Adjuster X

Citizen Kane

By: | March 3, 2014 • 3 min read
This column is based on the experiences of a group of long-time claims adjusters. The situations they describe are real, but the names and key details are kept confidential. Michelle Kerr is the editor of this column and can be reached at [email protected]

Cynthia Kane, 58, allegedly suffered shortness of breath due to breathing in petroleum fumes over a prolonged period. Kane had already “lawyered up,” so a statement was out of the question. Her file during her 15 years with Union Manufacturing raised no suspicions. Kane was a nonsmoker, and she had never complained to the company nurse about pulmonary problems.

I arranged to tour Kane’s work location. It was separated from the machine shop, where the actual manufacturing took place, by a floor-to-ceiling wall with glass windows. The assembly area was not particularly dirty, and I verified that the HVAC system was up to specifications and maintained twice annually.

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Kane didn’t appear to be in any distress as she did her job.

Kane’s shift ended at 5 p.m., so I returned to the plant at 4:45 that afternoon and waited in the parking lot. I followed her as she made her way home in a fairly new two-door sports car. She stopped at a dry cleaner on the way. I parked and waited nearby for 10 minutes. When she didn’t come out, I decided to
go in.

This was a large operation with the cleaning machines in the back room. There were huge fans throughout the store, but even so there was an unmistakable kerosene-like smell from the solvents used in the dry cleaning process.

At the counter, I asked the clerk about dry-cleaning bedspreads while I strained to see into the back of the store. It was evident Kane was working.

I scratched my head. Why didn’t her attorneys name the shop as a co-defendant on the claims petition? It had far greater pulmonary exposure to airborne contaminants than Union Manufacturing.

The next day, I went back to the dry cleaner and asked to speak with Kane. The flustered counter person said they had no employee by that name. I went back to the dry cleaners three more times during the next two weeks, and each time, I saw Kane’s car there.

I arranged to have a disability evaluation by a pulmonologist, who confirmed that Kane had a mild pulmonary disability (5 percent PPD rating). After reading my report, the doctor concluded the condition was not due to her work at Union Manufacturing. Kane’s attorney had a disability report rating Kane at 25 percent PPD.

I couldn’t fault Kane for wanting a part-time job to help pay for living expenses (and her sports car), but she left me no choice but to deny the claim against Union.

I called her counsel and explained that we’d have to go to trial. He was incredulous, until I explained my findings.

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“Your client didn’t tell you about her ‘under the table’ deal at Salerno’s Dry Cleaning, did she?” I asked him. “I personally observed her working there on three different occasions, and noted the smell of the dry cleaning solvent was very strong.

“I am willing to bet that exposure is the proximate cause of any pulmonary disability she has, rather than from a clean and temperature-controlled environment at Union Manufacturing Co. My examining physician agrees.”

The attorney reluctantly agreed to withdraw the petition. Kane continued to work at Union, and whether she kept her night job at the dry cleaner wasn’t my concern. A good investigation paid off and the claim against Union Manufacturing hit a snag.

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Regulatory Trends

Beware: Increased OSHA Enforcement Ahead

Experts explain what changes employers can expect from OSHA in the near future.
By: | May 2, 2016 • 10 min read
Inspecting

Higher penalties, threats to traditional safety incentive programs, and changes to when — or if — post-accident drug testing is allowed are possible changes coming from the Occupational Safety and Health Administration this year, according to two industry experts.

The landscape is increasingly turning into more of a “gotcha” mentality, they suggested, meaning employers need to be especially vigilant about crossing their T’s and dotting their I’s when it comes to issues involving the agency.

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During a recent webinar, the two revealed some of the sobering new realities and offered suggestions for employers. Among the issues discussed is what they say is OSHA’s increased publicizing of employers that are fined by the agency for violations.

“The one thing that really sticks in everybody’s craw is the press releases,” said Susan Wiltsie, an attorney with Hunton & Williams. “It used to be they’d just put out press releases for fatalities or huge penalties, or when they are big deals. Now, they do it in more than that. I had an ergonomics settlement where the fines were less than $10,000, and we got a press release.”

The Occupational Safety and Health Administration’s increasing use of press releases is part of what many experts have said is a plan to embarrass and give incentives to employers to maintain safer workplaces.

Instead of issuing press releases for violations amounting to $50,000 as was done in the past, they are now being issued for smaller violations. Employers penalized by OSHA may want to do whatever is necessary to avoid the negative publicity.

“My message to clients is, ‘it’s not yet in the news here; let’s try to do the right thing,’” said Don Enke, director of risk control services at Safety National. “The thing that sticks out to me is, regulation by shaming and press releases, which I just think is a terrible way to enforce.”

Fines Increasing

The agency will likely be issuing many more press releases later this year since fines will soon be increasing.

As of August, employers will likely see higher penalties for Occupational Safety and Health Administration violations. Legislation signed by President Obama allows the agency to increase its fines for the first time in years.

The Occupational Safety and Health Administration’s increasing use of press releases is part of what many experts have said is a plan to embarrass and give incentives to employers to maintain safer workplaces.

According to the speakers, OSHA was one, if not the only, agency that was exempt from increasing its fines for most of the last two decades.

The new legislation allows OSHA to make a one-time catchup assessment reflecting inflation from the period 1990 to 2015, as well as annual increases based on inflation. The cap, according to the speakers, is $150,000.

“You could be looking at fines increasing anywhere between 75 to 80 percent beginning this fall,” Enke said. “So when you do the math, a ‘willful’ or a ‘repeat’ violation that typically carries a maximum penalty of $70,000 could be $120,000. A ‘serious’ or other than serious violation that typically carries a maximum $7,000 penalty may be closer to $12,500 to $13,000.”

Wiltsie and Enke discussed a variety of OSHA-related topics during a recent Out Front Ideas with Kimberly George and Mark Walls webinar, sponsored by Sedgwick and Safety National.

Safety Incentive Programs

Many employers are confused about what is now acceptable to OSHA in terms of safety incentive programs. As the speakers explained, there is no hard and fast rule saying an employer may or may not have such a program, which have been used for many years.

“Really, the debate is whether or not OSHA feels like it’s aligned with their view of what an effective safety incentive program is,” Enke said. “I think what OSHA is looking for is, ‘does your program have characteristics that would compromise safety, discourage reporting a claim, or even delay reporting a claim?’ They definitely don’t want anything delaying reporting. And they don’t want anybody retaliated against if they report a claim.”

Traditional safety incentive programs often reward employees for having a certain number of days without any injuries. However, that could discourage employees or their supervisors from reporting an injury, a concern for OSHA.

“What I’m seeing in the workplace with various clients is more of a progressive program of leading indicators vs. lagging indicators,” Enke said. “It’s recognizing employees for various proactive safety behaviors. That is where I’m seeing more progressive programs or employers moving in that direction, where it’s part of their safety culture.

“They’re getting employee buy-in and ownership, and they’re making employees part of the program where they are involved with hazard indications, reporting near misses, reporting unsafe conditions, even involved with audits, training programs — even taking online training courses.”

The concern about safety incentive programs was heightened recently when OSHA sought public comments during the rulemaking for a separate issue. The proposed rule in question would require employers to report their OSHA recordable injuries for publication.

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“That rule, when it went for public comment was a proposed rule that would require employers with more than 250 employees to do quarterly reporting of their recordables to OSHA and smaller employers to do it annually,” Wiltsie said. “But what OSHA did in a nasty, sneaky way was to extend the comment period to ask for comments about incentive programs. … This sneak proposed rule about incentive programs and OSHA retaliation also is likely to include some pretty nasty stuff about drug testing.”

Drug Testing

There have been some estimates that up to one-third of workplace accidents involve workers impaired by drugs and/or alcohol. But Wiltsie said OSHA wants to discourage post-accident drug testing because it could cause impaired employees to delay reporting their accidents.

“You think?” she said. “Of course they are not going to report their accident if it resulted from their drug and alcohol use until they’ve sobered up. That’s the whole reason why employers need these policies requiring immediate reporting so they can test the employee before they’ve sobered up and find out whether drugs or alcohol contributed to the accident and of course put that person into the comp system so they can get the medical coverage they need through comp; and, finally, because we’re all good guys not bad guys, to fix whatever the safety issue was if there is a safety issue that contributed.”

“Do we really want OSHA deciding what is and isn’t acceptable entertainment in this country? Look at what else they could go after — horse racing, NASCAR, the NFL. All that’s now fair game. It shows how controversial OSHA’s approach has gotten.” — Susan Wiltsie, attorney Hunton & Williams

Wiltsie believes OSHA wants post-accident drug and alcohol testing allowed only if it meets the definition of “reasonable suspicion” that the worker was impaired. She questions what is supposed to happen if there were no managerial witnesses to an accident or someone with reasonable suspicion training.

“You know OSHA’s going to be all over that and consistent with these days with OSHA, what the employee says is deemed to be true and what the management says is deemed to be false,” Wiltsie said.

“So if management says there’s reasonable suspicion and the employee says ‘oh, but I didn’t have anything to drink, I’m not high, I didn’t take any prescription drugs that weren’t my prescription,’ they are going to believe the employee. So this is going to be a hot mess.”

General Duty Clause

OSHA’s use of the general duty clause to penalize employers is another concern among employers. The general duty clause requires employers to provide a workplace that is free from recognizable hazards causing or likely to cause harm to employees.

Although a fundamental part of the OSHA Act, the general duty clause has become “extraordinarily controversial” in the last few years, Wiltsie said. “The case that got everybody’s attention was the Seaworld case. For the first time, OSHA was using the general duty clause to address areas of what we look at as entertainment. They are not statutorily prohibited from doing that, but it was new terrain.

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“This year, there are no more orca shows at Seaworld. Do we really want OSHA deciding what is and isn’t acceptable entertainment in this country? Look at what else they could go after — horse racing, NASCAR, the NFL. All that’s now fair game. It shows how controversial OSHA’s approach has gotten.”

According to Wiltsie, ergonomics and workplace violence are also areas where OSHA is using the general duty clause to fine employers. “Oh my goodness, prisons and health care centers, particularly mental health facilities. OSHA is hammering them under the general duty clause because they can’t control people who are otherwise predisposed either because they are felons or they have significant mental health issues that make them have a tendency to violence,” she said.

“How on Earth is a psychiatrist or a prison guard supposed to control that, and yet OSHA’s making that the employer’s responsibility.”

A third category of “extreme controversy” is chemical exposure limits. “On the regulatory horizon is a very innocuous sounding pre-rule called the ‘revocation of obsolete health,’” Wiltsie said.

“What OSHA wants to do through that rulemaking is to eliminate Permissible Exposure Limits that are currently OSHA standards; just completely strike them out so they can use the general duty clause to enforce PELs of chemicals that they want to use, not the ones that the law currently requires. That’s going to be a big deal.”

Joint Employment

Employment situations in which more than one company is involved can be tricky in terms of determining who is responsible for an employee’s health and safety. The millions of temporary workers is a prime example.

“From my standpoint, OSHA’s view is both the host employer and the staffing agencies bear joint responsibility for compliance, safety training, health and safety. When it comes to regulatory requirements, they both bear responsibility,” Enke said.

“We’re seeing citations where both employers and the agencies are negligent. For employers, they can be cited for violations whether under multi-employer enforcement policies or jointly for different violations.”

Enke related an incident in which both a host employer and temporary agency were fined for failing to implement a hearing conservation program. “A shocker to me,” he said. “That gets me thinking about contract employees. What are the specifics around that?”

“OSHA is trying to be transparent,” Wiltsie said. “What they are trying to accomplish is to cite everybody; make every employer who’s in a given workplace take responsibility for the safety of that overall workplace. I think practically it’s unfeasible.”

The speakers suggested employers make sure their contract language with temporary agencies is clear in terms of which organization has responsibility for which issues. By working things out on the front end, employers may avoid OSHA citations later on.

“My rule of thumb is to treat temp workers no differently than staff employees,” Enke said. “Whether those temp workers are used for 60 or 90 days, don’t treat them any differently. That includes medical surveillance, safety orientation training, personal protection equipment, etc. That’d be my recommendation. I’d be hard-pressed to treat them any differently, given what OSHA is doing.”

Additional Solutions

“Shore up your safety programs,” Enke advised. “In this environment with OSHA, they are looking for every opportunity to sink their teeth into you from a violations standpoint. Be diligent, look for gaps in your program, correct them. Don’t be lax. And by all means, if you’ve been hit with a prior violation, do what you can to prevent a recurrence.”

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Taking shortcuts and failing to cross your T’s are red flags to OSHA, Enke suggested. “When you look at the press releases, some of the violations were easily corrected.”

Both speakers also recommend contacting the local OSHA office to get a pulse of the type of enforcement being emphasized locally. “Your best chance of getting penalties back down is informal. Federal OSHA policies are 100 percent against you. Local may not be,” Wiltsie said.

“Go into that with hat in hand when appropriate or guns blazing when appropriate. Be fair and accurate about when you screwed up, and use it as an opportunity to develop a relationship with the local OSHA office. Making a good impression for good cooperative relations gets you in less trouble down the road.”

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]
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Sponsored: Liberty Mutual Insurance

To Better Control Total Workers Comp Costs, Manage Physical Medicine

The time is ripe to consider physical medicine to better manage the total cost of risk.
By: | April 4, 2016 • 6 min read

Soaring drug prices get all the attention in the workers comp space. Meanwhile, another threat has flown under the radar.

More than 50 percent of lost time workers compensation claims involve physical medicine — an umbrella term encompassing physical therapy, occupational therapy, work conditioning, work hardening and functional capacity evaluation.

Spending on physical medicine accounts for 20 to 30 percent of total workers compensation medical costs, a percentage set only to increase in the coming years. Despite the rapid growth of this expense, very few employers are engaged in discussions around how best to manage it.

“Now is the time to take a look at physical medicine and think about how it impacts total cost of risk,” said Frank Radack, Vice President & Manager, Liberty Mutual Insurance, Commercial Insurance – Claims Managed Care. “Employers should investigate comprehensive solutions to keep costs manageable and to deliver quality, evidence-based care to injured employees.”

Liberty Mutual’s Frank Radack defines physical medicine and why it is so important in managing total workers compensation costs.

Cost Drivers

Upswings in both pure cost and utilization of physical medicine are driving the spending surge. State fee schedule changes are largely responsible for increases in cost. California, for example, has increased the cost of physical medicine services by 38 percent over the past two years, and will increase it a total of 64 percent by the end of 2017. North Carolina changed its approach to its fee schedule effective June 1, 2015, resulting in an almost 45 percent increase in the cost of the average physical therapy visit.

Increased utilization compounds rising prices. Low severity claims like soft tissue injuries typically involve physical therapy, especially when co-morbid conditions threaten to slow down recovery.

“When co-morbids are present, like obesity, more conditioning is necessary for recovery from injury,” Radack said. “With people staying in the workforce longer, we see these claims more often because these types of injuries and co-morbid conditions become more common as people age.”

De-emphasis on surgery also bolsters physical therapy prescribing as patients seek less invasive treatments that might enable a faster return to work, even in a light or transitional duty role. Sometimes, patients with a minor injury might seek out physical therapy on their own as a precaution after an injury or under the mistaken belief it will hasten recovery, even if evidence-based guidelines don’t call for it in every treatment plan.

LM_SponsoredContent“Now is the time to take a look at physical medicine and think about how it impacts total cost of risk. Employers should investigate comprehensive solutions to keep costs manageable and to deliver quality, evidence-based care to injured employees.”
–Frank Radack, Vice President & Manager, Liberty Mutual Insurance, Commercial Insurance – Claims Managed Care

“Without proper claims management procedures, some physicians might be inclined to prescribe physical therapy as a palliative measure, even when it doesn’t provide much benefit to the patient,” Radack said.

Building Solutions

Brokers and buyers may not be able to do much about fee schedule changes, but they can partner with an insurer that better manages utilization through a multi-faceted claims system, qualified network vendors, data analytics, and peer interventions.

The keys to better managing the soaring cost of physical medicine.

“There is an opportunity to move physical medicine spending into network solutions and partnerships,” Radack said. A strong, collaborative network is key to maintaining direction over treatment decisions.

Liberty Mutual uses a proprietary data analytics program to study its providers’ prescribing and referral patterns and their outcomes. It then builds a network of point-of-entry general practitioners with a proven track record of optimal outcomes.

“The treating physician is a gatekeeper to other services, so it’s important to start there in terms of establishing a plan and making sure evidence based guidelines are followed,” Radack said.

Radack and his team use similar data analysis and partnerships to deploy networks pertaining only to physical medicine, so it can identify physical therapists who understand the occupational space and are focused on effective Return-to-Work (RTW). A provider who doesn’t understand RTW, or even know that the employer of an injured worker has a modified RTW program, may over-utilize PT. Getting employees with soft tissue injuries back into the work place is critical for delivering the best possible medical outcome and a timely recovery.

These therapists know the value of adjusting a treatment plan based on a patient’s progress, which often cuts unnecessary appointments and therapies.

“Our data analytics program is built internally by people who are aligned with the claims organization,” Radack said. “These insights drive our ability to shape networks and direct injured workers to providers with proven outcomes.”

Peer-to-peer interventions also play a big role in adjusting provider behavior and ensuring adherence to evidence-based guidelines. Liberty Mutual’s in house regional medical directors can bring their expertise to bear on challenging claims and discuss how to redirect treatment to meet these guidelines. Liberty Mutual also partners with experts to build networks of physical medicine and physical therapy providers who deliver quality outcomes cost-effectively and to asses a patient’s progress, working with providers to identify and resolve treatment issues.

Sharing information and measuring performance in these settings helps to change the environment around physical medical care. For example, interventions that steer physical therapists back to  established, evidence-based medical treatment guidelines often reduce the use of passive therapy treatments, like hot and cold packs, which are not as effective and can slow down recovery.

“Active therapies that get people moving often help them get them back to work faster and at a lower cost,” Radack said. Utilization review also helps to identify unnecessary treatments and signals the insurer to communicate evidenced-based expectations with the therapist or prescribing physician.

Solutions in Action

Physical therapy offers great value in spite of rising prices — but only if it’s managed carefully.

An example of the benefits of managing physical medicine.

Take for example the case of a worker with a shoulder injury. In an unmanaged situation, a physical therapist may prescribe 12 appointments, and the injured worker will go through all 12 sessions with no pre-approval of the treatment plan and no interim checkup.

In a managed situation, the physical therapist may only prescribe eight sessions, because she understands the benefits of a faster return to work and sees that guidelines don’t dictate a full 12 sessions for this injury. Halfway through the eight sessions, she checks in on the patient’s progress and determines that only two more sessions are necessary given the recovery and the medical guidelines; and so adjusts the treatment plan to a total of six sessions.

In this scenario, managed care saves the cost of six sessions over the unmanaged situation, and the employee gets back to work faster with a healthy shoulder.

Ultimately, workers comp buyers can achieve cost savings by making treatment decisions that optimize patient outcomes, rather than cut pure cost. To achieve that, every player — point-of-entry physicians, physical therapists, medical directors, claims managers and patients — need to shoot for the common goal of shortening recovery time by following evidence-based medical guidelines.

“When medical experts and network vendors work in concert with each other, along with data analytics and research to back them up, we can drive down utilization while improving outcomes,” Radack said. “All of these working parts together are the solution to managing physical medicine costs.”

To learn more about Liberty Mutual’s Workers Compensation solutions, visit https://www.libertymutualgroup.com/business-insurance/business-insurance-coverages/workers-compensation

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.




 

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Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty, workers compensation and group benefits.
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