Archive for June, 2010

Life for Dr. Death?

Tuesday, June 29th, 2010

Five years ago almost to the day we blogged the saga of Dr. Jayant Patel, a surgeon of staggering incompetence who wreaked havoc on the citizens of Bundaberg, Australia. After 14 weeks of testimony, more than 75 witnesses and nearly 50 hours of deliberations over six days, a jury convicted Patel of manslaughter in the deaths of four patients and causing “grievous bodily harm” to a fifth. These charges involve just a small number of the cases where Patel’s doctoring skills have been called into question. There may be further trials ahead.
The most appalling aspect of this case involves institutional denial: despite Patel’s obvious incompetence – nurses actually hid patients from him – and despite explicit and alarming descriptions of his shortcomings as a doctor, administrators continued to support Patel, even naming him “employee of the month” following an egregious operating error that led to the death of a patient. Only when an enterprising reporter Googled his name did his prior problems as a surgeon in America pop up, at which point his employment was finally terminated.
The maximum penalty for manslaughter in Australia is life in prison. Dr. Death, in other words, is facing life. (He is filing an appeal.) In a just world, the administrators who hired, coddled and facilitated Patel would also be held accountable. But in case you haven’t noticed, this is not exactly a just world. The wheels of justice, slow though they may be, have finally put an end to Patel’s bizarre career, which transformed the medical premise of “do no harm” into its opposite. We can only say that he will do no further harm – a small consolation to his victims and a savage indictment of his profession.

Survivor stories: the human aftermath of the Deepwater Horizon tragedy

Monday, June 28th, 2010

Lawyers, investigators, policymakers and safety professionals will be wrangling over the Deepwater Horizon tragedy for years to determine what happened, where fault lay, and who will pay.
By many accounts, Deepwater Horizon was had a relatively good safety record. Its 125-member crew had no serious injuries in the seven years prior to the explosion. In a cruel irony, BP mangers were reported as being on board to recognize the Deepwater crew for its outstanding record on the very day that the explosion occurred.
The sheer magnitude of the disaster and the economic and ecological impact have taken center stage, while the deaths of 11 workers are all too often the asterisk to the story. Their surviving family members and their 156 work colleagues, who narrowly averted death themselves, are in the early stages of an arduous healing process. Coworkers lived through the harrowing and terrible event, many sustaining physical and psychological scars. At hearings and in the media, their personal survival accounts are beginning to be told.
In the first part of a 60 Minutes segment on the disaster, crew member Mike Williams talks about events leading up to the explosion. Production was off schedule by more than a month and $25 million had been lost. This put crews under even pressure to perform. A critical piece of equipment was damaged 4 weeks prior to the explosion, yet this unsettling event did not slow the inexorable push forward. Williams describes a “chest-bumping” argument that occurred on the morning of the fateful day, between a BP manager and crew manager about who would have the final word about process decisions. In his account, the BP manager won the argument and made a process decision, which preceded the explosion.
In the second part of the report, Williams relates his own struggle for survival, as well as the dramatic close call for other coworkers. He talks about being injured in the initial two explosions, the helpless feeling when crawling outside to see the extent of the damage, and the terror of jumping 90 feet into oil-slicked, fiery water and swimming until being rescued.
The dividing line between survival and death was a matter chance and of seconds. Although there had been weekly lifeboat drills, some survivors said that they had not anticipated such chaos, nor had they actually sat in lifeboats or thought through the details of a quick escape. And details could make the difference. One life raft of survivors was tethered to the rig and narrowly avoided being pulled back into the inferno simply because the company’s strict “no knives” policy meant that no one had a knife to cut the rope.
Other survivors and family members shared their experiences on CNN.

Family members relate the experience from their point of view – hearing the terrible news of the explosion and the long, terrible vigil waiting to get official word of whether their loved one survived or not.

Also see: Profiles of the profiles of the Deepwater Horizon Eleven, ranging in age from the youngest at 22 to the oldest at 56 years old.
Prior posts
News update on BP
Engulfed by risks

Health Wonk Review’s Research Edition & a roundup of other news

Thursday, June 24th, 2010

Brad Wright of Wright on Health has an excellent edition of Health Wonk Review, which shines a spotlight on research. Brad notes that, going forward, research will be incredibly important as health reform is implemented and evaluated. He offers a fine research roundup from leading healthcare bloggers – check it out!
Healthcare – According to a Commonwealth Fund report on healthcare, which assessed and compared data from patient and physician surveys in seven countries in 2007, 2008 and 2009, the U.S. scored sixth out of seven countries on quality issues, yet we spent more than double per person than any other surveyed country. See the full report How the Performance of the U.S. Health Care System Compares Internationally, 2010 Update, which includes both a snapshot chart and an interactive comparison tool. Related: Results from the National Scorecard on U.S. Health System Performance, 2008
The importance of timely reporting – In Manucy v. Joe Manucy Racing, The Louisiana Court of Appeal recently ruled that an employee who was injured during horse training was ineligible for benefits because although the injury was immediately apparent, the worker did not file for benefits until about a year and a half after the injury occurred. Louisiana law stipulates a one-year from date of injury filing deadline for injuries that are immediately evident, and two years for injuries that do not develop immediately. In this case, the injury was immediately apparent, requiring ambulance transport and surgery within two months. State law varies on statues of limitations for benefit eligibility, most commonly falling between one and three years from date of injury. Many states offer some exceptions to the statutes – such as starting the clock ticking at date of disability rather than date of injury or allowing exceptions if there is conduct that might be regarded as deceptive on the part of the employer.
Going and coming – As a rule, any injuries that happen to an employee when they are traveling to or from work – ‘going and coming’ – are not compensable, but there are exceptions. Fortney v. AirTran Airways, Inc. deals with one of those exceptions: service/benefit to the employer. In this case, the employee was killed in a plane crash while flying on a reciprocal arrangement with another airline. The Kentucky Supreme Court upheld benefits to the estate of the deceased. At Lexis Nexis Workers’ Comp Community, Roland Legal PLLC summarizes the issues: “Whether an employer uses transportation or transportation expense as an inducement for an employee to accept or continue employment is material to supporting compensability, particularly when the journey is sizeable and when the employer pays all or substantially all of the expense.” See our prior post about common exceptions to the ‘going and coming’ rule.
Medicare – Get your popcorn and follow along as Joe Paduda offers a guide to the status of the Medicare “fix” and looks at various scenarios for how things may play out.
Retroactive Insurance in Georgia – events continue to play out in the wake of the insolvency of Southeastern U.S. Insurance Inc (SEUS) in Georgia (a story in and of itself, and worth a read if you haven’t been following along). After the SEUS demise, many employers were left holding the bag for the open claims of injured workers because they had not paid into the state’s insolvency fund and were therefore ineligible for coverage. New legislation will cover employers retroactively if they pay into the state insolvency fund, but the Georgia’s Insurers Insolvency Pool has filed a challenge to the new law. “The pool is placed in a position of uncertainty as to whether the legislation imposes duties and obligations on the pool retroactively in violation of the Georgia state constitution,” the filing says.
Arizona judge: no raiding the compensation fund – The state of Arizona is considering an appeal to Maricopa County Superior Court Judge Larry Grant’s ruling which found that Governor Brewer and legislators ignored the plain language of the law by trying to use $4.7 million from the State Compensation Fund to help balance the budget. According to the judge “The proceeds held by the special fund are insurance proceeds held in the benefit of employees and employers covered by the Workers’ Compensation Act.”
Safety shorts

Fee Schedule in Maine: Interest without the Conflict?

Wednesday, June 23rd, 2010

We return to the beautiful state of Maine, where moose wander the woods looking for whatever interests a moose and where employers self-insured for workers comp look for a fee schedule. The moose are a lot happier than the self-insureds. As we have pointed out in prior blogs, the legislature mandated the creation of a fee schedule for medical services nearly 20 years ago. There is still no fee schedule. So while insurance carriers are free to negotiate with hospitals to determine rates, self-insureds – Bath Iron Works (BIW) the most notable and vocal – are stuck paying the exorbitant “usual and customary” fees.
BIW has sued a number of times to move this process to a conclusion. Most recently, they sued to remove Paul Dionne, chairman of the workers comp board, from heading up the fee schedule committee. Dionne is also board chairman of Central Maine Healthcare Corp., which includes Central Maine Medical Center in Lewiston. While he claims objectivity, Dionne is in an untenable situation: you do not ask a medical provider how much they want to cut their own revenues.
In deference to the “appearance” of a conflict of interest, and perhaps in an acknowledgement that after 20 years, enough is enough, Dionne has recused himself from any further involvement in the fee schedule process.
“It’s a hard decision because this is a very important issue for the workers’ compensation system,” he said. “But I’ve got a lot of confidence in the board members.”
So from here on Dionne will follow the debate from the sidelines: no conflict, but plenty of interest. His confidence in the other board members might give rise to anxiety for BIW. Regardless, this is surely a step in the right direction.
When it comes to the long-mandated, long-absent fee schedule, patience is wearing a bit thin in Maine. The moose may wander where they choose, but self-insureds are caught in a very expensive trap. Too bad they don’t sell fee schedules at L.L. Bean.

Sewer Dweller

Monday, June 21st, 2010

A sewer may not be the preferred place to begin the work week, but the working world calls and we must follow. About a year ago, we blogged the sad story of Shlomo and Harel Dahan, respectively the owner and heir of S. Dahan Piping and Heating company in Queens, New York. They were hired to vacuum an 18-foot-deep dry well at a plant owned by Regal Recycling. Harel went in first. When he failed to emerge, his father went in after him. When the father failed to surface, an employee of Regal, Rene Rivas, went in after them. All three were overcome by deadly fumes at the bottom of the well. All three died.
Now we read in the New York Times that Sarah Dahan, Shlomo’s widow and mother of Harel, brought the remains of her husband and son to Israel for burial. She left the company in the hands of Ygal Lalush, a trusted employee. In her absence, Lalush changed the locks, stole the company’s four trucks, wrote $30,000 in company checks for his personal benefit and started running the company out of his own home under a different corporate name.
Ms. Dahan discovered the problem when she returned from Israel. She first tried to resolve the issue directly with Lalush. When that failed, she went to the authorities. Lalush has been charged with fraud, grand larceny, forgery, possession of stolen property and falsifying business records.
Lessons from the Underground
We could conjecture about the frailty of human nature and the dark shadows that accompany us all as we make our way through the world. We could wonder at the transformation of a loyal employee into a pathetic crook. (Perhaps his lawyer will chalk it up to post-traumatic stress syndrome!) That aspect of this tale will remain forever hidden, like the contents of the sewers cleaned by S. Dahan Piping and Heating.
The take-away from this tale lies within the Dahan family: the father who tried in vain to save his son. The mother who fulfilled a commitment by burying her husband and son in Israel and who tried unsuccessfully to convince her wayward employee to abandon his demented plan. There is genuine dignity in these people, who deserved both a better fate and a higher class of employee.

New York: Joint and Infinite Liability

Friday, June 18th, 2010

The saga of the New York self insurance trusts continues. We reported in April that justice had been served by Judge Kimberly O’Connell, who ruled that requiring solvent trusts to pay for the sins of insolvent trusts was unconstitutional. Now, according to Work Comp Central (subscription required), O’Connell herself has been overruled by a four judge panel, which has reinstated the assessments on the solvent trusts. While the justices are undoubtedly correct in their literal interpretation of the law, the ruling comes under the heading of “let no good deed go unpunished.” It may be legal, but it is in no way just.
Here’s the (rotten) deal: 15 self-insurance trusts are shut down by the state. They ran out of money because they under-priced their premiums, under-reserved claims and sold insurance like a ponzi scheme. Oh, they also paid themselves handsomely for their fine work as administrators. These defunct trusts are in the hole to the tune of $500-$600 million. State oversight? There wasn’t any.
Who Pays?
The WCB decides to assess the remaining, solvent trusts to make up the deficit. In other words, the “joint and several liability” within a trust group now expands to include liability for all trust groups. To be sure, the enabling legislation allows the WCB to do this. After all, someone has to pay and this is New York, so deal with it. In this case, the trusts that operated by the rules, fairly pricing and fairly reserving claims, are penalized for the sins of the clowns who are no longer in business.
As we pointed out in yesterday’s post, a task force has recommended that New York get out of the self insured trust business. We concur. Any state that loads the dice of “joint and several liability” to this absurd point makes a mockery of the concept. Self-insurance is based upon the ability to limit risk and contain exposures. Given New York’s operating rules for self-insured trusts, conventional management tools are rendered useless. The liabilities of operating a group trust are uncontrollable and virtually infinite. Why would any company choose this path for managing risk?

New York: In Trusts We Trust Not

Thursday, June 17th, 2010

Two years ago, New York Governor Patterson convened a task force to examine the status of self-insured trusts for workers comp. He was forced to take action when a number of trusts failed, most notably those administered by Compensation Risk Managers (CRM). The insolvent trusts left behind a deficit of $500 million. (See our prior blogs here and here.) The task force recently presented its findings to the governor. In 189 pages of closely reasoned text, the commission recommends that New York abandon this particular model for insurance. The risks, in their view, outweigh the benefits and perhaps most important, the state lacks the resources to adequately monitor how these groups operate from day to day. You cannot trust the trusts.
The commission zeroed in on what it considers to be the (fatal) flaws in the group trust model:
: Joint and several liability, where prudent employers are held accountable for the actions of the weakest members
NOTE: it’s one thing to have “joint and several” liability; as the commission points out, it’s quite another to actually collect on these obligations: less than 15% of what is owed by participants in the failed trusts has been collected to date.
: potential conflicts of interest involving group administrators and TPAs, who seek to grow the business by keeping rates artificially low and by understating losses
: inability of trustees to understand what is really going on
: inability of the state to monitor and assess the true status of each operating trust
Death Spiral
Self insurance groups currently operate successfully in 18 states, but not in New York. As we pointed out in a prior blog, the NY comp board tried to assess all trust members – not just those in the insolvent trusts – to make up the $500 million deficit. The solvent trusts sued and for the moment, have prevailed. (The Held decision can be read in the appendix of the task force report).
There is a certain logic to assessing all members for the failings of a few, but this only works when you are dealing with very large numbers, so the individual assessments are relatively small. This was not the case back in 2008, when there were about 18,000 employers participating in NY trusts. After all hell broke lose, the number dwindled to 4,000.
The crippling assessments issued by the comp board to cover the trust deficit created a death spiral, with solvent trusts folding their tents and moving out of the state. Even though those assessments have been retracted by the courts, that action comes too late to save the viable trusts. New York probably has no choice but to abandon the group trust model.
Rotten Apples
The New York narrative, as written by the governor’s commission, attributes the trust failures to fatal flaws in the business model. But where New York sees an insurance approach that cannot work, other states see vulnerabilities that can be addressed through prudent management. Self-insured groups still operate profitably and effectively in many states. What happened in New York was the result of rogue and perhaps felonious trust management combined with inadequate state oversight. The state failed to see the true status of the troubled trusts in a timely manner and then took exactly the wrong action to correct it. That’s not a problem with trusts themselves, but with the people entrusted to run them.

Marking 100 Years: The history of Workers’ Compensation

Wednesday, June 16th, 2010

Workers comp is 100 years old this year and by way of Roberto Ceniceros’ informative blog Comp Time, we learn that there is a Workers’ Compensation Centennial Commission (WCCC), which was formed to celebrate the anniversary of the first constitutional workers’ compensation law in the United States. The WCCC was organized by a bi-partisan coalition of Wisconsin-based labor and government leaders, which is reaching out to other states to commemorate the anniversary of the landmark legislation. It’s pretty appropriate that this initiative is kicking off in Wisconsin because that was the state where the first state workers’ compensation law was signed on May 3, 1911.
The WCCC site has collected some really interesting resources, including a photo gallery and various historical documents. And one of the centerpieces of the collection is a terrific 10-minute video that was created by students from Nimitz High in Houston Texas for the 2008 National History Day.

Great job on the film – thanks, Nimitz High students!

Cavalcade of Risk #197

Wednesday, June 16th, 2010

For a biweekly risk roundup, check out this week’s edition of Cavalcade of Risk over at My Wealth Builder.

Tewksbury (Finally) Opts In

Tuesday, June 15th, 2010

There are five towns in Massachusetts that do not carry workers comp insurance for their employees. Four of them – Dana, Prescott, Enfield and Greenwich – are under 412 billion gallons of water: they were submerged during the 1930s in the making of the Quabbin Reservoir, which supplies drinking water to Boston and a number of suburban cities and towns. The fifth, Tewksbury, voted to join the workers comp system way back in 1914, but a clerical error recorded the positive vote as negative, resulting in nearly 100 years of a go-it-alone, pay-as-you-go, hope-for-the-best approach to comp among the residents of the town, now nearing 30,000 people.
To date, Tewksbury has been pretty lucky. The town has paid out between $100,000 and $189,000 per year for claims in recent years. That’s not bad, considering that one failed back can run upwards of $500,000. But just because Tewksbury has been lucky does not mean they are going to stay lucky. The liability to the town’s tax payers is precariously open-ended. In these challenging times of reduced budgets for all municipal services, the specter of an unanticipated claim could put Tewksbury on the verge of bankruptcy. Because the town did not participate in the comp system, injured workers had the option of suing for damages unavailable in the comp system.
As we read in Insurance News Net, last month the town meeting voted to adopt workers comp coverage. (Presumably, the vote was properly recorded this time.) It will take a few years to develop an experience rating, based upon actual losses and statutory benefits. Overall the cost of insurance will run a bit higher than an average loss year, but that’s price you pay for transferring the risk to a third party.Comp will finally become a set cost in the town budget. A workers comp policy comes with a comfort factor that cannot be measured simply in premium dollars: any claims, large or small, any catastrophic losses involving multiple town employees, will now be covered by insurance. That should help town residents and officials sleep a little better at night.
As for the surviving citizens of Dana, Prescott, Enfield and Greenwich, displaced long ago by the state’s appetite for water, comp is not a likely component in their dreams. I imagine they welcome a nocturnal glimpse of the communities where they once lived and waken with sense of sadness and of loss.