(c) 2018 Jon L Gelman, All Rights Reserved.

Wednesday, November 26, 2008

A Bailout for Workers’ Compensation

The issues facing the present economic downturn are not necessarily the same that existed  during the great depression and therefore the outcome may not be the same. The US workers' compensation system, a patchwork of State programs, is seriously being challenged during the present tough economic times. The past does identify a pattern that may require similar solutions. 

 It has been reported that the US government is contributing vast sums to bring the economy out of the ditch. "In the last year, the government has assumed about $7.8 trillion in direct and indirect financial obligations. That is equal to about half the size of the nation’s entire economy and far eclipses the $700 billion that Congress authorized for the Treasury’s financial rescue plan."

Workers’ compensation is not necessarily an anti-cyclical market. It is a political entrenched program. The present economic crisis will change the social and economic fabric of the country. "....the most troublesome unknowns are how the maze of protections for investors and consumers will change economic and political behavior in the future." The NY Times reported that levels of unemployment may reach 10%, a number used to define a depression.

During The Great Depression the US workers’ compensation system had an additional unique challenge confronting it. Silicosis claims were challenging Industry with uncertain economic outcomes. The insurance industry rushed to the rescue by advocating that silicosis and other occupational diseases be brought within the umbrella of the workers’ compensation system.

Activity soared within the workers’ compensation arena. The pace continued through the pre and post World War 2 years as the legacy of disease and death continued. Asbestos claims and other toxic tort claims continued the spiral. When workers’ compensation was unable to fully compensate the victims, the activity switched to the liability arena and claims proliferated and activity soared. Insurance exhaustion, corporate bankruptcy, an aging workforce, lack of manufacturing in the US and Federal Multi-District litigation. soon lead to a decline litigation activity.

Confronting the present workers’ compensation programs are the residual issues generated by  the expansion of occupational disease litigation program of the 1930’s. Cost shifting from workers’ compensation to other programs has resulted in workers’ compensation system becoming a collection agency and has resulted in bureaucratic stagnation. Occupational disease claims created major cost shifting of medical costs to other systems including: temporary disability benefits, major medical and Medicare and Medicaid, disability pension and Social Security.

 In the 1930’s the Federal government though the Department of Labor stepped in to save the system. David Rosner and Gerald Markowitz in their volume, Deadly Dust, point out that without national standards and a uniform approach, the 1930s' system system would not survived that moment in time.

The economic factors of The Great Depression now hover  over the present workers’ compensation system. The Federal Government now needs to intervene and bail out the State systems and rethink the medical delivery system that has generated tension in medical and reimbursement programs.

Tuesday, November 25, 2008

AAJ Publishes Report on Insurance Companies

The American Association for Justice (AAJ) has published a report, "Tricks of the Trade: How Insurance Companies Deny, Delay, Confuse and Refuse."

"The U.S. insurance industry has trillions of dollars in assets, enjoys average profits of over $30 billion a year, and pays its CEOs more than any other industry. But insurance companies still engage in dirty tricks and unethical behavior to boost their bottom line even further."

The repoort describes methods that it alleges that insurance companies utilize to make money at the expense of consumers.
The tactics insurance companies use against consumers include:

Denying Claims: Some of the nation’s biggest insurance companies – Allstate, AIG, and State Farm among others – have systematically denied valid claims in an attempt to boost their bottom lines. These companies have rewarded employees who successfully denied claims, replaced employees who would not, and when all else failed, engaged in outright fraud to avoid paying claims.

Delaying until Death: Many insurance companies routinely delay claims, even going as far as to lock paperwork in safes, knowing full well that many policyholders will simply give up. In the words of one regulator, “the bottom line is that insurance companies make money when they don’t pay claims… They’ll do anything to avoid paying, because if they wait long enough, they know the policyholders will die.”

Confusing Consumers: Insurance contracts are some of the densest and incomprehensible contracts a consumer is ever likely to see. More than half of all states have enacted “plain English” laws for consumer contracts, yet many Americans still do not fully understand the risks they are subject to.

Discriminating By Credit Score: Insurance companies are increasingly using credit reports to dictate the premiums you pay, or whether you can even get insurance in the first place. The practice penalizes senior citizens with little credit, those who responsibly pay bills every month with cash or check, or those who have suffered financial crisis through no fault of their own.

Abandoning the Sick: Health insurers looking to cut costs have taken to retroactively canceling, or rescinding, the policies of people whose conditions have become expensive to treat. Some insurance companies have even offered bonuses to employees who meet “cancellation goals” – cancer patients in the middle of chemotherapy have even been targeted.

Canceling for a Call: Many people are rightly reluctant to make small claims on their home insurance for fear their insurance company will raise their premiums. But few realize that insurance companies often refuse to renew a policy just for making a phone call. Often an insurance company will count an inquiry over the phone as the same as a claim, and then they will do everything in their power to drop you.

CMS Announces Future Tele-Conferences for MSP Reporting

November 17, 2008 Updates - Future Town Hall Teleconference Meeting Dates

January 22, 2009 - Liability (including Self-Insurance), No-Fault Insurance and Workers' Compensation

January 28, 2009 - Liability (including Self-Insurance), No-Fault Insurance and Workers' Compensation

February 25, 2009 - Liability (including Self-Insurance), No-Fault Insurance and Workers' Compensation

March 25, 2009 - Liability (including Self-Insurance), No-Fault Insurance and Workers' Compensation

April 22, 2009 - Liability (including Self-Insurance), No-Fault Insurance and Workers' Compensation

CMS Publishes Intrim Record Layout for Mandatory Reporting

CMS (The Centers for Medicare and Medicaid Services) has published a proposed format for reporting data under the Medicare Secondary Payer Act. Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (P.L. 110-173) madates reporting where, "...the settlement, judgment, award or other payment date is July 1, 2009 or subsequent and claims on which ongoing responsibility for medical payments exists as of July 1, 2009, regardless of the date of an initial acceptance of payment responsibility."

NJ Senate Passes WC Coverage Legislation

The NJ Senate passed (40-0) a substituted bill requiring the investigation of cases where employers fail to obtain workers' compensation coverage. The substituted bill adopts the suggestions of Governor Corzine who had proposed some changes in his October 2008 condititonal veto message.

The legislation requires the Insurance Fraud Prosecutor (IFP) to establish a liaison with the NJ Department of Labor and Workplace Development and authorizes the investigation of cases involving failure to obtain Workers' Compensation coverage.

Wednesday, November 19, 2008

CMS Announces Intention to Clarify MSP Recovery Language

CMS has announced it intends to clarify the language in recovery scenarios where occupational exposures occurred prior to the effective date of the Medicare Secondary Payer Act.

Barbara Wright of CMS said at a recent town hall meeting,...
"If all exposure (peaks) before 12/5/80, then it is CMS policy that it will not assert a recovery claim with respect to any liability settlement. And that can depend on -- again I’ll use asbestos as the example. Let’s say that you’re suing five different entities. I’ve seen situations where three of the entities -- all exposure connected with them -- did in fact end before 12/5/80 wherefore at the last one there was some exposure after 12/5/80. We are looking at language that could potentially eliminate reporting when it’s clear that the exposure ended before 12/5/80. "

As CMS ramps up for mandatory insurance carrier reporting, additional town hall conferences have been scheduled.

National Health Leaps Ahead on Agenda

It should no surprise to anyone that the Obama Transition is already targeting national health care as a first year agenda item. With Senator Edward Kennedy and the Clintons anticipated to be major participants in the new Obama Administration, the health care issue has now leaped to forefront.

Senator Kennedy's return to the Senate this week coincided with his announcement of the formation of 3 working groups to assist in the development of heath care legislation. He announced the following participants to his team: Sen. Hillary Rodham Clinton (D-N.Y.); Sen.Barbara Mikulski (D-Md.) and Tom Harkin (D-Iowa). They planned a meeting for today in an effort to plan out the immediate effort. This signals that health care reform will emanate from the Congress and not The White House.

Insurance company reaction was immediate. The carriers offered full medical coverage for pre-existing coverage providing that there was a global requirement for all to be insured.

As this program rolls out it is most certainly anticipated that workers' compensation medical coverage be included in the global effort. Studies have long shown that the litigation progress delays the delivery of benefits, increases administrative costs and depletes much needed medical resources from health research efforts.

Monday, November 17, 2008

The Rush to Follow Oregon

Praising of the Oregon workers' compensation system continues in earnest by the insurance industry. The Workers' Compensation Research Institute's (WCRI), Duncan Ballantyne, presented the winning factors about the Oregon system at a seminar to reform the Oklahoma system.

A reform movement has been launched in Oklahoma to overhaul the Oklahoma system. Orgeon contines to have very low workers' compensation rates and utilizes an administrative system to resolve work related claims. Legislation has been authored by Rep. Mark McCullogh to abolish the adversarial system in Oklahoma.

Thursday, November 13, 2008

Workers' Compensation Medical Benefits are in Critical Condition

Now that Barach Obama is a going to be at the helm of the US, greater attention is being focused on the need for a national health care system incorporating workers’ compensation medical coverage. With private insurance companies failing, unemployment increasing, the cost of medical care soaring, more attention has now been placed on the elimination of medical care as a workers’ compensation benefit paid by Industry.

It is not all surprising that Dr. Peter Barth reported to the WCRI Conference in Boston, that workers’ compensation programs may be swept up into a national health care system. He reminds us that this was attempted in the Clinton proposal. The enactment of such a proposal looks even more urgent now.

The medical system overall is now being stressed by: an aging workforce; medical conditions manifested by stress and aging; consumerism in health care; the attempt to shift costs from major medical plans and CMS to workers’ compensation; new and expensive treatment modalities, procedures and pharmaceutical products,and the expansion of palliative and “end of life care.” It is anticipated that the average cost may amount to $500.000 per claim.

The workers’ compensation system just can’t deliver medical treatment quickly and cheaply enough. The systems are frough with administrative costs delay. It is adversarial requiring legal timetables of investigation, litigation, adjudication and appeals. The progress of disease is not subject to court rules or judicial administration. Immediate and emergent medical treatment protocols follow a biological timetable not a legal one.

National health reform that embodies workers’ compensation as an element is a long awaited solution to coordinate and advance the delivery of health care to all Americans. Old, inefficient and archaic systems need to be abandoned if progress is to advance. Moving forward to the inclusion of workers' compensation into a universal and nationalized program for health care is an important and innovative change. The change is crticial and necessary to advance with science, the economy and the social structure of America.

Tuesday, November 11, 2008

“Going Green”-Alternate Dispute Resolution Proposed for Comp

A proposal has been introduced in the NJ Assembly formalizing an alternate dispute resolution (ADR) program for workers’ compensation. The proposal would allow the establishment of such a system through collective bargaining units and insurance carriers and group self-insurance plans.

Such programs have been utilized throughout the United States for decades and are commonly called “carve-out” programs. Labor and Industry have found them cost-effective and an expeditious manner of handling work related benefits. The cost of the NJ system, has been estimated at $1.8 Billion. The Star Ledger, in a series of articles entitled “Waiting in Pain,” highlighted the frustrations that have emerged because of delays encountered in the present system. The series focused on delays caused by multiple and fragment hearings.

The proposal has been introduced at a time when workers’ compensation systems and Industry as well as injured workers are seeking ways to reduce the spiraling costs of the administration of workers’ compensation and to enhance the delivery of benefits. Workers’ Compensation is struggling to reduce costs and employ environmentally friendly systems. The ADR program is an attempt to reduce costs and reduce environmental impact.

“Going Green” is a concept now being utilized by administrative and judicial systems throughout the country. One company, CourtCall®, utilizes telephonic conferences to avoid court appearances to help save the environment. Workers' Compensation claims in NJ require multiple appearances of the parties for both pre-trial conferences and hearings over extended periods of time.

Some reviewers have suggested elimination of the high cost of workers’ compensation program entirely as a value no longer justifying tort immunity. Instituting an ADR system, in a time of economic stress and increasing environmental costs associated with administration of a formal system, may offer an option to explore.