Wednesday, December 31, 2014

A Worthy Goal for 2015? Alaska Reduces Accidents Almost 50%

On the last day of the year, we reflect. Many will make a resolution or two for the year to come. It is a time of year for reflection and focus. Perhaps a worthy goal for 2015 is less accidents, less injuries, and less occupational disease. 

In 1983, the movie War Games was released, starring Matthew Broderick. In it, a United States Defense of Department ("DOD") scientist programs a computer to simulate possible outcomes from various hypothetical scenarios of global nuclear war. Remember back in the 1970s and 80s there was still a cold war and computers were not as universally accessible as they are today. The movie was topical then, and quite popular.

Having run through a very rapid succession of potential beginnings and endings of a "game" simulation called "global nuclear war," the computer, named JOSHUA, concludes that nuclear war is inadvisable. This conclusion perhaps makes us feel superior to JOSHUA in that most of us humans had already intuitively concluded that war is a bad idea. JOSHUA explains his conclusion to the scientist saying "a strange game. The only winning move is not to play. How about a nice game of chess?"

Over the course of the last several decades, I have held a multitude of jobs. I have seen workers' compensation from the perspective of being an injured worker, a manager, a coworker, an attorney, and judge. I have invested a significant portion of my adult life in this thing we call comp. I have studied it, written about it and lectured others on it. 

Work accidents and illness affect so many people, some more profoundly than others. The scope of workers' compensation is amazing. See How Huge is it Anyway, published in the Lex and Verum of the National Association of Workers' Compensation Judiciary. The workers' compensation industry focuses ample attention on dealing with those accidents and illnesses, how and where they are treated, etc.

A recent story on Workcompcentral trumpets that "Alaska Notches 46% Decrease in Workplace Accidents in 2014." 

We are used to seeing stories in the news describing how various efforts reduce the costs of workers' compensation claims that do occur. A recent reminder is the Tennessee announcement that it will be working toward a prescription drug formulary. Its idea may be modeled on the Texas formulary. Essentially, the state creates tiers of medication, some more available than others. The result in Texas has been cost savings in the medication segment of those claim that do occur.

Statutes across the country restrict or limit access to certain medical specialties, limit chiropractic care, define periods of entitlement to various indemnity classifications, and limit payment of attorney's fees in claims that do occur. Employers may be precluded from terminating an employee in retaliation for claiming workers' compensation, limited in the defenses they may raise to benefit claims, and may face presumptions in favor of various employees. The industry is replete with examples of constraints, limitations, and parameters for the claims that do occur. 

The various state law parameters define what is and what is not comp and what it will cost. Significant effort is focused on these various definition and constraint subjects every year in legislative committee rooms and chambers from coast to coast. Much in the same way that JOSHUA tried scenario after scenario testing the possible outcomes of global nuclear war in the movie. As with JOSHUA's evaluation, there will be outcomes in claims that do occur that will be better than other outcomes. But none of them is a "win." 

The win in workers' compensation, or "win-win" if you will, is just as JOSHUA concluded, not playing the game. In other words, both the employer and the employee are better off if the employee is simply not injured or ill to begin with. The best way to save all of the frustrations that can be workers' compensation is to simply avoid the accident or illness. As Benjamin Franklin posited, "an ounce of prevention is worth a pound of cure."

According to the National Council on Compensation Insurance, NCCI, workers' compensation "frequency" has been decreasing for the last 25 years. The decrease in "accident year 2013" was two percent. An NCCI  report documents that "from 1990 through 2009 claim frequency declined at an average rate of more than four percent per year." If there were 100 accidents in 1990, then in 2009 it would be about 46 calculated at that rate of decline. The average of 4% annually, would result in an aggregate reduction of about 54% over that 19 years. 

That is a significant result, and likely represents a positive outcome. Less injuries is a benefit to employers and employees alike. As an aside, a note of caution. There are those who argue that frequency figures like this may signal something other than reduced accidents and injuries. Some claim that frequency is down, in part at least, not because injuries have decreased but because injured workers have become increasingly reluctant to report their injuries or illness. 

Proponents of this logic contend that all of the parameters, restrictions, and complications that can be workers' compensation are discouraging reporting. They argue that many injured workers are electing to handle their medical treatment under a group health and possibly short-term disability plans because there are less restrictions, greater physician choice, and greater patient control. Some also claim that there is a stigma attached to being a workers' compensation recipient. 

So, counting things, like accidents in a given year, is relatively easy. But deciding the validity of what is counted, the "why" of the volume can also be relevant. It can also be more difficult than the counting itself. So, if those who raise the non-reporting argument are correct, then the decrease in claims may be less impressive than at first blush.

With all of that in mind, it is pretty impressive to see a state's work accident/illness frequency drop 46% in a single year. Despite this progress, Alaska remains one of the most expensive states for workers' compensation premiums. The recent story on Workcompcentral story notes that Alaska's premiums are still in the top five in the nation. The story notes that the high price of medical care is partly responsible. Alaska is a significantly rural state and access to medical specialists can involve significant travel. They note hat some procedures are 200% to 400% more costly in Alaska than in other surrounding jurisdictions. 

So, there may remain issues of access to care, cost of care, and the resulting progression or regression of the cost of obtaining workers' compensation insurance that will result. In other words, even with reductions in the volume of claims that do occur, there may be room to work on how the claims are effectively treated and compensated. 

However, as we conclude 2014 and look to 2015 with anticipation and expectation, why don't we make it a collective goal to do better next year at just not playing the game, and doing that the right way, meaning legitimately less work accidents and illness? It would be a "win-win" for employees and employers alike. 

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