Friend and colleague Bob Wilson has penned a piece essentially dismissing my claim that pay-to-play exists in the work comp services world. Responding to my series and a great column from WorkCompCentral’s Dave DePaolo, Bob said:
my impression is that major, blatant “payola” in workers’ compensation is rare. At least it has not existed within my personal experience.
In fact, my impression has been completely the opposite.
Bob’s a lucky man, fortunate indeed to not have encountered this sleaze.
I do know of several instances where it has occurred, and Dave described one in detail. And I am convinced there’s a lot more of this than the few instances Dave and I have heard of.
The fact that someone doesn’t know about them isn’t a surprise; by their nature they are entirely secret. If and when these transgressions are discovered by the payor, there is no reason for the payor to publicize the finding and every reason to cover it up. Such is the nature of white collar crime.
I’ve had several conversations with vendors after my series of posts where they described veiled and not-so-veiled requests for services, trips, and other consideration from buyers. It’s real, it exists, and the examples I cited are from conversations with individuals with direct knowledge of these events.
Some have asked why I don’t name names. It is NOT my responsibility to do so. The entities paying these bribes are well aware of the practice yet choose to pay. I am not going to pit my meager resources against those of corporations with hundreds of millions in revenue and legions of lawyers at their beck and call.
That’s part of my disagreement with Bob’s column. The other is that his piece doesn’t address the far more common practice of corporate pay-to-play.
Bob didn’t address the TPA industry’s common practice of charging fees to service companies to do business. That is ubiquitous, and was the subject of a rather contentious debate between Sedgwick CEO Dave North and I at the NWCDC several years ago. At the end of that debate, Mr North a) said Sedgwick doesn’t take much in the way of fees from vendors and b) agreed to share all his vendor contracts with his customers.
I lauded Mr North from the stage and in a blog post for his willingness to publicly offer to share those contracts with customers. I don’t know that any contracts have been shared or any fee-sharing arrangements acknowledged. I certainly haven’t heard about any such disclosure.
To be clear, I’d reiterate a key point made in one of my pay-to-play posts:
What’s not fine is not disclosing the fee-splitting arrangements between the TPA and service providers. Actually, let me refine that – what’s not fine is telling employers no such splitting occurs when it does. Some TPAs tell their customers that they get paid by vendors, and aren’t going to disclose those payments. Again, that’s OK – employers know they are paying “extra” to the TPA for claims and related services, and they know they won’t find out how much “extra” that is. Caveat emptor.
Based on his experience, Bob notes “Are we rife with corruption, with executives on the take and intentional efforts to defraud millions?
Of course not. ”
I suppose it depends on how you define “corruption” and “intentional efforts”.
What does this mean for you?
Employers, are you absolutely, positively, 100 percent certain you know what you are paying for claim-related services?