Archive for October, 2004

A (Tired) Fan’s Notes

Friday, October 29th, 2004

In these rare days of the first Red Sox championship since 1918, we take a few moments to extract some of the lessons in this dramatic triumph for managers in all types of businesses. This is not meant to be an exhaustive list (and is written, frankly, by an exhausted fan).
Hire people who are really motivated to do the work.
Have fun (but of course, work safely).
Conversely, don’t hold onto people who (apparently) don’t want to be there, even if they have performed well in the past.
Build a core crew of experienced and knowledgeable players. These players should welcome newcomers and make them feel part of the team.
Pay good wages (well, not that good!)
Have patience — as long as your trust is placed in people who really can do the work.
Accommodate injured workers. Highly motivated employees want to work. Team up with them and their doctors to make it happen.
Don’t let individual egos get in the way of the team.
Never give up. Even in the darkest hour, with defeat looming, you might be able to steal a base and turn the situation around.
If you’re lucky enough to win, start planning for the next big season.
Our apologies for those who do not follow baseball. For all the others, your comments and additions to this list are welcome.

West Virginia is cracking down on deadbeat employers

Wednesday, October 27th, 2004

West Virginia has a message for employers that have defaulted on workers comp obligations in one company, and moved on to another: You can run, but you can’t hide. The state has an aggressive plan to collect from deadbeat employers who owe the state millions of dollars in unpaid workers compensation claims. We found this story interesting after just having discussed the implications of insolvencies on state guaranty funds a few days ago. It is just such a scenario prompting West Virginia’s crackdown.
“The fund currently has $3.3 billion in unfunded liability because it needs about $4.2 billion invested to cover the projected costs of the claims it will pay out over the next 40 years but only has about $900,000 invested.”
The state has identified deadbeats through a new state Employer Violator System that crosschecks data from the Tax and Revenue Department database to identify ties between active companies and defunct companies, looking for shared officers, owners, and principals. They have identified nearly 400 companies that owe the fund more than $124 million in unpaid debts, and they plan to track them down and take aggressive actions:
“The system was developed to comply with a 2003 legislative mandate that state agencies revoke contracts, yank licenses and permits and otherwise block companies and individuals from doing business in the state if they default on their workers’ comp obligations.”
We’ve certainly heard of many state efforts to crack down on employer fraud – it seems as though this issue is particularly prominent right now. There is no doubt some relation between a tough economy when employers are squeezed and a spike in firms that fail to insure their employees. Add to that, the numbers of companies that fail in a bad economy, defaulting on obligations. By tracking senior managers from one business venture to another to collect debt, West Virginia’s initiative raises the stakes for noncompliant employers, althought there will still be issues to sort out.
“…the agency is still debating is how close the association must be between a defaulted company and other companies before those other companies also end up being barred from doing business in the state.”
This bears watching – some issues will no doubt play out in the courts. It may be good news for injured employees and taxpayers who have been stuck with bills. Compliant employers and insurers who bear a cost burden for the sins of the few should also applaud aggressive efforts to crack down on fraud wherever it occurs.

Insurer insolvencies, guaranty funds, and joint and several liabilities between temp staffing agencies & contracting employers

Monday, October 25th, 2004

Roberto Ceniceros of Businss Insurance points to a recent interesting decision by California’s 2nd District Court of Appeals in Los Angeles dealing with general and special employers. The case involved a claim by an employee of RemedyTemp, a temporary staffing firm, considered the general employer; the employee was injured while on assignment at Jacuzzi Inc, the contracting or special employer. Normally, Remedy Temp’s insurer would be responsible for the claim, but in this case, the insurer – Reliance – was in liquidation. The court found that Jacuzzi – not the California Insurance Guarantee Association (CIGA) – was responsible for the claim.
There are several interesting issues involved in this case, perhaps more than can be easily addressed in one post, but we’ll give it a try. The whole issue of “general” vs. “special” employers is one facet worth discussing. But by way of laying groundwork, let’s first look at the issue of employee protection when an insurer goes belly up. Sadly, this is not an uncommon scenario in recent times. In the first quarter of 2004, NAIC recorded 20 property casualty insurer insolvencies.
In this case, the original insurer, Reliance National, went into liquidation. While remedies vary state to state, most jurisdictions have an established state guaranty fund as an insurer of last resort to ensure outstanding workers comp claims are paid. A guaranty fund is usually funded through assessments of a state’s licensed insurers. If an insurer fails and a claim is pending, the guaranty fund generally pays the claim and seeks recovery through litigation. Generally, guaranty funds leave no stone unturned in an effort to exhaust any other available insurance .
This is a simplistic summary of a much more complex issue. The Insurance Information Institute (III) has an excellent overview on the issue of insurer insolvencies and state guaranty funds that is well worth a read. Just look at how the Reliance insolvency affected Pennsylvania and the tsunami effect it had on other states:
The Pennsylvania Insurance Department is seeking to recover hundreds of millions of dollars from former executives of the bankrupt Reliance Global Holdings and its insolvent subsidiary Reliance Insurance Company and also from companies that the department says owe the company money. Reliance has only about $5.9 billion in assets, which are being disbursed rapidly because the company has to pay claims as well as the salaries of administrative staff and law firms that keep the firm running until the liquidation process is complete. The company has 144,000 claims amounting to $8.7 billion, almost twice as many claims as expected. Every state has been affected by the insolvency, but those most severely impacted are California, New York and Texas. At the time Reliance was declared insolvent it had 187,000 unsettled claims. In a lawsuit filed in June 2002 in Philadelphia, the insurance commissioner blamed the company’s executives for the failure, charging them with draining cash from the company to support their “lavish lifestyle.” Reliance Insurance Company, established in 1817, is the largest insurance company to be liquidated in U.S. history.
Guaranty funds have been severely challenged by the flood of insolvencies in recent years. For example, III says that in California, where may insolvencies have occurred, the Guaranty Fund faced a more than $750 million shortfall, no small part of the recent crisis.
In the case at hand, Mark Micelli v. Jacuzzi, Inc., Remedy Temp, Inc., American Home Insurance Co., Reliance National Indemnity Co., and California Insurance Guaranty Association (PDF), the court reaffirmed the idea of CIGA as an “insurer of last resort,” and found that joint and several liability existed between Remedy Temp and Jacuzzi, and that Jacuzzi’s workers comp insurer, American Home Assurance, qualifies as “other available insurance.”
The implication for temp staffing agencies remains to be seen. According to Ceniceros’ report:
The appeals court ruling could cause customer dissatisfaction for RemedyTemp and “could affect thousands of companies that, in part, rely on temporary staffing to avoid the costly overhead associated with carrying additional workers compensation insurance,” RemedyTemp said in a statement.

Baseball and Workers Compensation

Friday, October 22nd, 2004

There are a lot of bleary-eyed workers staggering to their jobs across New England and all across America. This year

15 medical conditions driving cost increases – many can be managed

Friday, October 22nd, 2004

The August issue of Health Affairs carried a recent study issued by Emory University revealing that more than half the overall growth in cost of health-care spending could be attributed to the 15 most costly medical conditions. The study notes that many of these conditions are preventable or manageable conditions through interventions.
The 15 costly medical conditions (chart) accounted for 56 percent of the growth in health-care spending between 1987 and 2000; five accounted for more than 30 percent of the spending.
The study looked to the cost of treatment and prevalance as attributes in the change in spending (chart). In 8 of these conditions, the cost of the care itself primarily accounted for the rise in spending; in the other 7 conditions, increased costs were more associated with an increase in prevalance, presenting opportunities for intevention.
“For several conditions, the rise in the epidemiological prevalence appears to be responsible for the growth in treated cases. This result highlights the importance of developing interventions designed to reverse the rise in disease prevalence. This appears to be the case for pulmonary disease, which accounted for nearly 8 percent of the rise in spending over the decade. Prevalence and death rates for asthma have been rising since 1975. Factors accounting for the rise in asthma and other pulmonary disorders are not well understood. They have been linked to environmental exposures (both indoor, such as dust mites and smoking, and outdoor air quality). In addition, diabetes accounted for up to 3 percent of the rise in health care spending, with about 50 percent of the rise traced to a rise in treated prevalence. The U.S. Centers for Disease Control and Prevention (CDC) reports a continued rise in diabetes prevalence that now exceeds eighteen million among adults alone. The rise in the treated prevalence of diabetes closely tracks the substantial rise in obesity in the population. Since effective treatments exist for both of these conditions, however, it would be a mistake to see increased spending to treat them in a completely negative light.”
As the work force ages, general health concerns are likely to have a greater and greater impact on the workers compensation bottom line; many health conditions can increase a person’s risk for work injuries and can impede recovery when injuries do occur. Work wellness and preventive programs can help to screen, intervene, and manage many of the conditions cited on this list, and can have a salutory effect on occupational disability programs as well.

Americans With Disabilities Act (ADA) compliance

Wednesday, October 20th, 2004

How do you hire the right worker for the right job but avoid violating the ADA in the process? Michael at George’s Employment Blawg has done stellar work in unearthing some great Web resources on the topic so we are going to pass on the fruits of his labors and offer thanks for the pointers.
First and foremost, every job should have a written job description that describes the essential functions of the job. The job descriptions section of the Job Accommodation Network is an excellent resource to help in building descriptions that are ADA compliant.
Another unique set of tools that could be useful in developing job descriptions are 450 career videos available from America’s Career InfoNet. These short clips depict people performing the job, and describe the nature of the work involved in the job. In addition to being useful for developing job descriptions, they might also be helpful in planning return-to-work assignments.
Interviewing prospective employees is the next step in hiring. Michael points us to a good resource on asking the right questions to ensure ADA compliance. And to test your compliance quotient, take this quiz to see how successful you are at avoiding improper interview questions.
More information:
Job Accommodation Network
U.S. Department of Justice Americans with Disabilities Act Home Page

Additions to our resource and weblog sidebar

Monday, October 18th, 2004

It’s been awhile since we added any weblogs or tools to the sidebar, but we’ve been collecting some excellent new links. If you haven’t checked out the sidebar over on the right, make sure you do…we try to dig up some of the best workers comp-related web resources. Take the time to browse around every now and again – you’ll find some good tools. And be sure to visit some of the other fine webloggers in our “blogroll.”
TradePub allows you to sign up for dozens of free trade publications. Thanks to Anita at Small Business Trends for the tip.
HR Blog is an adjunct to Boston Works, the Boston Globe’s job site. It features links to human resources and recruiting information.
LaborProf Blog is a weblog by Professor Rafael Gely of the University of Cincinnati College of Law.
Laboring Away at the Institute is a weblog by Tulsa OK lawyer & organization development consultant Phillip Wilson. has a wealth of information. It’s a comprehensive resource ranging from a news aggregator to state-specific information and links.
American Journal of Managed Care and the Case Management Society of America are good managed care/medical resources.

Preparing for Flu Season

Friday, October 15th, 2004

With the dramatic shortage of flu vaccine, employers are facing some daunting problems this coming flu season. The limited available shots will go to high priority populations: very young children, the elderly and the chronically ill. For relatively healthy people, flu shots are unlikely to be available. This means, in turn, that the average workplace is much more likely to be confronted with flu-infected employees. What should be done?
The best way to prevent the spreading of flu is for the sick person to stay home. This sounds easy, but it isn

Compensability: deviation from employment and “personal comfort” doctrine

Thursday, October 14th, 2004

Recently, Florida appellate courts issued rulings on two cases on issues related to deviation from employment and personal comfort. Essentially, these are nooks and crannies having to do with the issue of compensability. Injuries are compensable if they arise out of and in the course of employment. Sounds simple? Not so: Thousands of court challenges have occurred interpreting those few seemingly simple words. Is a worker covered while driving home from work? Is a worker covered while they take a break or go to lunch? Is a worker covered while running a personal errand during a business trip? Is a worker covered when injured at the company picnic? The answer to all these questions would be “maybe.” Specific circumstances would dictate a yes or a no.

In the first Florida case, Galaida v. Autozone, Inc. 29 Fla. L. Weekly D2160d (Fla. 1st DCA Sept. 27, 2004), a worker was denied benefits for an injury sustained while on a smoke break in the company parking lot. Autozone allows employees to take smoke breaks, and the employee went to his car to get his cigarettes. When he opened the car door, his gun fell out of the car, discharged, and shot him in the foot. The claim for the resulting injury was denied not because it occurred during a break – that is an acceptable deviation for personal comfort – but because the employer had a policy against possessing firearms on company premises, and therefore, this incident was deemed a serious deviation from the course of employment.The employee subsequently appealed the denial based on the doctrine of “personal comfort.” The Appeals court upheld the denial, stating that:

The personal comfort doctrine incorporates a foreseeability element to the cause of injury. Thus, in Holly Hill Fruit Products 473 So. 2d 829, 830-1 (Fla. 1st DCA 1985), an employee who was injured while crossing a street to purchase cigarettes was held to have sustained a compensable injury because the ‘trip was a foreseeable and non-prohibited refreshment break activity, and employer’s authority over claimant was not significantly dissipated during the course of the trip.’ Similarly, in B & B Cash Grocery Stores v. Wortman, 431 So. 2d 171, 174 (Fla. 1st DCA 1983), an employee injured while attending to his personal comfort by washing off in a river was held to have sustained a compensable injury because ‘diving into the Alafia River was a momentary deviation without obvious danger, was impliedly tolerated, and was reasonably foreseeable.’

Being exposed to a firearm, however, is not a foreseeable consequence of an authorized cigarette break, especially when the possession of a firearm is strictly prohibited by the employer.

Workers compensation state news: CA, IA, IL, NV, OR

Tuesday, October 12th, 2004

Is the California Workers comp overhaul providing relief? Some don’t think so. Injured workers still face lengthy delays in getting treatment and resolving insurance claims. The main reason is that the new legislation took effect before critical rules and guidelines could be developed to accompany it, according to The Sacramento Bee. Officials say the new rules will not be ready before Jan. 1.
Iowa lawsuit challenges workers compensation rules
“An injured Iowa worker has filed suit against the state, claiming that legislation containing new workers’ compensation rules approved by lawmakers was constructed in a manner that violates the state’s constitution.
Gertrude Godfrey of Sioux City claims in a petition filed in Polk County District Court that lawmakers unlawfully rolled the new workers’ comp regulations into an economic development package along with several other provisions.
Her Des Moines attorney, Martin Ozga, said Godfrey, 63, suffered a lower back injury while working at a bakery thrift store and is seeking compensation.
The new rules, promoted by Republican lawmakers, limited an employee’s ability to recover workers’ compensation dollars when they have been injured on the job more than once.”

Other reports state that this challenge could threaten a new $87 million business tax break as well.
Illinois panel to study Hispanic immigrant work-related deaths
Kudos to Gov. Rod Blagojevich for appointing a panel to study the high rate of work-related deaths among Hispanic immigrants and to identify ways to lower the risk. We hope other states will follow suit.
“Blagojevich said two potential improvements would be to tighten health and safety requirements in the state’s day laborer law, and to increase bilingual worker training. Last year, of the 5,559 work-related deaths recorded nationwide by the federal Labor Department, 72 percent of the victims were whites, 14 percent Hispanics, 10 percent blacks, 3 percent Asians, and the rest were of other races or ethnicities.”
Nevada – Decrease proposed for workers’ compensation insurance rate
“State Insurance Commissioner Alice Molasky-Arman says she will make a decision in about one month on a recommendation to lower by 6.5 percent the average rate paid by businesses for workers’ compensation policies. She said this was the second straight year the National Council on Compensation Insurance has suggested a rate reduction.
But Dick Rottman, owner of a Reno insurance company and former state insurance commissioner, said he couldn’t understand how that national group is calling for a rate decrease in industrial insurance rates.
Rottman said there are double-digit increases in medical costs. And the 2003 Legislature changed the permanent partial disability law and in some cases the cost for injured workers has risen 15 percent to 20 percent.”

Oregon – No workers’ comp rate increase in 2005, Kulongoski says
Governor Ted Kulongoski recently said Oregon workers’ compensation insurance rates will not increase in 2005, and noted this was the third straight year without an increase following 12 consecutive years of rate reductions that began with a major reform in 1990 that has saved Oregon businesses a total of about $10.1 billion.
Critics said rates could be even lower if voters approve a ballot measure in November that would abolish SAIF Corp., the state-owned workers’ compensation insurer, and leave the market to private companies.
There “are other states where measures like this have passed and rates have gone down,” said Lisa Gilliam, spokeswoman for Oregonians for Accountability, a campaign to eliminate SAIF funded by Liberty Northwest, a subsidiary of Boston-based insurance giant Liberty Mutual.