Archive for February, 2008

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Ohio State University (Finally) Discovers Modified Duty

Friday, February 29th, 2008

We came across an article in the Columbus Dispatch by a reporter with the irresistible name of Encarnacion Pyle. It’s about the “novel” use of temporary modified duty at Ohio State University. With its workers’ compensation costs nearing $10 million a year, OSU finally discovered the idea that has been circulating among enlightened managers for 20 years or more: “moving ill and injured workers to less-demanding jobs instead of leaving them at home while they recover.”
The new modified duty program has already saved OSU $4 million — more than double what the college had expected. That number doesn’t include savings from hiring fewer temporary workers and from projected reductions in premiums for workers’ compensation insurance. Lower premiums probably will produce $500,000 in savings this year and reach $1.5 million annually within five years.
“We save money, and our employees feel productive and learn new skills and make new friends,” said Tori Weeks, who manages OSU’s disability programs.
Since January 2007, Ohio State has reassigned 500 employees — about 95 percent of the workers with temporary medical or psychological restrictions on what they can do. The other 5 percent are in the hospital or are hurt too badly for even light assignments, such as data entry.
I am tempted to ask OSU: “Where have you been?” Modified duty is not something that takes years to develop in a laboratory. You don’t have to wait until costs are wildly out of control to implement the program. But rather than criticize OSU for being so low to respond to the problem, let’s give them credit for implementing a first class program.
Healing Words
Our esteemed colleague, Dr. Jennifer Christian, CEO of Webility.md and a guru in occupational health, finds more news in the OSU program than I did. Here is her take on the article:

Two people have sent me this happy story about the financial
payback of a stay at work/return to work program from an Ohio newspaper — and it has
some really good phrases that might be helpful to you in marketing
these programs to employers. Selling ideas requires skill with
language because the words you use are going to create a response in
the gut/heart/head of the listener.
1. The first one is in the topic sentence: “moving ill and injured
workers to less-demanding jobs instead of leaving them at home while
they recover.” Note this: “moving” instead of “assigning”
or “putting” sounds more benign. “Leaving them at home” is similar
enough to “leaving them alone” that it creates the feeling in the
reader that staying home is like being abandoned.
2. The second one is “We save money, and our employees feel
productive and learn new skills and make new friends.” Note this:
this sentence is a list of THREE different areas of benefit to the
worker.
3. The third one is “by avoiding the workers’ compensation system,
workers receive their regular pay no matter where they end up during
their reassignment.” Note this: the word “avoiding” the work comp
system really emphasizes that this is protecting the working!
OK, I admit it. I am a word nut.

Jennifer has done a nice job of diagnosing the spirit and language of the OSU program that make it special. OSU has infused the return-to-work program with positive energy. OSU might have taken its sweet time to develop the program, but they have brought a subtle dimension of compassion and thoughtfulness that is instructive to those of us who have been developing these programs for decades. Thanks to OSU for doing it the right way – and thanks to Jennifer for recognizing their accomplishment.

Posted in Best Practices | 1 Comment »

Cool tools

Thursday, February 28th, 2008

From time to time, we like to share a mixed bag of useful tools ranging from health and safety resources to productivity enhancers. Here are our latest finds:
Compliance – State labor legislation enacted in 2007 – the Monthly Labor Review’s 29-page PDF offers a summary of major labor changes on a state-by-state basis, including minimum wage, immigration initiatives, child labor, worker privacy, and many other legal matters.
Trucking – Safe Stat is a safety resource for trucking, transportation and fleet safety. It’s a Department of Transportation site that includes such features as SafeStat, Crash Profile, Program Measures, and Current Analysis Results.
California – PD Rater bills itself as “a free benefits calculator for California.
Georgia – Georgia Tech’s OSHA 21D Consultation Program provides a free, confidential, on-site consultation service for small companies (fewer than 500 employees) in Georgia that need assistance in occupational safety and health.
Spanish – Georgia Tech’s OSH program also offers construction safety information in Spanish: Seguridad en la Construcción. The program includes posters, fliers and PowerPoint presentations. Other Spanish safety programs are also available.
Annoyances – Do you ever make a quick call and find yourself stuck in a nightmare automated loop and you can’t access the service you called for? Grrr. Here are two services that might help. Get Human is a company-specific database of phone numbers that will bypass the robots and get you directly to a human customer service rep. Sometimes they provide a direct number and in other cases, they give you the magic formula code numbers that will get you through. I’ve used this service a few times and it works. Someone also recently pointed me to an alternative service along the same lines, except it will do most of the work for you. Bringo! allows you to choose a company that you’d like to call from a list, you enter your number, and Bringo will call you back and connect you after they get through the phone tree and reach a human.
Travel productivity – If you travel a lot for work, FlightStats might be a lifesaver. The site allows you to track lights in real time, check on airport delays and wait time, and a links to a variety of other flight-related tools.
Search – Google has more search tools and web tools than you probably realized, some tucked away in various corners of Google that you may not have occasion to visit. Simply Google lets you access all Google’s tools one page without having to poke around to find them.

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Posted in Tools & Resources | 1 Comment »

White Collar Crimes: Marsh & McClennan, AIG & GenRe

Wednesday, February 27th, 2008

A few days ago we blogged insurance crime for amateurs: the saga of Regency Insurance, which was an insurance operation in name only. Today we deal with three big Kahunas: Marsh & McClennan, AIG and GenRe. When it comes to insurance crime, it just doesn’t get any bigger than these folks.
Before we get to the particulars of the Marsh situation, we need to acknowledge the ambiguity that lies at the heart of the agent’s role. In recommending the best insurance product for their clients, agents face a “perverse incentive.” The lower the premiums for the client, the lower the agent’s commission. The agent has a financial incentive to place the business either with a more expensive carrier, or with a carrier who pays higher commissions. The interests of the agent and the client are not always aligned.
Which leads us to the clever solution fashioned by some folks at Marsh. Bill Gilman and Ed McNemmy, former Marsh executives, solicited inflated bids from some (cooperating) carriers, so that the carrier they preferred would appear to be the lowest bidder. That’s illegal, of course. Bill and Ed have been convicted of one count of bid rigging and face up to four years in prison.
Gilman’s attorney, Robert Cleary, has not given up the fight. “Bill Gilman was really the client’s best friend and the insurance carrier’s worst enemy,” he says. “We look at this as merely round one.” That’s an interesting statement, which goes right to the heart of the matter. Gilman was many things, but given his cosy relationship with the carriers who participated in the scheme, he certainly was not “an insurance carrier’s worst enemy.”
Big Names, Really Big Mistake
The second criminal act involved two insurance behemoths: AIG and GenRe. AIG has a justly deserved reputation for insuring anything that moves (and some things that don’t), the bigger the better. Nothing wrong with a hearty underwriting appetite, but in embracing some pretty exotic risks, the company is vulnerable to big losses. So Christian Milton, AIG’s VP for reinsurance, cooked up a deal with GenRe to hide half a billion in losses: GenRe wrote a policy to “cover” the losses, when in fact AIG was still on the hook for payment. In other words, this was risk transfer (insurance) without the risk or the transfer.
Why bother? By cooking the books, AIG artificially inflated its profitability – and the value of its stock. High losses magically disappeared from the books. Ingenious, yes, but illegal. By participating in this fraud, GenRe executives are facing serious fines and jail time. We’re talking about people at the very top of the insurance food chain: Ron Ferguson, 63, former CEO of Gen Re, was found guilty on charges of conspiracy, securities fraud, false statements to the SEC, and mail fraud; Elizabeth Monrad, 51, CFO of Gen Re, was found guilty on charges of conspiracy, securities fraud, false statements to the SEC and mail fraud; Robert Graham, 58, SVP and assistant general counsel, was found guilty on charges of conspiracy, securities fraud, false statements to the SEC and mail fraud.
These former executives were mostly “boomers” – nearing undoubtedly lucrative retirements. The one exception is Liz Monrad, whose financial skills helped her break through the glass ceiling for women – only to crash back through it by her willing participation in fraud. These highly trained professionals are facing substantial jail time and fines for their cozy deal with AIG – a deal that ironically held no risk for GenRe. Ultimately, there was plenty of risk, just not the type they included in their calculations.
Why did these very well paid executives stake their careers on these ill-advised schemes? The motivation is not much different from that of the losers who concocted the Regency Insurance scam: sheer greed. There was (and is) a heck of a lot of money on the table. They did it because they could, and because they assumed with the customary arrogance of the truly powerful that they would get away with it. Which serves as a reminder to the rest of us that we all participate in ethical risk assumption and risk transfer, every day of our lives. Let’s hope we do a better job of it than these (former) captains of the industry.

Posted in Insurance & Insurers | 2 Comments »

When play becomes work, or the case of the traveling employee

Tuesday, February 26th, 2008

There are various circumstances in which an injury that occurs during a recreational activity might be compensable. One exception might be if the injury occurs on company premises or at a company-sponsored event, a likelihood that approaches near certainty if participation in the event was mandatory. Another common exception is in the case of traveling employees. When employees are engaged in business travel on behalf of their employer, compensable activities may encompass a variety of activities that would likely not be compensable for a “fixed place” employee. For the purpose of workers compensation, a traveling employee is generally considered to be working continuously during the business trip unless a special deviation from business can be determined. Daily life and personal comfort activities that would not be covered at home are generally considered work: eating, sleeping, and traveling, for example, as well as some recreational activities.
Roberto Ceniceros of Business Insurance has a brief write-up of a judgment by Washington’s Supreme Court that offers an excellent illustration of the traveling employee doctrine at work. Alfred Giovanelli was a skilled firebrick mason who regularly traveled the country to rebuild and fix furnaces for Saint-Gobain Corporation (formerly Ball-Foster Glass Container Company). During one assignment at one of the company’s plants in Seattle, he was injured on his day off. He was headed to a park with his supervisor to investigate a concert, but on crossing the street in front of his hotel, he was struck by a vehicle and grievously injured. He applied for and was granted workers compensation. His employer continued to appeal on the basis that the Giovanelli was engaged in a recreational activity that had no business purpose. The appeal wended its way through the various strata of the court until the matter reached the Supreme Court where compensability was upheld. In his article, Ceniceros notes:

The doctrine–also known as the “commercial traveler rule” or the “continuous coverage rule” — generally states that a traveling employee is considered to be in the course of employment during his or her entire trip, except for “a distinct departure on a personal errand,” court records show. The case document – Ball Foster Glass Container Company v. Alfred Giovanelli and the Department of Labor and Industries in the State of Washington – is worth a read. It’s pretty plain-spoken and it illustrates various principles that generally apply to workers compensation. It offers a brief history of how workers comp evolved, and the adoption of the British Compensation Act’s formula of an injury “arising out of and in the course of employment” – nine not-so-simple words that have spawned innumerable court challenges. The document discusses this phrase in this context and moves on to discussing the matter of whether Giovanelli fit the definition of a “traveling employee” (yes) and the meat of the case, whether Giovanelli had “left the course of employment” when he was injured. In its discussion, the court referenced a few cases when compensability for recreational activities was denied:

Although distinguishing between reasonable personal ministrations and purely
personal amusement ventures may be difficult, courts have had little difficulty denying compensation for unusual or unreasonable activities. See, e.g., E. Airlines v. Rigdon, 543 So. 2d 822 (Fla. Dist. Ct. App. 1989) (denying compensation for employee injured during skiing trip at resort over 50 miles from hotel); Buczynski, 934 P.2d 1169 (hot tub injury occurring in hotel 150 miles away from convention
center and days before convention not compensable).

The employer argued that Giovanelli’s activity was a deviation and that crossing a thoroughfare without the right of way was an “inherently dangerous” activity. The Court disagreed, citing the personal comfort doctrine, and finding that negotiating unfamiliar streets is one of the typical risks that a traveling employee faces. In the discussion of personal comfort, the Court stated:

The scope of activities covered by the personal comfort doctrine depends on the particular circumstances of employment. A traveling employee is entitled to broader coverage than a nontraveling employee because a traveling employee is in a significantly different position of risk than a nontraveling employee. The nontraveling employee may satisfy his personal needs without leaving the comfort of home. In contrast, the traveling employee must face the perils of the street in order to satisfy basic needs, including sleeping, eating, and seeking fresh air and exercise.

In evaluating this particular activity, the Court found that Giovanelli’s crossing the street did not represent a significant deviation from the course of employment.
For further discussion on these matters, see Jim Pocius’ excellent discussion of Workers Compensation and Course of Employment. He looks at the issues of course of employment, fixed place versus traveling employees, and scope of employment. He also offers excellent advice to employers on how to minimize risk:

  • Make social events voluntary. An employer should not make attendance at a social event mandatory. The less control that an employer exerts over social events, the less chance there will be that an injury during a softball game, volleyball game, basketball game, etc., will be considered within the course of employment.
  • Enforce work rules. If the employer has a valid set of work rules that are enforced, such employee behavior as fighting, foul language, and wandering to restricted areas of the plant can all be considered activities which would remove the employee from the course of employment.
  • Keep traveling employees to a minimum. There are innumerable cases of traveling employees being hurt while in vehicles, hotels, and restaurants. In order to avoid this liability, traveling employees should be kept to a minimum if your business permits.
  • Do not send fixed place employees on special missions unless absolutely necessary. If your employees work at one location, the employer must try to keep casual missions by these employees to a minimum. Thus, sending an employee to obtain a form at a state office building or run other errands increases workers compensation exposure.
  • Investigate all claims. As always, good factual investigation on any questionable course of employment claims will pay dividends during litigation.

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Posted in Compensability | 1 Comment »

S. 2044: Obama weighs in on independent contractors

Monday, February 25th, 2008

The fact that a U. S. Senator has filed a bill on independent contractors is not a major news item. But the senator is Barack Obama, and the bill, S. 2044, is entitled “Independent Contractor Proper Classification Act.” Obama has zeroed in on an issue of abiding interest to the Insider – and to all who deal with employment issues on a daily basis. (Search this site for our many postings.)
Obama’s bill would amend the Revenue Act of 1978 in three key areas:
1. Requires employers to treat workers misclassified as independent contractors as employees for employment tax purposes;
2. Repeals a ban on Treasury regulations or revenue rulings on employee/independent contractor classification issues; and
3. Eliminates the defense of “industry practice” as a justification for misclassifying workers as independent contractors.
The bill enables workers to petition the Treasury Secretary for clarification of their status. It prohibits employer retaliation against any workers filing these petitions. Language describing the petition process would be added to required workplace postings regarding employment rights. Finally, the bill requires any employer hiring an “independent contractor” to provide the following notice to the individual:

Each employer shall notify any individual who is hired…as an independent contractor…of the Federal tax obligations of an independent contractor, the labor and employment law protections that do not apply to independent contractors, and the right of such independent contractors to seek a status determinations from the IRS.

The FedEx Factor
Obama’s bill may well languish in committee. But to the degree it reveals the presidential candidate’s thinking, it is significant. I imagine that FedEx is paying close attention: the embattled delivery behemoth is fighting – and losing – a state-by-state defense of its hiring practices. Those ubiquitous “independent contractor” drivers, in their cool FedEx trucks and natty FedEx uniforms, are looking more like employees every passing day. If S. 2044 becomes law, or if Obama’s quest for the presidency succeeds, FedEx will probably have to throw in the towel. In the meantime, FedEx is undoubtedly writing a few hefty checks to a candidate whose name rhymes with “pain.”

Posted in Best Practices, Business | 1 Comment »

Health Wonk Review and other news

Thursday, February 21st, 2008

Health Wonk Review is posted at GoozNews, a first-time host for this health policy compendium. GoozNews is the blog of Merrill Goozner, who was in the news business for 25+ years as a foreign correspondent, economics writer and investigative reporter for the Chicago Tribune. His freelance work has appeared in some of the nation’s most prestigious publications. He’s also been a professor, a researcher, and an author of the 2004 book, “The $800 Million Pill: The Truth Behind the Cost of New Drugs.” All in all, a welcome new voice in our wonkosphere!
Other news notes:
Judge says second-hand smoke contributed to worker’s cancer – Roberto Ceniceros of Business Insurance reports that a NJ judge ruled in favor a casino dealer’s workers compensation claim that her 10-year exposure to second-hand cigarette smoke caused her lung cancer. Not only was she awarded benefits, but if she dies, her husband would be eligible for dependent benefits for life.
Why is workers comp reimbursement based on Medicare? – a good question posed by Joe Paduda who thinks states should start thinking now about a smarter way to pay docs.
Hide, Here Comes the Insurance Guy – We haven’t read this book, but someone passed this link along to us and we were amused by the title. The premise of the book is that all companies have risk, but few have budgets big enough to warrant a risk manager so this is a primer for all those do-it-yourself small to mid-size businesses. Sounds like it might be worth checking out.
The Myth of the Risk Manager – as long as we are on the topic or risk managers, Robe Enderle has an article on “why the risk manager position is a dead-end job.”

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TPAs, PEOs and Sham Insurance

Wednesday, February 20th, 2008

Insurance companies handle a lot of cash: a lot of money flows in (insurance premiums); a lot of money flows out (insured losses, administrative expenses, the cost of reinsurance). For legitimate carriers, a good year results when the premium dollars collected exceed total losses combined with total expenses. By prudently investing premium dollars, you can even make money when total costs slightly exceed the premium income.
What if you could eliminate, or at least severely limit, the dollars flowing out? What if you set up a scheme where you collect premium dollars, but you eliminate the step of purchasing insurance? Perhaps you pay some small claims, to keep up appearances. But when the catastrophic losses hit, you ignore them.
As far as criminal schemes go, this one is pretty stupid. There is an inevitable – and I do mean inevitable – day of reckoning, when the unpaid claims finally catch up with you.
All of which serves as an introduction to Donald Touche, Richard Standridge and Robert Jennings, operators of a diverse group of Third Party Administrators: Don ran Stat-Care out of California; Rich ran Global Healthcare and EOSHealth out of Arizona; and Bob operated Interstate Administrative and TPAOne out of Illinois. Their primary clients were professional employer organizations (PEOs). For three years – 2000 to 2003 – they sold insurance through non-existent companies: Regency Insurance of the West Indies and TransPacific International Insurance. On February 13, 2008 the house of cards came tumbling down, when all three were convicted of mail fraud, wire fraud and money laundering by a federal jury in Jacksonville, Florida.
The boys are facing some pretty serious jail time: 100 years each plus millions of dollars in fines. Gosh, it seemed like a good idea at the time…
The owners of several PEOs testified for the government. They admitted to knowing that the insurance was fraudulant. They are also going to jail, but unlike Don, Rich, and Bob, they have a chance of getting out to enjoy their retirement years.
The most damning testimony was provided by workers with catastrophic injuries. One man had lost both legs, but was unable to obtain prosthetics. Many severely injured workers had not collected any workers comp benefits. Insurance fraud of this type is not a victimless crime.
This sorry saga comes to a formal end in May, when the sentences are handed down. We are unlikely to see these three entrepreneurs on the street ever again. Their money laundering days are over, but it’s nice to imagine that their steamy days in the prison laundry have only just begun.

Posted in Insurance & Insurers | 2 Comments »

PPOs: Size Matters but Quality Rules

Tuesday, February 19th, 2008

Our colleague Peter Rousmaniere has a fascinating article on PPOs in the current issue of Risk & Insurance magazine, entitled “Has Competition Vanished?” Coventry has become the 900 pound gorilla of workers comp medical services, with 4,700 hospitals and 580,000 doctors. Through the aggressive use of acquisitions and partnerships, Coventry is approaching monopolistic status. The question, of course, is what this means for the carriers and employers using the network for workers comp. Is the Big Kahuna delivering quality services?
Coventry begins with a promise to their payers: they will secure medical services at a discount. According to one source, Coventry slashes more than 30 percent off state fee schedules. While this might be appropriate in states with inflated fee schedules (Connecticut comes to mind), it is definitely counter-productive where fee schedules are already putting the squeeze on providers. When you are dealing with as many providers as Coventry, it is tempting to grow fat off the small margin of a small margin. Unfortunately, slashing fees is no quarantee of quality. In addition, it’s often an invitation for providers to rely on quantity to make for skimpy reimbursements: repeated (and unnecessary) visits become “just what the doctor ordered.”
With its sophisticated understanding of the market it now dominates, Coventry is hedging its bets. They struck a deal with Aetna to sell and market the latter’s innovative program, Aetna Workers Comp Access. Aetna is building a network of providers selected for good clinical outcomes and economy in treatment. They have built 27 networks so far, with more on the way. Aetna is onto something important: instead of relying on discounts, they are looking for providers who understand return-to-work philosophy. Their primary concern is the quality and effectiveness of treatment.
Aetna is moving in the right direction. I hope they offer medical providers financial incentives for speeding the return-to-work process. Rather than demanding discounts, they should offer a reimbursement scheme that rewards results: fee schedule plus, not minus.
It will be intriguing to watch the partnering ritual between humongous Coventry and willowy Aetna. In many respects they are unlikely partners, with diametrically opposed philosophies. In the struggle between cost cutting and treatment quality, something has to give (and it’s usually quality). I’d like to think that Coventry will see the value of paying more for something that produces better results. If they do, we may see something truly unique: a big gorilla that really knows how to dance.

Posted in Best Practices, Business, Medical Issues | 1 Comment »

Pro Football and Workers Comp: A Violent Collision?

Thursday, February 14th, 2008

Chad Hennings spent nine years as a lineman for the Dallas Cowboys. He accounted for 28 sacks, 6 fumble recoveries, 4 return yards and 1 touchdown in 107 games before retiring after the 2000 season. He also suffered permanent damage to his back. The question is whether or not his work-related back injury is compensable under the Texas workers comp system.
The Texas workers’ comp law treats pro athletes as a special class. Under Texas Labor Code §406.095(a), a pro athlete “employed under a contract for hire or a collective bargaining agreement who is entitled to benefits for medical care and weekly benefits that are equal to or greater than the benefits provided” by workers’ comp must make an election between the two types of benefits. At first glance, it’s a no-brainer. Henning’s benefit package as a player dwarfs benefits under the comp system: he earned $1.4 million in salary and benefits in his final season with the Cowboys, including $225,000 under an “injury-protection clause,” $38,921.98 from the Cowboys to cover his medical costs and $87,500 in severance pay.
Reversing Field
At first, the court system threw Hennings for a loss. The 10th Court’s original July 23, 2007, opinion deemed Hennings’ overall contractual package of salary and medical benefits during his pro football career to be higher than benefits available under workers’ comp, thus rendering Hennings ineligible for such benefits under Texas law. But in its Jan. 30 opinion, the court reversed itself and upheld a jury finding that, in Hennings’ case, workers’ comp was a better deal for him because of its longer duration. After re-consideration, the court separated the indemnity benefit (where comp was insignificant) from the medical (where taken over a lifetime, comp might well exceed the deal offered by the Cowboys). In other words, Hennings’s medical benefit of $38,921 might well prove less than the lifetime medical charges for treating his back problems. Heck, he could blow through that in a single surgery.
Based upon the Court’s ruling, a Texas-size door has been opened for all professional athletes in the state to access the robust medical benefits of the workers comp system.
The decision may not help many retired pro athletes, because it may be too late for them to seek workers’ compensation; the statute of limitations may have run on their potential claims. (Most states require that claims be filed within 2 years or less of the occurrence.) Going forward, I would not be surprised to see players routinely file comp claims immediately after injuries, knowing that they will not qualify for benefits in the short run, but protecting their interests once they quit the game.
Rate Setting Dilemma
If professional athletes are increasingly successful in their efforts to win workers comp benefits, insurance carriers and regulators will face an interesting dilemma: determining an actuarially defensible rate for coverage. Right now, the Scopes classification manual offers just two classes for professional athletes:

Class code 9178 Athletic Team or Park: Non-Contact sports. Applies to players, coaches, managers or umpires and includes all players on the salary list of the insured, whether regularly played or not. Non-contact sports include baseball and basketball.

NOTE: Authors of the Manual obviously did not see the Detroit Piston “bad boys” in their prime!

Class code 9179 Athletic Team or Park: Contact Sports. Applies to players, coaches, managers or umpires…Contact sports include football, hockey and roller derbies.

As a point of reference, the current rate for class 9178 in Massachusetts is $23.11. Oddly enough, the rate for 9179 (contact sports) is slightly lower at $22.55. That is well below the rates for roofers and steel erectors.
NCCI might want to consider some serious revisions to the Scopes Manual. To begin with, separate classes are needed for coaches (relatively modest exposures) and players (huge exposures). They might even want to approach it in a manner similar to the construction industry, where the payroll is broken out by activity: field goal kickers, for example, are lower risks than lineman. Running backs are always at risk for knee injuries. And after the most recent SuperBowl, it appears that quarterbacks take their lives in their hands with every snap of the ball.
A Parallel Universe?
Professional athletes and workers comp are an odd mix. Where comp offers a combinatin of indemnity and medical benefits, for athletes the only issue is medical. With their enormous salaries, athletes will rarely have a need for indemnity benefits, which top out around $50,000 a year in even the more generous states. Medical benefits are a different matter entirely. When it comes to work-related injuries, comp provides lifetime coverage, with no co-pays, no deductibles and no time limits. Comp offers the best medical coverage of any kind, anywhere in the world. Just what a disabled athlete needs…
The permanent partial and permanent total exposures for football players are humongous: concussions, back injuries, blown out knees, torn rotator cuffs, torn biceps, nerve damage. Feed the injury data from pro football and pro baseball to an actuary and you’ll generate a rate that exceeds the current top ticket professions of structural steel erectors and lumberjacks. The rate would soar well above $100 per one hundred dollars of payroll.
The optimum solution lies outside of the comp system. Workers comp indemnity is simply not crafted to protect the interests of (wildly overpaid) athletes. The players associations of the various professional sports need to sit down with management and craft a parallel universe: not the conventional workers comp system, but a combination of income protection and lifetime medical benefits that contemplate the real risks inherent in professional sports.

Posted in Business, Compensability, Disability, Insurance & Insurers, Medical Issues | 1 Comment »

Cavalcade of Risk, plus a look at celebrity body parts and the matter of risk

Wednesday, February 13th, 2008


Cavalcade of Risk #45 is now posted at I’ve Paid For This Twice Already…, a blog that intriguingly describes itself as being “From financial imprisonment to financial independence, a penny at a time. This is one family’s story.” It’s a good healthy issue, lots of posts covering a variety or risk-related matters.
And while we’re on the topic of risk, one rather fascinating insurance-related item turned up in our mailbox this week that we can’t resist sharing: Supposedly, erstwhile heartthrob Tom Jones has his chest hair insured. Despite the press coverage, we don’t know if this story is fact or fiction, although it’s been making the news lately. We couldn’t verify, but a Google search turned up an older Risk & Insurance article entitled Insuring the flesh, a discussion with Jonathan Thomas, the man who underwrites celebrity body parts coverage for Lloyd’s of London. Lloyd’s is famous for being a firm with a reputation for insuring unorthodox risks. From star athletes and singers to circus performers and food critics, there are any number of celebrities who find it makes sense to insure a particular asset. In the interview, Thomas separates fact from fiction as he discusses this rather esoteric niche in risk management. Here’s just a sampling: Fiction: Jennifer Lopez insures her rear end. Fact: Marlene Dietrich insured her celebrated legs.
Slate magazine also ran an article billed as a primer on body parts insurance, which notes that you don’t have to be a celebrity to insure a particular body part – provided you’re willing to ante up the premium. They offer examples: In the United Kingdom, the members of the Derbyshire Whiskers Club insured their beards against “fire and theft,” and a soccer fan insured himself against psychic trauma if England loses this year’s World’s Cup.
These articles sent us scurrying to the Lloyd’s Web site to look for more. While a cursory search didn’t turn up much in the way of celebrity fare, we did find some interesting items that might be instructive to insurance geek and layman alike:

There are also some interesting historical articles about the Lloyd’s chronology from the 1700s on – a glimpse into the early years of our industry.

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