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Florida is famous for at least three things: citrus fruit, sunshine and pain pills. The citrus and sunshine are pretty much permanent, but it appears that the easy dispensing of opioids may be coming to an end. HB 7095, the state's new law regulating opioid distribution, bans doctor dispensing of drugs and subjects pharmacies to inspection of prescription records. The state is determined to put an end to its reputation as the pill mall of America.

Now CVS, the giant pharmacy concern with over 700 stores in Florida, has stepped into the breach. They have notified a small number of doctors that they will no longer honor their prescriptions for opioids. CVS has analyzed prescription data and determined that these doctors are over-prescribing. As with so many issues involving insurance coverage, the data goes into a black box and a determination comes out the far end. What happens in the box remains a mystery. Our esteemed colleague, Joe Paduda, has strongly endorsed the CVS effort at his Managed Care Matters blog.

Feeling the Pain
It should come as no surprise that a key stakeholder in the use of opioids, the Florida Academy of Pain Medicine, is crying foul. The academy points out that the criteria for blackballing doctors is unknown and that doctors - and only doctors - should be allowed to determine who needs pain killers and for how long. As Jeffrey Zipper, chair of the Academy's Medical Affairs committee puts it, "I don't want to be subject to the scrutiny of CVS."

Given the immense dimensions of the prescription drug problem in Florida, it's clear that some doctors have long been abusing their power to prescribe medications. They need scrutiny and they need to be sanctioned. While CVS and other pharmacies are a key part of the distribution network, their leverage in this area is somewhat limited. To begin with, other pharmacies may choose to pick up the rejected business: we're talking big bucks. In addition, CVS at some point will have to disclose the criteria used for rejecting the prescriptions written by certain doctors. Once this happens, doctors may attempt to manipulate their prescription practices to avoid detection and sanction.

In attempting to get its arms around this formidable problem, the State of Florida has reframed the question about who controls controlled substances. While it's apparent that doctors no longer have sole discretion in the area, it remains to be seen how effective and how equitable the control exerted by pharmacies can be. The Insider will monitor with great interest this important experiment in substance abuse control.

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

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

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

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

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

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

Not really.

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

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

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

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

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

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

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

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

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

It's been over 20 years since NCCI changed the rules relating to the calculation of the experience modification factor. Given that experience modification determines the cost of insurance for all but self-insured employers, these changes require careful scrutiny. While some of the details have not yet been announced, one thing is clear: employers with higher-than-expected losses are likely to pay more for insurance. [NOTE: the Insider apologizes in advance for what is inevitably a rather technical discussion. For readers who would like additional background, check out our 2004 primer here.]

Under the current system, claim dollars - what's been paid and what's been set aside for future payment on each claim - fall into one of three categories:
- Primary losses: the first $5,000 of each claim. These losses carry the most weight and drive up the experience mod much quicker than the losses above $5,000.
- Excess losses: the losses above $5,000 within each claim. These are discounted in the calculation, with as little as 10 percent of the total included in the calculation (depending upon the size of the premium)
- State Rating Point: the cap on individual claim dollars beyond which the losses are excluded from the calculation; this varies from state to state, generally falling between $125,000 and $200,000.

NCCI is expanding primary losses from the current level of $5,000 up to 15,000. This change will take place over a three year period, with the ceiling rising to $10,000 in the first year, $13,500 in the second year and $15,000 in the third year.

Why does this matter? Primary losses are the major cost driver in experience rating. Primary losses are not discounted: they go into the formula dollar for dollar. As a result, employers with moderately large claims (between $5,000 and $25,000) are likely to see an increase in their experience mod.

Expected Losses
Employers who have analyzed their premiums carefully understand that experience rating is essentially a comparison: the individual employer's losses are compared to the losses for other employers performing similar work. The actual comparison is contained in the rates paid for insurance.

For example, in your state the rate for carpenters might be $10.00 per $100.00 of payroll. The total expected losses within this rate might be $5.00 per $100 of payroll. The expected primary losses (called the D Ratio) might be 20 percent of total losses: in this case, $1.00 per $100 of payroll.

As NCCI increases the ceiling for primary losses from $5,000 to $15,000, they must also increase expected primary losses. Unfortunately, they have thus far provided no information on how much expected primary losses (the D ratio) will increase. This number will determine just how much more employers with higher-than-expected losses will pay for insurance. Conversely, the revised D ratio will also determine how much of a discount will be given to employers with lower-than-expected losses. As with our changing climate, the fluctuations under the new system will be greater than in the past.

Given the trend toward very large (catastrophic) claims, it would not be surprising to see the state rating points also increase: for example, instead of capping individual claims at $200,000, the limit might be closer to $300,000. (To date, NCCI has been silent on this matter.)

Winners and Losers
NCCI actuaries are working under the requirement that total premiums within a state remain the same under the new system. In other words, when they apply the new rules, experience mods will go up or down for individual employers, but the total premium in the state will stay the same.

On an individual insured level, there will be winners and losers. Here is our advice to any employers with debit mods (above 1.0) in states managed by NCCI: follow these new NCCI developments carefully. [The easiest way to do this, of course, is to keep reading the Insider.] Primary losses remain the biggest cost driver in the workers comp system and primary losses within individual claims are about to double and soon triple. The strategies for experience mod management that were effective with the primary loss ceiling at $5,000 may no longer apply. As the rules of the game change, savvy managers will change with them.

In the world of workers comp, chronic pain is a major cost driver. When pain persists beyond expected healing times, the prognosis is grim: injured workers suffering from prolonged pain often drift into anxiety and depression and may even become addicted to powerful pain medications. In the downward spiral of relentless pain, it becomes increasingly difficult to separate physical and psychological issues. The prospect of return to work disappears, the injured worker's life disintegrates and the cost of the claim goes through the roof.

The claims adjusters who are responsible for managing chronic pain injuries usually resist any recommendations for psychological counseling; they avoid such interventions because treatment - whether individual or group therapy - cannot and should not be limited to what is "work related." Pain subsumes the worker's entire life. Yet counseling is often an essential part of what is needed: injured workers talking through their many difficulties and sharing their experience with others.

So is it possible to develop a chronic pain program that limits financial exposures, narrows the treatment options and sets reasonable time frames for completing the treatment cycle? And can pain management encompass at least some focused counseling?

A Guide for the Perplexed?
Massachusetts has taken a shot. The state's Department of Industrial Accidents(DIA) Health Care Services Board has issued draft guidelines (PDF) for managing chronic pain. Under the leadership of Dean Hashimoto, who holds both medical and legal degrees, the draft protocol tiptoes through a minefield populated with poppy plants, doctors with prescription pads and long needles, chiropractors, acupuncturists, counselors and biofeed back practitioners - not to mention the ever-present drug salespeople. The draft guidelines could well serve as a Guide for the Perplexed.

Beginning with the caveat that 10 percent of all chronic pain cases will fall outside of the protocol, Hashimoto's task force tries to set parameters for all types of treatment: the number and type of diagnostic and therapeutic injections permissible; the goal-oriented use of mental health counseling, with specified durations (6 to 12 months); "very limited" use of opioid analgesics, with referral to pain specialists, if needed, and including a detailed list of specific actions designed to avoid addiction.

A Work in Progress
The DIA is soliciting comments on these guidelines. Alas, they are unlikely to hear from the relatively small portion of stakeholders who are profiting from the current chaos: the pill-happy doctors, the attorneys who discourage injured workers from returning to work, the physical therapists and chiropractors who believe that treatment, once begun, should go on forever, and the pharma sales folk who encourage use of the most powerful opiates for what is usually short-term pain.

The draft guidelines are comprehensive and reasonable. As the final guidelines will not and cannot have the force of law, they will not eliminate the abuse that currently exists. But if they help motivated treatment practitioners to offer more effective services, and if they open the door to at least some counseling for injured workers, the guidelines will surely save both lives and careers. That in itself will validate the admirable and essential work of Hashimoto's board.

DeWayne Sutton worked for Tomco Machining in Dayton, Ohio. When he hurt his back while dismantling some equipment, he followed "best practices" and reported the injury immediately to company owner Jim Tomasiak. The boss pulled a "Trump" - deviating 180 degrees from "best practices" by firing Sutton immediately. No reason was given for the termination. As you would expect, Sutton was able to collect comp benefits (termination is no bar to eligibility), but could he also sue for wrongful termination? In other words, was the termination retaliation for reporting the claim?

Under the Ohio statute, employers are prohibited from firing, demoting or taking punitive action against an employee who files a workers comp claim. The question at issue is one of timing: the claim had been reported to the employer, but not yet filed with the insurer. So did Tomasiak violate the law by firing Sutton in the interval between the injury and the report to the insurer?

Begging to Differ
In a sharply divided opinion (4-3), the Supreme Court of Ohio found in Sutton's favor, sending the case back to the lower court for reconsideration. Chief Justice Maureen O'Connor, writing for the majority, notes:

We find that the General Assembly did not intend to leave a gap in protection during which time employers are permitted to retaliate against employees who might pursue workers' compensation benefits.

The alternative interpretation - that the legislature intentionally left the gap - is at odds with the basic purpose of the anti-retaliation provision, which is "to enable employees to freely exercise their rights without fear of retribution from their employers."

The court minority noted that Sutton was able to collect comp benefits - kind of "no harm, no foul." Then, as Justice Terrence O'Donnell notes:

The majority has today expanded the public policy behind the provisions of (state law) to apply to those persons discharged before filing, instituting or pursuing a workers' compensation claim. This allowance is a legislative prerogative, and in my view, we should follow the law as written and defer to the General Assembly, instead of stretching the extent of protection to fit situations not addressed by the statute.

This is familiar territory in the world of law: liberal interpretation (the majority) versus strict construction (the minority). One vote determined the outcome.

The Biggest Loser
Business owner Tomasiak comes away with a double whammy: he is liable for the comp claim through the experience rating process; having fired Sutton, he is unable to lower the cost of the claim by bringing Sutton back to work on modified duty. Then he faces a wrongful termination lawsuit, which he is probably going to lose. The timing of his action, along with the absence of any stated rationale, reak of retaliation.

Tomasiak's impulsive response to Sutton's injury violated Rule Number One for employers: if employees are not working out, fire them before they get hurt. Once they are injured, comp laws pretty much assume that any firing would be retaliation. For Tomasiak, just trying to run his machine shop in Dayton, Ohio, this is a tough - and expensive - lesson in best practices.

As we noted in a blog earlier this year, the number of fatalities in grain bins reached record levels in 2010. There were 51 grain bin accidents last year, up from 38 in 2009 and the most since tracking began in 1978. Twenty-five people died, and five of them were children under age 16. The previous record for grain bin accidents was 42 in 1993. In response, OSHA has developed an explicit program to improve safety in grain bins. In doing so, they have increased the pressure on bin operators to operate safely. The stakes have been raised beyond even the robust fines that OSHA routinely hands out for violations.

As an example of the new program in action, OSHA has cited Lakeland Feed and Supply in Hamilton, Montana, for exposing workers to grain bin machine guarding and fall hazards, along with other safety and health hazards. At this point the fines total $122,500, but this might change after corrective actions and negotiations.

In detailing the serious violations, OSHA paints the picture of a hazard-filled environment that may well reflect the day-to-day operations of many grain bins across the country:

...Platforms missing guarding; no landing platform on a ladder; unguarded shafts, pulleys, chains and sprockets; the lack of an emergency evacuation plan and no fire alarm system; employees walking on grain in the bins; high levels of potentially explosive dust; the lack of a housekeeping program; not locking out augers when employees enter the bins; exposed live electrical lines; improper electrical wiring for high dust areas; and employees not trained on the hazards and chemicals associated with their work.

Not Exactly Junk Mail
As part of the grain bin initiative, OSHA has written to operators across the country, detailing specific steps to be taken to prevent accidents when workers enter storage bins. These steps include:

Turn off and lock out all powered equipment associated with the bin, including augers used to help move the grain, so that the grain is not being emptied or moving out or into the bin. Standing on moving grain is deadly; the grain can act like 'quicksand' and bury a worker in seconds. Moving grain out of a bin while a worker is in the bin creates a suction that can pull the workers into the grain in seconds.

Prohibit walking down grain and similar practices where an employee walks on grain to make it flow.

Provide all employees a body harness with a lifeline, or a boatswains chair, and ensure that it is secured prior to the employee entering the bin.

Provide an observer stationed outside the bin or silo being entered by an employee. Ensure the observer is equipped to provide assistance and that their only task is to continuously track the employee in the bin. Prohibit workers from entry into bins or silos underneath a bridging condition, or where a build-up of grain products on the sides could fall and bury them.

Test the air within a bin or silo prior to entry for the presence of combustible and toxic gases, and to determine if there is sufficient oxygen.

Ensure a permit is issued for each instance a worker enters a bin or silo, certifying that the precautions listed above have been implemented.

On Notice
Bin operators are on notice that the above safety procedures must be in place. By providing this unambiguous and highly detailed list, OSHA is saying, in effect, "these are the standards. Nothing less is acceptable."

Why does this matter? Attorneys for workers injured in storage bins will review the details of any and all accidents. Where the above standards have not been met - and they are not easy to meet! - these attorneys may aggressively pursue increased sanctions against employers. In many states, injuries due to the "wilful intent" of the employer result in higher indemnity payments. In the event of serious injuries or fatalities, attorneys may attempt to pierce the "exclusive remedy" shield of workers comp and secure substantially higher benefits due to employer "negligence".

In other words, OSHA may have raised the stakes for grain bin operators above the traditional "no fault" level. While there is nothing radically new in the required safety procedures, the fact that OSHA has presented a definitive list means that employers are accountable for each and every one of these procedures. As is customary, violations will result in heavy fines. But in addition to the fines, bin operators may be at risk for exposures well beyond the "usual and customary" comp benefits.

The working conditions in grain bins are extremely challenging. There are critical time pressures, complex mechanical issues, weather concerns and at times, a shortage of trained labor. Teenagers -all too frequently the victims in bin accidents - may or may not take safety precautions seriously. If life on the farm is difficult, life in the bins may be even harder. When it comes to safety and the protection of the people doing the work, OSHA's sympathies are with the workers. In this environment, when serious accidents occur, employers will be judged by a single criteria: did they follow the OSHA book on grain bin safety? If not, bin operators are likely to pay, pay and pay again.

Darrell Miller worked for the Illinois Department of Transportation (IDOT) as part of a crew that maintained bridges. He worked without any problems for five years, but then encountered some difficulty with the job related to a fear of heights. In the most dramatic event, he and another crew member had to "go over the edge" of a bridge over the Mississippi River to change the navigation light bulbs directly above the river. The court describes the incident:

Miller had to climb down a ladder on the side of the bridge to reach the station that held the light fixtures. Some of the stations would have required him to stand on a bridge beam while wearing a lifeline. When Miller attempted to change a bulb that would have required him to stand on a bridge beam, he was unable to complete the task. He suffered a panic attack and was taken by ambulance to a hospital. That was the first, last, and only time Miller was unable to complete an assigned task because of his fear of heights.

Subsequent to treatment for this panic attack, Miller was diagnosed with acrophobia, a fear of heights. Following a series of incidents where his requests for accommodation were rejected, he was fired.

Given the bare outline of what took place, it would appear that the employer was within its rights to terminate Miller. He could not perform some "essential" job functions. In fact, a lower court dismissed Miller's claim of discrimination, granting summary judgment for the IDOT. However, the 7th Federal District Court took the time to examine not just Darrell Miller, but the crew of which he was part. Their thoughtful and detailed ruling, from which we quote at some length, leads to an interesting and perhaps counter-intuitive conclusion.

The Devil in the Details
The Court noted that not all of the tasks associated with the job involved heights:

As a highway maintainer assigned to a bridge crew, Miller was responsible for a variety of tasks, many of which could be performed from the ground. Those tasks included operating and repairing maintenance vehicles and equipment, including trucks, pavement marking equipment, tractors, mowers, snow plows, and jack hammers; maintaining large culverts, abutments, guardrails, and drainage installations; spreading salt, sand, gravel, and asphalt; directing traffic during maintenance operations; cutting grass, weeds, and brush; repairing signs and digging post holes; cleaning and maintaining the crew's headquarters; disposing of trash and highway debris; and record-keeping.

In addition, Miller was able to perform most, if not all, of the job:

From the outset of his employment, Miller had occasional difficulty working from heights, particularly when he worked in an unsecured environment. When he began work he had not been formally diagnosed with acrophobia, but Miller informed IDOT and the lead worker of his bridge team, Steve Maurizio, that he had a fear of some heights and that there were a few tasks that he would not be able to do. Specifically, he informed Maurizio that he would not be able to "walk a bridge beam." In spite of his fear, Miller was able to perform work in an elevated, hydraulically lifted "snooper bucket" at heights of up to 80 feet, and he was able to crawl on the arch of a bridge on a catwalk. He estimated that his fear would be triggered and he would have problems with less than three percent of his job description, but even then he was able to complete his assigned tasks on all but one occasion.

Finally, the court observed that there were a variety of "reasonable accommodations" afforded different members of the crew:

Until early 2006, IDOT informally accommodated Miller by allowing other members of his team to handle those tasks for him, just as other team members' conditions or limitations were accommodated. For example, Maurizio was unable to weld. Another co-worker refused to ride in the snooper bucket, was not required to climb the arches of an interstate bridge linking Illinois to Kentucky, was unable to spray bridges because of his allergies, was not required to mow the yard, and was not required to rake patching debris. Other crew members would swap assignments as needed to enable the crew to complete those tasks. In short, the evidence would allow a jury to find that the team worked effectively as a team, taking advantage of each member's abilities and accommodating each member's limitations.

Essential Functions, Reasonable Accommodations
Then the court examined the crux of the case: was Miller able to perform the essential functions of the job, with or without accommodation:

We are confident that some high work in exposed or extreme positions is an essential function of the bridge crew as a whole. IDOT would have us take that point a step further to find that any individual assigned to the bridge crew had to be able to perform each and every task of the entire bridge crew. That would require finding that every task required of the bridge crew as a whole was an essential task of each bridge crew member. On this record, we cannot make that finding as a matter of law. Plaintiff has come forward with substantial evidence showing that his bridge crew did not actually work that way. The bridge crew worked as a team. No one person was assigned permanently to any one task. Although individual members of the team did various tasks as needed, there was no requirement that the bridge crew members rotate from task to task in an organized, routine fashion, such that it was necessary for any one member of the bridge crew to be able to do every task of the bridge crew as a whole.

In a footnote, the court tackles the unlikely possibility that an entire crew might suffer from acrophobia:

We recognize that if most or all members of a bridge crew had acrophobia like Miller's, the crew could not perform all of its essential duties. If and when such an extreme case might arise, we are confident that the law would accommodate an employer's need to get its work done. In this case, however, the evidence showing that plaintiff had actually been accommodated as he requested shows that the employer is not entitled to summary judgment on this theory.

The 7th District Court's reasoning is at once both compelling and intriguing. Miller, as a member of the crew, was able to do enough of the job to allow the team to proceed unhindered and unimpeded. They accommodated Miller - and his co-workers - routinely in the course of determining which crew members were assigned to specific tasks. Reasonable accommodation for everyone was an ongoing part of the job. Thus, when confronted with a diagnosis that appears to preclude bridge work, the court concluded that accommodating Miller was not only reasonable, but that IDOT had been doing it all along.

The purpose of the ADA is to welcome and sustain people with disabilities in the workplace. Conventional thinking all too often concludes that people who appear to be disabled, or who actually are disabled, cannot do the job. Can a person with a fear of heights work on bridges? In these specific circumstances, yes, he can.

Governor Rick Scott has issued Executive Order Number 11-58 compelling all state agencies under his control to implement a comprehensive drug testing program: all job applicants must undergo pre-employment testing. All current employees - regardless of what they do - must be randomly tested every quarter. Because drugs stay in the body for hours and even days after they are used, the governor is attempting to control every waking minute of the state workforce. Not even commercial drivers are subject to such stringent monitoring.

There is no question that drug testing can play an important role in a comprehensive safety program. For workers whose jobs put themselves or others at risk, random testing can be smart policy. For employers struggling with a rampant drug culture, drug testing often makes sense. [I remember discussing this issue at a workers comp seminar some years ago. The owner of a roofing company said, "I could never implement drug testing. Half my guys would fail!" (I made an immediate note to alert the underwriting team.)]

Even as we acknowledge that drug testing is appropriate under certain circumstances, we must recognize its limitations. Testing science itself, while significantly more effective than it was a decade ago, is not 100 percent reliable. The producing and subsequent custody of urine samples is at best embarrassing and at worst an invasion of privacy. Drug testing does send a message, but there are times and circumstances - such as now in Florida state government - when this message is demoralizing and counter-productive.

Within weeks of the issuance of the executive order, the ACLU sued to put a stop to the program.

Ideology and Policy
The testing of all employees, without even considering job function or safety exposure, crosses the line between best practice and rigid ideology. This policy does not stem from "business necessity" nor does it take into account individual freedom and the right to privacy. Using the governor's logic, you could argue that everyone in America should, for one reason or another, be tested for illegal drugs. This is bad policy and, to put it bluntly, unAmerican. Here's hoping the courts toss out this executive order and restore some light to the Sunshine state.

The brinksmanship continues in Illinois. A moderately effective reform bill passed the senate but has been defeated in the house by Republicans, who seek stronger ways to limit compensability. As a result, the Dems are moving forward with the Doomsday option: a bill to abolish workers comp and send each and every claim into the court system. Wow, that's one way to make everyone miserable, above all, injured workers looking for a reliable safety net.

Among other things, the defeated reform bill would have reduced the medical fee schedule by 30 percent, thereby saving (theoretically) $500m to $700m per year. The reduction sounds harsh, but in practice, fee schedules are fluid. For top specialists, the fees are almost always negotiated upward; for run-of-the-mill practitioners - or the Dr. Feelgoods with their pockets full of pills - they can take it or leave it. Lowered fee schedules provide payers with leverage to find the best available doctors - not necessarily a bad thing.

Who Blinks?
At the moment, legislators are playing a classic game of chicken: if we can't reach agreement on reforms, we'll blow the whole thing up. Given that Democrats are behind the Doomsday option, I doubt they will allow things to reach that point, as it would be a disaster for workers. But they are running out of time.

The potential good news for Illinois employers (and there isn't much when it comes to comp) is that even the modest changes in the reform bill will begin to reduce the cost of workers comp, currently the third highest in the nation. The bad news is that further reforms will be needed, most of all, perhaps, involving the de-politicizing of comp in a hyper-political state. My advice to the legislators is simple: take it incrementally. Pass the reform bill pretty much as is and revisit the issue in the next session. In this precarious situation, half a loaf is better than none.

Henry C. Becker Custom Building Limited was doing some construction work in Newburyport MA. They hired the Great Green Barrier Company to do some waterproofing. They apparently did not ask for a certificate of insurance; Great Green Barrier did not carry workers comp for their employees. There was an explosion on the jobsite. Timothy Wentworth, an employee of Great Green Barrier, was killed; his son, Ezekiel, was severely injured. As the employees of an uninsured subcontractor, the Wentworths collected workers comp through Becker's insurance company, which paid out substantial lump sum settlements to each.

Then the Wentworths sued Becker as a third party. Becker objected: comp, after all, is an exclusive remedy. Once the Wentworths collected comp benefits, they should be precluded from any other remedies. Becker sought and won a summary judgment dismissing the lawsuit.

The case wended its way to the MA Supreme Judicial Court, where the justices determined that the summary judgment was improper: the exclusive remedy provision of the comp statute applies only to employees. The Wentworths were not employees of Becker, but of Great Green Barrier. Becker, in other words, was a third party and thus, despite the payment of comp benefits, was not immune from lawsuit.

Compounded Liabilties
Becker is going to pay and pay again: first, under their workers comp policy, the payroll for Great Green Barrier employees will have been added to the Becker payroll in the premium audit; that's the chump change. Then, the substantial losses for the Wentworths - each likely exceeding the state rating point limit of $175,000 - will be added to the experience modification calculation for Becker over a three year period. That's serious bucks (but nowhere near the financial hit taken by Becker's comp carrier).

Then, given this ruling, the Becker company is vulnerable to a lawsuit, which is likely to result in additional payments to the Wentworth family. The MA Supreme Court has made it crystal clear: general contractors are liable for the comp costs of uninsured subs, but the acceptance of comp benefits does not preclude a third party lawsuit.

The lesson for GCs should be clear: proper risk transfer must be a fundamental part of the operation. Make sure subcontractors carry workers comp: require that any and all subs produce a certificate of insurance, with the GC named as an additional insured. Track the expiration dates on the certificates and do not allow subs on the job site unless they have shown that comp (and liability) policies are in place.

Henry C. Becker Custom Building has learned about risk transfer the hard way, an expensive lesson indeed. May a word to the wise be sufficient.

Illinois is struggling mightily with its bloated workers comp system. Currently ranked 3rd highest for overall cost in the Oregon study, the governor and legislature are under intense pressure from the business community to lower the cost of comp insurance. Aiming its powerful bulldozers at the state capital, the Caterpiller Company has threatened to move their business somewhere else if reforms are not implemented immediately. In exploring all options, the legislature has gone so far as to think the unthinkable: abolishing workers comp.

In looking for ways to save money, Illinois does what all states do: first, identify the cost drivers and then try to change the statute to bring down costs. Among the hot issues on the table are the medical fee schedule (too generous), employee choice of doctor (too flexible), duration of benefits (too long), causation (too vague). Ah, behind every cost driver is a vested interest (perhaps literally vested, with many of the lobbyists wearing three piece suits). The common denominator among all states struggling with high comp costs is the omni-present stakeholder, who is deeply committed to the status quo.

Governor Quinn would like to see a number of reforms, including the capping of carpal tunnel benefits, denying claims where employee intoxication is a significant factor, attacking fraud (see our blog on Illinois's dubious arbitration services), capping wage differential benefits at age 67 or five years after an injury, and implementing utilization review for physical therapy, chiropractic and occupational therapy services.

Going Nuclear
The Illinois legislature is so frustrated with the slow progress and with stakeholder resistance to change, they are now threatening to blow up the entire system. Interesting to note, this pressure is coming from the Democrats. John Bradley (D-Marion) has filed House 1032, a bill to repeal the workers comp act and send all workplace-injury issues into the court system. Should this happen, Illinois will find itself in the world prior to 1912, when injured workers had to sue their employers and could collect benefits only if their injuries were caused by someone other than themselves. They would collect no benefits while awaiting adjudication of their claims. They would be out of work and out of luck.

In all likelihood, repeal of workers comp is not a serious option in Illinois; it's a political strategy for getting the attention of inertia-bound legislators. But the prospect of abolition does raise an interesting issue. Workers comp came to America 100 years ago. By the end of the World War II, every state had implemented the program.

What if there were no workers comp programs today? What if each state were starting from the beginning and tackling the issue of protection for injured workers? I find it hard to imagine that state legislatures would be willing to implement a program, totally funded by employers, that provides indemnity for lost wages and 100 percent medical benefits for injured workers. Why so generous? Why so inclusive? It's too expensive. It will create disincentives for working. The cost will drive employers out of business or out of state.

With today's acrimonious, ideology-driven debates, workers comp would be a hard sell. That's too bad, for despite its problems and inequities, despite the wide variations in benefits and costs from state to state, comp is a compelling example of effective social engineering. In Illinois, cooler heads will likely avoid the meltdown option. To be sure, Illinois comp is a mess, but the alternative - a workplace without workers comp - would be far worse.

A couple of days ago my colleague Julie Ferguson blogged OSHA's new focus on farm safety. We all share the concern for the safety of farm workers. But OSHA is upping the ante in a way that requires the immediate attention of both insurance companies and their clients. As part of their investigation into the deaths of two teenage workers in a silo operated by Haasbach LLC, OSHA issued subpoenas for documents from Haasbach's insurer, Grinnell Mutual Reinsurance Co. OSHA wanted to review safety inspection reports and any follow up documentation from Haasbach. The insurer refused, arguing that the subpoena would discourage businesses from allowing insurers to conduct safety inspections if the material contained in the inspection reports can be used against a business during later litigation or OSHA enforcement proceedings.

The U.S. district court has ordered that the records be given to OSHA.OSHA Assistant Secretary Dr. David Michaels praised the decision. "The court affirmed OSHA's authority to obtain relevant information from an employer's workers' compensation insurance company. This is not surprising legally, but it does illustrate that workers' compensation and OSHA are not separate worlds divorced from each other," he said. "Workers' compensation loss control activities overlap with OSHA's efforts to bring about safe and healthful workplaces, and in order to achieve a safe and healthful working environment for all Americans, all efforts of business, insurance, labor and government must move forward together."

The court ruled that OSHA has jurisdiction to investigate the workplace fatalities, and further has the authority to require the production of relevant evidence and the ability to issue a subpoena to obtain that evidence. The requested documents, which included copies of site safety inspections, applications for insurance coverage for the site, and correspondence between Grinnell and Haasbach concerning the site, were found to "reasonably relate to the investigation of the incident and the question of OSHA jurisdiction," according to the decision.

A Tighter Safety Net
The court's ruling has important implications for both insurers and their clients.

Insurers are required to provide safety services, including site inspections with the findings documented in written reports. Usually, the safety inspector asks for a written response within a set time period. With OSHA potentially accessing these reports, there is liability for insurers: did they identify safety problems? Did they follow up to ensure that the problems were fixed within a reasonable period of time? It's another version of the great liability question: what did you know and when did you know it?

Similarly, the documents put insureds at risk. Safety issues have been identified. How did the business respond? Did they fix the problem? Did they perform the necessary training? Did they document their activities to show good faith in correcting identified concerns?

In all of this activity, candor is essential. The last thing anyone wants - and that anyone certainly includes OSHA - is for this court's ruling to have a chilling effect on the routine inspections performed by insurance companies. The concern is that inspectors, sensing OSHA reading over their shoulders, might hedge the findings just a bit - enough, perhaps, to create an ambiguity in the finding that results in an ineffective and unfocused response by the insured, which, in turn, perpetuates the hazard and leads, perhaps, to a serious injury or even death. That would be an unintended consequence of tragic dimension.

Focus on Safety
As always when OSHA becomes involved, there is a lot of money on the table. Following the fatalities, Haasbach was issued 25 citations with a penalty of $555,000. This was in response to the situation where three (untrained) workers became entrapped in corn more than 30 feet deep. At the time of the incident, the workers were "walking down the corn" to make it flow while machinery used for evacuating the grain was running: all in a day's work on the farm, and extremely hazardous.

It is certainly not in the best interests of insurance companies and their clients to build defenses against potential OSHA involvement. If we all share a commitment to safety - and we must - then an open and candid dialogue is essential. To be sure, both insurers and their clients are "on the hook" once problems have been identified. But surely it is in their combined interests to fix those problems as quickly as possible. Insurers and their clients must keep the focus where it belongs: not on OSHA, but on the moment-to-moment, day-to-day safety of workers on farms, in factories and in every American workplace.

Last month we blogged the suicide of Dave Duerson, a former NFL star who killed himself at the age of 50. In order to preserve his brain for study, he took the unusual step of shooting himself in the chest. He suspected - and the subsequent autopsy confirmed - that he suffered from chronic traumatic encephalopathy, a degenerative and incurable disease that is linked to memory loss, depression and dementia. A definitive diagnosis is available only through an autopsy.

Among the many ironies surrounding this sad tale is the fact that Duerson sat on the six person NFL committee that reviewed claims for medical benefits submitted by retired players. Duerson was known for his harsh line on these claims, apparently voting to deny benefits in many cases (the votes of individual committee members were not recorded). He even testified before a Senate subcommittee in 2007, supporting the NFL's position that there was no definitive relationship between repeated concussions and subsequent dementia.

The days of denial appear to be over. Dr. Ira Casson, who represented the "prove it" mentality of the NFL, is no longer actively involved. The medical evidence is accumulating; while some refuse to connect the dots, it's increasingly clear that repeated brain trauma (concussion) is often directly related to a precipitous decline in brain function in the post-gridiron years.

Old Game, New Order
The NFL is trying to improve the safety of its players. The new rules limiting return to the playing field after a concussion are taking root. Helmet to helmet hits are being penalized with increasing financial severity. But even as the league tries to limit future exposures, the fate of retired players looms large. There will be increasing numbers of claims for disability, including workers comp where applicable, by players who face a substantially diminished burden of proof to connect dementia to playing field ("workplace") exposures.

It is painful to contemplate the agony of Dave Duerson's final days. Confronted with the incontrovertible evidence of his own demise, he must have realized how wrong he had been in taking the company line on dementia. He knew what his own autopsy would reveal: a brain damaged by chronic traumatic encephalopathy, caused by repeated trauma. His choosing to shoot himself in the chest was a farewell gesture, not only to his own life, but to the beliefs that had led him to take a hard line with his former colleagues. A loyal member of the "old guard," he ended his life with the unmistakable and moving embrace of the new order.

Edwin Graning drove a van for the Capital Area Transportation System (CARTS), which serves the public in the communities surrounding Austin, Texas. He is also an ordained minister. He was sent to pick up two women and deliver them to the Planned Parenthood office in Austin. He was "concerned" that the customers were going to Planned Parenthood for an abortion, so he called his supervisor and told her that in good conscience, he could not carry out the job. He was instructed to return to the garage, where he was promptly terminated for this refusal to follow orders.

Graning, supported by lawyers from the American Center for Law and Justice, alleged a violation of the Civil Rights Act of 1964. (Goodness, quite a bit of irony in that!) He sued his employer for discrimination based upon religious beliefs. In the lawsuit, he sought reinstatement with backpay, payment for his pain, suffering and emotional distress.

Surely, there is no basis in the law for this claim. Surely, Graning is the one who should be sued. Then again, this is the Lone Star state that some would transform into a sovereign nation.

Unsettling Settlement
Lawyers for CART advised them to settle. Blanco County Commissioner Paul Granberg said that the attorneys "advised the board that it would cost a lot more in attorney fees than it would cost to settle." So they wrote a check to Graning for $21,000. Is there any such thing as principle in law these days? Did CART's attorneys even consider doing what is right and just?

CART, which did nothing wrong, has changed its hiring procedures, to prevent a recurrence of this ludicrous situation. David Marsh, CART general manager, said officials have begun making it clear when drivers are hired "that we have a job to do and we don't decide what destinations are." Boy, that must be a revelation (no pun intended) to people applying for jobs as drivers.

Graning has been amply rewarded for his discriminatory and prejudice-laden act. He had no way of knowing why the customers were going to Planned Parenthood, which offers a wide range of health services, by no means limited to abortion. He was represented in this crackpot lawsuit by attorney Thomas Brandon, Junior, of counsel to Whitaker, Chalk, Swindle & Sawyer. Chalk it up as a Swindle, indeed.

We have long puzzled over a peculiar and cruel stipulation in Virginia's workers comp statute that denies coverage to workers with brain injuries, where the injury had no witnesses and the injured could not testify on their own behalf. We first encountered the issue with a trucker named Arthur Pierce, who was found unconscious beside his truck with multiple skull fractures, a sinus facture and head trauma. Had Pierce been found dead at the scene, the injury would have been compensable. But because survived the accident only to die later at a hospital, the system invoked the rule that the claimant must provide direct testimony.

In their denial of benefits, the workers comp commission wrote:

The circumstances surrounding the claimant's injury and death are tragic, and we are certainly sympathetic to the loss his family members have experienced. We are also mindful of the difficulties in obtaining and introducing sufficient evidence to support those claims...It would be purely speculative to infer that the only rationale (for the accident) was a workplace risk.

Purely speculative?. Sure, he might have been knocked off the truck by space aliens (which, to my mind, would still be compensable as he clearly was in the course and scope of employment).

Ever-So-Gradual Justice
We are pleased to report that the Virginia legislature - through a unanimous vote in both house and senate - has corrected the statute, which Governor Bob McDonnell has signed into law. Title 65 of the Code of Virginia now reads:

In any claim for compensation where the employee is physically or mentally unable to testify as confirmed by competent medical evidence and where there is unrebutted prima facie evidence that indicates the injury was work-related, it should be presumed in the absence of a preponderance of evidence to the contrary that the injury was work related.

It's too late for Claire Pierce, Arthur's widow, to benefit from a law that she diligently lobbied for. And while the Virginia legislature would never thumb its nose at the comp board, it would have been nice to call Title 65 the "Arthur Pierce Provision." This grotesque loophole has finally been closed. Unwitnessed brain injuries may now be compensable. It appears to be a no-brainer, but it took the brains of Virginia a rather long time to reach this just conclusion.

Thanks to Workcompcentral(subscription required) for the heads up on this item.

If Missouri is the "Show me" state, Pennsylvania is in the running for the "show me the documents" state. They have a way of over-engineering solutions to what may or may not be problems. (See our prior post ["Blood on the Forms"] on requiring injured workers to sign 2 forms at the time of injury.) Now the Keystone state weighs in on the independent contractor conundrum through the recently implemented Construction Workplace Misclassification Act, also known as Act 72.

In tackling the problem of misclassification, Pennsylvania has done something smart: they have limited the scope of the law to the construction industry, where the worst abuses abide. (Massachusetts kicked a hornets nest with an expansive definition of independent contractor that extends well beyond construction.) The statute contains the usual and customary language requiring independent contractors to control the work, work for others and provide their own tools. But in its relentless need for documentation, Pennsylvania requires general contractors and subs to get out the pens and archive some paper. Independent contractors must:
- Have a written contract for every job
- Carry at least $50,000 in general liability coverage for the duration of the job (this requires a certificate of insurance from the agent)
- Document a proprietary interest in their business (how would a sole proprietor do this - tax forms?)
- Realize a profit or suffer a loss for the project (an interesting and potentially problemmatic issue for craftsmen whose spouses are not accountants)

Act 72 prohibits general contractors from forcing subs to sign any contract that results in misclassification. It also forbids retaliation against any person who files a complaint under the law.

The Amish Exception
As we pointed out in a previous blog, Pennsylvania's Amish population (roughly 51,000 total) is generally exempt from insurance requirements. Amish employers are not required to provide social security or workers compensation coverage, and it appears likely that the Amish will be exempt from the new health insurance standards. When a need arises, they pass the (rather old fashioned) hat throughout their community.

So what happens when an Amish (or non-Amish) general contractor hires an Amish sub? Which of Act 72's requirements apply to the Amish? Certainly not the general liability insurance. Perhaps not the "profit and loss" and "proprietary interest" documentation. While we are not suggesting that employers seek out Amish subs to avoid Act 72, it might simplify matters. For everyone else in PA, it's time to focus on the paperwork.

As long as we're on the topic of healthcare today, it seems to be an opportune time to share a moving video clip that we bookmarked over the holidays. Marty Ratermann, a Missouri a craftsman and furniture maker, relates his story as a cancer patient at the 2010 Health Literacy Missouri Summit. He was diagnosed with Stage 4 rectal cancer in 2008. After a grueling recovery process, he has been in remission for more than a year. He details how his situation could have been prevented with better communication between him and his doctors.

His story illustrates the difficult path that a person faces navigating the complex healthcare system and making critical choices at a point when he or she is particularly vulnerable. His prescription at the end of the clip is a simple one: take the time and make it a priority to communicate.

I couldn't help but think of the parallels in the healing process for workers who have experienced a serious injury. Many a claim has spiraled out of control for want of good, clear communication and a simple human-to-human moment of concern. So often, we see workplace injuries that are treated as financial transactions when, in reality, they are fundamentally human events: someone is injured, often through no fault of their own. The complexity of the system a worker may find themselves suddenly thrust into, the unfamiliar insurance jargon, the impersonality - all occurring at a point where the worker may be feeling fear and anxiety about their future physical and financial well being. Our prescription: Less thinking about the injured worker as a claimant and more thinking about them as a person. In our experience, that's what leads to the best financial outcomes in the long run.

A Patient's Story from Health Literacy Missouri on Vimeo.

This is a very busy time for delivery companies.Whether it's the post office, UPS or FedEx, there are more packages moving around than people to handle them. The UPS solution is the hiring of 37,500 (!) temporary workers. These folks have been working for a few weeks and will continue working right up until Christmas Eve, when they will all be laid off. Due to the struggling economy, UPS had no trouble filling temporary jobs. This year, many laid off white-collar workers donned the drab brown uniforms and hopped on board delivery trucks, occupying the "jumper" seat next to the regular driver.

The Wall Street Journal has a nice article about this war-scaled ramp up (subscription required). As you can imagine, there is not a whole lot of time for training the new employees: a few tips on lifting "in the power zone," a caution about getting into the truck ("three point contact") and then off you go. The job is a frenzy of lifting, bending, carrying and climbing. These are physically demanding jobs, with relentless exertion required.

Risk Management Nightmare
Which leads to a loaded question for the risk managers at UPS: what percentage of this temporary workforce will be injured on the job? Even if it's only one half of one percent, that would be nearly 200 people. In all likelihood, they will have been laid off before the claim has been filed. And once laid off, these temps will have no loyalty and no commitment to UPS. They will have already handed in their brown uniforms.

More troubling from a risk perspective, the types of injuries may be the most open-ended and expensive claims in the comp system: back, shoulder and knee injuries, slips and falls on ice (for most of the country it is, after all, a rather tough winter). Statistically, you can expect an occasional robbery or animal bite.

All business entails some risk. Hiring strangers is always risky, no matter how thorough the vetting process - and in this case, that process is foreshortened, to say the least. Placing thousands of temporary employees into physically demanding jobs increases risk exponentially.

So when you go home tonight and look for the packages you are expecting, think for a moment on the harried temporary employees who brought them to your door. And say a little prayer, that the New Year brings these former white-collar workers health, happiness...and a job once again suited to their hard-earned skills.

Up until recently, Peter Orszag was the director of the White House Office of Management and Budget. As he leaves this job for a presumably more lucrative position with Citibank (no comment), he offers a final op ed piece in the New York Times on the subject of disability: specifically, the sharp rise in applications for SSDI benefits that has accompanied the collapse of the economy. Discouraged job seekers, many with obsolete or atrophied skills, try to qualify for a program that will take them out of the job market forever.

Currently, about 750,000 people apply for disability benefits every quarter, a rate 50 percent higher than that of four years ago. Orszag fears the consequences of burgeoning disability rolls: it's not only expensive, it's counter-productive. Once on disability, people rarely return to the workforce, even when jobs become plentiful. They "qualify" for benefits by proving themselves incapable of productive employment.

The fundamental question for SSDI is similar to the one faced by workers comp practitioners: once an individual qualifies for permanent benefits - usually a long, drawn out process - is there any way to encourage a return to work? Or is eligibility for disability, by definition, a self-fulfilling acknowledgement that employment is no longer a possibility?

The Digital Divide
Orszag speculates that the problem may lie in the rigid determination of disability: once disabled, always disabled. There is no middle ground where an individual's limitations might be re-assessed periodically, where incentives for taking a job might encourage less dependence upon disability payments.

Orszag believes that we need some kind of interim program, less absolute in its determination of disability and less of a drag on public resources. He recommends privately funded, interim disability protection for non-work related disabilty (which would run parallel to the benefits already available through workers comp). The new program would last up to two years, during which both the employer and the worker would have strong incentives to return the disabled worker to productive employment. For workers who remain disabled at the end of the two years, application for SSDI would probably be in order. Under this model, the digital switch is made analog, with options and incentives all along the way. The cost? He estimates a relatively modest $250 per worker per year, assuming, of course, that all workers are included in the program.

Conundrum
Disability is indeed a conundrum: it requires people to prove that they are incapable of productive employment. The stage for this determination is strewn with detritus: the perverse incentive to prove one's lack of ability; the ever-changing economy, which casually discards workers with obsolete skills without a hint of compassion; the notion that disability is a permanent state, which, once entered, precludes the possibility of growth and change.

All too often, disability intersects with the law of unintended consequences. By seeking to protect those who cannot protect themselves, we place people in the awkward position of proving their inability to function in the working world. There is very little incentive to do otherwise. We set disability up as a locked room, with no exit. We need to think of disabiility as a bridge, arcing out of the darkness toward new possibilities. While most who are disabled may never be able to cross this bridge, those who can must be given every opportunity to make the journey.

In yesterday's blog on this topic, we told the story of a pizza delivery driver whose undisclosed seizure problem put others (and herself) at risk. Today we examine the inordinate and ultimately terrifying risks that routinely confront the people who deliver pizzas to homes.

The risks of delivery jobs are embodied in one sad tale. Richel Nova, 58, was a hard working immigrant who worked two jobs, one being delivering pizzas for Domino's in Boston. He responded to a call from the Hyde Park neighborhood. The address was a vacant home. He was lured into the house, robbed, stabbed multiple times and left for dead. The three thieves took his money ($100) along with the pizza and drove off in his 1995 Subaru. (The age of the car tells us a lot about Mr. Nova.) The abandoned car was found a bit later, along with the blood-stained pizza box. All but three pieces had been eaten.

Nova's life revolved around his family: twin 20-year-old daughters and an older son. The twins are both juniors in college. All that stood between Nova and a seat at his daughters's graduation next year were a hundred bucks and a pizza to go.

Robberies of delivery people in the Boston area have been a long-standing problem - 52 were reported through mid-September.

Common Ground Among Competitors
The three main pizza chains - Domino's, Pizza Hut and Little Caesar's - have collaborated on developing safety programs for drivers. Among them, they have nearly 90,000 drivers on the road. (Here is the Domino's description of the job.) Statistically, it's not difficult to identify the riskiest neighborhoods for delivery, but the chains face pressure from neighborhood groups and the federal government to provide delivery services without discriminating against the poor.

Back in 2000, Domino's reached an agreement with the Justice Department to formalize a delivery policy for all its restaurants. Reflecting what Domino's said were well-established standard practices, the new guidelines require managers to evaluate crime statistics with local law enforcement agencies and community groups before limiting delivery. As part of that policy, drivers must report any incidences of violence, and delivery limits must be drawn narrowly. (Easier said than done.)

(Sort of) Managing Risk
There are a number of ideas floating around on how drivers should handle what appear to be risky delivery scenarios:
- Require the customer to come to the car to pay for the delivery and pick up the pizza. (This may not be feasible in all circumstances - for example, disabled customers may not be able to come to the street.)
- Require customers to have exact change for their purchase (and hope against hope that they have a bit extra for the tip!)
- Advise drivers not to enter darkened dwellings
- Limit deliveries after certain hours (in the Boston data mentioned above, many of the robberies took place after 9:00 pm.)
- When in doubt, when confronted with what appears to be immediate risk of harm, the driver is instructed to return to the store (and risk the wrath of legitimate, irate customers awaiting their dinners)

For those of us who have never had a gun or knife thrust into our faces, the dangers confronting delivery workers every day are both frightening and unimaginable. For Richal Nova's children, any mention of pizza will haunt their thoughts for the rest of their lives - reminding them of their father's lonely and senseless demise at the hands of cruel thugs with a half-baked plan for a free meal.

Today we examine an interesting case where the ADA runs up against OSHA's general duty clause, where the individual's right to "reasonable accommodation" collides with the need to ensure the safety of the general public.

In 1999 Oscar Brownfield became a policemen in Yakima, Washington. By all accounts, he was a good cop. In 2000 he suffered a head injury in a non-work-related car accident. He returned to work about 6 months later. In 2005 the troubles began: he (wrongfully) accused a co-worker of malfeasance. He was short-tempered, storming out of a disciplinary hearing with a superior. He described moments of intense anxiety when he was not sure he could control himself. And he made alarming comments about how meaningless life had become.

Fearful of Brownfield's mental state, his employer sent him for a Fitness for Duty Exam (FFDE). He was diagnosed with a mood disorder and disabled from work due to his "emotional volatility, poor judgment and irritibility." The disability was considered permanent.

Then Brownfield had another auto accident. His treating physician, Dr. Gondo, released him for work: that is, he wrote that Brownfield could carry out the "physical requirements" of the job. When pressed on the issue of Brownfield's mental state, Dr. Gondo did not back down, but he did not respond either. He simply remained silent. As a result, the Yakima police department sent Brownfield for a second FFDE, with the same result as the first. Brownfield was terminated from his job.

Claiming an ADA disability (he does appear eligible), Brownfield sued for a violation of the ADA, violation of his first amendment rights of free speech (his apparently groundless accusations against a fellow cop) and violation of the FMLA (which limits the ability of employers to require multiple FFDEs). Brownfield's case was dismissed on summary judgment by the district court, a decision subsequently upheld by the 9th circuit court of appeals.

A Tool in the Toolbox
Employers often balk at requiring Fitness for Duty exams. They fear a violation of the employee's rights. This case clearly indicates that those rights can and should be tempered by a clear-headed vision of business necessity. If the employee's mental or physical condition undermines his ability to perform essential job functions safely, a fitness for duty exam is not only allowable, it is necessary. To be sure, the exam comes with a high standard: the need must be work related and it must derive from business necessity. But where these standards are met, employers must act. If the employer takes the path of least resistance and does nothing, they could easily be charged with negligent retention when and if something bad happens.

Management continuously walks a fine line between employee rights and the obligation to operate a safe workplace. Yakima took a chance in terminating Brownfield's employment, but it appears that they did what had to be done and they did it legally. Brownfield was unable to perform his job safely. His mental state comprised a risk to himself and to the public he was oath-bound to protect. It is never easy confronting an unruly, agitated and volatile employee, but it must be done - and done in a timely manner.

Erie County (NY) executive Chris Collins was frustrated by an annual outlay of about $11 million for workers comp. So the county implemented a policy requiring workers collecting indemnity (about 300 in all) to pick up the checks in person from the supervisor. Collins hoped that this face to face contact might lead to quicker return to work for employees capable of performing light duty.

Not surprisingly, the state comp board had serious concerns with the new "return to work" program.

"It places an additional burden upon an injured worker at a time when the claimant is not medically able to return to the workplace." Oh, by the way, it's also illegal.

The Collins administration fired back, saying that the board lacks the authority to halt Erie County's new policy and that it will continue, at least for workers with temporary injuries.

Erie spokesman Grant Loomis blasted the comp board: "We were not surprised that a board full of Albany bureaucrats would raise objections to getting municipal workers back to work as soon as possible." (With his demonstrated talent for distortion, Loomis may have a future in politics.)

Loomis said Collins wants to revise the program to call in only the recently injured who might have substantially recovered and can perform light tasks, currently about two dozen people. Collins wants workers to receive their checks directly from their supervisors, who then would ask whether they could return to work in some capacity.

Compounded Errors
The Erie folks are making a couple of basic mistakes: first, they issue a blanket policy covering 300 people, even though they only want to target about two dozen. Then they ask supervisors to do things they are not qualified to do: determine whether injured workers can perform light duty tasks and, while they are at it, distribute checks. All in all, not a very good idea.

The missing piece is obvious: no one is talking to the treating physicians. Only doctors can determine the medically necessary restrictions - what the injured worker can and cannot do - and whether temporary light duty would be appropriate.

Now before Erie County implements a policy requiring doctors to show up in person for their checks, here is an alternative: establish lines of communication with the treating doctors. Track medical visits and ask doctors to update restrictions each time the employee sees the doctor. Supervisors should be kept in the loop, especially in regard to available light duty tasks, many of which are seasonal, but they should not be asked to manage the entire process. That is a job for county administrators. Heck, even Grant Loomis could help out, provided, of course, he takes a class in diplomacy. Angry rhetoric might work for politicians stirring up the masses, but it is usually counterproductive in the challenging world of workers comp.

Performance incentive programs are a good idea - except when they aren't. The Insider has always viewed such programs with ambivalence: yes, it's a good idea to reward employees for safe performance over a given time period. The problem is that these programs can discourage employees from reporting legitimate injuries. And the employee who does report an injury - the guy or gal who breaks the string of injury-free days - may incur the resentment of fellow workers. "You blew the pizza and the draw for a TV because you cut your hand!" It can be yet another form of the great American tradition, blaming the victim.

Then there are the rogue performance incentive programs, where non-reporting of injuries is embedded in the work culture. Which brings us to California. (Is it my imagination, or does every conceivable scam bring us to California?)

At the Smurfit-Stone Container Corporation, the performance incentive program rewarded managers for not reporting workers comp claims. The company's motto is "solving it from all sides" - and it appears that one of the sides is, well, illegal.

David Polk, 53, and Douglas Tateoka, 61, pleaded no contest Wednesday to charges of concealing events related to on-the-job injuries and conspiring to deny injured workers their benefits. The two are scheduled for sentencing May 20 in Monterey County Superior Court.

Employees were discouraged from reporting workers comp claims. When injured, they were treated outside of the comp system: the employer took care of the medical bills. It's not clear whether any attempt was made to pay indemnity for lost time. I doubt it.

As is usual and customary in California, doctors figured out a way to make a few bucks in the scam: in this case, Steven Davis of Davis Chiropractic, who once worked for Surfit-Stone as a human relations manager, and Eugene Guzman, a physician's assistant at Pinnacle Urgent Care. Both are facing charges in the fraud.

Whose Incentive?
Any performance incentive program that focuses exclusively on managers is immediately suspect: a legitimate program rewards workers first, then managers, for good safety performance.

Performance incentive programs have a positive role in many workplaces, but it's crucial to align the incentives with the realities of the workplace. These programs should celebrate safe performance without penalizing or ostracizing employees who suffer injuries on the job. Beyond that, performance incentives must never trump employee rights under workers comp laws. It's one thing to reward safe performance; it's quite another to stifle claims reporting and the awarding of statutory benefits.

Managers at box manufacturer Smurfit-Stone tried thinking out of the box to lower their comp costs. Now they are on their way to a concrete box with bars on the windows. They are about to participate in a very effective performance disincentive program, one that most of us try diligently to avoid.

Bryan Griffin was a pilot for Australia's Qantas Air from 1966 to 1982. In 1979 he began to have "uncontrollable urges" to switch off the engines in mid-flight in order to bring down the airplane. He would leave the flight deck and smoke a few cigarettes until he calmed down. He made no attempt to hide his problem - he talked to his colleagues about it. Qantas had him examined and treated by several doctors, but the problems continued, including the urge to "scream and cry." He routinely ignored instructions and repeatedly missed radio and altitude calls. On a flight from Singapore to Sydney, he felt his hand "being abused by the uncontrollable pull of the start levers" - which, if pulled, would kill the engines.

OK. Not exactly "pilot of the month" stuff. There are a couple of intriguing aspects to this tale.

First, Qantas made the management decision to keep Griffin on the job. While the Insider normally recommends following a "return to work/stay at work" protocol, in this case, "staying at work" for three years with severe mental illness clearly put far too many people at risk. Griffin was incapable of performing his job safely; he should have been put on indefinite leave until his mental state stabilized beyond any reasonable doubt.

Griffin continued to fly until he retired in 1982 with a diagnosis of anxiety, depression and obsessive compulsive disorder.

Indemnity for Working?
Here is the second unusual aspect to this case: Nearly 30 years after his retirement, Griffin has been awarded $208,000 by an industrial compensation commission, which ruled that his mental problems were exacerbated by his continuing to work. The Workers Compensation Commission found that the pilot's condition had been worsened by continuing to fly for Qantas until his 1982 retirement. The financial award covers "loss of earnings, medical expenses and legal costs."

While I am no expert in the intricacies of comp as it operates down under, I am confused by this award. How can you suffer a "loss of earnings" when you continue to work? How does workers comp indemnity come to play in a situation where there was no lost time? Perhaps the commission assumes that if Griffin had been grounded during his prolonged period of mental disability, he eventually would have been cured and then would have been to continue his career with Qantas beyond 1982. In other words, Griffin's premature retirement was caused by making him work while he was suicidal. If that is the reasoning, it's a bit of a stretch.

I have one additional question for the commission: why did it take nearly 30 years to reach this conclusion?

Qantas is considering an appeal on this ruling. I think they should shut up and cut the check. Any additional proceedings might further expose their amazingly reckless decision to keep Griffin in the cockpit. That is negligent entrustment at its very worst. Ironically, had Griffin succumbed to his demons and crashed the plane, we might never have known the real cause of the accident. As it is, Qantas is lucky that both Griffin and his hundreds of passengers survived. Air travel is stressful enough without having to worry about a pilot with a barely controllable urge to crash the plane.

Robert Friedman went to his local Starbucks in Boca Raton and ordered a coffee. He sat at a table and began swearing loudly while punching the wall with his fist. Alarmed by this behavior, the baristas called the cops and had Friedman removed. They asked that he not return to the store or he would be arrested for trespassing. End of story?

Not quite. Friedman suffers from Tourette's Syndrome, which leads to uncontrollable actions in his body and, on rare occasions, a stream of obscenities. Friedman, in other words, suffers from a recognized disability.

In its initial review of the case, the Florida Commission on Discrimination ruled in Starbuck's favor, determining that the baristas had no way of knowing that Friedman was disabled. The commission's own lawyer, however, over-ruled the investigators and found that Friedman had been a regular customer and was thus known to the baristas as a disabled person. As his behavior did not constitute an immediate threat to Starbucks staff or customers, the store had an obligation to accommodate him.

Ah, there's the rub. How exactly do you accommodate an individual who is swearing loudly and smashing walls with his fist? The commission wanted Starbucks to at least ask Friedman to stop behaving in an unruly manner before calling the cops. The commission noted that Friedman did offer an apology at the time of incident, before the police removed him from the premises.

Starbucks disagrees with the commission's findings and believes that its personnel took appropriate action to remove a disruptive customer from the store.

Outside the Comfort Zone
It is easy, perhaps too easy, to side with Starbucks in this situation. It's difficult enough to run a coffee house without worrying about accommodating unruly customers. But before you allow your distaste for bad behavior to slam the door in Friedman's tormented face, take a moment to view this video of children who suffer from Tourette's. They are victims of a cruel and random process that robs them of their dignity and compromises their ability to function in a challenging world. They deserve our sympathy.

As for Friedman, it is admittedly difficult to empathize with an adult who appears simply to behave badly. If we met him as a stranger, we would distance ourselves immediately. But once we know the source of his disruptive actions, he deserves at least a chance to re-establish his tenuous equilibrium. Tourette's puts us all outside our comfort zones - not necessarily a bad place to be. Friedman has to live with this problem every waking moment of his life; he has few, if any, comfort zones. We can accommodate Friedman for a few random moments, while enloying our lattes or going about the many tasks that comprise our hectic days. If nothing else, Friedman's situation reminds us that it is a great gift to be masters of our movements and of our words.

NCCI has issued its latest report (PDF) on the status of older workers in the comp system, with a particular focus on workers 65 and up. If nothing else, the study reinforces the notion that older workers are safety conscious and a relative bargain. For employers worried about workers comp costs, older workers are not a significant problem.

In 1988 eleven percent of workers 65+ participated in the workforce; now 17 percent of these older workers are still working. That percentage will likely increase as the long-term effects of the financial collapse continue to resonate through the damaged economy. Some people continue working because they want to; many more continue because they have no choice.

Injury Prone?
The frequency rate for older workers varies by occupation: in construction, older workers appear to be safer than younger workers - they are injured at a 4 percent rate, compared to 12 percent for their younger colleagues. The results are flipped in retail/sales: older workers are injured at a 23 percent rate, compared to 15 percent for all others.

As you might expect, the leading cause of injuries for 65+ workers are slips, falls and trips - 47 percent of all injuries for this cohort. (Younger workers suffer these injuries at a 24 percent rate). For strains and sprains - the overall leading cost-driver for workers comp - the results are reversed: the frequency for older workers is 23 percent, compared to a whopping 38 percent for all others.

It does take longer for older workers to recover from injuries: they have a median days-away-from-work rate of 16, compared to 12 days for workers in the 55 to 64 group and 10 days for workers 45-54. Despite this higher rate, overall indemnity costs are lower. Why? Because older workers make substantially less on average than younger ones. Wages peak in the mid-50s and then fall off dramatically after age 65, down to the same level as the entry level 20 to 24 group. So much for the notion of paying for experience!

The only red flags in the study involve the retail trade and service/hospitality industries, where older workers are showing higher-than-average costs for comp. These jobs probably offer ample opportunity for slips, trips and falls, the number one cause of injuries for these workers, .

It will be fascinating to watch NCCI's study evolve over the next decade. The percentage of workforce participation for the 65+ group is going to increase steadily. With this growth, the risks will be enhanced. There is likely to be an upward trend in both frequency and severity, but perhaps not as much as feared. Certainly, the NCCI study reinforces the argument that older workers are safe, reliable and motivated. There is no reason to discriminate against them. If anything, you could make a good case for preferring an older worker to a younger one. Fodder for further thought, indeed.

NOTE: Special thanks to reader Soon Yong Choi for spotting an error in an earlier version of this post (see comments). Given my checkered track record with numbers, I can only hope that Choi and similarly adept readers continue to cast a critical eye on any of my postings where statistics are involved.

It's hard to think of anyone bullying Bath Iron Works, the General Dynamics subsidiary that builds destroyers for the U.S. Navy. But they are being kicked around like the proverbial 90 pound weakling by the workers comp system in Maine. Two years ago we blogged the inability of Mainers to come up with a viable fee schedule for workers comp medical costs. The legislation authorizing the fee schedule became law in 1992. Now we approach 2010 - nearly 20 years! - and there's still no fee schedule.

Workers comp insurers are free to negotiate rates for medical services. In effect, they develop their own de facto fee schedules. Bath Iron Works (BIW) is self-insured for comp. They do not have the leverage to negotiate fees. So when a local hospital sent a bill for $107,000 for treatment of two injured workers, BIW filed a lawsuit. They lost: they had to pay the hospital's "usual and customary" fees - an ironic appelation if there ever was one. The only suckers stuck with paying the full boat (so to speak) are self-insureds and uninsureds.

So how is the fee schedule coming along? And why the inordinate delays?

The rule-making group charged with developing the fee schedule is trying to come up with something acceptable to the medical providers. That's like asking an employee how much of a pay reduction they would like. How about nothing? In the current draft, total billings of $80 million would fall by about $1 million. In other words, a drop of less than 1 percent. That's a fee schedule only a medical provider could love!

The Massachusetts Model
Maine officials are worried that low fees would drive doctors away. Paul Dionne, executive director of the Maine Workers’ Compensation Board, says he heard from a group of orthopedic doctors who said if the board made the new base fee too low, “they weren’t going to treat injured workers. They’re private, they can do that.”

That's not what happens in Massachusetts, which has the lowest fee schedule in the nation. Everyone recognizes that the fee is too low. So insurance carriers and TPAs routinely negotiate a reasonable fee with doctors on an individual basis. For example, the scheduled fee for hand surgery is only $725. The "usual and customary" fee of a skilled surgeon might be $5,000. The insurer and doctor would settle somewhere in the middle, perhaps $3,000 for the service. It sounds frictional and inefficient and to some degree it is, but overall, medical costs remain unusually low in Massachusetts, doctors continue to provide services and injured employees are satisfied with the results. The system is working despite what appear to be severely deflated medical rates.

One unusual and perhaps unintended benefit of the low fee schedule is the leverage it provides against medical providers who refuse to treat with a return-to-work focus. If "Dr. Feelgood" insists on keeping a marginally injured employee out of work, the adjuster can dig in and offer to pay only the deflated fee schedule rates. That will get the doctor's attention immediately.

Maine used to be part of Massachusetts. If they want to solve this particular problem, they might consider re-joining the Commonwealth, or at least copying Massachusett's highly successful comp model. Step one involves some tough negotiations - with or without the doctors in the room. Thus far, by trying to please everyone, Maine is punishing some of their most valued employers. Nearly twenty years into a failed process, it's time to face reality: a fee schedule is a cut in pay. If the doctors are happy, it's not an effective fee schedule.

Meanwhile, it looks like a bleak Christmas for the mighty folks at Bath Iron Works. There are undoubtedly a lot of nice goodies under their tree, but a fee schedule is not among them.

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.”

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.

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.

Kris Indergard used to work on the railroad. Then she hurt her knee (partly work related), had surgery and was out of work for over a year. Her doctor established "permanent" restrictions. Indergard wanted to return to work, so Georgia Pacific sent her for a physical capacity exam (PCE). The PCE provider observed Kris's actual job, which the employer stated required lifting up to 60 pounds. Sixty pounds exceeded the restrictions established by the treating doctor, so the employer refused to take her back.

Half a year later, Kris's doctor lifted the "permanent" restrictions. ("Miracle recoveries" - a subject in themselves - are beyond the scope of today's blog.) So Kris had another PCE, this time including a complete medical workup. Her lifting ability was tested, along with job simulations. Not surprisingly, Kris was out of shape - she had been out of work nearly two years - so her aerobic capacity was limited. She could not complete a 60 pound lift. As a result, Georgia Pacific terminated her.

Indergard sued, claiming that the employer misrepresented the essential functions of the job: she believed that the lifting requirement was exaggerated; hence, the PCE was improper and discriminatory.

Her case boiled down to a technicality: was the PCE a medical exam? If yes, the exam "must be job related and consistent with business necessity." If not, the PCE was exempt from this requirement.

The prior court determined that the PCE was not a medical exam and issued a summary judgment for the employer.

Big Picture, Little Picture, No Picture
Indergard appealed, noting that the PCE included a check of her blood pressure, her aerobic capacity and a detailed medical history. In other words, it was not simply a test of her physical capacities. The U.S. Court of Appeals, 9th Circuit in Oregon, determined that the PCE was indeed a medical exam. They over-ruled the summary judgment and remanded the case back to district court.

What is fascinating in all the legal arguments is what is missing: the issue of "reasonable accommodation." Indergard challenges her employer's contention that the job requires lifting of 60 pounds. How often is this lifting required? Are there any available lifting aids? Are other people available to help? Is lifting 60 pounds truly an "essential" job function?

Indergard's victory isbased upon a technicality: the PCE was in fact a medical exam, because medical issues were included. (It's difficult to imagine any test for physical capacities that would not include at least some medical issues.) We can only hope that the lower court focuses on the big picture: Indegard's ability to perform the essential job functions, with or without accommodation. It's hard to believe that this case has dragged on for six years. It began with a rush to judgment and ends with an agonizingly slow parsing of technicalities. Indergard wants her job back. Sounds simple enough, but with the wheels of justice churning along, it is doubtful that such an outcome will ever take place.

You might not think that the H1N1 virus, commonly know as swine flu, has anything to do with the ADA. Well, you clearly have not been reading Nation's Restaurant News. Lisa Jennings writes a complex and cautionary tale for restaurant managers, warning them to back off from asking obviously sick employees whether they have the swine flu. Somehow, this advice does not sit well with me - or with anyone else who might sit down for a meal in a restaurant.

Attorneys with nothing else to do have raised the issue that swine flu may be a disability under the ADA. After all, we have all been warned of a potential pandemic and there have been a relatively small number of fatalities associated with the virus. But does that mean that every case of swine flu is a disability? Is the ADA's recent recognition of shorter term disabilities meant to include a week of sore throats, coughing and fever?

Jennings quotes Virginia attorney Jonathan Mook, who notes that the ADA sets limits for when and how employers may inquire about medical conditions. He concedes that swine flu may not technically be a disability, but "it could be perceived as disabling because of the myths about it. If an employer asks specifically about swine flu, for example, and later is perceived as not wanting to work near the employee, even after the worker is no longer contagious, there may be grounds for a discrimination complaint."

Are employers really supposed to worry about that?

Fortunately, the article recommends that employers focus on symptoms:

In communities where an outbreak occurs, it is a good idea to include in every preshift meeting questions about specific symptoms related to the flu. It’s also OK for employers to ask whether employees have fevers, sore throats, coughs or intestinal ills, so long as they don’t ask for a diagnosis [emphasis added].

In addition, attorneys say, employers are permitted to send employees home if they’re showing symptoms of the flu and are allowed to ask them to stay home for three to seven days, as recommended by the CDC in Atlanta—or as long as necessary to complete treatment, such as antiviral medication.

So the attorneys say that it's ok to send people home for flu-like symptoms, as long as you don't suggest that you are doing so because you think they have swine flu.

A Note from the Doctor and FMLA
To complicate matters even further, a specific diagnosis of swine flu is unlikely, as most people with flu-like symptoms are instructed to stay home and employ the usual remedies. We are not to go to hospitals and clinics unless symptoms are unusually severe. The CDC does not want to overwhelm emergency rooms and local clinics with needless requests for documentation.

On the other hand, if there is a formal diagnosis of swine flu, the employee may be eligible for FMLA leave, as this particular flu would be considered a "serious medical condition" - as opposed to regular flu, which might also kill you but is not viewed as a part of a world-wide pandemic. Go figure.

I hope that a fear of (preposterous) litigation does not result in employers keeping sick people at work. No one with flu-like symptoms belongs in the workplace. I have never sued anyone, but if my scrambled eggs are delivered by a waitperson with a runny nose, flushed skin, an expectorant cough and a raspy voice, I won't eat a thing. And if there happens to be a lawyer in the next booth, I surely would be tempted to strike up a conversation.

Postscript: A note of thanks to my esteemed colleague Jennifer Christian, CEO of Webility, who somehow finds the time to read National Restaurant News.

The Insider just returned from a speaking engagement in Stillwater, Oklahoma. The occasion was the annual workers comp conference sponsored by the judiciary that manages comp in the state. I was invited by fellow blogger Judge Tom Leonard, whose blog provides valuable information to comp practitioners in the state.

As a relatively high-cost state, Oklahoma is experiencing rumblings in the state legislature to switch to an administrative - as opposed to judicial - system. In theory, this makes sense, as a formal judiciary with its due process rules can slow down the resolution of claims. But this is no simple problem, with no simple solutions. The first event at the conference featured a panel of legislators who were involved in crafting the systemic fix: in general, republicans were pushing for change, while democrats cautioned that the interests of injured workers may be compromised.

While the Insider does not take a formal position on the controversy, we did caution all parties to "beware the law of unintended consequences." Every "fix" contains the seeds of both success and failure. The prudent legislator would do well to examine the problem from all sides and fashion a dispassionate solution - much as the talented and compassionate judges currently operating the Oklahoma system approach every claim.

Six Humongous Problems
The insider was invited to provide a national perspective on workers comp to the conference's 400 participants. We focused on six looming crises facing comp across America. Here is a brief summary of our concerns:

1. The Original workers comp model is obsolete: Comp is nearing its 100th anniversary (New York 1911). The workplace at the beginning of the 20th century was very different from what confronts us today. Legislatures struggle to modify the initial legislation to keep pace with change.

2. The economic collapse is a game changer: The comfortable assumptions of financial planners (stocks rise inexorably over time) have disintegrated in the world-wide collapse that began just over a year ago. This collapse has implications for workers comp, with employment shakier than ever and the retirement plans of millions in tatters. Which leads to:

3. The Aging American workforce is going to get older: With baby boomers approaching retirement age, the workforce is already at its oldest. As retirement accounts sink with the economy, more and more workers are finding themselves in a bind. They do not have enough money to retire. These older workers bring skill and experience to the workplace, but their aging bodies are breaking down. The comp system is not built to handle workers in their late 60s and 70s who plan to keep on working. Will comp become the retirement plan of choice for workers with no other choices?

4. Undocumented workers are half in and half out: most states cover the medical costs and indemnity for injured, undocumented workers, but draw the line at vocational rehabilitation. By definition, these folks are not "available for work." Will Congress create some form of amnesty, thereby opening the door to complete workers comp coverage for foreign workers?

5. Insurers are in big trouble: There may be low hanging fruit in the insurance world, but not in workers comp. There is a nation-wide suppression of rates, which is compounded, of course, by the idiocy of carriers who drop steep discounts on top of inadequate rates. Carriers may dream of a hardening market, but it never seems to arrive. Meanwhile, the bottom line continues to erode.

6. The federal government might mess everything up: The Medicare Secondary Payer program has invaded the settlement process for comp claims, creating chaos and uncertainty and increasing the costs. [Check out Judge Leonard's blog for some excellent materials on the Secondary Payer program.] Now we have national health insurance on the immediate horizon. No, it's not "death panels" or alleged coverage for undocumented workers that concern us. It's the more basic issue of who will choose doctors, under what circumstances, and what impact this might have on workers comp.

We have covered all of these crises in the Insider and will continue to do so in the coming months. I'm not sure that the good folks in Oklahoma found much solace in the fact that their own little comp crisis is dwarfed by issues that transcend state lines. Meanwhile, I did learn a thing or two about Oklahoma. It all comes down to this: Sooners versus Cowboys. No, I'm not going to explain. You have to be there to really understand.

Wyoming might be a good place to work, but it's also a good place to die at work. The mortality rate for occupational injuries is three times the national average, with 15.6 fatalities per 100,000 workers. Many of these fatalities occur in the oil fields, where "roughnecks" make pretty good wages in exchange for working in relatively dangerous conditions. As DeeDee Correll writes in the Los Angeles Times, everyone shares the goal of improving safety on the far-flung job sites, but there is a continental divide in how to achieve that goal.

Most oil workers are employed by independent contractors, who provide the bodies for the intense work in the fields. The fields are owned by big corporations. On one side of the fence you find workers and their advocates, who want to be able to hold the big corporations liable for what happens on the job. They want to be able to sue the big corporations when they suffer catastrophic injuries or deaths on the job.

The counter argument says that workers comp - carried by the employers of these field workers - should be the exclusive remedy for work-related injuries.

At issue here is the question of accountability and control: under current Wyoming case law, injured workers have to prove that the operator maintained "pervasive" control over the site. This is a very high standard, because the daily operations at these sites are primarily under the control of the independent contractors. By lowering the standard of control, worker advocates would make it easier for workers to sue the oil companies for damages.

Denim Versus Suits
The battleground for this dispute is the Wyoming legislature. As is so often the case, there is considerable theatricality on display. Many of the roughnecks lobbying for a change in the law show the scars of their chosen occupation. They are dressed in denim and baseball caps. Their opposition, lawyers for the oil companies, wear the indispensable dark suits.

The "suits" counter the compelling visual evidence of the roughnecks with some dubious arguments, maintaining, for example, that any change in the law would expose home owners to liability for injuries to contractors working on their houses. That's a red herring, as homeowners rarely exercise significant control over the work environment of their contractors.

There should be enough middle ground in this dispute to fashion a meaningful compromise. Wide-open litigation is rarely the best way to go. The legislature should set specific standards for safe operating procedures in the oil fields. Oil companies should be held accountable for meeting these standards. Only if they are demonstrably negligent in maintaining and documenting these standards should the door be opened to law suits. At the same time, the state should bolster the benefits available to workers who are killed or severely injured on the job.

The "exclusive remedy" provision of workers comp is a standard well worth preserving. It's tempting to carve out exceptions, but each exception becomes a fault line in the fundamental compromise that is workers comp. We are nearing the 100th anniversary of comp in America (New York 1911). For the most part, it is a remarkably successful experiment in public policy. The law makers of Wyoming would do well to keep this success in mind: by all means tinker with the statute to make it more responsive to 21st century working conditions, but don't mess with the premise. This is not the time to find fault with "no fault."

Earlier this week, my colleague Julie Ferguson blogged an intriguing case in Indiana, where Adam Childers, an obese pizza baker, suffered a back injury when he was hit by a swinging freezer door. He was unable to get better due to his obesity. As a result, the Indiana court ordered the employer to pay for weight reduction surgery, to be followed by back surgery, all the while providing temporary total disability benefits to Childers. A relatively large claim becomes a very large claim due to the prospect of sequential surgeries. This case raises some fascinating issues concerning the cost of getting better. Boy, does it ever!

There is no need to repeat the succinct summary of the case provided in Julie's blog. For those interested in the details, here is the actual opinion of the court.

This case raises two compelling issues: First, the degree to which employers become responsible for non-work related factors in recovery; and second, the looming specter of widespread discrimination against people whose pre-existing conditions make virtually any injury substantially more difficult to manage.

Taking People as They Are
Employers cannot set a high bar for "health and wellness" and then exclude everyone who falls below it. Any health standards must be grounded in business necessity. As we have seen in recent blogs, employers might be in a position to reject applicants who smoke (depending upon the state), but they generally cannot arbitrarily turn away people with co-morbidities that may impact recovery times: diabetes, heart conditions, asthma, etc.

In the Indiana case, at the time of the injury Childers weighed 340 pounds and smoked 30 cigarettes a day. In its opinion, the court did not consider him "disabled" as defined in the ADA: his weight did not "substantially impact" one or more major life activities. Thus, despite his weight, he did not fall into a protected class.

Once injured, however, Childers's weight became a major obstacle to his recovery. Indeed, any obese person suffering from back, hip, knee, leg or ankle injuries would find recovery extremely difficult, as their spine and limbs are routinely stressed by the sheer weight of the body. Under Indiana law, the pre-existing condition of obesity combines with the work-related injury to produce a single injury. With the pre-existing condition absorbed into the workers comp claim, the employer is responsible for any and all treatments required to bring the worker to maximum medical improvement.

There is a definite logic to the Indiana court's position. The problem is not in its protection of Childers, but in the implications for all Indiana employers as they are confronted with hiring decisions.

When in Doubt, Leave Them Out?
With the Childers's decision, employers in Indiana have been put on notice that at least one conspicuous part of the labor pool - obese people - bring the risk of substantially higher costs following injuries in the workplace. As employers make day to day hiring decisions, they may well have the image of higher costs of injuries associated with obesity in the back of their minds. Given two applicants, one obese, one within normal weight ranges, employers may be tempted to ignore other important hiring factors such as motivation and experience and reject the obese applicant.

Thus the unfortunate consequence of providing extensive benefits to Childers is that it may have the proverbial "chilling effect" on the job prospects for others with similar weight problems. The obese already suffer from the daily judgment of a thousand eyes: their weight problems are impossible to hide. Now they may have to overcome the additional burden of fearful Indiana employers, who exclude them from employment in the vague hope of keeping the costs of comp under control.

Back in December of 2006 we blogged the story of Scott Rodrigues, a new hire of the Scotts lawn care company, who was fired after failing a drug test. No news here, perhaps, except that the drug in his system, nicotine is perfectly legal. Scott's is self-insured for health benefits, so they have a vested interest in making sure that employees follow basic wellness practices.

On his way to a pre-placement drug test, Mr. Rodrigues chewed on Nicorette gum. He was trying to kick the habit. Ironically, the Nicorette may have triggered the positive finding for nicotine. Rodrigues was hired provisionally and then abruptly terminated once the test results were released.

Rodrigues brought suit in federal court for violation of privacy and civil rights. Judge George O'Toole has ruled in favor of the company. The judge found no violation of privacy laws, as Rodrigues smoked while walking down the street and in a restaurant parking lot. His supervisor spotted a pack of cigarettes on the dashboard of his truck. Would the judge have ruled for Rodrigues if the employer had peeked through a window to see him smoking at home?

O'Toole also rejected the notion that the firing violated a 1974 federal law that protects employee rights to benefits. O'Toole ruled that Rodrigues was not yet a bona fide employee and was working on the condition that he pass the urinalysis.

Jim King, a spokesman for Scotts, said the smoking ban has never been used to fire an "existing" employee. It is used solely to screen out applicants. Since the ban went into effect in 2005, the percentage of smokers among the company's 7,000 employees has fallen to 7 percent from 28 percent.

[The Insider notes in passing that even as a "provisional" employee, Rodrigues was covered by workers comp from the moment he began working - indeed, while he was on his way to the drug testing lab.]

Whether employees can smoke or not depends upon the state they work in. A few states (e.g., Kentucky, Louisiana) explicitly protect smoker rights. Other states do not. It's interesting that Rodrigues pursued his case in federal court, probably because Massachusetts laws offered no protection to smokers.

Is Obesity Next?
We all know that smoking increases the risk of illness and the cost of medical coverage. The same goes for obesity. So the next front in the battle to control the business side of medical costs may well be the bathroom scale. The New York Times magazine profiles the Cleveland Clinic, which has been upheld as a model for medical cost control. Two years ago, they stopped hiring smokers. Delos M. Cosgrove, the heart surgeon who is the clinic’s chief executive, would like to expand the hiring ban to include applicants who are obese.

“Why is it unfair? Has anyone ever shown the law of conservation of matter doesn’t apply?” Cosgrove states that people’s weight is a reflection of how much they eat and how active they are. The country has grown fat because it’s consuming more calories and burning fewer. Our national weight problem brings huge costs, both medical and economic. Yet our anti-obesity efforts have none of the urgency of our antismoking efforts. “We should declare obesity a disease and say we’re going to help you get over it.”

Should the Cleveland Clinic - or any other employer- decline to hire obese people, it will be interesting to track the results. Where obesity can be traced back to genetic or chemical issues - where it qualifies as a disability under the Americans with Disabilities Act- employers would be guilty of discrimination. If no such causes can be specified, employers may be on solid ground. (The unaddressed issue in these hiring practices, of course, is the loss of a vast pool of talented and often essential workers.)

A recent article in Health Affairs estimated the annual cost of obesity to be $147 billion and growing. That translates into $1,250 per household, mostly in taxes and insurance premiums.

The Fat Tax
Cosgrove is interested in an idea that some economists favor: charging higher health-insurance premiums to anyone with a certain body-mass index. Call it the Fat Tax. Another alternative might be taxing the calorie-rich foods that lead to obesity: just imagine paying a little surcharge for your large order of fries, your jumbo soda and your two-for-one pizza. That would be interesting, indeed! Just as smokers pay a tax-driven premium for their cigarettes, eaters would be taxed for their food addictions.

This is simply not going to happen. To be sure, fundamental wellness is the cornerstone of any plan to contain health care costs. But when the public good collides with the rights of freedom and privacy, individual rights will win out. Policy wonks may not like it, but citizens can eat whatever they damn well please. Lighting up after that supersized meal? Well, that's one area where the public good pretty much trumps the private right.

We live, alas, in interesting times. As the health care debate spirals downward, the fault lines in our culture become more and more evident. On one side, anti-reformers stack town meetings to prevent any meaningful dialogue from taking place. These folks are even trying to intimidate unions. What am I missing here? Who is supposed to intimidate whom? On both sides of this momentous debate, pockets are being stuffed with special interest money. This makes the ultimate outcome - whether status quo or some degree of reform - highly suspect. The notion of genuine debate and civil discourse have disappeared altogether.

Which leads us back for a moment to the lingering conflict between UPS and FedEx. Back in December, we blogged FedEx's unusual charter:

FedEx began 35 years ago as an airline. As such, it fell under the Railway Labor Act of 1926, which made unionization of public and commercial transport companies extremely difficult. By contrast, UPS began as a trucking company and was subject to the National Labor Relations Act from day one. UPS is unionized: they pay workers more than FedEx, they provide better benefits.

It would be to UPS's advantage to remove their fierce competitor from the Railway Labor Act and force them to operate under the NLRA. That requires an act of congress, so it's no surprise that UPS has been aggressively lobbying congress for this change. They say they want to level the playing field.

Level playing fields are fine. The devil is in the details: how do you accomplish your goal? Apparently, by playing unfairly. UPS has been accused of forcing union members to write to their congressmen, urging passage of legislation to eliminate the FedEx exemption. The letters bombarding congress appear to express the views of individual UPS drivers. In fact, many are based upon prescribed forms. We read in the Washington Post:

Officials with UPS and the International Brotherhood of Teamsters, which represents 240,000 UPS drivers, acknowledge that the company has paid for workers' time to pen many of the letters and has supplied the envelopes, paper and stamps needed to mail thousands of them to Congress. UPS spokesman Malcolm Berkley said the effort was "totally voluntary, and any allegations to the contrary are ridiculous."

But Internet sites dedicated to UPS-related discussions feature dozens of accounts from anonymous employees who in recent weeks have said they were forced to write the letters or felt they would be punished for not doing so. Such tactics could run afoul of both labor laws and lobbying disclosure requirements, according to legal experts.

So it appears that UPS may be violating labor laws in order to force FedEx to operate under labor laws. Were you expecting anything different?

Images
In one of Norman Rockwell's many iconic images, a humbly dressed man stands up in a town meeting to express his opinion. The painting is entitled "Freedom of Speech." We could certainly argue the degree to which such freedoms ever existed. But it's all too clear that Rockwell's image bears no relation to what is occurring today. If he were to depict our present situation, we would see an enraged citizen shouting down his local congressman. This individual would waive an inflammatory poster complete with Nazi symbols. In his pocket, we might glimpse the bus ticket that brought him into town. In the corner we might see an innocent mother, huddling to protect her child from the pending violence.

We are currently facing many complex issues, ranging from FedEx's status as an employer to the health care options for every American. There are pros and cons to every path. No one really knows how to get from point A to point B. Indeed, we may not even agree on what point B is. But when civil discourse deteriorates into the ravings of the mob, we all lose. If winning is defined by who shouts the loudest, who cheats the most effectively, who succeeds in intimidating the oppostion, there will be no victory for anyone.

The other Nicholas Sparks is in a bit of trouble: not the well-known writer, but an obscure 25 year old tow truck driver from upstate New York. The lesser known Sparks has earned himself a place in the Business Hall of Shame when he raised multi-tasking to new heights (or better, depths). He was talking on one cell phone, texting on another(!), when, surprise of surprises, he lost control of his vehicle, smashed into another car, careened across a front lawn and plunged his flatbed tow truck into a swimming pool. The 68 year-old woman driving the other car suffered head injuries but is in good condition; her 8 year old niece suffered minor injuries.

Sparks has been charged with reckless driving, talking on a cell phone and following too closely. He was driving a truck for Adams Towing Company. While I was unable to find an area company listed under this name, I do hope they carry robust liability coverage. The company is clearly guilty of negligence and will pay dearly for their multi-multi-tasking employee.

Driven to Distraction
The New York Times has singled out the use of cell phones while driving as a major danger. They have a begun a series focusing on this new road hazard entitled "Driving to Distraction." In their most recent article, they describe the ubiquitous talking on cells performed by taxi drivers. (My family caught a cab during a downpour in Brooklyn last week; I sat in the front seat and listened to one side of a conversation in an Arabic tongue that was underway when we entered the cab and continued after we had paid and exited.)

While New York City has one of the most stringent laws in the country prohibiting taxi drivers from using cell phones while driving, it is rarely enforced. Fewer than 800 summonses were issued to cab drivers in 2007. If the law were enforced, the annual summonses would run in the hundreds of thousands.

It all comes down to this: anyone who drives can no longer plead ignorance to the dangers of talking/texting and driving. A new and potentially huge liability has emerged for the employers of people who drive in the course of employment. The employers are going to be held accountable for the mistakes of their employees. Property will be damaged and people will be hurt, even killed. In order to avoid liability, management will have to demonstrate that effective cell phone policies have been both promulgated and enforced.

Which leads to one final question: with liability ultimately falling to the insurance companies, what steps have they taken to ensure that policy holders have mitigated this ever-increasing risk? How will their underwriters identify the companies most likely to produce the next Nicholas Sparks - the driver, that is, not the writer.

Alan Rosenbaum is a revered professor of art at Virginia Commonwealth University (VCU). He shows students how to work with clay - at least, he used to, until he was disabled by silicosis. Rosenbaum was exposed to silica dust in the clay mixing room and ceramic studios of the university. The state Workers Compensation Commission last year found that the professor's silicosis was caused by his exposure to hazardous dust and awarded him permanent disability benefits totaling $211,800.

Silica is a common mineral found in clay, sand and rock. The dust in the VCU's Fine Arts Building came from the powder that students and staff mixed with water to make clay, as well as from scraping kilns clean of bits of clay and glaze after firing. There are intake vents directly above the five mixing machines, designed to take in dusty air and run it through a filter before releasing it outside the building. However,the vents failed to function properly, because for five years university staff members taped plastic bags over them, apparently to keep the dust from spreading elsewhere in the building. (There were complaints from woodworking and other shops that the dust migrated from the intake vents into work areas.) By blocking the vents, all the dust was contained in the ceramics area.

In addition to the vents being blocked, janitors swept the floors daily, causing the dust to fill the air for thirty minutes or more.

The Hazards of Sand
Ironically, VCU art classes included instruction on the hazards of silica in clay. (Here is a fascinating, if somwhat bizarre MSDS sheet on sand. It might make you think twice about heading for the beach...) It is hardly surprising to learn that students and teachers ignored the warnings.

Air-quality tests conducted by VCU staff after Rosenbaum's diagnosis found dust levels were 98 percent below hazardous levels -- but VCU did the testing after removing plastic bags that blocked the ventilation vents. In addition to activating the vents, janitorial staff began using sweeping compound to capture fine particles before they were released in the air. In other words, mitigation of the risk was readily available, but such measures were not implemented until Professor Rosenbaum became ill.

As in Julie Ferguson's post last week on laboratory hazards, this situation in the art studio of a major university reminds us that education is not without risk. A little learning can quickly become dangerous. The budding artist working with clay and the mason cutting a cinderblock face essentially the same hazard. Dust is dust. If we are not careful, dust can speed our return to the dust from which we all come. That's one lesson that Professor Rosenbaum is unlikely to forget.

Here's a question that comes up frequently in our employer seminars: can you terminate an employee who is on workers comp? In general, it's not a good idea. In many states there is a presumption that the termination is in retaliation for filing the comp claim. Nonetheless, the complete answer to the question is yes, you can, but you must do it very carefully.

The invaluable Risk and Insurance Magazine describes a case in Texas that illustrates this point nicely (Williams v AT & T, U.S.District Court, Southern Texas). Williams, a telecommunications tech, alleged that he sprained his leg stepping down from a ladder. He was a bit confused about the exact date, offering more than one in his descriptions of the incident. His claim was denied. One month later, he violated an important company policy and was suspended and then terminated. Even though his comp claim was denied, he alleged that he was terminated in retaliation for filing the claim. He sued AT & T for violating the Texas comp act.

Keep in mind, the employer must be able to demonstrate that the termination had nothing to do with the (denied) claim. In this situation, the burden of proof is definitely on the employer. AT & T presented evidence that Williams had a history of poor performance and excessive disciplinary actions for more than a year prior to the alleged injury. In other words, two key criteria of proof were met: the disciplinary problems preceeded the workers comp incident and they were thoroughly documented.

The court granted summary judgment to the employer. While falling under the protected class of employees who have filed comp claims, Williams could not establish that his termination was related to the comp claim. There were plenty of other reasons for the employer's actions.

I often hear employers complain that they had been planning to terminate a marginal employee, but then the employee got hurt. In most cases, there is inadequate documentation of poor performance prior to the injury. These employers are stuck: any attempt to document performance issues after the injury will be viewed sceptically by the court. The termination will trigger retaliation claims.

Here is a quick tip to avoid this situation: fire marginal employees before they get hurt. Once employees are injured on the job, an employer's options narrow significantly. Given that marginal employees are more likely to be injured - that's part of what makes them marginal - prompt action to end their employment is an essential "best practice."

We've been following the tentative steps taken by management to confront a relatively new and ubiquitous risk: the use of cell phones while driving. Most people seem to realize that cell phone use is a dangerous distraction, whether involving talking or, lord help us, texting. While surveys indicate that nearly every driver (98 percent) considers him or herself a safe driver (NOT!), fully 20 percent of drivers between 16 and 61 admitting to texting while driving and 80 percent admit to talking on their cells. What we have is a serious disconnect between risk and action. We are all just driving obliviously up DeNile.

We have focused our attention on the potential risks to corporations, who are liable for the actions of their employees "in the course and scope of employment." Back in 2001, Dyke Industries settled a case for $16 million, involving one of their salespeople taking out an elderly pedestrian while chatting on a phone.

Maggie Jackson in the Boston Globe writes that some corporations have taken aggressive action to mitigate the risk. Back in 2005, the engineering firm AMEC prohibited employees from any and all cell phone use while operating a vehicle. DuPont, a legendary leader in safety, first required employees to use headsets and then, on second thought, forbid all cell phone use while driving. AstraZeneca has similar policies in place.

Risky Business
What about everyone else? When, if ever, will managers of major and minor corporations bring the hammer down on blatantly risky behaviors behind the wheel?

We have two thoughts on the matter. First, it will take a few more tragedies to get the attention of corporate America on this risk. We all seem to labor under the delusion that multi-tasking is necessary and harmless. It is neither. Secondly, insurance companies are bound to wake up and smell this distinctly acrid brew: underwriters for general liability and fleet auto policies will begin to ask whether potential insureds have policies in place prohibiting the use of cell phones while driving. Those failing to implement such policies may find themselves scrambling for coverage. Perhaps a few innovative carriers will begin to offer discounts to employers with credible policies in place.

Employees subject to cell phone restrictions are beginning to develop new means of coping. Heck, there are support groups for everything, why not for cell phone withdrawal? Here are some of the tips that have emerged:

Plan Ahead. Call and send messages before leaving your desk.

Play relaxing music in traffic jams to reduce the frustration of "not doing anything."

Turn off wireless devices. Still tempted? Lock them in a bag. Place the bag in the trunk.

Put a message on your voicemail saying, "I'm in a meeting or driving."

Take a cab instead of driving, especially on out-of-town trips.

Warn people who regularly call - i.e. spouses - that you aren't available in transit.

The Insider would add one more tip: when driving, just drive, with one relentless point of attention and with one goal in mind: arriving safely at your destination. For most of us, driving is the riskiest part of the work day, yet we treat driving as a relatively mindless means to an end. Alas, if we are not careful, driving may be the last thing we ever do.

Our blog last week linking skin cancer to workers comp has already generated a few comments. "Workers comp attorney" raises some interesting questions:

(1) How much weight do you give to the person's leisure activities and/or length of employment? It seems these would certainly be factors in assessing whether the employment is the predominate cause.
When assessing the work-relatedness of skin cancer, claims adjusters will look carefully at non work exposures: hobbies such as hiking, fishing, boating, outdoor sports, surfing, swimming or simply tanning. Balanced against these exposures will be the work setting: outdoors all the time (eg, roofing, migrant farm work, paving) or just incidentally (framing carpentry).

While the case law is still rather limited, there are examples of compensable skin cancers involving a limousine chauffeur (!) in New York and an architect in Texas. [NOTE: a sun screen manufacturer, unsurprisingly, is keeping close track of case law developments!] It is safe to assume that the burden of proof remains on the employee to show that the cancer is work related, but this burden is now supported by substantial medical evidence. Indeed, the existence of government funded education on the risk - here is a CDC link - would tend to support claims of compensability.

As far as length of employment goes, it usually does not matter. As in the case of repetitive motion injuries, the most recent employer is usually on the hook for coverage, even if the employee has only been working for a few weeks.

(2) What steps could employers take to prevent work-related skin cancer other than the mentioned provision of sun screen and policies to enforce dress code?
Employers should just stick with the basics: provide - and enforce the use of - sun screens; require head gear. In the vast majority of exposed workers, this is not happening. There is research showing an increase in skin cancers among Latinos. I wonder if this is related to the negative cultural images associated with protective gear. [NOTE: my teenage daughters hate my wide-brimmed sun hat. It's just not cool!] [I wear it anyway.]

(3) What about research indicating that some, if not all, sunscreen products are carcinogenic?
While there is some evidence that tanning booths may be associated with cancer, I am not aware of any medical evidence to support a connection between sunscreens and cancer. In any event, the risk of not using a sunscreen far exceeds the risk of using one.

4) What balance should be sought between skin cancer and heat-related illnesses (if any "balance") as far as prevention is concerned?

Skin and heat protection are not mutually exclusive. People have been covering up in desert cultures for centuries by wearing light colored, loose clothing and head gear. (I hardly need add that American workers would vehemently reject any protective measures that made them resemble middle-eastern sheiks!)

Proactive, Reactive, Inactive?
Another reader wonders how many companies have actually implemented the recommended preventive measures. That's a great question. Judging by limited observation of workers in the sun, smaller employers have done little if anything to prevent risk. Any time I see a worker in the hot sun, shirtless and hatless, I assume that the cancer issue is simply being ignored.

What, if anything, will mobilize employers to take action to limit sun exposures? It usually comes down to money. Employers who operate in states that view skin cancer as potentially work related will eventually find it cheaper to provide (inexpensive) sunscreens and hats to their workers in the great outdoors. If state courts reject these claims, the workers will bear the burden.

Let's hope that employers take action before the courts force the issue. We have a known risk and we have proven remedies. Reason says that employers, at a minimum, will immediately share this information with exposed workers. But then again, how often is the voice of reason heard in the American workplace?

Last week Julie Ferguson blogged the interface between workers comp and recessions. For the most part, the news is good: during tough economic times, the frequency of injuries goes down, as workers hunker down and do their jobs as well and as safely as possible. But there is a big downside to downsizing: lay offs raise the specter of injuries - legitimate or otherwise - that are no longer under the employer's control.

The most effective tools for managing comp losses are in the hands of the employer: by responding to injured workers in a supportive manner, by securing the best available medical care and by speeding recovery through the prudent use of temporary modified duty, employers are able to keep employees positive and productive throughout the recovery process, all the while holding losses to a minimum.

But after lay offs, the employer tool box is virtually empty. There is no trust - most often, there is no relationship - between employer and former employee. The employer cannot manage the recovery process. The bond between employer and employee - whether it formerly was strong or weak - disappears altogether. Laid-off employees often feel anger toward their former employers and could care less about driving up the cost of insurance. In the context of considerable vulnerability and resentment, employees have to find their own path through the disability maze.

Who Manages, Who Cares?
After a lay off, injured employees are on their own. Where once there were (at least theoretically) two supporting pillars - the employer and the insurer - now there is only one. And where the insurer once relied upon the employer to maintain open lines of communication with the employee during recovery, the communication has been severed. The goal cannot be to return the employee to the prior job, as that job no longer exists. The modified goal is securing a release for full duty from the treating doctor, at which time benefits can be terminated.

After lay offs, employers have relatively little leverage in the recovery process. The burden falls almost exclusively on the (usually overworked) claims adjuster. And there is little incentive for the adjuster to aggressively manage the claims of laid off workers. These claims tend to fall through the cracks in the system, resulting in higher than necessary costs.

So here is a little advice to employers who find themselves laying off workers with (real or alleged) work-related injuries:
1. Aggressively manage any injuries reported at or near the time of lay offs. [For details, contact LynchRyan.]
2. Use the leverage of ongoing benefits to keep lines of communication with laid-off workers open.
3. Once laid off employees report injuries, keep in close contact with the claims adjuster. While you cannot offer return-to-work options, you can actively strategize open claims and ensure that the adjuster keeps these claims on the radar screen. This continued collaboration goes a long way toward reducing the ultimate cost of a claim.

Lay offs are traumatic for everyone, employers and employees alike. The bond of trust - such as it is - has been irretrievably broken. But even with the employer tool box stripped bare, there are still opportunities to keep losses at a reasonable level. The key is quite simple: even though workers are no longer employees, management must continue managing. That might sound like a "duh," but all too often in the world of business, out of sight means out of mind.

Recessions tend to place downward pressure on workers' compensation frequency, according to NCCI economists who made a recent presentation to the Casualty Actuarial Society. That makes sense. Reduced payrolls means fewer claims. Plus, with potential layoffs looming, some employees may be reluctant to report injuries - which might be part of the reason why there can be an uptick in claim reports after a layoff. The folks at NCCI note that economic expansions are times when frequency spikes - more injuries occur as payrolls climb and new, less experienced employees are added to the work force.

But despite a drop in frequency, safety experts would caution that an economic downturn requires greater vigilance, not less. In a white paper entitled Leading Safety in a Downturn, staff at BST point out that like many other operational areas, safety budgets are often cut and staff are forced to maintain the same standards with fewer resources at their disposal. They also suggest that in a downturn, there is a more complex cultural risk posed by changes in the business: "Even if it is not intended, an organization responding to economic conditions can experience a climate shift that puts a higher focus on production than safety. These shifts are "loud" to the employees who will take away from these experiences long-lasting memories of how they were treated and what they perceive the organization to truly value."

The authors suggest that a downturn can be a defining moment in a company's culture, and note that "how you do the hard stuff matters." They offer five critical actions that business leaders should take to be transformational leaders and to ensure continued safety excellence during a downturn.

More on recessions and workers comp
We've talked about workers' comp and recessions before, specifically, the impact on claims. We cull out this quote from a California study of prior recessions:

"In a six-state study, researchers noted that "...recessions increase back-end cost drivers (i.e., increase the cost per claim) to a greater extent than they increase front-end cost drivers (i.e., increase the number of claims). They state that recessions are 'characterized by increased use of the system, longer duration claims, and more frequent and larger lump-sum settlements.'"

In a prior post, Down the Rabbit Hole: The Economic Crisis and Workers Comp, my colleague Jon also talked about some other aspects of the current economic scenario that are playing out in workers' comp. These include the impact of the economy on the illegal immigrant work force, the fact that older workers may be forced to work longer since retirement funds have been destroyed, and the downward pressure that poor investment returns are putting on insurers.

The latest edition of Cavalcade of Risk, hosted by Joseph Leppard, is available here. Oh my, there's risk aplenty: in health care, in life, in investing and in the economy. Perhaps it's time to create a Cavalcade of Safe Havens (assuming, of course, that such places still exist). In the meantime, if your looking for some compelling reading about risk, this should satisfy the need.

Dr. Scott Haig, an orthopedic surgeon, has a thought-provoking article in Time Magazine on returning to work after surgery. As those of us involved in workers comp know all too well, returning to productive employment is not simply a matter of healing. Motivation is obviously a huge factor, as is the lurking sense of entitlement that may accompany a work-related injury.

Haig cites a study conducted back in 1995, involving 103 patients who underwent rotator cuff surgery. The study focused on the type of insurance coverage. Where the injuries were work related and covered by workers comp, only 42% of the patients felt better and returned to work in the medically necessary time frame; by contrast, fully 94% of those covered by conventional insurance felt better and returned to work in a timely manner.

These differing results have little, if anything, to do with the quality of the surgery. It's a matter of motivation: people covered by conventional insurance are not making money during recovery; they need to get back to work to pay their bills, or back to whatever life requires them to do. By contrast, people on comp are being paid not to work. They may prefer life on comp to the working grind. They may not approach the return-to-work process with the same sense of urgency that others usually feel.

Chester's Pain
Haig goes on to tell the story of a cop named Chester. Haig performed rotator cuff surgery on Chester, who healed well and seemed ready for a return to light duty, which was readily available. Haig was scrupulous in cultivating a good relationship with Chester; he was confident of optimum results. But well into the recover process, Chester, accompanied by his aggressive mom, complained that light duty wasn't fair. "My sergeant had the same operation and he got six months off...[and by the way],I'm in constant pain."

Alas, despite the availability of appropriate light duty (answering phones), Haig realized that his return-to-work plan was doomed. "I knew the mess I was in. You can't argue with the complaint of pain. I could imagine the grimaces I would see when I examined his shoulder..."

Ultimately, Chester went back to work in four months and stayed on light duty for two more months. In other words, he got his six months, just like his sergeant.

As Haig concludes, the type of insurance coverage goes a long way to determine how much pain you feel. For those who qualify for comp with work-related injuries and illnesses, the pain just might reach the level where work of any kind is simply not not an option. At that point the pain is shared by the employer, who loses a productive employee for a longer period than is medically necessary, and faces increased cost of insurance through the experience rating process. When it comes to comp, there is plenty of pain all around, for sure.

The National Safety Council, surely a credible safety organization, has come out for a total ban on cell phone use while driving. The council points to increasing evidence that the distraction of cell phone use - with or without headphones - is a major cause of accidents. The council has written to the governors of all 50 states, recommending legislation to outlaw cell phones for individuals operating vehicles.

This is from their press release: “Studies show that driving while talking on a cell phone is extremely dangerous and puts drivers at a four times greater risk of a crash,” said Janet Froetscher, president and CEO of the NSC. “Driving drunk is also dangerous and against the law. When our friends have been drinking, we take the car keys away. It’s time to take the cell phone away.”

Of course, this is not about to happen. A few states have limited cell phone use - some require headsets and others prohibit teen drivers from using the ubiquitous devices. (The NSC website has maps showing which states have implemented bans.) Charleton Heston famously noted that he would never give up his right to bear arms - you would have to pry his guns from his "cold, dead hands." American consumers have a similar attachment to their cell phones. Unfortunately, if the NSC numbers are correct, thousands of drivers will end up in accidents, cell phones in their cold hands - or perhaps headsets on their (cold) ears.

Looming Liabilities
The Insider has no position on cell phone use while driving. We recognize that it's a dangerous distraction, but one that has become an essential component of American life. Do it if you must, but do it carefully.

The emerging issue is one of liability. Many of us make work-related calls while driving in our vehicles. If we were distracted during such a call (post-accident, it is pretty easy to determine to whom we were talking at the exact moment of impact), our employers are vulnerable to lawsuits for negligence.

In response to what is now a widely acknowledged risk, some employers have issued policies banning cell phone use while driving on company business. Are they serious about this, or are they just "covering their butts?" It's one thing to have a policy, but if employers really intend to use the policy as a defense, they would have to prove that the cell phone ban is enforced. Theoretically, they would have to correlate cell phone records with known "time on the road" and take disciplinary action on employees who violate the policy. (Sounds like a lot of work for not much return, let alone a way of seriously compromising productivity.)

Perhaps the parties with the most at stake are the insurance carriers - the folks who write general liability and fleet auto policies for American companies, large and small. They are ultimately holding the bag for losses due to "negligent" driving. I wonder if these insurers will begin to require that their insureds issue and enforce "no cell phone" policies for drivers, in a manner similar to their requirements for safety committees and return-to-work programs for workers comp policy holders.

It will be interesting to track the development of this new and potentially expensive liability. In the meantime, the NCS has raised the bar significantly for all of us who drive and talk, and dare I add, drive and text. The sages of India recommend "one point of attention" at all times: when driving, just drive. Alas, this is hardly a viable option for a nation of time-harassed multi-taskers.

Clyde Stroman, 53, of Elmira, NY, worked as a youth aide at the MacCormick Secure Center in Brooktondale, NY. He worked with some pretty tough kids. While restraining a "client" back in August 2008, Stroman injured his right eye. If you were his supervisor, filling out the incident report, you should write: "Injury to right eye." Sounds obvious, of course. If you were in a hurry, as I suspect his supervisor might have been, you might just write: "Injury to eye."

The actual injury was minor. Stroman did not miss any time from work.

Sometime after the incident, Stroman had a complete eye exam. The ophthamologist found an old injury in his left eye. Stroman apparently decided to work the system: according to investigators, he attempted to convince the New York State Insurance Fund and his employer that the initial treating doctor’s reports identified the wrong eye as being injured. He gave a detailed, sworn written statement to that effect. (I'm guessing that the accident investigation form - if any - did not specify which eye was injured.)

As a result of this eye "switcheroo," Stroman received $2,860 in workers comp benefits. Investigators estimated the potential future value of his claim to be more than $118,000. (The injury to the left eye must have been fairly severe, with some permanent loss of vision.) Unfortunately for Stroman, his ruse did not work. Investigators determined that the original injury to his right eye was minor, while the serious injury to his left eye was not work related. Stroman was arrested on January 8 and charged with falsifying business records and violating the Workers’ Compensation Law.

A Lesson in Documentation
Only time - and a trial - will determine whether Stroman is guilty. The important lesson here lies in the area of post-injury management, in those critical moments immediately following an injury. When supervisors fill out their first reports, they should carefully note not just the body part involved, but which body part. For injuries involving fingers or toes, for example, supervisors should specify which digits are involved. In this particular case, noting that the incident involved Stroman's right eye might have saved everyone a lot of trouble (including, perhaps, Stroman himself). These details might seem trivial at the time, especially in the context of rushing someone off to treatment. Nonetheless, a few moments of careful documentation often prove critical in the weeks and months following an accident, long after the initial (and often traumatic) details have been forgotten.

When a flock of geese flew into two engines of US Airways Flight 1549 last Friday, pilot Chesley Sullenberger was confronted with a set of circumstances he had never seen before. Sure, the flight simulators may have thrown a similar scenario at him, but this was real: he had a plane loaded with 155 passengers and a crew of six. The engines had just failed. He was piloting the plane in one of the most densely populated places on earth. He had to figure out where and how to put the plane down and he had just a few moments to make a decision. That's pressure in real time.

They're calling Sullenberger's actions the "Miracle off 47th Street." He somehow managed to land the plane in the chilly but not quite frozen Hudson River. The passengers donned their personal flotation devices (which I always thought so ridiculous when demonstrated by the flight attendants before take off) and safely exited the plane. Many huddled on the wings of the floating aircraft (the fuel is lighter than water, thereby helping the plane to float). Nearby boats plucked the passengers off, one at a time. There were minor injuries, but no fatalities. Sullenberger made one last tour of the aircraft, to make sure everyone had gotten off safely, before leaving the plane himself.

We all marvel at the calm skill shown by Sullenberger. One moment he was a pilot among thousands of pilots who do their jobs anonymously every day. The next he is a hero. To this point, Sullenberger had not agreed to perform any interviews. He canceled a scheduled appearance on the Today show. Good for him. This should not be about the public's relentless appetite for the story behind the story. Ultimately, it is about someone who simply did his job under very trying circumstances. He may not have "expected the unexpected," but he surely was able to handle it.

Hemingway wrote that "courage is grace under pressure." Sullenberger has become an instant icon for such courage and grace. I suspect that the passengers on Flight 1549 will say quiet prayer each morning for the rest of their lives, thanking their lucky stars for having Chesley Sullenberger in the cockpit on that fateful day.

Footnote: Perhaps the title of this entry led readers to believe that the Insider was about to pontificate on our about-to-be inaugurated president, Barack Obama, who in his own way has demonstrated, at least on the campaign trail, considerable grace under pressure. We strive for non-partisanship, of course, but in this case we do hope that America's new leader will perform his onerous duties with Sullenbergeresque efficiency.

Now that Robert Aurbach's compelling discussion of bankruptcy has concluded, we thought readers might enjoy a quick look at an issue that none of us can do anything about: drunken workers in Peru.

Peru's top court has ruled that workers cannot be fired simply for being drunk on the job. The case was brought by Pablo Cayo, a janitor for the city of Chorrillos, who was fired for being intoxicated at work.

The court determined that the firing was excessive: yes, Cayo was drunk, but as Justice Fernando Calle put it, "he did not offend or hurt anybody." In other words, he was a pleasant drunk.

Calle went on to say that the court would not revise its decision, despite complaints from the government.

What is most surprising about this decision is the implications for safety: not just Cayo's, but other employees and members of the public who might come into contact with the intoxicated worker. Cayo might not be much of a risk while pushing a broom, but surely his ability to perform the full range of his job duties safely is severely compromised by his intoxication.

Here in the States, active drug/alcohol use is not protected. Under OSHA's General Duty clause, employers are expected to take immediate action when a worker is intoxicated: they are required to eliminate the risk of harm to the employee and to others. (See a related Insider story here.) In most cases, this means sending the employee home - providing transportation if needed. (You do not - repeat, do not - allow an intoxicated employee to drive him or herself home!)

While recovering alcoholics/addicts are protected by the Americans with Disabilities Act, active drug/alcohol use is not considered a disability. Most employers would be within their rights to terminate any employee who is found to be intoxicated while at work. Under some circumstances, employers might be expected to guide the employee toward a treatment program, but in general we have zero tolerance for being drunk at work.

The high court in Peru appears to be breathing that thin Peruvian air. This is the kind of decision that drives managers crazy. As Celso Becerra, chief administrator for Chorrillos, put it: "We've fired four workers for showing up drunk, and two of them were drivers. How can we allow a drunk to work who might run somebody over?" Normally, I might say "Tell it to the judge." But in this case, they have to take their complaints somewhere else.

When we think of safety on the construction site, it's usually in the context of new and renovated buildings. But deconstruction is fraught with hazards, too. Just as the timing and sequence of events in building must be constantly reviewed from a safety perspective, deconstruction requires a similar review. You could say that failure to anticipate safety concerns, whether you are building or unbuilding, is criminal. That's just what the grand jury decided in New York City.

The Deutsche Bank building in lower Manhattan was a victim of the 9/11 attacks. The building withstood the initial blasts, but the structural damage was too severe for repair. The building had to come down. In the process of this deconstruction, a fire broke out in August 2007. Firefighters do not distinguish between buildings going up or coming down: they rushed in to put out the blaze. Firefighters Robert Beddia and Joseph Graffagnino died in the blaze.

In the anguish that always follows this type of fatality, fingers have pointed in many directions and then settled on two individuals: Mitchell Alvo, an executive of subcontractor John Galt Corporation, and Jeffrey Melofchik, a site safety supervisor for Bovis Lend Lease, the construction management company. (You can read the New York Times article by William Rashbaum and Charles Bagli here.)

What went wrong? Where did deconstruction decisions cross the line into criminal behavior?

Timing and Sequence
In deconstruction, it's not just what you do, but when you do it. At the time the fire broke out, the building's sprinkler system had been dismantled. The fire exits had been sealed off (to facilitate asbestos abatement). A standpipe designed to carry water to the upper floors had also been dismantled. Finally, cheap, non-fire-retardant plywood had been used in deconstruction. None of these actions in themselves are criminal acts, but because they combined to create extraordinary hazards in the event of a fire, they resulted in grand jury indictments.

You may wonder what role New York City played in the hazardous conditions. Plenty, but the city dodged indictment due to the formidable legal obstacles in establishing liability for a public entity. Nonetheless, the city has agreed to acknowledge its failures and establish a new division in the Fire Department, to be staffed with 25 civilians. Its mission will be to inspect high-rise buildings under construction or demolition. Let's hope they do a better job than the city's crane inspectors...

My thoughts wander to Jeffrey Melofchik, the site safety supervisor. In retrospect, he must be going over and over the sequence of events that lead to the deaths of the two firefighters. Beddia and Graffagnino haunt his dreams. Now his guilt and self-reflection become a very public process as he faces a daunting accountability for his actions. My guess is that there is plenty of blame to go around, but in this sad tale, two men are apparently in position to take the fall.

On December 1 we blogged the story of Taneka Talley, an employee of the Dollar Tree stores who was stabbed to death at work by a deranged racist. We believed that Talley's death was compensable under workers comp, as she died at work, performing her job (she was stocking shelves at the time of the assault). Dollar Tree's TPA denied the claim under the theory that the death was not work related because the killer was motivated solely by Talley's race (she was African American). A few of our readers agreed with the denial.

This was no personal dispute. Talley and her assailant had no prior relationship. She died because she was in the wrong place at the wrong time. If she had been stabbed on the street, there would be no workers comp claim. But she died while working, so in our view her orphaned son is entitled to benefits.

Dollar Tree's mission statement refers specifically to the importance of good judgment: "Do the right thing for the right reasons." Well, Dollar Tree has now agreed to pay the full amount allowed by California workers comp for death benefits. The company's statement asserts that it was acting voluntarily because "we feel this is the right thing to do." Mission accomplished!

In this emotion-laden situation, a literal and nit-picking interpretation of the law is simply not in the company's best interests. To be sure, a case for denial can be made. They might even prevail in workers comp court (we doubt it), but Dollar Tree had much to lose in the court of public opinion. Some customers had called for a nationwide boycott and protesters picketed the Fairfield store where Talley died. With this agreement to pay the claim in full, Dollar Tree ends a public relations nightmare and preserves its standing in the community. Dimes to dollars, that's money well spent.

Dollar Tree is a national company with stores in all 48 states. Everything they offer costs a buck. (They are doing very nicely in this recession.) Here's how they describe themselves:

Walk into one of our stores and it hits you immediately: this is a place where shopping is fun. We call it "Thrill of the Hunt". We have worked hard to create an environment where our customers can discover new treasures every week. Where entire families can enjoy looking for that special something.

As you will soon see, the "thrill of the hunt" has become a very unfortunate metaphor for the Dollar Tree experience, at least for one hapless employee.

Taneka Talley worked at a Dollar Tree store in Fairfield, California. On March 29, 2006, Tommy Joe Thompson walked into the store not looking for a bargain, but for someone black. Identifying Talley as a person of color, he stabbed her to death. Talley left a son, Larry, who was 8 years old at the time of the murder.

It seems pretty obvious that Talley was in "the course and scope" of employment at the time of her murder. She had no prior relationship with Thompson. Her death, therefore, is a compensable event under workers compensation. Thompson's racist motives have no bearing on that compensability.

Well, it appears that it's not just the merchandise at Dollar Tree that's worth a buck. Their legal advice is equally on the cheap. Dollar Tree's TPA, Specialty Risk Services, has denied the Talley family claim for survivor benefits. Their reasoning? Thompson's sole motivation for attacking Talley was her race. The death had nothing to do with her being a Dollar Tree employee. She just happened to be at work when Thompson walked into the store on his demonic errand.

The insurer's denial is based upon testimony during Mr. Thompson's mental competency hearing. District Attorney Dane Neilson asked psychiatrist Herb McGrew, "You know that he (Thompson) got up that morning and he said, 'I'm going to kill a black person.' She was unfortunately, the first person he saw, correct?"

"Correct," McGrew said.

It took the jury less than half an hour to determine that Thompson could understand the proceedings against him and was competent to stand trial. At some point, if this case reaches a judicial proceeding, Specialty Risk's denial of the claim will be brushed aside with equal fervor. Dollar Tree would do well to work out a (generous) settlement prior to any such hearing.

If Dollar Tree needs additional motivation to reach a settlement, perhaps they should begin by reading their own "mission and values" statement:

Attitude: Responsibility, Integrity, Courtesy
Judgment: Do the Right Thing For The Right Reasons.
Commitment: Honor and Respect for Self and Company

Do the Right Thing for the Right Reasons, indeed.

This is part 3 in a 3-part series. Click here for part 1 and part 2.

Step 6 – Establish a partnership with your claim service provider
The role of the insurer or third party administrator (TPA) is not to solve your workers’ compensation problem. That is something you do together. The insurer or TPA administers and manages your company’s claims according to relevant law and brings a diverse array of claims-related services to the table, including utilization reviews, intensive case management for catastrophic injuries and investigation of dubious claims. Your goal should be to develop a close working partnership. On your side, you need to report claims immediately and establish good documentation to serve as the basis for the insurer’s work.

Together, you and your insurer or TPA should maintain a steady and consistent focus on every open claim. Use all the tools and resources available to return your injured workers to the job; where this is not possible, work diligently to reach agreement on the appropriate way to reach closure on the case.

Step 7 – Measure and track results
You know the drill – what you measure becomes important.

Be sure to establish clear objectives for what you want to accomplish and communicate them in concrete terms.

Here are three simple, but effective, ways to measure performance. These are measurements that senior management can readily understand and track on a monthly basis.

First, measure the total costs of losses per full-time-equivalent (FTE) employee. Doing so factors out both overtime and part time employment.

Second, measure the cost of losses per hundred dollars of payroll.

Third, measure days lost due to injury per every 200,000 hours worked (equivalent to one hundred employees working 2,000 hours per year). This is the OSHA Severity Rate and is an excellent way to measure lost time.

With this data in hand, ask your insurance broker or carrier what the averages are for these metrics in your industry. They should be able to tell you. Then, benchmark yourself against your industry and yourself.

Track results and report them just as you would track and report production or quality objectives. Moreover, discuss the results with employees. If senior management pays consistent attention to the organization’s loss reduction performance, everyone else will, too.

Another measurement factor focuses on accountability: make support of your injury management system an ongoing part of performance reviews for management and supervisory staff. Not doing this sends a subtle message – safety and injury management are really not that important at your company.

Step 8 – Define and communicate responsibilities
In a well-coordinated injury management system, everyone knows his or her proper role and responsibilities. Each person must understand how to respond. Injured workers must notify supervisors immediately of any injury. Supervisors must respond in a caring manner and make sure that workers who sustain injuries are escorted quickly from the work site to the right medical provider. Supervisors also are charged with analyzing accidents and taking steps to ensure they don’t happen again. Supervisors should thoroughly document accidents and injuries with the assistance of injured workers. And senior management should follow through by making sure that corrective action identified actually does occur.

It is a truism of business that well-defined responsibilities go a long way toward assuring that objectives are met or exceeded. Workers’ compensation cost control is no different.

Conclusion
Workers’ compensation is not an insurance problem. It is a management problem. Employers committed to taking control can reduce costs significantly. At the same time, their companies will benefit from improved morale and productivity. Like so many of life’s thorny issues, workers’ compensation can be managed if you only have the will to do it.

This is part 2 in a 3-part series. For part 1, click here.

Step 3 – Develop an injury action plan
Many employers think that when an injury occurs responsibility for getting the injured worker back to work shifts to the claim adjuster. Nothing could be further from the truth, and it is this basic misunderstanding that causes many claims to deteriorate with oftentimes tragic consequences for both worker and employer.

The claims adjuster’s job is to determine compensability, coordinate benefits, follow the law and work within it and the workers’ compensation insurance contract to resolve the claim satisfactorily. And while adjusters play a vital role in the process, they can never be your human resource director.

Misunderstanding the role of the adjuster creates an atmosphere in which injured employees are left to drift, groping their way through a quagmire of medical services, uncertain benefits and a cloudy future. In fact, a truism in workers’ compensation is, “When a claim goes south, costs go north.” As the employer, you need to structure a clearly defined path from the moment of injury through early return to work back to full employment. What you do or don’t do in the first few hours after an injury has a significant impact on your ultimate costs.

Employers need to create a turnkey action plan – a clear set of policies, procedures and expectations with supporting tools and documentation. The plan must include a way to stay in continuous contact with injured workers throughout the recovery process, keeping employees connected to your organization and motivated to return to work.

Step 4 – Establish a relationship with a high-quality medical provider
A close relationship with medical providers of exceptional quality who understand work-related injuries is essential to managing costs. The pivotal emphasis should be on quality, not price. This sounds paradoxical in these times of higher and higher medical costs, where medical treatment now accounts for nearly 60% of workers’ compensation loss costs. However, ample research shows that doctors who specialize in occupational medicine with a sports medicine approach and who follow ACOEM (American College of Occupational and Environmental Medicine) guidelines, consistently provide injured workers with high-quality treatment while shepherding them back to the workplace in a compassionate and caring manner. Board-certified occupational medicine physicians know that a worker should remain out of work no longer than is medically necessary. This leads to an active recovery and lower costs.

Take the time to shop for a provider who offers the highest-quality care with an active sports medicine philosophy. Look for physicians who will take the time to understand your needs, perhaps through actual work site visits. Once you have identified a potential provider, develop a written agreement that sets explicit procedures for handling workplace injuries. Be sure that the provider is willing to identify specific restrictions resulting from injuries and work with you to accommodate appropriate modified duty placements.

Now, admittedly, this approach can be difficult in the 21st century workers’ compensation medical environment. Large medical management companies have enrolled more physicians than there are entries in the New York City telephone directory and have wrung out of each a discounted rate for service. This arrangement might be good for the medical management companies, but not necessarily for you. In workers’ compensation, like in most everything else, you get what you pay for. So, our suggestion is that you should be prepared to negotiate higher payment for the good service you expect. It is well worth it in the long run.

As with any valued vendor, you should provide positive feedback to physicians who take the time to care well for your injured workers. However, while everyone appreciates praise for a job well done, you should always remember that a physician’s first responsibility is to the patient. The more that the physician understands that you have the same outlook, the more the physician will trust you and work with you to accommodate the injured workers needs appropriately.

Step 5 - Stress early return to work
Time away from work can be frightening and debilitating for injured workers. Their physical, emotional, and financial well-being are often in turmoil. They are worried about their job and how they will pay their bills, particularly so in today's economic climate. They often begin to think of themselves as “disabled.” The longer they are out of work, the harder it becomes to get them back into the work routine. Consequently, it is crucial to speed recovery through the use of modified duty, one of the most important tools an employer has to reduce loss time and costs.

Modified duty is a bridge back to full duty, keeping workers active and part of the team. Instruct your medical provider to focus on what the employee cannot do while injured, clearly delineating work restrictions.

For a moment, put yourself in the skin of the injured worker and imagine you are talking with your doctor about your injury. Would you want the doctor to list for you the potentially countless physical tasks you could actually still do while injured? Or, would you want the doctor to tell you the realistically few things you should not do? The latter approach is the one doctors prefer, too.

Once you have the medical restrictions, work with your supervisors to develop progressive, short-term transitional jobs and tasks. Most important, make sure that employees and supervisors carefully follow the physician’s restrictions: The goal is to speed recovery, not aggravate the condition and make things worse. As medical treatment continues and your medical provider gradually lifts restrictions, increase job demands to ease the employee back to his or her original job.

Many companies have recognized a basic truth about workers' compensation: that the worksite is the best place to control losses, and that they, as employers, have the maximum leverage to lower losses. These employers no longer try to hand the problem off to their legislators, their insurers or their attorneys; instead, they manage workers' compensation as a controllable expense. This fundamental shift in attitude empowers employers to take charge of workers’ compensation.

How have they done this? What are the key steps foresighted employers take? Over the last 25 years, our company, Lynch Ryan, has been privileged to assist many of America's leading corporations as they struggled with this issue. I've now concluded that there are eight essential strategies that help savvy employers turn workers' compensation liabilities into assets. The principles are simple, founded on basic human values. They involve a concrete action plan and sound management. More important, they work.

Today, we'll focus on the first three steps, and over the course of this week, we'll post the other five.

Step 1 – Make a commitment
As with any major corporate endeavor, commitment starts at the top. Make sure that workers' compensation is afforded priority status throughout the organization. Set realistic and attainable goals, and communicate them to the organization from the top down.

If you approach injury management simply as the "idea of the month," you will certainly fail. Commitment involves building safety and injury management into the very fabric of your organization. You should never lose sight of your goals. And you should never compromise your commitment to safety by drifting toward expedient, short-term objectives that place production quotas above the safety of your people.

Step 2 – Focus on reducing lost time
Chances are, your company has been working to create a safe working environment. That’s good. Safety is essential in controlling workers' compensation, but it's only half the equation. Good safety programs have a positive effect on the frequency of injuries, but the best safety program in the world will not eliminate all accidents. People being human, injuries will happen. Try as we all do, work conditions change and we make mistakes. To really attack workers' compensation costs, you need to focus on reducing severity: the length of time injured employees stay out of work. Severity is the real cost driver in workers' compensation. Every day that an employee is off the job costs you money.

When your machines break, you fix them immediately. Think of something as simple and common as a department's copier. When you purchased or leased that machine, you insisted that prompt maintenance or even replacement was part of the deal. An out-of-order copier slows production. You need to do the same for your most important resource, your employees. So your goal must be to keep days away from work to an absolute minimum. You need to focus, laser-like, on the goal of returning every injured employee to work, through modified or transitional duty if needed, and to the original job as quickly as possible. That's good for you and it's also good for the employee.

Steps 3 through 8 will be posted over the course of the week.

Milliman, Inc has just released a study that shows that Paradigm Management Services has remarkable rates of return to work for catastrophic and complex claims when compared to a benchmark database of 60,000 similar claims. Paradigm was five times more successful in getting patients released to return to work, 5 time better in getting patients returned to work, and 13 times better in getting employees returned to work in full-duty. The study notes that 20% of the Paradigm cases returned to work in full duty capacity compared to 1.5% of the benchmark claims.

Those are some pretty impressive numbers because just one catastrophic claim can have a serious impact on an organization's bottom line. But the costs go well beyond the financial - the harsh reality of a debilitating, life changing injury can have a profound effect on the worker who suffered the injury and on the injured worker's family and work colleagues. One problem that plagues workers comp all too often is that people tend to view it as a financial transaction when at its very heart, it is a human event. We've found that if you take care of the human event, the dollars and cents generally follow.

Most work injuries are relatively minor - soft tissue injuries such as sprains and strains, abrasions, cuts, burns. Most workers can be restored to good health and resume normal life and work activities within a few days. About one in every 4 or 5 injuries requires some degree of lost time, but even the bulk of those generally only require a matter of days or weeks. According to Paradigm, catastrophic injuries are 1/10 of 1% of all workers compensation claims, but can account for 30% of total medical dollars paid.

For this small percentage of injuries, the injured employee won't be able to resume "normal" life activities, at least in the sense of pre-injury levels. These types of injuries include spinal cord injuries, brain injuries, severe burns, amputation, and multiple trauma. Think the workplace equivalent of war injuries. These injuries are complex and costly, requiring sophisticated medical care and rehabilitative services.

Paradigm offers some good advice on managing catastrophic claims - see Managing Catastrophic Injuries, a handout by Jo Carter, RN, BSN, CCM from a recent presentation. It outlines some of the issues and best practices, and gives a window into why and how Paradigm is achieving impressive outcomes.

For more on the importance of return to work, we highly recommend the ACOEM Guideline Preventing Needless Work Disability by Helping People Stay Employed (PDF). This is a workers compensation "must read," authored by occupational physicians.

Yesterday, at Managed Care Matters, our good friend Joe Paduda published an excellent "how-to primer" for starting a workers' compensation medical network. Essentially, Joe's advice for would-be network creators is:

• Bring the right physicians into the network - board-certified occupational health specialists, for example, as well as primary care and specialist physicians who understand workers' compensation;
• Exclude physicians who don’t know anything about the subject;
• Pay the physicians a reasonable rate; and,
• Support the network physicians by sending them patients.

We're all familiar with the super-large networks that include anyone with a medical degree - as long as "anyone" agrees to see network patients for a discounted fee, which the network can then tout as "savings" for employers regardless of the quality of care. Most of these networks and the doctors in them came from the group health arena where modified duty, transitional duty, early return to work, the buzzwords of workers’ compensation professionals, are foreign concepts. And why should that be surprising? After all, workers’ compensation is only one, tiny room in the American health care house that Jack built.

What workers’ compensation professionals sometimes forget is that most doctors, whether in or out of these networks, went to medical school because they wanted to devote their lives to healing the sick, not to becoming some company’s external medical personnel director. Many, perhaps most, physicians in networks that have physician directories the size of New York City’s phone book understand “injuries,” but not workers’ compensation, and that is not their fault. It is ours. We have not educated them sufficiently regarding workers' compensation, nor have we cohesively partnered with them to help injured workers transition at the right pace back to full duty, which, in my 25-year Lynch Ryan experience, is where injured workers really want to be.

Consider this. Most doctors have small practices that turn them into small business owners. I've never met one who liked that, the business end of medicine. Most are not technologically facile, and workers' compensation injuries comprise a minor share of their "business." Their responsibility focuses totally on their patients and what's wrong with them. They don't see a real need to be overly interested in the workplace; in fact, they most often don't even know what or where that is. On the assembly line that has become American health care, where insurers force physicians to cycle through patients in fifteen minute intervals, who has time to probe deeply about the workplace and what goes on there? When some claims adjuster or nurse case manager wants to pin them down about physical restrictions or a date when their patient can return to work, they err on the side of humongous caution in order, in their minds, to "do no harm." This leaves workers' compensation professionals and employers befuddled, scratching their heads and wondering what is wrong with the doctor. They think, "Why can’t the doctor see what’s really going on here?" They don't understand the doctors and the doctors don't understand them.

That's the scenario in which workers' compensation professionals very often find themselves. At Lynch Ryan, the only way we have ever found to deal with it successfully is one doctor at a time, sitting face to face and finding common ground. Occupational health specialist or not, an educated physician is a powerful weapon for good in the little world of workers' compensation.

In my next post I'll describe the step-by-step process my colleagues and I went through to build the first workers' compensation medical network in Massachusetts once upon a time. Here’s a teaser: It was a thing of beauty, profoundly successful for everyone involved, and would not be legal today.

Back in February we blogged a rather drastic proposal to "restore" the Americans with Disabilities Act (ADA) by expanding eligibility to just about anyone. We feared that blurring the lines between transient conditions and impairments that "substantially limit" major life activities would paralyze American business, clog the courts with trivial cases and divert attention away from the truly disabled, who desperately need ADA protection.

Well, it appears that the "restoration" has been restored and the "fix" has been fixed. Proposed reforms would expand coverage where the U.S. Supreme Court had curtailed it: individuals whose disabilities can be treated - with medication, with prosthetic devices, with assistive technology - would still be considered disabled. In other words, their ADA protection would not end simply because their disability is mitigated through some form of treatment. (Got that, Justice Thomas?)

The fix also addresses the paradox of "regarded as" disability. This involves situations where an individual is discriminated against because he or she is perceived to have an impairment: "Jack looks like an alcoholic." These people do not require accommodation (they are not really disabled), but the ADA will ensure that they are not discriminated against based upon a false perception.

Formidable Support
While disagreement on the nature of disabilities will continue, substantial agreement has been reached on language for the revised ADA statute. Here are some of the organizations that have signed off on the proposed revisions:
- American Association of People with Disabilities
- American Diabetes Association
- Bazelon Center for Mental Health Law
- Epilepsy Foundation

No surprises there. But check out some of the mainstream business organizations that are also on board:
- National Association of Manufacturers
- National Restaurant Association
- US Chamber of Commerce

With such diverse and powerful backing, the ADA fix appears to be headed for passage. That's all well and good. But as we pointed out in February, there is a sad paradox in the ADA itself: since the law was enacted in 1992, overall levels of employment for the disabled have declined. Employers, intimidated by the law's many requirements, apparently take the path of least resistance and avoid hiring qualified disabled applicants. So in some respects the ADA "fix" compounds the problem. The real fix goes beyond the language of this or any other law: it involves transcending stereotypes and embracing people for who they really are and recognizing what they are truly capable of doing.

Risk & Insurance Magazine has announced the 2008 competition for the Teddy Awards, given to organizations demonstrating a long-term commitment to improving workers compensation performance. Creativity and teamwork are major considerations. Four awards will be given: one for a company; one for a nonprofit or government entity; a third award will honor a federal government entity (that will be interesting!). Finally, a Teddy will be awarded to a small employer--a company or organization with fewer than 500 workers.

As you can probably guess, the award is named in honor of President Theodore Roosevelt, who in 1908 introduced and promoted the first piece of important workers' compensation legislation in the United States. The law, called the Federal Employer's Liability Act, covered workers in hazardous industries and workers for common carriers. In signing the new law, Roosevelt said to Congress "the burden of an accident fell upon the helpless man, his wife and children." With that new law, the federal government took the lead in combating on-the-job injuries, which Roosevelt had characterized as "outrageous." In the years immediately following Roosevelt's initiative, states, beginning with Wisconsin, began to implement their own workers comp laws.

In the interests of full disclosure, the Insider is part of the judging panel for these awards (lively narratives preferred!) But you must hurry: Applications are due by July 15.

Safe Talk, Perilous Walk
Roosevelt may have talked the talk, but when it came to personal risk management, he loved adventure and all-too-frequently put himself in harm's way. There is no better example than the ex-President, after losing a third party bid for office in 1912, heading off to explore an uncharted tributary of the Amazon River, dubbed the "River of Doubt." The trip, plagued by haphazard preparation, the wrong type of canoe and 24/7 perils, very nearly killed him. Candice Millard's well-written story makes for a fascinating summer read. Needless to add, Teddy does not deserve a Teddy for his ill-fated journey.

You probably have never heard of Brendan Doyle, a Rhode Island state trooper, but his story, as told by Amanda Milkovits in the Providence Journal, belongs in the hearts and minds of anyone involved in disability management. He exemplifies what great medicine, combined with ferocious determination and discipline, can accomplish.

Just over a year ago, he was punched to the ground by a low life named James Proulx, hitting his head on the pavement. His injuries were so severe, doctors discussed organ donation with his family. He was comatose, hooked up to a respirator, his skull shattered.

But he held on. Eventually, he was moved to Spaulding Rehabilitation Center in Boston, where doctors dismissed any notion that he would be able to return to work. He was paralyzed on his right side and suffered from double vision. But by the fall of last year, after doctors reattached a piece of his skull, Doyle noticed that his fine motor skills started to return. The double vision disappeared and he regained feeling and mobility in his right side.

Against All Odds
By this past spring, Doyle said he wanted to return to his job as a trooper: not a modified duty, desk job in the back of some precinct, but full duty. His supervisors, who supported him from day one, put him through rigorous retraining in firearms, pursuit driving, use of force techniques and through "shoot - don't shoot" scenarios to test his reaction times. He endured the standard three week course of 13 hour days in the police academy. He passed every test with flying colors, even earning a master pin for firearms.

So against all odds, with no small element of luck, Brendan Doyle is back on the job. From the beginning of his ordeal, this was his one goal. By all rights he should have become permanently and totally disabled, drawing 100 percent of his trooper pay tax free for the rest of his life. No one would have questioned it. But Doyle refused to bow to this fate. In doing so, he exemplifies what the human spirit can accomplish despite ridiculous odds.

I would like to see a picture of Doyle, with his humble smile and crescent moon-shaped scar, posted over the desk of every ER and occupational doctor, every nurse case manager and claims adjuster - and every employer - to remind us that the goal of treatment for injured workers is return to full duty. Forget the odds. Look beyond the trauma of the incident itself and the dire prognosis. Anyone seeing Doyle in the days and weeks following his injury would have scoffed at the notion that he would ever be in uniform again. But that is exactly where he is today.

I hope never to meet Trooper Brendan Doyle: to do so would probably mean I was involved in an accident or going a little too fast on I-95 outside of Providence. Nevertheless, I will try to keep his image in mind. For all of us who work in risk management, cost control and safety, who focus on doing the right thing for injured workers, Trooper Doyle embodies the spirit and goal of our work. He is the Insider's Return-to-Work Person of the Year.

Imagine you are an attorney in Massachusetts looking for a little work. The Office of Labor and Workforce Development (OLWD), a state agency, hires you and 10 other attorneys to examine applications for unemployment insurance. Normally, this work would be performed by state employees, but the combination of cost-efficiency lay offs and a bad economy has caused a surge in applications. The state pays you through a 1099 form. You are responsible for your own taxes. And you soon find yourself in the middle of a story concocted by Franz Kafka.

In a parallel operation (bordering on a parallel universe), Governor Deval Patrick has announced a crackdown on employers who commit fraud by misclassifying workers to avoid paying workers comp insurance, plus state and federal taxes. The governor creates an Underground Economy Task Force to ferret out abuses of the independent contractor designation. The task force resides...in the OLWD. (You can read the AFL-CIO's endorsement of the task force here.)

These two worlds collided when someone (presumably a state employee affiliated with the unions who lost employees in lay offs) dropped a dime on OLWD, complaining that the 11 attorneys hired as "independent contractors" were performing the job duties of regular employees. So now OLWD is being scrutinized by its own task force. We can only hope that members of the task force are state employees, and not "independent contractors" who have signed on to carry out a short-term project: an image arises of a dog furiously pursuing its own tail.

Management Conumdrum
Many employers face the conundrum embodied in this situation: when you have more work than you can handle - especially on a short-term basis - it's convenient to hire temporary "independent contractor" consultants to carry out the work. Hiring is much easier; there are no long term commitments. When the work has been completed, you simply terminate the contracts.

Because there is such widespread abuse of the "independent contractor" designation (did someone say "FedEX"?), these convenient arrangements are now routinely challenged. At OLWD, the questioners themselves have been called into question.

Suzanne Bump, the state's secretary of Labor and Workforce Development, is not using the word "investigation" to characterize her examination of this particular form of outsourcing. She points out that the practice began in the prior (Republican) adminstration, which had enthusiastically reduced the size of the state's workforce, only to discover they did not have enough people to do the necessary work.

"We are taking steps to reverse this practice and are looking to hire more review examiners on a permanent basis when possible," Bump stated. This in itself raises a problem: by creating regular, full-time positions to handle the jobs, the state will have to grow the budget. Regular employees cost more than "independent contractors" because you have to pay for insurance and taxes (which is one of the reasons they hired independent contractors in the first place).

What used to be routine HR functions have become enormously complicated. I am sympathetic to all employers who have to work through these often paradoxical issues. When it comes to managing a business in these challenging times, we find ourselves lost in a dimly lit, endless corridor, characters in a Kafka story, looking for the room where all the answers are rumored to reside. Like the good folks at OLWD, we eventually conclude that the room does not exist.

California had a long-standing reputation as a workers compensation nightmare: not because injured employees received generous benefits - they did not - but because doctors and lawyers exploited the system to generate enormous fees. Governor Schwarzenegger, AKA the Terminator, put an end to that with his extensive 2003-04 reforms. In the effort to contain costs, the reforms for the first time brought managed care tools into the comp system. The bottom line for employers has improved dramatically.

Among the many provisions of the reform was a limit on physical and occupational therapy treatments for an injury. Injured workers are now limited to 24 visits. Jose Facundo-Guerrero, a worker at a nursery in Half Moon Bay, challenged the limits on constitutinal grounds, alleging that he was entitled to the "full provision for such medical, surgical, hospital and other remedial treatment" promised in the CA Constitution. Jose had visited his chiropractor 76 times and he wanted the carrier to pay.

The First District Court of Appeal in San Francisco has upheld the limits in the comp reform package. They found that the Constitution does not require "unlimited" treatments and leaves the details up to the legislature.

Arbitrary Limits
There is no question that the 24 visit limit is arbitrary. This one size does not fit all. On the other hand, chiropractic treatment can be addicting. It feels good. Jose went 76 times and might well have continued on indefinitely, had the treatments been compensable.

One aspect of the reform language caught my eye: the 24 visit limit can be exceeded if the employer agrees. This raises an intriguing possibility. If valued employees require extensive physical therapy that goes beyond the arbitrary limit, enlightened employers might well authorize the carrier to cover a specific number of additional visits. This makes sense as long as it keeps the employee happy and productive.

As with so many workers comp issues, law makers struggle to find the middle ground between no limits and severely curtailed treatments. What's missing is reliable and effective lines of communication among employers, their employees, medical providers and insurance carriers. The rigid limits on treatment in California are apparently legal, but that does not mean they are fair. There is no question that the reforms of 2003-04 have reduced costs. Ironically, injured workers were not the primary beneficiaries of the state's pre-reform, out-of-control comp system. And it now appears likely that these same workers will pay the price for reforms as well.

The Group Insurance Commission (GIC) in Massachusetts came up with a nifty idea: let's grade physicians based upon efficiency and competence; we'll reward those with high marks and penalize those who are (relative) failures. (The GIC administers health plans for public sector employees.) The GIC worked with the MA Medical Society (MMS) and a number of insurance carriers to come up with a reasonable methodology and metrics for grading doctors. After four years of planning, the GIC rolled out the program. Unfortunately, the MMS rolled out the lawyers: they are suing GIC and a number of health plans for defamation, interference, breach of contract, bad faith and violation of due process. Other than that, Mrs. Lincoln, what did you think of the play?

The suit claims doctors have been capriciously ranked into tiers, from 1 through 3, based upon a faulty analysis of billings. The tiers assigned to a given doctor result in progressively higher co-payments for their patients. For example, the Tufts Health plan has established the following co-pays for doctor visits:
Tier 1 doctor = $15 co-pay
Tier 2 doctor = $25 co-pay
Tier 3 doctor = $35 co-pay

The MMS claims, first, that the tiering system is based upon faulty data. For example, one doctor who specializes in treating severe cases of multiple sclerosis has an inflated "cost per patient" due to her inter-disciplinary approach. She has a tier 3 ranking. But this low score does not take into account the severity of her patients's conditions or her success in treating them. In another example, one doctor simply examined medical records and provided an interpretation: he was held accountable for the ultimate treatment provided to patients he never actually saw.

With low rankings based upon incomplete and often inaccurate data, the MMS concluded that good doctors have been defamed.

In addition, MMS claims that patients have been defrauded, by being directed toward certain doctors for no particular reason. They pay less for tier 1 visits, even though they may not be getting the best available services; conversely, they have to pay substantially more for tier 3 visits, even though the quality may well exceed that of tier 1 doctors.

Dr. Bruce S. Auerbach, president of the MMS, said efforts to improve the tiering program have failed.

"There is a right way to do this, and a wrong way - and the Clinical Performance Improvement initiative is definitely not the right way."

"We have worked with the GIC for four years to improve its program, and the agency has made changes in some limited areas. However, the GIC has refused to correct the CPI's most glaring problem, which is its ranking of individual physicians using inaccurate, unreliable, and invalid tools and data."

Not Close Enough
We all know that there are physicians whose services are mediocre and at times, dangerous. But the problem is in the data: how do you determine the quality of services? How do you distinguish between prudent and outrageous treatment? Data is data, but behind the numbers are stories of lives saved and lives ruined. Number crunching computers cannot tell the difference.

Unless the parties settle prior to trial, the discovery process will expose GIC's methodology for grading doctors as clearly as an MRI. Based upon the MMA's lawsuit, the GIC's metrics appear to be fairly crude. The good news is that a number of mediocre doctors have been exposed. Unfortunately, the broad net cast by the tiering system has tainted the reputations of some very competent and compassionate physicians. In this particular endeavor, "reasonably close" assessments are not sufficient. The margin of error - where the reputation of a doctor is at stake - is very small indeed.

Medicine is both a science and an art. With the livelihoods of medical practitioners at risk, any methodologies for evaluating the quality and effectiveness of services must be precise and accurate to the nth degree. If your methodology cannot distinguish between incompetence and art, if it cannot place virtually every outstanding physician in the top tier, then the metrics are pretty worthless. At first glance, GIC's admirable effort to triage the docs fails to pass muster. In all likelihood, the pending clash in court will send all the parties back to the proverbial drawing board.

What do Bank of America, Citigroup, Merrill Lynch, J.P. Morgan Chase and Morgan Stanley have in common? If you said they all have lost billions in absurdly risky loans, you would be right, but that's not the answer we are looking for. We learn in the latest edition of Cavalcade of Risk, ably hosted by Jason Shafrin of Healthcare Economist, that these companies have all filled new positions entitled Chief Risk Officer (CRO). In fact, you will find that many of the companies involved in the great mortgage fiasco of 2008 are trying to mitigate future risks by hiring into these positions. It would be interesting to read the job descriptions. Being a Risk Manager is one thing; Chief Risk Officer sounds a bit more, well, exposed.

Good management teams empower everyone to focus on risk. Will CROs be able to do this? Or is the CRO just another way for senior managers to toss someone else under the bus? Only time will tell.

Bill Thorness has written an interesting article for NCCI on the relationship of wellness programs to workers comp costs. In some respects, it involves a "duh" thesis: wellness programs can significantly lower comp costs, because healthy workers are less prone to injury and, once injured, recover more quickly than their out-of-shape co-workers. Conversely, obese and out-of-shape workers are more at risk for strains and sprains, because the additional weight they carry compounds the impact of day-to-day workplace functioning.

There is even an overlap between wellness and one of the Insider's favorite topics, the aging workforce. Older workers are more at risk for serious (and expensive) injuries such as rotator cuff tears. A relatively healthy, well conditioned, non-smoking older worker is more likely to avoid these injuries and again, once injured, more likely to shorten the normally extended recovery time.

With all of the compelling logic underscoring the benefits of a healthy workforce, it might be natural to assume that workers comp would jump at the opportunity to provide incentives for wellness programs - dare we say, even pay for them. Perhaps we could find examples among the national carriers, where workers comp safety programs include wellness training. Unfortunately, for the most part wellness remains an afterthought in the comp system. Aside from conventional safety programs, which focus on injury prevention, comp coverage tends to sleep like a hibernating bear, roaring into action only after injuries occur. Even then, wellness is a marginal issue: if, for example, obesity hinders recovery, carriers are unlikely to pick up the cost of a weight-reduction program, because the obesity is not work related.

Who Owns It?
The ultimate cost of most injuries is directly related to the health and conditioning of the injured worker. Logic says comp carriers should embrace wellness programs in both injury prevention and post-injury treatment. But as is often the case, it comes down to a question of who owns it, who benefits and who pays. Wellness is a proven concept, but comp carriers are unwilling to own it and very reluctant to pay. They are, nonetheless, more than happy to reap the substantial benefits.

Nassau County in New York is currently paying about $10 million a year for the partial disability claims of former county employees. They would like to settle these claims, but as with most municipalities, their budget process offers no opportunity for fronting the costs of settlement. It's cheaper to keep paying the claims from year to year, pushing the problem onto future tax payers.

The county is now exploring the idea of borrowing $55 million to off-load about 1,000 claims to a private insurer. In return for the one large payment, the insurer would accept responsibility for all the claims. We think Nassau County is moving in the right direction, but there are some significant pitfalls. (Perhaps county officials should read our February blog on Connecticut, which encountered serious problems in attempting the same off-loading procedure back in 2001.)

A Well-Dressed Gorilla
Any municipality seeking to privatize the handling of workers comp claims has to deal with the 800 pound gorilla, in this case appropriately dressed in a three piece suit: what is the true value of the claims being privatized? No one really knows. Because municipalities operate on annual budgets, they pay claims from year to year, presumably until the recipient dies. While actuaries could project with reasonable certainty the ultimate cost of each claim, no such projections have been made. In Connecticut, the projections were performed by untrained college students. Their guesses wildly overstated the value of the claims, resulting in grossly overstated "paper savings." Instead of saving CT taxpayers money, privatization became a collosal rip off.

The fact that the county is spending about $10 million a year on these claims tells you very little, if anything, about the ultimate value. In fact, the only way to determine the real value is to secure a professional review of the claims, preferably before the county issues its RFP. That way tax payers will benefit from real savings and carriers will understand the actual risk of the undertaking.

Of course, the carriers are salivating at the $55 million upfront payout. They are probably so confident in their ability to make the cash grow, they could care less how accurately the county claims are reserved. Given today's market (subprime mortgages, anyone?) a little caution is certainly in order.

We've been down this road many times before: county officials dreaming of million dollar savings; private carriers dreaming of healthy profits. That's a lot of dreaming, which quickly turns into a nightmare if the process is not approached with an appropriate appreciation for the complexity of the task. A word to the wise is (presumably) sufficient.

The RTW Knowledge Base Website is a free service from Australia providing research based information and links to external resources on work disability prevention. We received a notice about this site from Mary Wyatt, an Occupational Physician based in Melbourne Australia. She offered a good overview of the site's features, so we will take the liberty of using her description of the site:

The Return to Work Knowledge Base was developed by ResWorks (a small Australian nonprofit) with the support of the WorkSafe Victoria RTW Fund. The site has been endorsed by the Australasian Faculty of Occupational & Environmental Medicine.

There are two broad ways the site can help:
1. Increasing peoples’ knowledge and understanding of the area through reading the information provided on the site.

2. Influencing others. Many working in this area practice best evidence care. However it can be difficult to influence others with a less enlightened approach. The site is designed for sharing of information with the ability to send links to colleagues or print articles (eg for patients, HR managers, supervisors).

The Iraq and Afghanistan theaters of war represent the largest deployment of civilian soldiers since WWII. Of the 1.5 million troops that have served, approximately one in every four is a National Guard member or a Reservist. While the Uniformed Services Employment and Reemployment Rights Act offers legal job protections, the road back will not be an easy one for many veterans. Many have suffered profound and life-changing physical injuries; many also face less obvious wounds - Iraq and Afghanistan Veterans of America estimate that about one in three Iraq veterans will face a serious psychological injury, such as depression, anxiety, or PTSD:

These psychological injuries exact a severe toll on military families. Rates of marital stress, substance abuse, and suicide have all increased. Twenty percent of married troops in Iraq say they are planning a divorce. Tens of thousands of Iraq and Afghanistan veterans have been treated for drug or alcohol abuse. And the current Army suicide rate is the highest it has been in 26 years. One of the goals of any disability program is to help the injured party to recover and to return to their normal lives, including return to work. This is true whether the injury occurred in the workplace, at home, or on the battlefield. Work is not only vital for economic security, for most of us it is also a core part of our identity, an integral part of our lives. A good return to work program can be restorative on a financial, emotional, and psychological plane. Both in the short term and over the longer term, employers will play a vital role in helping veterans readjust to civilian life. This requires that employers have awareness of the many challenges that veterans face and the willingness to provide the resources to support a successful transition.

Enter the Workplace Warrior Think Tank, a coming together of The Disability Management Employer Coalition, several of the nation's premier insurers, employers, and military and veteran participants with the purpose of helping veterans to ease the transition from the war to the workplace. The group examined challenges and opportunities facing returning employees and identified employer-based resources and strategies. The end product is a useful guide for employers, Workplace Warriors: The Corporate Response to Deployment and Reintegration Highlighting Best Practices in Human Resources and Disability Management (PDF). The guide includes a list of best practice recommendations to help returning vets reintegrate in the workplace. These include such things as celebrating the employee's return to the workplace, recapping changes that occurred while he/she was gone, and training supervisors to be aware of certain red flags that might indicate a problem. The group also emphasizes that the availability of effective EAP services can be critical to successfully helping veterans to face the many psychological problems that are common in the aftermath of war service.

It's great to hear about the efforts of the think tank and their recommendations for employers - please help to distribute the guide and raise the issue because as the report notes, "Repercussions and delayed effects of the war experience will be felt in the workplace for decades to come." Hopefully, this will be the first step in many by leaders in our industry to dedicate resources and attention to this important issue.

For more information and resources:
The Corporate Response to Deployment and Reintegration - this is the full report from Workplace Warriors, available through DMEC.

Wounded Warriors is a blog that collects veterans coverage from the McClatchy Washington Bureau, McClatchy Newspapers, and other sources. It's a good source of news for items that affect returning vets and their families.

Resources for returning veterans and their families - from the Substance Abuse and Mental Health Administration.

Veterans and Military Health - from MedlinePlus

Iraq and Afghanistan Veterans of America - since 2004, the nation's first and largest group dedicated to the Troops and Veterans of the wars in Iraq and Afghanistan, and the civilian supporters of those Troops and Veterans.

Joe Juran died this week, at the ripe age of 103. You may or may not know him by name, but his remarkable contributions to management are visible in worksites around the globe. In 1937, he coined the Pareto Principle, also known as the 80-20 rule, which states that 80% of effects come from 20% of causes. As a theory it achieved a sort of universality that could be applied to almost anything, from 20% of customers buying 80% of products, to 80% of production errors being made by 20% of workers, or 80% of the medical costs deriving from 20% of the patients.

Juran's story, summarized nicely by Claudia Luther in the Los Angeles Times, is so classically American, it seems a cliche. He was born Dec. 24, 1904, in Braila, Romania, the son of a cobbler. When he was 5, his father left for the United States to try to improve the family's financial situation. (Had his father stayed put in Romania, Joe would have perished in the Holocaust, his name - and his contributions - erased from history).

Small, wiry and smart, Joseph went to work when he was 8, driving a team of horses, selling shoes and bookkeeping for a local icehouse, among many other jobs. The first in his family to attend college, Juran earned a bachelor's degree in electrical engineering at the University of Minnesota and a law degree at Loyola University. In 1924, he went to work for Western Electric's Hawthorne plant in Cicero, Ill.

At that time Joe entered the workforce, quality control generally meant inspection: the products were made, inspected and, if they didn't make the grade, rejected. Juran thought this was backward, that quality should be instilled long before the product got made.

In centuries past, "the typical craftsman was his own customer, over and over and over again," Juran told Jane Gaboury in an interview for the Institute of Industrial Engineers.

"That is to say, because the craftsman himself performed every step of the process of, say, barrelmaking, he could see and correct whatever mistakes he made along the way, and avoid them the next time," Juran said.

That ability was lost as manufacturing became compartmentalized. Juran's solution was to re-empower the managers and workers who had been disempowered by the manufacturing process.

The Making of Japan
Joe was part of the team of consultants who revolutionized manufacturing in Japan. Along with W. Edwards Deming, Philip Crosby and Armand Fiegenbaum, Joe helped transform "made in Japan" from an insult to the highest possible compliment.

"The Japanese found they couldn't sell their products because they had a very bad quality reputation," Juran told Industrial Engineer magazine in a 2002 interview. "Of course when you can't sell your product the chief executives are going to move in, and that's what happened." With the help of Juran and the other consultants, senior management embedded the "quality" message in every aspect of the manufacturing process.

Juran brought a uniquely practical perspective to his work. He believed that the human factors in production were paramount, especially the work of managers, and that quality problems should be solved systemically. Juran focused on the fundamental sequence in production management: market research, product design, product development, production and sales. He believed that quality work had to be properly valued by everyone involved - from the lowest-level worker to the CEO.

Joe Juran's business education began behind a set of horses when he was not quite 10 years old. It ended, finally, after nearly a century of paying attention in his idiosyncratic and brilliant way. If the goal of life is to be of use, then Joe Juran lived a very good life indeed.

If you were to guess which jobs for the city of Philadelphia resulted in the most workers comp claims, you'd probably start with police and fire. These are high risk jobs, for sure, but the losses in these departments pale beside those of the Parking Authority. Patrick Kerkstra at Philly.com provides the numbers on the cost per claim:
: Firefighters $1,084
: Police $833
: Parking Authority $1,558

The Authority's risk management director, Allen Dunkelberger, thinks that they have a culture problem. "Sometimes people don't want to work." The agency has spent $5.8 million settling comp claims over the last four years. At this point, Dunkelberger cannot tell how much of that was spent on legitimate claims.

He told of one "frequent flyer" who filed claims for being bitten by a spider. Four times. Try as they might, they could not find any spiders in the building where the employee worked.

To be sure, there are significant risks in work performed by the authority: motor vehicle accidents; long hours on foot; slips and falls on icy sidewalks. To which we might add the open-ended risk of motorist rage, where parking enforcement officers (formerly known as "meter maids") are assaulted after vehicles have been tagged.

Any review of the risks in authority jobs must also take into account the stress: the work of the authority is generally despised by the public, who have to pay the fines for exceeding time on meters and who have to retrieve their towed vehicles from remote parking lots. These are stress jobs with a capital "S."

A Culture of Abuse
Kerkstra's article presents images of a work culture run amok. At the top of the food chain, you have problems in the administrative ranks, with the extensive use of high-priced consultants, high salaries and a fleet of SUVs. This type of conspicuous consumption does not go unnoticed by the rank and file. They want their piece of the action; if it involves extending vacation time through the use of workers comp, so be it.

Then there is the authority's attempt to reduce losses through the use of temporary modified duty. It's not a model program, to say the least:

The program is reviled by rank-and-file authority workers, and little wonder. It typically consists of standing watch outdoors at authority impoundment lots, often during late-night and early-morning hours.

"Basically you sit there in the cold, in the rain, from 8 pm to 4 am doing nothing," said an authority parking-enforcement officer, who asked to remain anonymous out of fear of retribution. "It's a punishment."

Dunkelberger knows that the..alternative duty is loathed, but he makes no apologies.

"There are some people here who've had literally a dozen workers' comp claims," he said. "They're going to be inherently negative about any method we have for trying to deal with them."

Note to Dunkelberger: Alternative duty should never be used as a punishment. A punitive program simply reinforces the negative work culture. The authority needs to learn from Ohio State University, whose exemplary program we blogged just last week. Use alternative duty as an incentive for full recovery. Place injured (even allegedly injured) employees into useful positions where their time is valued and their contributions are real. You cannot punish people into recovering; you have to support and nurture them. Modified duty without respect and compassion is ultimately worse than no modified duty at all.

The high cost of comp is symptomatic of much larger culture issues within the organization. There are many paths to improvement, but punishing injured employees by isolating them at night in parking lots is certainly not one of them. That's a "solution" that will make the problem worse.

The work culture needs improvement, so fix it. Good employees need to be rewarded; the bad eggs need to be terminated. Senior management needs to clean up its act. Once these fundamental changes take place, workers comp will no longer be an issue. Under a positive work culture, modified duty will no longer be viewed as a punishment. It will be what it is supposed to be: a clear, well-lit path for returning valued employees as quickly as possible to their full duty jobs.

We came across an article in the Columbus Dispatch by a reporter with the irresistible name of Encarnacion Pyle. It's about the "novel" use of temporary modified duty at Ohio State University. With its workers' compensation costs nearing $10 million a year, OSU finally discovered the idea that has been circulating among enlightened managers for 20 years or more: "moving ill and injured workers to less-demanding jobs instead of leaving them at home while they recover."

The new modified duty program has already saved OSU $4 million -- more than double what the college had expected. That number doesn't include savings from hiring fewer temporary workers and from projected reductions in premiums for workers' compensation insurance. Lower premiums probably will produce $500,000 in savings this year and reach $1.5 million annually within five years.

"We save money, and our employees feel productive and learn new skills and make new friends," said Tori Weeks, who manages OSU's disability programs.

Since January 2007, Ohio State has reassigned 500 employees -- about 95 percent of the workers with temporary medical or psychological restrictions on what they can do. The other 5 percent are in the hospital or are hurt too badly for even light assignments, such as data entry.

I am tempted to ask OSU: "Where have you been?" Modified duty is not something that takes years to develop in a laboratory. You don't have to wait until costs are wildly out of control to implement the program. But rather than criticize OSU for being so low to respond to the problem, let's give them credit for implementing a first class program.

Healing Words
Our esteemed colleague, Dr. Jennifer Christian, CEO of Webility.md and a guru in occupational health, finds more news in the OSU program than I did. Here is her take on the article:

Two people have sent me this happy story about the financial payback of a stay at work/return to work program from an Ohio newspaper -- and it has some really good phrases that might be helpful to you in marketing these programs to employers. Selling ideas requires skill with language because the words you use are going to create a response in the gut/heart/head of the listener.

1. The first one is in the topic sentence: "moving ill and injured
workers to less-demanding jobs instead of leaving them at home while
they recover." Note this: "moving" instead of "assigning"
or "putting" sounds more benign. "Leaving them at home" is similar
enough to "leaving them alone" that it creates the feeling in the
reader that staying home is like being abandoned.

2. The second one is "We save money, and our employees feel
productive and learn new skills and make new friends." Note this:
this sentence is a list of THREE different areas of benefit to the
worker.

3. The third one is "by avoiding the workers' compensation system,
workers receive their regular pay no matter where they end up during
their reassignment." Note this: the word "avoiding" the work comp
system really emphasizes that this is protecting the working!

OK, I admit it. I am a word nut.

Jennifer has done a nice job of diagnosing the spirit and language of the OSU program that make it special. OSU has infused the return-to-work program with positive energy. OSU might have taken its sweet time to develop the program, but they have brought a subtle dimension of compassion and thoughtfulness that is instructive to those of us who have been developing these programs for decades. Thanks to OSU for doing it the right way - and thanks to Jennifer for recognizing their accomplishment.

The fact that a U. S. Senator has filed a bill on independent contractors is not a major news item. But the senator is Barack Obama, and the bill, S. 2044, is entitled "Independent Contractor Proper Classification Act." Obama has zeroed in on an issue of abiding interest to the Insider - and to all who deal with employment issues on a daily basis. (Search this site for our many postings.)

Obama's bill would amend the Revenue Act of 1978 in three key areas:
1. Requires employers to treat workers misclassified as independent contractors as employees for employment tax purposes;
2. Repeals a ban on Treasury regulations or revenue rulings on employee/independent contractor classification issues; and
3. Eliminates the defense of "industry practice" as a justification for misclassifying workers as independent contractors.

The bill enables workers to petition the Treasury Secretary for clarification of their status. It prohibits employer retaliation against any workers filing these petitions. Language describing the petition process would be added to required workplace postings regarding employment rights. Finally, the bill requires any employer hiring an "independent contractor" to provide the following notice to the individual:

Each employer shall notify any individual who is hired...as an independent contractor...of the Federal tax obligations of an independent contractor, the labor and employment law protections that do not apply to independent contractors, and the right of such independent contractors to seek a status determinations from the IRS.

The FedEx Factor
Obama's bill may well languish in committee. But to the degree it reveals the presidential candidate's thinking, it is significant. I imagine that FedEx is paying close attention: the embattled delivery behemoth is fighting - and losing - a state-by-state defense of its hiring practices. Those ubiquitous "independent contractor" drivers, in their cool FedEx trucks and natty FedEx uniforms, are looking more like employees every passing day. If S. 2044 becomes law, or if Obama's quest for the presidency succeeds, FedEx will probably have to throw in the towel. In the meantime, FedEx is undoubtedly writing a few hefty checks to a candidate whose name rhymes with "pain."

Our colleague Peter Rousmaniere has a fascinating article on PPOs in the current issue of Risk & Insurance magazine, entitled "Has Competition Vanished?" Coventry has become the 900 pound gorilla of workers comp medical services, with 4,700 hospitals and 580,000 doctors. Through the aggressive use of acquisitions and partnerships, Coventry is approaching monopolistic status. The question, of course, is what this means for the carriers and employers using the network for workers comp. Is the Big Kahuna delivering quality services?

Coventry begins with a promise to their payers: they will secure medical services at a discount. According to one source, Coventry slashes more than 30 percent off state fee schedules. While this might be appropriate in states with inflated fee schedules (Connecticut comes to mind), it is definitely counter-productive where fee schedules are already putting the squeeze on providers. When you are dealing with as many providers as Coventry, it is tempting to grow fat off the small margin of a small margin. Unfortunately, slashing fees is no quarantee of quality. In addition, it's often an invitation for providers to rely on quantity to make for skimpy reimbursements: repeated (and unnecessary) visits become "just what the doctor ordered."

With its sophisticated understanding of the market it now dominates, Coventry is hedging its bets. They struck a deal with Aetna to sell and market the latter's innovative program, Aetna Workers Comp Access. Aetna is building a network of providers selected for good clinical outcomes and economy in treatment. They have built 27 networks so far, with more on the way. Aetna is onto something important: instead of relying on discounts, they are looking for providers who understand return-to-work philosophy. Their primary concern is the quality and effectiveness of treatment.

Aetna is moving in the right direction. I hope they offer medical providers financial incentives for speeding the return-to-work process. Rather than demanding discounts, they should offer a reimbursement scheme that rewards results: fee schedule plus, not minus.

It will be intriguing to watch the partnering ritual between humongous Coventry and willowy Aetna. In many respects they are unlikely partners, with diametrically opposed philosophies. In the struggle between cost cutting and treatment quality, something has to give (and it's usually quality). I'd like to think that Coventry will see the value of paying more for something that produces better results. If they do, we may see something truly unique: a big gorilla that really knows how to dance.

Workers comp in the public sector is like an iceberg: what is visible from year to year does not really tell you how big the problem is. With the budget funding cycle running fiscal year to fiscal year, there is no incentive to close out open claims. It's actually cheaper - in the short run - to keep paying on a monthly basis, as opposed to writing one big check to make the claim go away. There is no incentive for a sitting official to settle old claims.

The problem with this approach, of course, is that governments never confront the real cost of comp. The claims "ball" just keeps getting bigger and bigger - a problem, in effect, that is constantly pushed ahead to the next elected official.

Back in 2001 officials with the Department of Administrative Services in Connecticut recognized the problem and tried to do something about it. They made a deal with ACE Financial Solutions, which agreed to assume up to $150 million in potential liability from 660 workers' comp claims. By privatizing the handling of the claims, the state reduced the number of workers' compensation cases it was handling and saved $13.5 million in both 2002 and 2003. The state used a bond to raise the funds for off-loading the claims. (A bond spreads the cost over many years, as opposed to making a big hit on the "current" fiscal year.)

In return for assuming the $150 million liability, ACE was paid $80 million. Sounds like a good deal for Connecticut, doesn't it? Alas, the state failed to follow its own procurement standards and they apparently way overpaid for the privilege of handing off the claims.

Nothing in Reserve
With private insurance, it's pretty easy to determine the value of claims. You simply take, in this case, the 726 claims, add up the reserves and come up with a number. You cannot really do this in the public sector. With a "pay as you go" mentality, there are no meaningful reserves. You can project how much a claim will cost in a given year, but no one really knows how long the payments will go on and what the ultimate cost of the claim will be.

MRM Consulting,a private firm, was hired to determine the ultimate value of the claims: that's where the $150 million figure came from. Unfortunately, MRM hired untrained college students to make the estimates, at the attractive rate of $105 an hour. That's great for the students, but bad for the state. CT Attorney General Richard Blumenthal has determined that the estimated total value of the claims was grossly overstated. Over 60 of the claims included in the estimate had already closed. As a result, the state overpaid ACE and wasted taxpayers' money.

Improprieties
ACE has paid the state $40,000 to settle a lawsuit by the AG's office that alleged the company paid an illegal $50,000 commission to brokerage giant Marsh & McLennan to get the workers' compensation contract. A similar lawsuit by the state against Marsh & McLennan over the deal is pending.

The AG's bottom line assessment is pretty harsh: "Privatization spawned inefficiency, incompetence and increased costs. We must reform conditions - lack of funding and procedures - that led to this bungled deal."

The Right Way
Privatization is really a good idea. When it is done right, it can save state and local municipalities a lot of money. But you need good fundamentals in three key areas: a professional assessment of the value of the claims; an open and competitive procurement process; and strong management oversight from day one. Yes, you can privatize the handling of claims effectively, but the need for good management does not end with the awarding of the contract. Indeed, good management looks for accountability and performance every step of the way. Privatization is not an invitation to wash your hands of a problem, but to partner with a competent vendor to achieve mutual goals.

As the Super Bowl looms over the weekend, our thoughts turn toward the challenge of personnel management. Most of us are periodically involved in hiring decisions: for some, it's a major responsibility, for others, an occasional task. Some applicants come across as a perfect match (and turn into a bust) while others are nervous and unimpressive, yet turn into the perfect employee. For all the psychological profiling, background checks and careful reading of the resume, it's never an exact science.

Case and point: Tom Brady, the quarterback for the New England Patriots. He was chosen by the Patriots in the sixth round of the draft, the 199th player selected. The physical skills he demonstrated at the "combine" were modest, to say the least. Quite a few quarterbacks were chosen ahead of him. Yet he has risen to the pinnacle of his sport, mentioned in the same breath with the legendary Unitas, Montana and Bradshaw.

This raises some fundamental questions about hiring: how do you distinguish among applicants? How do you ferret out the intangibles that separate a good candidate from a great one? How can you eliminate the candidate who sounds good but lacks passion and identify the one who really wants the job?

In an article in the Boston Globe, John Powers dissects the qualities that made Brady special from the moment he showed up in training camp:

"Nobody expects anything of you," Brady says. "You just show up and you're trying to make the team. You're trying to bring your playbook to the meetings and not forget it in the room. When you're a first-round pick, everybody's counting on you to come in and save the franchise." No one had any notion that Brady was special; unlike Eli Manning, his New York Giant counterpart with an impeccable bloodline and the burden of a number one selection in the draft, Brady was able to develop outside of the limelight.

Early on coach Bill Belichick noticed Brady's knack for command and control. "You could really see some of Tom's leadership taking over at that point, even though it was with other rookies. You could see him handle the team, handle the call, getting people lined up and making sure everybody knew what to do." Brady, the consummate team player, made everyone around him better.

Nobody in the locker room worked harder or studied more diligently, then or now, than Brady. He was driven, he later acknowledged, by the insecurity of the perennial backup, the kid who couldn't play on a winless high school freshman team, who began Michigan as a seventh-stringer. "You don't forget where you came from," Brady once said. "The scars that you have from those days are deep scars."

Good Managers are Hard to Find
As we watch the game this Sunday, it will be fascinating to see the two outstanding quarterbacks carry out their management roles. They represent the full hiring spectrum: the cannot miss, high profile number one versus the after-thought, the long-shot (who is no longer either). Regardless of the outcome, athletic scouts and personnel managers of businesses across the world will share a common thought: how do you find the real deals in leadership? How do you master the art of hiring?

New Hampshire has come up with their own 12 step program to determine whether contractors are truly independent or just employees. Meanwhile, the IRS has come down hard on FedEx, hitting the company with a $319 million fine for misclassifying drivers as independent contractors.

Let's start in New Hampshire. The state has come up with 12 criteria for determining independence, all of which must be met or the system defaults toward an employer-employee relationship. The criteria include the usual focus on control of the work, but there are a few new wrinkles:

A. The person possesses or has applied for a federal employer identification number of social security number or in the alternative, has agreed in writing to carry out the responsibilities imposed on employers under this chapter.

F. The person has continuing or recurring business liabilities or obligations.
G. The success or failure of the person's business depends on the relationship of business receipts to expenditures.

Like Massachusetts, New Hampshire is looking for objective evidence that the independent contractor runs a legitimate business. Both states accept the presence of employees with the IC as compelling evidence - but that will not help the typical sole proprietor without employees. Whereas Massachusetts has stipulated that a subcontractor in the same trade as the contractor is by definition an employee, New Hampshire does not focus at all on the sub's specific trade.

Having issued all this clarification, the states now sit back and let someone else figure out the details. That someone else, alas, is the poor insurance auditor, who has been given the unenviable task of determining the status of each and every subcontractor. You don't suppose that this detective work is contemplated in the current fee structure, do you?

In MA, auditors have some latitude. If the independent contractor/sole proprietor does not have any employees, they are likely to be added to the general contractor's payroll for workers comp. In New Hampshire, auditors are held to a higher standard. They must inspect records and operations of every GC and sub to determine whether the subcontractor meets all 12 criteria for independence. They do this at their own risk: If they make a wrong determination, they are in violation of state law.

Closing in on FedEx
The IRS in December determined that FedEx drivers were misclassified as independent contractors. They slammed the company with a $319 million fine and penalties. Since the fine only covers 2002, FedEx could face additional penalties totaling over a billion dollars after the IRS completes its investigation. FedEx has already lost the argument in a number of states, including California. Now they've lost at the federal level as well. They are going to sit down with the IRS this spring to hash out the implications of their latest losing argument. (For our numerous postings on this important case, just enter "FedEx" in the search box.)

FedEx managers are apparently hanging their hopes on a 1995 agreement between FedEx Ground's predecessor company (Roadway Package System) and the IRS, which reads in part: "The Service agrees that it will not reclassify the RPS owner-operators as employees, except upon a determination after audit, that RPS has exercised control over the RPS Owner-Operators in a manner that conflicts with the 1994 Operating Agreement, Letter of Assurance and Exhibits." Unfortunately for FedEx, there is a growing body of evidence that the company exercises rigid control over every aspect of the relationship with their "independent" drivers, from uniforms and length of hair to schedule of pick up and delivery.

Much has been made of the liability facing FedEx in the area of employee benefits, but little attention has been paid to workers comp. We can safely assume that hundreds of current and former drivers have been injured on the job. When they come up with a total cost for violating fair labor standards, the comp costs will have to be added in. This long-profitable enterprise appears on the verge of accepting retroactive responsibility for as many as 17,000 employees. That's a lot of drivers and a truckload of liability.

If it isn't clear by now, the Insider believes in a sense of humor. A few laughs help us get through the working day. So it is with some ambivalence that we tackle the issue of the Tribune Newspaper's new Employee Handbook. Written by a non-lawyer, the handbook attempts to present the myriad issues contained in a handbook in a light, rather flippant tone. It's a fun read. But alas, it's like "shooting the bird" at a policeman: it might be protected as "free speech," but it's still not a very good idea.

Sexual Harassment
The Handbook opens the section on harassment with a warning to people who might be sensitive to the actions of others:

4.1 Working at Tribune means accepting a creative, quirky, intelligent, odd, humorous, diverse, opinionated and sometimes annoying atmosphere.
4.2 Working at Tribune means accepting that sometimes you might hear a word that you, personnally, might not use. You might experience an attitude that you don't share. You might hear a joke that might not consider funny. That is because a loose, fun, non-linear atmosphere is important to the creative process.
4.3 This should be understood, should not be a surprise and is not considered harassment.

Any joke? In any context? The Tribune is basically telling employees to chill out. The sublimely tasteless Borat would love it. This "values statement" is far too general. It could make anyone squirm, not just a labor attorney.

Drug Policy
Here again, you will find language that is unprecedented for an employee handbook:

7.1 If you use or abuse alcohol or drugs and fail to perform the duties required by your job acceptably, you are likely to be terminated. ..Coming to work drunk is bad judgment.
7.2 If you do not use or abuse alcohol or drugs and fail to perform the duties required by your job acceptably, you are likely to be terminated.

The first section seems to imply that being stoned at work is ok, as long as you can still do your job. Yikes! The second section has nothing to do with drug abuse and certainly does not belong in this section of the handbook. It seems to imply that you'd be better off stoned at work and doing your job well - as opposed to sober and performing badly. That certainly reflects the Hollywood version of the newspaper business, but it does not belong in a handbook.

Disability and Workers Comp
The disability statement is pretty straight forward, although it places the burden squarely on the employee:

3.1 Tribune will make reasonable accommodations if you have a disability and are otherwise qualified to perform your job.
3.2 If you need an accommodation, tell your supervisor.

Here is the complete section on workers comp leave:

17.1 State law dictates how Workers' Compensation is handled.
17.2 Please let your supervisor know immediately if you're hurt on the job.
17.3 If this injury is also considered to be a serious health condition under FMLA, Workers' Compensation Leave will be counted as, and run at the same time as FML.

This a bit thin, to say the least. The handbook should emphasize the importance of working safely, reporting all hazards and management's commitment to speed return to work through the use of temporary modified duty.

Employee Rights: No Laughing Matter
Employee Handbooks are generally regarded as quasi-legal contracts, primarily designed to outline the rights and benefits of employment and limit the employer's exposure to lawsuits. Handbooks are rarely read, and when they are, it's not for the entertainment value. The Tribune's attempt to have their handbook mirror the creativity valued in the workplace is well intentioned, but incredibly risky. It won't take long for labor attorneys to pounce and when they do, the Tribune will have to back-pedal furiously to contain the damage. This particular handbook may get a "high five" from Borat, but it's no way to define the employment relationship.

For 17 years, Tommy Holly worked for Clairson Industries, a plastic injection molding company, as a mold polisher. At age 20, Tommy was in a motorcycle accident which left him a paraplegic. Despite the disability, Tommy established himself as an excellent employee. His job reviews were consistently positive. He was neat, meticulous and well organized. He had one problem: because he was wheelchair bound, he was often late for work. Sometimes the corridors inside the plant were blocked by pallets; sometimes the rain slowed his exit from his vehicle; and on rare occasions, bowel problems sent him back to his home for a change of clothes. Usually his lateness was no more than a minute or two and had no impact at all on his evaluations.

Long into his tenure, the company hired a new personnel director with the intriguing name of Cloteen Kilkelly (scroll down this site for her photo). Cloteen eventually rose to company president (it's not just cream that rises, as you will soon see). Cloteen implemented a new "no fault" tardiness procedure. Whenever employees clocked in late for the shift - with late defined as one second or more! - they were charged with "half an occurrence." After 9 occurrences, the employee was terminated. By "no fault" Clo (let's get informal) meant that no excuses were allowed. Late is late. Needless to add, arriving promptly for the shift was defined as an "essential" component of every job.

Even though Tommy had a problem clocking in on time, he made up his admittedly frequent tardiness without fail on the same day it took place. Tommy would skip his break, work through lunch and work past the end of the shift, as needed. In addition, his job was not on the assembly line, where his tardiness might impact the ability of others to perform their work. Promptness to the nearest second might possibly have been an "essential function" for assembly line workers, but it was marginal for Tommy.

You can surely see where this is going. Tommy hit the 18 incident mark, tipping the scale at 9 occurrences. With no excuses tolerated, he was terminated. For the record, the cumulative late time was one hour and 13 minutes - all made up, as we noted, on the same day.

A Plaque for Clo?
When Tommy filed suit under the ADA, the case was dismissed under summary judgment by the Florida's central district court, which found that he was unable to perform an essential function of the job (getting to work at the precise start of the shift). The court accepted Clairson's contention that such promptness was an "essential function" of the job. Shame on the court for jumping to conclusions.

The appeals court over-ruled the summary judgment and remanded the case for further consideration. Tommy is going to win this case. It's a no brainer. He is certainly disabled. He was able to perform the job with a no-cost accommodation that required very little from the employer. The accommodation would have no impact on the company's ability to perform the essential work in a timely manner.

The most puzzling part of this sad tale is the obtuseness of the employer. They had a highly skilled and motivated worker. Tommy had proven over the course of 17 years that he could perform the job extremely well. Good workers like Tommy are hard to find. Instead of recognizing his unique circumstances and accommodating his obvious disability, the company stood behind a rigid, ill-conceived personnel policy - one that is punitive for every worker, not just someone with a disability. Clairson's tardiness policy - and their unwillingness to accommodate Tommy Holly - merit a "worst practice" plaque on the Insider's Management Wall of Shame.

Hispanic workers suffer fatalities and serious injuries at significantly higher rates than other workers and this is due in large part to language barriers. Previously, we've discussed the importance of keeping the multicultural workforce safe by ensuring that your safety programs address language barriers. We've also discussed how qualified interpreters can save lives.

Recently, some of our readers who run a Spanish translation firm shared an article they authored, which discusses cultural misunderstandings that can jeopardize safety. We thought it was valuable enough to pass along to our blog readers and we secured their permission to feature it here:

Safety for Spanish Speakers: Beyond the Language Barrier
by Ferney Colorado and Melissa Burkhart, Futuro Sólido USA

When providing safety training for Spanish speakers, the most obvious challenge that employers face is the language barrier. However, translation is the easy part. Bridging the cultural barrier - addressing what Spanish speakers actually believe about safety in this country - is much more difficult. And, because these workers will rarely voice their misconceptions, they are rarely addressed. The result is that employers and workers compensation providers can often go to a great deal of trouble to provide quality safety training in Spanish, only to have their workers go back to the job site and do exactly what they had been doing previously.

This can be a source of great frustration, not to mention loss. The reason for it is that many Spanish speakers enter a training session holding very firm beliefs that are contrary to what they are about to be taught. Rather than instructing people who are simply uninformed on the subject, trainers have to “convert” people who believe very staunchly that they are much more valuable as workers or employees when they do not comply with federal regulations.

Back in February of 2005 we blogged the case of Margaret Morse, a member of the Legion of Mary, a volunteer group affiliated with Christ King church in Wisconsin. In the course of delivering a statue of the Virgin Mary to a parishioner, she ran a red light and crashed into a vehicle driven by Hjalmar Heikkinen, an 82 year old barber. Heikkinen was paralyzed. A jury awarded him $17 million - and tapped the liability policy of the church to pay it. The case reached the Wisconsin Supreme Court, where a split ruling (3 to 3) sustained the original award.

There apparently was language in the church's insurance policy that included coverage for volunteers. While the Legion of Mary operated with considerable independence from the church itself, it was founded in 1968 with the support of a parish priest. It's not far fetched to say that the specific action involved here - delivery of the statue - was related to the core function of the church. But then, any act of kindness might fall under that very wide umbrella!

Liability for Volunteers
Beyond the unfortunate circumstances of this case, anyone using volunteers needs to be aware of potential liabilities. In our increasingly litigious society, prudent managers must take the extra step to protect their companies/organizations. Here are a few very basic steps in managing volunteers:
- If they're going to drive at any time, check the driving records. If the record is spotty or poor, do not allow them to drive while carrying out volunteer duties.
- If they are near children or vulnerable adults, or entering private homes, run a criminal background check
- Require a resume. It's important to know who they are and where they come from.
- Train, orient, supervise and document. The services might be free, but proper management requires the commitment of adequate resources.
- If they are not working out, terminate the relationship. As in regular hiring, it's important to take action before serious problems emerge.

It's not at all clear that any actions would have insulated the church from this unexpected liability. The court's ruling has stretched the definition of volunteer and liability to the limits. Nonetheless, when it comes to volunteers in general, it is indeed time to look the gift horse in the mouth. The notion that services do not "cost" anything is attractive, especially in the non-profit world. But in a culture that puts a price on everything, everything has a cost. The cost of volunteers lies in the essential screening, training and supervision. Anything less opens the door to very big liabilities indeed.

As we approach the fourth anniversary of the Workers Comp Insider (September 17, 2003), it's a good time to step back and ask a fundamental question: Why are we doing this? Four years ago Tom, Julie and I observed that there were a lot of bloggers tackling a lot of issues, but they mostly involved isolated individuals pursuing a particular passion. Businesses in general seemed disinterested and our particular focus, the insurance industry, was totally missing in action from the blogsphere.

As a company specializing in designing and fine tuning loss control and risk management programs for employers and insurers, Lynch Ryan saw an opportunity. With its infinite, instantaneous reach, the web offered a virtual forum for exploring the many ramifications of workers comp. As consultants, we wanted to create a meaningful and objective means of communicating issues related to the key comp constituencies:
- helping employers minimize the cost of risk, while still managing their injured employees
- supporting insurance companies in risk selection and in the education of policy holders
- guiding injured employees back to gainful employment
- facilitating medical provider interaction with injured employees, their employers and insurers (and helping them survive increasingly stingy payment schemes)
- guiding states through the complex task of legislative reform, where they must balance the needs of injured employees, employers, insurers and medical providers, without allowing the cost of insurance to drive business out of state
- alerting workers' comp professionals and risk managers to issues of compelling interest which they might not otherwise encounter

Fertile Ground
Over our four years as bloggers, we have examined managed care, coverage for independent contractors, the practices (good, bad and indifferent) of insurance carriers, the impact of designer drugs on the cost of insurance. We have discussed fraud in Ohio, legislative reform in dozens of states, the use (and abuse) of temporary modified duty, myriad safety issues - cell phone use while driving, heat in the summer, cold in the winter. We have highlighted the aging American workforce and the implications for workers comp in the years ahead. We have explored the profound implications for the comp system of the millions of workers lacking health insurance, along with the nation's dilemma dealing with 12 million undocumented workers. And that's just a hint of the fertile ground we have plowed, up to five times a week, for over 200 weeks. Dull it isn't!

We also have created and refined a website that makes accessing web resources as easy as possible, linking our readers to business, risk management and health-related resources. In addition, you can use our robust search engine to explore nearly 800 blog entries by content area. All modesty aside, we think that the Insider has become the best workers comp reference library on the net.

How are We Doing?
We think it's working pretty well. We have as many as 20,000 hits a month, with several thousands of loyal readers and hundreds of casual visitors seeking inforation on a specific issue. Readership has increased steadily from month to month. We are approaching our goal of becoming the "go to" site for workers comp issues.

And, although Google and others call several times a month, we don't allow advertising, except for a small banner that links to LynchRyan, our parent company.

All of which leads to a very fundamental question for any business: is it worth the effort? Is this free service in any way profitable? That's not an easy question to answer - and in some respects, it's the wrong question. But in the interests of full disclosure and the candor to which we are committed, yes, we have established long term and meaningful relationships with a number of insurance companies and employers who found us through the blog. The considerable effort easily pays for itself.

But even if the blog were a "loss leader" we would probably continue the effort. We are filling a definite need on the web, providing a balanced and objective view of risk management and risk transfer issues, with a special focus on workers comp. Our goal is to provide our readers with a reliable, well written and entertaining news source that reflects our abiding passion and our many years in the field. And whatever you think of the Insider, you'll have to agree on one thing: the price is right.

Your comments are always welcome.

What better way to herald the end of summer by returning to the issue that just won't go away: workers comp coverage for sole proprietors and independent contractors. Massachusetts has just taken an extraordinary step that provides a strong incentive for sole proprietors to "opt in" to the comp system.

Under the old rules, any sole proprietor seeking comp coverage was assumed to make the state average weekly wage (SAWW). In MA, that is a whopping $52,000 per year. While MA enjoys some of the lowest rates for comp coverage in the nation, that high wage base drives up the cost of comp:
- for a $5.00 rate, the annual premium would be $2,600
- for a $10.00 rate, the annual premium would be $5,200

Those can be tough numbers for a lone craftsman trying to operate his/her own business. Especially when you consider that the weighted average median wage of all sole proprietors in the state is only $35,843. The result, of course, was that most sole proprietors gave up the notion of participating in the comp system. The coverage was way too expensive. They opted out in droves.

Recognizing the powerful disincentives to select coverage, the MA Workers Compensation Rating and Inspection Bureau decided to make the coverage more affordable. They have dropped the wage base by 30 per cent, to 70 per cent of the state AWW, effective August 1, 2007. Now, when a sole proprietor chooses to be covered, the premium is based upon an annual wage of just $36,400. This means that the cost of coverage is suddenly pretty reasonable:
- for a $5.00 rate, the comp coverage costs $1,820
- for a $10.00 rate, the coverage costs $3,640

A Comp Bargain
For marginal sole proprietors, with annual billings below the $36,400 level, there is still a strong incentive to opt out of the system. However, for the many skilled tradesmen who routinely bill well above the $36,400 level, workers comp has suddenly become a bargain. A skilled mason or carpenter might bill upwards of $75,000 or more per year. Nonetheless, the cost of comp coverage will be based upon a much lower wage level. In effect, well established sole proprietors now enjoy comp rates that might be 50 per cent or more lower than the rate for competitors with employees working in the same trade.

Which leads to one more very important consideration for general contractors in MA: in the construction field, sole proprietors are a common sight. We have blogged about the MA crack down to push coverage deep into the subcontractor and sub-subcontractor levels. (See just a couple of our prior blogs here & here.) At premium audit, if a GC shows a certificate of insurance from a sole proprietor sub who has "opted out" of coverage, the cost of that coverage is added to the GC's payroll for premium calculation. Now GCs have a very compelling argument to encourage their sole proprietor contractors to opt in for coverage: "Don't wait for me to charge back the cost of comp. Take advantage of the suppressed rates and choose coverage on your own. You benefit from a lower rate and you have the advantage of knowing the cost of coverage up front." For sole proprietors who routinely have billings above the $36,400 level, this is truly a no brainer.

It will be interesting to see if other states follow the MA lead in this important policy area. Surrounding states use a very high wage standard for calculating sole proprietor premiums: in Connecticut, $56,200. In New Hampshire, $58,100. When you factor in the very high rates for comp in these states, the cost of insurance for sole proprietors is truly prohibitive. That's no welcome mat. It's a kick in the butt toward the door.

Workers comp coverage for independent contractors is the issue that just won't go away. A while back we blogged reform efforts in Delaware, which almost became the first state to require comp coverage for sole proprietors. Almost, but not quite.

Delaware has a long-established (and well-deserved) reputation for being a comp disaster zone. That may no longer be the case, as they have implemented far-reaching reforms that should bring down costs substantially. They decided, however, not to become the pilot state for requiring coverage on all sole proprietors. There was a tremendous push-back from independent contractors, who argued (not without reason), that the cost of coverage would be prohibitive. It would put many of them out of business.

So Delaware backed down. The revised statute [s. 2311(a)(4)] reads as follows:

All independent contractors governed by this subsection shall be covered under this chapter. Independent contractors shall have an option to purchase coverage to satisfy this requirement, or alternatively shall be insured by the general contractor, subcontractor or other contracting entity for which they perform work or provide services...Partners and sole proprietors, when working in an independent contractors role, shall be subject to the requirements of this subsection...

Delaware, in effect, has chosen to implement the Massachusetts's solution: allow sole proprietors to choose coverage, but don't force it. However, when sole proprietors exercise their opt-out option, the burden of their coverage falls unambiguously on the general contractor. At premium audit, Delaware GCs who cannot produce a certificate of insurance with proof of coverage for their sole proprietor subs will be billed for the payroll portion of the subcontract. My guess is that many will try to pass this cost back down to the sole proprietors, who might well end up paying for the coverage they said they cannot afford.

New Jersey
John Geaney, Esq., our go-to guy in New Jersey, summarizes a new law that comes down hard on employers who deliberately misclassify employees. Bill no. 4009 makes it a criminal offense to knowingly fail to properly classify an employee. In other words, general contractors are presumed to be the employer of everyone on the job site, unless they can prove otherwise. Proof would likely require a certificate of insurance and a contract for the work. In addition, New Jersey will probably follow something similar to the three step test currently in use in MA:
1. The sub must run an independent business and be in complete control of the work at all times
2. The sub must work for others
3. The sub must be in a trade distinct from the trade(s) performed by employees of the GC.

Crack Down
These recent actions in New Jersey and Delaware are part of a strong national trend. States are determined to crack down on the wide-spread practice of avoiding the payment of benefits in the construction industry: not just workers comp benefits, but social security and unemployment insurance as well. Historically, when independent contractors have been injured on the job, state funds have provided coverage. Now it appears that general contractors are going to be held accountable: when sole proprietors opt out, GCs - willingly or not - will have to pick up the tab.

Back in June we blogged the interesting case of Tony Boyle, who was awarded over $600,000 for wrongful termination after his employer, Weyerhauser, put him in a modified duty job that aggravated his work-related condition. I half expected to hear from the employer, defending their modified duty program. Instead, I am on notice from Mr. Boyle's attorney that we have defamed his client.

The point of contention was my conjecture (and it was a conjecture), that Boyle had been prescribed narcotic pain medication for his serious lower back injury (two herniated discs). After all, such drugs are the most frequently prescribed medications in the workers comp system (see prior blog here.) Attorney Richard Yaskin asserts that there is no evidence for the claim that Boyle "failed a company drug test." He further asserts that Boyle was taking anti-inflammatories and muscle relaxers.

As a blogger, I rely on a variety of sources: in this case, two newspaper articles. Renee Winkler wrote in the Courier-Post that "when (Boyle) was terminated, company officials said he was violating the substance abuse policy." I (mis)interpreted that to mean he had failed a drug test. In the other source, Pete McCarthy wrote in the Gloucester County Times that Boyle "was prescribed two painkillers by the company's workers' compensation doctor, and told to work light duty...Within two months, Boyle was fired. He had been accused of violating company policy by taking prescription medication while operating machinery."

So here's where my reading of the articles led me astray: both articles refer to violation of the company substance abuse policy. McCarthy referred to painkillers (which frequently involve narcotics). I was wrong to assume that the violation involved prescribed narcotics and also mistakenly assumed that the violation involved a failed drug test. Indeed, the situation is even more bizarre than I originally had thought: Boyle was fired for operating equipment while taking anti-inflammatories and muscle relaxers, both necessitated by his work-related injury.

So in the interest of keeping the Insider outside of the courtroom, we publish the following retraction:

LynchRyan and reporter Jon Coppelman regret the erroneous statements concerning Mr. Tony Boyle of Washington, Twp., NJ in the Workers' Comp Insider welog of June 26, 2007. The posting inaccurately states that Mr. Boyle was taking prescribed "narcotics" and that: "...he failed a company drug test."

Indeed, Mr. Boyle's prescribed medications, Soma (Carisoprodol) and Celebrex, are not "narcotics." Further, Mr. Boyle never failed a drug test in connection with his Weyerhauser employment.

LynchRyan regrets any misunderstanding caused by publication of the original Weblog.

Our sympathies in this situation clearly remain with Mr. Boyle. We had no intention of defaming him. In fact, given the severity of his injury, a short-term prescription for a narcotic medication would have been medically appropriate. Good for him that he worked through the pain and the injury with non-narcotics, and good for him that he is back to productive employment. And thanks to Attorney Yaskin for helping to clarify the situation.

On September 10, 2001, just one day before this country's sense of security collapsed along with the World Trade Center towers, a smaller world collapsed around Anthony Boyle, an employee of the Weyerhauser Company in New Jersey. A 600 pound bale of waxy cardboard material fell from a conveyer belt. Boyle used his back to prop it up. He suffered two herniated discs in the accident.

Then Weyerhauser tried to do the right thing. Or did they? They sent Boyle to their doctor, who prescribed some strong medication (presumably narcotics) and released him for light duty. What happened next is a little unclear, as the two available press reports (available here and here) are not consistent. It appears that the light duty work involved operating a sweeper, which had no power steering and stressed Boyle's arms and shoulders, thus aggravating the injury to his lower back. In addition, in order to operate equipment, Boyle had to forego use of the narcotics prescribed by the company doctor. He tried to rely on aspirin to manage the excrutiating pain.

In too much pain to comfortably operate the sweeper, I'm guessing that from time to time Boyle continued to take the prescribed narcotics. At some point, he failed a company drug test. He was terminated for violating substance abuse policy.

Boyle sued for wrongful termination. A Camden jury recently awarded him $606,000, including $86,000 for lost wages, $70,000 for emotional distress and $450,000 in punitive damages. Clearly, the jury did not buy Weyerhauser's approach to modified duty: knowing that Boyle was in a lot of pain, they put him in a position that aggravated the injury and at the same time prevented him from taking prescribed medication for that pain. Their mistake was in requiring him to operate equipment in his modified duty position. A more reasonable accommodation would have involved Boyle doing lighter tasks that did not require the operation of equipment. If such a position were not available, the company should have allowed Boyle to collect indemnity until his back improved to the point where narcotics were no longer needed.

A Word to the Wealthy
Boyle is probably satisfied with the work of his attorney, Daniel Zonies. The attorney made a good case and secured a pretty substantial payment. But a word of caution to Mr. Boyle. If he googles his attorney's name, he will find Mr. Zonies in some p