massachusetts might be a bit frustrated, because not being able to settle the medical portion of a claim, along with having to contend with annual Cost of Living Adjustments, tends to obliterate predictability.

The perspective Mark mentions changes, however, when one considers a workers’ compensation program unique to the Massachusetts voluntary market, a program that substantially increases premium collected in the state while not driving up premium rates: the All Risk Adjustment Program, or, as it’s better known, the ARAP Surcharge.

In all 38 NCCI states, the ARAP, a sort of second experience modification that penalizes severity more than frequency, exists as the Assigned Risk Adjustment Program and is found in the Residual, but not in the Voluntary, market. This is supposed to provide even more of an incentive for employers in the Pool to do the right things to get themselves into the voluntary market. It’s a debit mod only. In Massachusetts, however, the ARAP can be found in both the Residual and Voluntary markets. If an employer in the Voluntary market has a high experience modification, it will also most likely find itself with an ARAP surcharge, anywhere from 1% to 25%, which is applied to the standard modified premium.

For example, say a company in the Voluntary market has a manual premium of $100,000, an experience modification of 1.5 and an ARAP of 1.2. The resultant total premium will be $180,000. Think of the $30,000 ARAP charge as compound interest. This means that Massachusetts premiums are more sensitive to losses than premiums in other states, even “loss cost” states.

And why shouldn’t an employer with high claim severity pay more for workers’ compensation? Why should employers with low claim severity subsidize those with high claim severity? Although many in industry abhor the idea of the Voluntary market ARAP, it seems to me that Massachusetts is doing the fair and reasonable thing.

In 2007, ARAP surcharges in Massachusetts brought in additional premium of $60 million, or about 7% of total premium in the state. However, this should decline fairly significantly in 2008 and going forward for two reasons:

• First, until 2008, the maximum ARAP surcharge was 49%; in 2008, the maximum was lowered to 25%;
• Second, Massachusetts has been hard hit by the recession, causing payrolls to decrease substantially; lower payrolls result in lower premiums.

The Massachusetts Workers’ Compensation Rating and Inspection Bureau is now engaged in the monumental task of putting together a rate filing to be submitted in 2010. It will be interesting, indeed, to see to what extent lowering the maximum ARAP surcharge from 49% to 25% impacts the filing.

Posted by Tom Lynch at 11:51 AM Link to, Comment (0), or E-mail this post
November 20, 2009

Housekeepers, Revisited

Back in September we blogged the mass layoffs of housekeepers at the Hyatt Hotels in Boston. After unknowingly training their replacements, long-term employees were laid off, their jobs taken over by employees of a temp firm called Hospitality Staffing Solutions (HSS). Given the the low wages and marginal benefits offered the replacement workers, this solution was lacking in hospitality, to say the least.

Well, there is more to the story. As we read in an article by Steven Greenhouse in the New York Times, a study is about to be published in the American Journal of Industrial Medicine on the disproportionate rate of injuries among housekeeping staff in several hotel chains. The findings of the report were presented to the annual meeting of the American Plublic Health Association in Philadelphia.

Would it surprise you to learn that injury rates among housekeepers in the Hyatt chain are nearly double that of the Hilton Hotels? Or that injury rates for hispanic and asian workers were twice as high as those for other workers? The study focused on 50 unionized properties and examined 2,865 injuries over a three-year span. The highest injury rate for housekeepers was at the Hyatt chain, at 10.4 percent, and lowest at the Hilton chain, at 5.47 percent.

Root Causes
Let's put on our MBA hats and perform a little "causal chain" analysis. The Hyatt Hotels find themselves paying too much for workers comp coverage. The high rate of injuries among housekeepers is driving up their costs. With cost reduction as the over-riding goal, the hotel strikes a deal with HSS, outsourcing the jobs. The cost of labor acquired through HSS is certainly lower for Hyatt (even when you factor in HSS admin and profit), but HSS also assumes responsibility for any workers comp losses. It is incidental and perhaps irrelevant to Hyatt that the work is being performed at much lower wage rates and with fewer benefits. From the Hyatt perspective, the goal has been achieved: hourly labor costs have been reduced and someone else is holding the bag on the cost of injuries.

When you ask the wrong question, you often end up with dubious answers - and, in this case, a public relations nightmare. The right question, of course, is why are Hyatt housekeepers suffering injuries at twice the rate of Hilton employees? As we back up the causal chain, the MBAs at Hyatt should have zeroed in on the real issues: Are we providing the requisite orientation and training for our employees? Are supervisors focused on best ergonomic practices? How well are we managing injured workers: do we provide prompt treatment and speed return to work through modified duty?

Hyatt opted to throw out the housekeepers with the bathwater- a solution that immediately gave rise to largely unforeseen problems, the most prominent being a tongue-lashing from Massachusetts Governor Deval Patrick. In full disaster-containment mode, Hyatt has offered to continue health insurance coverage and maintain wages of laid off employees - if they agree to join the ranks of HSS. (This "loss leader" of higher wages and benefits comes to an abrupt end next spring.)

One way or another, Hyatt will ride out the PR storm, but the fundamental problem of unsafe practices among housekeepers remains. Perhaps HSS, in the midst of slashing wages and benefits, will commit to making the work and the working conditions safer. I'm not holding my breath. In the meantime, the rooms at the Hyatt will continue to appear spotless, despite the fact that no one seems to care about the people who make them that way.


Posted by Jon Coppelman at 11:57 AM Link to, Comment (1), or E-mail this post
November 19, 2009

State Rankings: Why is Massachusetts at the Top?

Recently, in one of his Risk & Insurance columns, our friend and colleague, Peter Rousmaniere, wrote a piece examining workers’ compensation costs and benefits among the various states. There are a few organizations that do this annually. In my opinion, the most scholarly work is done by The National Academy of Social Insurance. However, the Academy, created in 1997 after the Social Security Administration stopped producing annual comprehensive national data and estimates on workers’ compensation benefits and costs, doesn’t really rank states in terms of either costs or benefits; it just lays out a mountain of interesting data .

The most incisive ranking of state benefits and costs is done by three organizations: the Oregon Department of Business & Consumer Services, the actuarial consulting firm, Actuarial & Technical Solutions (ATS) and the National Foundation for Unemployment Compensation and Workers’ Compensation (UWC) headquartered in Washington, DC, which has, since 1984 published annual, and class specific, comparative state data. (We’ve blogged reports from these organizations whenever they’ve been published. Go here and here.

Rousmaniere used reports from Oregon and ATS to construct a sort of consensus ranking of the 50 states. In his ranking, Massachusetts emerged with the lowest costs and the highest benefits. How can that be? It sounds paradoxical. To answer the question, I thought it might be useful to peel the Massachusetts onion a bit, because Massachusetts is the Insider’s home state, and we at Lynch Ryan played an active role in the turnaround.

Why does Massachusetts have low costs?
Throughout the mid-1990s, Massachusetts had some of the highest costs in the nation – annually about $2 billion in premium, compared to $878 million today.
Reform happened in 1992 (after a failure of reform in 1986). Here are some important reform initiatives:
• Indemnity wage replacement was lowered from 66 2/3% of an injured worker’s average weekly wage to 60%. This provides incentive for injured workers to stay out of work no longer than is medically necessary. (A case can certainly be made that this somewhat gratuitous cut in benefits is unfair to injured workers.)

• The state introduced the lowest medical fee schedule in the nation (there is no pharmaceutical fee schedule).

Currently, the fee schedule for physicians is about 100% of Medicare rates, but that just became effective in April, 2009. Prior to that, the rate was about 95% of the Medicare rates of 2004. Hospital rates are even lower. The result is that the medical portion of loss costs in Massachusetts now hovers around 40%, significantly lower than the rest of the nation.

However, physician specialists no longer accept fee schedule rates (as my colleague and fellow blogger, Jon Coppelman, puts it, “Any hand surgeon that accepts the fee schedule of $725 will be doing hand surgery in the back seat of a Buick.”) So, insurers must now negotiate fees with specialists (or with the consulting negotiators representing them – I’m not making this up!). The back and forth negotiating can delay care, frustrate employers and anger injured workers. Over time, we believe that the medical share of loss costs will rise in Massachusetts. It is interesting to note that, despite the low fee schedule, injured workers report satisfaction with their medical treatment.

• In the early 1990s, premium in the Assigned Risk Pool, the Residual Market, was $1.2 billion; today, it’s $117 million, or 11.7% of the entire insured market. A number of initiatives contributed to this decline. Lynch Ryan offered a program recommendation that became one of the most influential: the QLMP, or the Massachusetts Qualified Loss Management Program (We might have designed the program, but we sure didn’t pick the name!)

This program allowed employers in the state’s Assigned Risk Pool to receive intense and in-depth training and education in managing their workers’ compensation and injured employees from consulting firms that “qualified” to provide it. Firms became “qualified” by having their entire Massachusetts book of business analyzed by the Massachusetts Workers’ Compensation Rating & Inspection Bureau. The Bureau designed a special one-year experience modification for each consulting firm’s total book of business, comparing the Mod in the year prior to the consulting firm working with a client to the Mod in the year following the work. Consulting firms were then awarded a credit, graduated from zero to fifteen percent, depending on the decline in the Mod of their books of business in the year following the work. This credit was passed on to any company in the Pool that hired the consultant, and the consultant’s fee would come out of the passed-on credit. This program gave Pool employers a way out, and was later replicated in Missouri and West Virginia.

We think it an elegant program, because each consulting firm had to re-qualify every year. Under Paul Meagher’s steady leadership, The Rating Bureau has done an excellent job managing this program, which continues to this day.

• The state lowered attorney fees: a prudent and necessary move to reduce frictional costs (but the howls of protest still echo in the legislative chambers). They also hired and trained more judges, making the entire system more efficient.

Why does Massachusetts have high benefits?
Central to the reform effort was pegging the maximum temporary total disability (TTD) benefit to the average industrial weekly wage in the state. The maximum benefit is currently $1,094 per week. However, only if an injured worker’s pre-injury weekly wage is $1,823 or more will he or she receive this generous maximum. Thus, while indemnity only covers 60 percent of the average weekly wage, the maximum of $1,094 is substantially higher than what is available in most states.

There were many other reforms, but, to my mind, these have been the most influential. After twenty years, it is clear that the Massachusetts workers comp reforms were well crafted. The legislators, regulators, insurance executives, union representatives and employers who spent long days and nights dissecting the workers’ compensation crises of the early 1990s built a system that has stood the test of time. As I tell clients, “There may be reasons for not doing business in Massachusetts, but workers’ compensation isn’t one of them.”

Posted by Tom Lynch at 12:15 PM Link to, Comment (0), or E-mail this post
November 18, 2009

Cavalcade of Risk: Short and Sweet

Jason Shafrin of Healthcare Economist has posted the latest edition of Cavalcade of Risk. It's a pungent mix of interesting items and well worth a few minutes of your time. Readers will be rewarded with a nice precis on the nature and predictability of risk, along with the story of an English company called the French Connection, which achieved notoriety and profit by abbreviating the name to FCUK (no comment necessary).

Posted by Jon Coppelman at 2:13 PM Link to, Comment (0), or E-mail this post
November 17, 2009

Workers Comp Insider Wins Top National Blog Award

Well, bust our balloons and call us surprised!

We learned yesterday that the Lexis Nexis Workers’ Compensation Law Center has honored the Workers Comp Insider with the award of Top National Workers’ Compensation blog of 2009. With so many excellent blogs being written now, we’re proud and humbled at the same time.

When we created the Insider in September 2003, we hoped that we’d attract others to join the insurance blogosphere, but we never imagined that so many superb professionals would join the blogging rolls. Now, to be singled out for this honor is more than a little gratifying.

I need to take a moment to commend and thank Julie Ferguson for hatching the idea in 2003 and for managing the enterprise ever since. Julie is one of, if not the, nation’s foremost blog experts, and we are lucky indeed to have her at Lynch Ryan. Moreover, she’s an excellent writer who’s written about a third of all our blog posts.

And where would we be without the tireless search for blogging excellence exemplified every day by Jon Coppelman, a bona fide workers’ compensation guru. Jon’s posts are always interesting, thought-provoking, honest and well-sourced. Judging by your comments, they can also be provocative and controversial, but that’s what the medium is all about. I’m thankful for Jon’s expertise and his friendship.

In making the award, here’s what the Lexis Nexis Workers’ Compensation Law Center said about the Insider:

Workers’ Comp Insider’s excellent coverage this past year of the side effects of the economic recession on workers’ compensation, from government bailouts to bankruptcy to fraud and more, made it our choice for the Top Blog of the Year 2009 on national workers’ compensation and workplace issues. Workers’ Comp Insider also proved again the power of a company blog to showcase the expertise of its employees as evidenced this year by articles in both The Washington Post and the Las Vegas Sun, which cited the Workers’ Comp Insider on the issues of death from a workplace injury and controlling workers’ comp costs, respectively. Workers’ Comp Insider’s in-depth research to uncover the best government and industry websites and blogs in the blogosphere was second to none in 2009, and enabled policymakers, journalists, and anyone with an interest in and passion for workers’ compensation and workplace safety to do a deep dive into a collection of online resources that they may never have heard of otherwise.

All of us at Lynch Ryan are committed to doing everything in our power during the coming year to justify this award. Thanks again to Lexis Nexis and thanks to our readers for joining us on the ever-fascinating journey that is workers compensation.

Posted by Tom Lynch at 1:00 PM Link to, Comment (11), or E-mail this post
November 16, 2009

The Geography of Health: US vs. Them

Given the discouraging and often appalling level of debate on health insurance in America, it was refreshing to view the PBS Frontline broadcast “Sick Around the World,” a documentary that dispassionately analyzed different health care systems from five developed countries: Britain, Japan, Germany, Taiwan and Switzerland. The program originally aired during the presidential campaign of 2008, but, given the current country-wide debate regarding health care, PBS executives thought a re-broadcast would be appropriate, and they were right. You can view the entire program online here: The veteran Washington Post foreign correspondent, T.R. Reid, wrote and hosted the program. After the program aired, Reid kept working on the global health care issue, and in August, 2009, Penguin Press published his new book, The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care.

Neither his Frontline program nor his book have the vitriol or cynicism of Michael Moore’s “Sicko,” which Reid suggests did a good job of showing what is wrong with America’s health care system, but a poor job of showing what is good (and bad) about health care in other nations. In Moore’s piece, any other health care system is in every way better than America’s. Reid does not make that mistake. He just lays out the facts and lets the viewer or reader come to easy conclusions.

At Lynch Ryan, we’re vitally concerned about American health care, both personally and professionally. Personally, because we believe that high-quality health care is a basic and essential right for all Americans; professionally, because nearly 60% of workers’ compensation losses are spent on medical treatment. Workers’ compensation is the tiny caboose at the back of the great big American health care train. In March, 2008, I published “The Best Health Care in the World” as a series of essays in our Workers Comp Insider. In it, I tried to compare health care in America with that of the rest of the developed world, the other twenty-nine countries that make up the Organization for Economic Cooperation and Development (OECD).

In Sick Around the World, T.R. Reid cites the same statistics I did, but focuses on five countries within the OECD that have systems different from America’s and mostly different from each other. However, unlike America, each of them has universal health care and achieves results that are better and cheaper, sometimes far better and cheaper, than ours.

Britain
First, he examines Britain, the system most Americans who don’t know any better like to belittle, but whose population has somehow managed to have a life expectancy that is two years longer than ours. Reid treats the British system with great respect. Why? Because as a reporter he lived there, and his family routinely used the National Health Service. He found the care exemplary and never paid a dime for it. It’s a government owned and operated system, and all prices are set by the government. And, lest you think that it would be intolerable in America, you should know that it is exactly the system used by our Veterans Administration. Year after year, the VA significantly outdistances the private health care sector in patient satisfaction, as measured by the University of Michigan’s American Customer Satisfaction Index . Patient satisfaction in the private sector has been increasing over the last few years and has a current score of 77 out of 100. The Va’s 2008 scores, on the other hand, are 89 for retirees, 85 for inpatients and 81 for outpatient clinics. And at 3% administrative costs, the VA provides quality medical care much cheaper than any other health care program in America.

Japan
Next, Reid traveled to Japan where the population lives five years longer than ours, 82.1 versus 77. Somehow, despite those mortality figures, much longer hospital stays, three times the number of CT Scans and 30% more MRIs per capita than in the US, Japan spends only half as much of its GDP on health care as we do: 8% compared to a whopping 16%. Japan uses a “social insurance” system with citizens either getting insurance through their employers or through community-based non-profits. The average family monthly premium is $280, and employers pay more than half. Costs are kept down, because every two years the government negotiates the price of every singly procedure, something our congress refuses to allow. Moreover, there are no gatekeepers; the Japanese can see specialists whenever and as often as they want, and waiting periods are insignificant. Finally, because Reid also lived and worked in Japan for years (he even speaks the language), he once again offered the personal perspective regarding the high satisfaction he and his family experienced within the Japanese health care system.

Germany
After Japan, Reid wandered to Germany, the country with the very first “social insurance” system, created by Otto von Bismarck, the Iron Chancellor, in the mid-1880s. Germany’s citizens live two years longer than ours, and the German infant mortality rate is about half that of the US, yet the country spends less than 11% of its GDP on health care. The average family premium is $750 per month, but premiums are pegged to patients’ income. Germans buy insurance from one of 200 non-profit “sickness funds.” Co-pays are about $15 paid once every three months. The “funds” cannot discriminate in any way; for example, through pre-existing conditions, age, demographics, medical history, etc. Germans like their system, although doctors, who are paid only about two-thirds of what their American counterparts make, would like to earn more. However, malpractice insurance is a non-issue and many doctors attend medical school for free, obviating any need to repay a huge school loan, as most US doctors must do.

Taiwan
Staying in Asia, Reid hopped a plane for Taiwan. Why Taiwan? Because its system was created from scratch in 1995, only 14 years ago. Prior to that, the Taiwan health care system was third-world at best, but in the late 1980s and early 1990s its economy grew, propelling it into the ranks of wealthy nations and giving the country the chance to build an entirely new health care paradigm. The Taiwanese were very systematic in designing their health care program. They hired Harvard Professor Bill Hsiao to examine and analyze all of the systems in the rest of the developed world (Why can't we get guys like that?). On his recommendations the government then crafted a sort of smorgasbord of a National Health Insurance plan, although, fundamentally, it’s based on the Canadian system. Every citizen has to buy insurance, but there is only one insurer, the Taiwanese government. This keeps premiums down to about $650 per year for a family of four. Employers split the cost of the premiums with their workers. Where the Taiwanese really excel, however, is in their embrace of technology; it’s a paperless system, because every citizen has a “smart card,” which stores medical histories and bills the government insurer for services. Like America's VA, the entire country is on an electronic medical record system, and that is one of the big reasons that Taiwan manages to achieve excellent health care results while spending only 6.3% of GDP on health care. Admittedly, when you’re creating something from next to nothing you don’t have to go to war with rich vested interests; there are none.

Switzerland
And that’s why Reid went to Switzerland. Prior to ten years ago, the Swiss health care system closely resembled America’s, warts and all. Not only that, Switzerland is home to a lot of insurance and pharmaceutical companies. But a decade ago, the Swiss had an epiphany: they decided that quality health care is a basic human right, and the country’s elected officials decided to redesign the system, which they concluded was discriminatory and costly. It wasn’t easy. They faced many of the same arguments that now float over and suffocate America. Ten years later, the Swiss still have, per capita, the second most expensive health care system in the world, but it’s still 25% less than America’s. They have achieved universal health care coverage. Insurance premiums are $750 per month for a family of four, paid entirely by consumers, but the government subsidizes low income citizens. Insurers cannot make a profit on basic care and have to accept everyone. They negotiate prices with doctors, but the government sets the price of drugs.

Home Again
In America, health care plays a significant role in about 50% of bankruptcies. When Reid was interviewing ministers from each of the five countries, he asked if anyone in their countries ever went bankrupt because they couldn’t afford health care. They were aghast at the thought. It could never happen, they said. And none of them could understand why it would be allowed to happen in the world’s richest country. Neither can I.

In America, health care has become a commodity, market driven enterprise. Throughout the rest of the developed world, it is an essential human right; something governments were created to provide and protect. In America, legend and myth influence many of our citizens, who feel that any government intrusion into health care will lead to draconian tactics typical of a fascist state. They don’t seem to realize that our Veterans Administration health care, treating millions of our veteran heroes every year, is a direct copy of Britain’s. Or that Medicare, our largest insurer with more than 36 million members who, in poll after poll, report high satisfaction with their health care, is modeled on the health care system of Canada.

Maybe our American health care house that Jack built, what T.R. Reid calls a “badly fragmented crazy quilt system,” is just too big to be redesigned into something we could all be proud of. But when I’m tempted to say, “A plague on all their houses,” I think of the Taiwanese, who went from nothing to one of the most technologically advanced, yet inexpensive, health care systems in the world in just fourteen years. And I think of the Swiss, the bureaucratic, economically driven Swiss who have come to see high-quality, affordable health care as the absolute right of every Swiss citizen. If these two totally different countries can do that, I ask you, why can’t we?

Posted by Tom Lynch at 11:36 AM Link to, Comment (3), or E-mail this post
November 12, 2009

Hot off the press: Health Wonk Review; other news notes

Louise Norris has posted a very simpsons-esque edition of Health Wonk Review at Colorado Health Insurance Insider. Of course, commentary on the Affordable Health Care for America Act is front and center. This issue is also packed with such diverse topics as limericks and Japanese organized crime bosses. Thanks to Louise for compiling a great edition.

Other news notes
Toxic mold - Is workplace mold compensable? Roberto Ceniceros notes that this was a big topic in workers comp circles a few years back, with many predicting it would be the new asbestos. In his blog posts, he looks at a pair of recent court cases dealing with mold claims.

Swine flu - The New York Times reports that the CDC will soon be releasing updated fatality counts for the H1N1 virus, with the new number closer to 4,000 deaths since April rather than the 1,200 previously estimated. While this number is still low in comparison to the 36,000 killed by seasonal flu each year, over 90 percent of seasonal flu victims are over 65 and in most cases have other health problems so it will be interesting to learn the demographics with swine flu. The new figures are expected to be released next week.

Veterans - Just a few followups to Veteran's day. Consumer Insurance Blog posted a comprehensive rundown of Insurance issues for U.S. military service members & their families. And on another note, we call your attention to one of the most heartwarming and sob-inducing posts we've seen in awhile - a compilation of video clips of dogs welcoming home soldiers. Is it any wonder that dogs are now playing a big role in helping vets deal with PTSD?

Smart Pills - Jacob Goldstein of the WSJ Health Blog posts about a new technology that can detect if you forget to take one of your important medications and send you a text reminder - based on a microchip implanted in the pill. Exciting health innovation or brave new world? Katherine Van Tassel of HealthLawProfBlog wonders just who will be keeping track of this information?

Immigration - Peter Rousmaniere posts Important 2008 statistics about immigration. Also, don't miss his recent post on recent ICE estimates that 17,500 people are trafficked into the U.S. each year. Human trafficking is just another way of saying "slavery"- unlike illegal immigrants, there is nothing voluntary about their presence here - these are people who are abducted from homes or deceived with false promises.

Compensability - Man plays volleyball at work and is injured. Is his injury compensable? Check it out at SafetynewsAlert.

Posted by Julie Ferguson at 8:59 AM Link to, Comment (0), or E-mail this post
November 11, 2009

Promising PTSD and TBI research holds hope for better treating injured veterans

On this Veteran's Day, here's a salute to all the veterans and active military service members out there. In the shadow of the horrific events at Fort Hood, this day of commemoration takes on a particular poignancy.

Here at Workers Comp Insider, we have a tendency to view things through the lens of dis-ability and the restoration work-ability because that's the nature of what it is that we do. So we were particularly intrigued to read about new research that is offering hope to unlock some of the secrets of post traumatic stress disorder (PTSD) and traumatic brain injuries (TBI), two of the most frequent and debilitating types of injuries sustained in Afghanistan and Iraq.

Powerful new scanning techniques are allowing doctors to see how the brain changes with such injuries, and doctors are learning that there are many similarities in these injuries, including symptoms like memory and attention problems, anxiety, irritability, depression and insomnia. This leads researchers to believe that the two disorders share brain regions.

"A brain processing system that includes the amygdala — the fear hot spot — becomes overactive. Other regions important for attention and memory, regions that usually moderate our response to fear, are tamped down.

"The good news is this neural signal is not permanent. It can change with treatment," Hayes says.

Her lab performed MRI scans while patients either tried to suppress their negative memories, or followed PTSD therapy and changed how they thought about their trauma. That fear-processing region quickly cooled down when people followed the PTSD therapy.

It's work that has implications far beyond the military: About a quarter of a million Americans will develop PTSD at some point in their lives. Anyone can develop it after a terrifying experience, from a car accident or hurricane to rape or child abuse."

These physical signs that tests are revealing hold the potential to greatly enhance a physician's ability to accurately diagnose and treat PTSD - an illness that is often unrecognized and untreated. While there is heightened awareness of PTSD, it can be difficult to diagnose and there are limitations for establishing accurate prevalence rates.

Additional Resources on PTSD and TBI
National Center for PTSD - with resources for veterans, the general public, providers, and researchers
Veterans: where to get help for PTSD
Post-Traumatic Stress Disorder (PTSD) - from the National Institute of Mental Health
Post Traumatic Stress Disorder Gateway
Defense and Veterans Brain Injury Defense Center
Traumatic Brain Injury Information Page - from the National Institute of Neurological Disorders and Stroke (NINDS)
Traumatic Brain Injury - from the CDC


Posted by Julie Ferguson at 2:05 PM Link to, Comment (1), or E-mail this post
November 10, 2009

A Matter of Time: Independent Contractors Morph into Employees

We turn yet again to the ever-troubling issue of independent contractors. In today's case we examine a situation where two individuals, beginning as legitimate independent contractors, morph over time into employees. It's a cautionary tale that demonstrates what is true today may no longer be true tomorrow.

Fred Cromwell and Jeff Bankston became involved in the restoration of damaged telecommunication lines along the Mississippi Gulf Coast in the wake of Hurricane Katrina. They were hired as independent contractors by Driftwood Electrical, a subcontractor of BellSouth. Cromwell and Bankston provided their own trucks, testing equipment, connection equipment, insulation equipment and hand tools - a total personal investment of $66,000. BellSouth supplied materials, including cables.

Each day Cromwell and Bankston reported to BellSouth's location to receive their assignments. They worked 12 hours a day for thirteen days and then had one day off. (Tough working conditions, indeed.) They were paid a fixed hourly wage for their work and labored under these exhausting conditions for about 11 months.

At issue is the rate of pay: Driftwood paid them a set hourly rate. (They also, we note with interest, provided workers comp coverage.) Cromwell and Bankston sued for overtime pay under the Fair Labor Standards Act (FLSA). A district court granted summary judgment against Cromwell and Bankston on the grounds that they were independent contractors, not employees, and thus exempt from the overtime provisions of the FLSA. The U. S. Fifth Circuit Court took up the appeal.

The court found that Cromwell and Bankston were to a significant degree independent contractors:
- They controlled the work, with no direct supervision from Driftwood
- They provided their own tools
- They could theoretically work for others (although they did not)

The court also found, however, that in comparing this case to others, there were significant differences:

The plaintiffs in this case worked full-time exclusively for the defendants for approximately eleven months...The plaintifs did not have [a] temporary, project-by-project, on-again-off-again relationship with their purported employers.

While the court found "facts pointing in both directions" regarding the issue of employment status, they determined that on balance, and as a matter of economic reality, Cromwell and Bankston were economically dependent upon Driftwood and were not in business for themselves. "The permanency and extent of the relationship [with Driftwood], coupled with Driftwood's...complete control over...schedule and pay, had the effect of severely limiting any opportunity for profit or loss by Cromwell and Bankston."

Thus, even though Cromwell and Bankston controlled the details of the work, were not closely supervised, invested in equipment and tools and used a high level of skill in performing the work, they were not "in business for themselves" during the eleven stressful months of Katrina clean up. The judgment of the district court was vacated and the case was remanded back to that court for reconsideration.

The Lessons of Time
The lessons here are clear: even when virtually all the criteria for independence are met, independent contractors may still be considered employees, especially where they work for a substantial block of time for only one employer. The case serves as a warning to contractors going forward: if your "independent contractors" only work for you over a substantial period of time, they are likely to morph into employees, with all the rights and considerations attached to that fundamental and eternally-perplexing relationship.

NOTE: A special thanks to Michael Maslanka, a Texas attorney blogging at WorkMatters, for highlighting this case. His blog, just celebrating its one year anniversary, is an excellent resource.

Posted by Jon Coppelman at 11:02 AM Link to, Comment (2), or E-mail this post
November 9, 2009

Disabled Carpenter Climbs a Mountain

Christopher Robin Briejer used to be a carpenter. He suffered a back injury in 2000 and was disabled from work. Except that he apparently kept on working. In 2003 he hurt his back again while working without comp coverage. He claimed the new injury was a recurrence of the 2000 incident. The claim was re-opened and he began collecting benefits. Between January 2004 and April 2008, Briejer received 121 state checks totaling $258,995 for time-loss compensation, $75,295 in medical services and $31,651 in vocational retraining – for a total of nearly $366,000.

The state of Washington recently indicted Breijer for comp fraud, alleging that the 2003 injury was not a recurrence, but a new injury. Someone dropped a dime on him.

Breijer states: “I have a permanent back injury with permanent damage to my spine.”

For a man collecting disability payments, Breijer maintains a very active life style. He likes to "rock crawl" and last year he climbed Mount Ranier.

“It doesn’t take a back to climb a mountain, it takes legs,” he said. [Think about that for a moment.] “I’m an active injured person. Even though I’m injured, I take care of my body. My doctors are 100 percent in favor of me hiking.” Hmm. I wonder if his doctors are 100 percent in favor of him working...

A Famous Bear of LIttle Brain
Breijer appears to have been named after Christopher Robin, the boy who appears in the Winnie the Pooh books written by A.A. Milne. (I refer to the books, not to an abomination of the same name from the Disney folks.) It seems that Breijer took to heart one of the Pooh bear's famous quotes: "A bear, however hard he tries, grows tubby without exercise." No bear belly for Breijer!

I'm guessing that Breijer might resent being named after a character in a children's book. Well, the original Christopher Robin resented it, too. Christopher Robin was based upon Milne's own son, Christopher Robin Milne, who in later life became unhappy with the use of his name. "It seemed to me almost that my father had got where he was by climbing on my infant shoulders, that he had filched from me my good name and left me nothing but empty fame". Children can be so harsh!

Well, as Pooh himself famously said: "People who don't Think probably don't have Brains; rather, they have grey fluff that's blown into their heads by mistake.” And again: "If the person you are talking to doesn't appear to be listening, be patient. It may simply be that he has a small piece of fluff in his ear."

I wonder if the prodigiously active Christopher Robin Breijer might have just gotten a little confused, Pooh-bear style, between right and wrong, between being truly disabled and being able to work. Such confusion is rampant in these morally compromised times. It's a bit like distinguishing one hand from another, which Pooh himself found to be quite difficult:

Pooh looked at his two paws. He knew that one of them was the right, and he knew that when you had decided which one of them was the right, then the other was the left, but he never could remember how to begin.

When it comes to confronting moral hazards, it's really important to remember how to begin.

Posted by Jon Coppelman at 11:46 AM Link to, Comment (2), or E-mail this post
November 6, 2009

Compensable Shampoo?

Ginger Wilson works as a librarian in Montgomery County, Virginia. One day she arrived at work, got out of her car and headed for the library entrance. Then she remembered that she had a hair appointment at noon, so she returned to the car and opened the door to fetch a bottle of shampoo. A gust of wind caught the door, which slammed against her. She fell, breaking her wrist.

Compensable under workers comp? Not likely, as the return to the car was a definitive deviation from her work routine - she had already exited the car and was headed toward the library. The fetching of shampoo was a personal errand, having nothing to do with work.

Ah, but this is Montgomery County, home of the $32 million comp problem. Ginger was awarded $5,500 in comp benefits, covering her medical costs and six weeks of lost time.

Associate County Attorney Susan Chagrin (who immediately earns a place on my All Name team for attorneys) has sued Ginger for repayment, asserting that the injury had nothing to do with employment. I'm with Chagrin, but to our mutual chagrin, the county is unlikely to prevail. There is nothing fraudulant in Ginger's filing a claim. She apparently was completely candid about the circumstances of the injury. The claim was accepted by the adjuster. Getting money back on this one is likely to be as difficult as the proverbial putting toothpaste back into the tube.

I have a few random questions for Montgomery County and for Ginger:
1. Why does a librarian with a broken wrist have to miss 6 weeks of work? Library work is about as light duty as it gets.
2. If Ginger returned to her car for the specific purpose of fetching the shampoo, why is she still in "the course and scope of employment"?
3. According to her testimony, Ginger planned to "eat my lunch while I was getting my hair done." Excuse me and with all due respect, that is a truly revolting example of multi-tasking.
4. Finally - admittedly a bit off point - why does Ginger have to provide her own shampoo for a hair appointment?

As is so often the case, the best opportunity for controlling the outcome of questionable claims is at the beginning. If compensability is in doubt, adjusters should take aggressive action at the outset. Given the particulars of Ginger's situation (at least as this article presents them), there was enough evidence to deny the claim when it was first filed. Once accepted as compensable, however, it's unlikely that the decision could be reversed. Ms. Chagrin, in all likelihood, will remain, well, chagrinned.

Posted by Jon Coppelman at 9:19 AM Link to, Comment (4), or E-mail this post
November 5, 2009

Cavalcade of Risk & other workers' comp news briefs

Debbie Dragon or Wise Bread hosts this week's Cavalcade of Risk, which she dubs the "the How Much Assurance Does Your Insurance Offer edition." As usual, a good source of some of the best biweekly risk-related posts in the blogosphere!

OSHA - frequent citations - OSHA recently announced its Top 10 Enforcement Citations. For a more generic, non-company specific view, see the top 10 lists for the most frequently cited standards and the standards with the highest penalties. To narrow down to information to an industry SIC code, a state, or a size of employer, see the interactive frequently cited OSHA standards page.

Montana Supreme Court - Montana's Supreme Court ruled that workers' compensation benefits for permanently and totally disabled workers are meant to assist them for their "work life," and not into retirement. Writing for the 5-2 majority, Justice William Leaphart stated that, "By acting to terminate benefits as it does, (the law) rationally advances the governmental purpose of providing wage-loss benefits that bear a reasonable relationship to actual wages lost."

Chronic illness - This week, Roberto Ceniceros has featured a pair of posts related to chronic illness on his Comp Time blog. The first highlights a research report from the Integrated Benefits Institute in which nine in ten workers reported one or more chronic health problems. The report is based on 27,000 employee surveys. In his second post, Ceniceros explores the issue of wellness programs as they relate to chronic illness and workers comp. He makes the point that an increasing number of employees may be getting better health care attention after reporting a comp injury, but that is likely true mostly for employees of large, sophisticated employers.

Related to this issue, Peter Rousmaniere writes about "the elephant in the room" in his column in Risk and Insurance, noting that co-morbidities -- such as obesity, depression, diabetes, sexual trauma, smoking, and drug addiction -- derail the recovery of injured workers and pose challenges for claims adjusters and case managers. He makes the point that the the workers' compensation courts are more inclined today to rule that insurers "own" the comorbidity that impedes recovery, as evidenced by the recent weight-loss surgery rulings.

Long road to recovery - the Pocono Record features the story of John Capanna's long, slow recovery from a severe industrial injury. John was severely burned and disfigured in a flash explosion at an oil refinery some 30 years ago. It's a story of courage and strength. Thanks to SafetynewsAlert for pointing us to this story.

Saving lives through safety - Robert Hartwig, president of the Insurance Information Institute, makes the case that insurers don’t get enough credit for saving lives with safety research in this month's National Underwriter. Among the points that he makes: "Today, workers’ comp insurers are a primary source of loss control expertise for millions of American businesses - with tangible results. Consider that in 1926, an employee working in a manufacturing setting had a 25 percent chance of being injured on the job. In other words, one-in-four workers suffered injuries each year. In 2008, the odds were only about 5 percent, or just one-in-20."

Ferreting out fraud through social networking - Attorney Molly DiBianca discusses risks entailed in using Facebook to investigate employee fraud, suggesting guidelines to ensure employer protection.

Quickies
Surgical Fire Prevention
Who is the authorized employee for Lockout/Tagout?
Lack of paid sick days may worsen flu pandemic
Your forklift questions answered
More forklift questions, more answers

Posted by Julie Ferguson at 3:46 PM Link to, Comment (0), or E-mail this post
November 3, 2009

OSHA issues largest fine on record to BP

At the end of last week, OSHA issued $87 million in penalties against BP for failure to make make the changes which were specified in a settlement agreement related to the 2005 explosion at a Texas refinery which killed 15 and injured more than 170 others. The second-highest penalty that OSHA has imposed was in 2005 for $21 million - also issued to BP related to the same explosion.

BP had paid the $21 million fine and agreed to corrective actions to eliminate potential hazards similar to those that caused the 2005 tragedy as part of a settlement agreement with OSHA in September 2005. The penalties were imposed after a 6 month OSHA investigation. BP had recently sought but was denied more time for compliance.

OSHA issued 270 "notifications of failure to abate" previously identified hazards, as well as 439 new willful violations for failures to follow industry-accepted controls. A willful violation is defined by OSHA as an intentional violation of the Act or plain indifference to its requirements.

Unsurprisingly, BP is contesting the fines, stating that they have spent more than $1 billion on modernization and safety and have taken 550 corrective actions. (See BP's offical response and October 5, 2009 response to OSHA, a 17-page PDF). The company has also gotten support from Texas City's mayor, Matt Doyle, who has criticized OSHA for the fines, calling OSHA's actions "one of the biggest affronts to the working men and women of this country" and "an example of intrusion into private business by government."

Jordan Barab, acting assistant secretary of labor for OSHA, noted that BP had four years to comply with the agreement, and defended OSHA's actions as protecting the safety of working men and women. While Barab acknowledged that improvements had been made, he noted that some of the most important things had not been addressed, particularly pressure relief and automatic shutdown systems, problems directly related to the accident. "Our experts say BP is 10 years behind where a lot of the leading refineries are when it comes to process safety," Barab said. "This is a company that should have known better."

Posted by Julie Ferguson at 11:44 AM Link to, Comment (1), or E-mail this post
November 2, 2009

The Tennessee Solution

It's safe to say that no state has really solved the independent contractor/sole proprietor conundrum. Rather than require comp coverage for all workers, most states either exempt sole proprietors from coverage or make it optional. As a result, many small construction sites are full of "sole proprietors." No one works for anyone. Thoeretically at least, no one is in charge. Nonetheless, the building goes up on schedule. And the final cost of construction is far less than similar job sites where all workers are protected by comp. If one of these sole proprietors is severely injured, the state will try to pin the cost on a general contractor, if they can find one. Otherwise, the state fund usually pays for the benefits.

Solving this problem creates new problems. In Massachusetts, the attorney general issued an advisory with a catch-all definition of "independent contractors" that is so broad, it includes virtually everyone. As a result, when general contractors cannot produce certificates of insurance for subcontractors, the cost of these subs is added to the payroll for calculating comp premiums. The cost of doing business goes up substantially.

In Delaware, they passed a law a few years ago requiring coverage for everyone, including sole proprietors. That is the cleanest and most comprehensive way to solve the problem. Alas, it's also fraught with political risk. The subsequent uproar led legislators to back track and repeal the law.

Now, Tennessee is moving ahead with a new law that mirrors the one repealed in Delaware: limited to construction workers, the law requires coverage for everyone, including sole proporietors. Cost estimates for individual policies range from a few hundred to as much as $6,000. The latter figure is pretty daunting to a part-time, semi-retired craftsman who earns less than $25,000 a year.

The Tennessee legislature is considering some modifications to the law, which is scheduled to go into effect on December 31, 2009. They may allow for cheaper-than-usual policies that include high deductibles. Or they might let sole proporietors off the hook, if they can show that their own health insurance will cover workplace accidents. (Now there's a cost-shifting measure that will create some interesting dialogue on the health care side!) The legislature has the right idea: find a way to make comp affordable to people who cannot afford much in the way of premiums.

With the legislature not scheduled to meet again until mid January, the law will go into effect as written on the last day of the year. Solve one problem, create another. Welcome, once again, to the ever-complicated world of workers comp.

Posted by Jon Coppelman at 11:29 AM Link to, Comment (2), or E-mail this post