Whew–the workers comp picture in North Dakota resembles a bowl of spaghetti.

The issues sort of splay all over the place, with some overlapping others, then disappearing into the pile and re-emerging on the other side.

Unusual provision

An Aug. 16 post at Insurance Journal says, “An unusual North Dakota workers’ compensation law provides reduced benefits when a job injury worsens a medical problem the employee already has, and a consultant told state lawmakers on Friday they should repeal it.”

The Aug. 12 Bismark Tribune reports, “The latest performance evaluation of the Workforce Safety and Insurance department shows denials of claims have nearly doubled since 2005.

Claims denials

“The report, prepared by Sedgwick Claims Management Services for today’s Interim Worker’s Compensation Committee, finds that while North Dakota’s initial claims denials are lower than the national average, they are high compared with other states.

Schwarzenegger furloughs headed to Supreme Court

As a follow-up to our March 22 post, “California furloughs of workers comp attorneys ruled ‘illegal’, “ we see a June 13 piece in the San Francisco Chronicle reporting that yet another court has found that “[a]bout 7,900 state workers’ compensation employees were furloughed illegally by Gov. Arnold Schwarzenegger last year and are entitled to $25 million in back pay . . . .”

The March ruling was from a different appellate panel, which “found Schwarzenegger acted illegally when he furloughed about 500 lawyers and hearing officers employed by the same insurance fund.”

The June 11 ruling applies to all employees of the fund, which “sells workers’ compensation insurance to employers and uses their payments to run its operations.”

According to the Silicon Valley MercuryNews, “The furloughs were part of an cost-cutting move by the governor last year, when he ordered nearly 200,000 state employees to take two days off each month without pay.”

However, the issue does not appear to be over. Both outlets report that the state Supreme Court has agreed to review the furlough issue.

Fired manager plans WC fund for construction insustry

Another brawl over workers comp funds is shaping up in Minnesota, where, says a June 14 StarTribune.com report, “The founder and former head of Minnesota’s largest workers compensation self-insurance fund is launching a new, competing insurance program for the construction industry.

“David Bjorklund said The Builders Group (TBG), the Eagan-based fund he founded in 1997, has lost its way, citing its recent $30,000 state fine for falsifying safety-related scores and a drop in its financial reserves.”

According to the article, Bjorklund was fired as manager by the fund’s board, 11 years after he created the fund. He says he was a whistle-blower and that speaking out is what got him fired. Subsequently, he and other ex-employees helped the state during an investigation of the fund.

“Last week, he said, he met with several concerned fund members to outline the new venture. His goal is to line up charter members for a new ‘captive’ insurance company owned and controlled by the membership.” Such firms “are a bit like self-insurance funds, but members don’t bear ‘joint and several’ liability for losses, Bjorklund said. The venture, yet to be submitted to insurance regulators or given a name, would operate under the umbrella of a large insurer, though Bjorklund said he would administer it.”

Settlement for 9/11 workers extends benefits, caps legal fees

Yet another captive insurance fund made news recently, as part of the revised, $712 million settlement between New York City and thousands of 9/11 rescue workers.  According to a June 10 piece in Bloomberg BusinessWeek, “Lawyers for 10,000 workers claiming illnesses from rescue, recovery and debris removal after the Sept. 11 World Trade Center attack have agreed with New York City on a $712.5 million compensation fund to settle the cases.”The city and its WTC Captive Insurance Co., set up with $1 billion from [FEMA], joined with plaintiffs’ attorneys to present the agreement today to U.S. District Judge Alvin Hellerstein in Manhattan.”

According to Reuters, the revision includes a larger payout to the workers but less to the attorneys: “In March a federal judge rejected an initial settlement of up to $657.5 million, saying it needed to be more transparent and that too much of the money — about one third — would be spent on lawyers’ fees.”

The settlement caps attorney fees at 25 per cent, which lowers “their previous cut by more than $50 million. The WTC Captive Insurance Company has agreed to pay up to an additional $55 million to the workers as part of the revised settlement.”

BusinessWeek says the judge termed the agreement “a very good deal,” and  “signed an order dismissing the lawsuit, and set a June 23 public hearing for claimants and their attorneys to raise any objections. At least 95 percent of the plaintiffs must consent to the agreement for it to become legally binding.”

Oklahoma finally passes WC reform package

Elsewhere, reform is the name of the game in Oklahoma, where Gov. Brad Henry has signed legislation aimed at upgrading the workers comp system. According to a May 28 report from TulsaWorld.com, “The key features include a reorganization of the workers compensation courts and a tightening of definitions and benefit eligibility.

“Supporters say the reforms will save businesses more than $60 million a year.”

A June 12 piece at NewsOK.com explains that the legislative reform comprises four separate bills and that its passage removes one ballot proposal from November elections.

“The two bills signed by the governor Friday were part of four measures legislators approved after months of negotiations with business, medical and legal representatives. Henry earlier this week signed Senate Bill 1973, which allows the state Supreme Court to review workers’ compensation claims like any other civil case and requires that the claimant be in attendance unless all parties agree, and HB 1611, which requires workers’ compensation claims adjusters to have six hours of education on the state workers’ compensation act.”

A twenty-two point, bulleted list of changes in the reform measures are spelled out at InsuranceJournal.com.

***********************************************************************************************************************
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

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 stamfordadvocate.com. 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 ABC.com 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.’ ”

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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

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

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.

Ooops.

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 examiner.com: “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 examiner.com 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 examiner.com 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?

One of the crucial aspects of the pending financial reform legislation involves strengthening requirements for banks to have more cash reserves on hand. Here’s a quick summary from John Waggoner at USA Today: “The legislation would give regulators more information on mortgages and derivatives, which are complex agreements whose value depends on the level of interest rates, indexes or other financial instruments. Financial companies would have to keep bigger cushions against losses. And the government would be able to seize failing institutions and liquidate them or sell them off, as it can with commercial banks.”

The entities that finance the monetary benefits awarded to injured workers face similar issues and constraints. When employers game the system, by, say, under-reporting headcount or by claiming employees as subcontractors, there’s less funding in the account than there should be. This is why states wrangle with so many permutations of systems to legitimately address treatment for injured workers.

So what happens when the regulators or the fund  itself get things out of whack?

MIMRA deep in the hole

Such is the case in Connecticut, where, according to theday.com, “The Municipal Interlocal Risk Management Agency (MIRMA) was formed in 2002 by the towns of Chaplin and Willington to provide an alternative risk management pool through which towns and other public entities could buy workers’ comp and other insurance.

“But MIRMA has racked up deficits in every year since its formation and now teeters so close to insolvency that a recent report by an external auditor questioned how long the agency would continue to exist.”

Since its creation, designed to provide competition with the Connecticut Interlocal Risk Management Agency (CIRMA), MIMRA has grown to include more than 60 towns and other public entities. Apparently, there’s been warning signs before, but recently the client towns have have had to digest the disturbing news that they are on the hook for more than $9 million.

Creating risk?

Instead of managing risk, MIMRA has been running deficits and was planning on tapping its clients via increased fees, distributed among its 60-plus clients in varying schedules–which could hit some towns to the tune of several hundred thousands of dollars.

According to an April 24 piece at insurancenewsnet.com, “Among the affected towns are North Branford, which will have to pay $600,000 to the agency, and Westbrook, which will pay $158,000, officials said.

” ‘Obviously we were very surprised to hear about this assessment. …. Somehow or other [MIRMA] fell short with projected revenue and had a variety of issues,’ Westbrook First Selectman Noel Bishop said.”

Legislators to the rescue

But facing a major deadline resulting from prior legislation, state legislators have intervened. According to The Day: “But on Wednesday, the state Senate stepped in, voting 33-0 for a measure that postpones by six years the date when MIRMA must bring itself into compliance with the contingency fund requirements. The House of Representatives had earlier passed the bill by a vote of 145-2. The bill awaits action by Gov. M. Jodi Rell.”

In an opinion piece April 25 in the Hartford Courant, Kevin Rennie takes everybody to the woodshed.

“A compelling example of why we don’t trust government to use its authority wisely has been unfolding in the General Assembly. It is a cautionary tale about a small insurance company, bad decisions and legislators who ignore startling facts.”

MIMRA has a “straightforward mission,” Rennie writes,  “and it’s a failure. If MIRMA were a private insurance company, it would have been shuttered long ago. MIRMA, however, enjoys friends and advocates in the legislature, so it careens on toward an expensive abyss. Its financial health has never been robust.”

A series of mistakes

If Rennie’s right, the whole mess is a chain of bad decisions, dating back at least several years, when “the legislature took away the state Department of Insurance’s authority to regulate MIRMA, according to frustrated officials in that agency.

“It has power to review the condition of MIRMA but it cannot act when it sees trouble, and there’s plenty. The department raised the prospect of MIRMA shutting down five years ago. Instead, the legislature passed a bill exempting it from prudent financial standards that require reserves to pay expenses — the medical bills of injured workers.”

Apparently, MIMRA was begun with state-provided capital, unlike its competitor, but by 2004 was running $2.2 million in the hole and about $10 million by the end of 2009. In its most recent audit, an independent outfit found MIMRA’s fiscal condition shaky enough to raise doubts about its ability to continue.

“These bare facts ought to be enough to prompt the legislature to authorize state regulators to intervene,” writes Rennie, adding that, “Instead, a bill extending MIRMA’s exemption from sound business practices sails through the legislature. Swaddled in isolation, the legislature’s Insurance and Real Estate Committee ignored terse February testimony from the Insurance Department describing MIRMA’s troubles.”

Workers’ Compensation Commission Chairman John Mastropietro, “sent a searing letter to MIRMA chairman David Denvir of Killingworth,” says Rennie, “telling him MIRMA must pay the medical bills for the injured workers it insures.” He quotes the chairman: “If doctors and hospitals were to opt out of treating injured employees due to your failure to compensate them in a timely manner, our Workers’ Compensation System would be severely compromised.”

According to The Day, at least part of the impetus in creating MIMRA was because “fully private insurers were not often serving the municipal market, [Rep. Craig] Miner said, noting that MIRMA’s primary approach had been to try to beat CIRMA, its primary competition, on price.”

Co-sponsor claims ignorance of bill

This next revelation from Rennie demonstrates the depth of chaos and confusion. He says he asked one of the new bill’s co-sponsors about the criticism from the WCC chairman–but she said didn’t know about the bill.

“This came as a surprise to one of the co-sponsors of the MIRMA bill, state Rep. Marilyn Giuliano, R- Old Saybrook. She sang the praises of MIRMA and its mission to provide affordable insurance coverage to small towns, when I spoke to her last week. She appeared not to have a clue that the reason it’s affordable is that the premiums it collects don’t cover the cost of paying claims, and haven’t for years.

“When asked why she co-sponsored the bill to exempt from state regulators a company that isn’t paying medical bills incurred for the care of injured workers, she went wobbly. ‘I don’t know where this [bill] might have come from,” she claimed. Perhaps in my research I might ask, she suggested.”

The Day piece closes with a quote from Insurance Commissioner Thomas Sullivan, describing both the way MIMRA was created as well as the dangers of not requiring enough reserves: “This bill is an illustration of the dangers of legislative carve-outs,” said Sullivan. “When companies are permitted to operate with less money than they need, the taxpayers in those towns could be asked to pay more money in taxes to keep the company afloat.”

***********************************************************************************************************************
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

Injury on the job

Choosing an attorney

In an April 6 article, The New York Times reported on what was then an under-the-radar, developing story involving the NFL and workers comp benefits in California.

At the time, apparently only a few league insiders and legal types were following the developments of what was being cast as “the Bengals situation,” involving hundreds of retired, injured players getting better benefits by filing under California’s surprising set of rules:

Hundreds of players pursuing claims

“California provides the only workers’ compensation system that allows retired pro athletes to file claims for long-term injuries sustained on playing fields years or even decades before. Quietly, hundreds of football players have received awards or settlements worth at least $100,000 and 700 more players are pursuing claims, many of them by satisfying California’s unique requirement that they played at least one game within state borders.”

That “one game” thang seems to be the crux of the dust-up.  So much so, that some NFL teams have challenged the status quo:

“ ‘It was the sheer number of claims that really started to get the attention of certainly the Bengals and, I think, of other clubs as well; it became an extreme cost,’ said Sam Duran, a lawyer based in Cincinnati who represents the Bengals in workers’ compensation matters. ‘These players have workers’ compensation rights. Those rights happen to be in Ohio.’ ”

In other words, NFL teams are pushing to bring the cases back to their states of origin: If you played for a team based in Ohio, file in Ohio, etc.

The problem, of course, is that the “home states’” benefits that get awarded are often meager, compared to what the former players can get by filing in California.  So injured players have often ignored contract clauses that were “aimed at restricting workers’ compensation option” and filed in California, leading teams to sue players in state court.

A legal maze

The result? “The Bengals situation, as it has become known among the few people paying attention to it, has developed into a knot of legal strings, cases, venues and precedents that even those involved have difficulty untying.”

For example, the Miami Dolphins are taking the tack that such matters must be decided via the arbitration regs in place as part of the players union’s collective bargaining agreement. (Florida law, apparently, does not recognize professional athletes as “employees.”)

From the union’s point of view, contract clauses such as used by the Bengals and Titans are legally unenforceable because of certain California statutes; furthermore, neither “could the union itself bargain away those rights on behalf of players collectively in current negotiations over a new labor agreement.” Perhaps even more compelling, union attorneys contend that the players are backed up by decades-old U.S. Supreme Court rulings that allow “employees from states with limited workers’ compensation benefits . . . [to] file in any state that will accept them.”

The cases of dozens of former Bengals’ players started in state court but got moved to federal court (still in Ohio) and may be decided later this month.

In some cases, state courts have even crossed swords: “After an Ohio judge granted the Bengals’ motion to vacate the California awards pursued by Wilson and other Bengals, the California workers’ compensation judge Joanne M. Coane rebuked not only the team but the Ohio court for issuing the ruling, saying the [Ohio] court was ‘not legally empowered’ and that the ruling ‘has no legal effect.’ ”

Proposed bill could affect all Louisiana workers

More recently, the “Bengals situation” has lost its low-key status. From the April 16 BusinessWeek: “An attempt by the New Orleans Saints to lessen its workers’ compensation costs for injured players mushroomed Thursday into an issue that would apply to all businesses and employees in Louisiana.”

From an April 15 nola.com piece via the Times-Picayune: “A bill that started out trying to lower the New Orleans Saints’ payouts of workers compensation benefits to injured players was expanded in a House committee Thursday to apply to all employers and employees in the state.”

Wow–how’d that happen?

BusinessWeek says, “The Saints were pushing a bill by Rep. Cameron Henry that would require professional athletes for Louisiana teams to be subject to workers’ compensation benefits under Louisiana law if they are injured in a game or practice.”

The Times-Picayune piece says, “Because of possible ‘legal infirmities’ of carving out a niche in the law only for professional athletes, Henry got the panel to amend it to apply to all Louisiana companies whose workers are injured while working out of state.”

Players union disputes bill’s legality

BusinessWeek also makes a distinction not found in the NYT article, which mentions the Dolphins’ preference for arbitration via collective bargaining. According to BW, the players union favors arbitration, too, and in fact disputes the legitimacy of the bill: “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.

” ‘With all due respect to Louisiana and any other state, you can’t deal with our issues in California. Only we can deal with that,’ said players union general counsel Richard Berthelsen.”

Some question the need for filing claims for injuries that may go back decades. Berthelsen is indirectly quoted in the BW account, indicating that “many of these claims are being filed decades later because the teams didn’t properly notify players of their workers’ compensation rights to make those claims.”

Another state rep wants to slow down, according to the TP: “Rep. Herbert Dixon, D-Alexandria, the committee’s vice chairman, urged Henry to delay action on his bill since the amended version deals ‘with all employees in Louisiana’ who work out of state, not just athletes. Ponti [another state rep, who voted against the bill] agreed: ‘It leaves a lot of questions unanswered.’ ”

‘Unintended consequences’

BW quoted Ponti:  ” ‘I’m concerned about passing something that we don’t know the unintended consequences of. Is this not something the players and owners could work out in their contract negotiations?’ said Rep. Erich Ponti, R-Baton Rouge, chairman of the committee.”

Sounds like this complicated issue will take quite a while to work through the courts, so it just may be up to collective bargaining to address it in the next NFL-players union negotiations.

Meanwhile, oddly enough,  Rep. Henry’s out-of-date Web page makes no mention of House Bill 1097, but a copy can be found here.

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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

Injury on the job

Choosing an attorney

As we’ve mentioned before, the stereotype of the scheming worker is not a myth. Insurance investigators frequently bust idjits and ne’er-do-wells who fake injuries and file false claims–only to be caught in videos performing activities too vigorous for their supposed injuries–curiously, some get caught when they themselves post the damning material online.

Nevertheless, judging from news stories, anyway, it seems the reverse is more often true. That is, it seems some employers just can’t stop themselves from trying to game the system by misreporting employee head-counts, denying or discouraging treatment or delaying the process any number of ways. We’ve covered some such actions here and here.

Well, here’s some more.

After all the horrible news about catastrophes in various mines through the years, wouldn’t you think a mine operator would be one of the last to get charged with safety or workers comp violations?

Obviously, the most recent case to grab headlines is the explosion in West Virginia, reported on April 6 in The New York Times and commented on the same day in an NYT editorial. No telling what sorts of legal actions and lawsuits may arise from such a well publicized tragedy.

Hiding mine employees in ‘trucking company’

But what about the smaller, “less volatile” cases?  For instance, According to an April 5 post at ClaimsJournal.com, Pamela Allen, “listed as the sole officer of Sly Branch Energy, an underground coal-mining operation” in Kentucky “has been indicted on charges stemming from an alleged scheme to avoid paying workers compensation insurance.

“A federal grand jury in Lexington has charged Pamela Allen with five counts of mail fraud.”

The allegations center around a fake trucking company, apparently created on paper in order to show mine employees as trucking company employees instead.

“The indictment charges that by hiding employees this way she was able to pay less than she should have for workers compensation insurance.”

Former Smurfit-Stone managers plead guilty

In California, two brainiac, ex-managers for Smurfit-Stone have pleaded guilty to charges involving a slapdash plot to dodge the workers’ comp system by allegedly, for instance, steering  injured workers to a physician’s assistant instead of using the proper medical channels; attempting to fudge leave time; and denying time off to recuperate.

If  it’s the same large company that uses the Smurfit-Stone name throughout North America and a couple of overseas locations, the problem may trace to the company’s pursuit for an exemplary safety record.

News accounts say the employees were managers at Smurfit-Stone’s Salinas, CA, factory, and the Smurfit-Stone Web site indicates that it does have a facility there.

The Insurance & Financial Advisor Web news site posted April 5 that subsequent to an investigation begun in 2006, “[t]wo former managers of a California-based container company pleaded guilty to conspiring to deny injured employees workers’ compensation benefits.

“David Lawrence Polk, 53,  . . .[and] Douglas Minoru Tateoka, 61, both former managers of the Smurfit-Stone Container Corp. plant in Salinas, Calif., recently entered the pleas, according to the California Department of Insurance.”

Between the IFA’s account and a late-March report in the The Herald of  Monterey County,  the picture that emerges is a twisted take on Dumb and Dumber, but instead of unintentionally intercepting a load of ransom money, the principals were intentionally misrouting injured workers away from bona fide medical treatment–and from the injury-reporting system.

Workers steered to physicians assistant

The local DA’s office was contacted in October 2006 by a pair of Smurfit-Stone employees, says The Herald, complaining that workers were discouraged from filing workers’ compensation claims at the Salinas plant.

“The original complaints . . . [reported] that workers were taken to the company doctor, who actually was a physician’s assistant.”

The IFA report says that Polk and Tateoka even managed to insert themselves into the examination area where they tried “to influence the diagnosis and treatment of injuries.

“Polk and Tateoka allegedly concealed workers’ injuries, tried to prevent leave time from being medically prescribed and denied injured workers time off to recover, officials said.”

Effort to reduce reporting injuries

Furthermore, in an apparent effort to keep from reporting time lost due to injuries, the affected employees were reassigned to answering phones, shown training videos, and in some cases relegated to “even remaining in their vehicles in the parking lot . . . .”

In 2007, officials from the DA’s office and state insurance regulators arrived with a search warrant and found that workers were being handled outside the system–so much so, according to The Herald, that “[o]ne employee was given a prescription written in the manager’s name, with the understanding the medication could be given to other employees at the manager’s discretion without medical consultation.”

Perhaps the  larger issue is whether Polk and Tateoka are competent managers who were pressured by a too-stringent company policy, or were they simply a pair of goofballs who overzealously interpreted a strong-but-good-faith effort by the company?

The prosecutor is on the record for the company’s sharing blame, according to The 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.”

Certainly, we’ve such issues before, which we mentioned in our “Report Cards” post in September 2009, describing the concerns of Colorado legislators over reports of bonuses for state agency workers who denied workers comp claims.

And there’s little doubt that Smurfit-Stone with this homepage takes pride in its claims to safety. On the Web site’s “About our company” page, this is third paragraph: “When it comes to our people, safety is at the core of our operating culture. We are proud to have been recognized as the industry’s safety leader every year since 2001.”

Then, there’s a separate “Corporate Safety” page, with six paragraphs about goals, meeting objectives and so forth, including this: “We are proud to have led the industry in safety since 2001, and our performance continues to improve year after year. Our 2008 corporate safety goal was met by achieving a recordable case rate (RCR) of 0.94, making 2008 Smurfit-Stone’s safest year yet.”

Below a link to Pandemic Preparedness (with a specific bullet point admonishing workers to “stay at home” rather than coming to work sick) are three paragraphs that emphasize the RCR highlights of different divisions.

Unanswered e-mails

But what role the case that resulted in these guilty pleas played in the company’s emphasis on safety–if any–is unclear. Two separate e-mails requesting clarification from media relations personnel remained unanswered at post time.

According to The Herald and IFA, Polk and Tateoka are set to be sentenced May 20.

He may not be a terminator in real life, but that Gov. Shwarzenegger is a rip-snorter for putting state workers on furlough–so much so that now there’s seven separate lawsuits challenging the legality of the tactic, which the San Francisco Chronicle reports has affected nearly a quarter-million state employees.

Wow, if the Chronicle is correct (apparently they’re rounding up numbers, to 238,000), then all state employees are affected: according to the California State Controller’s Web site, the State Employee Demographics page shows a total of 237,731 employees, including part-time, intermittent and indeterminate workers.

Schwarzenegger says the furloughs are a cost-cutting measure for state coffers that have been ravaged by the Great Recession. Unemployment reached a record level in January, and California is one of five states sharing $1.5 billion in aid, for the areas hardest hit by foreclosures.

Whatever the total count turns out to be, the furloughs certainly involve several thousand employees of a state workers comp fund, a quasi-public agency that has one set of rules for line workers and another for execs.

Furloughs of 7,400 already ruled on, last year

We first mentioned the furloughs back in September, when a superior court ruled “that Gov. Arnold Schwarzenegger illegally furloughed 7,400 employees of the State Compensation Insurance Fund this year. . . .”

The governor’s actions have been upheld in some courts, but according to a March 20 San Francisco Chronicle piece, “An Alameda County judge ruled in December that Schwarzenegger illegally furloughed more than 50,000 employees in 68 agencies, [although] other judges have upheld the governor’s actions.”

But on Friday, Schwarzenegger took another hit when a three-judge appellate panel ruled that he “had no right to furlough about 475 lawyers who work for the State Compensation Insurance Fund.

“The Court of Appeal said the attorneys are protected by a provision of state insurance law that makes fund employees ‘exempt from any hiring freezes and staff cutbacks otherwise required by law,’ according to the Silicon Valley Mercury News.

The Chronicle had this: “The ruling by the First District Court of Appeal in San Francisco applies to about 500 attorneys and hearing officers who work for the State Compensation Insurance Fund. It is likely to affect a separate case, pending before another division of the court, that involves more than 7,000 clerical workers, support staff and other employees of the insurance fund.

“Other laws apply to most of the 238,000 state employees the governor furloughed for two days a month from February through June 2009, and for three days a month since then.”

Governor asks Supreme Court to intercede

A very interesting aspect of the seven suits is that Schwarzenegger has requested intervention from the state supreme court, which the Sacramento Bee earlier this month described as move that stunned labor unions: “Gov. Arnold Schwarzenegger’s request Tuesday for the California Supreme Court to take over seven key furlough lawsuits caught state employee unions off guard.

“Schwarzenegger wants to legally leapfrog two appellate courts now considering those cases and go straight to the state’s highest legal authority, sort of like skipping the playoffs and going straight to the Super Bowl.”

And, of course, the sheer size of the numbers grabs your attention–this from the Chronicle’s account: “At stake is more than $1 billion in back pay, plus interest, that the state would owe the workers if they won their cases.”

But here’s what really interesting, again (with our emphasis added) from the Chronicle:

“The governor’s Supreme Court request did not include suits by employees of the insurance fund, which is authorized by state law to make its own staffing decisions. Schwarzenegger’s press secretary, Aaron McLear, was noncommittal about an appeal of Friday’s ruling, saying only that the administration was reviewing its options.

“Patrick Whelan, lawyer for the union representing the insurance fund attorneys, said the ruling doesn’t apply directly to most furloughed state employees but is still encouraging.

” ‘It shows the governor’s authority is not as broad as he believes,’  he said.

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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

AIG, the giant insurer and a major player at the core of the Great Recession, has been allowed by a federal judge to begin issuing subpoenas to 400 of its competitors in the workers compensation insurance business, according to a March 16 piece at businessinsurance.com.

The ruling, which allows AIG to pursue “nonparty discovery,” is part of a larger dispute between AIG and several competitors–but extends to “discovery of practices by insurers not named in the lawsuit, AIG said Monday in a statement.”

Industry leaders involved

The fracas involves some heavyweights in the industry, including some who joined forces in the original RICO suit against AIG: “The ongoing litigation grew out of a May 2007 lawsuit against AIG originally filed by the National Workers Compensation Reinsurance Pool made up of AIG competitors and operated by Boca Raton, Fla.-based NCCI Holdings Inc. That suit alleged violations of the Racketeer Influenced and Corrupt Organizations Act by AIG, among other assertions.”

It also involves some colorful language, for what might seem an otherwise dry topic.

Let’s pick up the story in 2005 when, according to an August 26, 2009 post at an insurance law blog, “a New York state investigation revealed that AIG had, over several decades, provided false reports of its workers’ compensation premiums to NCCI and state tax authorities to evade its residual-market obligations.” Id. Thereafter, in 2006, AIG entered into settlement agreements, including a $1.6 billion settlement with New York and federal authorities. The Participating Companies contested that the settlement agreements offered full and fair restitution. Id. at 5.

“On May 24, 2007, NCCI filed suit against AIG, alleging underreporting of premium data. AIG interposed numerous defenses and asserted counterclaims for an equitable accounting and an action on an open, current, and mutual account, both of which survived NCCI’s motion to dismiss. AIG also filed a 12-count third-party complaint against 24 named companies and numerous unnamed companies. Id. at 3.”

Court dismisses NCCI suit

But in August 2009, a federal district court dismissed the suit against AIG, “holding that the NCCI failed to establish standing to assert claims on behalf of the Pool.”

That’s when AIG came out swinging, inserting itself as plaintiff, and as described at workerscompsc.com, in September 2009 amended that complaint “in its Chicago racketeering conspiracy fight alleging fellow members of the National Workers’ Compensation Reinsurance Pool conspired to suppress a state and federal probe of the systematic underreporting of workers’ compensation premiums.”

AIG’s amendment, according to Michael Whiteley, “names as defendants the pool, NCCI and 19 insurance companies. It focuses on the actions of Liberty Mutual Group, Travelers, The Hartford, Ace INA Holdings and Sentry Insurance Co. as carriers AIG says have dominated the governing board of NWCRP.

“The amended complaint, which was filed under the Racketeer Influenced and Corrupt Organizations Act (RICO), alleges that NCCI flagged significant problems with the misreporting of premiums as early as 1986 and then conspired with pool members to conceal the problem while then-New York State Attorney General Eliot Spitzer was investigating the practice at AIG.”

AIG says it was targeted as scapegoat

Furthermore, AIG alleges the whole thing was a longstanding sham-up, designed to hurt AIG.

Again from the Whiteley piece: “And AIG repeated assertions that its competitors – led by Liberty Mutual, which last year overtook AIG as the leading comp insurer in America – conspired to make AIG the scapegoat in the Spitzer probe to prevent investigators from broadening their target.

“AIG said a Liberty Mutual representative on the pool’s governing board said at a board meeting in 2005 that the Spitzer probe gave the board ‘an opportunity to get the bastards at AIG.’ “

The residual market

What’s at stake is who-owes-what to cover costs in the so-called “residual market,” the pool for employers who can’t workers’ comp coverage in the primary market. As the insurance law blog explains:

“The action concerned the workers’ compensation insurance market. Employers obtain workers’ compensation insurance coverage from insurers in what is known as the “voluntary market.” Insurers that provide coverage to the voluntary market are required by state law to provide coverage to the “residual market,” which is the market for employers who cannot obtain coverage on the voluntary market. Those employers obtain workers’ compensation insurance coverage through an individual state’s assigned risk plan. Under that plan, the amount of insurance an insurer is required to provide for the residual market is directly proportional to the amount of premiums it collects for the policy it writes for the voluntary market. Mem Op. 3″

“Therefore, ‘any company that underreports its premiums to NCCI decreases its reinsurance participation rate and the overall total used to calculate all the rates.’ Id.”

‘Common practice in the insudtry’

Looking through the various accounts of the lawsuits and countersuits, it’s hard to find any instances in which AIG denies under-reporting these premiums. After all, it did settle for at least $1.6 billion in 2006. So far, it seems like AIG is merely saying, well, everybody did it.

From the businessinsurance.com conclusion, re AIG’s most recent action: “Now AIG is seeking proof through its subpoenas that premium underreporting practices it is alleged to have engaged in were common practice in the industry.”

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Regardless of whether you’ve been hurt on the job, it’s wise to know the basics of workers compensation in case you, a friend or family member need to file a claim in the future. If you do get hurt, you should be aware of the first things to do or what to tell a co-worker who has been injured.

Sometimes an injured employee takes all the correct steps but still has trouble getting the claim taken care of; in that case here’s some information for problems with denial of benefits. If legal help is needed to help with the case, be sure to speak to a trained, experienced attorney.