Get it while it’s hot: Health Wonk Review: NBA Playoffs Edition – posted by Jason Shafrin at Healthcare Economist – a lean & clean compendium of what the health policy wonks are talking about.
Bloggers are taking over the world – We attended a few days of the Risk & Insurance Management Society (RIMS) annual meeting in Boston this year and were happy to have the opportunity to meet with four fellow bloggers: Joe Paduda of Managed Care Matters; Roberto Ceniceros, an editor at Business Insurance who blogs at Comp Time; Cara Barde, President and COO of Total Medical Solutions, which sponsors the Work Comp Complex Care Blog; and Peter Rousmaniere, workers’ comp columnist at Risk & Insurance who has the Working Immigrants blog. We also chatted with Bob Wilson, founder of one of the online pioneering sites, workerscompensation.com – a valuable resource that gets better with time.
So many white crosses – “Look around your workplace tomorrow and imagine 29 people gone in one instant.” Ken Ward posts a moving account of the final farewell to the deceased miners: Coal miners memorial: So many white crosses. Former Massey Mine worker to Congress: “People shouldn’t have to work like that” And in today’s news: two miners missing in Kentucky.
Jordan Barab video – Jon Gelman features a video clip of testimony that Jordan Barab, Deputy Assistant Secretary, OSHA, made before the U.S. House of Representatives Subcommitttee on Workforce Protections on Workers’ Memorial Day: Facing unacceptable hazards in the workplace. Many of our readers will remember Jordan Barab as the passionate advocate for worker safety on his now-retired blog Confined Space.
BPEP oil rig explosion – At Today’s Workplace, Lindsay Beyerstein has compiled a history of safety violations for BP Exploration and Production (BPEP), the company that held the contract for the oil rig that exploded off the Louisiana coast. Liz Borowski at The Pump Handle has more on the missing miners and the decision to call off the search. At III’s Insurance Industry’s Blog, Claire Wilkinson posts that the oil spill continues to worsen – and despite the event being a man-made catastrophe rather than a natural one, the scope of the disaster may prompt a federal disaster declaration.
Giving kids a chance – Over at LexisNexis, Robin Kobayashi posts about Kids’ Chance, a nonprofit formed with the mission of providing scholarships to children of workers seriously injured or killed on the job. Founded in 1988 by Georgia attorney Robert Clyatt, today there are programs in more than 25 states. Check out Robin’s post to learn more.
CT comp chimp case – The Connecticut Senate has approved a bill allowing police officers to seek workers’ compensation for stress after using deadly force on mammals. The bill awaits House action before going into law. We’ve blogged about Officer Chiafari’s ordeal previously, as well as that of the victim. Hopefully, this bill won’t need to be called into use very often.
Case Law – Workplace Prof Blog posts about Bollinger Shipyards, Inc v. Director, Office of Worker’s Compensation Programs, U.S. Dep’t of Labor: Immigration Status Irrelevant under Longshore and Harbor Workers’ Compensation Act
Archive for April, 2010
Get it while it’s hot: Health Wonk Review: NBA Playoffs Edition – posted by Jason Shafrin at Healthcare Economist – a lean & clean compendium of what the health policy wonks are talking about.
Today is Workers’ Memorial Day, both a global and a national day to remember those who lost their lives on the job. April 28 has been an annual day of remembrance since 1989. It is the anniversary of the Occupational Safety and Health Administration and the day of a similar remembrance in Canada. Trade unionists around the world now mark April 28 as an International Day of Mourning.
Here in the US, in addition to remembering the more than 5,000 workers who die on the job each year, we face the fresh and painful large-scale tragedies of the 29 workers who lost their lives in the West Virginia Massey mine disaster, 7 workers killed at the Tesoro refinery explosion in Washington, 6 workers killed at the Kleen Energy Plant in Connecticut, and 11 workers missing and presumed dead from Transocean’s oil rig explosion off the coast of Louisiana.
These large-scale disasters were played out on a very public stage, with much media attention on the accidents, on the loss of life, and on the grief of the survivors. Less public but no less tragic and painful are the stories of the other 5,000+ deaths: 56-year old father of four James Wetzel, crushed to death in a collapsed trench that was not properly secured; a double fatality at the Kansas MagnaGro International Plant, in which 25-year old Iraq veteran Brandon Pierce and 51-year-old grandfather of four Roy Hillebert lost their lives in a vat of unspecified liquid or 32-year old mother Lori Keen who was killed after being struck by a pallet of bottled water in a Kroger store in Illinois. News reports often paint work-related deaths as freak accidents, but safety experts know that workplace freak accidents are a media myth – most entail preventable safety violations.
The AFL-CIO has amassed resources and information on Worker Memorial Day, including the release of its 19th annual report on the state of health and safety for U.S. workers: Death on the Job Report 2010: The Toll of Neglect. It’s worth reading and passing along. The best way that we can honor fallen workers is to pledge that we can and we will do better.
Salverio Todaro, a 68 year old entrepreneur, ran a safety inspection company called SAF Environmental Corporation. You may never have heard of Todaro, but if you live in the New York City area, Todaro may have succeeded in damaging your brain or shortening your life by a number of years. Certified to inspect buildings for lead and asbestos, Todaro rarely actually tested for the deadly substances. Beginning in 1989, he routinely filed bogus inspection reports, including phony lab results, on buildings scheduled for renovation or demolition across the five boroughs. (William Rashbaum of the New York Times provides the appalling details here.)
Think about the consequences of Todaro’s failure to do his job. He gave the green light for projects that put construction workers on hundreds of jobs at immediate risk for exposure to lead and asbestos. These workers ripped apart buildings contaminated with asbestos, raising clouds of toxins for all to breath – construction workers, neighbors, passers by. It will take years for the toxins to do their work, but rest assured, that dreadful work will be done.
NOTE: I hardly need add that construction workers on the job sites certified as safe by Todaro are unlikely to qualify for workers comp benefits: thanks to Todaro, there are no records of hazardous substances on these sites.
In one documented case, Todaro was asked to examine an apartment where a young child had suffered from exposure to lead. Todaro gave the building a clean bill of health. As a result, the family had no reason to move, no reason to suspect that every breath their child took put him at risk for further brain damage.
A Punishment to Fit the Crime
In an earlier time, we might have pondered Todaro’s fate after his death. In Dante’s Inferno, the Ninth Circle of Hell is reserved for traitors, who find themselves eternally locked into awkward positions, encased in ice. Todaro betrayed his city and his fellow man, and made a few bucks in the process. But his actual fate is pretty mild by Dante’s standards: he is facing four to six years in jail. After that, I imagine, he’ll head south to a quiet retirement in Florida. No eternity encased in ice for this despicable betrayer of the public trust.
We have been following the implosion of self insurance groups (SIGs) in New York. Back in June 2008, SIGs operated by Compensation Risk Management (CRM) collapsed. CRM had grown their business by offering comp coverage at very low rates. For a long time, they were able to maintain an illusion of profitability by under-reserving losses. Eventually, it all caught up with them.
When the CRM SIGs went belly up, the state worker’s comp board looked around for some free cash to pay for the $450 million in unfunded liabilities incurred by CRM. They decided to penalize all the SIGs that had been operating in the black. In a move stunning for its arrogance (facilitated by legislation passed in 2008), they decided to raise assessments on these SIGs from the modest annual total of $104,000 to a whopping $11.1 million.
In other words, the insurance groups operating prudently – charging adequate premiums, controlling losses and turning a modest profit – were forced to make up the losses incurred by a company operating like a ponzi scheme. Well, as they like to say in New York: “You gotta problem with that?”
Acting state Supreme Court Justice Kimberly O’Connor had a problem with it. She ruled on April 14 that the 2008 laws that empowered the comp board to assess the SIGs were unconstitutional, as were the assessments issued by the board.
Justice Too Late
Unfortunately, judicial relief comes long after the once-profitable SIGs have folded their tents. First Cardinal once operated 13 SIGs in New York, with $166 million in premium. When hit with the exponential increase in assessments, First Cardinal decided to move its business out of the state (in itself a sure sign of management that was paying attention). They stopped writing in New York and laid off the 57 (innocent) workers who were doing a good job of managing the New York business.
You may recall the old saying: “The wheels of justice grind slow but they grind exceeding fine.” In this case, justice – and fairness – were eventually served. But the pace of the process seems to have crushed the parties harmed by an unjust law.
Of course, the comp board believes that the assessments are legal and is planning to appeal. That should add a few more months to this ridiculous situation.
“You gotta problem with that?” Indeed, I do.
Cavalcade of Risk #103 – Risk Management with the Stars Edition is posted at My Wealth Builder. Check it out – and don’t miss Nancy Germond’s post on the alarming increase in the U.S. disability rate.
Misclassification – Employers can expect a heightened focus on misclassification, with a push on both the federal & state levels. Risk & Insurance reports that the Obama administration recently earmarked an additional $25 million in the DOL’s proposed FY 2011 budget for a misclassification initiative. The plan calls for hiring 100 additional enforcement personnel to address the problem and to provide grants to aid states in addressing the problem. Prior studies have indicated that more than 3 million employees may be misclassified. A 9-state study by the DOL found as many as 30% of audited employers misclassified at least some employees.
Fee schedules – Joe Paduda offers his thoughts on the role fee schedules play in workers comp: “…at best, a short term fix, and at worst, a blunt instrument that actually encourages over-treatment and extended disability.” He also cites a column by Greg Krohm, Executive Director of IAIABC, who has a similar take.
New blog finds
First up – as we all watch developments in the new health care law playing out, you might add Covering Health to your reading list. It’s a blog maintained by the Association of Health Care Journalists. While its mission it to keep health & healthcare journalists informed, it’s a good read for anyone tracking the issues. The Association of Health Care Journalists is an independent, nonprofit organization with more than 1,100 members, and is dedicated to advancing public understanding of health care issues. In addition to the blog posts, the blogroll has a good list of health news blogs.
Reinsurance, you say? Try reinsurance girl’s blog. She features a recent helpful post: Who to follow: insurance and reinsurance businesses in social media, which links to more reinsurance resources.
Death on the job – We haven’t linked to the Weekly Toll in some time – it’s a sobering look at recent on-the-job deaths. It puts a human face on statistics and exposes the geographic and industrial diversity of workplace fatalities. In a world that aspires to “zero defect” for product parts, can we aspire to any less when it comes to human injuries?
Hard market – Conning Research & Consulting forecasts that property and casualty insurance rates will begin to firm up in 2011 and that premium will grow modestly at about 2%. But the firm says to expect larger UW losses this year, and a deterioration in loss ratios. Meanwhile, the RIMS Benchmark Survey reports that the soft market still prevails, at least at present.
Virtual medicine – Jon Gelman has an interesting post about the trend to virtual doctors and online medical care, and speculates about whether such technological advances could benefit workers comp.
Massachusetts health care reform – “When Massachusetts’s politicians designed their reform, they calculated that achieving near-universal coverage first would then give all participants in the health care system an incentive to help rein in costs. There are encouraging signs that that is starting to happen.” This according to a New York Times editorial, Health Care Reform and Massachusetts. Thanks to Tinker Ready at Boston Health Blog for the pointer and for more links on Mass. reform.
- Judge: Fraud Case Against Ex-AIG CEO Greenberg ‘Devastating’
- Apparently, workers comp can be a heated issue in Maine
- The Psychological Concerns of the Soldier Amputee (PDF)
- Employer’s refusal to hire medical marijuana user upheld. See also: Medical Marijuana: Accommodation Required? Which Way Do You Think Oregon Went?
- COBRA extended again
- Too fat to fight: Excess weight prevents military service
- Medical groups sign on to tough ethics rules
- Experts Clear Up Travel Insurance Misconceptions After Volcano
Because of their rarity, volcanic eruptions are a pretty interesting insurance topic, so on the “thigh bone’s connected to the hip bone” principle, we thought we’d stray a bit afield today. Mother nature has reminded us who’s boss in a truly spectacular display of muscle flexing that’s brought travel and commerce to an unprecedented standstill for a huge part of the globe.
As an insurance event, it may not prove to be as costly as one might think, given the havoc that it is wreaking on business and travel – estimated at $2 billion and counting. Most airlines will be absorbing the cost of the delays since there is not actual physical damage to the fleet, and a volcano would be considered an ‘act of God.’ This prompts Vladimir Guevarra of the Wall St, Journal to ask if we might see volcano-related insurance as a new product for the airline industry.
European insurers don’t expect a big hit, largely because business interruption claims are considered unlikely – claims would need to be triggered by actual physical damage. The property and casualty damage from volcanic ash is not expected to be extensive.
For at least one segment of the industry, this is being deemed a significant claims event: Insurance companies that provide trip coverage are being inundated with calls, and they expect to pay out millions in trip claims. For travelers who were insured before April 13, coverage is likely, depending on exclusions, but after April 13, travelers should not expect ash coverage.
In the great scheme of things, as far as volcanic eruptions go, this is a modest affair. However, there are two scenarios that could raise the stakes. The first is what the effects would be if volcano disruption lasts weeks, months – many are speculating about how the European crisis could play out
The second rather troubling scenario would be if this is a dress rehearsal, which it could well be if history is any guide.
“Eyjafjallajokull has blown three times in the past thousand years,” Dr McGarvie told The Times, “in 920AD, in 1612 and between 1821 and 1823. Each time it set off Katla.” The likelihood of Katla blowing could become clear “in a few weeks or a few months”, he said.
The 1783 eruption was devastating and had a global impact:
A quarter of the island’s population died in the resulting famine and it transformed the world, creating Britain’s notorious “sand summer”, casting a toxic cloud over Prague, playing havoc with harvests in France — sometimes seen as a contributory factor in the French Revolution — and changing the climate so dramatically that New Jersey recorded its largest snowfall and Egypt one of its most enduring droughts.
Despite that sobering thought, Iceland’s glaciers do not pose the most serious risk, according to the Willis Research Network. According to their research, an eruption of Mt. Vesuvias could be devastating, with 21,000 casualties and an economic toll of $24 billion. For some interesting risk-related reading, check out the Willis Research Network report on Insurance Risks from Volcanic Eruptions in Europe.
More volcano resources
Lists of the most deadly and the most costly eruptions
Aerial photo gallery of the Iceland volcano
Another gallery of stunning images
How to pronounce Eyjafjallajokull (video)
We recently blogged California’s open door policy on comp claims for professional athletes based in other states. Most of the claims involve orthopedic injuries. Today we examine a claim for coverage of brain injuries – specifically, dementia. This one might blow California’s doors right off the hinges.
Ralph Wenzel toiled in the trenches for the Pittsburgh Steelers and the San Diego Chargers from 1966 to 1973. After retiring from the NFL, Wenzel coached for a number of years. In his mid-50s, he began suffering from dementia-like symptoms. Now, at age 67, he is institutionalized with full-blown dementia. He is no longer able to communicate.
Wenzel’s wife, Dr. Eleanor Perfetto, has filed a claim under the California workers comp system, contending that the dementia was the result of Wenzel’s football career. (At 6’2″ and 250 pounds, he was somewhat undersized for a lineman.)
“Absolutely, this was work-related for Ralph,” Dr. Perfetto said. Given that the NFL has toughened its stance on post-concussion activity for active players, the medical evidence is certainly leaning in what now appears to be a rather obvious direction: constantly banging your head in the course of work leads to mental impairment, up to and including dementia.
There is a lot of money at stake. California law requires that the employer or insurer pay not only all current and future medical costs associated with the injury, but also all the incurred costs. Wenzel’s institutionalization, going back to 2006, runs about $100,000 a year. If deemed compensable as workers comp, his claim will run into the millions.
Dr. Perfetto is not without resources in caring for her husband. He is eligible for beneifts under the NFL’s 88 Plan, which reimburses up to $88,000 per year in medical costs for former players with dementia. [There does seem to be a presumption of work-relatedness for dementia in the very creation of such a fund.] The 88 Plan, plus Dr. Perfetto’s health plan through her employer, pretty much cover the costs of Wenzel’s care. Dr. Perfetto, however, wants to open doors for families who do not qualify for the 88 plan, which is limited to players with at least 4 years in the league.
[A question for no one in particular: If dementia is determined to be a work-related condition, could the health insurer invoke the “exclusive remedy” provisions of workers comp and refuse to pay for treatment?]
There are a number of parties very interested in the outcome of this case: not just the self-insured team owners and insurance companies, who are confronted with huge (and retroactive) liabilities, but the federal government itself, which would welcome an opportunity to shift the formidable costs of caring for patients with dementia out of the social security system and into the private sector.
If Dr. Perfetto succeeds, it will be interesting to see who becomes the first payer: 88 Plan or workers comp. As is usually the case, there will be winners and losers. For poor Ralph Wenzel, however, winning and losing – once the paramount goal of his existence – no longer matters at all. It’s probably impossible to say what does matter to this once handsome warrior, who has paid a dreadful price for the all-too-brief glory of his seven years in professional football.
Alan Schwarz of the New York Times has written a fascinating series on workers comp in California: specifically, a cottage industry that has sprung up securing comp benefits for retired National Football League (NFL) players. The interesting part is that the claims are not limited to players from teams based in California. In its effort to protect transient workers (e.g., truckers, flight attendants), California offers recourse to anyone who temporarily passes through the state. Thus, professional athletes on any teams that compete in California can file for benefits, even if years have past and even if it was just a single game. Needless to add, the carriers for these out-of-state teams are trying to get the California system ruled off-side.
There are currently about 700 former NFL players pursuing benefits. Most of the injuries are orthopedic – bad backs, shoulders, knees, ankles. (We will deal with a claim for dementia in a future blog.) Two points should be made about these orthopedic injuries: many are cumulative in nature, so there need not be an acute injury specific to the sporting event in California; and virtually anyone who played professional football is likely to have one or more injuries directly related to the game.
Attorneys Take the Field
Behind every loophole lurks an attorney. In this situation, two former NFL players, now attorneys, are leading the charge: Ron Mix, a lineman for the San Diego Chargers in the 1960s, and Mel Owens, a linebacker for the Los Angeles Rams in the 1980s. Mix and Owens help former players from teams across the country to file claims in California. There is some question, however, about the quality of help that they offer.
Once deemed eligible for benefits under California law, players could opt to receive lifetime medical benefits for any medical expenses related to their football years. Think about it. That might include shoulder and back surgeries, hip and knee replacements, not to mention treatment for dementia related to on-field concussions.
Would it surprise you to learn that over 90 percent of the players entering the California comp system decline the lifetime medical coverage and instead, settle for a lump sum payment? Most players have accepted an extra $60,000 to $100,000 to settle their claim for future medical coverage. That amount would pay for one, maybe two surgeries.
Why settle out the medicals? Settling avoids the necessity of a trial (in these instances, not by jury but by administrative law judge). It puts a significant amount of money in the players’s pockets sooner rather than later. And, of course, it puts money in the pockets of the attorneys, which lifetime medical benefits do not.
Judge Norman Delaterre, who sits in Santa Ana, notes that judges must consider whether proposed settlements are fair. “These players are represented by experienced, competent attorneys – the players themselves, they’re adults. Presumably they’ve discussed the ramifications of the various types of settlements with their attorneys and they’ve come to a decision to accept the lump sum. Even though the judge in the back of his mind is thinking, you know, if it were me, maybe I wouldn’t do this.”
Hey, it’s all just a game, right? The players took their chances on the field. Now they roll the dice in the corridors of comp system. If they end up doing what’s in the best interests of their attorneys, what harm is there in that? They get some cash, the attorney gets a nice fee, the insurer gets a settled claim with no future exposure. One door opens, another one closes. When and if the future medical issues arise or the dementia sets in, well, someone else will be on the hook for that.
There are a lot of people unhappy with California’s wide open door, above all, team owners and insurance carriers outside of California. They are going to do their best to shut the Golden State’s door – the only such door, we should add, that is available to the walking wounded veterans of the NFL wars. We will keep readers posted on any developments.
But enough with the old folks who can no longer play and whose names we barely remember. The NFL draft is just weeks away. Hope springs eternal for every team, even the Detroit Lions. I can’t wait to see what happens.
Just how much of a toll has the poor economy taken on the workers comp system? Robert Hartwig looks back and looks ahead in his article for this year’s NCCI Issues Report, The Great Recession and Workers Compensation: Assessing the Damage and the Road to Recovery (PDF). He notes that while the property casualty industry fared better than many industries – not a single property casualty insurer folded due to the economy vs the 170 banks that did – the industry still took some serious body blows. And of the damage to the industry, the workers comp line was hardest hit. With 7.1 million job losses, declining payrolls, and a continuing soft market, net written premium fell by a whopping $8.5 billion in 2008, with another steep decline anticipate for 2009.
With such a grim backdrop, what’s in the cards for recovery? Hartwig notes that recovery will be largely contingent on job and wage growth over the next several years, and on that front, he is not overly optimistic. If job growth proceeds at a pace consistent with that of the most recent expansion suggests a painfully long recovery period, job losses won’t be recouped until late 2016. That doesn’t leave insurers a lot of room to move:
With a limited ability to grow exposures and greatly diminished investment earnings across all lines of insurance, especially especially longer-tailed lines such as workers compensation, the focus — at least for the first half of the 2010s — must be on underwriting profitability. Generating consistent underwriting profits is the only way to earn risk-appropriate rates of return in the current slow growth, low investment yield environment.
What’s in the card for employers? Look for the potential of price hardening and greater selectivity on the part of insurers. Tight underwriting means that options may be limited for employers with poor experience. While it’s always important to control losses, this environment ups the ante. In particular, employers need to be taking steps to control losses as hiring ramps up: new and untrained workers experience more injuries than veteran employees. A recent article in Industry Week suggests that employers should make safety part of the hiring process: Hiring for Safety: Risk Takers Need Not Apply. In addition, employers should put a heavy emphasis on safety training for all new hires.