Monthly Archives: August 2014

Work Comp Costs Going Up

Business Insurance reported today that workers’ compensation costs paid by employers rose 6.9% to $83.2 billion year-over-year in 2012, driven largely by an increase in worker numbers and earnings, according to a report by the National Academy of Social Insurance

There was a modest increase in workers’ compensation benefits from 2011 to 2012, with an increase in medical benefits of 0.9% to $30.8 billion.

The report said that wages eligible for workers comp coverage increased 4.3% to $6.3 trillion in 2012 from 2011, and the number of covered workers increased 1.6% to 127.9 million in 2012. 

If you consider how much of these rising costs are due to employer, physicians, service providers, and carrier fraud, abuse and waste, and not because of any alleged fraud by claimants, which is miniscule by comparison, and if you factor in how much workers’ comp is being ripped off by paying for surgeries that are more expensive under comp than under general health care, you can then appreciate why saving money by having the surgeries performed in lower cost, better quality facilities abroad makes sense, both logically and dollar-wise.

But if people insist on doing things over and over again the same way and expecting different results, that is crazy. But those who say the law won’t allow it, should be reminded of what Mr. Bumble said in Oliver Twist, “If that is the law, sir, then the law is an ass. If that is the law, then the law is a batchelor.” 

Aged statutes and old case law should not stand in the way of lowering the costs for employers, provided the employers are not part of the problem in the first place. Things are happening that will make changes in workers’ comp, and hopefully they will be for the better for all concerned parties, and not just the employers, physicians, service providers and carriers.

Have a good Labor Day weekend everyone, and remember, workers’ comp is for the workers, not the bosses.

 

Escaping the Padded Cell

Recently, my fellow blogger, David De Paolo mused about why the workers’ compensation industry is failing to attract top talent and younger people as the “old farts” die off, as Scott Hudson, the CEO of Gallagher Bassett spoke about at a workers’ compensation educational conference.

David asked the following questions, to which I would like to respond. He asked: Why can’t we attract top talent into our industry? Why can’t we have the big thinkers, people that go outside of the box to solve our problems, to bring good things to life?

As many of my readers know, I have been a passionate advocate of implementing medical travel (i.e., medical tourism) into workers’ compensation, so that injured workers can receive the same high quality medical care that those with private or group health plans are getting from medical care abroad, and so that their employers can truly realize cost savings from expensive surgeries for common workers’ compensation injuries.

In my previous post, There Are No Words, I told you that my other fellow blogger, Joe Paduda, listed me as one of the people who makes workers compensation great.  He even said that I am far in front of the crowd on this.

I have received some other words of encouragement and support from people outside of the workers’ comp industry, mainly in health care and medical tourism. In fact, one of my re-publishers gave me an entire page on her website called “Outside the Box”.

The reason she did that, and the reason that these individuals have acknowledge my writing is, to answer David’s questions, because I am a big thinker who can go outside the box, but it seems that the box is in reality a padded cell, and the “patient” inside is straitjacketed, as far as the “old farts” are concerned.

I have written about aged statutes and old case law, about a broken and dysfunctional system rife with fraud and abuse, the expansion of opt-out programs and the demand for bundling of work comp and health care, how it is under assault and challenge on the constitutionality of the so-called “Grand Bargain” upon which workers’ compensation rests, and the entrenched special interests in the medical-legal world who want the status quo.

So no wonder younger people are staying away from the workers’ compensation industry. It would be the same if the horse and buggy industry tried to recruit younger people to work for them. Who wants to work in an industry that is stuck in the past, in both mindset and in law?

That is not the case in health care, as far as new technology is concerned, but there are other areas, such as providing affordable, universal coverage to all Americans, but in the main, the larger health care industry, as I pointed out in Miami Beach: Fun, Sun and Medical Tourism, when I quoted Thomas Ryan of Lynch Ryan:

When it comes to technological innovations, the health care industry’s advancements dwarf anything that’s developed in the workers’ comp industry for years.”

He went on to say that: “The P/C insurance industry is very slow to innovate and is lagging behind other industries, as well as other parts of the insurance industry, in adoption and rapid movement to technology usage and innovation,”. He added that “the workers’ comp industry is way behind and it must catch up.”

So it is no accident that today’s college graduates, those who just have a four-year degree, or those who go on for their MBA’s, run from the workers’ comp industry as if it had leprosy (I would have mentioned Ebola, but that analogy is too modern for the work comp industry to comprehend).

David’s post talked about recognizing the good things that workers’ comp does, and he is correct to say that, because for the most part, it does. Yet as we all know, the good news does not lead on the evening news, the bad news does, whether it is Ferguson, Iraq, Mork’s suicide, etc., the feel-good news comes at the end, or not at all.

However, it must be understood that when anyone such as myself criticizes the industry, it is because we want everyone to benefit from it, not just those who do because their claims are cut and dry. I know what I am talking about, I was a Claims Examiner and Claims Administrator in New York for a mid-size insurance carrier and for a retail insurance broker handling a wrap-up program for a very large public agency in the New York/New Jersey area.

But it makes no sense to want to attract big thinkers who can go outside the box, if the box is set in concrete and the “patient” is in a straitjacket, and his “doctors” refuse to accept modern forms of treatment.

If you want things to change in workers’ comp, then you need a little Robin Williams craziness, a little Jonathan Winters zaniness, and you need people who are not as constrained in their thinking as those who are inside the box.

Schopenhauer said this, and I think you should all think about it: “Every man takes the limits of his field of vision for the limits of the world”. It’s high time we change our field of vision and break out of the box, and escape from the padded cell.

Update on Constitutionality of Work Comp in Florida

Three weeks ago, I discussed a workers’ compensation case here in Florida where the Plaintiff and his attorney alleged that the Florida workers’ compensation act was unconstitutional.

The article, Constitutionality of Workers’ Comp Challenged: What that could mean for Medical Travel, suggested that if the Florida act was ruled unconstitutional, there could be an opening for medical travel in workers’ comp in Florida, as both injured workers and their employers would no longer be subjected to administrative law judges and the courts.

At that time, it was speculative if the workers’ comp act would be ruled unconstitutional. But as CA attorney David De Paolo wrote yesterday on his blog about another case in Florida, the judge in that case declared the system to be unconstitutional.

According to De Paolo, a ruling on Wednesday by Miami-Dade Circuit Judge Jorge Cueto in Padgett vs. State of Florida, said that the exclusive remedy provision of Section 440.11 is facially unconstitutional.

David reported that the basis for Judge Cueto’s ruling is that over the years the Florida workers’ compensation act’s original grant of benefits for permanent disability, which was part of the “Grand Bargain,” has been so eroded as to no longer serve as an adequate remedy.

Judge Cueto, David says, cited the original constitutional test of the exclusive remedy of workers’ compensation in the United States Supreme Court case of New York Central Railroad v. White, 243 US 188 (1917), a case in which ironically the business community sought to declare compulsory workers’ compensation laws unconstitutional.

According to David, Judge Cueto quoted one of the more powerful passages in that case:

“One of the grounds of its concern (the workers’ compensation act in question) with the continued life and earning power of the individual is its interest in the prevention of pauperism, with its concomitants of vice and crime.”

For years, David tells us, attorneys representing injured workers throughout the nation have been saying that the compensation bargain has been eroded and one need only visit all of the various injured worker “forums” on the Internet to see that this particular demographic feels pushed into pauperism as a consequence of industrial injury.

What the judge is actually saying, David explains, is that if the remedy provided by the Florida Act is mandatory and exclusive, then it doesn’t meet constitutional muster because there isn’t enough money to keep injured workers from diving into pauperism, which harms all of society and places excessive burdens on other systems such as Social Security or Medicare (or what we like to call in our sanitized jargon “cost shifting”).

In previous posts, The Stench of Fraud: Why Workers’ Comp Can No Longer Be a Closed System and The Stench of Fraud, Continued, I discussed the plight of someone I called “Ms. X”. This individual has been abused by the system in her state, and has been reduced to some level of pauperism by the system for its failures to adequately and fairly treat her for her work-related injuries. As I reported at the time, she has been abused by both the medical profession in CA, the legal profession, her former employer, and is now subject to having her communication, both telephonic and internet, being monitored by defense attorneys.

In light of the civil unrest in Ferguson, Missouri and the militarization of the police there, one has to assume that we are living in a police state more like that of Communist China, Cuba, and North Korea, as well as the former Soviet Union, instead of the US. I can see why Judge Cueto ruled as he did in the Padgett case, since the injured worker is being treated like a political prisoner or a common criminal, instead of as someone who needs to be taken care of when suffering an injury arising out of and in the course of their employment.

But back to the case before us.

Without going any deeper into the ruling itself, and to get to the wider point of what it means for workers’ compensation, let me say that as David mentions in his blog, the adequacy of benefits in workers’ compensation is getting the attention of the judicial system from coast to coast.” He goes on further to say that in California, the constitutionality of the state’s system is being picked at piece by piece.

In addition, last year, he states, the Texas Office of Injured Employees Counsel released a couple of reports suggesting the dispute resolution system lacked constitutional protections for injured workers, and there are other states where workers’ compensation laws are being questioned as conforming to the original bargain in one form or another.

He also points to the Oklahoma opt-out (see my posts, Opt-out as a way in: Implementing Medical Tourism into Workers’ Compensation and Opt-out as a way in: An Update for more in-depth understanding of what an opt-out program is), as well as the constitutional attacks, complaints about costs and inadequate benefits, and says that what is really going on here is a debate that he’s been having for quite some time: Is workers’ compensation even relevant any longer?

I think another point that needs to be made is this: are our politicians, or at least some of them (the Tea Party/Libertarian wing of the GOP) trying to undo the rights of injured workers the same way many of their governors have been doing to public employee and private employee unions since a former head of the Screen Actors Guild became their knight in shining armor and patron saint.

David goes on to add, and I agree with him that, this debate is getting louder and, as work comp is a microcosm of society, it points to larger issues facing society – a huge discord between the minority of “haves” versus the vast majority of “have nots.” In other words, between the “one percent” and Willard Mittens Romney’s (aka, Thurston Howell III) “forty-seven percent”.

But what is really happening at a much deeper level is that ever since the late 1970’s or early 1980’s (“Well, there you go again!”), the US has been in the grip of what Said Dawlabani calls “the only money matters” vMeme. This vMeme (or value system) is what has been driving the American economy off a cliff for more than thirty years, and is being orchestrated by the players on Wall Street.

We have seen this in nearly every industry that Wall Street gets its grubby little hands on. It has happened in retail, in banking, insurance, health care, and now workers’ comp. My fellow blogger, Joe Paduda has written extensively about the corporate buyouts of third party claims administrators and claims management companies, as well as other service providers to the workers’ comp industry such as pharmacy benefit management firms and translation/transportation companies.

These acquisitions have either come from competitors buying up each other, or from private equity firms seeing the potential of big payouts to their investors from workers’ compensation. But in the consolidation and accumulation of companies that has taken place over the years, jobs have been lost, workers have been ignored or forgotten as the main reason why workers’ comp exists in the first place, and as I’ve said many times before, it is a broken and dysfunctional system that is too dependent on the legal system or on doctors who are milking the system for all they can.

The social safety net that began to be weaved one hundred years ago, from the enactment of workers’ comp to Social Security, Medicare and Medicaid, is being slowly unravaled by Ayn Rand devotees who think such things are “entitlements”, but who believe that a millionaire or billionaire who gets a tax break at our expense is a “job creator”, and therefore they are entitled to get wealthier. Yet, I’d like to see how wealthy they’d be without workers making the goods or providing the services that they are getting rich from.

David brings up one other point about the judge’s ruling and its meaning that I also agree with. He says that Judge Cueto in the Padgett case is really opening up a debate about whether society is taking care of its own any longer, and that the Padgett case is about social unrest. We are, indeed, meandering into challenging times where the nation’s soul is being examined.

And I would add, that it is incumbent on everyone who cares for sick or injured people, no matter whether they are rich or poor, that they get the best care available and at the lowest cost possible, even if that means having them travel to other countries to get it. Because in the final analysis, if the Rand Paul’s and Paul Ryan’s and the Letter to the Editor writers to the Wall Street Journal, Fox News viewers and talk radio ditto heads get their way, this country will look like it did in 1789, not 2014.

Medical travel may be able to salvage some of the social safety net, but the industry must make that decision. The future medical care of injured American workers depends on it if the Padgett case stands.