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Workers' Compensation

Author:  Karl A. Schmidt
Contributed by: Parker, Milliken, Clark, O�Hara & Samuelian


I.    Introduction

In recent months much deserved criticism has been heaped on the California Workers� Compensation system and much newspaper and newsletter space has been devoted to analysis of its ills and the need for reform.  Some of the more insightful reform suggestions are summarized in Section III below.  However, except for employers who feel compelled to active involvement in reform efforts (we can put you in touch with those in the forefront of the movement), complaints about the system don�t bring about much relief.  Therefore, it is important to note that employers who actively work at minimizing workers compensation problems can achieve effective results.

II.    Review of Employer Actions to Address Workers Comp Costs:

A.  The Proactive Employer.

In their own shops many employers have safety programs which educate both supervisors and employees as to �best practices� at prevention and also for treating injuries.  This begins with a review of any obvious points which may have been overlooked.  For example, one employer reports that its manufacturing workforce had no clear idea of what injuries were treatable with first aid and which required examination and treatment at the clinic (a distinction which often was the dividing line between a workers comp claim and not).  Just by training on this point they were able to cut down workers� comp claims and save themselves paperwork and otherwise lost work time.

Beyond such simple ideas, comprehensive safety and safety awareness training, both for the general workplace and as to specific jobs, should be a routine part of every workplace where any physical labor is performed.  Employers have sometimes been very inventive in this regard, for example, contracting with attractive female body builders to come in and demonstrate proper lifting techniques to warehouse workers.  Others have made their concern for safety clear by the visible involvement of senior management with those on the floor to discuss safety issues and suggestions for improvements.  These employers have found that as the profile of workplace safety is raised, employees become more alert and aware and thus more involved and oriented toward prevention.  Many employers supplement such measures with group rewards which increase for the number of consecutive days without a workers compensation injury.  This practice has been criticized by some, however, (particularly in the union movement) as discouraging claims from being filed.  But as long as an employer and its management are scrupulous about the filing of all legitimate claims, the reward practice has viability as contributing to the ongoing focus on safety.

In employer retreats and educational meetings, it is not uncommon to hear complaints being shared about inattentive workers comp insurance company case managers.  Most employers seem to have had a bad experience in this regard at one time or another.  However, this problem is not universal as there are conscientious brokers, carriers and managers in this business, both in the direct insurance area and among third party administrators.  Among the practices used by these representatives are counseling to employers to, among other things, encourage post-offer pre-employment physicals for jobs involving physical labor.  This helps spot potential problem employees before they start and establishes a baseline should subsequent injury occur.  Such case managers also maintain intense involvement with the employer�s designated physician or clinic during the allowed initial 30-day period of medical control following an injury (which they envision as a partnership) to analyze the medical issues and develop resolution scenarios early on. 

In this connection, they are proactive in establishing a dialogue with an applicant�s counsel to explore all possibilities for subrogation or settlement, and to obtain advance information if a dispute appears likely.  Additionally, they coach management on techniques to maintain an open dialogue with injured workers, with different levels of management involved in making regularly scheduled follow-up calls to any employee who is off work due to injury.

Some industrial medical clinics are also more tuned in than others to employer workers� compensation concerns.  They actively work with the carrier and employer, even insofar as providing light duty work for injured employees on their premises to keep them in the work routine and set the stage for their prompt return to work.

B.  Handling Fraudulent Claims.

Employers who are aggressive and dedicated to maintaining well- manicured employee relations tend to generate work atmospheres which are less conducive to workers� compensation fraud.  Up to date employment policy manuals and supervisors who have been properly schooled in leadership techniques can help prevent the kind of employee disaffection which sometimes leads to fraudulent claims.  However, few employers are totally immune from the occasional claim which is very questionable.  Employers in such circumstances complain about insurance company foot dragging in the investigation of employer concerns and the assessment of fat premium increases on account of cases that are not yet resolved or fully investigated.  While this is both frustrating and expensive, it is not a fate to which an employer need meekly succumb.  One investigation and consulting firm which partners in various matters with us is working with the Los Angeles District Attorney�s office to develop precise criteria for workers� compensation fraud prosecution.  They then will design and focus their investigation in order to develop these �criteria� for delivery to the appropriate assistant district attorney for prosecution.  Convictions in this area typically result in removal of the charge against an employer�s record and resulting improvement in workers� compensation rates.

III.             Reform Considerations.

A.     Summary of the Problems.

Virtually all California employers have experienced rapidly escalating workers compensation insurance premium costs in recent years.  About half of such employers are covered by the State Fund, which is facing a difficult financial situation with less than optimum operating systems and overburdened personnel.  Litigation rates are high, benefits and medical fee schedules are low.

This situation has heightened the focus and comparison between this and other major health care delivery systems, such as with Medicare, Medi-Cal and other private insurers.  The California system is far behind in developing a meaningful form of electric communication for transmitting reports or billing information and performance standards for those in the array of system service providers.

In view of the above, Dr. Ronald Crowell, a clinical doctor with decades of experience with the system, has set out several observations which point the way toward reform.  The first is that lower medical costs can be achieved by medical providers who are experienced in proving care for large numbers of injured workers.  Second, providers who are managed to communicate with those involved in a claim (worker, employer, carrier) have fewer false steps and glitches in the treatment process (as well as greater integrity) and thus lower treatment costs.  Third, standards can be delivered and financial incentives can be designed to promote such quality.

Fourth, when the workers� comp medical provider community is analyzed, it can be divided into employer directed, self-procured and attorney directed segments.  In the latter two divisions there has been disproportionate growth of late, presumably because in them there is no oversight of the quantity or quality or services being provided.  Fifth, the absence of a central management system makes accurate assessment of current performance difficult to monitor and assess, and thus permits inefficiencies (as well as outright fraud) to persist.

In addition to recommendations to address the problems noted above, Dr. Crowell recommends many other specific initiatives.  These include:

1.      Reduction of carrier decision time on new claims from 90 to 30 days.

2.      Increased surveillance to ensure service provider compliance with workers� comp policy and law.

3.      Adoption of a certification process for all workers� comp medical providers to require minimum training and experience levels, mandatory participation in oversight and reporting systems and participation in regular audits to verify compliance with �best practice� standards in the quality and quantity of care.

4.      Expansion of the employer initial selection period to 90 days, with the employer required to provide access to alternate medical care if the employee objects to the first selection.

5.      Access to a certified specialist, if the injured employee is dissatisfied in the course or at the conclusion of treatment � who shall be chosen at random by computer.  Any decision by such a specialist would be appealable to a three-physician panel, which may determine that further or different care should be provided and will select the provider from a list of certified providers.

6.      The current system of dueling medical evaluations will be eliminated.

7.      The liberal award of benefits for subjective, soft-tissue (unprovable/pain) would be substantially curtailed as awards for Disability Ratings of 18% or less would be eliminated.  This would allow for increased and fairer benefits for workers who suffer truly devastating and life altering injuries.

8.      Carrier standards should be adopted to require acceptance of electronic bill and report submissions, require certification of adjustors, regulate the number of caseloads per adjustor and address and remedy abuses of computerized bill review entities.

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