Archive for December, 2007

Santa Claus is a risky guy!

Friday, December 21st, 2007

SantaThere’s no two ways about it – Santa is an underwriter’s nightmare. He’s overweight, he drives too fast, and there is some evidence that he is tipping brandy while he drives. Plus he smokes a pipe and eats too many cookies.
Besides all his bad habits, Santa’s job is a nightmare, and he faces a lot of unusual health risks. He is sneezed or coughed on up to ten times a day, and he has been “wet on” in 34% of his mall stops, poor guy! And sometimes, he is even attacked and mauled by his reindeer! (video alert). And an ergonomic risk assessment of Santa’s job turns up a host of other alarming issues that need to be addressed.
Would you insure this guy? One independent insurance agent enumerates Santa’s risks and offers some sound pointers that Santa would do well to heed:

  • Hire a fulltime risk manager, or at least allow his agent to conduct a loss control and safety survey of Santa’s home and workshop.
  • Put together an employee manual and provide instructional DVDs to all supervisors and elves to avoid EPLI claims
  • Expand his in-house manufacturing operation to eliminate the use of sub-contractors and control his liabilities
  • Consider self-insuring some hard-to-place risks in a captive. Bermuda was dismissed as too warm, but Vermont would be acceptable.

~~ All of us at Workers Comp Insider wish you and yours a happy and safe holiday season. ~~

Cavalcade of Risk

Wednesday, December 19th, 2007

Matthew Paulson is hosting the holiday edition of Cavalcade of Risk at American Consumer News. The host blog is an online magazine offering tricks, tips and ideas designed to promote financial freedom. It focuses on such topics as investing, real estate, frugality, saving money, debt reduction, and more – timely topics for those of us who are in New Year’s resolution planning mode!

Last minute holiday gift ideas for the insurance professional in your life

Tuesday, December 18th, 2007

If you haven’t done your holiday shopping for that special actuary or risk manager on your list, never fear! We’ve scoured the Web to bring you a variety of last minute gift suggestions.
You should be able to find something for everyone with this huge selection of insurance-related T-shirts – “Trust me, I sell insurance” for your agent, perhaps? There are more than 290 choices. Or if you are feeling a little more daring, perhaps some “Insurance Is Fun” boxer shorts ?
If you are less into wearables and more into office decor, take your pick from a baker’s dozen of insurance-related throw pillows. We’re not sure if “bind me baby” and “kiss me, I’m all risk” pillows are the best choice for the office, but they are pretty fun.
For those of you who like to give more practical gifts, we recommend some stylish safety glasses or perhaps the ever-popular “Ultimate Hurt” trauma and extrication manikin – good choices for the safety professional on your list!
For the collector, eBay has a good selection of insurance-related ephemera ranging from insurance company mascot toys to promotional calendars and stock certificates.
If you know where to look, there’s really the perfect gift for just about everyone on your list:
For your company physician: Med School in a Box or some giant microbe plushies
For your ergonomist: Lumbar coffee mugs
For your attorney: Something rather practical perhaps? Or the talking professional dolls come in attorney, doctor, judge, and dentist models.
We’re still shopping, so if you have any other insurance-related gift ideas, feel free to offer suggestions!

Workers Comp in New Hampshire: A Cold Wind Blows

Monday, December 17th, 2007

For those of you into weather, here is what’s happening today on top of Mt. Washington in New Hampshire, home of some of the world’s most extreme conditions: it’s -13 degrees fahrenheit, with the wind blowing at 93 miles an hour. Wind chill a brisk -59 degrees. The wind has died down a bit – a few days ago it was clocked at 117 mph. That’s hurricane force, but hardly the usual tropical setting for a hurricane.
If extreme cold is not your thing, you can generate some heat in the granite state just by mentioning House Bill 471, a product of last year’s legislative session. The law requires workers comp coverage for all people within a corporation if they are “actively engaged in on-site work on any construction site within the state.” The bill eliminated an exemption for up to three corporate officers or directors.
The bill was a well-intentioned attempt to expand coverage in the system and eliminate premium avoidance. That’s all well and good, but when you factor in the very high cost of coverage in the construction trades, some small operators would rather face the winds on Mt. Washington than pay the premiums.
New Hampshire is ranked 19th for overall costs of workers comp in 2006 (as determined by Oregon’s invaluable study on state to state premiums). This was an improvement over the 2004 rank of 12th. However, a closer look at construction classes is not so favorable. Quite a few construction classes rank in the top five for cost among all the states. Here are a few examples:
– concrete construction (class 5213). $27.20 per $100 of payroll. Second highest in the country.
– excavation (class 6217). $14.81 per $100 of payroll. Third highest.
– Wallboard (class 5445). $19.66 per $100 of payroll. Fourth highest.
– Roofing (class 5551). $48.34 per $100 of payroll. Fourth highest.
When you combine the very high rates for coverage with the attempt to force more small businesses into the system, you create a very severe wind chill factor indeed. New Hampshire lawmakers have already drafted an amendment to the law reinstating the exemptions.
Solutions for the Granite State
The backpedalling by legislators does not really confront New Hampshire’s problem, which is twofold:
First, the rates – especially in construction – are too high. The state is at a competitive disadvantage when compared to other New England states (Massachusetts, despite its reputation for high taxes, has comp rates roughly half of those in New Hampshire). These high rates provide a very strong incentive for people to opt out of coverage (when given a choice) and avoid coverage altogether (legally or otherwise).
Second, the cost of insurance for independent contractors is so high, it’s absurd. (See our related blog here.) The assumed payroll is a whopping $58,100 (highest of all the New England states). Combine that with typical comp rates in the $20 range and the cost of comp for an independent contractor drifts well above $10,000 per year. For the typical small business, that is likely to exceed total profits.
So here are a couple of practical suggestions for New Hampshire. First, figure out why the cost of comp in construction is disproportionately high. Develop some incentive programs to bring down those costs. For immediate relief, follow the example of Massachusetts and drop the wage basis for sole proprietors by at least 30 percent. The unreasonable $58,100 becomes a theoretically feasible $40,670. The typical independent contractor would face a premium around $8,000. That’s still too high, but at least it’s moving in the right direction. A lower wage basis, combined with significantly lower rates, might generate real interest.
In the meantime, bundle up. We’re in for some serious weather. By Mt. Washington standards we might be having a heat wave, but it sure feels cold to me.

News roundup: Health Wonk Review, survival story, manhole covers, I.C.E. followup, OSHA agenda

Thursday, December 13th, 2007

David Harlow hosts the holiday edition of Health Wonk Review at Health Blawg, our final edition of the year. As one of the few attorneys in our HWR lineup, David lends a unique and valuable perspective to our discussions. Today, he sheds light on a variety of health matters in what may well be the largest edition of the year. Grab some coffee and holiday cookies – there’s enough good reading to carry you into the New Year.
Survival story – Thanks to Jordan Barab for calling our attention to this follow-up story to the recent scaffolding tragedy in New York: After a Window Washer’s 47-Floor Plunge, the Big Question Is: How Did He Survive?
NYC to India and back again – A freelance photographer for the New York Times captures a work scene out of the Middle Ages in India, and it happens to be a foundry with a local link: New York Manhole Covers, Forged Barefoot in India. Here’s an excerpt:

When officials at Con Edison — which buys a quarter of its manhole covers, roughly 2,750 a year, from India — were shown the pictures by the photographer, they said they were surprised.
“We were disturbed by the photos,” said Michael S. Clendenin, director of media relations with Con Edison. “We take worker safety very seriously,” he said.
Now, the utility said, it is rewriting international contracts to include safety requirements. Contracts will now require overseas manufacturers to “take appropriate actions to provide a safe and healthy workplace,” and to follow local and federal guidelines in India, Mr. Clendenin said.

Immigration raids – one year later – Chris Ortman of Change to Win follows up on I.C.E. Raids – one year later in Greeley, Colorado; Worthington, Minnesota; and Grand Island, Nebraska. Peter Rousmaniere also features an item from Morning Edition revisitng a Cargill plant in Beardstown, Illinois one year later.
OSHA’s agendaThe Pump Handle reports on OSHA’s issuance of its semi-annual agenda, noting that several of the safety issues and standards that had been on the agenda in the past are curiously missing: “The Secretary’s last regulatory agenda (April 2007) listed 38 workplace health and safety hazards for possible regulatory action, 16 for MSHA and 22 for OSHA. The newly published regulatory agenda lists only 9 items …”. The post details what’s still on the list and what’s missing.

Changing the way we see disability

Wednesday, December 12th, 2007

For a seasonal heart warmer, you can’t do much better than the creative animated ad campaign entitled Creature Discomforts (video, sound alert) that is running on BBC. The ads are sponsored by Leonard Cheshire Disability to raise awareness for and change attitudes towards disability. The theme cues off a popular BBC series, Creature Comforts.
As is often the case, the story behind the story is also interesting. The voiceovers for each of the animated characters in the spots are actual disabled persons. Flash the Sausage Dog is a man named Alex who has been disabled for 25 years since an on-the-job fall that damaged his spine. You can get a fascinating behind-the-scenes glimpse (part 2) of the making of these spots and learn more about the participants.
In workers comp, we spend a lot of time trying to prevent disability. We also focus a lot of effort on recovery and return to work programs, with a focus on “ability” rather than “disability.” It wasn’t always this way. Years ago, most employers refused to take someone back to work until they were fully recovered – even when the person was willing and could do most of the job without any problems. Early return to work was a difficult concept to sell to many employers, who were often reluctant to make temporary accommodations to ease a person back to work. Yet without an active recovery, depression and disability syndrome can often occur. For most people, income, identity and feelings of self-worth are tied to work and productivity. Today, most employers understand that helping injured workers get back to their normal lives, including work, is an important part of recovery. This is true whether an injury or illness occurs on the job or off.
To ensure success for a stay-at-work or return-to-work program, it can be helpful to get buy in from all employees. This is often best done by explaining the organization’s philosophy and policies in an orientation program or as part of other human resource communications rather than as a reactive measure when the need arises. Co-workers need to understand the importance of their support and the role they play in helping recovering and disabled colleagues in the workplace. The Creature Discomfort campaign might be useful tools to open talks or discussions about attitudes and practices related to disability.

California Scheming: The State Fund Audit

Tuesday, December 11th, 2007

Authorities are in the midst of a huge investigation of the State Compensation Insurance Fund (SCIF) for workers compensation in California. The fund is a hybrid: the employees are state workers, but the behemoth insurer is not subject to the rules normally governing state entities. They operate in secret, outside the reach of Open Meeting laws. SCIF is quasi-public and quasi-accountable. They manage $22 billion in assets, with little oversight, minimal checks and balances and what appears to be wildly indiscriminate spending. With a quarter of the state market, the fund generates $3.5 billion in premium – more than the total premium in most states. And that’s way down from the 2003 level of $7.6 billion.
There is (moderately) good news and a lot of bad news in the audit released today. The good news is that the fund does not appear to achieve anywhere near the level of corruption found the Rhode Island’s Beacon Mutual (see our posting here) or in Ohio’s “coingate.” The bad news is that there has been little accountability in the fund, with millions spent on vague IT projects and dubious marketing activities. There was rampant conflict of interest as well, with board member organizations benefiting directly from huge contracts. And there was a lot of driving around: the fund has a fleet of 2,000 motor vehicles – 1 for every 4 employees.
As with Beacon Mutual, the Fund has digested the audit and issued assurances that they will implement most of the 110 recommendations. Only time will tell. Fortunately, despite the fund’s huge level of premium, CA remains a highly competitive market. Private carriers have held their own against SCIF, which indicates that the fund did not have the grotesque competitive advantage enjoyed – and abused – by Beacon Mutual.
As for outright corruption, there is an ongoing criminal investigation involving the Highway Patrol, the Department of Insurance and San Francisco District Attorney. With all the money on (and under) the table, we can safely assume that they will find something. For the moment, when it comes to corruption, Ohio holds on to the number one spot, with RI a respectable second. My money is on California. When it comes to corruption, size matters.

Contract Workers as Employees in Texas

Monday, December 10th, 2007

There are many permutations in the employer/independent contractor matrix. The Texas Supreme Court has ruled in Entergy v. Summers that the employees of a subcontractor – in this case, International Maintenance Corp (IMC) – can be considered employees of the general contractor. The United Steel Workers cry foul: without the remedy of tort liability, they argue, employers can get away with murder.
This case brings us to the heart of workers comp system. Entergy hired IMC to perform maintenance, including “water and turbine-related, generator-related work” at its plant in Sabine LA. In the contract, Entergy defined IMC as an “independent contractor” but also stipulated that Entergy could use a “statutory employee” defense against liability. An addendum to the contract recognized Entergy as the statutory employer of IMC employees (while IMC remained the “direct employer”). Most significant for our purposes, Entergy paid the workers compensation premiums on all IMC employees working on their premises. (Of course, IMC employees were not parties to the written agreements between their employer and Entergy.)
When John Summers was injured, he collected workers comp. However, he subsequently sued Entergy as a third party for negligence. Entergy sought dismissal under summary judgment, arguing that that it was a general contractor and Summers’s virtual employer and was thus shielded from tort liability. First they won, then the lost on appeal. Finally, at the Texas Supreme Court, they won again.
The court relied on a couple of definitions:
– A “subcontractor” is a person who contracts with a general contractor to perform all or part of the work or services that the GC has undertaken to perform.” With equipment maintenance a key part of Entergy operations, the IMC people appear to fall under this definition.
– The court goes on to say that a premises owner is not precluded from meeting the definition of “general contractor.” (The appeals court based its reinstatement of the claim in part on this issue.)
Comp vs. Tort Liability
Here’s how the steelworkers frame the issue:

Worker’s compensation was never intended to compensate an injured worker fully and deals with compensation only and not prevention of an unsafe workplace. Benefits decrease dramatically regardless of the severity of the injury. Even though a worker may not be recovered or be able to fully recover, he or she is thrown out of the system when the benefits end. Workers’ compensation also does not include non-economic damages like the pain and suffering of a worker burned severely on the job and the costs his or her family bear because of the injury.

This is an interesting argument, but one that butts up against the very nature of workers comp, which is by definition the “exclusive remedy” for workplace injuries involving employees. To be sure, the benefits provided for catastophic injury are often inadequate. Comp does not take into account pain and suffering. It is by nature “no fault” – its goal is to cover medical costs and replace lost wages. There are built-in limitations in benefits that come into play as you go from state to state. It’s an imperfect system. Nonetheless, comp provides the primary protection for workers across the country.
While the Steelworkers Union finds no incentive in the comp system to provide a safe workplace, employers (and general contractors) are penalized for high losses. Comp is experience rated: this year’s losses translate into future increases in cost. To be sure, employers in IMC’s line of work – energy-related companies – often have poor safety records (did someone mention BP?). Once the “exclusive remedy” protection is breached – as happened with the explosions at the BP plant – liability soars into the stratosphere.
The steelworker’s argument is not really with the “pro-business” Texas Supreme Court – it is with the nature of workers comp itself. Comp is a no-fault system designed to protect employees who suffer work-related injuries. It also protects employers by limiting their liability. Comp is not perfect. The benefits can be stingy. But once an employer-employee relationship is established, comp is the exclusive remedy in all but a very few cases. Once Entergy took on the payment of workers comp premiums for IMC workers, the potential for tort recovery all but disappeared.

Mitt Romney: Illegal Immigrants Hit Close to Home

Friday, December 7th, 2007

It’s Friday – a good time to kick the hornet’s nest of illegal immigration and see what happens. Mitt Romney wants to be the baddest Republican dude on illegals – toss ’em out, every last one of the 12 or so million. His position on undocumented workers is similar to former MA Governor Bill Weld’s position on crime: “somewhere to the right of Attila the Hun.”
So it’s with considerable embarassment that Romney is exposed as someone who is dependent upon the labor of undocumented workers (just like the rest of us). First, it was his lawn company, which used undocumented workers, promised not to, and then was caught doing it again. Safe to say their bid was one of the lowest – as their labor costs would be lower than a competitor hiring U.S. citizens.
Then Romney gets his house painted (salmon color, for those of you who might be interested). He chose Olympic Painting and Roofing, a contractor with a long history of employment problems. (Romney probably liked the name – it reminded him of his success in running the Olympic games.) The Boston Globe quotes Olympic owner George Vasiliades as denying that he employed illegal immigrants at Romney’s house – or anyplace else.
Vasiliades’s record is spotty, to say the least. In 1998, he pleaded guilty to workers’ compensation fraud charges and failing to pay unemployment tax contributions. He was sentenced to one year probation, and ordered to pay a $250 fine, court costs, and $4,880 in restitution to three employees. Olympic is currently under investigation by the attorney general’s office for allegedly paying numerous workers off the books.
Olympic is also part of a federal investigation into the Aug. 31 death of Benedelso Ovalle of Lynn, who fell from a 2 1/2-story church in Salem while working for an Olympic subcontractor, BC Construction. Ovalle was a 17-year-old illegal immigrant from Guatemala, according to his family’s lawyer, Anne Gugino Carrigan. According to the police report, Ovalle was not wearing a safety harness before he fell, and neither were two of five other workers at the scene. (Perhaps the safety manual was written in English.)
Of course, Vasiliades defends himself by asserting that he is not responsible for the actions of a subcontractor. I’m sure he was shocked – shocked! – that no fall protection was in place.
Frozen Rhetoric?
As part of his Iowa strategy, Romney is working diligently to secure the endorsement of U.S. Representative Steve King, who has identified illegal immigration as the most important litmus test for Republican presidential candidates. When King selected a contractor to paint his own house, he was not content to secure verbal assurances that all the employees doing the work had proper documentation. He decided to hang around the house while they were working, listening oh-so-carefully for Spanish accents – a sure sign (for King at least) of illegality. Maybe Romney could pick up a few tricks about household management from King.
This post began with the image of a hornet’s nest. Let’s end with one, too. Driving to work on this frozen Friday, I saw a bird perched beside a huge football-sized nest. All the insect inhabitants were presumably frozen. The bird was plucking them out and eating them, one by one, as if they were delicacies on a platter. That image may contain a lesson for all the politicians trying to confront the undocumented worker dilemma: let’s chill out. Let’s avoid inflaming an already over-heated situation. Sometimes a little perspective and dispassion can take the sting out of an issue and make it more manageable. After all, come spring, someone has to mow the lawns and paint the houses.

News roundup: Cavalcade of Risk, modern day slavery, new NIOSH blog, and more

Thursday, December 6th, 2007

This week’s Cavalcade of Risk, the pre-holiday edition is hosted by our respected friend, Joe Paduda at Managed Care Matters. It’s a smorgasbord of links on a wide variety of risk-related topics, from the sub-prime mortgage mess to health insurance.
And for all you workers comp wonks out there, while visiting Joe’s place, be sure to check out his two-part post on the workers comp bill review industry, part 1 and part 2. These two posts are part of a planned series giving an overview of the industry sector changes roiling about in both software vendors and service providers. Joe has his finger on the pulse.
Our blog post on the new Canadian safety ads is included in this week’s Cavalcade. As a follow-on, our friend Dave at rawblogXport has linked to some media coverage of the ads:
The Ottawa CitizenThe new workplace safety ads are revolting. That’s why they work
The Vancouver SunOntario safety ads go for shock effect
The Vancouver SunWorkSafe videos posted on YouTube draw an audience
In other blog news, Peter Rousmaniere of Working Immigrants calls our attention to an important New York Times article on domestic slavery in the U.S. – hard to believe that actual slavery and human trafficking is occurring in the land of the free, but sadly, it is and it is estimated to affect 15,000 to 20,000 workers a year, about a third of those being domestic workers who are kept in involuntary servitude. We’ve discussed modern day slavery previously in relation to Florida’s orange juice industry.
Thanks to the folks at The Pump Handle for alerting us to the NIOSH Science Blog, a blog with a dedicated mission of “translating NIOSH scientific research into practice” and “engaging in robust scientific discussion with the goal of protecting workers.” The most recent post deals with workplace stress, and other recent entries discuss truckdriver safety and firefighter fatalities related to cardiovascular incidents.
Or neighbor to the north, Michael Fitzgibbon of Thoughts from a Management Lawyer, has posted about a recent Canadian study on the prevalance of depression at work, noting that that employers are increasingly having to deal with and accommodate employee absences having their root in mental or psychiatric impairments. That increase does not stop at the border – while we know of no similar study here in the U.S., psychiatric issues are a not-insignificant contributor to disability.