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September 17, 2012

 

Today, we host a guest blog written by our good friend and colleague, Gary Anderberg, PhD (Stanford). In addition to being one of the smartest people I have ever met (and I've met a lot of smart people), Gary is an exceptionally interesting and imaginative person. Currently Broadspire's Practice Leader for Analytics and Outcomes in its Absence and Care Management Division, Gary is quite the expert regarding predictive modeling.

Gary's been a college professor, a management consultant, VP of a California TPA and Founder of another California TPA. He helped design Zenith National's Single-Point Program and Developed Prudential's Workers Comp Managed Care Program, as well as its Integrated Disability Management Product.

Gary went to college to become an astrophysicist, but along the way found himself with a passion for ancient languages and cultures. As he puts it, "Some of my best friends have been dead for a few thousand years." If that's not enough, he also writes mystery novels, short stories and screenplays, and is a member of the Mystery Writers of America. In his spare time (you may be forgiven for asking, "He has spare time?"), Gary can sometimes be seen driving his space-age motorcycle through the back roads of Pennsylvania, wearing enough protective gear to make him look like an intergalactic warrior. - Tom Lynch

Predictive Modeling in Workers' Compensation

Predictive modeling (PM) appears to be the buzzword du jour in workers' compensation. There are real reasons why PM can be important in managing workers' comp claims, so let's stop and take a look at the substance behind the buzz.

PM is a process. Put simply, we look at tens of thousands of claims and try to discern patterns that link inputs - claimant demographics, the nature of an injury, the jurisdiction and many other factors - to claim outcomes. Modelers use many related techniques - Bayesian scoring, various types of regression analysis and neural networks are the most common - but the aim is always to link early information about a claim with the most probable outcome.

Obviously, if the probable outcome is negative - a high reserve, a prolonged period of TTD or the like - modeling can prompt various interventions designed to address and ameliorate that negative outcome. In effect, we are predicting the future in order to change the future. Spotting the potential $250,000 claim and turning it into an actual $60,000 claim is how PM pays for itself.

There are two approaches to PM: (a) mining existing claims data and (b) using claims data plus collateral information that models claim factors not well represented in a standard claim file. Ordinary data mining uses the information captured as data points during the claim process - claimant demographics, ICD-9 codes, NCCI codes, location, etc. But the standard claim file is data-poor. Much of the most revealing information about claimant attitude, co-morbid conditions, workplace conflicts and the like is captured - if it is captured at all - as narrative. Text data mining is a complex and less-than-precise science at this point, thus conventional data mining is limited in what it can provide for PM.

The best PM applications based on conventional data mining can provide a useful red light, yellow light, green light classification for new claims, identifying those claims with obvious problems and those that are obviously clean, leaving a group of ambiguous claims in the middle. This is a good start, but two important refinements that ratchet up the usefulness of PM materially are becoming available.

Sociologists, psychologists, industrial hygienists and others have done a tremendous amount of research in the last 30 years or so into the many factors that influence claims outcomes and delay normal RTW. Many of these factors are not captured in the standard claims process, but they can be captured through the use of an enhanced interview protocol and they can be mathematically modeled as part of a PM application.

Systems are already in place that ask value-neutral but predictive questions during the initial three point contact interviews. Combining the new information from the added questions with the models already developed through claim data mining produces a more granular PM output, which can identify particular claim issues for possible intervention.

For example, development is now underway to include a likelihood of litigation component in an existing PM system by adding a few interview questions and combining those responses with information already captured. Predicting the probability of litigation has a clear value to the adjuster and others in the claim process. Can potential litigation be avoided by changes in how the claim is managed? Do other factors in the claim make running the risk of litigation a worthwhile gamble? Better predictions make for more effective claim management.

Most of the PM systems in development or online are front-end loaded and look at the initial claim data set. But some trials are already underway to perform continuous modeling to look for dangers that may arise as the claim develops. The initial data set for a new claim can predict the most probable glide path for that claim, and in most cases the actual development of the claim will approximate that glide path. In some cases, however, the development can go awry. A secondary infection sets in or the claimant unexpectedly becomes severely depressed or lawyers up. This new, ongoing PM process monitors each claim against its predicted glide path and warns whenever a claim seems to be in danger of becoming an outlier - or a reinsurance event.

But wait a minute: isn't an alert adjuster supposed to catch all of these factors from the initial interviews on? The use of PM is predicated on the idea that the best adjuster can have a bad day or miss a clue in an interview. A claim may have to be transferred to a new adjuster due to vacation, illness or retirement. Claim adjusters may well have invented the concept of multitasking and we all know that oversights can happen in a high-pressure environment.

A good PM application is the backstop, and it can be set up to alert not just the adjuster, but also the supervisor, the unit manager and the client's claim analyst all at the same time. This brings new power and precision to the whole claim process, but only if the PM application becomes an integral part of how clams are handled and is not relegated to after-the-fact reporting. Several presentations at a recent Predictive Analytics World Conference in San Francisco made it clear that, in a wide range of business models, PM is still a peripheral function which has not yet been integrated into core processes.

To make the best use of PM in managing workers' comp claims, two conditions have to be met: (a) adjusters have to understand that PM does not replace them or dumb down their jobs and (b) claim managers have to trust the insights that PM offers. When the PM system tells you that this little puppy dog claim has a very high potential to morph into a snarling Cujo based on how the claimant answered a handful of non-standard questions . . . believe it. Taking a wait and see approach defeats the whole purpose of PM, which is to get ahead of events, not trail along after them in futile desperation.

Remember, the purpose of PM is to avert unfortunate possible outcomes. This is one job at which you can never be too effective. Progress catches up with all of us - even in workers' comp (one of the last major insurance lines to go paperless, for example). It is unlikely that, in another five years, any claim process without a robust PM component can remain competitive. If you can't predict how claims will develop, you will be throwing money away.

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September 20, 2011

 

The following is a guest post by Frank Pennachio of The WorkComp Advisory Group

In the September 7th edition of the Workers' Comp Insider, I noticed a reference and link to a tool known as the OSHA $afety Pays Program. I find value with the process of determining how many dollars of revenue is required to pay for an injury, but have serious reservations with the tool's calculation of indirect costs. Calculating the indirect costs of an injury is far more complex than the OSHA tool would indicate, and reliance on such a tool may erode credibility with an employer.

For example, let's look at two employees who work for a Franchised Auto Dealer that experience the exact same injury, medical costs, and lost time. One of the employees is a top notch auto technician who frequently outperforms the manufacturers allotted time for warranty work, thus generating significant profits for the dealership. This employee is difficult to replace and each day of lost time is costing the business substantial profits.

The other injured employee is an auto detailer who is much easier to replace and train. Profits are not affected at the same level for the detailer as they are with the loss of a highly productive technician.

So, we have the same injury, medical costs, and lost time, but dramatic differences with indirect costs to the employer. According to the OSHA tool, both would have the same indirect costs.

The best article I have read on this topic, "Accident Costs: Rethinking ratios of indirect to direct costs," was written by Fred A. Manuele and published in the January, 2011 edition of ASSE's, Professional Safety Magazine. As Manuele states, "The literature on direct and indirect costs does not present a uniformly accepted computation method. Differences in the various systems are substantial. More importantly, no published ratios are currently valid because the increase in direct costs (indemnity and medical costs resulting from an injury or illness) has exceeded the increase in indirect costs substantially in the past 15 years."

In addition, Manuele makes a strong case to support his position on the OSHA $afety Pays program: "Data on indirect costs produced using this program is misleading.

We want employers to understand and consider indirect costs. However, if employers suspects the formula to calculate indirect costs lacks credibility, they will likely question and remain skeptical on other more credible assertions and issues.

Indirect costs are real. Reducing them is a critical component of effective risk management and cost control. However, the issue is complex and deserves a conversation that is not reduced to a simple multiplier. Let's embrace the complexity and lead employers through a conversation that will enlighten and inspire.

Frank Pennachio is co-founder of The WorkComp Advisory Group, a sales training and consulting organization that works with agencies to leverage technical knowledge and sales strategy into successful new business development.

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June 21, 2011

 

We posted earlier this week on draft guidelines for pain management issued by the Massachusetts Department of Industrial Accidents. While we found much to like in the draft, our colleague Peter Rousmaniere, proprietor of his own blog on immigration issues, finds that the guidelines leave much to be desired. He views them as somewhat of a mincing mini-step in an area where rather big strides are needed.

Here are his thoughts on ways to make pain guidelines more effective:

Workers Comp Insider alerted us on Monday to the publication of draft chronic pain guidelines by Massachusetts DIA.

Medical treatment guidelines are helpful where clinicians, payers and courts desire an authoritative third party to say if and when a treatment is appropriate. But the value of guidelines really strikes home not only in the details but in how they pick their topics. Only so much can be covered proficiently. Guidelines need to focus on pressing matters of protecting lives and husbanding scarce resources. Then even the non-clinician in workers comp can say, "I may not understand all the medical details, but I know that these guidelines speak to my top concerns, and I will respect them and promote them accordingly."

Perhaps because workers comp chronic pain treatment guidelines tend to avoid some of the most pressing issues for claims payers, they are not as useful as they could be. Perhaps also because claims payers feel free to ignore them, which they regularly do, we don't see a visible, sustained effort within the claims payer community to improve the management of chronic pain cases.

Something for the Pain
One thing the guidelines have done laudably is to alert their readers to the very important patient safety issue when opioids are prescribed. This is very important: claims payers usually don't require periodic drug tests for injured workers who have been prescribed opiates and they rarely are trained to respond when a test shows that the patient's urine has no trace of the prescribed drug.

On balance, the Massachusetts guidelines, like other chronic pain guidelines used in the workers compensation community, are rather narrowly focused to the point where their usefulness is compromised. These various guidelines focus on non-surgical treatment of patients after they reach the stage at which they can be called chronic pain cases, and before they become extended, multi-year dependents on pain medication.The proposed guidelines devote just a few summary paragraphs to a challenge of the highest importance to claims payers: knowing the specific steps physicians can take to help their extended treatment patients improve their pain experience and function.

Predicting Pain
None of the current guidelines invest any time in describing the quite rich and fertile topic of chronic pain prevention among newly injured workers. Prediction and prevention are areas in which only a few occupational medicine doctors and nurses have achieved proficiency. Claims payers should focus on the need to identify chronic pain risk and encourage doctors to intervene as early as possible, when chronic pain risk, having been identified, can be addressed before the downward cycle begins. Unfortunately, you won't learn about these best practices in these or in other state-promulgated guidelines. (I have proposed that chronic pain predictive models, matured through the wisdom of many, be placed in the public domain and inserted in treatment guidelines.)

Why these gaps? I wonder if the claims community has taken the time to communicate its concerns about chronic pain, so that guideline editors might address them? I imagine that they were back at the office, unaware of guidelines being drafted, and deeply involved in the deep stack of files that welcome them every working day.

Let's Talk!
An inconvenient truth for workers comp claims payers is the universal endorsement of counseling intervention. Virtually all the chronic pain guidelines share a high regard for the psychological dimension of non-cancer chronic pain, which surfaces in pain perceptions and beliefs, catastrophizing, poor locus of control, and other traits that can be both measured and altered. The guidelines recommend time-limited cognitive behavioral therapy, the kind used to help you, say, overcome your anxiety about elevators, re-injury, or perpetual pain. The Massachusetts guidelines contain within their relatively thin girth a full-throated endorsement of psychological intervention - and that's a good thing.

Unfortunately, most claims adjusters refuse to recognize the importance of cognitive therapy. They will have none of it and will deny treatment if the word "psychology" is attached to a request for treatment. The adjusters argue that once they allow psychological treatment, the workers comp courts will require them to pay for a lifetime of counseling intervention. I've heard this argument a lot. I wonder if the claims community and treatment guideline editors have ever had an extended discussion about psychological services and how to frame the issue to be most useful in a workers comp setting.

While the proposed pain guidelines leave a lot to be desired, I believe that an effective strategy for controlling chronic pain risk is within reach. Pain management is an essential element of any cost reduction strategy. If states can begin to draft chronic pain treatment guidelines that are more prescriptive, more specific and more focused on prediction and prevention, we would take a giant step toward bringing the costs of many large comp claims under control.

Submitted by Peter Rousmaniere

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July 19, 2010

 

The following guest post was submitted by Gary Anderberg, Phd, the Practice Leader For Outcomes and Analytics at Broadspire.

I was participating in a recent meeting of health, wellness, workers' compensation and disability professionals. One of the issues on the table was information that the regs defining "Cadillac" plans may loop the cost of wellness programs, disease management and other health related productivity benefits into the total cost of the employer's health plan for purposes of assessing penalties. If this intelligence is correct and if such provisions become effective, most large employer plans, so defined, will be subject to potentially expensive penalties, thus strongly incenting employers to relegate employee health care to the soon to be created exchanges.

This question stirred up a wide ranging discussion of how to frame the value of health and productivity programs for employers. For the last several years, most of the players in this space have been using the "investment" and "ROI" model, telling employers that they will reap rewards for astute investments in employee health and productivity. As a practical matter, returns on investment have been problematic to quantify. There is broad, intuitive agreement that a healthier workforce is a good thing, but what does it drive to the bottom line?

I suggested a different model -- risk management. If trained, knowledgeable, productive employees are indeed a corporate asset -- like trucks, buildings, airplanes, equipment, and so forth -- then the health and well being of those employees presents a major risk exposure for the corporation in very immediate terms. We know that as the overall well being of a workforce declines, not only do absences of all types go up, but so do opportunity costs and the costs of poor performance and decision making. As absence rates and disability claims climb, more positions are filled by new employees with less experience and training than the absent workers. Mistakes get made, customers do not get the service they expect, and product quality suffers.

I suggested that, properly viewed, health plans, chronic disease programs and all types of effective wellness programs are really risk management tools in much the same way that fleet maintenance is a risk management tool. We assume that companies will maintain their eighteen wheelers and provide safety courses for their drivers, but the health and well being of the person behind the wheel is equally critical to the company's risk exposure when a truck is on the road.

Every time a company hires a new employee, it takes on a new risk. For every employee on the payroll, from the CEO on down, there is a definite risk cost of employment which is based in large part on that person's health and well being. So, are health, wellness and productivity programs investments with uncertain returns or are they critical risk management tools which allow the employer an important measure of control over the performance of a key asset -- employees? It seems to me that these tools are vital to controlling employment costs and critical parameters of product and service delivery, especially in a world of very lean staffing and just in time management.

To my mind this is not just a question of which metaphor to use. Managing risk is real and the consequences of poor risk management are often dramatic and even tragic. I wonder how many companies would consider handing over the maintenance of their critical manufacturing and distribution equipment to a government program just to save a few bucks. But how many employers may be tempted to do the same thing if the soon to be created healthcare exchanges offer a short term dollar saving?

The words we use to frame decisions can carry massive consequences. If you think about the health and well being of your employees as a risk exposure to be effectively managed to minimize replacement costs and the expense of suboptimal performance and errors, what might you do differently? Think about it.

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June 14, 2010

 

In the the following guest post, Gary Anderberg, Phd, the Practice Leader For Outcomes and Analytics at Broadspire offers his thoughts on the potential impact of healthcare reform on workers comp in the coming years.

At the moment, health care reform appears to have a number of positive and negative potential impacts on workers compensation over the next few years. The net results cannot be estimated this early in the game. We can, however, identify a few elements and their possible consequences:

  • Insuring the now uninsured: Positive -- employees who have health insurance tend to file fewer workers compensation claims. They have less incentive to cost shift. Another result will be that chronic medical conditions will be, over time, better controlled and less likely to increase the severity of work related claims.
  • Availability of care: Negative -- with a large number of people having new health coverage, doctors and facilities may be swamped in some areas. The problem will lead to (a) delays in appointments for workers compensation-related medical treatments and (b) less willingness by providers to participate in occupational medical networks and offer discounts off fee schedules.
  • Removing the pre-existing exclusion: Unknown -- in 2014 the pre-existing exclusion will disappear in group health. This cuts several ways at once. There will be less incentive for employees to claim long standing "wear and tear" conditions as work related - a positive change. There may also be much greater demand on employers for workplace and job accommodations leading to new exposures and safety issues.
  • Medicare reform: Negative -- the passage of HR 3590 was predicated on massive adjustments in Medicare reimbursement levels, which are marginal for medical providers now. This will pressure providers, especially hospitals and some specialists, to cost shift where possible and workers compensation is a soft target in most states. We could see significant increases in medical costs per claim as the Medicare changes begin to bite in a couple of years. (The recession-driven cutbacks in state Medicaid reimbursements will only amplify this effect in the near term.)
  • Libby care: Unknown -- the "Libby care" clause of HR 3590 (sec 1881A) is not intended to lead to the federalization of industrial diseases absent some very specific catastrophic circumstances comparable to those of the WR Grace disaster in Libby, MT. But we all know that ERISA was intended to address a very narrow set of union pension abuses when it was passed, but the Department of Labor, abetted by the Florida Administrators decision of the Supreme Court in 1977, expanded it greatly. The Libby care provision will bear watching.
Workers compensation was not at the table when Congress hammered out its health care reform solutions. Other than a few glancing mentions, such as the Libby care clause noted above, occupational medicine was overlooked and, by default, left to the states. This is probably a good thing, on balance. Yet, as health care reform changes begin to penetrate the enormous US health care enterprise, they will impact workers compensation in many overt and subtle ways over the next several years. Carriers, third party administrators, and managed care vendors will need to be alert to capture possible advantages and avoid potential nasty surprises.
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February 26, 2010

 

Recently, I attended the 2010 Health and Productivity Forum jointly sponsored by the Integrated Benefits Institute (IBI) and the National Business Coalition on Health (NBCH) in San Antonio. I had been invited to participate in a panel discussion by Gary Anderberg, of Broadspire, who, as I have written previously, is one of the smartest people I'm fortunate to know.

With me on the panel were Dan Shaughnessy, Director of Disability Programs, Textron, Inc., and Mike Machanich, Chief Executive Officer, Workers' Comp Solutions. Gary's charge to us was to discuss the effect of national health care reform on workers' compensation. Thanks a bunch, Gary. But we had a stimulating discussion as we opened that colossal can of worms. I'll write more about this in another post. One of the issues our panel tossed around was chronic pain. We've written about chronic pain many times over the last few years. Here are links to a couple of the relevant posts:Workers Comp Drugs: Paying too much...For the Wrong Medicines!; The Pain Conundrum.

Our concern is that the treatment of chronic pain often involves what is to us a highly problematic overutilization of narcotics. So, I was a bit surprised to learn of Broadspire's well thought out and relatively holistic approach to treating this debilitating and often times life-changing medical condition. With that in mind, I invited Broadspire's medical team to submit a guest blog post for the Insider. Our one requirement was that it be informative to our readers, but not a self-serving advertisement for Broadspire. The company accepted our invitation, and what follows is Broadspire's approach to the treatment of chronic pain. I'd be remiss if I didn't add that Broadspire is not a client of Lynch Ryan's and our publication of this guest blog post does not constitute an endorsement of the company's products or services.

Chronic Pain Management Matters
Candy Raphan RN, BSN, ARNP, MAOM and Dr Jacob Lazarovic, MD, FAAFP, Broadspire

In 2006, The Center for Disease Control and Prevention (CDC) released its 30th annual report on the health status of America, "Health, United States, 2006" which found that the overall health of the nation seemed to be improving or holding steady, but highlighted one particular condition as needing further attention: pain.

Pain is a common and troubling condition around the world. In a 2005 European study, it was estimated that 20% of the world's population deals with some form of chronic pain. In Europe, chronic pain accounts for over 30 billion euros in lost productivity. In 2002, an American study found common pain conditions caused 13% of workers to experience a loss of productivity over a two-week period. The estimated cost to corporate America was $61.2 billion dollars that year. In fact, pain has been such a prominent health care issue that the 106th U.S. Congress passed Title VI, Sec. 1603, of H.R. 3244, declaring the period between January 1, 2001 and December 31, 2010 the "Decade of Pain Control and Research."

Solutions
Conventional treatment of chronic pain is time-consuming and often very expensive, particularly for those claims that continue without resolution over the course of several years. For this reason, it is important that employers and payers understand the dynamics and drivers of the costs associated with chronic pain. By employing a focused, multi-disciplinary clinical approach very costly segments can be targeted. It is then possible to effectively manage chronic pain from the overall costs associated with medical care and treatment as well as loss of a productive workforce.
Using evidence-based medicine to create a plan of action for those individuals with inadequately managed chronic pain promotes optimum results. Medical management programs can provide information and resources to the claimant's current treating doctors, clinics and hospitals. These types of consultations with providers help achieve the following objectives:

  • Safe, rational and effective management of the chronic pain population
  • Maximized functionality and return to work
  • Management of medical costs
  • Focused and designated processes/people to reduce internal duplication of effort
  • Documented and measurable results and ROI metrics
How It Works
Broadspire's Chronic Pain Program, for example, uses a defined and rigorous process. After an initial eligibility assessment, a team of specialty physicians and nurses reviews the medical and psychosocial aspects of each case. The team establishes a list set of customized strategies in the form of recommendations to ultimately achieve the goals and objectives for each case. The team then monitors the impact of interventions during subsequent meetings and follows the case through to timely resolution.

The key to the program is the expertise clinical and claim professionals bring to each claim. A highly experienced staff performs the data analysis, oversight and management of the process. An expert panel of specialized pain physicians (anesthesiologists, physiatrists, orthopedists, and psychologists or psychiatrists) provides guidance. Other contracted resources such as selected, accredited pain management facilities and urine drug monitoring labs help ensure that patients are compliant with prescribed regimens.

A Chronic Pain Program has the power to make a sizable difference. With proven methods, resources, and expertise it can provide the support and control to help employees beat pain back and return to productivity.

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July 21, 2009

 

The following article is a guest post by Joey Lucia, a loss prevention supervisor at Austin-based Texas Mutual Insurance Co., the largest provider of workers' compensation insurance in Texas.

Non-English-speaking Hispanic workers present unique safety challenges.

Picture this: It's your first day on the job with a construction crew. Your boss asks you to help lay a foundation for an office building. High above, another worker is walking along a scaffold. He accidentally kicks a hammer off the scaffold, and you're directly below it.

Fortunately, your company embraces a "total safety" culture. In a "total safety" culture, employees look out for one other. Everyone is accountable for not only their own safety but also their co-workers' safety.

With that in mind, someone yells, "¡Cuidado, el martillo se puede cáer sobre ti!" Your co-worker warned you to get out of the way. If you didn't understand Spanish, you might have been involved in a serious accident.

In 2006, Hispanic workers died at a rate that was 25 percent higher than all other workers in the United States, according to a study published last year in Morbidity & Mortality Weekly Report. As of 2006, nearly 20 million workers in this country were Hispanic, making them one of the fastest-growing segments of the U.S. workforce.

Here are some tips for keeping non-English-speaking Hispanic workers safe. Follow the ones that fit your business, and you can help make your workplace safer and more productive.

Challenge: language
Language can be a barrier to communication, even among people who speak the same language. Imagine how hard it is for Hispanic workers who speak little or no English.

Solutions

  • Use more pictures and fewer words to point out hazards and teach safety procedures.
  • Most communication is nonverbal. Watch workers' eyes, body language and expressions to see whether they understand instructions.
  • Train supervisors in basic, conversational Spanish. Send non-English-speaking Hispanic workers to a conversational English class. Focus on commonly used words in your industry.
  • Hire Spanish-speaking supervisors who have experience in your industry.
  • Ask bilingual employees to translate safety messages.
  • If you have training requirements, the Occupational Safety and Health Administration mandates that you provide them in a language that workers can understand. Hire a translation company to put safety training material into Spanish. Make sure the translator is fluent in the Spanish dialects spoken by your employees.
Challenge: literacy
Many Hispanic workers do not have the luxury of pursuing their education because they have to help support their families. About 40 percent of Hispanics age 25 and up do not have a high school diploma, according to the U.S. Census Bureau. By comparison, about 14 percent of the total U.S. population does not have a high school diploma.

Solutions:

  • Keep training basic.
  • Provide simple, hands-on safety demonstrations.
  • Do not let employees start work until they show that they understand the training.
  • Provide follow-up training, and be sure to address new workplace hazards.
Challenge: fear
Have you ever been afraid of asking a question in front of a large group of people? Imagine asking it in a different language. Non-English-speaking Hispanic workers may put themselves at risk because they're too embarrassed to ask questions about safety procedures. Some may even fear for their jobs if they report unsafe working conditions.

Solutions

  • Encourage every employee to report unsafe conditions.
  • Offer safety training away from the workplace. If the trainer is someone other than a manager, employees may be less intimidated and more likely to ask questions.
  • Make sure non-English-speaking Hispanic workers have peers they feel comfortable talking to.
  • Deliver the safety message to employees in their environment. For example, distribute Spanish-language safety training material at community functions.
  • Reward safe behavior in front of co-workers.
  • Take time to learn about your Hispanic workers and their culture.

Past blog posts that relate to this topic:
Safety for Spanish-speaking workers must address cultural as well as language barriers
Keeping the multicultural workforce safe
Qualified interpreters can save lives
Hispanic Fatalities on the job: the Tip of the Iceberg
When it comes to safety, make sure you speak the same language!
Mandatory English at the workplace?

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March 19, 2009

 
Our guest blogger is colleague Peter Rousmaniere, a columnist for Risk & Insurance magazine and blogger on the immigrant workforce. Beginning with the sudden and unexpected death of actress Natasha Richardson, Peter explores the murky issue of brain injuries, where what appears to be minor may suddenly morph in to a life-threatening - indeed, life ending - catastrophe.

The actress Natasha Richardson's death was emblematic of the frightening uncertainties surrounding brain injury. She died from what appeared at the outset to be a trivial incident on the slopes of Mont Tremblant, Quebec.

The NY Times reported: "Ms. Richardson, who was not wearing a helmet, had fallen during a beginner's skiing lesson, a resort spokeswoman, Lyne Lortie, said Tuesday. "It was a normal fall; she didn't hit anyone or anything," Ms. Lortie said. "She didn't show any signs of injury. She was talking and she seemed all right." Within two days, she was dead. She joins 50,000 others who die in the U.S. each year from brain injury.

Here are some lessons from this tragedy.

First, brain injuries are far more frequent than we assume.

One million athletes a year sustain brain injuries, the vast majority being "mild" traumatic brain injuries, or MTBI in medical jargon. Rand Corporation estimates that 19% of American troops in Iraq and Afghanistan sustain a brain injury, once again mostly MTBIs.

Second, prevention is improving. Sports helmets are less onerous to wear (though Richardson, a novice on the slopes, declined to wear one). In the military, Humvees are better designed to deflect IED blasts. One important step in secondary prevention and in avoiding re-injury is to remove from activity for about a week anyone who sustains a concussion, until subtle imbalance problems from the initial incident resolve. (We are beginning to see a much more cautious approach to managing athletes with concussions.)

Third, is it increasingly evident that the quality of medical and rehab care greatly matters in TBI outcomes. We in workers comp are focused, appropriately, on vocational outcomes, where the variance in return-to work outcomes for TBI survivors is much wider than it is for burn and spinal cord injury survivors.

I recently interviewed TBI experts working for Paradigm Corporation, including its chief medical officer, Nathan Cope, MD. This firm's specialty is taking over the management and financial responsibility for medical care of catastrophic work injuries. The firm's thoughts on TBI treatment is useful because a Milliman study showed that Paradigm's TBI patients return to work 40% of the time versus a workers comp industry average of only 8%. I asked Paradigm to explain this wide variance of outcomes in light of the Richardson tragedy.

According to the company, the immediate initial care can be deemed adequate as long as the TBI is diagnosed upon initial intake. Treatment has to begin very quickly after injury. In Richardson's situation, the symptoms began to occur a couple of hours after the incident, when the actress experienced a headache.

Problems are usually indicated by a combination of two factors: physical complications (such as headaches) and behavioral (such as depression). Supervisors and managers need to look for these symptoms in any worker suffering a head injury.

For the brain injured who survive the immediate aftermath of trauma, there is another layer of risk, involving low expectations for recovery: there is a cultural (and perhaps even medical) tendency to assume that once the brain is damaged, recovery automatically becomes a remote possibility. This is not necessarily the case.

Unfortunately, in workers comp few managed care people really understand TBIs. For them, brain injured workers disappear into a black box, with virtually no prospect for returning to productive employment. Such pessimism is often misplaced and usually results in substantial costs to both the injured worker and the employer.

Peter Rousmaniere

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January 14, 2009

 

Part three of a three-part guest post series on bankruptcy and workers compensation by Robert Aurbach, CEO of Uncommon Approach..
Part 1: Bankruptcy and Workers' Compensation: Broken Promises, Broken Lives
Part 2: Reducing the Conflict Between Bankruptcy and Workers' Compensation

Three changes are proposed to the Federal Bankruptcy Code:

  • changing the accrual of workers' compensation claims for bankruptcy purposes
  • allowing them to be adjudicated in the applicable administrative court without delay
  • giving the payment of post-petition medical and indemnity benefits administrative priority for payment during the course of the bankruptcy

While these won't fix every possible problem, they solve the most prominent incompatibilities between two regulatory systems while preserving the essential integrity of both.

What the Proposed Amendment Doesn’t Do
First of all, these changes only affect the self-insured or illegally uninsured employer. Since commercially insured claims continue to be paid by the insurer while the insured company is in bankruptcy, there should be no need for extra protection for such claims.

Second, the pre-petition claims of the workers are still treated like all other claims. This is not likely to be a significant issue in most cases. Regulators will hear quite quickly if the self-insured employer stops paying claims, and the usual response is to revoke the self-insured status and force the company into purchasing commercial insurance ― usually at a premium from the state assigned risk pool. Since this places additional economic stress on the self-insured company, the behavior is avoided. Self-insurers rarely are as much as one week behind in their benefit payments when they file for bankruptcy. In any event, a fix that included pre-petition arrearages in post-petition claims would fly in the face of the most basic bankruptcy philosophy and likely create opposition to the proposal. Since the worker's position is still improved from what it would be under current law, that battle is left for another day.

Most importantly, the protection package fails if the self-insured employer decides, or is forced, to liquidate, instead of merely reorganizing. If that happens, the affairs of the company are concluded in an orderly way, and the assets are distributed as determined in the Bankruptcy Code ― and workers' compensation claimants are still general unsecured creditors (the lowest priority classification). Why not give them a higher priority? The establishment of preferences for various kinds of secured claims is a sacred cow that will not be disturbed without opposition, and other claimants can be expected to seek preference for their claims as well. So what good is done under the proposal if the company eventually liquidates? During the administration of the bankruptcy estate in Chapter 11 reorganization (which is where almost all large company bankruptcies start out) the post-petition part of the claim continues to be paid. Medical treatment is not delayed, indemnity benefits are paid in a timely manner and the claim is adjudicated in the normal way. This administrative pay down will, in turn, reduce the ultimate drain on the security held by the self-insurance regulator, reducing or eliminating the ultimate call on the self-insurance guaranty fund (if any) and increasing the chances that the worker will get all the benefits that the law promised.

Who Benefits?
Self-insured employers benefit. Employers are generally amenable to this proposal because they do not, as a group, appreciate the idea that one of them would walk away from workers injured in their service. Moreover, since they are the contributors to funding self-insurance guaranty funds, where such funds exist, and they are the ones compelled to place security to cover liability exposures under the current law, they have an economic stake in ensuring that all self-insured employers do the right thing by their workers. If the probability of a call on security (or a guaranty fund) is diminished, there is no need to tie up business capital funding it to ultimate reserves. That’s why the National Council of Self-Insurers recently ratified their prior endorsement of this proposal.

The state benefits by avoiding the political cost of having administered a program that left workers uncompensated. It avoids the complication of the sometimes-inconsistent positions taken by state agencies in Bankruptcy Court in their efforts to collect obligations such as back taxes and environmental cleanup from the company. The state also avoids the drain caused by disabled workers ending up on public assistance rolls in the state. The proposal was endorsed by the Western Governor’s Association, the National Association of Attorneys General, and the International Association of Industrial Accident Boards and Commissions, (workers’ compensation regulators) in 2004.

And Joe benefits. He may lose most of the two weeks of indemnity payments that he was owed when his Company went down, but his "post-petition" payments were restarted in time for him to keep his house. His medical dispute is resolved through a local "mediation" proceeding instead of a formal trial in another state in front of a bankruptcy judge who doesn't know his state’s workers' compensation law. He receives the reasonable and appropriate medical care promised by law without delay caused by the bankruptcy. The long-term medical benefits for his permanent injury should continue to be available as promised in the law ― his "post-petition" claims will not be discharged by a reorganization plan if the Company successfully reorganizes, and the pay down of his total claim will help security and guaranty funds held by the state stretch to cover him if the Company ultimately folds. Hopefully, when he is able, there's a job for him to return to.

This proposal goes a long way to eliminating the clash between the incompatible policies of bankruptcy and workers' compensation, without disrupting the foundations of either system. The language is ready for Congress to consider. Perhaps it’s time for Mark Twain’s advice: "Always do right. It’ll gratify some people, and astound the rest."

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January 13, 2009

 

Part two of a three-part guest post series on bankruptcy and workers compensation by Robert Aurbach, CEO of Uncommon Approach.

The last posting introduced Joe, the injured employee of a self-insured employer, and discussed the ways the workers' compensation system failed him when the employer filed for Federal Bankruptcy protection. It's important to understand the reasons why this happens to understand the current proposal for fixing the problem.

How the Law Victimizes Joe
First, it's important to understand that Federal Bankruptcy law pre-empts any state law that conflicts with it. This makes the power of state regulators attempting to preserve the benefits of injured workers under state law extremely limited. In this context, it is necessary to understand that the Bankruptcy Code treats workers' compensation claims as having fully accrued on the date of injury ― that is to say that the claim is treated as being fully defined the day it happens. Several things happen as a result. Workers' compensation claims are then separated into "pre-petition" and "post-petition" claims, and the two groups are handled completely differently. Pre-petition claims are thrown into the bankruptcy proceedings, frozen for an indefinite time and then, when the bankruptcy proceedings are over, completely "discharged" by whatever distribution the Bankruptcy Court approves. Joe's claim accrued before bankruptcy petition was filed and that's why his benefits were frozen, his medical dispute "stayed" and his case delayed while the rest of the complicated bankruptcy case played out in front of a court in a distant city.

On the other hand, workers' compensation claims that arise during the bankruptcy case do not face any of those disabilities. Thus, the date on which two similarly situated coworkers are disabled is critical to the determination of the way the current Bankruptcy Code will treat their claims, despite the fact that the states have promised all workers mandated to participate in the system that they will be treated the same, and the fact that both employees may be left with life-long injuries or illnesses.

Another factor affects Joe's claim. When a Petition for protection is filed in Bankruptcy Court, it issues an "automatic stay" that freezes every other court proceeding, no matter where located, in which the debtor company is involved. This means that Joe can't use state dispute resolution mechanisms, unless and until the Bankruptcy Court issues an order allowing it. This forces him to appear in front of a strange court, often in a distant city, with specialized rules and lawyer admission requirements, in front of a judge who is likely to be unfamiliar with state workers' compensation law.

A Surgical Solution
The solution for this grim, and plausible scenario is simple and causes minimal disruption of the overall bankruptcy scheme. The most important change is to redefine when the workers' compensation claim accrues. By making each wage or medical benefit accrue when it is due and payable in the normal course of workers' compensation claims administration, the claimant will only have those benefits that are already delinquent at the time the bankruptcy petition is filed be caught up in the bankruptcy system. As new medical and indemnity benefits become due, they will arise "post-petition" and avoid both the court's freeze and the wiping out of debts at the end of the case (assuming the debtor successfully reorganizes), because they will have the status of "new" debts, as they are accrued. This treatment is also consistent with the current treatment of medical and disability plan payments for ill, injured and disabled workers that were not hurt on the job.

In addition, explicit treatment of workers' compensation benefits accruing postpetition as "administrative" expenses of the debtor during bankruptcy will ensure that they are paid during the case.

Finally, adjudication of determinations relating to such benefits should be exempted from the "automatic stay" so that they can be adjudicated as usual, avoiding the economic burden for the employee to appear in the bankruptcy court, while allowing for the agency and court with the specialized expertise under applicable state law to do its job.

By these small, surgical changes, the harsh and inequitable effects of bankruptcy on these involuntary workers' compensation debtors can be avoided, and the need for more intrusive and burdensome regulatory oversight and security requirements to offset or forestall the effects of bankruptcy can be lessened.

The Effect of the Proposed Changes
Under the new proposed law, any of Joe's unpaid benefits at the time the bankruptcy is filed will be thrown into the bankruptcy proceedings. But as soon as the bankruptcy is filed, his benefits can start again. The local administrative authority will decide the medical dispute in his claim, and he will not need a lawyer admitted to bankruptcy court to get the treatment he needs to return to work. Assuming that the company successfully reorganizes, any long-term medical benefit eligibility that he may get from permanent injury will be preserved. The state's promise to Joe is fulfilled ― and the Company doesn't have the option of walking away from its injured workers as if they were standard commercial debts.

The final chapter: Security deposits, guaranty funds and what the proposed solution doesn't fix.

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January 12, 2009

 

With the difficult economy, the issue of "what happens to a workers' comp claim in the event of a bankruptcy" is on the minds of many of our readers. We’ve addressed the issue of bankruptcy in the past. Today, we are pleased to introduce a more detailed three-part guest post series on bankruptcy and workers compensation by Robert Aurbach, CEO of Uncommon Approach. Robert is former General Counsel for the N.M. Workers’ Compensation Administration and personally been involved in the evaluation and redesign of five separate workers' compensation programs. He has served as editor of the International Association of Industrial Accident Boards and Commissions (IAIABC) Journal since 2003. He is an expert on various issues that involve the intersection of workers' compensation and other programs, such as bankruptcy, tribal sovereignty and PEO-leasing arrangements.

Joe worked for Chryslord Moters, a large manufacturing concern with billions in assets and locations in many states. He never concerned himself with workers' compensation, and was unaware that his Company was self insured for workers' compensation in the state where he lived and worked. When he was injured on the assembly line, he set about the job of getting better and getting back to work, as his family could ill-afford the loss of his income in the midst of a full blown recession. When the Company sought Chapter 11 bankruptcy protection, Joe still wasn't particularly concerned, due to the assurances that had been provided to the active employees. But then the Company cut off his benefit payments, so he had no wage replacement income, and his minor dispute over the reasonableness and necessity of a medical treatment proposed by his doctor was taken off the administrative agency's hearing docket due to an "automatic stay" issued by the Bankruptcy Court. When he called to try to resolve these issues, he was told that he needed to file a claim in a Bankruptcy Court half way across the country, in front of a judge that had no idea what the law of workers' compensation was in his state. When he asked how long it would take to resolve the problems, he was told that it would likely be at least a year. Upon checking with a lawyer, he also was told that his claim would be paid only if there was money left after paying all the vendors, suppliers, utilities and others who had voluntarily entered into business relations with the company. If there was no money left, or only enough to pay pennies on the dollar, he had no other recourse against his employer. Moreover, his lawyer informed him, his claim would be considered resolved by the bankruptcy proceedings, and that no medical expenses after the bankruptcy case was done would be paid by the Company.

What About Recourse to a Guaranty Fund?
There are various forms of security used to prevent injury to employees of self-insured employers from being uncompensated. The state administrative agency usually demands a security deposit from the self-insurer, based on the size of the liability exposure. Unfortunately, these deposits are often inadequate, due to understated reserves, and may be tied up in court proceedings on their own, depending on the form of the security. State property/casualty insurance guaranty funds do not apply to the debts of self-insurers, but some states have separate guaranty funds for the self-insured employers. Unfortunately, those funds usually contain a small fraction of the total potential liability, and could be easily drained by prior calls on those resources. The promise of the workers' compensation system to Joe ― medical care and indemnity benefits to allow him to heal and return to work ― is more wishful thinking than a guaranty when his employer seeks bankruptcy protection.

Systems in Conflict
Bankruptcy is a system designed to give a "fresh start" to businesses and individuals who are in debt and cannot survive economically without intervention. Debts are collected and assets are divided and distributed at the end of the process in what is intended to be an equitable manner. The law freezes all claims during this process, to allow the presiding court an opportunity to get control and a global picture of the debtor's situation. At the end of the court administration period (which is of indefinite length), either the debtor ceases to exist, and its assets are distributed, or the emerging debtor, after negotiated resolution of past debts, is permanently absolved of all debts that arose before the process. The principals of equitable distribution are based on a commercial model where (presumably equally sophisticated) creditors have chosen to do business with the debtor before the bankruptcy and either have or have not availed themselves of certain legal protections for their transactions.

Workers' Compensation is based on an entirely different set of premises. The state demands that businesses and workers participate in the system, and in return guaranties that the worker will get certain benefits, and guaranties the employer that there will be no other kind of recovery against it for the injury.

Why Isn't the Worker Protected?
As demonstrated above, the interplay between the two systems can seriously compound the workers' injury. When the employer has a commercial insurance policy for workers' compensation, the policy pays independent of the policyholder's economic condition. But when the employer is illegally uninsured, or legally self-insured, the effect of bankruptcy can be devastating and unavoidable under current law. Medical treatment necessary for recovery is often withheld when the health care provider becomes informed that they will not be paid at all or will only be paid as a general unsecured creditor in a bankruptcy proceeding. Wage replacement for the worker during the period in which he or she is unable to work is cut off by automatic order of the bankruptcy court, causing immediate and substantial economic hardship. The delay in benefit provision can be years in length and can be adjudicated in a court in a remote state, where the worker is effectively cut off from representation by the very economic hardship that the court proceeding created. Moreover, when the bankruptcy court finally adjudicates the worker's claim, the distribution scheme places the injured worker in the lowest priority level for distribution of assets.

Joe never volunteered to be a creditor to the Company and he is the least able to protect himself in the process, yet the current Bankruptcy Code treats him as the least "worthy" creditor.

Next time: what can be done to fix this conflict between systems.

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October 4, 2004

 

[We are pleased to welcome as a guest blogger today our favorite actuary, Don Bashline of Bashline & Associates, based in Watertown, MA. Don has some interesting thoughts on the federal government's new regulations pertaining to overtime, which have a direct impact on workers compensation.]

On August 23, 2004, the U.S. Department of Labor's new regulations defining worker eligibility for overtime pay went into effect. In a possible attempt at subliminal spin, the program is called "Fairpay." Let's say it's "fair" for some and not so fair for others. For a critical view of the regs, see the white paper at the Economic Policy Institute. Although the net effect of the new regulations won't be totally clear for a while, no one disputes that some low-wage workers (earning less than $23,660 per year) will gain overtime protection, while many others will lose it. Among the apparent losers: sous chefs, childcare workers and a very large number of supervisors...

The regulations are complex and employers will have some flexibility in implementing them. There have already been cases where employers have given raises (good news?) to employees near the $23,660 threshold, resulting in those workers losing eligibility for overtime (bad news!). Others have chosen to preserve overtime eligibility for workers in high-demand occupations (for example, nurses) that theoretically could have been exempted under the new regulations.

What does this mean for workers compensation? The net effect of the new regulations is to lower the wages of many workers. This will impact workers compensation in two ways: First, overtime wages are included in the calculation of an injured worker's average weekly wage. With changes in eligibility for overtime, average weekly wages for many workers will decline. As a result, the weekly workers comp indemnity payments for these "exempt" injured workers will also decline.

In addition, these changes will impact workers compensation premiums, which are calculated based on a rate per $100 of payroll. With payrolls declining due to the new regulations, insurance premiums will also decline. Insurers, particularly those who have a high percentage of premiums in affected classifications, will need to think about calculating the estimated impact of these changes on both premium income and claim costs. Employers, especially those who are self-insured, might also need to assess the impact of the new rules on their projected workers compensation costs.

The impact of these new regulations on workers comp calls for careful scrutiny in the coming months. LynchRyan will keep you posted.


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