Archive for February, 2009

Comp as Enabler: The Nadya Suleman Story

Friday, February 6th, 2009

Nadya Suleman recently gave birth to octuplets, six boys and two girls. These newborns join the six other children that were also conceived through in-vitro fertilization. Suleman is a single mother of 14 young children, living at home with her (distressed?) parents. As the father of two teenage daughters, I certainly appreciate the joys (and challenges) of parenting. But this is ridiculous.
Workers comp has played an interesting role in enabling Suleman to become the media’s latest and greatest fertility symbol. Back in 1999, Suleman worked the graveyard shift as a psychiatric technician at the Metropolitan State Hospital in California. She was injured in a mini-riot, when a patient threw a desk at her, injuring her spine. The back injury was clearly visible on her MRI and obviously compensable. She was disabled from work and collected workers comp. We don’t know how hard the hospital tried to bring Suleman back to work.
In 2001 she was on her way to a treatment session, when she was involved in an auto accident, injuring her back, shoulders and neck. She filed a claim for continued benefits based upon these new injuries. Her employer objected, but Suleman prevailed at a hearing. (I would have thought that going to a scheduled appointment, like “to and fro” in going to work, would not in itself be “in the course and scope” of employment – but obviously, the judge disagreed.) As a result of her continued indemnity payments, Suleman was supported by workers comp during her extensive and remarkably successful attempts to have children.
Pregnancy and a Bad Back
Suleman admitted that her back injury was exacerbated by her pregnancies. At the most recent hearing, in August 2008, Dr. Steven Nagelberg attributed 90 percent of her injury to the work incident and 10 percent to her pregnancy. (Obviously, Dr. Nagelberg has never been pregnant!)
In any event, Suleman has collected about $165,000 on her workers comp claim. Here is the key point: Suleman claimed to love her job, but her employer was unwilling or unable to bring her back to work. Given her attitudes toward life, marriage and children, she was undoubtedly a handful. Nonetheless, an aggressive attempt to return her to productive work might have saved the state a lot of money. As it was, comp became Suleman’s primary means of support as she pursued her dream of having a family. Some dream!
In a recent interview on the Today show, Suleman says she had six embryos implanted in her fertility procedure — far more than industry guidelines recommend — and was well aware that multiple births could result. Indeed, during the very early stages of the pregnancy, the six became eight. (Hmm. I wonder if the infertility doctor consulted his/her local medical ethicist when agreeing to do this procedure.)
“I wanted them all transferred. Those are my children, and that’s what was available and I used them. So, I took a risk. It’s a gamble. It always is.”
“It turned out perfectly,” Suleman added.
Perfection is not the word that comes to my mind. This is a failure of mind-boggling dimensions, with profound implications for 14 innocent children. It is ironic that workers comp, the safety net for injured workers, has played a relatively small, but definitive role in this sorry saga.

Health Wonk Review & news from the insurance fraud front

Thursday, February 5th, 2009

Awaiting your perusal, this week’s edition of Health Wonk Review. David Williams of Health Business Blog has compiled the best health policy wonkery from the creme de la creme of the health policy blogs. A preview of this week’s fare to whet your appetite: Pharma’s foibles; Less is more; The profit motive; The wonky section; Navel gazin’; The odd couple; Einstein in love; and Curmudgeon care.
And now, for an update on fraud watch:
Insurance Fraud Hall of Shame – It’s a motley crew: a serial home arsonist, a dentist who did worthless root canals on children. and two elderly women who bought life insurance policies on homeless men and then killed them were all among the 12 swindlers elected to the 2008 Insurance Fraud Hall of Shame. Insurance fraud is estimated at $80 billion a year, a costly toll that adds to insurance costs for all the honest people.
Here are a few nominees for next year’s list…
Coingate redux? – Things have been quiet in Ohio in the last year or so, but if some Ohio pols have their way, Tom Noe could find himself testifying at the Statehouse about the origins of Coingate. One matter that has never been established is how in the heck Noe ever persuaded the state to fork over $50 million to invest in rare coins in the first place. Noe is currently serving an 18-year prison sentence, but he has an appeal hearing on February 17.
AIG VP convicted – Christian M. Milton, a former AIG Vice President is facing a 4-year prison term and a a $200,000 fine following his conviction on charges of conspiracy, securities fraud, false statements to the U.S. Securities and Exchange Commission and mail fraud. ” …Milton and his co-defendants, Ronald E. Ferguson, Elizabeth A. Monrad, Robert D. Graham and Christopher P. Garand, all former General Reinsurance Corp. executive officers, engaged in a scheme to falsely inflate AIG’s reported loss reserves, a key indicator of financial health to insurance industry analysts and investors. According to trial evidence, the fraud was carried out through the use of two sham reinsurance transactions between subsidiaries of AIG and Gen Re in response to analysts’ criticism of a $59 million decrease in AIG’s loss reserves for the third quarter of 2000.”
NJ uncovers multi-million dollar fraud scheme – Seven individuals, 11 corporations and a Pennsylvania broker have been indicted for money laundering, racketeering and other charges in a workers’ comp fraud racket. Defendants netted as much as $1.5 million. Nearly three-quarters of a million dollars were misappropriated from clients who thought they were paying their workers comp insurance premiums, leaving many employers and employees without workers comp coverage.

Big Holes in the Comp Safety Net

Wednesday, February 4th, 2009

We know how James Strickland died. Strickland worked for Bay Area Regional Transit (BART) in San Francisco. On October 14, he was walking east on the westbound track, checking for safety problems. An eastbound train, traveling 70 mph, slammed into him. (Now there’s a safety problem!) He died instantly. But when you review the post-accident activities of BART, you get the impression that they are not quite sure Strickland is really dead.
We read in that Strickland’s widow Linda is still waiting for workers comp benefits, nearly four months after the accident. According to BART, they are lacking some paperwork – not enough, mind you, to prevent them from paying the $5,000 burial benefit, Strickland’s final paycheck and a life insurance policy.
Systemic Failures
Linda Strickland complains that BART failed to contact her directly on the day her husband was killed. BART responds that they tried unsuccessfully to reach her. Mrs. Strickland first learned about the accident on the radio; a friend later informed her that her husband was involved.
BART has apparently told Linda that Strickland himself was at fault in the incident: he should have known that BART was single-tracking trains on the day of the accident. Of course, under workers comp laws, even if Strickland was at fault, the accident is still compensable and Linda is entitled to benefits. (A more gracious employer might avoid placing blame directly on the deceased, especially in the course of informal conversations with the grieving widow.)
As far as the missing documentation goes, it’s easy to understand why BART needs a copy of the marriage certificate. But why are they asking for the death certificate, the coroner’s report and earnings statements? Don’t they know the circumstances of the death and how much they paid Strickland? Don’t they have enough information readily available to commence weekly benefits and adjust them later, if necessary?
The comp system is designed to provide prompt benefits, usually commencing (by law) within 14 days of an injury. Sometimes there are significant questions of compensability, which under rare circumstances might delay the initial payments. In this case, it’s hard to imagine the rationale for any delays. BART prides itself in providing on-time transportation for its customers. They should approach benefits for their own employees with the same determined attitude.

Social networking for the safety community

Tuesday, February 3rd, 2009

You’d have to be living under a rock to be oblivious to the revolution that is online social networking – blogging (hey, that’s us!); networking sites like Facebook and LinkedIn; social bookmarking services like or Stumble Upon; photo sharing sites such as Flickr; video sharing sites like YouTube; microblogging and texting, such as Twitter; and Google mashups. The list could go on. If you find all this confusing, here’s a good little video clip: Social networking in Plain English.
The insurance industry could hardly be described as an early adapter to new web technologies, but now, with, we have a social networking site designed for “safety managers, foremen, safety engineers, factory and construction workers, and anyone for whom workplace safety is a profession or passion.” A group with such a shared interest is natural for collaboration, networking and sharing. As of today, there are about 1,000 members registered. We’ve only just begun to explore, but there are shared videos, blog posts, discussion boards, scheduled chats, Twitter feeds, and links to safety communities on some of the major established networking sites. Check it out – there’s a lot to explore. And kudos to Ansell Healthcare of New Jersey, which sponsors and maintains the site.
Next on the agenda – social networking for actuaries?

Wyoming Workers Comp: Frontier Justice?

Monday, February 2nd, 2009

Cody, Wyoming, was founded in part by “Buffalo Bill” Cody, the renowned slaughterer of buffalo. The town bills itself as the eastern gateway to Yellowstone National Park. “A small western town with a big city attitude.” Sally Spooner, a long-time school teacher in the town, might question the “big city attitude.” Sally tripped and fell at school in December. She suffered serious injuries, resulting in the amputation of her right leg below the knee. A simple matter of workers comp, right? Think again, cowboy.
The Cody school district, along with 45 of 48 districts in the state, has opted out of comp coverage for most teachers. (Wyoming, a monopolistic state, does not require coverage for all employees.) Using a rather crude risk management assessment, the Cody district provides comp coverage only for “higher risk” teachers: those working in wood and machine shops, along with those in special ed and transportation. The rest – the “low risk” employees” – are factored out of the comp premiums. Nothing ever happens to ordinary classroom teachers, does it?
Superintendent Bryan Monteith admits to feeling terrible about Sally Spooner’s situation, but he has no regrets about the decision to eliminate comp coverage for most teachers. “We looked at it and said spending $175,000 a year for workers comp was not a good use for our money in terms of providing risk protection for the district. We decided using the money for salaries was a way to benefit the entire district.”
Monteith admits that Sally is a great teacher. They would like to do something for her, but given “fiduciary responsibilities” to the district and the potential for setting a bad precedent, they probably will let Sally fend for herself. Call it frontier justice.
Pretty Scenes, Ugly Scenario
I expect that Sally will pursue a little frontier justice of her own. Because she is not subject to the “exclusive remedy” of workers comp, Sally can sue the district for her lost wages and medical bills. In addition, she can access the open-ended benefits excluded by comp, including her (considerable) pain and suffering and possibly loss of consortium. Depending upon the school’s insurance arrangement for general liability, the ultimate cost of the settlement might wipe out the relatively modest comp savings.
Despite its cost, comp is generally a good deal for employers. For a relatively small premium, you are protected from the usually unforeseen, large losses like Sally Spooner’s. Tort liability is off the table. Even more important, comp provides an immediate safety net for the employee: there is no anxiety about the (extraordinary) medical expenses and lost wages in the days, weeks and months following an injury.
Given a choice, Sally Spooner probably would have preferred the prompt, if somewhat limited, payments of comp, as opposed to the potential down-the-road payoff of a lawsuit. Alas, she is the victim of frontier justice, and unlike Old Faithful in Yellowstone, it’s not a pretty sight.