Thursday, July 30, 2015

Newspaper Carriers and the Independent Contractor

I read an article recently on WorkCompCentral. A New York Senator has filed a bill to change the definition of "employment" so as to exclude "newspaper carriers." This would also "remove most newspaper carriers from workers' compensation, unemployment and minimum wage protections" of state law. In late June, the bill passed.

This caught my eye because I began my working life as a newspaper carrier, back in the day. I was carrying The Washington Post. As I recall, school required me to be catch the bus about 7:30 each morning. That effectively meant that from 5:30-7:00 I was moving newspapers. The exceptions were Thursdays and Sundays. Those were "insert" days. Insert days were far tougher.

The newspaper generally came fully assembled. But on Thursday mornings I got both bundles of papers and bundles of "inserts," essentially a section of the paper printed separately. On Thursdays, the insert I recall was about the coming weekend, and included some flyer-like ads. On Saturdays, I would receive the Sunday inserts, several for each paper. As I recall it was the "style" section, the "book" section and the "comics," within which were many advertising flyers. Those would all have to be combined, usually on Saturday, so that they were essentially complete on Sunday morning when the actual "news" sections arrived to be integrated into the final product.  

So, on Thursday and Sunday mornings I had to start earlier, to do the inserting before delivery. Sunday required more time because I could carry far less of the Sunday papers at one time, they were about two inches thick while most days the paper was less than 1/2 inch (slow news days were a blessing). Like the Postal Service motto, the papers had to be delivered through rain, sleet and snow. I learned a lot from that job. 

First, I did not get paid for doing inserts or delivering the papers. I did not work for The Washington Post. In my naivete of youth, I thought I worked for a distributor. He drove a decrepit step van that rattled a great deal and emitted a foul-smelling fog. His work hours were obviously worse than mine because he would drive to some production facility in the middle of the night and fill that van with papers every morning and deliver my bundles to the corner of Murray Lane and Moss Drive. Usually he got the number exactly right. Occasionally he would "short" me. 

I was supposed to call his answering machine if I was short. He asked that I do that "immediately," but in those days making a phone call meant going back home. I would generally finish my route before returning home to make that call. I would leave the address of the house or houses that did not get a paper or did not receive an insert that day. Since I had school to get to, he would then usually make the delivery to cover the short. I came to realize that my customers were my boss more than he was. However, I also realized that without his cooperation, on-time performance of his duties, and support, I could not deliver to my customers effectively and timely. It was my first lesson in supply chain. 

Second, I learned about customers. There were people who wanted their paper on the front door mat, some wanted it under the mat so that wind would not destroy it. Some wanted it stuck in a shutter beside the front door, or between the front storm door and door, others at the kitchen door. A regular smorgasbord of choices that the customer made and which I had to remember and deliver. They did not hesitate to remind me of their preferences with a call or when I saw them monthly. 

I learned that work is hard. I was walking about two miles each day. On good days, I could carry enough papers to make it through each of my streets (they fanned out in three directions from the corner of Murray and Moss) on one trip each. On Sundays and Thursdays with the thicker paper, there was a fair amount of backtracking to the corner to get more papers. I had to rise early, carry, walk, and finish on time. It was not easy. I had to plan, execute, reevaluate. I made mistakes. I failed. And I learned. I was rewarded for success, back then an extra dollar (tip) per house might add up to $50-$75 per month, which would be about $200 today. Not bad money for a teenager.

Finally, I learned that delivering papers was only half the job. I never got a paycheck. I instead got a book of coupons/receipts. Monthly I had to walk my route in the evening or afternoon with that book and "collect." It turns out I was buying the papers from the distributor at an advantageous price, and collecting the retail price from my customers, so I made a profit. 

I also received tips, where someone would give me an extra dollar or two for the month. These were very dependent on following the instructions as to where the paper was placed each day. It also made a difference if I got certain people their papers early so they could see if before they began their long commute into the city. Of course, following Murphy's law, those who wanted early delivery rarely lived next to each other. Satisfying one often meant not satisfying another. 

It was a hard job. I thought I worked for the Washington Post, and it was not until several years later that I came to appreciate I was likely an independent contractor all along. I was pleased when I got old enough to get a "real job" and could give up the route. 

I have worked in a number of jobs and industries since then. I understand that the newspaper business has changed a lot since then also. But in New York at least it appears that newspapers can still be delivered by kids looking for that first job. In New York, this is a job you can take when you are 11 years old, subject to some restrictions.  I think I was just a bit older than this when I started my carrier career. 

According to WorkCompCentral the recently filed bill is a response to some decisions by the Unemployment Compensation officials there, essentially concluding that some carriers are employees. The periodicals, under this new law, could have independent contractor carriers if their contracts contained at least seven of the following nine terms (quoted from the article)

* The carrier could not be treated as an employee for federal tax purposes and would have to be issued an Internal Revenue Service Form 1099.
* The carrier has the right to determine the sequence of deliveries within a route.
* The carrier is not required to attend group meetings.
* The carrier has the right to engage the services of others to distribute the newspaper without the approval of the publisher.
* The carrier is required to submit written reports with respect to deliveries and internal circulation statistics.
* The carrier has the right to engage in other business activities.
* The carrier is not identified as representing the publishing house through business cards, uniforms or signs.
* The carrier has the ultimate responsibility to resolve subscriber complaints, even though the publisher may receive and resolve complaints and reach financial settlements with the carrier.
* The carrier is responsible for maintaining and insuring delivery     vehicles.

The red items I think were present in my work delivering the Post so many years ago. I had no delivery vehicles. I did turn in a work-sheet each month when I paid my distributor. Perhaps that would meet the "written reports" condition. I cannot remember what if any tax documents I received, that is 1099 or W-2. So in the end, I am not certain I would have qualified if these constraints had applied back then. However, everything but the vehicle constraint certainly could have been applied. 

I do clearly recall that I took my primary instruction from those customers from whom I had to collect money. Which of my three streets got priority on a given morning depended on their requests and propensity to tip. Whether I did inserts on Saturday afternoon or arose an hour earlier on Sunday was my decision alone (though my parents often offered "advice"). When I did my collecting was up to me, but I had to be able to pay my distributor by the due date. As I recall, his primary concern was the amount and timeliness of those payments.

One of the issues that comes up periodically when workers' compensation is discussed at national conferences is the conundrum of independent contractors. It is a potential problem when the unscrupulous use the concept to misclassify workers. They do this to avoid costs of workers' compensation and unemployment compensation, and tax withholding. Some may also do it to avoid the requirements of adequate pay and overtime found in the Fair Labor Standards Act. The misclassification issue is often discussed.

The result has been enactment of various laws that attempt to tighten the definitions of "independent contractor" and "employee." Unfortunately, some jurisdictions do not take a broad approach to this issue, and instead pass specific statutes directed at specific kinds of contractors or at certain types of business issues. 

As a result there are jurisdictions that have as many as four different statutory definitions of independent contractor. One for unemployment, another for workers' comp, another still for licensing, etc. This results in conflict and confusion. Would it be better if states had singular definitions that are comprehensible to the people that do the work? Shouldn't people that have to follow the law be able to understand the law?

I lament that newspapers today (where I live at least) are usually delivered in bags, thrown from the open window of passing vehicles (when they are delivered at all). The days of the kid with the "front-back" saddle-bag trudging through wet grass in the pre-dawn seemingly past, except in New York. That in itself is a shame. I am not at all sure I made minimum wage. I am pleased that I never learned whether I was covered by workers' compensation or unemployment compensation. 

But, I do know I learned a lot from that experience. Much of it I have been able to use since. Customers are still customers. Hard work still has value. Follow-through and service have value. But, could those lessons be learned as an "employee" with the protections of FLSA, workers' comp, unemployment comp, and tax withholding? 

Wednesday, July 29, 2015

Castellanos will not be decided this week

We are waiting to hear from the Florida Supreme Court in both Casellanos and Westphal. The Court's calendar slows in the summer. According to the Court's calendar, it heard oral arguments on June 5, 2015. The next arguments are scheduled for August 31, 2015. So things may be a little quiet around the Court this summer.

In Wherefore Art Thou Morales, I provided a very unscientific analysis of when the Court might rule. I hypothesized that Westphal might be rendered as early as February 2015, and as late as July 2, 2015. It is now safe to say that my guesstimate was absolutely wrong. The Court will not rule before fall. 

In that same post, I conjectured that Castellanos might be decided as early as July 9, 2015 and as late as December 3, 2015. 

The oral argument in Westphal was held June 5, 2014. It has today been 419 days. The oral argument in Castellanos was held November 5, 2014. It has been 266 days since that oral argument. 

So when will the decision come in either of these cases?  The last decisions of the Court were published July 9, 2015. It appears that there will be nothing of substance before the Court returns in September. 

The marketplace of workers' compensation will gather in Orlando in about three weeks at #wcec2015. Last year the buzz was all Padgett. Many conjectured that this year the buzz would be (predicted to occur) recent rulings from the Court in Casellanos and/or Westphal. It looks like the marketplace will instead have to be satisfied with medical marijuana, MSA, presumptions and the plethora of non-supreme court issues that are currently at the fore. 


Monday, July 27, 2015

“Dogbert” (Daubert) and the Expert Medical Advisor in Florida

Note: Today's post comes to us from Judge Stephen Rosen, Judge of Compensation Claims in St. Petersburg, Florida. 

Every time I dictate the word “Daubert” into my dictation software, it comes out as “Dogbert.” For those of you who are familiar with the “Dogbert” comic strip, I find it to be both satirical yet practical. My dictation software converting the Daubert evidentiary standard to a satirical comical strip is certainly nothing less than "déjà vu all over again….".

The expert medical advisor standard was put into F. S. 440.13 by the Florida legislature quite a few years ago. As a Judge of Compensation Claims, I am not a fan of that legislative provision as it takes away the power of a JCC to resolve medical disputes when there is a conflict in the opinions of 2 healthcare providers which is properly brought to the JCCs attention or, if necessary, on the JCCs own motion if the JCC feels he or she needs help in resolving medical conflicts. It is virtually  a “must”  to appoint the EMA if the medical conflict is brought to the attention of the JCC in a timely fashion. I almost referred to the JCC’s requirement to appoint the EMA as a “no brainer” but that would be too “Dogbert-ish.”

The Daubert evidentiary standard first appeared in the case of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and was adopted into the Florida evidence code at F. S. 90.702 by the Florida legislature in 2013. This section now provides that a witness qualified as an expert by knowledge, skill, experience, training or education may testify in the form of an opinion or otherwise if:
1. The testimony is based upon sufficient facts or data;
2. The testimony is the product of reliable principles and methods, and
3. The witness has applied the principles and methods reliably to the facts of the case.

The intent of the addition to the evidence code is to prohibit pure opinion testimony from an expert.

However, when the Legislature added the expert medical advisor requirement in F. S. 440 .13, it did so with the existence of  F. S. 440.09 which admits the opinions of authorized treating physicians, independent medical examiners, and expert medical advisors appointed by a JCC into evidence. The opinions of authorized treating physicians need no further authentication to be admitted evidence, while the opinions of independent medical examiners must at least be authenticated to avoid the hearsay objection to their admissibility.

The undersigned has consistently ruled that an expert medical advisor appointed by a JCC becomes a witness of the judge and the opinion of the expert medical advisor may be admitted into evidence without further authentication. No case law is available on this issue.

When admitted into evidence, the opinion of the expert medical advisor is granted the presumption of correctness. That presumption, of course, can be rebutted, but the rebuttal is directed to the opinion of the expert medical advisor, not the admissibility of the expert medical advisors report.
Giaimo v. Florida Autosport, Inc, 154 So.3d 385 (Fla. 1st DCA, 2014) is the initial case applying the Daubert standard to workers compensation cases. The most recent case is Booker v. Sumter County Sheriff’s Office, Case No. 114-4812 (Fla. 1st DCA, May 29, 2015 ). In Booker, the JCC applied the Daubert test and the appellate court found that the Judge did not abuse discretion in admitting the expert’s testimony. Neither case involved the opinions of an expert medical advisor appointed by the JCC.

It is quite clear that the Daubert standard will continue to be applied in workers compensation cases even though the stated purpose of the Daubert rule is to allow the gatekeeper (judge) to screen all opinion testimony to determine if that testimony should be presented to a jury. Attorneys for all parties in workers compensation claims are becoming more skilled in preserving their Daubert objections to expert’s opinions during medical depositions.  Judges of Compensation Claims retain the option of having a separate hearing on the application of the Daubert standard prior to any hearings on the merits which will entail presentation of medical opinions

Since the Judge of Compensation Claims is both the judge and jury in a Worker’s Compensation proceeding, one could argue that to apply the Daubert evidentiary standard to expert medical advisor opinions flies in the face of  legislative intent;  that the appointment of the expert medical advisor is to resolve a conflict in the opinions of two healthcare providers. The purpose of the expert medical advisor’s opinion is to resolve conflicts, not create them.

One party must spend a maximum of $2400 for the records review, examination and report, plus possible diagnostic testing, plus expert witness fees for deposition, transcript costs, etc. only to raise the possibility of the expert medical advisor’s opinion being ruled inadmissible for failure to comply with the requirements of  F. S. 90.702.

No doubt the District Court of Appeal will have the opportunity in the near future to issue guidance to Judges and litigants alike on the application of Daubert to expert medical advisor opinions. 

Friday, July 24, 2015

Measuring Marijuana Intoxication

The Colorado Supreme Court decision in Coats v. DISH answered some marijuana issues, but left some unanswered questions. The primary one that marijuana states will have to address is likely how to measure impairment. A discussion of the Coats decision is here. In that post, I refer to a story regarding a race car accident, in which conclusions were published regarding the extent of marijuana impairment. 

Marijuana acceptance is growing. Yahoo reports this week that forty-four percent of Americans have tried the drug. Ten percent admit to currently using it. They say "Gallup's new poll conforms to an upward trend in which Americans have become more liberal on the issue of marijuana legalization." It is likely that more states will follow in relaxing constraints on marijuana. There will be use, and unfortunately, there will be use on the road an in the workplace. 

The issue of impairment will become important in "legalization" states, and elsewhere as marijuana continues to gain acceptance. Currently, there are four states that have "legalized" recreational marijuana use. They are Alaska, Colorado, Oregon, and Washington. When this is discussed, the District of Columbia is also mentioned, but that jurisdiction being under the control of Congress seems less clear to me. The Business Cheat Sheet reports that seven other states are contemplating legalization. They include Arizona, California, Hawaii, Maine, Massachusetts, Missouri and Nevada. 

The legalization complication remains federal law. Despite these states changing their laws, "the federal government seems as though it still won't budge on reclassifying cannabis out of its current Schedule 1 status." The implication of that is discussed in Medical Marijuana. Essentially, marijuana use is against federal law. The recent decision of the Colorado Supreme Court in Coats supports that in some contexts Federal Law Matters.

In recent WorkCompCentral coverage of Coats, the subject of impairment is discussed. Stuart Sanderson is the president of the Colorado Mining Association. He says that "since modern science has yet to establish a test for detecting whether someone who used marijuana in the recent past is still impaired by it . . .we choose to err on the side of safety." That is, employers choose to have zero tolerance of marijuana use by employees.

Dr. Matthew Lee discusses the issue of marijuana impairment in his blog. He notes that there is no congruence between marijuana impairment and alcohol impairment. He explains that alcohol has "only one intoxicant" which is ethanol. He says that it is therefore "relatively easy to measure (ethanol) in the blood and extrapolate these measurements to degree of impairment" of a particular person. 

By comparison, in marijuana there are multiple "psychoactive or intoxicating constituents," although the most familiar is THC (tetrahydrocannabinol). Some "are psychoactive, while some are not." He notes that the human body does not process THC in the same manner as alcohol. Instead "THC from marijuana is immediately taken up by the fat cells in the body, where it is released slowly over time."  However, that release over time and the resulting presence in the blood is "generally non-contributory to intoxication." That is, it can be detected after it is an intoxicant. Dr. Lee says that this can be "anywhere from 3 days to a month or more, depending on a number of individual parameters."

He explains that the complexity of marijuana is a "prohibitive factor in accurately establishing an absolute correlation between" a particular level of THC presence and "intoxication." He reports therefore that "the National Highway Traffic Safety Administration and the National Institute on Drug Abuse have stated that marijuana impairment testing via blood sampling is unreliable." There simply is no "reliable metric" like the blood alcohol content (BAC) against which marijuana or THC presence may be measured. This has not stopped some states from instituting "legal limits for THC blood levels." He suggests that those levels could be efficacious in determining presence, and therefore perhaps helpful states with "zero tolerance policies."

Dr. Lee contends that "to even begin," measuring marijuana intoxication would require "behavioral tests." These would purportedly be similar to the kinds of testing that are required for diagnoses of psychological issues. He says that the "Diagnostic and Statistical Manual IV (DSM IV)" is the "standard used by mental health professionals" to identify "behavioral criteria to diagnose marijuana intoxication." Dr. Lee says that there are states with testing to determine whether motor vehicle operators are "under the influence and thus assumed to be impaired." These may include blood testing, but are primarily base on "what was observed," that is behavioral testing.

This conclusion regarding THC testing has been echoed by the American Bar AssociationThe Denver PostPopular Science, and others. Though Popular Science also reports that despite these complexities Colorado has enacted a impairment standard based upon THC level in Nano grams, derived from a blood test. 

Dr. Lee's conclusion is that "there is no reliable method of quantitatively determining if a person is impaired due to marijuana consumption" at least as of 2010. He says that because of the complexity of marijuana's "pharmacology" and "multitude of individual characteristics that determine the impairment or intoxication due to marijuana consumption, it will likely be a long time before we see this technology commercially available."

At the SAWCA Annual Convention this week (07.15) there was an excellent panel discussion of medical marijuana, moderated by Paul Tauriello, Director of the Colorado Division of Workers' Compensation. As a side note, it was one of several interesting panels this week). The marijuana panel included Colorado's State Medical Director Kathryn Mueller, an Assistant Attorney General from Maryland, Scott Curtis, attorney Robert Luskin from Georgia, and a young man named Michael Newman.  

Director Tauriello brought everyone up to speed on the impact Colorado has noted from legalized marijuana. The marijuana revenue last year was over $700 million and is projected to be over $1 billion in 2016. For comparison, he noted that the total of all written workers' compensation premium and calculated premium for Colorado self-insureds is about $1.3 billion. Marijuana is projected to soon be a bigger business in Colorado than workers' compensation. It seems likely to me that there have been ancillary economic impacts in the area of tourism also (just Google "marijuana Colorado tourism" and see how many sites are suggested). Even Fodor’s has some suggestions. 

Dr. Mueller argues that marijuana impairment can be measured, when the testing is within 3-6 hours, and blood is the foundation of the test. She says a similarly efficacious test is coming soon, which will use saliva instead. These tests do not look for mere presence, as urine tests do, and so they are favored in the context of impairment measurement. Conceding that the standards are not universally accepted, she says that Colorado has enacted an impairment standard and that it will be effective for defining impairment from this substance. 

She cautioned that many employers already have impaired workers, from prescription medications that are as hard to quantify. In other contexts I have heard that alcohol impairment is arguably different in various people depending on the nature of use, habitual versus occasional. This seems somewhat logical to me, but I am no doctor. 

Dr. Mueller's broader point is that the benefits and detriments of marijuana are not fully explored. She laments that study of the substance has been frustrated by the federal laws against marijuana. Because of the federal Prohibition, she explained, doctors do not "prescribe" medical marijuana, they "recommend" it. Prescribing it would apparently put the doctor's license at risk because it is a prohibited Schedule I substance. 

According to Mr. Curtis, this phraseology may be an issue in states like Maryland where drug use can be a bar to workers' compensation benefits, unless "prescribed" by a physician. So in Maryland, even if marijuana is "recommended" the use would still result in a bar to benefits, should an accident occur during its use, as it cannot be "prescribed" as defined by statute. WCI has reported that one workers' compensation system, in New Mexico, must pay for marijuana even though it was not, and cannot be, prescribed. 

Legally, Robert Luskin assured the audience that employers need not accommodate, under the ADA, employee's use of marijuana, even if it is recommended by a physician. This, he explained, is because marijuana remains illegal. On the contrary, however, he says that if an employee asks to use FMLA leave to treat an addition to marijuana (or alcohol or other drugs) that he recommends clients afford that leave. 

Mr. Luskin cautioned employers to be consistent. Noting that some occupations experience difficulty filling positions with persons who have no history of marijuana use. In other words, there are some positions in companies that attract primarily applicants who use this drug. Thus, there is an inclination to be more lenient on use for those scarce occupations. He cautioned that waiving or reducing requirements for some employees or classes within a company, but not for others, could lead to allegations of disparate treatment and lawsuits. 

Another aspect of impairment was recently reported by WorkCompCentral regarding a case in Texas. An employee there was killed in an automobile accident. It was alleged to be work-related and this Texas employer was subject to workers' compensation. A post-mortem test revealed THC, and the "THC in his body created a presumption that he was intoxicated at the time of his death." Thus, in this context, the burden was legally on the person claiming benefits (the employee's survivors) to prove that the employee "was not impaired at the time of the accident." 

Proving a negative is always difficult. The effect of this provision of Texas law does not change the challenge of proving marijuana impairment. That determination of how recently marijuana was used and how much equates to impairment will remain a challenge. The Texas law, however, puts that burden on the injured worker instead of the employer by use of this presumption. 

I also wonder how the issue of "second hand smoke." It is a subject that has received ample coverage in the cigarette and lung cancer discussions. Forbes reports that there is a perspective that there is "no clear link between secondhand smoke and lung cancer." But, TheWeedBlog and others suggest that there is support that "exposure to secondhand cannabis smoke under unventilated conditions produced detectable cannabinoid levels in blood and urine."

For now, is Mr. Sanderson's comment our paradigm? Will the establishment of presumptions control this issue? Is the only solution in the current time to "to err on the side of safety?" Is there an option beyond zero tolerance in the workplace? Will THC Nano gram level restrictions/presumptions such as Colorado's be an enforced paradigm despite the scientific doubts of their reliability? Will marijuana "impairment" be measured with more subjective testing (think of the field sobriety test administered by police officers)? In the event of a positive workplace test, will the issue of "second- hand smoke," or inadvertent impairment, have relevance?

There will be many questions to answer if the predictions hold true and recreational use spreads despite federal prohibitions. Changes in that federal prohibition are being advocated, and that could also result in revisiting many questions as issues like those presented in Coates and accommodation under the ADA would then perhaps be decided differently. There seem to be many issues on the marijuana horizon.

Update 07.24.15 FoxNews reports that a teen died after eating 6 times the recommended dosage, followed by a jump from a balcony. The news reports include discussion of impairment and the onset of effects when marijuana is eaten instead of smoked. 


Thursday, July 23, 2015

The Future or Workers' Compensation - Revolutionary Ideas

The 67th Annul Convention of the Southern Association of Workers' Compensation Administrators (SAWCA) continued on Wednesday. The Regulator's Roundtable of Tuesday was a tough program to follow, but Wednesday's speakers were up to the task. We heard predictions about the future, discussions of alternatives, and threats to our daily operations. 

Frank Neuhauser led the program Wednesday with his vision of what the future of workers' compensation holds over the next twenty years. Mr. Neuhauser is the Executive Director of the Center for the Study of Social Insurance at Berkley. He brought a perspective that some might see as revolutionary. Ironically this year's SAWCA program is titled "Revolutionary Ideas." right here in the birthplace of American democracy and revolution.

Mr. Neuhauser contends that workers' compensation is a creature of the industrial age, and that our adoption of the concept is rooted in the dangers inherent to manufacturing and transportation in the 19th and early 20th centuries. He says that this was for the traumatic injuries like fractures, burns, amputations, and contusions. Conversely, he argues that this program was not designed for the injuries that might occur in what he terms "safer occupations." For context, it is fair to consider a judge as being in a "safer occupation" in his paradigm. 

He notes that injuries for which workers' compensation was intended were apparent injuries, and the system did not initially involve litigation over causation issues because the occurrence of accidents and the resulting injuries were easily observed. He says that the data supports that more of these traumatic injuries can be shown to occur at work than in our non-work life. To the contrary, he says the data also supports that the volume of non-traumatic events, like back injuries, at work is generally consistent with the volume of non-work back injuries. In other words, he says the volume of back injuries is statistically the same in work and non-work life. 

He concludes that workers' compensation programs should be amended to focus on these more obvious traumatic conditions for which he contends it was originally intended. The non-traumatic events should be removed from the systems, and dealt with through a group health/disability paradigm. In other words, remove the non-trauma conditions from compensability under workers' compensation. He also has proposed a solution for the interaction of workers' compensation and other programs like Medicare. 

Mr. Neuhauser contends that actuaries can very accurately predict medical expenditures for Medicare beneficiaries after age 55. He says that Medicare is a highly efficient system for delivery of medical care, spending $.04 in administration for every $1.00 of care delivered (there was some skepticism in the crowd on Medicare being efficient). Mr. Neuhauser says that by comparison group health plans spend about $.14 per dollar delivered and workers' compensation spends over $1.00 per dollar delivered. He says that we should therefore allow Medicare to become the delivery platform for medical care in all workers' compensation cases. 

He sees this as a process in which insurance carriers or employers would manage medical care delivery immediately after a work place injury; for perhaps two or three years, or until the injured worker is 55, whichever comes first. He is not advocating that the taxpayer take over financial responsibility. No, he proposes that at the time of the transition of a particular case to Medicare, the probable future costs could be predicted by actuaries and the employer or carrier would pay this value to the government as a "premium tax."

This would allow the employer/carrier certainty and finality. This would also allow what he sees as a more efficient delivery platform, Medicare, to deliver the benefits. As importantly, he says that the current paradigm of MSA and recovery would be alleviated. Because of the elimination of ancillary concerns, he contends that this proposal would result in lower medical costs in workers' compensation and thus lower premiums for employers. 

Bary Dalton from the Federal Reserve and Susan Gordon from Zurich took the stage next and discussed cyber-security. They outlined an amazing array of cyber-threats. They explained that our mission to possess and use electronic documents has allowed us the possession of massive volumes of easily accessed and used data. While that provides convenience to workers' compensation agencies and businesses, that also facilitates access for outsiders who have their own designs on that data. 

They shared a quote that is telling: "there's two kinds of CIOs (Chief Information Officers): ones who have been hacked and know it, and those who have been hacked and don't yet realize it. But the reality is, you've been hacked." Essentially, we are all in this threat pool together, whether we know it, admit it, or not. They explained that there are a broad spectrum of people seeking to hack data.

Some are merely adventurers who want to see what they can hack. Some are organized crime, hacking for money, such as the recent breach at Target. Others are called "hactivists" and are perhaps hacking to make a point, such as the recent breach at Sony. Still others are persistent threats, which are perhaps state-sponsored efforts at disruption to a countries financial and information processes. 

They suggested that the threat to data is a direct result of our drive to provide ourselves ease in access. As we have moved from storing data in a file cabinet, to a machine, to a networked and then Internet accessible paradigm, we have facilitated our access to data. In that transition, and furthermore in moving to the "clouds" we have facilitated our progress, but enabled the "bad actor" access as well. 

The take-away from this presentation is that we can defend against their inappropriate access. The best plan is a series of "layered" defenses. Some will actually prevent disclosures of data and others will merely alert us to the presence of trespassers in the data. There are protocols which can be followed, and a growing tendency towards sharing information on security breach for the benefit of other potential targets. It seems clear that we are becoming more self-aware and we are making progress understanding this threat.

In the end, we learned that companies like Sony, Target, and others may have spent hundreds of millions of dollars in reacting to cyber-threats. There are hardware, software and public relation costs. Then there are accommodations for those whose data is stolen, such as credit monitoring services and more. An interesting note, Ms. Gordon says that insurance coverage for these threats is a rapidly growing segment of the casualty insurance market.

The morning concluded with a panel discussion led by our own Abbie Hudgens of Tennessee. She is the Administrator of that state's system and our SAWCA Vice President. Too often, we attend panel discussions in which the phrase "I agree with . . . ." is the norm. This panel on alternatives to workers' compensation could not be criticized in that context. The perspectives on opt-out and our future were diverse and did not hesitate to disagree with one another. 

The panel included Mr. Neuhauser, Trey Gillespie from the Property Casualty Insurer's Association, Jerry Murphy from AmWINS Brokerage of Texas, and John Fervier of the Georgia Second Injury Trust Fund and Waffle House. The conversation was animated and engaging. There are those who see opt-outs as the solution to all that ails us, and those who see opt-outs as a threat to our way of life. Even among those who favor them, there is disagreement as to whether the Texas model (comp is optional, and if you do not have it you are "bare") or  the Oklahoma model (you either participate in the comp market or you provide the financial equivalent of that protection through some approved alternative plan) is the best alternative.

One of the contention points regards the portability of care. It was pointed out that an injured worker in a workers' compensation system can leave the employer with no effect whatever on continuing benefit entitlement for a work injury. The entitlement to workers' compensation is not dependent on an ongoing employment relationship post-injury. The contention is that in an Oklahoma style opt-out that may not be the case. 

The due process arguments against opt-out that are heard in other contexts (legal challenges currently in Oklahoma) played a less-central role in this discussion. The focus here was on whether the opt-out alternative makes sense in the business of employing people. Tennessee faces the prospect of an opt-out. Having gone through a marked statutory revision just two years ago, many wonder if that state will adopt the opt-out alternative. South Carolina also has a bill pending to allow opt-out. There are those who have told me they believe Florida will have a bill if the workers' compensation statute is on the legislative agenda for other reasons next year, such as reacting to the current supreme court challenges. 

It is worth remembering that many states have allowed employers to avoid workers' compensation participation. Most of these have limitations and restraints, and they are reasonably specific. Florida allows the use of an alternative benefit program, much like Oklahoma, if the employer negotiates that through a collective bargaining agreement, that is a contract for employment through a union or similar employee organization. 

With the recent decision in New Mexico regarding farm workers' and equal protection, some wonder if an equal protection argument by non-union employers might challenge any state's statutory decision to allow some employers an alternative ("carve out") to workers' compensation, but not to allow that alternative to all? That might be an interesting analysis. 

Will the opt-out come to Florida? The fact is that the collective bargaining alternative, which some insist on calling a "carve out" has already come to Florida. There are employers that have used this alternative and who believe strongly in it. So, some would argue that the alternative has already come and the real question is whether it will be expanded by court or legislative action to include a broader population of employers. 

An amazing morning of programs bringing a broader understanding of the history and potential futures of this thing to which we devote our professional lives. There is no end to intellectual challenges in workers' compensation. I count myself fortunate that there are so many who think, research and share perspectives on this concept and all that effects it.  


Wednesday, July 22, 2015

What is Hot in Workers' Compensation? At SAWCA 2015

The 67th Annual Convention of the Southern Association of Workers' Compensation Administrators (SAWCA) kicked-off Tuesday with its signature Regulator's Roundtable (TM). This annual conversation highlights the issues that are perceived as topical and critical by state regulators. 

There are 18 SAWCA jurisdictions; 13 had representative present on July 21. Regulators and/or judges from Colorado, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New Mexico, Oklahoma, Tennessee, Texas, Virginia, and West Virginia conversed for almost three hours in an open exchange of ideas. SAWCA President Roger Williams led the conversation in his inimitable style. The hot topics of the day included constitutionality of workers' compensation laws, misclassification issues, presumptions, recent developments with Medicaid, cyber-security, opiods, physician dispensing, mental claims, changes in the carrier marketplace, and more. 

Since we gathered last, there are new commissioners. It was great to meet Bob Gilliland of Oklahoma, Ryan Brannan of Texas, and Patrick Robinson of Louisiana. There were lots of familiar faces around the table also. 

On the constitutional front, an overview of the Padgett case from Florida led into a discussion of constitutional challenges throughout the country. Louisiana has recently had a portion of its statute held unconstitutional in a civil case in Baton Rouge. Louisiana has a medical review process to make decisions about entitlement to care and treatment, highlighted recently in Another Unconstitutional Statute - And it is not Florida. The Louisiana Comp Blog also has an excellent summary of that situation. The agency there awaits an actual judgement, but it seems likely that dispute resolution for injured workers may slow as this decision is considered on appeal or the process is re-worked. 

New Mexico has also had a recent constitutional ruling. The workers' compensation statute there provided coverage for many workers, but excluded agricultural workers. In June, the state's appellate court held that there was no basis for that distinction. As reported by In These Times, the court found the distinction "absurd." A market concern with this decision is the decision currently has retroactive effect. And it could create liabilities for employers, for which they cannot now retroactively purchase insurance. Claims may bankrupt or damage some business with no coverage for certain claims. The state's uninsured employer fund has joined in seeking further review, because claims could become its responsibility.

Tennessee has recently had a portion of its act declared unconstitutional also. There was a distinction regarding benefits available to workers who are in the country illegally. The Tennessee court concluded that this distinction is an attempt to legislate immigration policy, and therefore precluded by the fact that this is an enumerated power of the federal government. 

Oklahoma has seen constitutional challenges regarding the statutory amendments enacted in 2013. The change there has been profound. Oklahoma had a Court of Compensation Claims, which regulated workers' compensation, a mandatory system much like Florida's. In 2013, the state established a Workers' Compensation Commission with three commissioners to oversee a new administrative process more similar to other states', with administrative law judges. Simultaneously, Oklahoma made workers' compensation participation voluntary, at the discretion of employers. They can now "opt out."

Oklahoma discussed all that is changing and being challenged there. One of the interesting cases is Duck v. Morgan. There, the injured worker sought a path out of workers' compensation, seeking to sue in tort like Padgett did in Florida. At the same time, there are workers who are seeking to have the Oklahoma courts declare the statute unconstitutional on various grounds. A major focus according to Business Insurance is their contention that the new employer opt-out denies due process.  

Kentucky described a three year old decision by its supreme court determining that a statutory scheme for adjudicating black lung claims. The court concluded that treating those claims differently than other lung exposure cases created an improper equal protection distinction. Apparently, the language used by the court in that decision is being urged in other circumstances in which the Kentucky law treats claims differently. 

It is an interesting time for the constitution and workers' compensation. 

The issue of classification and therefore misclassification continues to occupy the forefront of workers' compensation. Disruptive technology like Uber is changing the way people get around. WorkCompCentral succinctly summarized the current trend towards Most Workers are Employees recently. Highlighting a series of cases in which the classification of employee was found appropriate in various industries like truck driving, entertainment, construction, real estate and more. 

Some of those businesses are reacting with further legal challenges. Others are moving to adjust their business model. An Internet based delivery service, Instacart, has elected to respond to recent rulings by offering some portion of their drivers part-time employee status according to WorkCompCentral. It is a partial solution, called the "employee option," currently offered in about half of the cities in which Instacart does business. It will be interesting to observe how these modern era "disruptive technology" companies adapt or react.

The discussion on Tuesday included much regarding classification and the federal Fair Labor Standards Act (FLSA). That law defines who is considered an employee for wage purposes. There was discussion of Virginia establishing a task force to work on misclassification. One complication expressed was the fact that various state agencies have various definitions of "independent contractor." These may or may not correspond with the FLSA definition. It may be that one is an employee for some legal purposes and a contractor for others. 

Presumptions are a topic for discussion in multiple jurisdictions. The presumptions for first responders began with firefighters and police officers. Various states have seen the financial exposure of these presumptions expand as other state employees are included in the first responder definition. Curiously, some states have interesting variations of both workers' compensation and presumptions. Tennessee noted that municipalities there can decide whether to participate in workers' compensation or not. An interesting twist on the opt-out discussion. Another twist to consider is the relationship possible between opt-outs in a broad sense and the so-called "carve-out" (discussed here) in a more constrained sense. 

Kentucky noted that there have been changes in the workforce recently. The Affordable Care Act has expanded the scope of Medicaid in some jurisdictions. This leads to more Medicaid recipients who are simultaneously in the workforce. Just as the federal government has begun to seek reimbursement when work injury costs are paid by Medicare, states like Kentucky have begun to seek such reimbursement when Medicaid provides care following a work injury. This will be a development that bears monitoring. 

Cyber security is a concern that seems universal. The news is full of hacks and breaches at various companies and agencies. States report that millions of "attacks" are being repulsed. NCCI noted that about 1,000 attacks or attempts to breach data occur daily, regarding its proof of coverage database. The consensus discussion was that states are doing a tremendous job of keeping data secure and safe in the face of these challenges. 

Opiods continue to be a challenge. Texas noted that its implementation of a pharmaceutical formulary has helped with control of narcotics. Some discussion revolved around the contention that WC has become an "addiction source," by introducing people to these drugs. When opiods are withdrawn, will there be assistance for those who have become dependent over time? Another perception is that as people decrease opiod use and their access thereto is limited, they may turn to illicit drugs like heroin; however, Texas denies that their experience has demonstrated the turn to illicit drugs. There is concern about dependence, and overdose and various deleterious effects of these drugs. 

Georgia is considering a formulary. California is working towards a formulary. In a post last summer I tried to make some sense of formularies. I still wonder how prevalent they will become in the world of workers' compensation. Every time I hear these discussions, I wonder if Florida will move that direction and whether it would be a positive for injured workers and employers.

Physician dispensing continues to be a curiosity. Various drugs were discussed Tuesday, and the prices that are related to them. Some prices are constrained by an established average wholesale prices (AWP); a medication may have been traditionally marketed in a 5 mg dose and 10 mg dose. Those dosages have AWP established by the manufacturers and at that price have been marketed to pharmacies across the country. 

Some prescribers are apparently forsaking these dosages in some instances and turning to new strengths like a 7.5 mg dose that has not been traditionally sold. There is no existing AWP for these new dosages and an AWP has to be established. Since this new dosage is not distributed widely, the AWP can be more carefully set, and in some cases is markedly higher for these new dosages. In some instances, it may even be many times higher than the stronger, already common, 10 mg dose. 

A WCRI study was mentioned, which found that these new dosages were prescribed primarily when the physician was dispensing, not when the physician was prescribing for filling at a pharmacy. The discussion suggested that some believe this raises questions about whether these new doses are prescribed because of their efficacy, compared with existing alternatives, or because of profit associated with them based on the newly established AWP. It is an interesting question and the discussion may continue. 

States are considering compensability of post traumatic stress disorder. Connecticut was recently in the news regarding its consideration of this after complaints by first responders who worked at the Sandy Hook disaster. Various states have different views on mental injury claims, the relationship to physical injuries, and compensability. This was a lively discussion wherein multiple jurisdiction representatives noted their state's distinctions and similarities regarding "mental" injury and requirements for relationship to physical injury, the so-called "impact rule." 

What causes most work accidents? A significant volume occur in automobiles. The discussion revealed that many such accidents occur, and then evolved into a discussion of distracted driving. We learned that cell phone use may be the equivalent of a .08 alcohol level. Voice texting may be just as distracting as typing while driving. It is apparently all more distracting than talking to someone in the seat next to you. 

Another disturbing concern with auto accidents is a perception that many  employees who suffer these are not wearing seat belts. One state related an incident in which a coroner was called out to an accident scene, and in the process of returning to the office s/he was killed in a vehicle accident while not wearing a seat belt. Commissioner Williams asked for a show of hands regarding who at the meeting wears seat belts regularly and the response was not unanimous. There apparently remains more to do in educating and encouraging the use of safety equipment. 

Finally, there was discussion of changes in the insurance market. Recently, Liberty Mutual announced its intention to withdraw from workers' compensation. Purportedly this is to seek greater return on investment in other market segments. This decision was compared with other carriers that are seeking to expand their participation in the workers' compensation market. Questions were raised as to why one company sees the market as one to leave while others see it as one in which to expand their involvement. The group reached no real conclusions on these seemingly incongruous decisions. 

In April I attended the NCCI in Orlando. Salim Ismail discussed disruptive technologies. He contends that Tesla built the first electric car because it could, as a new company with a stated vision supporting that course. He explains that when new ideas come up in a long-established company, with entrenched and existing products, the internal resistance to change can and often does kill the new idea. He contends that this is why GM and Ford did not produce the equivalent of the Tesla; and that a new entity, without the established corporate culture favoring some other paradigm, was required to bring this new idea to market. 

It is possible that this is true to some degree in the present insurance paradigm; that is, some new thoughts and ideas are perhaps more palatable or acceptable in newer or smaller carriers than they might be in an established entity with strong long-standing company cultures. Regardless of cause, it appears that change will continue in the carrier community. 

The regulator roundtable was an enlightening afternoon at SAWCA 2015. The next SAWCA roundtable will be on Monday, August 24, 2015 at the WCI in Orlando. Currently, there are 29 jurisdictions committed to participate in this roundtable, which will be moderated by SAWCA's own Judge Melodie Belcher of Georgia. For more information, visit www.wci360.com or www.sawca.com. 


Monday, July 20, 2015

Cases Remind us of Safety

I spend a fair amount of my life striving to understand workers' compensation. Despite the effort, I am constantly learning new things and finding perspective. Three recent stories caught my attention in late April 2015, and a fourth in July.

The first reminds us of the "going and coming rule" in a decision from Mississippi. On April 30, 2015 WorkCompCentral reported Woman Injured by 400 Pound Hog Gets Comp Benefits. The headline grabbed my attention. The woman was a passenger in a car that struck a wild hog in Mississippi, leading to significant injuries. The Mississippi appellate court affirmed the Mississippi Commission determination that the travel involved was incidental to the work. We do not have a significant wild hog population in Florida, but deer are periodically spotted along our highways. 

Another case about the same time had the headline Texas Nurse Dies after Falling from Hoist on Medical Helicopter, as reported by Fox News. The nurse was rescuing a hiker from a trail. She was inexplicably detached from the helicopter, fell and died at the scene. The matter remains under investigation. Some occupations present significant danger no matter how careful you might be. 

Then there was the case reported the last week of April regarding charges to be filed against Bumble Bee Tuna. NBC reported Bumble Bee Foods, Two Managers Charged in Death of Worker Cooked with Tuna. The story says that Mr. Melena, a maintenance worker, was repairing a 35 foot oven on October 11, 2012. Co-workers "mistakenly believed Melena was in the bathroom, filled the pressure cooker with 12,000 pounds of canned tuna and it was turned on." Co-workers searched for him, but he was found two hours later when the cooker was "turned off and opened."

In California more recently, an unfortunate man had a fall which resulted in a near fatal encounter with a meat grinder. CNN reported that he was "one blade swipe away from a fatal injury. The "machine's blades came around and broke his arm and came around again and broke his arm a little further up," according to Fire Chief Neal Berryman. He predicted that "the man's head or neck would have been hit next" had coworkers not responded to his screams and stopped the machine. 

Four unrelated stories from three jurisdictions; their only commonality might be that they involved work-related injuries. But the four came together in my head for a different reason. These stories made me think about the role that safety plays in our everyday lives. Accidents are that, unexpected and unintended. When they happen there can be profound effects on people's lives. To some extent, we are all dependent upon others for our safety, but ultimately we are also responsible for our own. 

The woman injured in Mississippi had travelled from Mississippi to Alabama to investigate a bingo operation there. The employer conceded that travel was a significant part of her job. However, she left Alabama "around 4 a.m." and was riding home with her sister driving "in a rainstorm" when the vehicle struck a "400-pound hog." 

The Mississippi Court held that these facts did not mean the worker's accident was not compensable. But, that does not mean that the choices were good. A gentleman I know who mentors high school kids stresses to them the simple fact that "nothing good happens after midnight." Not a bad adage. You tend to see animals near the highway at night. You I often see major accidents in rain.

The second story points out that sometimes it is not about choices. Some people work in industries where there is every expectation that their work will be in dangerous situations. The helicopter nurse cannot choose time or manner of travel like the Mississippi casino worker could. The nurse has to go when there is urgency, where there is urgency, and can only mitigate danger through attention to the method of her efforts. 

Though not yet reported to be a workers' compensation case as far as I can tell, this will in likelihood be a compensable accident. Of course, that is if her employer, STAR Flight, is a subscriber to workers' compensation in Texas. In Texas participation in workers' compensation is voluntary for employers. It may be of interest enough that one might ask when hired if workers' compensation is part of a job. Even in states with mandatory coverage, there may be statutory exemptions and exceptions. 

The third case is just as tragic. I wish it were the first case in which I have heard of someone killed in an industrial machine, but unfortunately this has happened before. We tend to think of an oven as that little device in our kitchen, but industrial facilities use tools that are larger and more complex than we typically envision. Repair and maintenance can require climbing inside the devices, where there are moving parts or other hazards. 

Because of the hazards that machines and the energy that drives them can present, the Occupational Safety and Health Administration (OSHA) has procedures called "lock out tag out." These recognize the hazards and require that the energy source is interrupted before maintenance work is performed. The energy is locked, and the maintenance worker has the key. The power cannot be turned back on without the maintenance worker's participation. If the oven had been properly locked-out, it could not have been turned on because the maintenance worker's key would have been in his pocket.

The Fourth case ads a little to our review of safety. There is always a chance for a coworker to play a positive role. In the meat grinder case, attentive coworkers heard the commotion, reacted rapidly and saved a man's life. Investigation will no doubt address ways that accident could have been prevented to begin with. Prevention is critical to be sure. But having coworkers who are safety-focused and ready to appropriately respond has a critical value as well. 

These cases help us to remember that there is a risk of accident in any job. It can present in a facility in which we work, at a destination to which we travel, and in the course of our travel itself. There are likely risks that we can minimize through choices like when to travel (and perhaps how fast we travel) and risks that we can perhaps minimize by following regulations or rules in place for our safety. We may be called upon, regardless of what might be "best practices" to put ourselves in situations that are dangerous despite our best efforts. 

In the end, the fact is that accidents happen, and will likely happen despite best efforts. Our best efforts should include knowledge of and compliance with safety regulations and safety equipment requirements. We should keep an eye on maintenance of our equipment and our own safety devices. Knowing that accidents will nonetheless happen, we are obligated to remain vigilant for the safety of ourselves and our co-workers. It is important to be reminded of that periodically.