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PHOENIX — State lawmakers are tinkering with the way workers’ compensation operates, but some of the more drastic proposed changes to the system have been put on the back burner, at least for now.

State Rep. Karen Fann, R-Prescott, knew she was facing an uphill battle in passing legislation designed to streamline workers’ compensation, but she decided to push the programs anyway because she says the system needs reform.

The first-term lawmaker said the ideas in her package of three bills heard earlier this month in the House Banking and Insurance Committee have been proposed in past years. However, each time legislators examined the types of reforms she is looking for — including cutting down on workers’ compensation fraud, allowing state and municipal governments to enter into agreements with directed care medical provider networks, and making sure the system covers only “evidence-based medicine” — the proposals were kicked down the road.

But Mike Colletto, director of legislative affairs with the Professional Firefighters of Arizona, said the reforms haven’t been implemented before because they’re bad policy. He has been involved in stakeholder’s meetings on proposed workers’ compensation legislation since the 1980s and opposed the efforts.

“There have often been stakeholders meetings in the past and the Legislature chose not to move forward with it because they saw the reasons not to,” Colletto said. “That’s the reason that it gets so-called kicked down the road, because once they fully reviewed the ins and outs of this complex system, they saw the balance of rights and responsibilities they chose not to move forward.”

Even other Republicans said the sponsor put a lot on her plate with the highly technical, big-change bills.

“Representative Fann, boy, you really know how to bite off a big apple, that’s for sure,” said Rep. Carl Seel, R-Phoenix, during a Banking and Insurance meeting Feb. 6.

One bill (HB 2368) tries to combat fraud in the workers’ compensation system by authorizing insurance carriers and employers processing a workers’ compensation claim access to contribution and wage reports to verify income.

The bill also increases payout for an unemployed person seeking benefits by implementing a modified index for calculating average monthly wages, and allows an injured employee to pursue remedy against the person who further aggravated the employee’s previously accepted industrial injury.

Supporters say the system contains no fraud prevention method now, and allowing insurers and employers to access outside information regarding employment and income will allow them to better combat fraudulent claims. The modified index, supporters say, is a more stable way to calculate wages that doesn’t dip and soar with employment shifts.

The bill was the only one of the three to make it out of the committee, and it now awaits a full vote by the House. Before becoming law, the bill would also need approval from U.S. Department of Labor to allow insurers and employers to access wage reports.

Under another bill (HB 2365) workers’ compensation providers would have to use American College of Occupational and Environmental Medicine’s (ACOEM) occupational medicine practice guidelines to establish evidence-based treatment practices for workers’ compensation cases.

Dr. Mitchell Lichton, a hand surgeon, told the committee that he looked at the ACOEM’s book, and looked up the section about his practice. While it might be good for a new doctor as a guideline, he said it simply isn’t extensive enough as a list of accepted treatment.

“They have here 20 hand wrist and form disorders, of which they will tell you how to treat,” he said. “Instead of going to 11 years of school after high school, I could have learned those 20 and probably been pretty good at it. There’s a lot more than that.”

The third bill (HB 2367) proposed the biggest changes in workers’ compensation and would allow state and municipal governments to enter into medical care networks to provide their workers’ compensation coverage. If the employer decided to use a medical care network, workers would have their option of doctors limited to doctors within that network.

The Arizona Chamber of Commerce and Industry supported the bills, and its lobbyist, Marc Osborn, said allowing state and municipal governments to use medical care networks for workers’ compensation will make the system easier and cheaper, and will allow employers to drive down rates.

“The whole idea is you can provide care in a much more streamlined, cost effective way,” Osborn said. “On behalf of the privately insured, we’ve seen huge benefits. Things like being able to get our employees into a physician in a much quicker manner, which means their injuries get taken quicker, which means they get back to work, and we’re able to negotiate aggressive rates with those providers.”

Detractors agree the networks will drive down costs, but they say the savings will come at the expense of workers, who will have limited options in their doctors and who will use workers’ compensation less.

“I’ve heard today this is going to drive down costs,” said Barry Aarons, a lobbyist for the Arizona Association of Chiropractic and the Injured Workers Pharmacy. “Oh yeah, it’s going to drive down costs — it’s going to drive down costs by driving down utilization. That’s the only way that they have to drive down costs.”

Aarons said the measures are too draconian and he likened using these bills to try to cut down on excesses in workers’ compensation to trying to kill a mouse with a gun meant for an elephant – “You’re going to succeed in killing the mouse,” he said. “But you’re going to have an awful lot of collateral damage on the side.”

Opponents also argue that the proposed changes would constitute a reduction of benefits, which the state constitution says would require voter approval through a referenda.

Article 18, Section 8 of the Arizona Constitution, which established the workers’ compensation system, reads: “The percentages and amounts of compensation provided in house bill no. 227 enacted by the seventh legislature of the state of Arizona, shall never be reduced nor any industry included within the provision of said house bill no. 227 eliminated except by initiated or referred measure as provided by this Constitution.”

Rep. Debbie McCune Davis, D-Phoenix, worried the legislation would make it harder for rural Arizonans to get access to treatment in areas where networks aren’t as robust as they are in bigger cities.

Committee chair Rep. Nancy McLain, R-Bullhead City, was concerned the legislation did not provide an opt out option for employees, as she is required to do with the employees of her janitorial service company.

Because of these concerns and more, Fann decided to ask the committee to hold the last two bills, and they have not had a hearing since. Opponents of the bills plan to keep a lookout for similar proposals to surface in the Senate.

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A state surcharge paid by employers to fund New York’s workers’ compensation system is the highest in the nation, putting municipalities under the new tax cap between a rock and a hard place, a new study concludes.

The Workers’ Compensation Policy Institute on Wednesday announced its findings: that a surcharge paid by all employers in addition to their insurance premiums is roughly five times higher than the national average.

And, the institute says, much of that has happened in just the last two years, when the “tax” known as an assessment on insurance premiums was raised by 10.4 percent and 27 percent, respectively.

“This tax burdens all employers — and municipal employers feel this mandate especially acutely as they struggle to provide essential services and contain taxes,” Paul Jahn, executive director of the institute, said.

Workers’ compensation insurance is mandatory in New York — where there is no cap on individual claims — meaning the state system is sometimes described as a “risk pool” for businesses who don’t deal with a private insurer. All employers, however, pay the surcharge.

Thirty-two other states impose a similar “tax” with an average surcharge hovering around 4 percent.

In New York state, that percentage is 20.2 percent.

The next highest state tax can be found in Minnesota, at just 8.9 percent.

“The assessments that we pay to the state are based on our self-funded claims, and that has been going up exorbitantly,” City of Tonawanda Treasurer Joe Hogenkamp said.

But, he said, thanks to a little luck, the city’s current number of open claims is small. He said it hasn’t allowed the state payments to exceed past highs, and despite budget constraints, workers’ compensation costs aren’t currently to blame for any budget gaps.

“A lot of it is luck,” he said.

The city had 27 open claims at the end of 2010, though just eight actually occurred that year, as the number of claims is an evolving list year to year.

To get an idea of that, that means the city is self funded and pays out of pocket for comp claims up to a point, before insurance takes over. The stop loss figure varies, but is roughly a little more than $200,000,  Hogenkamp said.

Of the 27 open claims in 2010 (which simply indicate an injury not a loss of manpower) the city’s insurance carrier valued them at a net $851,000.

As an example of the budgetary impact, he said the city that year budgeted $725,000 to maintain adequate reserves to pay for current and future workers’ comp claims.

Around the same time, in 2011, the city paid a total of $30,000 in state assessments into the system — a number that today would increase along with percentage increases in the state’s assessment rate.

If the city is hit with a high number of claims, the figure could quickly come to impact year to year budgets in a big way, especially since a new state law largely bans tax levy increases of more than 2 percent to otherwise backfill the potential costs.

“New York’s municipalities now find themselves caught between a rock and a hard place,” reads a statement accompanying the latest report by the policy institute. “Their ability to raise revenues is constrained by the 2 percent cap on property tax … the additional increase of the hidden tax on workers’ compensation premiums complicates an already difficult situation and cannot be sustained long term.”

Over in the private sector, North Tonawanda’s Taylor Devices, a publicly traded firm manufacturing all manner of industrial shock absorbers, has had its run-ins with a workers’ compensation system that’s failed in recent years.

While the company, according to President and CEO Doug Taylor, has a favorable claim history, it was forced to settle for a large sum in 2008, after an Albany-based cooperative insurance carrier they had been using went belly up.

Such insurers acting in cooperation with one another had been recommended by the state to companies looking for an answer to high state premiums, but have been the subject of justifiable criticism in recent years, in some cases for  being underfunded and risky.

When the insurance cooperative went bankrupt, companies like Taylor were left to settle or hold the bag — potentially for millions in unpaid claims not even related to the company — since a “joint and several” stipulation of the policy required them to inherit liability for all of the carrier’s clients in the event they went under.

Taylor said since then, his company has secured a dedicated, private policy covering workers’ compensation, but that many new businesses without a demonstrated claim history or businesses with a large claim history may be forced to use the more expensive state system.

Such private insurers are increasingly hard to find in New York, he said. But, Taylor’s Chief Financial Officer Mark McDonough said if enough employers have since found similar dedicated, private policies, it could at least partially explain the state’s explosion in assessment surcharges.

In Indiana, a subsequent injury resulting from a worker’s blocked vision due to his wearing a bulky medical device for his compensable injury can be compensable.

Case name: Moorehead Electric Co., Inc. v. Payne, No. 93A02-1105-EX-457 (Ind. Ct. App. 12/29/11).

Ruling: The Indiana Court of Appeals held that a worker was entitled to benefits for the reinjury of his shoulder.

 

What it means: In Indiana, a subsequent injury resulting from a worker’s blocked vision due to his wearing a bulky medical device for his compensable injury can be compensable.

Summary: A worker injured his shoulder during the course of his employment for an electric company. The company provided him with benefits and authorized two surgeries. The worker was instructed to wear a bulky shoulder brace 24 hours per day. The worker was attending a wedding reception when an individual carrying a rod with a large bag walked toward him and wedged himself between the worker and his wife. To avoid being struck by the rod and bag, the worker stepped to the right. His foot hit a raised grate surrounding the base of a tree, causing him to fall and reinjure his shoulder. The worker’s shoulder brace blocked his view of his foot and the raised grate on the sidewalk. The worker had a third shoulder surgery. The company refused to pay workers’ compensation benefits for the third surgery and additional disability benefits. The Indiana Court of Appeals held that the worker was entitled to benefits.

The parties did not dispute that the worker’s initial shoulder injury arose out of and in the course of his employment. The company argued that the causal connection between the original work accident and the second incident was broken by an intervening act of the individual forcing the worker to quickly move out of the way to avoid being struck by the individual and the rod and bag he was carrying. The court disagreed, finding that the reinjury was a proximate cause of the original injury.

The court found that the worker’s ability to walk was impeded by the bulky shoulder brace he was required to wear. The brace contributed to his fall. The court also concluded that the worker was not negligent when he stepped to the side to remove himself from the individual’s path.

Read more at the WorkersComp Forum homepage.

 

A sharp reader pointed out a potential problem in the state’s plan to relocate the Workers Compensation Board from its offices on Park Street in Albany to 328 State Street in Schenectady: the law dictates that its “principal office” must be in Albany.

Here’s the relevant section of law:

§  146.  Offices of the board. The principal office of the board shall
  be in the city of Albany.  There shall be also an office in the city  of
  New  York  and  at  such  other  place  or places in the state as may be
  required properly and conveniently  to  transact  the  business  of  the
  board.  The  board may meet and exercise any or all of its powers at any
  place in the state.

The e-mail from WCB Executive Director Jeffrey Fenster announcing the change to employees makes note of this, saying the Board “will continue to maintain a presence in the City of Albany.” But a paragraph earlier in that missive, which we posted yesterday, Fenster describes a move of WCB’s “primary administrative offices” to Schenectady. I’m unclear how this will be reconciled, and exactly what the “presence” will entail. For example, whether Fenster will remain in Albany.

Fenster referred a call to his spokesman, who e-mailed this statement in Fenster’s name, and wouldn’t elaborate further about that “presence.”

“Any move being considered by the Board is in compliance with existing law and regulations,” Fenster said. (Phew.) “Further, any move will result in significant cost savings to the state. Additional details will be provided in the future when the move is finalized.”

NEW ROCHELLE, NY — Jake Ballard was hoping it wasn’t serious when he went down with a left knee injury in the fourth quarter of the Super Bowl.

After the 21-17 win, he was initially encouraged to hear that the feeling was he injured his meniscus.

But after undergoing an MRI, the tight end got much worse news with a torn ACL.

“I was pretty surprised,” Ballard said after an autograph signing for Steiner Sports. “[After] the MRI, the doc came in with a look on his face and I just knew it wasn’t my meniscus. So it was pretty frustrating.”

General manager Jerry Reese said Ballard and tight end Travis Beckum will likely start the 2012 season on the physically unable to perform list. Beckum tore his ACL in the Super Bowl as well.

“Six-to-eight months and they’re going to try and make it for the beginning of the season but if not a good chance at PUP,” Ballard said of an optimistic timetable for recovery. “I definitely don’t want to go out there too early and hurt it again so if I get eight, nine months to prepare, I’m fine with that.”

“Clint Sintim came back too early and he might not have been ready and he hurt it again,” Ballard added of the linebacker who tore his ACL in the preseason after tearing his ACL in December of 2010. “So we’re going to play it by ear and I’m going to bust my butt to try and make it by the beginning of the season.”

Both Beckum and Ballard will undergo surgery on Feb. 21. It was a bittersweet ending to a breakout season for Ballard. He emerged as Eli Manning’s top tight end, replacing Kevin Boss.

But Ballard injured his right PCL late in the season and fought through it in the playoffs.

Tearing his ACL in the fourth quarter of the Super Bowl was painful in more ways than one.

“It’s the biggest game of anyone’s life,” said Ballard, an exclusive rights free agent who will re-sign with the team. “To get hurt in it and can’t contribute in the end when the game’s on the line, it’s like a nightmare. But they came through in the end and we still got that ring.”

Ballard tried to get back into the game and attempted to run on the knee on the sideline before falling in pain.

“Probably the worst pain I’ve ever had in my life,” he said. “But what was I going to do? Not try to go back in?”