Archive for May, 2012

Compensability of a Crooked Nose

Monday, May 7th, 2012

Imagine the scene at the Pennsylvania Workers’ Comp Appeal Board earlier this year: the judges each carefully examined the nose of Rhonda Walker, to determine just how crooked it was and whether Walker was entitled to disfigurement benefits. Prior to the appeals hearing, a judge had awarded Walker 45 weeks of compensation for scars and disfigurement on her nose.
WorkCompCentral (subscription required) tells us that Walker was a meter reader for Health Consultants. In May 2007 she fell down a flight of stairs and fractured her nose. She was cleared for full duty in August, at which time her indemnity payments were halted. She resigned her position soon after and then filed for permanent disfigurement benefits; she considered herself to be “deformed” because her nose had scars and the tip was crooked.
Following their close and individual examination of Walker’s nose, the judges determined that there was “a slight crookedness” but this was “not noticeably disfiguring.” The alteration in her nose did not “rise to the level of creating an unsightly appearance.” They reversed the award of disfigurement damages. Walker may be self-conscious about her transformed nose, but the changes are not compensable.
Aesthetics and Self-Image
With all the emphasis on personal appearance in this culture, with the myriad options for changing one’s appearance, it is easy to become obsessed with what we see in the mirror. (I often wonder where that aging man in the bathroom mirror came from.) A few years back we blogged the interesting case of Penny Rumple Richardson, one of whose breast implants was damaged in a work-related auto accident. In the understandable interests of symmetry, her doctor replaced both implants. In the similarly related interests of compensability, the comp insurer paid for one implant and denied the other as not being work related.
Rhonda Walker is sensitive to the imperfections that greet her every time she looks in the mirror, but she will not be reimbursed for her troubles. In a mysterious footnote, President Judge Dan Pelligrini dissented without opinion. Given his silence, we will never know what he was thinking, but it appears that he bought Walker’s argument. In the inherently subjective matter of compensability, who knows whose nose meets an elusive standard?

Workers’ Comp Annual “Must-Read” Doc: The NCCI Issues Report

Thursday, May 3rd, 2012

Workers’ comp geeks and nerds, your wait is over: NCCI’s 2012 Workers’ Compensation Issues Report is out. For the uninitiated, NCCI stands for “National Council on Compensation Insurance, Inc.” NCCI manages the nation’s largest database of workers compensation insurance information, supplying data to more than 900 insurance companies and nearly 40 state governments.See the NCCI state map for a quick glance of states that use NCCI as their licensed rating and statistical organization. NCCI describes the services it offers as “analyzes industry trends, prepares workers compensation insurance rate recommendations, determines the cost of proposed legislation, and provides a variety of services and tools to maintain a healthy workers compensation system.”
So the Annual Issues Report is a rather big deal – arguably one of the most important workers’ comp documents of the year. It offers an annual checkup on the health of market, along with discussion of trends, legislative changes, and the like. Plus, informed commentary on hot topics from various industry leaders.
The cornerstone document in the report is President and CEO Stephen Klingel’s annual update, this year entitled Workers Compensation Market Struggles to Identify a Direction (PDF). Klingel notes that it’s no easy matter offering any forecasts because we are in a time of uncertainties and adjustments as we make the long, slow climb from the recession. A few of his observations we found noteworthy:

  • In what is referred to as “the most surprising and disturbing negative
    development,” claims frequency saw its first increase in 13 years.
  • After 6 years of decline in the residual market (aka, “market of last resort” or “the pool”), NCCI is seeing initial signs of an increase.
  • Direct written premium is showing some growth.
  • State results show deterioration, with the ratio of increases in loss costs to declines doubling in just two years, a trend that is expected to continue in 2012.
  • Key quote: “With investment yields at historic lows, the current levels of underwriting losses are not sustainable. Even with what appears to be a temporary increase in investment gains, the combined ratio needs to decline substantially to earn a reasonable return on capital.”

Goring forward, uncertainties prevail. There are many wild cards that make forecasting difficult, with two big ones being the effect of the economic recovery and the 2012 election. And while there have been both troubling indicators (a rise in frequency, signs of residual market growth) and more positive indicators (improved investment scenario, growth in written premium), it is too soon to say if any of these are the beginnings of a trend.
Here’s an overview of other articles included in the Issues Report – all available for download, and all worth your time.

  • Robert P. Hartwig looks at the labor market recovery and the impact on insurers
  • Harry Shuford talks about the economy and what it will take to get us moving again
  • Peter Burton offers a legislative outlook, in which he recaps some of the major changes in 2011 and looks ahead to 2012
  • Joe Paduda looks at some key issues driving medical costs, opioid overprescribing and physician dispensing
  • Nancy Grover offers an overview of the state of insurance technologies
  • Tanya Restrepo and Harry Shuford write about the aging workforce and its effect on comp
  • Jim Davis and Yair Bar-Chaim examine the first rise in injury claims frequency in more than a decade
  • Dennis Mealy and Karen Ayres discuss the history of ratemaking in workers compensation
  • Charles Tenser examines four of the most discussed legal challenges involving workers comp

Risk roundup of the week

Thursday, May 3rd, 2012

Hot off the press, the current edition of Cavalcade of Risk is posted at Free Money Finance blog!

Not-So-Great Scott: Punitive Drug Testing in Florida

Tuesday, May 1st, 2012

The courts have been giving Florida Governor Rick Scott a few lessons in the Bill of Rights. He does not appear to be listening, but perhaps the voters of Florida are. Scott wants the state to require drug testing of all welfare recipients and all state employees. A temporary injunction put a stop to the welfare testing and now federal judge Ursula Ungara has ended Scott’s bizarre vision of every state employee peeing into a cup.
The state argued, in part, that the program was voluntary: people don’t have to do it, they’ll just lose their jobs if they don’t. Some definition of “voluntary”!
There are times and circumstances where drug testing is useful and necessary. For jobs involving public safety and genuine risk, drug testing should be mandated. But courts remain sensitive to the constitutionally guaranteed right to privacy. Under the “probable cause” standard, courts look for specific risks and exposures, not for blanket policies that cover everyone. There should be evidence of a problem, possible harm if drug abuse takes place and an over-riding safety interest. This may well describe the situation of a police officer or firefighter, but not a clerk in the Registry of Motor Vehicles.

Insubstantial and Speculative Risk

Judge Ungaro pointed out the fundamental flaw of Scott’s executive order: it infringes privacy interests in pursuit of a public interest which is both insubstantial and speculative. She writes that “the proffered special need for drug testing must be substantial- important enough to override the individual’s acknowledged privacy interest, sufficiently vital to suppress the Fourth Amendment’s normal requirement of individualized suspicion.”
By trying to lump all state employees into one big drug testing net, Governor Scott displays his contempt for government and the people who carry out its work. Beyond that, his drug testing obsession runs contrary to a fundamental premise in the Bill of Rights. Someone needs to remind the governor that his job is to protect the rights of every Florida citizen, not compromise these rights in the interests of punitive and ill-conceived policies.
A Random Note on the Original “Great Scott”
The origin of the phrase “Great Scott” is unclear, but Wikipedia surmises that the reference is to U.S. Army, General Winfield Scott, known to his troops as Old Fuss and Feathers. He weighed 300 pounds in his later years and was too fat to ride a horse.