Trump Policies Bad for Workers’ Compensation

Dr. Richard Victor

Dr. Richard Victor, an economist who founded the Workers’ Compensation Research Institute (WCRI) 35 years ago, just presented a paper at the WCRI National Conference in Boston.  He indicated that federal policies on immigration and health insurance promise to make worse the challenges the United States faces by an aging workforce and a widespread labor shortage. He noted that workers’ compensation claims could double and overall costs could expand by over 300% in the next dozen years, without any increase in benefits to workers.  External forces could bring far more cases into the system because of a number of forces, including an aging workforce, labor shortage, slowdown in immigration, and more shifting to workers’ compensation claims that should be paid by group health insurance. Dr. Victor projected current claims out a dozen years to 2030 indicating that claims should actually be down to about ¾ of today’s numbers, but external factors will more than overtake that favorable percentage. Labor shortages caused by baby boomers retiring will increase injury rates.  Research indicates that the older workforce will mean an increase in lost work days and more injuries and a real impact on labor shortage as more baby boomers retire. Dr. Victor indicated “These labor shortages, which will be longer and deeper than anything we have experienced, will lead to significant increase in workers’ compensation claims and longer durations of disability.” During a period of labor shortages, employers relax hiring standards and hire workers they would not have hired in a normal labor market, including workers who are less capable. The overall labor shortfall leads to more workers’ compensation claims.

The Immigration Factor:

Economists have seen immigration as a factor that mitigates against the impact of the labor shortage. The Trump Administration, changing federal immigration policy, will further tighten labor markets and prolong the duration of a labor shortage. Moreover, Trump’s “anti-immigration rhetoric” also discourages people to come to America.  In health care, Victor noted that one in six health care workers is foreign-born including 27% of physicians and surgeons, 15% of nurses, and 22% of home health aide, each of which effects the workers’ compensation system.

Health Insurance

A shortage of people with adequate health insurance is also a problem for workers’ compensation. Health insurance deductibles have risen from the hundreds to many thousands of dollars, and this new reality causes more workers to go without or delay getting medical care for an injury or illness. When they can no longer ignore their condition, many claim it as a work-related condition and seek workers’ compensation (he cited a Rand Research study indicating workers with high deductible or co-insurance plan postponed care in over one-third of cases of the most common kind of workers’ compensation claims – soft tissue injuries.” As the number of workers who lose their insurance grows (since the Trump Administration and Congress ended subsidies and other aspects of the Affordable Care Act) case shifting form health insurance to workers’ compensation could have a major effect, ballooning workers’ compensation claims by as much as 35% in the next dozen years.

Victor’s conclusion: “You end up with a 300% increase in workers’ compensation costs without increasing benefits to injured workers.”

 

Center for Progressive Reform Launches National Database of Crimes Against Workers

Today’s post comes from guest author Paul J. McAndrew, Jr., from Paul McAndrew Law Firm.

Every year are a few work-fatalities that garner criminal prosecution and conviction. This is out the thousands of work-fatalities that occur every year. Until now, there’s been no one keeping a record of these fatality-causing events.

Now, the Center for Progressive Reform’s (CPR) Katie Tracy has reviewed court records, investigation files, and news stories to identify them many of them. After assembling information on more than 75 criminal cases from 17 states, she knew it was time to share all of it.

The result is CPR’s user friendly and publicly-available at Crimes Against Workers Database. I encourage you to explore this valuable tool. We believe that the awareness caused by sharing this information nationally can be a catalyst for legislators and others to understand the scope and scale of these crimes.

Temporary Help Employees Can Sue Their Employers?!

Temporary Help Employees Can Sue Their Employers? …. Well, maybe not.

The Wisconsin Court of Appeals considered the following issue: can a temporary help employee who was injured at work elect not to pursue a worker’s compensation claim and, instead, actually sue their employer in civil court?  The Court said the answer is “YES.”  

Wait….what?!  That is not how the worker’s compensation system was supposed to work.  Cue panic mode for employers who used temporary help employees.  (or at least until the legislature “fixed” this).

The necessary background (and backbone) of the worker’s compensation system is the 100+ year old “grand bargain” between employers and employees.  Employers agreed to provide smaller, defined benefits regardless of fault for the work injury, while employees gave up the right to tort damages (like pain and suffering) in exchange for those benefits.   Thus, worker’s compensation became the worker’s exclusive remedy against the employer.  A worker cannot sue their employer (or co-worker) for a work injury.

That exclusive remedy also extends to temporary help agency situations.  Under the traditional interpretation of the worker’s compensation act, a temporary help employee is barred from any tort lawsuit against their employing temporary help agency and against the employer where they were placed/working.   This was the interpretation…or so we thought.

In Estate of Carlos Esterley Cerrato Rivera v. West Bend Mutual Ins Co., the Court of Appeals allowed a temporary help employee’s tort lawsuit to proceed against the placed employer.  The case arose from tragic and slightly convoluted facts.  Three temporary help employees all died in a motor vehicle accident.  All three were driving in the same car and performing services for Alpine Insulation (insured by West Bend Mutual).  Mr. Rivera was a temporary help employee of Alex Drywall, who sent him to work for Alpine Insulation.  Alpine, in turn, paid Alex Drywall for the services.  The driver, whose negligence resulted in the accident, was also a temporary help employee, but of another employer.

Mr. Rivera’s estate did not pursue a claim for worker’s compensation death benefits.  The estate instead sued the placed employer, Alpine Insulation, in circuit court for tort damages.   Alpine and West Bend Mutual argued that the work comp exclusive remedy protects them from these types of lawsuits.

[Note: the facts are unclear about whether there was an “election” not to pursue a work comp claim.  There could have been difficulties by the work comp carrier in determining if there were any eligible surviving dependents.  There also could have been issues involving establishing the employment relationship with Alex Drywall.  This is mere speculation, but it is interesting to think about how the case genesis]

The Court of Appeals interpreted the relevant statutes to allow the tort suit to proceed!  Specifically, Section 102.29(6)(b)1. says that “no employee of a temporary help agency who makes a claim for compensation may make a claim … in tort against … any employer that compensates the temporary help agency for the employee’s services.”   The Court ruled that because Rivera’s estate had never pursued a worker’s compensation claim, the statute actually allowed the tort suit.

Based on the immediate outrage and backlash in the employer community (and specifically the massive amount of employers who use temporary help employees), the Wisconsin legislature moved swiftly to “fix” this perceived loophole in the law.   The legislature passed 2017 Wisconsin Act 139 (effective March 1, 2018). The Act amended the governing statutes in Section 102.29 to now state that “no employee of a temporary help agency who has the right to make a claim for compensation may make a claim … in tort against … any employer that compensates the temporary help agency for the employee’s services.”  

Accordingly, for a fleeting moment, it appeared injured temporary help employees could elect to forego a work comp claim and maintain a civil lawsuit against their placed employers for pain and suffering.   The legislature effectively restored and reiterated the exclusive remedy provision in temporary help agency situations.  If a temporary help employee is injured on the job, worker’s compensation remains their only recourse against the temporary help employer and their placed employer.

Employee Workers’ Compensation Fraud? No – Employer Fraud Rampant.

Attorney Leonard Jernigan compiled a list of the biggest workers’ compensation frauds

My friend and colleague Len Jernigan has again compiled the Top 10 Workers’ Compensation Fraud Cases for 2017.

 His results emphasize a theme that has been present for the last dozen years during which he has been compiling a “Top 10” list.  This year the Top 10 non-employee fraud cases resulted in fraud totaling just under $700 million.  Employee fraud cases resulted in zero fraud.  Seven of the Top 10 cases were from California, two from Texas, and one from Tennessee.

The cases involve health care fraud, where doctors prescribed inappropriate medications to pharmacies they operated, overbilling schemes for durable medical equipment, mail fraud, kickback schemes, referral of patients for unnecessary care, and prescribing unnecessary treatment.

A recurring theme, falsifying documents and under-reporting payroll to workers’ compensation insurance companies also appeared in the Top 10.  In one notorious case, the owners of a hotel hid the existence of 800 housekeeping and janitorial workers to avoid paying workers’ compensation insurance rates and payroll taxes.  The list also contains references to dishonest employers misclassifying more and more workers as independent contractors.  This misclassification is a fraud that wrongfully denies these employees workers’ compensation when injured, denies the government millions of dollars in payroll taxes to support Medicare, Social Security, Unemployment Compensation, and the fundamental rights of the workers.  Simply put, this misclassification is another employers shift the cost of accident and injury to the taxpayers and the fraud continues.

Small Businesses Don’t Have Workers’ Compensation Insurance

In a new study by Insureon, less than 1 in 5 small businesses carry workers’ compensation.  Although all State regulations require that small businesses have workers’ compensation, this study indicates that workers’ compensation is the least purchased insurance by small businesses.  (In Wisconsin, employers must have workers’ compensation if they hire only one employee paying more than $500 in a quarter or hire any three employees at any one time.)  The President of Insureon Jeff Somers said in an interview with workerscompensation.com that “small businesses often fail to carry workers’ compensation because they truly do not understand their insurance need; there is a major lack of awareness and education which insurers and brokers can alleviate.  One reason for this protection gap is a misplaced anxiety around how much workers’ compensation coverage actually costs, but when you compare the small price. . . the protection workers’ compensation provides makes an investment worth it.”

According to the Bureau of Labor Statistics, almost 3 million workplace injuries were reported by private industry employers in 2016, with nearly one-third resulting in time away from work.  The Insureon statistics showed that one in three businesses reported an incident that could have been covered by a workers’ compensation insurance policy and that one-fifth of all small businesses that filed for bankruptcy in 2016 did so because of lawsuits.  Workers’ compensation protects an employer from a lawsuit.  (In Wisconsin a worker injured by an uninsured employer has access to the Uninsured Employers Fund.  After the Fund pays workers’ compensation benefits, the Fund then pursues reimbursement from the employer.)

The Three Stooges Get Workers’ Comp: Why Backs Trump Knees and Shoulders in Wisconsin

Wisconsin’s unique workers’ compensation system contains one significant distinction, between “limb” injuries and “spine” injuries. Limb injuries (shoulders, elbows, wrists, hips, knees) are not worth as much to the injured worker as a spine injury.

To illustrate this problem to my law students, I use the 3 Stooges example: Moe, Larry and Curly work for a tree service earning $15 per hour or $600 per week. A tree branch falls on all three of them, injuring Moe’s shoulder, Larry’s knee, and Curly’s neck. They are all off work for 10 weeks while they are healing from surgeries required by the injury. During that time they received Temporary Total Disability at two-thirds of their wage or $400 per week, a total of $4,000 for each of them. After they are done healing, all three of their doctors assign a 10% functional disability rating for their injury and a 10- pound lifting restriction, which their employer cannot accommodate.

Moe gets 10% of 500 weeks for his shoulder payable at $362 per week, or a whopping total of $18,100 – making his total workers’ comp recovery just over $20,000.

Larry gets 10% of a knee or 42.5 weeks at $362 per week, or $15,385 – making his total recovery just under $20,000.

Curly, who had a neck injury and surgery, gets 10% of 1000 weeks at $362 per week, or $36,200. However, since he cannot return to the tree company, he also gets a recovery for his Loss of Earning Capacity. Based on his 10- pound restriction and his very limited education, he is probably limited to a minimum wage or part time job which would result in a 50% Loss of Earning Capacity, payable for 500 weeks or a total of $181,000. If his disability is serious enough, he may in fact receive his $400 per week for the rest of his life, bringing his total to well over a half million dollars.

That’s why many workers’ compensation attorneys (and insurance companies) focus their attention on spine injuries.

“Independent” (or are they “Adverse”!) Medical Examinations

Don’t get mad…get an attorney.

Was your worker’s compensation claim just denied by an “independent” medical evaluator?  You are not alone.

Following a work injury, the insurance company legally can require the injured worker’s attendance with an independent medical evaluator, or IME.  The IME doctor is not the worker’s doctor, and the worker does not have to agree with the doctor.  The problem, however, is that many IME doctors disagree with the causation opinion of the treating physician, and then the IME opinion effectively serves as the default legal opinion until the case either goes to court or is settled.   That means that the insurance company’s hired doctor can be used to cut off a worker’s benefits–forcing the case into litigation.

If the treating physician disagrees with the IME report, a worker should consult with an attorney to dispute the IME denial.  After all, the IME is hired by the insurance company.

A recent in-depth article pointed out the potential for bias by insurance company-hired IMEs: Long-time judge: Some ‘independent’ doctors routinely rule against injured workers.  For many in the work comp world, a more appropriate term for these hired doctors is adverse medical examination.  Certainly that is not true of all IMEs, but some physicians–especially those who are not actively seeing patients–seem to curry favor with the insurance company by denying a worker’s medical claim.

When the insurance company doctor disputes a claim, the injured worker needs their own treating doctor and their attorney to push back against the IME denial.

 

Limits on Medical Treatment Options for Injured Workers?

Doctor choice.  And choice of treatment.  The Wisconsin way.

Unlike systems in other states, an injured worker in Wisconsin has access to their own doctor and what that doctor recommends for medical care.  Wisconsin does not have specific directed care or a panel of worker’s compensation doctors. The choice of medical care and experienced practitioners produces some of the fastest return to work rates in the country, along with low costs per claim.

The only “limit” is the “two doctor rule,” where a Wisconsin injured worker has the right to see their own doctor or to get a second opinion from another doctor.  While any doctor beyond the “two doctor” limit would be excluded from coverage (unless mutually agreed to by the work comp carrier), a worker has the right to see any doctor that is part of the referral chain from the two doctors–making doctor choice virtually unlimited if the worker obtains an appropriate referral!

The recommended medical care should be covered by the work comp carrier is reasonable and necessary to cure from the effects of an injury.  Unless the insurance company has a contrary medical opinion (through an adverse, or “independent” medical evaluator), they generally are responsible for the medical treatment recommended, whether that is therapy, office visits, prescriptions, injections, surgery, etc. 

Other states place limits on the type of treatment a worker can receive.  A recent article revealed that Ohio legislators are limiting when injured workers can have certain prescription medications or surgery (Ohio Imposes Strict Rule on Workers’ Back Surgery, Opioids).  Ohio is required a worker undergo 60 days of “alternative care”, potentially without opiate use, before having a work-related back surgery.

To date, Wisconsin’s legislature preferred the medical expertise of its physicians and their treatment recommendations.  Relying on experienced, quality medical practitioners allows workers swift access to the necessary medical care and recommendations–and puts them back in the workplace fast!