Archive for April, 2008

Kneading the Dough

Friday, April 11th, 2008

The Arthur Avenue Bakery in the Bronx NY is famous for its cannoli and crusty bread. The bread is not the only crusty item at the bakery. We read in the NY Times that the 50 year old institution is suddenly famous for unfair labor practices: some employees worked 12 hour days for $50 a day – an hourly rate of $4.16, well below the state’s minimum wage of $7.15. The bakery does not carry workers comp insurance. New employees often worked the first week without any pay. Some employees have not been paid for over a month. Occasionally, pay checks bounced. All in all, the bakery seems to be lacking in dough.
State officials deemed the conditions so unfair to employees, they shut the business down. The bakery can re-open only if they pay $140,000 in back wages and $37,500 in penalties for not carrying comp. That’s a lot of cannolis!
Despite the stop-work order, it appears that the bakery may still be operating. Manager Walter Galiano says he is still doing business. (The state vows to look into this.) Arthur also questions the penalty and back wage calculations of the state labor investigators. “The high school they went to did their math differently from the way my high school did math.”
It would be interesting to check out the problems in Walter’s old math book:

Walter runs a bakery. If one of his employees works a 12 hour day and the minimum wage is $7.15, how much does Walter pay the employee?
Answer: Whatever he feels like.

You’ve heard of the new math. This is New York math. You gotta problem with that?

Are bloggers the new occupational risk group?

Wednesday, April 9th, 2008

If you have bloggers on the payroll, both you and they may be at risk for work injuries – or even death! At least that’s the word according to a recent article by Matt Richtel in the New York Times, In Web World of 24/7 Stress, Writers Blog Till They Drop. Richtel describes a growing work force of sedentary workers who toil around the clock under great competitive stress to cover the latest news, “a digital-era sweatshop.” While many bloggers are either non-paid or self employed, many are employees or contractors. Some work on a piece-work basis paid by the post and others depend on pay-per-click advertising.
The article cites the examples of two prominent bloggers who recently died of heart attacks, noting that while the deaths cannot be definitively linked to blogging, certain aspects of the blogger lifestyle can lead to weight gain, inactivity, poor nutrition, and sleep disorders. Plus, many suffer stress and blogger burnout.
Of course, the story has been buzzing through the blogosphere to mixed reactions. There is no shortage of bloggers having fun with the story (Five Brooklyn Bloggers Die Over the Weekend, Latest Victims of New, High-Tech Disease; The NYT Covers Blogging) – bloggers can be a very snarky and cynical group. But while many fault the story for being a bit on the dramatic side, it raises some good points that employers should consider: sedentary workers have unique health risks. Of course, this isn’t limited to bloggers – it also includes IT workers, telemarketers, assemblers, managers, typists, receptionists, office workers – just to name but a few. Sedentary work environments can contribute to obesity, diabetes, circulatory problems, deep-vein thrombosis, musculoskeletal disorders, and other health problems.
While we haven’t seen any workers comp claims for blogging yet, employers need to keep an eye out for sedentary workers, particularly any home-based teleworkers, to ensure that health risks are mitigated and that workers comply with health and safety standards. Set an expectation that work be punctuated with periodic breaks for activity or exercises and ensure that workstations have good ergonomic design. Blogger LifeDev shares some other pointers for keeping web workers healthy.
And as for us hard working bloggers at Workers Comp Insider, we offer assurances that we are not pulling all nighters to update the blog or struggling to feed our families on a click-by-click basis. But after this article, I am wondering if our readers’ insatiable demand for the latest workers comp news might have something to do with my recent 10 pound weight gain.

New Jersey Comp: A Safety Net with Big Holes

Tuesday, April 8th, 2008

New Jersey is known for many things, including these odd tidbits: three consecutive governors broke their legs while in office (Whitman, McGreevey, Corzine); no self-serve gas; no state song; the lowest rate of depression in the US. And an idiosyncratic workers comp system that has not been changed significantly since the 1970s. We will pass on whether they need a state song (surely Springsteen could provide one), but the comp system needs some fixing.
Dunstan McNichol and John Martin, writing a multi-part series in the Star-Ledger, have done an admirable job exposing the considerable holes in the New Jersey comp system. With inordinate delays in the provision of benefits (it can take years), with no way to determine whether injured workers are receiving the benefits they need, with political patronage the order of the day in the appointment of judges, and with a bureaucratic structure that makes New York seem streamlined (yikes!), New Jersey is operating in the darkest of dark ages.
McNichol and Martin point to the plight of John DeJulio, a retired veteran working at Home Depot. He slipped on a puddle and broke his leg. It took more than three years to secure approval for knee surgery: over the course of two years he had to see five specialists and attend nine court hearings before the surgery was approved.
Claimant Joe DelDuca was involved in a work-related car crash. When a hearing on his claim was postponed for the 8th time in two years, he plowed his pick up truck through the glass entrance of a workers comp courthouse in Morris County. (No, any injuries resulting from this rash act would not be work related.) Ironically, his desparate ploy worked. One week later the judge order all parties back to court, weeks ahead of the scheduled hearing. They settled DelDuca’s claim in a few hours. Unfortunately for the claimant, he was subsequently jailed for 6 months and died within two years of his claim’s resolution.
Idiosyncrasies
New Jersey definitely goes its own way in comp. In terms of cost to employers, they are middle of the pack, ranked in the most recent Oregon study at 23rd overall. They run their own, unique experience rating system, independent of NCCI. Benefits can be generous, but they also can be extremely stingy: workers with minor injuries can receive permanent partial awards, even after returning to full duty; on the other hand, workers reaching maximum medical improvement (MMI) can lose all benefits, along with their jobs. McNichols and Martin describe the inordinate delays in accessing the second injury fund.
In most states, a workers comp advisory council oversees the performance of the system and makes recommendations for improvements. These councils, a blend of labor, management and administrators, can serve a vital function in fine-tuning benefits and in defining parameters for eligibility. New Jersey has a council, but the meetings are closed to the public and minutes are not recorded. Kind of a Star Chamber for comp, which, given the way things currently operate, is emblematic of a deeply flawed system.
Employers are generally content with the current state of affairs, because it is reasonably cost effective. The only real pain in New Jersey belongs to injured workers, who can encounter considerable difficulty in securing the benefits they need to stay afloat. I suspect that injured workers in the Garden state might have a few suggestions for a state song: the Stones’s “I can’t get no satisfaction,” or maybe the Ray Charles classic, “Drown in My Own Tears.”

Privatizing in Nassau County: A Good Idea, But…

Monday, April 7th, 2008

Nassau County in New York is currently paying about $10 million a year for the partial disability claims of former county employees. They would like to settle these claims, but as with most municipalities, their budget process offers no opportunity for fronting the costs of settlement. It’s cheaper to keep paying the claims from year to year, pushing the problem onto future tax payers.
The county is now exploring the idea of borrowing $55 million to off-load about 1,000 claims to a private insurer. In return for the one large payment, the insurer would accept responsibility for all the claims. We think Nassau County is moving in the right direction, but there are some significant pitfalls. (Perhaps county officials should read our February blog on Connecticut, which encountered serious problems in attempting the same off-loading procedure back in 2001.)
A Well-Dressed Gorilla
Any municipality seeking to privatize the handling of workers comp claims has to deal with the 800 pound gorilla, in this case appropriately dressed in a three piece suit: what is the true value of the claims being privatized? No one really knows. Because municipalities operate on annual budgets, they pay claims from year to year, presumably until the recipient dies. While actuaries could project with reasonable certainty the ultimate cost of each claim, no such projections have been made. In Connecticut, the projections were performed by untrained college students. Their guesses wildly overstated the value of the claims, resulting in grossly overstated “paper savings.” Instead of saving CT taxpayers money, privatization became a collosal rip off.
The fact that the county is spending about $10 million a year on these claims tells you very little, if anything, about the ultimate value. In fact, the only way to determine the real value is to secure a professional review of the claims, preferably before the county issues its RFP. That way tax payers will benefit from real savings and carriers will understand the actual risk of the undertaking.
Of course, the carriers are salivating at the $55 million upfront payout. They are probably so confident in their ability to make the cash grow, they could care less how accurately the county claims are reserved. Given today’s market (subprime mortgages, anyone?) a little caution is certainly in order.
We’ve been down this road many times before: county officials dreaming of million dollar savings; private carriers dreaming of healthy profits. That’s a lot of dreaming, which quickly turns into a nightmare if the process is not approached with an appropriate appreciation for the complexity of the task. A word to the wise is (presumably) sufficient.

An Apology from Walmart

Friday, April 4th, 2008

Back in November, just before Thanksgiving, we blogged the story of Deborah Shank, a 52 year old woman who stocked shelves in Wal-Mart’s Cape Girardieu, Missouri store. Here’s how we described the situation:

Seven years ago, [Deborah] was perusing yard sales with a friend when a tractor trailer plowed into her van. She was left with permanent brain damage. Walmart paid about $470,000 in medical expenses. The Shanks sued the trucking company and collected about $1 million, the limit of liability under the company’s policy.
Jim Shank, Deborah’s husband, used his portion of the settlement to buy an accessible home for his disabled wife. After paying legal fees, his wife was left with $417,000 to help supplement her care. End of sad story? Not quite.
When she signed onto the Walmart health plan, Deborah agreed that her employer would be first in line for payment out of any subrogation. [This type of language in employer health insurance policies is becoming increasingly popular.] Walmart sued Deborah for $470,000 plus legal expenses – in other words, they are suing for more than the balance of her settlement funds. They rejected the Shank’s offer to settle for a portion of their costs. And of course, Walmart being Walmart, they have won the suit.

Despite the odds, at the time of the blog Jim Shank was pursuing an appeal to the Missouri Supreme Court. We predicted he would lose and he did. End of family, end of story?
Not Quite.
The Court of Public Opinion
In an extraordinary and totally uncharacteristic move, Wal-Mart has backed away from its claim on Deborah Shank’s settlement. They won, but they have generously decided not to collect. Pat Curran, Wal-Mart’s Executive VP for operations wrote to Jim Shank: “Occasionally, others help us step back and look at a situation in a different way. This is one of those times. We have all been moved by Ms Shank’s extraordinary situation.”
Curran said that Wal-Mart would drop its claim and would work with the family on Shank’s continuing care, adding: “We are sorry for any additional stress this uncertainty has placed on you and your family.”
When Jim shank received the letter at the beginning of April, he thought it was an April Fool’s joke. It’s no joke. Wal-Mart, invincible in the courts, has surrendered to the devastated and defenseless Shanks.
When the original story broke, we acknowledged that Wal-Mart was within its rights to seek reimbursement for expenditures under the employee health plan. Nonetheless, we awarded the retailing behemoth a turkey, for turning a tone-deaf ear on the pain and sorrow of the Shank family. (Their son, Jeremy, was killed in Iraq shortly after their case was dismissed at the appeals court level.) Wal-Mart has finally come to realize that there may actually be something more important than the bottom line. They have taken a huge PR hit for their relentless focus on cost-cutting perfection. Pursuing the Shank family may have been legally sound, but it was utterly lacking in compassion. Sure, America loves a bargain, but we believe in fairness, too.

Health Wonk Review is posted; plus, weekly news roundup

Thursday, April 3rd, 2008

An excellent new edition of Health Wonk Review is awaiting your perusal at The Health Care Blog. The post is authored by Brian Klepper, a nationally recognized health care analyst and consultant and a roving blogger who regularly posts at Matthew Holt’s The Health Care Blog, Patricia Salber MD’s The Doctor Weighs In (where he is the sole non-physician contributor), and Robert Laszewski’s Health Care Policy and Marketplace Review. One of his recent posts, What Worksite and Retail Clinics Mean for the Primary Care Crisis is well worth a read for his discussion of this trend, and the exchange this has prompted between Brian and Maggie Mahar.
Wal-Mart relents – There’s been an interesting development in a story discussed by my colleague Jon Coppelman last November. He awarded Wal-Mart a turkey in his post about subrogation and the case of Deborah Shank, a Wal-Mart employee who suffered permanent brain damage after her van was hit by a truck. Wal-Mart’s health care plan paid her medical expenses, but when the Shanks sued and won damages against the trucking firm, Wal-Mart stepped in via subrogation rights to scoop up the settlement. Subrogation is not uncommon in the insurance world, but the harshness of this particular case (coupled with the fact that the Shank family also lost a son in Iraq around the same time) prompted a public outcry and national media attention. In an extraordinary response to this outpouring of condemnation, Wal-mart has backed off from its reimbursement claims, noting that in the future, company policies on subrogation will be reviewed on a case by case basis.
Good adviceTen Insurance Tips For Corporate Counsel, Risk Managers And Executives – Mark Grabowski notes that, “Insurance policies often are acquired and then put in a drawer. But there are important steps that policyholders should take to help maximize the value of their insurance coverage.”
High cost of alcohol problems – Researchers at The George Washington University Medical Center has recently issued a report on prevalence of alcohol problems by industry segment and what employers can do about it (PDF). While the national average for employees with alcohol-related problems is about 9 percent, the hospitality industry tops 17% and construction and mining is more than 15%. (See chart). The Report is issued by Ensuring Solutions, a part of the Medical Center which provides research-based information on effective alcohol treatment and the barriers many people face when they seek help for a drinking problem. The website is a handy link with much useful information, including an alcohol cost calculator that allows you to estimate the cost to your industry. Nationally, alcohol costs American employers an estimated $134 billion in productivity losses, mostly due to missed work.
OSHA and penalties for work fatalities – The Senate HELP Subcommittee on Employment and Workplace Safety recently held a hearing on serious OSHA violations, and as part of the hearing, OSHA’s frequent practice of reducing penalties in workplace-related fatalities was discussed. Former OSHA Assistant Secretary Jerry Scannell, commenting on the pressure he felt to reduce monetary penalties, posed the question, “What are we, a discount house?” Read more at Celeste Monforton’s post in The Pump Handle.
Advance notice – We’ll be posting more about this in the future, but just an alert that April 28 is scheduled as Workers’ Memorial Day, a day dedicated to those who died on the job and also to bring awareness to the need for worker safety.