Archive for April, 2005

Administrative note

Friday, April 15th, 2005

We’re all traveling over the next week or so – some of us will be at RIMS – so blogging may be light. While we’re gone, we will be turning comments off – we are being bedeviled by comment spam and won’t be here as frequently to weed the garden. We should be back to regular posting the week of the 25th.

Docs and Jocks: Exclusive Remedy for a Pro Football Player

Wednesday, April 13th, 2005

I set out this morning to blog the general status of “exclusive remedy” in the workers comp system, but I’ve been distracted by a specific case which involves an injury to a professional athlete. I will return to the more general ramifications of “exclusive remedy” in a few days.
Greg Lotysz was a lineman for the New York Jets. In July of 2000 he sustained an injury to the anterior ligament of his left knee while blocking another player during pre-season practice . Pursuant to his NFL Player contract and the players’s Collective Bargaining Agreement, he received care from the Jets’ Medical Department. Lotysz underwent surgery and post-surgery rehabilitation under the care of the Jets’ physicians. A post-surgical infection resulted in permanent damage to his knee, which in turn brought a premature end to his football career.
No Malpractice Here
Lotysz tried to sue the team doctors for $10 million in damages, but in December of 2002 an appeals court in New York ruled against him. The court found that the doctors were employees of the Jets, that their medical services were made available to plaintiff as a consequence of his employment and that their services were not available to members of the general public. In other words, the court viewed the team doctors as co-workers of the same employer, so tort liability was not available as a remedy. You cannot sue your employer and you cannot sue co-workers for work-related injuries. Comp was the “exclusive remedy” for the injured player. It’s interesting to note that the unions for all the major pro-sports leagues (NFL, NBA, NHL and MLB) filed a friends-of-the-court brief in Lotysz’s behalf, arguing that team doctors are actually independent contractors. (You can view a detailed case study of Lotysz’s story here.)
The fact that Lotysz’s claim falls under the workers compensation system is not all bad. While he cannot sue the doctors for malpractice, he is eligible for indemnity benefits (admittedly chump change compared to a professional lineman’s salary) and for lifetime medical benefits for any treatments related to the injury (given the apparent permanency of his disability, this could turn out to be a significant benefit).
It is important to note that hospitals and similar medical facilities that treat both the public and their own employees may not find the courts so receptive to the “exclusive remedy” approach. For the most part, when hospitals treat their own employees for work related injuries, they become a third party vendor. If employees are unhappy with the treatment, they usually have the option of pursuing tort remedies. The main difference, I would guess, is that the hospitals routinely treat the public, while the “team doctors” have a more limited practice.
Docs and Jocks
The Lotysz opinion is binding only in New York. It’s possible that under similar circumstances other states will conclude that team doctors are indeed third parties and thus liable to lawsuits for malpractice. In the world of professional athletics, the medical profession is intricately involved in what from time to time may be ambiguous circumstances. With such enormous sums of money at stake, owners may pressure doctors to rush star athletes back onto the field. Permanent damage may result. Under these circumstances the player will certainly want to pursue a tort remedy. Whether this option is available to the athlete remains a state by state situation.

New tools and weblogs for our resource sidebar

Monday, April 11th, 2005

Today, we have an array of new widgets and reference materials to add to the “Cool Tools” section of our sidebar, along with a few new weblog discoveries to add to our ever-growing list.
Want to know what the cost of a poor hiring choice is? Compute the cost of a bad hire or calculate the cost of turnover – it generally makes good economic sense to invest in and keep your current work force happy.
The U.S. Small Business Administration bills itself as the voice for small business in the federal government, as well as the source for small business statistics. If you are curious about statistics related to the size of firms, or how many nonemployer businesses there are, this site offers some good research data.
With the shakeup in the brokerage world today, lots of innocent people are suffering job disruptions. Ultimate Insurance Jobs or Insurance Workforce are some resources that might come in handy.
Among its many fine resources, the Insurance Information Institute offers a comprehensive Glossary of Insurance Terms.
Noteworthy weblogs
Actuarial News by Tom Troceen is a stylish weblog that is “a resource for both aspiring students and seasoned actuaries as a place to gather information on current events that affect how we do business and where we are headed.”
Medlogs is a medical news and weblog aggregator that displays headlines and excerpts from than 80 blogs by docs and medical professionals. Great source.
Construction Law Blog by Dave Seitter is “dedicated to the explanation and clarification of the often complex legal issues involved in the day-to-day operation of a construction related business.”
Unintended Consequences is Doug Simpson’s weblog of “research on the collision of law, networks and disruptive technologies.”

When Disability Pays

Thursday, April 7th, 2005

Perhaps the most fundamental condundrum of workers compensation (and other forms of disability insurance) is this: when a worker is paid for being sick, there is a strong disincentive for getting well. Employers and insurers have long been frustrated by this problem. Attorneys have long viewed it as a business opportunity. And now the doctors are beginning to confront this profound fault line in the world of medicine.
In an article by E. J. Mundel at, a “meta-analysis” of 211 research studies from across the globe reveals that indemnity (lost wage) payments have a strong influence on medical outcomes. (The full article, available only to subscribers, is in the April 6 issue of the Journal of the American Medical Association.) In all but one of the studies, workers receiving financial compensation for work-related injuries were almost four times more likely to have poorer long-term medical outcomes than uncompensated workers.
“Essentially, the worker is getting paid for being sick, and it’s hard for anyone who’s being paid to get sick to get well,” said Dr. Robert H. Haralson, immediate past president of the American Academy of Disability Evaluating Physicians, and the current executive director for medical affairs at the American Academy of Orthopaedic Surgeons.
According to Haralson, who was not involved in the study, this phenomenon “has been known for years” among orthopedic surgeons treating such common, tough-to-diagnose workplace problems as back pain or carpal tunnel syndrome.
“It’s very frustrating” for doctors,” he said. It’s very frustrating for employers and their insurance carriers, I would add.
Attorney Involvement
It’s no surprise that attorney involvement has an adverse effect on medical outcomes. “If a lawyer is involved, it’s five times as expensive as if a lawyer is not involved,” noted Dr. Edward Bernacki, director of occupational medicine at Johns Hopkins University School of Medicine, and past president of the American College of Occupational and Environmental Medicine. While the workers might experience some ambivalence about getting better, there is less ambivalence for the attorney: it’s in his or her financial interest to present the medical aspects of the disability in the most negative possible light. The better the employee feels, the less money is in it for the attorney. If the employee fully recovers, the attorney is out of a job!
Best Practices
Doctors are catching on to the need for a quick return to work. Dr. Haralson says that the most common problem in these situations is back pain, and “there’s good evidence that what you ought to do with back pain is head back to work within a couple of days — even if you continue to have some pain.”
Back at work, the injured workers should initially avoid tasks that might exacerbate symptoms. (We call this “temporary modified duty.”) The important thing, according to Haralson, is to keep injured workers from what he called the “disability cascade.”
We are in total agreement with Dr. Haralson’s comments. Indeed, they provide a concise restatement of the defining principles of a well-structured return-to-work program. We also agree with him that few workers plan out a disability path for themselves. “It’s not that the patient lays awake at night thinking “OK, I’m going to go fool the doctor tomorrow,'” he said. “It’s much more complicated, it’s more of a natural human phenomenon.” What�s so natural? When you are paid for not working, your subconscious may have difficulty generating the motivation to get back to work.
We are not suggesting that there is no role in the system for attorneys. Indeed, when employers and carriers deny legitimate claims, attorneys are essential. We are also not implying that indemnity payments are not needed or that injuries never require time away from work. But we do believe that the main cost driver in the workers compensation system is delayed recovery and medically unnecessary time away from work. That’s why we urge employers to move aggressively in the first hours and days following an injury: support the worker, secure first class medical treatment, and get the worker back to the workplace as quickly as possible. When a worker is away from the workplace, being paid not to work, there is a powerful risk of a bad outcome for everyone.

NCCI 2005 Issues Report – a look back, a look ahead

Wednesday, April 6th, 2005

Every spring, NCCI publishes a series of reports that paint a portrait of the workers compensation industry’s health. These include an annual “Issues Report,” followed later by a “State of the Line” report. For those of us who work in the industry, these reports offer a quick look of where we’ve been and provide a cookie trail for where we are likely headed. They are mandatory reading for industry insiders, but they are not just for insurance wonks. If there’s one drum we continually like to beat here at Workers Comp Insider, it’s that the more employers understand about the insurance industry, the better prepared they can be to weather any market vagaries.
The 2005 Issues Report has been released, and in his Annual Snapshot (PDF), executive director Stephen Klingel paints a good news/bad news scenario of a market in transition. Some of his observations include:
Insurer reserve deficiencies were reduced by approximately $5 billion dollars. Although improved, reserve deficiencies are still a problem. In workers comp, losses have the famous “long tail” – that is, they play out over years. Insurers set aside reserves for the estimated cost of the claim. If they don’t set aside adequate reserves, when it’s time to pay the piper, insurer insolvencies occur and havoc ensues. Insurer insolvencies still loom as a potential problem.
Medical costs – particularly prescription drug costs – are still galloping away. Wage replacement was always the largest share of lost time claim cost, but now medical costs represent 55% of the cost, on average. In some states – AL, AZ, IN, KY, TX, and WI – the cost approaches 70%.
Frequency continues to decline. That’s good news. It means that employers are doing a better job in the area of safety. NCCI reports “significant declines occurred in fatal, permanent total, and permanent partial claim frequency.” But on the flip side of the coin, severity is increasing. That means that the medical costs and/or the duration of claims are rising. Not so good.
Terrorism Risk Insurance Act (TRIA) uncertainty looms. The uncertainty about whether Congress will extend TRIA casts a pall over the industry. The clock is ticking, it is due to expire at the end of the year. TRIA provides a federal backstop or safety net for insurers in the event of any catastrophic events. Because workers comp is mandatory coverage, it is a line of insurance that is particularly exposed – insurers can’t exclude terrorism coverage when issuing policies.
The residual market is stabilizing. The residual market is sometimes called the assigned risk pool, or more familiarly, “the pool” or “the market of last resort,” while the rest of the market is known as the voluntary market. If you are an employer, you might get thrown in the pool for any of a number of reasons: your loss experience may be terrible or you may simply be in a high-risk industry. For one reason or another, no one wants to write your policy. NCCI reports that the residual market now represents about 13% of the total premiums, up from about 10.7% in 2003. However, the rate of growth for the residual market appears to be appears to be slowing.

Workers without Health Insurance

Monday, April 4th, 2005

As the costs of health insurance rise, the number of people who cannot afford it rise, too. An article in the Los Angeles Times (registration required) addresses the issue of people spending more of their income on health insurance, to the point where they can no longer afford coverage. Working families are devoting as much as 25% of their income for health insurance, forcing them to reduce other expenditures drastically. Of course, this is not a new issue. We blogged it back on March 9, 2004.
“More people are nearing a tipping point,” says Mark Goldberg, senior vice president for policy at the National Coalition on Health Care, an organization of businesses, provider groups and pension funds that advocates for affordable healthcare. “Eventually, something has to give.”
Like the house-rich, cash-poor who stretch their finances to pay for housing, those who are barely holding on to their coverage are increasingly known as the “insured poor.” Eventually, many probably will lose the battle, joining the 45 million Americans without medical coverage.
The Times article points out that more employers also are capping the amount they spend on health costs, meaning they’re no longer increasing what they contribute to an employee’s plan. So as premiums rise, employees are on the hook for paying for them, which in effect is a cut in pay by the amount of the increase. In addition, as premiums climb higher and higher, a small but growing number of companies, mostly smaller firms, have started dropping employee health insurance altogether.
The Kaiser Foundation estimates that in 2001 about 15% of the workforce lacked health coverage. In Florida, the figure appears to be 20%. While a number of states have gotten involved to the point of providing coverage for minors, the needs of adults have not really hit the radar screen.
Implications for Workers Compensation

The worst jobs in history

Saturday, April 2nd, 2005

Some point to the medieval guilds as the origin of workers comp; others see the emergence of workers comp as a response to the industrial revolution when dangerous factory jobs grew more prevalent. But the truth is, hard working laborers have been battling dangerous and unpleasant work conditions from time immemorial. The Worst Jobs in History is a journey through 2,000 years of British history and the worst jobs of each era. It is an alternately amusing and horrifying look back at the types of jobs our forebears held, and a description of the work conditions they faced. So if you ever wondered what it would be like to be a Medieval fuller or leech collector, a Tudor woad dyer or groom of the stool, a Stuart nit-picker or plague burier, or a Victorian rat catcher – now’s your chance to find out. You can even take a skills assessment quiz to see which jobs might be best suit you. Jobs for women were relatively scarce – so if I had a career, it is likely I might have been a wise woman or a fish wife