Archive for May, 2012

The high price for fast phones: Cell tower deaths

Tuesday, May 29th, 2012

The boom in cell phones has spawned a huge demand for the building and maintenance of radio towers and that demand accelerated with the introduction of iPhones. The good news was that work proliferated – but under brutal, highly aggressive schedules. Now, with carriers gearing up for 4G networks, the anticipated building boom raises alarm in many seasoned workers – who see a proliferation of less trained, less experienced workers, working under more pressure for less pay – a recipe that points to the potential for more fatalities.

Frontline and Pro Publica focus on cell tower worker deaths, a small industry with a death rate that is about 10 times the rate of construction. Free climbing – climbing completely untethered without any safety gear – was involved in about half the deaths. (See our prior post with a gut-wrenching free climbing video clip: You think your job is tough? It remains one of this blog’s most visited posts.)

Tower work is carried out by a complex web of subcontractors – an arrangement that makes good sense on many levels, but that allows large carriers to deflect responsibility for on-the-job work practices – and for any workplace deaths. These networks are like like the Russian nesting dolls: layer after layer of progressively smaller employers. Tower owners are carriers like AT&T that hire firms such as Bechtel and General Dynamics to manage and complete tower projects. The industry jargon for these firms is “turf vendors.” The turf vendors then hire contracting firms, who in turn hire subcontractors. The end result: less money, less experienced workers, less training, less focus on safety and more deaths. This layering makes OSHA enforcement almost impossible. The lowest rung on the ladder is the one responsible for safety – and enforcement becomes what some industry observers call a game of “whack a mole.” Safety experts say that the responsibility for safety has to lie up the line, probably with the turf vendors.

Contract work and subcontracting is the new normal. The old contract between the employer and the employee is fraying, the concept of lifetime employment is increasingly a quaint tale of yesteryear. How this new normal will play out in terms of employee safety and employee protections should be of great interest to workers as this pattern proliferates in other industries. Even aside from politics, one has to wonder if the very concepts of workers compensation and OSHA — and other worker protections — would come into existence in a fragmented work environment like the current one.

Additional articles from the series
Transcript of a live chat with reporters and project manager for the Tower Climber Protection project. We note that the project manager is Wally Reardon, who commented on our prior post, linked above.)
Jordan Barab discusses OSHA limitations
How Subcontracting Affects Worker Safety

Celebrate Memorial Day 2012 by hiring a Vet: You may qualify for a tax credit

Friday, May 25th, 2012

In all the hype about barbecues and beaches, it’s easy to forget the original history of Memorial Day was as a day of remembrance for those who died in our nation’s service. Originally called “Decoration Day,” the tradition began in 1868, a few years after the close of the Civil War. In early commemorations, flowers were placed on the graves of Union and Confederate soldiers at Arlington National Cemetery, but after WWI, the day of remembrance was changed to honor those who died fighting in any war. Over time, many started using the day as a day of remembrance for not just vets, but for commemorating deceased family and friends, as well.
If you’d like to take a few moments to honor the men and women who died in military service, you can visit the Veteran’s Affairs Memorial Day page to learn about related events and traditions.
While we honor the dead, let’s not forget about the living vets who are returning from Iraq and Afghanistan to face a difficult job market, among other re-acclimation challenges they face when returning home. The unemployment rate for veterans returning from Iraq and Afghanistan is about 12%, or 4% higher than the overall unemployment rate.
Potential Tax Credit if You Hire a Vet in 2012
Do you know about the Work Opportunity Tax Credit (WOTC) for hiring vets? It’s a provision in the VOW to Hire Heroes Act 2011. The Act allows employers to claim the WOTC for veterans certified as qualified veterans who begin work before January 1, 2013. Credits are substantial: as high as $9,600 per qualified veteran for for-profit employers or up to $6,240 for qualified tax-exempt organizations. There are a number of factors that determine the credit amount, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. Learn more about potential tax credits for hiring veterans from the IRS.
Additional Resources
Department of Labor Hiring Veterans – Compliance Programs
CareerOneStop offers employer resources for hiring veterans, including a Military to Civilian Occupation Translator helps service members match military skills and experience to civilian occupations.
US Chamber of Commerce: Hiring Our Heroes, including a map of upcoming hiring fairs.

The Doctor dishes up this week’s edition of Health Wonkery

Thursday, May 24th, 2012

Dr. Jaan Sidorov has posted Health Wonk Review, Come Back, We’ll Leave The Light On For You Edition at Disease Management Care Blog. It’s a substantive and far-ranging edition which encompasses a broad range of commentary on key healthcare policy issues. Jaan serves as a great guide through this week’s many posts. Workers’ comp is only a very small sliver of the overall health care marketplace. Because it’s a case of the dog wagging the tail rather than the reverse, it’s important to keep a finger on the pulse. The biweekly digest from HWR is a good way to do that.

Risk Transfer as Three-Card Monte

Tuesday, May 22nd, 2012

When you’re looking for ethically-challenged business practices, Florida is usually a good place to begin. The latest kerfluffle involves a toxic combination of very high deductibles for workers comp insurance and employee leasing companies. Oklahoma based Park Avenue Property and Casualty Insurance sold policies with deductibles as high as $1 million to PEOs. Think about that for a moment: a million dollar deductible is virtually self-insurance, as very few claims break that formidable barrier. Park Avenue, along with its successor companies, sold these policies to employee leasing companies, who in turn passed the coverage through to their client companies. With such a huge deductible, the coverage must have been relatively inexpensive compared to standard market rates.
Under large deductible programs, the insurance company pays all the bills and then seeks reimbursement from the client company, up to the deductible amount. It’s not hard to figure out the flaw in this business model: client companies will welcome the discounted premiums, but when it comes time to pay back the insurer for paid losses, they will be unable to cut the checks. Given the complete absence of regulatory-mandated collateralization for the claims liability, there is no way the insurer will be reimbursed for large loss claims.
That’s where the three-card Monte comes in: the insurer wrote these policies knowing full well that the deductibles would never be paid. That’s why Park Avenue morphed into Pegasus Insurance, which morphed into Southern Eagle Insurance, which flies off into the pastel sunset of bankruptcy.
Gaming Risk Transfer
The cards have been moved around at blinding speed, but who ends up paying? Once again, those who played by the rules will have to pay for those who didn’t. (For a more egregious example of punishing the innocent, see our blogs on the New York Trusts.) Policy holders in Florida will be charged somewhere between 2% and 3.5% of premiums to cover the $100 million plus of losses.
In the WorkComp Central article by Jim Sams (subscription required), Paul Hughes, CEO of Risk Transfer Company, which markets insurance to PEOs, complains that singling out the PEO industry is unfair. The state should never have allowed Park Avenue and its winged successors to write insurance, as they were clearly incapable of assuming the risk. True enough, but even Hughes would have to admit that the PEO industry offered a ripe venue for the scam: individually, PEO clients would never have qualified for high deductible coverage, but somehow, under the collective umbrella of a PEO, they did.
Meanwhile, PEOs are being sued for failing to reimburse the claims payments of Park Avenue and its successors. After the PEOs lose these cases, they will seek payment from their clients, who are unlikely to have the ability to pay anywhere near what is owed. The litigation will go on for a long time, but the bottom line is simple: risk transfer cannot exist where none of the parties can cover the exposure. That isn’t risk transfer: it’s a shell game, where those who did not play are left holding the bag.
Follow Up – June 7, 2012
After posting this blog, I received a call from Paul Hughes, CEO of Risk Transfer in Florida, who is quoted above. While not contesting the premise that large deductibles are poorly managed in Florida (and elsewhere), he believes that I unfairly singled out PEOs in the blog. The fundamental issue is the failure of the state to adequately regulate and oversee large deductible programs. I agree.
Please take a few moments to read Paul’s response, which employs the useful metaphor of a casino for the risk transfer industry:

The core issue to me is the role of the regulator versus the business owner in the management of the “casino” (insurance marketplace). That is one of the parts of Jon’s article in Workers Comp Insider that blurs the line a bit on what the PEO’s role is within the casino and whose job it is to set the rules. The casino is the State as they certify the dealers to play workers’ compensation (Carriers, MGU’s, MGA’s, Agents and Brokers) and the State also certifies that the players are credible (not convicted of insurance fraud) and can pay/play by the rules of the house. The rules are set by the house and the games all require public filings – ability to write workers’ compensation (certificate of authority), ability to offer a large deductible plan (large deductible filings), agent license, agency license, adjusters license and any other deviation from usual business practices (like the allegations that one now defunct insurance carrier illegally charged surplus notes to desperate PEO’s in the hardest market the industry has ever seen). The “three-card monte” that Jon alludes to in this article is managed not by the dealers (carriers), but by the house (state). Would a real life casino consider it prudent to allow one of their dealers to expose 20% of their $5m in surplus through high deductibles sold to PEO’s with minimal financial underwriting and inadequate collateralization? Would any casino write harder to place (severity-driven) clients to include USL&H, roofers etc with the minimum amount of surplus needed to even operate a carrier…? Of course not. These “big boy” bets would never be allowed in Vegas without the pockets being deep enough to cover the losses.

“All the dogs want to kill me”

Monday, May 21st, 2012

“All the dogs want to kill me” is the plaintive plea of former mail carrier Ryan Bradford, who logged snapshots of dogs lurking on his postal route a few years ago. The public was much amused by the photos and he made the circuit of morning news shows. But despite the humor, occupational dog bites aren’t a particularly amusing prospect to the postal workers, delivery people, police and firefighters, outdoor workers, and home service providers who have to contend with the reality every day.
This week is National Dog Bite Awareness Week, and the Postal Service is at the forefront of trying to raise awareness about this issue. Every year, about 800,000 dog bites are treated in emergency rooms – and the vast majority of the bite victims are children, followed by seniors. Work-related dog bites are also a significant injury problem – letter carriers and postal workers are third on the victim list. Last year, 5,577 postal employees were attacked in more than 1,400 cities – resulting in a nearly $1.2 million price tag.
A worker who is bitten by a dog in the course and scope of employment would likely be eligible for workers comp, but the insurer may subrogate (file against a third party) to recoup losses, which can be substantial. The Postal Service will hold pet owners liable for medical expenses and other costs. With some exceptions, most homeowners and rental policies will cover dog bites up to the limits of liability coverage (generally $100,000 to $300,000). An analysis of homeowners insurance data by the Insurance Information Institute found that the average cost paid out for dog bite claims was $29,396 in 2011, up 12.3 percent from $26,166 in 2010. In fact, dog bites accounted for more than one-third of all homeowners insurance liability claims paid out in 2011, costing nearly $479 million.
Bite Prevention Tips from the Pros
We searched everything from animal trainer and vet sites to letter carrier message boards to amass some bite prevention best practices for workers whose jobs expose them to dogs:

  • Be aware of your surroundings and anticipate so you aren’t caught by surprise. Be aware that dogs are protecting their master’s territory. Don’t approach strange dogs and try to avoid startling sleeping or eating dogs.
  • Carry something to keep between you and the animal. Some suggest a dog stick, others suggest an umbrella which can be opened, and some letter carriers use their bag to hold between them or to throw down as a distraction. Consider protective clothing such as padding, footwear or gloves.
  • Many postal workers are required to carry dog spray. If you carry a spray, attach it to a belt or bag with short bungee cord to offer quick access and to ensure you don’t lose or drop it.
  • Pepper spray or mace should be a last resort. Sprays may not stop all dogs and can also pose a blow-back risk when used in windy conditions. Also, sprays require care if other people are around.
  • Be careful with door slots. Postal worker message boards hold many stories of close calls to fingers and tugs of war with dogs on the opposite side doors. Some frustrated workers say they feed these aggressive dogs the most important looking mail first!
  • While many pet lovers suggest that delivery persons carry dog treats to tame savage beasts, this is neither practical nor wise. It is also against the work policies of many organizations.
  • Do not run from an aggressive dog. Easier said than done, but you do not want to be perceived as prey because most dogs will give chase. Stay still and avoid eye contact.
  • If attacked, stay as still and calm as possible and do not fight back, which may increase the dog’s agitation. If pushed to the ground, cover your ears and lie still. If bitten, push into the dog’s mouth instead of pulling away.

Additional resources

Cavalcade of Risk Plus Frisky Risk Management

Wednesday, May 16th, 2012

The latest edition of Cavalcade of Risk, hosted by Dennis Wall at Insurance Claims and Issues, is up. It’s the risk-free option for checking out a potpourri of interesting posts related to risk.
And while we are on the topic of risk, let’s give a Bronx cheer for Jamie Dimon, CEO of JP Morgan Chase, for the work of his risk management team. The bank’s $2 billion plus loss was the result of “sloppy” and “stupid” trading, a “mistake” which involved “bad judgment,” and which caused losses that are “very unfortunate” and that come at an “inopportune time,” but which in any case are not “life threatening.” The risk management team is supposed to prevent such problems, not perpetrate them. Oh, well, that’s just the risk you take when your frisky risk managers manage risk.

Too Much Sitting Plus Comorbidities = Big Trouble

Tuesday, May 15th, 2012

For those who seek risk conundrums, workers comp is fertile ground. From a micro perspective, the unfortunate Ronald Westerman, a paramedic for a California ambulance company, embodies many of the elements that result in sleepless nights for claims adjusters and actuaries: Westerman had an inordinately long commute (2.5 hours each way!), a sitting job with periodic lifting (inert patients and medical equipment), along with the comorbidities of hypertension, obesity and diabetes. In two years of ambulance work, Westerman gained 70 pounds, thereby compounding the co-morbidity issues.
In March 2009 Westerman returned home from a 36 hour shift and suffered a stroke. His doctor determined that the stroke was work related and that Westerman was permanently and totally disabled. He was 50 years old. While there was some dispute over the cause of the stroke, an independent medical evaluator surmised that it was caused by a blood clot moving through a hole in Westerman’s heart to his brain, otherwise known as in-situ thrombosis in his lower extremities – a direct result of too much sitting. (We blogged a compensable fatality from too much sitting here.)
At the appeals level, compensability centered on the performance of a shunt study – an invasive test – that would have determined whether the blood clot caused the stroke. Westerman was willing to undergo the test, but his wife refused to authorize it, due to his fragile health. If there was no hole near the heart, the entire theory of compensability would be disproven; the stroke would not have been work related.
Had the defense attempted to force the test issue, it would have given rise to yet another conundrum: was refusing an invasive test the equivalent of “unreasonable refusal to submit to medical treatment”? Indeed, does a diagnostic test, by itself, meet the definition of “treatment”? Fortunately for Westerman, the defense requested – but did not attempt to require – the shunt test.
Managing Comorbidities
Our esteemed colleague Joe Paduda, who blogs over at Managed Care Matters, provides the macro perspective, one which is unlikely to aid in the sleep patterns for actuaries. He reports on the impact of comorbidities on cost from the recent NCCI conference:

The work done by NCCI was enlightening. 4% of all claims (MO and LT) between 2000 – 09 had treatments, paid for by workers comp, for comorbidities, with hypertension the most common. These claims cost twice as much as those without comorbidities [emphasis added].

It is beyond doubt that comorbidities make work-related injuries more expensive. But what, if anything, can claims managers do about this? In the Westerman case, there is not much to be done, as the stroke resulted in a permanent total disability. But in other cases where there is a path to recovery and even return to work, adjusters should flag these claims for early, intensive intervention, including psychological counseling and support for weight loss and other life style adjustments. To be sure, this would increase the upfront costs, but these steps just might go a long way toward mitigating the ultimate cost of the claims.
As is so often the case in workers comp, it’s “pay me now” and “pay me later.” To which I can only say to my claims adjuster and actuary friends, “sweet dreams!”

When it Comes to Safety, This is Just Ducky…

Monday, May 14th, 2012

We begin the week on a somewhat bizarre note, as Donald Duck does safety in this vintage 1959 cartoon clip entitled “How to Have an Accident at Work.” When it comes to safety, Donald is everyone’s nightmare worker. For those of us in the workers comp field, this may seem more horror film than cartoon, but Donald, unlike ordinary workers, is literally indestructible.

This clip was a sequel to “How to Have an Accident in the Home”

Health Wonk Review Hath Sprung

Thursday, May 10th, 2012

Hank Stern of Insure Blog has hosted the latest edition of the health work review. It’s a bouquet of wildflowers, well worth a few minutes of your time. And if you think palliative care is just for the terminally ill, check out Diane Meier’s inspiring post, which reads like a sprig of lilacs in a mason jar on the kitchen table.

NCCI Experience Mod Changes: The (Ominous) Future is Now

Wednesday, May 9th, 2012

These are the calm days before the coming storm. For most employers, workers comp falls under the “business as usual” category. If a worker is injured, the standard protocols are followed: secure medical treatment; report the claim; if it’s convenient and not too difficult, bring the worker back on temporary modified duty. Sure, you will eventually pay for the losses in the form of higher premiums. But rates have been low for a long time. As for the experience mod, how high could it possibly go?
Pretty high! NCCI’s new rating plan will roll across the country throughout 2013, beginning in January in a handful of states and finishing up in Utah at the year’s end. Employers who pay attention to these things know that primary losses – the most expensive dollars in every claim – are doubling from the current cap of $5,000 to $10,000 in 2013, and eventually going up to $15,000 by 2015. It sounds a bit ominous, but it’s still way off in the future, right?
The future is now. Most employers are currently operating in policy year (PY) 2012, which began sometime between January 1 and today. The losses under this policy will not be included in the experience mod until PY 2014 and they will remain in the calculations through PY 2016. In other words, the increased primary losses in these calculations have already been incurred – not only for PY 12, but going back as far as PY 09. The future rating plan, in other words, is not only with us, it’s behind us!
What Should Be Done?
Employers who want to stay on top of their insurance costs need to ratchet up their loss control programs. The best injury is the one that never occurs. And for those moments when a safety program fails, employers need to enhance their post-injury management programs, which should include:
– Employee awareness on hazards and safety
– Supervisor training in immediate post-injury response
– A relationship with a quality occupational medical provider
– Prompt reporting of all injuries to the insurer
– An effective and aggressive temporary modified duty program
– Accident analysis to prevent recurrence
To be sure, these key elements are no different from what was needed under the current rating system. But the situation is about to change dramatically. With primary losses doubling and eventually tripling, the need to manage claims from day one has become much more important. Under the current system, the “heavy losses” end at $5,000. Going forward, the heavy losses push much deeper into each claim and will come back to haunt employers in future experience mods.
Waiting Periods: No Time for Waiting!
For employers in states managed directly by NCCI, there is an opportunity to reduce primary losses substantially. If injured employees can be brought back to work – in regular or modified jobs – before the end of the waiting period, the medical-only costs associated with the claim will be discounted by 70%. Waiting periods vary from state to state, with the shortest running for three days and the longest for seven. Once the waiting period is over, out-of-work employees are eligible for indemnity (lost wage) payments and the discount disappears.
So here is some free – and, if I must say so, extremely valuable – advice: do everything humanly possible to bring injured workers back to work before the end of the waiting period. Even if medical bills run to thousands of dollars, the total amount of these primary losses will be reduced by 70% – if, and only if, return to work occurs before indemnity kicks in.
This may not seem important today, but once the experience rating sheets for PY 2014 and beyond start to hit the your desk, you will see the wisdom of this preventive action. The experience rating changes may still be months away, but you are already operating under the new rules. For those who remain oblivious to what is already happening, the future may be dark and ominous indeed.