Archive for May, 2008

Workers compensation and recessions

Wednesday, May 14th, 2008

Are we in or headed to a recession? Each of us might have our own opinions based on the industry we work in, the number of times we have to fill our gas tank during the week, and the area of the country where we live. According to the economic cognoscenti, the jury is still out – some industry insiders say yes while others disagree. At least some industries say they are in a recession and in a recent survey, nearly 80% of affluent Americans believe a recession has already hit the U.S.
What would a recession mean for workers compensation? A few weeks ago, Insurance Journal looked at the issue of recession and its impact on insurance as viewed by independent agents in various sections of the country, who offer commentary on both actual and anticipated effects. Some note that it is somewhat unusual to have a recession occurring in conjunction with a soft market. There isn’t much mention in the way of workers comp, except in terms of noting that declining payrolls lead to lower workers comp premiums. Some agents note that significant business curtailment has been in evidence in the housing and construction industry.
The past may be the best predictor of the the future. The Minnesota Department of Labor & Industry compiled a 2002 report on the effects of recession on workers comp as evidenced by various state studies.
Conventional wisdom points to a preliminary spike in claim frequency as employers reduce ranks – there is some anecdotal discussion about an increase in fraud, although most data doesn’t support that. Overall, during a recession the number of claims tends to decline – there are fewer workers, and those workers may be more timorous about filing claims, fearing job loss.
While frequency drops, severity tends to increase. Researchers in MA suggested this might be because businesses find it more difficult to provide light-duty work; also, due to the fact that because more experienced workers are retained, the average injury will be more severe. A California study also noted that recessions may add to claim severity by increasing the time it takes for a worker to find a job.
In a six-state study, researchers noted that “…recessions increase back-end cost drivers (i.e., increase the cost per claim) to a greater extent than they increase front-end cost drivers (i.e., increase the number of claims). They state that recessions are ‘characterized by increased use of the system, longer duration claims, and more frequent and larger lump-sum settlements.'”
Minnesota also reported in some detail on their own state’s experience with a workers comp during a recession, a report which our colleague Joe Paduda discussed at some length.
During a recession, employers should be doing what they should always be doing: preventing injuries from occurring, tightly managing any injuries that do occur, and helping injured workers to recover and return to work as expeditiously as possible. While there is always cause to keep an eye on things during any sudden shift in employment, the stories about an increase in fraud may be overblown. As the researchers in the Minnesota report note, boom times pose a greater risk for a rise in frequency as organizations experience a sudden influx of inexperienced workers.

FedEx Sued by Shareholders

Tuesday, May 13th, 2008

As if Fed Ex did not have enough problems, the company with the unusual staffing model is now being sued by some shareholders. Given that the suit has been filed by Local 51 of the Plumbers and Pipefitters Pension Fund, it’s no surprise to find that the suit attacks the business model of hiring “independent contractors” to carry out the core activities of the company. FedEx has hired over 15,000 of these “contractors” to deliver the goods: in FedEx uniforms and FedEx trucks, along company assigned routes, with company approved hair styles …and no white socks!
FedEx dismisses the suit as “frivolous.” Company spokesman Maury Lane asserts that “FedEx has a long record of providing outstanding shareholder value and is led by a board of successful and experienced directors…” To which Dan Newman, attorney for the disgruntled stockholders, replies: “There’s nothing frivolous about illegally exploiting workers and cheating on taxes — it’s gross mismanagement and a grave breach of fiduciary duty.” Ouch!
The lawsuit includes a chart of compensation for FedEx directors, which has risen from a minimum of $48,000 in 2002 to the current minimum of $160,000. For most directors, the annual pay is $220,000. Not bad for independent board members (who don’t have to wear uniforms, who wear any color socks they like and who can drive any vehicle, the fancier the better).
Despite a series of losses in state courts and with the IRS, the company continues to defend the fundamental business model. They say that drivers can buy multiple routes and hire people to work those routes for them, thus making the route owners “entrepreneurs.” True enough. But the key word is “can.” Most can’t and most don’t. The vast majority of the 15,000 drivers have no employees and are not entrepreneurs. They are by any reasonable standard employees of FedEx, carrying out the basic work of the company.
At some point, sooner or later, FedEx will probably have to throw in the towel. Then they will face a huge bill for retroactive benefits (including workers comp) owed to their employees. The stock will surely take a big hit. I’d like to think that the directors who have managed this dubious experiment in outsourcing might actually be held accountable. But FedEx’s team of seasoned (and I do mean seasoned) litigators will make sure that never happens.
NOTE: Type “FedEx” in the search box to access our numerous blogs on this topic.

Workers Comp and Wellness: Partners at a Distance

Monday, May 12th, 2008

Bill Thorness has written an interesting article for NCCI on the relationship of wellness programs to workers comp costs. In some respects, it involves a “duh” thesis: wellness programs can significantly lower comp costs, because healthy workers are less prone to injury and, once injured, recover more quickly than their out-of-shape co-workers. Conversely, obese and out-of-shape workers are more at risk for strains and sprains, because the additional weight they carry compounds the impact of day-to-day workplace functioning.
There is even an overlap between wellness and one of the Insider’s favorite topics, the aging workforce. Older workers are more at risk for serious (and expensive) injuries such as rotator cuff tears. A relatively healthy, well conditioned, non-smoking older worker is more likely to avoid these injuries and again, once injured, more likely to shorten the normally extended recovery time.
With all of the compelling logic underscoring the benefits of a healthy workforce, it might be natural to assume that workers comp would jump at the opportunity to provide incentives for wellness programs – dare we say, even pay for them. Perhaps we could find examples among the national carriers, where workers comp safety programs include wellness training. Unfortunately, for the most part wellness remains an afterthought in the comp system. Aside from conventional safety programs, which focus on injury prevention, comp coverage tends to sleep like a hibernating bear, roaring into action only after injuries occur. Even then, wellness is a marginal issue: if, for example, obesity hinders recovery, carriers are unlikely to pick up the cost of a weight-reduction program, because the obesity is not work related.
Who Owns It?
The ultimate cost of most injuries is directly related to the health and conditioning of the injured worker. Logic says comp carriers should embrace wellness programs in both injury prevention and post-injury treatment. But as is often the case, it comes down to a question of who owns it, who benefits and who pays. Wellness is a proven concept, but comp carriers are unwilling to own it and very reluctant to pay. They are, nonetheless, more than happy to reap the substantial benefits.

Cavalcade of Risk; kudos; perverse incentives; legal nooks and crannies

Thursday, May 8th, 2008

Cavalcade of Risk is being hosted by Spencer Hill at Hill’s Personal Finance Blog. He’s got a good roundup of posts on a variety or risk-related matters from business to personal exposures – check it out!
Kudos – Congratulations to Michael Fitzgibbon for his five year “blogiversary” at Thoughts From a Management Lawyer, a blawg (or law blog) that offers discussion and commentary on Canadian labour and employment law matters. Michael is one of the pioneer law blogs who saw the value in blogging before most did. We’ve always found his blog to be a good read and an inspiration, to boot. Now if only we could get him to spell “labour” correctly – that’s not in our spell check!
Perverse incentives – Nick Avgerinos of InjuryBoard.com discusses the matter of when safety incentive programs are a disincentive to timely claims reporting. When coworkers are eager to claim a record or earn a prize for the most consecutive injury-free days, it can result in negative peer pressure for an injured worker. As an employer, it’s always in your best interest to have any injuries reported as soon as possible – make sure you don’t have any programs that conflict with that goal.
Legal nooks and crannies – At The Buckley-Brown Blog, Catherine Dellinger Buckley looks at the workers compensation complexities in a Georgia case where a woman was shot and killed by a co-worker during her lunch hour. If a spurned spouse or a random stranger who walked in off the street had shot the employee, it would not be likely to be compensable, as Ms. Buckley notes – at least not without some mitigating factors. But this scenario is one with a lot of potential legal hooks: it involved a co-worker (albeit a temporary worker) and it occurred on company property during lunch. In some states, injuries that occur on operating premises hold great weight; under some laws, lunch might fall under the personal comfort doctrine; or if the deceased employee was engaged in some business pursuit during her lunch or was in any way furthering the employer’s business, her death may be compensable.

Eye safety and eye health on the job

Tuesday, May 6th, 2008

If today is an average day, more than 2,000 people will have an eye injury at work. And tomorrow, the risk is even greater because the Bureau of Labor Statistics (BLS) says that more eye injuries occur on Wednesdays than any other day of the week. While many eye injuries will be relatively minor, about 5 percent will be debilitating enough to interfere with work on a short or a long-term basis. According to BLS, more than 36,000 eye injuries require time off from work. Yet with proper eyewear, it is estimated that 90% of these injuries could be prevented. Approximately 3 out of 5 of the injured workers were either wearing no eye protection whatsoever or were wearing the wrong type of eye protection.
This month is a good time to redouble your eye safety efforts since May is Healthy Vision month. Most eye injuries were surface wounds, injuries resulting from being struck by foreign matter such as splinters or chips. The second most common type of injuries are abrasions and scratches, and the third most common are chemical burns. A 2002 BLS report on Nonfatal Occupational Injuries Involving the Eyes offers more detail on the nature of work eye injuries and the types of professions where injuries are most prevalent.
Special worker populations and eye safety
When you audit your workplace for eye safety, don’t forget eye protection for outdoor and seasonal workers, such as groundskeepers. Outside work can involve dust and flying objects, such as chips from mowers and clippers. Exposure to UV rays is another hazard, and one that requires head coverings with a visor and eyewear that limits UV rays.
Another group of workers that are often overlooked for eye safety are computer users. The National Institute for Occupational Safety and Health reports that 75% of computer users surveyed report occasional aching or burning eyes at work. The Lighting Blog offers a good list of 22 ways to reduce eye strain at your computer.
Eye safety resources
Eye protection in the workplace – from OSHA
Eye safety – from NIOSH
Types of eye protection – illustrated examples – from the CDC
First aid – from the CDC
Wise Owl Program – from Prevent Blindness
Workplace Eye Safety – from Prevent Blindness
Ten Ways to Prevent Eye Injuries at Work – from Prevent Blindness
Eye Safety for emergency response and disaster recovery – from the CDC

Abusive Behavior as a Disability?

Monday, May 5th, 2008

Rosemary Verga worked for United Airlines as a staff representative in human resources. This seems an odd choice for a woman described by co-workers as “a difficult person to get along with” – “impolite, unpleasant” and quick to explode. In addition to being rude, inflexible, easily upset and demeaning toward others. All in all, a rather marginal member of the HR team!
After a group of employees had a carefully structured opportunity to confront her bad behavior in the summer of 2000, Verga sought help from the Employee Assistance Program. The company doctor treated her, authorizing a brief medical leave and then cleared her for return to work. She sought treatment with her own physician, Dr. Ho (no comment), who authorized an indefinite medical leave in 2000. She has not worked since.
Verga filed a workers comp claim for psychological stress, claiming the disdainful actions of her peers caused her mental disability. Even conceding that her own actions may have contributed to this disdain, she argued that because workers comp is no fault, it didn’t matter. She was entitled to compensation for work-related stress.
California’s labor code (S3208.3,(B)(1) states that “In order to establish that a psychiatric injury is compensable, an employee shall demonstrate by a preponderance of the evidence that actual events of employment were predominant as to all causes combined of the psychiatric injury.” At her initial hearing, the workers comp board ruled that the disdain expressed by her fellow employees was not an event of employment, but something brought on by Verga’s own (consistently obnoxious) actions. They denied the claim. The Court of Appeals has now upheld the denial.
Shrink Wraps
The role of psychiatrists in this case is instructive. Dr. Perry Segal, a Qualified Medical Examiner (QME) offered the opinion that Verga suffered from “adjustment disorder with mixed anxiety and depressed mood, resulting from cumulative trauma caused by negative interactions with her co-workers and her supervisor.” Dr. Perry based this rather dubious diagnosis solely on Verga’s version of the events. A second QME, performed by Edward Duncan, PhD, diagnosed Verga with an adjustment disorder and mild depressive symtoms, but he did not find her psychiatrically disabled from work. Duncan observed that statements of co-workers and Verga’s employment records reveal ongoing problems in her relations with co-workers and customers going back 20 years. Prior to working in HR, Verga had served as a customer service rep for United (now there’s a great job for someone with a short fuse!).
So the court has determined that Verga’s “harassment” by fellow workers was caused by her own harassment of fellow workers. Her disability is the cause – not the result – of workplace stress. With her low frustration level, Verga abused co-workers when they did not meet her expectations. Verga was the aggressor. She created the negative work atmosphere which she claimed (unsuccessfully) caused her psychological injuries. Her supervisors tried to counsel her that rudeness and inflexibility were counterproductive. She ignored their advice and continued to belittle her co-workers. Needless to add, Ms. “Gloom and Doom” has not been missed during her prolonged absence from work.
ADA Remedy?
One final note. It does seem clear that Verga has psychological issues. Can she sue United to get her old job back, claiming that they must make “reasonable accommodation” for her under the Americans with Disabilities Act? Does her anxiety and depression qualify as an ADA disability? I doubt it. It is not at all clear that her mental disability “signficantly limits” one or more major life activities. Then again, you might well view her inability to establish friendships and collegiality as a disability. I am inclined to. But I still would not encourage United to take Verga back. She has proven unwilling to make her own accommodations for others and as such would be a huge liability anywhere in the company. After all, being “nice” is really an essential job requirement, one well beyond Verga’s reach. With all their current problems, United has no need for an intractable, inflexible and embittered worker.

Waterboarding for Sales

Friday, May 2nd, 2008

Joshua Christopherson is a supervisor of sales for Prosper, Inc., a Utah company that peddles on-line training and motivation courses. The courses range in price from $3,000 to $15,000. By most accounts Christopherson is a decent enough guy, albeit a bit obsessed with the performance of his sales team. He apparently read about an incident involving the ancient Greek philosopher Socrates, who plunged a student’s head under water and then told him that his yearning for learning must equal his (underwater) yearning for air. Like any good manager looking for an edge, Christopherson decided to bring this aggressive “Socratic method” to his team.
Chad Hudgens, a member of the under-performing sales group, made the mistake of volunteering for the “team-building exercise.” In a park outside Prosper’s offices, he lay on his back with his head downhill. Co-workers knelt on either side and pinned his arms. Christopherson proceeded to pour water from a jug over his nose and mouth.
“So they held me down,” Hudgens reports. “…I can’t scream because the water’s going down my throat…Toward the end, I’m starting to black out. I think I am drowning.”
After finishing with Hudgens, Christopherson told the assembled sales team:”You saw how hard Chad fought for air right there. I want you to go back inside and fight that hard to make sales.” Let’s give Christopherson some credit: that is one sales lesson no one is likely to forget!
Ignorance or Evil?
I assume you may share my puzzlement at the thought process that led Christopherson to his training plan. Perhaps we find a clue in the May newsletter from Prosper, which offers the following message:

In business and in life, we are often inspired in some way or another to do the things we do. Each of us has something that inspires us, be it a friend, a goal, a dream, or even a Mother. As many of us reflect this time of year on the inspiration that comes from our Mothers, the focus of the newsletter this month is inspiration.

So maybe Christopherson’s mother inspired him to do it? In any event, and no surprise here, Hudgens is suing his (former) employer for torturing him. Prosper Inc. maintains that what Christopherson did was unauthorized, overzealous and misguided, but it falls short of torture.
“We are not the mean waterboarding company that people think we are,” says the aptly named George Brunt, general counsel for the company. He adds that Christopherson is a “nice, sensitive guy.”
Hudgens claims that the harassment was not limited to the water boarding. If the 10-person sales team went a day without a sale, members had to work the next day standing up – Christopherson removed all the chairs.
Management Philosophy 101
The original Socrates was a very interesting fellow, one who might well be confused by what passes for society these days. In the dialogue Meno, Socrates tries to determine whether virtue is inherent in us or whether it can be taught. This leads to an investigation of the nature of virtue itself. Although his direct answer is that virtue is unteachable, Socrates does propose the doctrine of recollection to explain why we nevertheless are in possession of significant knowledge about such matters. He argues that knowledge and virtue are so closely related that no human ever knowingly does evil: we all invariably do what we believe to be best.
Given the hindsight of a couple of thousand years, I’d say Socrates was spot off on this one. But he may have a point with the hapless Christopherson. He was doing what he thought to be best. He was trying to make a point. The fact that his method demonstrated an alarming lack of compassion and common sense is probably more a symptom of ignorance than sheer evil. As far as the victim is concerned, however, that is a distinction without a difference.

Health Wonk Review, RIMS, emergency responders, mysterious pork worker illness

Thursday, May 1st, 2008

Daniel Goldberg has posted an excellent new edition of Health Wonk Review at his Medical Humanities Blog. This week’s roundup from the brainiacs of health wonkery encompasses everything from the usual health policy debates to alcopops, including a handful of posts on legal matters and new legislation.
RIMS – Joe Paduda of Managed Care Matters has been blogging his observations from RIMS this past week. He’s posted news from the pharmacy sector, notes an emphasis on outcomes, and discusses innovation.
Emergency responders – In response to a recent reader inquiry about injury rates among police, we unearthed a 2004 Rand report on Emergency Responder Injuries and Fatalities focusing on U.S. firefighting, law enforcement, and emergency medical services personnel. While a little dated, it’s still worth a read. The report notes that while data for firefighter injuries are readily available, there are significant gaps in available data for police and EMT injuries. Line-of-duty fatalities are tracked, data on the frequency, type, and duration of injuries can be harder to come by. We’d welcome any pointers to data sources from readers.
Minnesota pork plant workers to be compensated – At least 18 workers at the Quality Pork Processors plant of Austin have come down with strange, debilitating neurological illnesses. Those affected worked at or near the “head table” where compressed air was used to blow brains out of pig skulls. The brain matter turned into a fine mist, and health authorities believe that the workers’ exposure to this mist led to progressive inflammatory neuropathy, or PIN. The workers were initially denied workers compensation, but at least one worker has been notified that her claim will be honored so it sounds as though the insurer rethought matters, perhaps in light of some pending lawsuits.
Workers compensation is relatively clear cut when it involves injuries, but illnesses can pose numerous complexities and employees bear the burden of proof for demonstrating the work relatedness of the illness. With many illnesses, such as cancer, there can be delayed onset and it is difficult to prove that work and not some outside factor was the precipitating cause. In this ghastly case, medical authorities are still puzzled but have observed cases of the illness among pork workers in other states, all of whom were engaged in similar work at the “head table.” All plants have now discontinued this practice.