No OSHA administrator.

Rollback of regulations on exposure limits for beryllium and silica.

Eliminating the Chemical Safety Board.

These are just three examples of the Trump Administration’s apparent move to de-emphasize worker safety, and appear to be a harbinger of things to come. There’s no question the current regime is focused on business’ interests; what’s troubling is there appears to be no recognition that worker safety IS good business.

As a frequent and scathing critic of some of ProPublica’s past mis-reporting on workers’ comp, I do have to acknowledge they have done good work reporting on individual companies abusing workers, particularly undocumented immigrants. However, the ProPublicas of the world have been mostly silent on these alarming changes at the Federal level. These self-appointed watchdogs made hay two years ago using distortions and anecdote to pillory an entire industry; I would suggest that their reporting expertise would be well-employed if it focused on the potential long-term impact of the Trump Administration’s rollback in worker safety.

As a side note, WCRI’s just-published report on wage replacement for long term injured workers in Michigan brings some much-needed perspective to this key issue. If the feds are going to roll back safety enforcement, the burden is going to fall on individual states. That will require resources that many state legislators will be loathe to find in these days of tax revolts.

What does this mean for you?

Don’t buy cheap chicken.

Is not the occasional worker cashing checks s/he shouldn’t, or bowling while fully disabled, or double dipping.  No, it’s:

• employers going without insurance coverage so workers and taxpayers foot the bill,
• providers scamming the system to make millions, and
• a relative few applicant attorneys and their schemes to defraud employers and taxpayers.

Today’s WorkCompCentral has a terrific piece by Greg Jones highlighting this last scam. Jones has dug deep into “capping”, a California scheme to recruit allegedly injured workers for attorneys and their physician “partners”.  These fraudsters may have single-handedly generated hundreds of repetitive trauma cases in the LA County area…CWCI’s done masterful reporting on this issue, finding “a strong association between attorney involvement and regional variation in the Los Angeles Basin and the high cost of CT claims.”

Then there’s the incredibly creative providers that make millions from:

• dispensing drugs to patients;
• doing drug “tests” using their inhouse machines;
• unholy alliances with compounding “pharmacies” or
• compounding drugs in their own offices.

A new scam was also reported in this am’s WCC; a Florida doc (why is it always Florida and LA County?!) allegedly used telemedicine “visits” to prescribe compounds to work comp claimants.

These bad actors suck money out of taxpayers and employers and do NOTHING to help work comp patients.

Blood boiling yet? Well, it’s about to vaporize.

Bad as that is, the real fraud is employer misclassification and related schemes.

A seminal study indicates ten to twenty percent of employers misclassify workers as independent contractors.

As the gig economy expands, this is going to get worse – much worse. From the Economic Policy Institute:

• Atlanta stagehands for concerts produced by Live Nation, a company listed on the New York Stock Exchange that has held shows for such artists as Maroon 5 and Billy Joel, have been misclassified as ICs by a staffing provider (Vail 2015; DePillis 2015).
• An estimated one-third of construction workers in Southern states such as North Carolina and Texas have been misclassified (Ordonez and Locke 2014a). [emphasis added]
• And roughly 20,000 employees of CrowdFlower Inc., a San Francisco–based startup that breaks down digital jobs such as data entry, are misclassified, alleges a case now moving through the courts (Weber and Silverman 2015)

This is particularly problematic in construction, but it isn’t limited to southern states. Payroll fraud cases have been reported in Massachusetts, Washington, and many other states.

Yet you wouldn’t know from the press – and press releases from insurers – that payroll fraud and other schemes are the real problem dwarfing the individual worker fraud problem.

That’s just too bad disappointing awful.

I’d encourage real journalists to concentrate a lot more on the real problem – employer fraud – and avoid the clickbait nickel-and-dime “fraud” allegedly perpetrated by individuals.

What does this mean for you?

Work comp insurers, the ones that are really screwing you are employers. Get with it.

“If we didn’t come up with the idea, it isn’t worth considering.”

“That can’t be a good idea, we didn’t think of it.”

“Why would we listen to anyone from outside our company; we’re the biggest/best/most experienced/industry leader.”

Those are just three of the statements I’ve heard from large work comp insurers over the last two decades – all  from insurers who’ve fallen far from their glory days of market dominance. They may seem ignorant, or dumb, or even kind of funny – but they were real.

Sitting comfortably in leather chairs behind their nice desks, the men who made these statements were completely secure in their belief that their company, their way of doing things, their mindset and culture were completely infallible.

How wrong they were. As easy as it is for us to see that now is how impossible it was for them to see reality then. 

The next five years are going to bring profound changes to workers’ compensation, changes which – by definition – will make many of today’s business practices obsolete. It isn’t hyperbole to say that unless you completely revamp the processes, systems, technology applications, and metrics you use today, you’re toast tomorrow.

We are seeing that with Liberty’s progressive de-emphasis of workers’ comp. With the increasing outsourcing of claims functions to TPAs. With the rapid growth of what were relatively small players just a few years ago.

And that’s just the beginning.

All these changes have been driven by lower work comp claims frequency – that’s not new news to anyone. But hidden behind this is another major driver – the continued inability of major insurers to understand the business they are in.

Work comp insurers are in the business of managing medical and disability. While many think that’s what they are doing, they aren’t. Their claims management approach, predicated on the disproven model of huge provider networks delivering discounted care and the medical model of disability, overseen by overworked and under-resourced claims adjusters reporting to executives steeped in claims who don’t understand medical issues at all, only seems to work as long as premiums stay high and frequency continues to decline.

Wrenching changes are coming to employment, job availability, workplace demographics, trade and safety nets, changes that the industry is completely unprepared for.

Not to worry; the powers-that-be will schedule meetings, draft memos, write white papers, and do re-org planning, most of which will be completely ineffective, except insofar as it makes the execs feel like they are doing something. They’ll get rid of managed care departments, expertise, programs because “those programs haven’t worked.”

Of course they haven’t, because they were either the wrong programs to start with (percentage of savings network models) or the execs didn’t force adoption of intelligent medical management on a recalcitrant claims culture.

I see this happening all around the industry, and it’s like watching Antarctica melt. By the time these worthies figure out it’s real, they’ll be floating towards the tropics on a rapidly-melting iceberg.

With no landfall in sight.