Monthly Archives: May 2010

States around the nation facing workers comp budget woes; Texas whistleblowers ‘blasted’ by chief

Update from preceding post: Sandra Herold died Monday night, according to the Boston Herald. Herald, 72, was the owner of the 200-pound chimp who mutilated Charla Nash. We first covered the story here because of the legal questions raised about workers’ compensation versus a civil settlement. Herold’s cause of death was reportedly a ruptured aortic aneurysm. Any effect on the $50 million civil suit filed by Nash’s attorney was unknown at post time, but we will continue to follow the case.


We’ve discussed successes and shortcomings of various states’ workers comp programs, from furloughs that were ruled illegal in California, to subsequent California rulings contrasted against efforts to privatize in Oklahoma and Colorado– and even looked over the best and worst “report cards” for various states.

But according to at least one report, states may have more pending budget crunches in common than not.

Workers comp and state budgets

In a May 24 post, says, “State budget shortfalls are hindering the resolution of workers compensation cases and may increase employer claims costs as states cut back on judges and other critical staff, risk managers say.

“Furloughs of state workers including administrative law judges, auditors and other public employees that handle claims are increasing litigation expenses and even hamper return-to-work efforts, risk managers say.”

The article says an opposing point of view is that reduced personnel is OK because injuries/claims are going down, so less staff, at least temporarily, is not an impediment to processing and treating injured workers.

Still others counter that these same staff reductions are linked to rises in claims’ resolution problems.

“In an April report, the National Conference of State Legislatures said ‘state budget gaps loom as far as the eye can see.’ It said 31 states and Puerto Rico foresee fiscal 2012 budget gaps of at least $73.5 billion, and 21 states project fiscal 2013 budget gaps of at least $64.7 billion. ‘Including previous amounts, states will have addressed budget gaps in excess of $531 billion since the recession began in December 2007,’ according to the report.

“The issue is not apparent in all jurisdictions and depends on the state, risk managers say.”

Colorado lege thinks Pennacol is lowballing

For example, in Colorado, Pinnacol Assurance remains a hot topic for industry news, occasionally even wandering into the streetlights of mainstream news. Apparently, Pinnacol’s latest bid to take itself private–out from under its “status as a political subdivision of the state” to being a private vehicle owned by policy holders, in the form of a mutual insurance company.

“Gov. Bill Ritter Jr. had examined selling off Pinnacol as a solution in addressing Colorado’s estimated $1.3 billion shortfall for the fiscal year that begins in July,” says BI.

Pinnacol submitted a bid on itself, offering $200 million.

Nobody bit that hook, so Pinnacol recently upped the ante to $330 million–but still can’t get the lege to bite:

“Talks broke down after it became apparent that there was a lack of support for the proposal among state lawmakers, many of whom said the insurer’s worth was far greater than what Pinnacol was offering. No legislation aimed at privatizing the insurer was ever introduced.”

No legislation? At all? Not even one bill? In either house? Wow–usually some lobbyist can get at least one bill introduced.

I-1082 in Washington State

OK, let’s swing over to Washington state, where something called I-1082 is a lightning rod of sorts. (Google it. Can’t say how far down the links are relevant, but “I-1082” returns more than 18 million results, in .33 seconds.)

A May 24 opinion piece at the Kitsap Peninsula (Washington state) Business Journal says that Washington employers of every stripe are sick of rising costs for workers comp premiums and are afraid there’s no end in sight.

“Our per worker costs are the second highest in the nation, according to the National Academy of Social Insurance. And while improvements in workplace safety have reduced injuries 55 percent since 1990, claims are taking longer, and costs skyrocket as workers are off the job until their claims are resolved.

“According to the Washington Department of Labor & Industries, injured workers who miss work are off an average 274 days, over twice the national average. Washington also leads the nation in the number of expensive, lifelong pensions awarded each year, a rate that has ballooned more than 300 percent since 1996.”

During times of plenty, writes Don Brunell , president of the Association of Washington Business, premiums were invested, thereby masking weaknesses in the system; but that’s been stripped away during the financial crisis.

Among other measures being considered, Brunell describes “Initiative 1082” as “only the beginning” but also the only real hope for ending “the state’s monopoly on workers’ compensation insurance. Washington is one of only four states with a monopoly. With the exception of 375 large self-insured businesses, all employers are required to purchase their insurance from the government. The initiative would allow private insurers to compete with the state under the very same rules and restrictions governing L&I and self-insured companies like Boeing.”

We’ll end this post with a Texas twister on attempts to reform and streamline workers comp systems.

Workers comp whistleblowers canned in Texas

Earlier this month, the Texas Tribune ran a story called “The Workers’ Comp Whistleblowers,” Following is the nut graf, referring to former state fraud enforcement attorney Cathy Lockhart, who first was put on “emergency leave” then fired a few weeks later for ” ‘secret and clandestine’ activity — namely, that she researched how much money had been spent on medical fraud investigations”:

“Lockhart, along with three other former division employees who have come forward, say the division’s staff identified and recommended sanctions for nearly 70 Texas physicians who overbilled and overtreated patients, engaging in such practices as ordering needless surgeries or prescribing unnecessary narcotics. In the process, the former employees say, a relatively small number of rogue doctors cost insurers millions of dollars and, more importantly, placed patients in harm’s way. Yet since 2005, division records show, the state has sanctioned just five doctors with removal from the workers’ comp system — and only in cases involving paperwork violations rather than harm to patients. The other cases are said to be pending.”

Ok, you get the drift. Now let’s fast-forward a few days, to May 18, when the Tribune answers its own headline question “Workers’ Comp: What’s Next?” with this lede: “On the heels of allegations last week by former employees of the Texas Department of Insurance’s Division of Workers’ Compensation that their higher-ups have failed to sanction or remove dozens of doctors accused of overtreatment and overbilling, Texas lawmakers are pledging to investigate the consequences for patient care and the state’s finances. In addition, sources say the division’s lead enforcement attorney has resigned, bringing to six the number of employees who’ve exited the division’s medical oversight and enforcement staff since February.”

Deeper in the story, this nugget: “Three former employees of the division — Dr. Bill Nemeth, its first medical advisor, who served from 2001 to 2007; Dr. Ken Ford, the assistant medical advisor from 2004 to March of this year; and Dr. Clark Watts, a consultant on the division’s Medical Quality Review Panel (MQRP) — each say they resigned out of frustration that cases were not being enforced, and in some instances, the division leadership “traded political favors” (Nemeth’s words) in keeping cases from moving into enforcement.”

OK, so high-ranking officials quit in frustration and whistleblowers were fired. Still, “Texas lawmakers” are aware of the situation and “are pledging to investigate.” That should put a stop to any shenanigans, right?

Well, apparently not. On May 21, we get this lede from a Tribune blog, entitled “Workers’ Comp Chief Blasts Whistleblowers”: “As the Division of Workers’ Compensation heads into a public hearing at the Sunset Advisory Commission next week, Commissioner Rod Bordelon is blasting his former employees for their allegations in the Texas Tribune earlier this month, putting the blame on them for abuse and mismanagement in the system.”

The entire matter was headed for a showdown May 25 in a hearing of the Sunset Advisory Commission. More on that when it becomes available.


Are you covered by Workman’s Compensation?

Read here for an introduction.

Chimp-attack victim evaluated for transplants; officer who killed chimp at center of ‘mammal attack’ proposal

We first covered the Charla Nash story back in October 2009.

She’s the Connecticut lady who got ripped apart by the 200-pound chimpanzee owned by Sandra Herold, who has been described as both friend and boss. While in recovery after the attack, Nash learned that she may not be able allowed to sue for damages because the boss maintains Nash was working and therefore is covered by workers comp provisions. If that is the case, Nash will lose recourse to possibilities for a larger settlement from a civil suit.

Officer cites emotional stress

In the meantime, the case has taken another twist that may affect state worker’s comp law: the police officer who had to shoot the chimp applied for coverage for treatment of emotional stress, according to a May 6 piece at Initially declined, the claim has led to legislative proposals to close what has been called a “loophole” in dealing with dangerous animals. Shelved by missing a deadline, the proposal will likely resurface in the 2011 legislative session.

Lawsuit not stopped yet

Nash appeared on Oprah’s TV show in November, and Oprah removed the hat and veil covering what’s left of Nash’s ravaged face (here’s a clip from ABC, but be warned: as the commentator mentions, many will find it disturbing).

According to an May 7 post, Nash was discharged from the Cleveland Clinic earlier this month and transferred to Brigham and Women’s Hospital in Boston, where experts were evaluating her for face and hands transplants. William Monaco, Nash’s attorney, told ABC that the $50 million civil suit he filed is proceeding but that “he did not know when the case would go to court,” and it is “possible Nash would testify.

” ‘It remains to be seen if she’ll testify,’ Monaco said. ‘She does not remember much about the attack, but her testimony about her life since then will be key.’ ”

Frank Chiafari is the Stamford police officer who, apparently, was next on the list for the attacking chimp. According the Advocate, “After almost killing Nash, the chimp charged at Chiafari, who shot and fatally wounded the frenzied animal.”

‘Monster with fangs’

According to various reports, subsequent tests revealed the presence of the prescription drug Xanax in the chimp’s system, but it’s unknown whether that contributed to the animal’s violent behavior. Regardless, the chimp was so agitated that Chiafari had to plug him four times at what must have been very close range. During the legislative process, the officer described the encounter as running up against a “monster with fangs and blood all over it . . . .”

Subsequent to his saving Nash and killing the animal, says the Advocate, “Chiafari applied for workers’ compensation . . .  asking the city of Stamford to cover his treatment for post-traumatic stress disorder. The city denied his claim at first, but later agreed to cover out-of-pocket . . .” expenses “. . . related to his treatment.”

The loophole: Humans? Check. Animals? No.

Revealed in the process was the loophole the new legislation aimed to sew shut: As the law stands, police officers can “receive workers’ compensation for emotional stress following a dangerous situation involving another human being” but not for similarly threatening encounters with animals.

What’s barely been mentioned is whether the stress derives from encountering “wild-animal” behavior or, instead, from putting down a pet that has gone loco.

Regardless, lawmakers were not able to push the bill through both houses during this session, and the wording has already undergone an oddball change in language.

Originally “introduced to the General Assembly nearly a year after” the event, the bill passed the state Senate 29-4 in April. “But it died in the state House of Representatives when the legislative session deadline passed Wednesday night [May 5] before it could vote on it. State Sen. Andrew McDonald, D-Stamford, introduced the bill and said he will do so again during the next legislative session.”

All animals? No–let’s restrict that to ‘mammals’

McDonald was quoted as saying the bill had enough support in  the House, but the reps’ missing the deadline cut it short. However, there’s apparently some dissension in the lege about how far to stretch the new parameters. For example, the original wording applied to “imminent danger” from animals. But a later version changed the wording from all animals to “mammals.”

Which, of course, rules out dangerous encounters with reptiles and raptors… For example, although rarely encountered, Connecticut does have Timber Rattlers and Northern Copperheads as well as hawks and owls. That’s not to suggest that such animals are inherently dangerous. Still, if cornered, they could certainly damage a human.

Oh, and what the other end of the scale, away from big, scary creatures toward little scary critters, as in bacteria and viruses? That’s something any public safety or health worker might encounter.

Think that’s silly? Maybe. But look where the lawmakers took the discussion.

Skunks and squirrels squeak into the question

The bill’s sponsor, McDonald, alluded to “pockets of opposition” that would have created enough drag on the process to threaten other needed legislation. “McDonald said lawmakers who opposed the law by claiming it would allow for officers to gain workers’ compensation benefits for encounters with mammals such as skunks did not thoroughly read the law.”

” ‘People who talk about the skunk and the squirrel are choosing to disregard language that the officers be in imminent risk of dying,’ McDonald said. ‘It’s not the emotional trauma of having to shoot a dog or anything like that.’ ”



Exec at WCRI urges states to communicate better with injured workers, drop ‘dueling doc’ systems

A report from the National Council on Compensation Insurance, Inc. (NCCI) is generating some industry buzz about the “precarious position” of the workers’ compensation insurance industry. But a speech at the same symposium by the executive director of the Workers Compensation Research Institute (WCRI) frames the problem in language the rest of us can understand.

Workers comp insurers in ‘precarious position’

Here’s a typical trade press take, from a May 10 post at the Web site of Workforce Management:

“The state of the U.S. workers’ compensation insurance industry is in a ‘precarious position’ following a trying 2009, while economic uncertainties remain ahead, said NCCI Holdings Inc.

“The pace of economic recovery and unknown factors related to health care reform and financial regulation are among uncertainties facing the U.S. industry, NCCI said Thursday, May 6, in its annual ‘State of the Line’ market analysis.

“Meanwhile, workers’ comp insurers’ 2009 combined ratio rose to 110 percent from 101 percent the previous year—the largest single-year increase since the mid-1980s, said the Boca Raton, Florida-based unit of the National Council on Compensation Insurance Inc.”

NCCI: ‘largest data base’

According to the “About” section of its Web site, the “National Council on Compensation Insurance, Inc., based in Boca Raton, FL, manages the nation’s largest database of workers compensation insurance information. NCCI 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.”

The NCCI 2010 report is worth looking at, even if you don’t follow the stats, graphs and industry terminology–the so-called “3D” twist on the .pdf-style document is pretty cool. If you want even more stats and graphs, there’s also the chief actuary’s outline for the symposium. We’ll be referring back these and other related documents in the months ahead, but for now let’s focus on the remarks of Richard Victor, WCRI’s executive director.

WCRI exec says remove unnecessary costs

Another trade-press Web site, in a May 7 piece at P&C National Underwriter, indirectly quotes Victor as saying, “As states exit the recession with a focus on saving money in the new economy, workers’ compensation systems will have to strip out as many unnecessary costs as possible to be successful.”

That may sound like jingo–ism, especially when coupled with Victor’s defining ” ‘unnecessary costs’ as costs borne by the employer in a workers’ comp system that do not improve the outcomes for injured workers.”

But, for anyone hoping for the voice of reason, the examples Victor cites are reasons for encouragement.

Fears of injured workers

“After a workers’ comp claim is filed, Mr. Victor said, the worker generally has three fears: that the worker will lose his or her job; that the worker is distrusted by the supervisor, and a perception that claim denial has occurred or will occur.

“Those with job loss fears are twice as likely to hire an attorney, Mr. Victor said. Those who feel distrusted are 50 percent more likely to hire an attorney.

“Mr. Victor said perceiving that a claim denial will occur is easy for a worker that is not getting money or receiving communication from the employer or insurer.”

Sounds as though he’s paying attention.

So much so, that he recommends all states should do a better job of communicating with workers, as in what to expect if they’re injured,  and how to go through the process. “He said states should have a way for workers to call and find out what will happen with a claim and when. If the claim process deviates from the information given, workers should be able to call back and get further guidance.”

What do higher costs achieve?

And this part is really good: Victor urges states with high claim costs to analyze their systems–not merely to see where costs can be lowered but more important to see whether those extended costs are leading to better results for injured workers. Even better, he uses examples of states with different systems to argue against the adversarial system common to many states. Injured workers who run into balky insurers–and their attorneys–the workers are more likely to need attorneys of their own.

This results in what the article refers to as “dueling docs,” in which “the worker gets a lawyer, who in turn gets a doctor, and the [insurance company] gets its own doctor and they testify against each other . . . .”

Wisconsin system lauded

To get the point across, Victor compares “the systems in states like New Jersey and Maryland with Wisconsin, noting that defense costs are around 40 percent of payments in the former states and 14 percent in the latter state.

“Wisconsin has a higher incidence of voluntary partial permanent disability (PPD) payments, he said, while such payments are virtually non-existent in New Jersey and Maryland. Workers in Wisconsin are also less likely to hire attorneys, he noted.”

Victor cites Wisconsin’s system as possible model because the adversariel model “is discouraged in favor of a system more akin to salary arbitration in baseball.

“In Wisconsin, he said, there is no ‘splitting of the difference’ when dueling docs are used, he said. Instead, the workers’ comp director picks one side or the other.

“This, he said, encourages both sides to make their most reasonable offers, as each side strives to make a more reasonable case than the other.

“ ‘It’s a whole different dynamic . . .’ that leads to both sides coming closer together rather than moving further apart, he said.”

Wouldn’t it be nice if all states workers comp systems were more intent on ensuring that proper treatment of injured workers were the focus of the process?

We’ll be looking for data or studies that delve into the Wisconsin system.  It would be interesting to know how satisfied those workers are with the “arbitration model” as well as any quantifiable health improvements following treatment.

Stay tuned.


Have you, a friend or a loved one been injured on the job? Whether you’re merely seeking answers about your rights or believe a lawsuit may be necessary, be sure to seek counsel with attorneys trained and experienced in workers’ compensation. Here’s some resources:

Workers compensation basics

Injury on the job

Choosing an attorney

NFL measure dies on the vine; CA authorities busy with scams

From the serious to the flat-out ridonculous, in this installment we’ll update a few former posts and take a look at a few new stories in the sometimes bizarre world of workers comp cases.

On April 20, we discussed a previously little-known battle within NFL ranks, involving mostly ex-players who have been filing for workers comp benefits in California. State law allows the players to file if they played at least one game in California, and the benefit awards often are more generous than in other states, which costs franchises more money.

From the Bengals to the Saints

Insiders following the story had labeled it “the Bengals situation,” but then the Louisiana state legislature intervened, intending to help its native Super Bowl Champions with a little personnel problem.


The proposed legislation got skewed in the process, potentially affecting every worker in the state. What had been  a barely discussed industry issue suddenly was making regional, even national headlines.

But according to a May 4 article in Bloomberg Businessweek, the Louisiana lege has decided to stand down.

“The Saints had been pushing a bill to lessen its workers’ compensation costs for injured players. But Rep. Cameron Henry shelved the proposal Monday and said he doesn’t expect to bring it up again for the session that ends in June.

” ‘It became clear to all of the parties that it would be easier to work this particular issue out through contracts and the collective bargaining process,’ said Henry, R-Jefferson, after he declined to hear the bill on the House floor as scheduled.”

The players union may have influenced the lawmakers.

“The NFL Players Association argued that the claims complaints should be addressed in the collective bargaining agreement between players and team owners and that Henry’s bill will end up in court if it passes.

“Players union general counsel Richard Berthelsen said many of these claims were being filed decades later because the teams didn’t properly notify players of their workers’ compensation rights to make those claims.”

California employers and ‘safety contests’

What’s with California, anyway?

Maybe it’s because of being so populous, but the Golden State seems to generate more than its fair share of workers comp news. Our most recent California-related report concerned two former managers of a Smurfit-Stone facility who are set to be sentenced later this month after pleading guilty to a screwball scheme to steer injured workers away from proper treatment.

A question in that case was whether the managers were simply overzealous in pursuing company safety standards or whether company policy itself was at fault.  According to the Monterrey County Herald, “Part of the motivation, said the DA, was an incentive program that paid bonuses to managers and other employees if the number of reported injuries was minimized.”

Similar questions may apply in a recent settlement between six counties and the Raley’s grocery chain that operates as Raley’s, Bel Air Markets, Nob Hill supermarkets and Food Source stores, employing about 14,000.

According to a May 4 piece in The Sacramento Bee, the $550,000 settlement resulted from a 2007  investigation that began at one store in Amador County.

The Amador County DA’s office and the state insurance department “began a criminal investigation of a complaint that store managers at the store on Foothills Boulevard had tried to stop an injured employee from filing a claim. Bel Air is owned by Raley’s.

“Two managers eventually were charged with multiple counts of insurance fraud.

“Investigators said they acted on an anonymous tip and learned that the managers dissuaded injured employees from filing state workers’ comp claims in order to earn bonuses for themselves by maintaining the store’s injury-free record.”

The managers eventually pleaded guilty to misdemeanors, drawing substantial fines,  probation and community service. However, the one-store investigation led authorities to widen the inquiry that led to the settlement, which includes neither admission of guilt nor denial of charges–but also contains a provision for “a $150,000 sanction if other violations occur in the next five years.”

The next case also involves a purveyor of food, apparently a well-known bagel chain. Here’s the lede from a May 5 post at “If you live in the Bay Area, you’ve probably seen a Posh Bagel store. If you live in prison, you may soon see Posh Bagel’s management on your cell block.”

It seems the California Department of Insurance (CDI) has powers of arrest–in late April CDI agents “slapped . . . the bracelets” on the top three execs of the chain, who now stand charged in what looks like yet another slipshod scheme to  game the system.

“The trio stands accused of what is commonly known as workers’ compensation premium fraud. To understand this crime, you must know that workers’ compensation insurance premiums are determined by such factors as the number of employees on a company’s payroll, the amount the employees are paid, and how frequently the employees get injured on the job.

“All employers in California are required by law to carry workers’ comp insurance, and it isn’t cheap. Employers that aim to lower their workers’ comp expense through dishonest means try all sorts of tricks, from under-reporting payroll to lying about the state in which their employees work.”

The account is pithy and more than a bit sassy, well worth reading for the writer’s take on how ill-advised it is to concoct bozo attempts to cheat a system that has necessarily evolved systems to detect cheaters, whether the cheaters be employers or employees, or  insurance or medical providers.

Others may disagree, but this seems to be the “nut graf”:

“Speaking of dumb, CDI alleges that in June 2006, Posh inadvertently sent its former workers’ comp insurance carrier, Applied Underwriters, an internal spreadsheet that showed different payroll data than the company had previously reported to the insurer. When Applied asked Lee what gives, she allegedly said the insurer was mistaken and canceled the policy, CDI said. Posh turned around and took out a new policy from Endurance Reinsurance Corporation of America.”

Like we said in the Smurfit-Stone case: dumb & dumberer…

Although, to be fair–as the post reminds us–these accusations are only allegations. We will follow along.< OK, one last case for this post, involving this time not an employer, but an employee.

‘Stripper Stripped of Her Disability Check, Charged with Insurance Fraud’

Won’t even comment on this, much; if you’re interested, read here.

Here’s the small comment: Strippers provide a legal service, one which many seem willing to subsidize. But doesn’t it test the limits of goofy to swear that you can’t move well…and then go swing on the pole? naked? in a place where anybody might walk in?