Of Wage-Earning Capacity and Human Wreckage
Ronnie Ramroop was an employee of Flexo-Craft Printing in New York. In March of 1995 he caught his hand in a press, crushing four fingers. After seven surgeries, two fingers were amputated. It goes without saying that this is a work-related injury; workers compensation paid the medical bills, loss of function benefits (Ronnie lost 75% of the use of his hand), along with indemnity for lost wages. Ronnie received benefits through January 2000, at which point his eligibility ended.
Ronnie then applied for the "additional benefits" available under New York law. To receive these benefits, Ronnie had to prove that the impairment to his wage-earning capacity was due solely to the work-related injury. That's where Ronnie's claim hit a big snag: Ronnie is an undocumented worker. Yes, his inability to work is connected to his rather severe injury, but it is also related to the fact that he is not qualified to work in this country. As the court put it, Ronnie's appeal puts into clear focus the tension between the statute's voc rehab objective to return an injured worker to the marketplace and the re-employment of a worker who is not allowed to work. Some tension, indeed!
The NY Court of Appeals, in a 5 to 1 vote, has denied Ronnie's claim for additional benefits. They concluded that it was not the Legislature's intent to "restore to re-employment" a worker who cannot be lawfully employed.
The Lone Dissent
The dissent by Justice Ciparick raises an interesting issue. The judge quotes Chief Judge Cardozo, who emphasized the humanitarian purposes of the comp statute, with its goal of ensuring that injured employees "might be saved from becoming one of the derelicts of society, a fragment of human wreckage." Judge Cipatrick believes that the right to full benefits should be considered an absolute, unrelated in any way to a worker's immigration status. For this (dissenting) judge, there are no tiered benefits. All workers are entitled to all the benefits.
Virtually all the comp statutes in the US were drafted before the issue of undocumented workers became visible. A number of states have begun to step into the documentation and enforcement void created by a paralyzed Congress: they are drafting punitive laws on the hiring of undocumented workers (and thus giving rise to great concerns among American businesses). Some of these same states are toying with the idea of curtailing comp benefits for undocumented workers. This would be the final step in the creation of a truly third-class workforce, with sub-standard working conditions, wages and protections. We will have come full circle, with the fears of Judge Cardozo fully realized: millions of essential jobs performed by a marginalized workforce - derelicts of society, fragments of human wreckage.
Cavalcade of Risk; WC and hospital profits; poultry industry expose
It's Cavalcade of Risk day, and Louise Norris has an Independence day edition posted at Colorado Health Insurance Insider. Louise and her husband Jay have an interesting story about how they came to the field of health insurance: literally, through the school of hard knocks after intersecting with the health care industry through personal experience, a series of sports-related injuries. Today, as a locally-owned Colorado brokerage, they are respected health insurance consultants. One nice thing about the web is how an informative site such as theirs can serve as a great equalizer for smaller entrepreneurial firms - if you live in Colorado, they sound like great people to do business with.
Meanwhile, check out today's edition. There's a lot of good reading material linked - be sure to catch Nancy Germond's entry on writing a workplace incident report and Joe Paduda's entry on the horrors of universal coverage. And while over at Joe's place, also see his post on workers comp - the hospital profit engine - it's a real eye opener. Here's a teaser: "The entire US hospital industry generated profits of roughly $25 billion, workers’ compensation – which you will remember represents only about 1.5% of total hospital revenues – accounts for approximately 16 percent of all the profits for US hospitals." He follows this post with another on DRGs, Medicare, hospitals, and workers comp, where he delves into further explanation for the costs. If you work in workers comp or managed care, these are must-read posts.
Bill Moyers on the poultry industry and worker safety - We've blogged several times about the appalling state of safety in the poultry and meat packing industries. This year, there has been a concerted focus on the poultry industry, largely thanks to the excellent investigative journalism in the Charlotte Observer's The Cruelest Cuts, a six-part multimedia series - well worth exploration if you missed it first time around. Now, Bill Moyers has picked up the ball, covering the topic in a 22 minute investigative report of the poultry industry (video clip), which shows how official statistics showing a drop in workplace injuries may have been the result of deceptive reporting. See much more information on poultry worker safety at Bill Moyers' Journal on PBS.
ADA: The Fix is Fixed
Back in February we blogged a rather drastic proposal to "restore" the Americans with Disabilities Act (ADA) by expanding eligibility to just about anyone. We feared that blurring the lines between transient conditions and impairments that "substantially limit" major life activities would paralyze American business, clog the courts with trivial cases and divert attention away from the truly disabled, who desperately need ADA protection.
Well, it appears that the "restoration" has been restored and the "fix" has been fixed. Proposed reforms would expand coverage where the U.S. Supreme Court had curtailed it: individuals whose disabilities can be treated - with medication, with prosthetic devices, with assistive technology - would still be considered disabled. In other words, their ADA protection would not end simply because their disability is mitigated through some form of treatment. (Got that, Justice Thomas?)
The fix also addresses the paradox of "regarded as" disability. This involves situations where an individual is discriminated against because he or she is perceived to have an impairment: "Jack looks like an alcoholic." These people do not require accommodation (they are not really disabled), but the ADA will ensure that they are not discriminated against based upon a false perception.
Formidable Support
While disagreement on the nature of disabilities will continue, substantial agreement has been reached on language for the revised ADA statute. Here are some of the organizations that have signed off on the proposed revisions:
- American Association of People with Disabilities
- American Diabetes Association
- Bazelon Center for Mental Health Law
- Epilepsy Foundation
No surprises there. But check out some of the mainstream business organizations that are also on board:
- National Association of Manufacturers
- National Restaurant Association
- US Chamber of Commerce
With such diverse and powerful backing, the ADA fix appears to be headed for passage. That's all well and good. But as we pointed out in February, there is a sad paradox in the ADA itself: since the law was enacted in 1992, overall levels of employment for the disabled have declined. Employers, intimidated by the law's many requirements, apparently take the path of least resistance and avoid hiring qualified disabled applicants. So in some respects the ADA "fix" compounds the problem. The real fix goes beyond the language of this or any other law: it involves transcending stereotypes and embracing people for who they really are and recognizing what they are truly capable of doing.
Teddy Awards: A Pat on the Back for Comp Management
Risk & Insurance Magazine has announced the 2008 competition for the Teddy Awards, given to organizations demonstrating a long-term commitment to improving workers compensation performance. Creativity and teamwork are major considerations. Four awards will be given: one for a company; one for a nonprofit or government entity; a third award will honor a federal government entity (that will be interesting!). Finally, a Teddy will be awarded to a small employer--a company or organization with fewer than 500 workers.
As you can probably guess, the award is named in honor of President Theodore Roosevelt, who in 1908 introduced and promoted the first piece of important workers' compensation legislation in the United States. The law, called the Federal Employer's Liability Act, covered workers in hazardous industries and workers for common carriers. In signing the new law, Roosevelt said to Congress "the burden of an accident fell upon the helpless man, his wife and children." With that new law, the federal government took the lead in combating on-the-job injuries, which Roosevelt had characterized as "outrageous." In the years immediately following Roosevelt's initiative, states, beginning with Wisconsin, began to implement their own workers comp laws.
In the interests of full disclosure, the Insider is part of the judging panel for these awards (lively narratives preferred!) But you must hurry: Applications are due by July 15.
Safe Talk, Perilous Walk
Roosevelt may have talked the talk, but when it came to personal risk management, he loved adventure and all-too-frequently put himself in harm's way. There is no better example than the ex-President, after losing a third party bid for office in 1912, heading off to explore an uncharted tributary of the Amazon River, dubbed the "River of Doubt." The trip, plagued by haphazard preparation, the wrong type of canoe and 24/7 perils, very nearly killed him. Candice Millard's well-written story makes for a fascinating summer read. Needless to add, Teddy does not deserve a Teddy for his ill-fated journey.
Health Wonk Review and news roundup
Health Wonk Review - Jaan Sidorov has posted a well-written and very interesting issue of Health Wonk Review at Disease Management Care Blog. Jaan has been a frequent contributor to HWR of late but this is his first time hosting - so when you stop by, be sure to check out his blog, which is billed as "An ongoing forum for information, insights and musings from the world of disease management, the medical home, informatics, pay for performance, primary care, chronic illness and health insurance."
New Jersey reform - New Jersey lawmakers have taken fast action to enact reforms in response to recent scathing public critiques of the state's workers comp system. This represents the first major overhaul of workers comp since 1979. The measure now awaits Governor Corzine's signature before it will become law.
Toxic exposure - Iraq vets - In April, we posted about contractors in Iraq bringing suit against KBR for exposure to the highly toxic substance of sodium dichromate. Now, via the Boston Globe, we learn that contractors weren't the only ones affected. As many as 250 soldiers were also believed to have been exposed to the chemical, according to the Department of Defense. Reports stated that soldiers were observed to be bleeding from the nose and spitting blood. Congress is currently holding hearings to examine potential malfeasance of contracting firms operating in Iraq.
Medicare Set Asides - A few weeks ago, we linked to the Medicare Set Aside flow chart. Since then, we've found another good resource in the Medicare Set Aside Blog and Information Resource. We'll be adding this to our blogroll.
Electronic Medical Records - On Monday, we blogged about Google throwing its hat in the electronic medical records (EMR) field, and today we learn that a major consumer group, insurers, Google, and Microsoft have just agreed to adopt standards to help speed adoption. Congressional lawmakers are also looking at a various bills related to EMR.
Heart animation - Anatomical illustration has come a long way in recent years. Click on the hybrid interactive heart to see a fascinating example of the state of the art. Also related: heart animation with bloodflow. These links are via the always-interesting Medgadget.
Political regime change and health care - Joe Paduda looks at what health care initiatives might look like in a democratic landscape come 2009 and beyond: "While the Dems would love to begin with a huge overhaul of the entire health system, they've learned that doing really big things takes time, consensus, and foundation-building. Instead, the new year will likely start with fixes to current programs and 'corrective action' to address issues of little concern to the Bush Administration."
Industry consolidation - in a $2.1 billion deal, Willis Group agrees to buy Hilb Rogal & Hobbs, locking up Willis' standing as the third largest global brokerage. (Aon and Marsh hold positions one and two, respectively). Does this signal the start of a spate of M&A activity?
Short takes
9/11 Rescuers: Fools Rush In...?
Anthony DePalma has an interesting analysis of the 10,000 claims against New York City in the aftermath of 9/11. The city has reviewed the claims submitted by people involved in the immediate aftermath and clean up. As many as 30 percent of the claimants are suffering from nothing more than a runny nose or cough. In over 300 of the records, there was no evidence of any illness at all. What's going on?
Nearly seven years after the twin towers collapsed, we are not even close to resolving the fate of the 40,000 individuals who rushed in to help. A quarter of the rescuers have filed claims, but it turns out that many of the filings are incomplete. Alvin Hellerstein, the U. S. District Court judge overseeing the claims, has asked for detailed medical records on all claimants going back to 1995. At this point, literally thousands of documents are missing.
Attorneys for the claimants admit that nearly a third of the filings involve minor or even non-existent problems. But they defend the submissions as a necessary hedge against future illness: even though there are no major symptoms today, debilitating illnesses related to the clean up may develop sometime down the road. The attorneys say that New York law allows a suit if the claimant has "a rational basis" for their fear. Heck, under that standard every single person involved in the clean up could file a claim.
Some of the ailments listed bear no obvious connection to the events of 9/11: deviated septum, multiple sclerosis, high blood sugar, and Bell's Palsy. The attorneys concede that these problems are not likely related in any way to 9/11 and will be dropped. But then again, maybe there was something in the dust...
Second Thoughts in Catastrophic Moments?
New York City is struggling with a monumental liability in the aftermath of 9/11. As a result of the failure to require rescuers to wear breathing masks (remember Rudy Giuliani's maskless photo op on a pile of rubble?), the city faces charges of negligence that may exceed $1 billion. From day one there have been complex problems in establishing a relationship between 9/11 and subsequent illnesses; these problems are now likely to stretch more than a decade beyond the event itself.
My concerns are not so much retrospective - the individual claims stemming from 9/11 will be determined on a grueling, case-by-case basis. But what happens the next time catastrophe strikes - be it terrorist attack, earth quake, hurricane or meteor from outer space? Humans tend to respond instinctually, rushing in to help those in need. The events of 9/11 have created a cloud of doubt as thick as the one raised by the collapsing towers. Going forward, rescuers may and perhaps should ask themselves, "Will I be protected? Will my family be provided for if my rescue work harms me? Have the people in control - even in the context of unimaginable disaster - set up reasonable risk parameters for my entering the damaged area?"
My guess is that we have learned a few things about risk management in the months and years following 9/11, but we still fall far short of readiness. One thing is certain: we cannot have first responders worried about their own health and the well-being of their families. Yes, "fools rush in where angels fear to tread." But rational human beings (some politicians excluded?) are not fools. We have all seen the inordinate delays, the complex arguments and the sheer passage of time as the legal system struggles with compensability for 9/11 rescuers. Setting aside the marginal claims, which probably deserve their current fate, the legal system must be able to protect courageous responders in a timely manner. Someday, alas, they will be needed again.
Injured and Illegal...in South Korea
We sometimes forget that the USA is not the only country with an undocumented worker problem. Anywhere you find developed countries with lots of (relatively high paying) jobs, you will find people willing to do anything to get them. Which leads us to an article in Korea Times by Park Si-soo.
Zhang Shuai, 22, entered South Korea on a student visa in March of 2005. He took a language course at a nearby university, but he also began working (illegally) at an electronics firm in a neighboring city. In May 2006, immigration officials raided the building (shades of last year's ICE raids in New Bedford). His employer told Zhang to skedaddle pronto (using, of course, the Korean equivalent). During his flight, he accidentally fell from the building, suffering brain damage and paralysis in his left arm and leg.
Zhang filed for the South Korean equivalent of workers comp benefits. His initial petition was denied, because "his escape had nothing to do with his duties at work." But the Busan High Court has granted Zhang compensation for his injuries. The court is able to connect the dots between Zhang's job duties and his escape attempt (please excuse the rather byzantine grammar, a product, perhaps, of hasty translation):
His escape attempt was to avoid many disadvantages that he would receive after the inspection, but it is also true that his employers forced him to escape so as to continue their operations because they were not able to find local workers despite repeated recruitment advertisements. Therefore, the escape was part of his duties at work.
There are several seemingly universal principles here: people will gravitate to available work with minimal consideration of national boundaries or workrules; undocumented workers will be injured on the job with the same or higher frequency of regular workers; in most instances, undocumented workers will be eligible for workers comp or its equivalent.
We have an undocumented worker problem in this country of humongous proportions, but we are by no means alone. Perhaps the United Nations could come up with a solution that attacks this problem not just in the US, but across the entire world. Just kidding. That would imply a rational and universal approach to shared problems. No way, Jose! It is far more likely that undocumented workers will continue to break the rules and continue to do the work, country by country, across the face of the earth.
Google throws its hat into the electronic medical records arena
Search behemoth Google is making its initial foray into the electronic medical records (EMR) business with the recent launch of Google Health. (Also see the FAQs). This service goes toe-to-toe with Microsoft's Health Vault in the race to become the web's dominant player. Some large health plans such as Kaiser Permananete have been rolling out EMR programs to members. And a single medical record digital system that was implemented by the military a year ago is improving care and eliciting favorable reviews from patients.
A single, portable, user-controlled medical record that is available online offers many potential benefits. People would have medical information such as diagnoses, lab reports, and prescriptions downloadable from providers in a single record that would be accessible anytime and anywhere. Single records will create efficiencies and eliminate duplications. Plus, a host of other user-controlled benefits would follow, such as medication management that would screen for potentially harmful interactions, an alert system for scheduling tests or screenings, and even device connections that would allow electronic readings of such things as blood pressure and sugar monitors. It would be much easier for consumers to manage their health care, particularly for complex conditions.
But there are impediments, a primary one being physician adoption. Fewer than one out of every five doctors are using computerized patient records, according to a recent report in the The New England Journal of Medicine (see NYT: Most Doctors Aren’t Using Electronic Health Records.) The study reports that the physicians who are using electronic records report many advantages: 82 percent said they improved the quality of clinical decisions, 86 percent said they helped in avoiding medication errors and 85 percent said they improved the delivery of preventative care. For those who haven't moved to computerized records, the initial cost and disatisfaction with available products were cited as barriers.
Among consumers, privacy is front and center as a barrier to adoption. Scare stories abound. Consumers fear medical record theft and fraud, data mining by insurers and providers, and leaks of sensitive medical data to inappropriate parties such as employers. Of course, such security breaches can happen offline, too, but the ability to search data adds an additional layer of concern. Consumers want legal protections, including the ability to control who sees what. Services like Google and HealthVault have plans to keep controls with the consumer, but the public may be skeptical given the many security breaches that have occurred with identity fraud. Problems or not, the trend is clear so keep alert for developments on this front. A new Medicare pilot program by Health and Human Services aims to offer physicians incentives that will lower the cost barrier and hasten adoption rates.
Brendan Doyle: Return-to-Work Person of the Year
You probably have never heard of Brendan Doyle, a Rhode Island state trooper, but his story, as told by Amanda Milkovits in the Providence Journal, belongs in the hearts and minds of anyone involved in disability management. He exemplifies what great medicine, combined with ferocious determination and discipline, can accomplish.
Just over a year ago, he was punched to the ground by a low life named James Proulx, hitting his head on the pavement. His injuries were so severe, doctors discussed organ donation with his family. He was comatose, hooked up to a respirator, his skull shattered.
But he held on. Eventually, he was moved to Spaulding Rehabilitation Center in Boston, where doctors dismissed any notion that he would be able to return to work. He was paralyzed on his right side and suffered from double vision. But by the fall of last year, after doctors reattached a piece of his skull, Doyle noticed that his fine motor skills started to return. The double vision disappeared and he regained feeling and mobility in his right side.
Against All Odds
By this past spring, Doyle said he wanted to return to his job as a trooper: not a modified duty, desk job in the back of some precinct, but full duty. His supervisors, who supported him from day one, put him through rigorous retraining in firearms, pursuit driving, use of force techniques and through "shoot - don't shoot" scenarios to test his reaction times. He endured the standard three week course of 13 hour days in the police academy. He passed every test with flying colors, even earning a master pin for firearms.
So against all odds, with no small element of luck, Brendan Doyle is back on the job. From the beginning of his ordeal, this was his one goal. By all rights he should have become permanently and totally disabled, drawing 100 percent of his trooper pay tax free for the rest of his life. No one would have questioned it. But Doyle refused to bow to this fate. In doing so, he exemplifies what the human spirit can accomplish despite ridiculous odds.
I would like to see a picture of Doyle, with his humble smile and crescent moon-shaped scar, posted over the desk of every ER and occupational doctor, every nurse case manager and claims adjuster - and every employer - to remind us that the goal of treatment for injured workers is return to full duty. Forget the odds. Look beyond the trauma of the incident itself and the dire prognosis. Anyone seeing Doyle in the days and weeks following his injury would have scoffed at the notion that he would ever be in uniform again. But that is exactly where he is today.
I hope never to meet Trooper Brendan Doyle: to do so would probably mean I was involved in an accident or going a little too fast on I-95 outside of Providence. Nevertheless, I will try to keep his image in mind. For all of us who work in risk management, cost control and safety, who focus on doing the right thing for injured workers, Trooper Doyle embodies the spirit and goal of our work. He is the Insider's Return-to-Work Person of the Year.
Looking for Fraud...In the Mirror
Imagine you are an attorney in Massachusetts looking for a little work. The Office of Labor and Workforce Development (OLWD), a state agency, hires you and 10 other attorneys to examine applications for unemployment insurance. Normally, this work would be performed by state employees, but the combination of cost-efficiency lay offs and a bad economy has caused a surge in applications. The state pays you through a 1099 form. You are responsible for your own taxes. And you soon find yourself in the middle of a story concocted by Franz Kafka.
In a parallel operation (bordering on a parallel universe), Governor Deval Patrick has announced a crackdown on employers who commit fraud by misclassifying workers to avoid paying workers comp insurance, plus state and federal taxes. The governor creates an Underground Economy Task Force to ferret out abuses of the independent contractor designation. The task force resides...in the OLWD. (You can read the AFL-CIO's endorsement of the task force here.)
These two worlds collided when someone (presumably a state employee affiliated with the unions who lost employees in lay offs) dropped a dime on OLWD, complaining that the 11 attorneys hired as "independent contractors" were performing the job duties of regular employees. So now OLWD is being scrutinized by its own task force. We can only hope that members of the task force are state employees, and not "independent contractors" who have signed on to carry out a short-term project: an image arises of a dog furiously pursuing its own tail.
Management Conumdrum
Many employers face the conundrum embodied in this situation: when you have more work than you can handle - especially on a short-term basis - it's convenient to hire temporary "independent contractor" consultants to carry out the work. Hiring is much easier; there are no long term commitments. When the work has been completed, you simply terminate the contracts.
Because there is such widespread abuse of the "independent contractor" designation (did someone say "FedEX"?), these convenient arrangements are now routinely challenged. At OLWD, the questioners themselves have been called into question.
Suzanne Bump, the state's secretary of Labor and Workforce Development, is not using the word "investigation" to characterize her examination of this particular form of outsourcing. She points out that the practice began in the prior (Republican) adminstration, which had enthusiastically reduced the size of the state's workforce, only to discover they did not have enough people to do the necessary work.
"We are taking steps to reverse this practice and are looking to hire more review examiners on a permanent basis when possible," Bump stated. This in itself raises a problem: by creating regular, full-time positions to handle the jobs, the state will have to grow the budget. Regular employees cost more than "independent contractors" because you have to pay for insurance and taxes (which is one of the reasons they hired independent contractors in the first place).
What used to be routine HR functions have become enormously complicated. I am sympathetic to all employers who have to work through these often paradoxical issues. When it comes to managing a business in these challenging times, we find ourselves lost in a dimly lit, endless corridor, characters in a Kafka story, looking for the room where all the answers are rumored to reside. Like the good folks at OLWD, we eventually conclude that the room does not exist.
Cavalcade of Risk and news roundup: NH, WV, residual market, WC cost drivers & more
Weekly carnival - A lively edition of Cavalcade of Risk has been posted by Jim at Bargaineering.
NH targeting misclassified employees - New Hampshire employers take note: The departments of labor, employment security, insurance and revenue are teaming up to ferret out employers who misclassify workers as independent contractors to avoid paying workers compensation and unemployment insurance. In addition to potential criminal penalties, various state agencies may impose hefty fines and penalties.
WV: open for business - West Virginia's transition from a private state fund to an open market will enter its final phase on July 1 when WV opens to competition. A total of 150 companies have filed the rates and forms required to offer workers' comp insurance, including 25 companies that were not previously licensed in the state.
Residual market update - Roberto Ceniceros of Business Insurance notes that for the third year in a row, the residual market has declined. He notes that workers' comp residual market premiums fell by 17% to $1 billion during 2007. A declining residual market (also sometimes called the "market of last resort") is an indicator of market health. For the full report, see NCCI's Residual Market Management Summary 2007 (PDF).
WC cost drivers - Joe Paduda discusses how the workers' comp supply chain is killing workers' comp - a good explanation of why purchasing vendor services based on discounts is a flawed strategy - particularly when it comes to medical care.
Occupational safety - we call your attention to OSHA Underground, a blog we've cited before. It includes frequent, informed updates about various occupational safety failures and OSHA's response - or all too often, lack of response. Lately, bloggers have offered numerous stories on crane-related incidents, including a recent study that points to a need for a national certification program is needed for crane operators, inspectors, riggers, and signalers.
Election year: health care plans - Heath care is one of the nation's most pressing domestic issues and will likely carry great weight in the upcoming election. Two respected health care pros offer their comparisons of the candidates' health care plans: Bob Laszewski of
Lighter side - We call your attention to this important medical research: D'oh! An analysis of Medical care Provided to the Family of Homer J. Simpson (PDF). While this is a 1998 article, we think that a decade later, it still has relevance to those interested in medial research.
New York Trusts, Revisited: Comp Board Channels Willie Sutton
Yesterday we blogged the New York Workers Comp Board's unusual solution to a cash flow problem: when a dozen trust funds collapsed, the Board decided to hit up the remaining, solvent funds with an assessment: they raised assessments from the routine total of $500,000 to a staggering $12 million. The Board is using the logic of notorious bank robber Willie Sutton, who famously said that he robbed banks because "that's where the money is." In this case, the Board is hammering the people who paid their full premiums and whose administrators abided by the rules, simply because they have the money. The board has transformed the "several liability" of independent trusts into a gerry-built "joint liability." While their motives are good - benefits to injured workers must be paid - their method is patently unfair.
In their press release, the Board pats itself on the back for forcing the third party administrator, CRM, out of business in New York. Here are the terms of the settlement:
- CRM surrenders its TPA license no later than September 8, 2008, and ceases representing self-insured employers and carriers before the Board;
- CRM transfers to the Board all claims, as well as the responsibility for the administration of all such claims, for all of the group self-insured trusts that it still administers; and
- CRM assists in the well-ordered and timely transfer to the Board of all claim files, documents, information, and funds associated with the trusts.
"The Board sought to revoke CRM's license and today's agreement accomplishes just that," said New York State Workers' Compensation Board Chair Zachary Weiss. "This result speaks volumes about both the strength and validity of the charges the Board brought against CRM. It also sends the strong message that we will vigorously safeguard the well-being of honest business and injured workers."
The results may speak volumes, but not necessarily in the manner Weiss intends: yes, the charges obviously had merit; yes, it's important to shut down CRM's operation. But what about accountability? According to an unidentified spokesman, CRM has admitted no violations and paid no fines or penalties. Despite the apparent deliberate misrepresentation of actual losses, despite paying their own executives inflated salaries, despite creating this entire mess, CRM just walks away. For the moment at least, they are off the hook, while the solvent trusts who played by the rules are required to dig deep into their own pockets.
Eventually, when the forensic audits have been completed, members of the failed trusts will probably receive retroactive bills for underpaid premiums. Then it will be their turn to howl. When and if that happens, the Board has promised to refund the humongous assessments placed (unfairly) on the solvent trusts. That is not very reassuring to innocent bystanders facing immediate bills for someone else's problem. My guess is that the Board will run up against the same problem as Willie Sutton: the money might be there (in the trusts), but that does not make it right to take it. Through attorney Richard Honen, the solvent trusts have filed suit to end this ill-conceived bailout. In the interests of fair play, here's hoping they find a sympathetic judge.
Risky Risk Management in New York
Compensation Risk Management (CRM) is a third party administrator for eight workers comp trusts in New York. These trusts offer comp coverage to affinity groups in the areas of health care, wholesale/retail and transportation. As we read in the New York Times in an article by Steven Greenhouse, there is good news and bad news about CRM: the good news is that CRM offered low cost premiums to members and high rates of reimbursement to its own executives. The bad news is that the reserves in the the trusts were woefully inadequate. In one of the trusts, reserves fell from 90 percent to 40 percent of liabilities in just a few months.
Trusts have long offered a major alternative to (expensive) conventional insurance for New York employers. About 35 percent of the state's businesses are self insured for comp, with one fifth of those participating in trusts. The really bad news in CRM's collapse is that other, healthy trusts may have to pick up at least part of the tab for CRM's poor management. The workers comp board has ordered that the state's 50 healthy trusts pay emergency assessments totaling tens of millions of dollars. As you might imagine, they are not thrilled to be doing this. In fact, they have sued the board, saying that it has no right to force them to contribute. At this point, they have been granted injunctive relief.
State officials believe that a $200 million emergency fund will be needed to finance the statutory benefits of thousands of injured workers covered by 12 failing trusts. So ultimately, the taxpayers will have to make up for CRM's management deficiencies.
The Company Line
Eric Egeland, a CRM VP, said that the problems were caused by an unexpected increase in workers comp liabilities and fast-rising medical costs. (Gee, Eric, that's why you have actuaries!) He said the eight trusts could not increase reserves fast enough in response to their increased liabilities because of recent state-ordered cuts in comp premiums. (I don't think so, Eric. If you set reserves properly, a cut in rates will not present any unusual problems.)
If you peruse the long list of executives at the company website, you begin with the CEO, Daniel Hickey, who is described this way: "At age 22, he attended the Aetna Institute, the nation’s top property and casualty training program, and received the coveted Gold Ribbon for excellence in sales presentation." Note that the gold ribbon is for sales. He might have been better off shooting for a gold ribbon in management.
CRM's management of their comp business is now under intense scrutiny. Too little, too late. The artificially low premiums pleased their participants, but these deflated premiums simply masked inadequate reserves. The risk managers took far too many risks. Now, as usual, those who played by the rules will have to pick up the tab.
Health Wonk Review, scaffold survivor update, hand protection, and potential cancer cluster
Jane Hiebert White has posted a great edition of Health Wonk Review: Washington Week at Health Affairs - and she notes that this issue coincides with Academy Health's Annual Research Meeting held in DC this past week, a gathering based on the concept that health policy should be informed by research. In this HWR issue, one of the major themes centers on health care reform. It's worth your time to check it out - it may be one of our biggest and most substantive issues yet.
Survival story - at the beginning of the year, we posted about miracle survivor Alcides Moreno who lived through a NY scaffolding collapse which sent him plummeting 47 stories. Today, the New York Post features a story about Moreno entitled 47-story guy walking tall. But not all the news associated with this story is good: his brother who was also on the scaffold was killed in the fall. Earlier this week, The New York Times covered the OSHA report about the accident, which found fault with City Wide Window Cleaning, the service that employed the Morenos, and Tractel, the firm that had repaired the scaffold.
OSHA issued five citations against City Wide for what it called serious violations. Three carried proposed fines of $7,000 apiece, the highest the agency can impose. One was for lack of a system to protect against falls — cables that would have left the Morenos dangling at the top of the building when the scaffold gave way.
Another citation against City Wide was for failing to train employees in how to inspect the scaffold, and for not training them to wear "personal protective equipment" before they stepped onto the rig. The article lists other charges against both companies. Commenting about the fines imposed, the Daily News editorializes that death comes cheap, noting that, "Financial penalties like that are meaningless as a deterrent to corner-cutting by contractors."Hand injury prevention - According to an article on hand injuries by Don Groce in Occupational Hazards, gloves can prevent injuries and reduce costs. Recent research shows that "The cost of hand injuries in just one sector of the construction industry is six times what it would cost those employers to offer every employee appropriate hand protection." This preventive measure represents potential to reduce pain, reduce lost productivity, and save dollars. According to the CDC, hand injuries account for more than a million emergency department visits by U.S. workers per year. Groce's article also discusses advances in glove manufacturing and various types of safety glove alternatives.
Dupont cancer cluster? - Celeste Monforton of The Pump Handle raises the question of whether there is a cancer cluster associated with Dupont in response to 19 cases of rare carcinoid tumors among DuPont employees, with 6 of the cases surfacing among workers at the Washington Works plant in West Virginia. She reports that adverse health effects have been associated with exposure to perfluorooctanoic acid (PFOA or C8), the chemical used to make Teflon and other non-stick surfaces.
Footnote on a Fatality
Yesterday we blogged the death of Lauro Ortega, who was crushed while excavating a building site in New York. We assumed that he was protected by workers comp, even as his lawyer pursued more lucrative remedies from the (recently indicted) employer, William Lattarulo. It appears that we were just a bit naive. Ortega was an illegal immigrant, working construction jobs on a cash-only basis. He labored long hours, six days a week, sending most of his earnings home to his family in Cuenca, Ecuador.
"He came to this country to work. He liked to do it. That was his love," his brother is quoted as saying. Ortega lived in a tiny apartment by himself; he spoke to his wife and children every day. He had very little life outside of work, with Sundays reserved for church. He would have preferred to stay in Ecuador, but there was no work available. He came to this country for one simple reason: it's where the jobs - and the money - are.
There will be readers who lack sympathy for Ortega. He was here illegally. He was paid under the table. He took his chances and reaped a harsh reward. At best, he is viewed with considerable ambiguity: he was here illegally, but to some degree our laws still protect him as a worker. His family will receive some compensation for his untimely death: either in the form of workers compensation (presumably paid out of the state fund) or tort liability stemming from his employer's negligence. It will take some time, but eventually his family will receive financial support simply because Ortega died at work in America.
I am struck by the quiet desperation that brought Ortega to New York. I am impressed by his willingness to work hard, every day, and use his earnings to support a wife and two children back home. I am saddened by his sudden and very unnecessary death. And I am frustrated by the stalemate in Congress, which has been unable to construct a reasonable and just solution to what has become an intractable problem of enormous magnitude. There are over 12 million workers like Ortega, all of whom are here illegally and most of whom are working hard and doing jobs that need to be done.
Yes, they are illegal. And yes, we need their services. Two simple, contradictory facts. What, if anything, are we going to do about it?
Employers as Criminals
William Lattarulo owns several buildings and vacant lots in Brooklyn NY. Back in March, his workers were digging a foundation for a commercial laundry at 791 Glenmore Ave, when a more experienced contractor warned Lattarulo of an immediate hazard: the excavation had reached a level below the foundation of the adjacent building. He advised Latturo to install underpins to make the excavation site more stable.
Instead of stopping the work, Lattarulo ordered his employees to keep digging. Moments later, the wall of the adjacent building collapsed, crushing Louro Ortega, a 30 year old laborer who had been on the job just two days.
"I don't think I killed that kid," Lattarulo is quoted as saying. "They're just looking for someone to blame for all this" (an apparent reference to the spate of construction-related fatalities in the city).
The attorney for Ortega, Kenneth Halperin, says the accident never should have happened. "They failed to make sure the foundation wall was stable. No one checked anything."
In the New York minute it took to snuff out the life of Louro Ortega, Mr. Lattarulo went from entrepreneur to defendant. He has been charged with manslaughter. Even if he is successful in avoiding jail time, he faces long and expensive days in court, trying to defend himself against charges of negligence.
Beyond Exclusive Remedy
Under most circumstances, workers comp offers the only recourse for a deceased employee and his family. Comp is an exclusive remedy. As we have blogged in the past, "substantial certainty" that an injury would occur is one of the factors that can help victims pierce the exclusive remedy shield. Lattarulo's actions appear to be so egregious, so likely to result in bodily harm, the doors to tort liability have been thrown wide open.
For the time being, workers comp will cover the cost of Ortega's funeral and provide his wife and two children with some modest level of support. Attorney Halperin will certainly not be content with that. He will pursue the big bucks that accompany criminal negligence. Mr. Lattarulo is about to learn that business owners can be held accountable for what in retrospect was an ad hoc and hasty decision. He thought he was just digging a hole for a new building. Through his dismal judgment, he dug a grave for an innocent worker and inadvertantly buried his own modest ambitions in the same rubble.
Driving and flash floods
Flash flooding (video) in the central states over the last few days has resulted in numerous deaths. With "ordinary" flooding, there is a build up over time from rain or melting snow as rivers and bodies of water overflow their banks. Weather authorities and media have time to issue public alerts. But flash flooding is the rapid and extreme flow of water that occurs unexpectedly. It usually occurs within a few hours of a rain event. Flash flooding can often happen when a dam, levee, or embankment gives way or when an unusually heavy torrential rainfall occurs quickly. While some areas are prone to flash flooding, flash floods can occur unexpectedly almost anywhere given the right confluence of conditions.
Here are some facts about floods that many people don't know:
- Flash flooding is one of the most frequent weather-related killers in the U.S., resulting in more deaths than lightning or tornadoes
- Nearly half of all flash flood fatalities are auto-related
- Six inches of fast moving water can knock you off your feet
- A depth of 18-24 inches of water will float your car, SUV, or pickup
- 90% of all presidentially declared natural disasters include flooding
- Flooding can occur in any of the 50 states or U.S. territories at anytime of the year
- Be aware of and avoid areas on your way to and from work and home that are subject to flooding in heavy rain conditions.
- Monitor weather conditions through NOAA or reliable news radio.
- If you come upon roads or walkways covered with water, the depth of the water or the condition of the road underneath cannot be adequately assessed. Don't drive or walk through water - turn around and find another route.
- Don't drive around barricades.
- Be particularly alert at night.
- If a vehicle stalls in water, leave it immediately and move to higher ground. Many vehicles are swept away, greatly increasing the danger for occupants.
Research demonstrates that those who take flash flood warnings seriously and have knowledge about the associated risks are less inclined to attempt to drive through water than those who don't. Public education which emphasizes the seriousness of flash flood warnings and safe driving behavior can save lives. Employers can:
- Know and be familiar with the Emergency Alert System and the various NOAA weather hazard warning categories
- Monitor NOAA weather radio during unusual or potentially hazardous weather conditions
- Know if your workplace is located in a high-risk area for flash flooding
- Communicate flood warnings to workers, particularly at times when people are commuting to or from work
- Help to raise awareness about the dangers of driving in flood conditions. (We've compiled some resources, below)
- Equip your outdoor workers and frequent drivers with safety and prevention tips for weather-related hazards, including hot and cold weather hazards, and safety tips for working or driving in snow and ice, electrical storms, and flooded areas or flash floods
- Issue special safety precautions and training for workers engaged in flood clean-up or rescue
Flood safety Awareness - The National Weather Service
Floods: the awesome power - PDF from the National Weather Service
Are you ready for a flood or a flash flood? - PDF from the American Red Cross
How to survive flash floods in your car
There Goes the Judge
Back in November we blogged the saga of Judge Robert Restaino, a City Court judge in Niagra Falls NY. He apparently was having a terrible, horrible, no good, very bad day on March 11, 2005, when a cell phone went off in his courtroom, in violation of his judicial protocols. When no one fessed up to the crime, he jailed 46 people, most of whom had been waiting for disposition of domestic violence cases.
At the time of our first blog, New York's judicial oversight commission had voted 9 to 1 to fire Restaino. He appealed. Now the State Court of Appeals, with a vote of 6 to 0 with one abstention, has upheld the termination. The Appeals Justices said they have "serious doubts that this breach in trust is reparable."
Restaino is not without his supporters (two wrote in to comment on our original posting). It appears that his work, prior to this incident, was satisfactory. Niagra Falls District Attorney Michael Violante (excellent name for a DA!) was disappointed in the outcome. "He had a bad day and it's cost him the bench...I think that it's very unfair, frankly." Even one of the judge's critics, David Jay, a Buffalo civil rights attorney, thinks the outcome was too harsh. He believes that the courts need a disciplinary option between the extremes of dismissal and censure.
Aaron Besecker, author of the article in the Buffalo News, points out that at the time of the incident, Judge Restaino did not have a cell phone. Now that he is out of a job (and a comfortable salary of $113,900), he might want to invest in one. You always want to be accessible when someone calls with a lucrative job offer.
