A couple days ago a shadowy equity “research” outfit that goes by the name Copperfield Research published what can only be described as a hatchet job, with CorVel the target.
I’m no fan of CorVel - their business model makes little sense, their pricing model for bill review/networks/ancillary savings appears designed to maximize their revenue, the quality of their services varies widely, and I’ve been generally unimpressed with their customer service and value proposition.
I’m even less enamored of the “research” and “analysis” done by Copperfield. This isn’t a well-known research firm or trading outfit, I couldn’t find anything definitive about Copperfield, what their business is, who works there, and why they publish “research”. Others speculate Copperfield is the product of an individual engaged in short selling; making money when a stock price drops. I have no idea if that’s the case, but that would help explain the CorVel research paper.
Whoever wrote the hatchet job quoted me extensively; that’s why I find it necessary to speak out.
It is quite clear that Copperfield knows next to nothing about CorVel’s workers comp business, or the work comp world in general, for that matter. Here are a few specific issues I have with their “report”.
Copperfield cites the 2005 Broward County audit as an example of CorVel’s problems – folks, that was seven years ago. Why did Copperfield resurrect that story? How does this support his claim that “Corvel operates in the gray area of legal and business practices?”
Copperfield raises the Silent PPO issue; CorVel’s PPO, like every other PPO, probably has serious data issues and may publish inaccurate provider manuals as well. This isn’t evidence of intentional fraud; as anyone who’s ever been in the network business knows, the directory is obsolete the instant its published.
CorVel’s bill review and related operation is cited as another example of possible malfeasance. Again, disagreement between bill repricers and providers is not exactly new news, and disagreements don’t mean there’s intentional fraud.
Copperfield can’t understand how a work comp services company can grow while frequency declines. Boy, talk about a guy without a clue about comp. Severity is up, Copperfield, medical complexity is up, and many other services companies have also grown over the last decade – despite declines in frequency. Perhaps Copperfield’s extensive research staff didn’t find Sedgwick, MedRisk, PMSI, MSC, Express Scripts, Align Networks, York Claims, MHayes or any of the dozens of other companies, that have grown quite nicely over the last ten years.
He says “CorVel is paid based on the number of claims it manages and is often paid a percentage of the client’s savings…” Well, not exactly. CorVel gets paid in a variety of ways for a variety of services; Copperfield’s failure to delineate these various services and describe the associated pricing mechanisms shows a lack of attention to detail, or perhaps eagerness to avoid talking about issues that don’t support his assertions.
Moreover, Copperfield’s complete lack of professionalism is evident in his assertion that somehow CorVel’s percentage of savings model is an outlier, unique and different. We all know that’s far from reality. While I have voiced my objections to the model, the fact is it’s all too common.
He also says no analysts are following the company – not true. There are any number of research reports on Corvel
Okay, those are the highlights. Now let me get snarky.
This guy just flat out can’t write, yet he thinks he can. Here are a couple examples.
Discussing the Broward audit, he says it “succinctly details” information. Huh? That’s an oxymoron, and a wrong one at that – the report has 211 pages…
Copperfield likens himself to perhaps the most attractive exposer of corporate malfeasance in recent history, saying “we feel a certain kinship to the Erin Brockovich’s [sic] of the world…” I have no idea if Copperfield is the male equivalent but he certainly doesn’t know the difference between the possessive and the plural.
In discussing the results of his(?) extensive research, Copperfield says “we have uncovered some alarming finding.[sic] There’s that damn plural again…
If you really want a hoot, read his description of the work comp claims process on page 5. It is (unintentionally) hysterically wrong.
Finally, this knucklehead says “According to Joseph Paduda [that's me]…nurse case management is a low-margin.” I know, I know, he just forgot to add “business.” That’s not acceptable for two reasons. One, if you’re going to paraphrase or quote someone, get it right. Two, it shows a lack of attention to detail, an absence of care and thoroughness that may well extend beyond his inability to write.
What does this mean for you?
If Copperfield is selling short, he’s already done well. And if you’re reading his stuff and acting on it, good luck.