Race to the Bottom

Wednesday, March 18, 2015 | 0

Normally, workers' comp doesn't get much national media attention.

To begin with, it is somewhat arcane. And with systems varying from state to state, it is not an easy subject to cover. Generally, there is not much headline appeal in the topic.

Economic justice is becoming a more frequent topic in the media, but that doesn't extend to workers' comp topics. And a casual look at a week's media coverage will show many more stories focusing on identity politics, racial issues, immigration, Obamacare and the like.

But there was an exception earlier this month. The nonprofit ProPublica teamed up with National Public Radio to do a series on workers' comp (see links at the end of this blog post).

The series makes a strong argument that nationally, workers' comp has gone astray from the original intent of the system. There is, according to noted workers' comp scholar John Burton, a race to the bottom.

Benefits vary from state to state, but the national trend has been to cut back on benefits and to make it harder for workers to access benefits, including medical treatment.

Michael Grabell (from ProPublica) and Howard Berkes (from NPR) note the following national themes:

• Thirty-three states have cut benefits or made it harder to qualify.
• Employers complain of rising premiums, but workers' comp nationally is at a 25-year low.
• Workers' comp costs have been going down while other employer costs such as health insurance have been going up.
• The cost of caring for many workers is being shifted onto federal programs, such as Social Security Disability and Medicaid.
• Anonymous doctors who never see patients have gained increased power in various state systems.

ProPublica and NPR also note that the recommendations of a Nixon-era national commission on workers' comp laws are now widely unfulfilled. Their research shows that "only seven states now follow at least 15 of the recommendations made during the Nixon administration. Four states comply with less than half of them."

So while I can't vouch for the accuracy of their summary of the benefit systems in each state, the overall picture is clear. Workers' comp is devolving.

Whatever national consensus that previously existed has been collapsing.

Why is that? To say that it is the product of conservative ascendancy in many red-state legislatures is overly simplistic. After all, California is one of the bluest states, yet we have seen several reforms since 2000 that resulted in workers losing significant rights.

The 2003, 2004 and 2012 California reforms were passed by legislative chambers controlled by Democrats, and the 2003 and 2012 reforms under Democratic governors.

Embattled labor unions have been unable or in some cases unwilling to make workers' comp a priority. Politicians have not generally focused on workers' comp as a high priority public policy issue.

What we are seeing is the pressures of global economic forces and domestic competition playing out, as states cut benefits. Competing states fear that their economic base will erode if they are seen as high-cost states, so there is pressure to cut.

And it's quite likely that some of the interstate efforts to trim workers' comp are spurred by corporate think tanks such as the American Legislative Exchange Council.

Joe Paduda, in his blog Managed Care Matters claims that the ProPublica series is one sided, arguing that:

"I would suggest that writing about reforms, without discussing what's driving the medical care reforms, is an oversight. And there was precious little discussion of cost drivers, but a lot of discussion about cost control methods, including a tortured passage attempting to describe California's utilization review process, and the issues inherent therein.  Unfortunately, the coverage of this issue focused on the denials of care, not on the reasons therefore, the process that is used, and why some requests should be denied."

Paduda goes on to note that:

"I'd suggest that the story is far from complete. It ignores the rampant profiteering that is the primary driver of the reforms described in generally negative terms, fails to point out the complicity of the claimants bar in extending disability, and completely misses the damage done by profiteering physicians over-prescribing opioids and benzodiazepines and failing to work closely with payers and employers."

In truth, Paduda is correct that some of the reforms in various states have been a response to out-of-control trends in the system. I wouldn't argue with that overall point, though we might debate the details, particularly as they relate to California.

However, as I was wrapping up this post, it has come to my attention that David Lanier, California's Labor Secretary (and boss of Department of Industrial Relations' Christine Baker), wrote to ProPublica challenging the way California reforms were portrayed.

Here is the text of Lanier's letter:

The reporting of Joel Ramirez's case in the NPR/ProPublica article of March 4, 2015, incorrectly implies that California's negotiated workers' compensation reforms of 2012 allowed Travelers Insurance to unilaterally cut off his home health care and renege on a previously approved treatment plan. This is not accurate.  Further, omitted in its entirety in your report and misrepresented in the interactive graphics included, was any mention of a nearly $1 billion increase in benefits for injured workers in California under the 2012 reforms.

On the question of cutting off home health care, agreed-upon medical treatment must be honored, and California's 2012 reform law, SB 863, did not change this. The insurance company was responsible for Mr. Ramirez's tragic situation, not the new law. When Mr. Ramirez took his insurance company to court for having denied the health care services he relied on, the court found no evidence that could justify ending those services and they were restored. Under the 2012 reforms, unless a treating physician provides medical evidence of a change in the injured worker's condition that justifies modification of agreed-upon treatment, the treatment cannot be modified.

Two important components of California's reforms are utilization review and the newly created independent medical review procedure. Utilization review ensures that treatment requests by a physician are, in fact, medically necessary. This process prevents harmful over-treatment and over-medication. The independent medical review program uses neutral medical experts to make evidence-based determinations to more quickly resolve disputes regarding the medical necessity of recommended treatment. This replaces the prior system that delayed treatment because it required a costly and time-consuming medical-legal process.

Regrettably, Travelers Insurance did not follow the mandated utilization review process, which would have allowed Mr. Ramirez to then use the independent medical review procedures to appeal. Instead, the insurance company unilaterally terminated Mr. Ramirez's round-the-clock home health care services outside of any approved procedure, and he was left with no recourse but to take his insurance company to court.

As to the question of benefit cuts, California's reforms in SB 863 united labor and employers to improve the system for workers by increasing permanent disability benefits and eliminating frictional costs of providing medically unnecessary treatment. Permanent disability benefits were increased 30 percent, increasing payments to injured workers by more than $800 million per year. Included in this major benefit increase is up to $120 million annually in special funds for injured workers whose employers do not offer them continued employment after the injury at approximately the same pre-injury income levels.

I appreciate the opportunity to set the record straight on California's progress to increase benefits for injured workers and improve the medical treatment process.

David Lanier
Secretary
California Labor and Workforce Development Agency

The Joel Ramirez case that Lanier writes about is featured in the ProPublica piece. Ramirez is paralyzed from the waist down and had his home care pulled. Without home care, he has at times been forced to lie in his own excrement for hours.

Lanier appears to be challenging ProPublica on whether the California utilization-review and independent medical-review system had anything to do with the termination of Ramirez's home care or whether it was indeed a unilateral termination of care by the carrier. I'd like to post on that once I learn more of the detailed facts in that case.

My own experience has shown that home care is being cut in serious cases where severely disabled workers rely on it.

Lanier may be poorly informed.

Lanier is, of course, "all in" for what he argues are positive effects of the 2012 SB 863 reforms. So anything that reflects badly on the fairness of the reforms is a potential public relations problem for the Brown Administration. Lanier glosses over many problems with the reforms.

More to come on this in future blog posts.

Meanwhile, here are links to the ProPublica articles:

"The Demolition of Workers' Comp"

http://www.propublica.org/article/the-demolition-of-workers-compensation

"Workers' Comp Reforms By State"

http://projects.propublica.org/graphics/workers-comp-reform-by-state

"Premiums for Employers are Down"

http://projects.propublica.org/graphics/workers-compensation-premiums-down

"How Much is Your Arm Worth?"

http://www.propublica.org/article/how-much-is-your-arm-worth-depends-where-you-work

"Benefits by Limb"

http://projects.propublica.org/graphics/workers-compensation-benefits-by-lim

Julius Young is an applicants' attorney at the Boxer & Gerson law firm in Oakland. This column is reprinted with his permission from his Workers' Comp Zone blog.