When you see a headline such as “Workers comp premiums drop fifth straight year: Analysis” in this Oct. 4 Business Insurance post, your first thought might be, “Oh, good–my employer’s costs for workers comp are going down.”

But such is not the case.

As explained in this Bloomberg.com post, also from Oct. 4, declining prices are a factor in the overall picture, but what’s really going on is that fewer companies are buying workers comp policies. The data are from an industry group, A.M. Best Co.

2009: Policy sales down 15 %

Bloomberg says, “Workers’ compensation policy sales dropped 15 percent in 2009, to the lowest in 10 years, as unemployment depressed demand, A.M. Best Co. said.

“Policy sales slid to $12.3 billion in 2009 for companies in A.M. Best’s workers’ compensation composite index. Revenue has declined for five straight years, falling 41 percent from its 2004 high of $21 billion, the Oldwick, New Jersey-based insurance ratings firm said today in a statement.”

Highest industry ratio since 2002

The BI account, citing the same report, wrote, “At the same time, the workers compensation insurance industry’s composite combined ratio deteriorated 8.8 percentage points to 120%, the highest composite combined ratio since 2002, when it reached 118.6%.

“ ‘The deterioration was driven primarily by the downward spiral in premium volume as the economy continued to take its toll on exposure levels and competitive pricing remained widespread,’ ” Best said in a statement.

NCCI report found similar rates

InsuranceJournal.com says the report echoes findings of another industry group: “The report is consistent with findings from the National Council on Compensation Insurance (NCCI), annual report that also painted 2009 as a difficult year for workers’ compensation providers.”

According to Bloomberg, Travelers beat Warren Buffet’s Berkshire Hathaway in this sector but that Travelers’ success was a rarity: “Berkshire Hathaway Inc., Warren Buffett’s company, posted a 37 percent decline in policy sales, the steepest fall of the largest 25 companies by premiums in the composite. Travelers Cos., the insurer added to the Dow Jones Industrial Average last year, was the only company in the top 25 to increase its policy sales, gaining 1.2 percent.”

‘Jobless recovery’

BI quoted A.M. Best about the economy and provides links for more information: ” ‘As the economy moves slowly from recession to recovery, the consensus anticipates a jobless recovery; and therefore, sluggish premium growth, meaning the workers compensation segment’s underwriting performance is not expected to rebound over the near term,’ Best said.

“BestWeek subscribers can download a PDF of the special report, “U.S. Workers’ Compensation—2009 Market Review,” at https://www3.ambest.com/MemberCenter/sMC/Cust_Existing.aspx?URATINGID=&fs=0&altnum=0&altsrc=0&tl=7&b=0&nextpage=http://www3.ambest.com/bestweek/purchase.asp?record_code=178548 target=”_blank”. Nonsubscribers can access an excerpt of each special report and purchase individual reports with spreadsheet data.”

‘Stunning’ Michigan case reaches U.S. Supreme Court

Another BI post deals with a Michigan case that earlier in the year had astonished industry observers and legal minds alike . Hearing the case for a second time, a federal judge has once again barred a RICO suit from proceeding against employers accused of conspiring against workers.

“A federal judge has ruled that an attempt by a group of workers to sue their employer under federal anti-racketeering law is pre-empted by Michigan’s workers compensation law’s exclusive remedy,” writes Mark A. Hofmann in an Oct. 4 post.

Plaintiffs invoke RICO

“The case, Paul Brown et al. vs. Cassens Transport Co. et al., was brought by several employees of Edwardsville, Ill.-based Cassens. The plaintiffs alleged that self-insured Cassens and its third-party administrator, Crawford & Co., used unqualified doctors to give fraudulent medical opinions supporting denial of workers comp claims. The plaintiffs filed suit alleging mail and wire fraud violations under the federal Racketeer Influenced and Corrupt Organizations Act, which allows triple recovery of damages.”

Ruling from the 6th Circuit

Here’s a description of the case as it stood during February, from InsideCounsel.com:

Forget gambling, drug trafficking and prostitution.

The latest organized “crime,” according to the 6th Circuit, is conspiring to defraud injured employees of their workers compensation benefits.

In the first decision of its kind, the appeals court recently stunned employment attorneys across America by holding that employers alleged to have schemed with their insurance carriers and/or physicians to wrongfully deny workers compensation benefits can now be sued for treble damages and attorneys fees under the civil fraud provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO).

Although RICO originally targeted criminal organizations such as the Mafia and Hells Angels, counsel warn that Brown v. Cassens Transport Co. exposes legitimate businesses to RICO litigation and intrusive discovery into their handling of workers compensation claims.

“I was frankly quite surprised,” says Robert Abell, a solo employment law practitioner in Lexington, Ky. Abell suggests the ruling should “raise a flag of caution” for any self-insured employers, insurance adjusters and doctors who might appear to reflexively deny workers compensation claims.

Judge said No in 2005

Judge Borman originally rejected the RICO claims in 2005, but a subsequent appeals court allowed them in 2008.

From there, the case proceeded to the U.S. Supreme Court. According to a LexisNexis blog, “The United States Supreme Court vacated that judgment, however, and remanded for further consideration in light of Bridge v. Phoenix Bond & Indemnity Co., — U.S.—, 128 S. Ct. 2131, 170 L. Ed. 2d 1012 (2008), which held unanimously that a civil-RICO plaintiff did not need to show that it detrimentally relied on the defendant’s alleged misrepresentations.”

Argument comes full circle

The LN blog says, “Judge Borman also held that the plaintiffs lacked standing to sue under RICO because their claims for medical expenses and related pecuniary loss did not constitute injury to business or property under RICO and were too speculative to confer standing under RICO” and that  “. . . the court was essentially being asked to decide whether the workers were entitled to workers’ compensation benefits. That decision was exclusively for the state administrative agency under the WDCA.”

In one sense, it seems as though workers comp law should be fairly simple: Was the worker injured on the job? If so, let the workers comp insurance pay the bill.

However, as we’ve seen repeatedly, these cases can be so complex as to wind up in the highest court in the land–whether they get heard there–or not.

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Frequently enough, a workmen’s compensation case may be so complex as to demand legal representation. However, sometimes what seems like a cut-and-dried situation to an injured worker may result in a smaller award than envisioned–or even a denial. 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

Filing a claim

Recent news shows the importance of retaining experienced counsel in the often confusing world of workers compensation law.

Take the case of minor league hockey player, Canadian Andy Bezeau.

According to this AP brief from December 9, Bezeau, 39, is from St. John, N.B. but “was living in Michigan in 1998 when he signed a three-year contract with the now-defunct Detroit Vipers . . . .”

But the Vipers sent him to Providence, R.I., to play for the Bruins, “where he was injured Oct. 6, 2000.”

So what’s the problem? He was working, and he got hurt, right?

Well, not so fast.

“His request for compensation from the Vipers was under review when the Michigan Supreme Court ruled in 2007 a person must be a Michigan resident when hurt to collect.”

Oh, OK–so then he needs to collect from the Bruins’ carrier, right?

Well, what if he maintained his residence in Michigan and only had temporary digs in Rhode Island? Then what?

We’ll find out later–the Michigan board ruled against him, because of the state Supreme Court’s 2007 ruling, so now the Supreme Court has to rule on this specific case. Watch here for an update.

Here’s another example of a someone not from the U.S. getting hurt, this time a worker in Nebraska. The difference is that even though the worker was working here illegally, he’s still entitled to workers comp. Also from a December 9 AP account: “The Nebraska Court of Appeals has upheld a lower court ruling that an illegal immigrant injured at a slaughterhouse is eligible for workers’ compensation benefits.

“Cargill argued that because Odilon Visoso cannot legally work, he should not be eligible to receive weekly wages of about $340, payment for future medical expenses related to his spine injury and other benefits.”

And, get this: Cargill fired the guy after he got hurt–supposedly because he’s here illegally.

After a 100-pound slab of beef fell on him, he had surgery “in October 2007 and was fired shortly after by Cargill because, its officials say, he was an illegal immigrant.”

As a side note, one wonders why Cargill is not in trouble for hiring illegals in the first place…

At any rate, “. . . the court pointed out that state law says all employees, including illegal immigrants, are eligible for workers’ compensation.”

A copy of the ruling is here.

Another Michigan case also involves that state’s Supreme Court, which sent a RICO case back to lower courts. According to a December 10 account at ClaimsJournal.com, “The U.S. 6th Circuit Court of Appeals had found in Paul Brown et al. vs. Cassens Transport Co. et al., the plaintiffs could sue their employer and its workers’ compensation claims adjuster under federal racketeering laws.”

The details involve a so-called “cutoff doctor,” a term recognized by anyone who has ever worked for a health provider–it’s lingo for docs who seem to be in the pocket of insurance companies based on their patterns of claims denials and lowered injuries ratings.

“The six plaintiffs alleged that the defendants–Cassens Transport Co., Crawford & Company, and Dr. Saul Margules–had schemed to deny them workers’ compensation benefits under the Michigan Worker’s Disability Compensation Act (WDCA) in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO).”

According to a December 8 brief at BusinessInsurance.com, the appeals court decision may set a bad precedent for employers and their carriers: “Attorneys and employer groups have criticized the appeals court decision, arguing among other things that it provides an avenue for federal courts to rule on workers comp claims decisions and that the ruling will raise costs.”

The Claims Journal account says that a lower court had ruled in favor of the defendants by dismissing “the plaintiffs’ RICO claims,” but in October 2008 the 6th Circuit court reversed that decision.

“The defendants had argued that WDCA preempts the plaintiff’s RICO claims and the lower court agreed. The appeals court found that was not the case, however, and determined that the plaintiffs had ‘sufficiently pleaded a pattern of racketeering activity,’ according to court documents.

“Specifically, the plaintiffs alleged that Cassens and Crawford deliberately selected and paid unqualified doctors, including Margules, to give fraudulent medical opinions that would support the denial of worker’s compensation benefits, and that defendants ignored other medical evidence in denying them benefits. The plaintiffs claimed that the defendants made fraudulent communications amongst themselves and to the plaintiffs by mail and wire in violation of” the racketeering act.”

That’s a case worth following, too.

Of course, employers can’t be too careful, either.

In California, a city official been charged with “workers’ compensation fraud after authorities allegedly caught her exercising and riding a motorcycle at a time she said she was too injured to do her job.”

If she did what authorities are alleging, it’s one of those head-scratching, you’d-think-she-knows-better kinda deals: the lady is not only a city council member but also a former mayor.

According to a December 3 piece in the portal to the San Francisco Chronicle, “The charges stem from a workers’ compensation claim that [Maggie] Gomez filed in 2005 with Seton Medical Center in Daly City, where she works as patient relations manager.

“Gomez said she had been injured while working, authorities said. From 2005 to 2007, she lied to doctors, insurance companies, claims administrators and the state Employment Development Department ‘regarding the injury and the extent of her disability,’ said Karen Guidotti, an assistant district attorney.

“Investigators with the district attorney and state Department of Insurance allegedly saw Gomez exercising at the gym, walking long distances while shopping, riding a motorcycle and climbing out of her boyfriend’s truck, all activities she said she was unable to do.”

Another high-profile case hinging on questions of employee status (which we profiled here ) involves a woman who was severely injured by a chimpanzee. She was on Oprah recently, providing details of the attack and insights into life since the mauling. Here’s the update, but be forewarned: Some of the pictures include shots of her without the veil she normally wears–and the images are highly disturbing.
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Whether you’re an injured employee or an aggrieved employer, if you’re facing legal problems regarding workplace injuries, be sure to seek counsel with attorneys trained and experienced in workers’ compensation. Here’s some resources:

Workers compensation basics

Denial of benefits

Choosing an attorney