Sunday, January 31, 2016

Federal Shaming for Work Injuries

Late last year, reported recent action by the Occupational Safety and Health Administration (OSHA). When I see a federal agency interested in workers' compensation, I pause and think. There has been discussion in recent months of fears about the potential to federalize workers' compensation. David DePaolo and Bob Wilson have both spoken to the possibilities. I have touched on federalization a few times

In workers' compensation, there have been discussions of incongruity of benefits and procedures between various state systems. There have been a handful of national news stories, but primarily from only one outlet whose motivation and partiality have been questioned. National legislators have discussed legislation and even written letters to federal agencies regarding regulation. Some in the industry have even questioned whether the President will take action regarding state workers' compensation, without Congress. In the midst of this discussion, the story came and went with little fanfare. Is the OSHA action newsworthy?

According to OSHA is drawing "attention to workplace injuries and illnesses by disclosing more information on employers' workplace safety records." The safety record of an employer may be relevant in regards to OSHA regulatory efforts. However, the safety record may now also name the employer's workers compensation insurer(s). 

In recent disclosure and publicity of fines, OHSA has been "including the names of the cited employers' workers compensation insurers." This innovation has not drawn comment from the carriers as yet. Logically, the carrier has some interest in safety at the employer. At some level of exposure, the expense is the carrier's to bear. 

I note that it is "at some level" because many employers have "deductibles" or "retentions" that define some level of benefit exposure for which the employer itself will be financially liable. The insurance carrier, through operation of contract, will have financial exposure at some defined level of expense. Because of these contracts, many workplace accidents may never become the financial responsibility of the workers' compensation carrier. 

It is important to remember also that insurance does not generally cover fines and penalties imposed by the government for the occurrence of accidents, or for employer safety records more generally. When accidents occur, record keeping and reporting is required. If this is not appropriately performed, there can also be OSHA penalties. The liability for these fines or penalties is on the employer.

Why would OSHA find it relevant to publicize the names of insurance carriers who are not being fined, and who have no liability for the fines being imposed on these employers? That question was posed by and OSHA responded “for some companies, the damage to their corporate image may be more of a deterrent than the fines OSHA may issue." The agency hopes that carrier's fear or trepidation of being mentioned in connection with a fine or penalty will cause them to engage or act regarding safety practices at their client's businesses. 

OSHA believes that "workers compensation insurers can have a role in influencing companies to implement safety and health management systems and reduce the risk to employees. By including these insurers in the press release, OSHA hopes to encourage them to have a more active role in addressing the hazards.” In other words, the federal government wants to to embarrass companies into taking on responsibilities that are otherwise not theirs. 

The federal government could approach these carrier/insurers (or the industry as a whole). There could be a dialogue, a coordination, a cooperation to the end of carriers encouraging or influencing employers to take a more active role in worker safety. That collaborative process through a partnership might produce positive results. Teamwork is often a successful approach. 

OSHA has taken the opposite approach, however, seeking to influence behavior, to motivate improvement, through embarrassment or "damage to their corporate image." Perhaps not an unthinkable last resort method of motivation or encouragement, but at best a curious way to start such a hoped-for relationship. 

There is another motivation behind the federal "news releases about citations and fines." OSHA believes that these notifications "get the word out about specific risks." That is a more admirable and logical basis for OSHA publicity. If one employee suffers an injury at one employer in one town, it is productive and helpful for other employers in other towns to know of the risks, potentials, and solutions. That enhances safety and reduces risks. Publicity in this regard is more likely productive. This may be in the context of heavy industry, construction and what are thought of as dangerous jobs, but may just as easily be in retail, clerical and the perhaps less risky employments

The recently announced press-release methodology may be the precursor to public dissemination through the Internet. The OSHA has proposed a search able database of "workplace injuries and illnesses." The prediction is that OSHA will move forward with this plan in 2016. Curiosity and concerns remain regarding the details of this discussion, and the ultimate product that will result. Will this database provide seemingly ancillary information regarding those injuries, like who the responsible insurance carrier is? 

Is it intended to spread news and prevent future injuries, or is it intended to shame employers and/or carriers? Some might argue that it is clearly to inform, but with the admission that OSHA is not above the shame motivation regarding carriers, its intentions regarding employers, with Internet postings, may be called into broader question. 

It will be interesting to see the course OSHA elects to travel. Will it partner with the marketplace to build better processes through better communication, leadership and cooperation? Or will if find success in shame and reputation "damage?" In the end, one may wonder whose image is damaged more when approaches are heavy-handed and unilateral.

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