‘Workers’ Comp Industrial Complex’ Cost-Containment Measures Harm Workers

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The National Workers' Compensation and Disability Conference & Expo in November featured a party with an acrobat, Hummer limos and a live alligator named Spike. Another workers' comp conference in August hosted a concert by Joan Jett & the Blackhearts. (Clockwise from top left: Michael Grabell/ProPublica, Artemis Emslie via Twitter, Tom Kerr via Twitter, Jamie Gassmann via Twitter)

The National Workers’ Compensation and Disability Conference & Expo in November featured a party with an acrobat, Hummer limos and a live alligator named Spike. Another workers’ comp conference in August hosted a concert by Joan Jett & the Blackhearts. (Clockwise from top left: Michael Grabell/ProPublica, Artemis Emslie via Twitter, Tom Kerr via Twitter, Jamie Gassmann via Twitter)

It is the beginning of a new legislative year in the United States. State legislatures will face the latest versions of “reforms” to workers’ compensation laws from business and insurance interests. They will renew their annual claims that the proposals benefit workers while coincidentally lowering or containing costs for employers and insurers. I wish these people would be honest about their real intentions. Cut the **** or to quote Monday Night Football: “COME ON MAN!”

A recent expose on the “workers’ comp industrial complex,” is a must read for all who care about injured workers and their rights. ProPulica author Michael Grabell describes the   “workers’ comp industrial complex” as a loose association of insurance and business groups and cost-containment companies, which are being bought and sold for billions of dollars in profits. Meanwhile, workers and their representatives fight endless legislative battles to prevent more benefits reductions and added obstacles to collecting those benefits. 

“… Over the past two decades, a cottage industry of middlemen has emerged, which some have dubbed the ‘workers’ comp industrial complex.’ Even private equity firms have bought in, seeing profit opportunities in employers’ and insurers’ quest to contain spending.

“The middlemen offer an array of services, from managing claims to negotiating medical bills, all promising to reduce costs — although critics say some actually raise them, as well as the burden on those hurt on the job.”

This ProPublica article shows the HUGE business opportunities some see in workers’ compensation. But these efforts will not help the injured worker, because cost containment means reduced benefits, stalling, denied claims, and working the system to delay, all at the expense of the injured worker and often his or her long-term health.

Respected workers’ compensation commentator David DePaolo, writes a column called “DePaolo’s Work Comp World” at workcompcentral.com, a website that bills itself as “Workers’ Compensation Education, Courses, News and Information.”

One of his recent articles, titled “Stop The Fantasy,” takes the notion of cost containment to task, and he also writes his views on the state of how “the media” cover workers’ compensation.

“Workers’ compensation should not be mysterious, should not be hiding, and should be exposed to the public good or bad, because it is for the public – each and every person that works in this country should be afforded reasonable work injury protection. It’s good social policy. It’s good economic policy.”

This focused quote from DePaolo’s commentary regards the “workers compensation industrial complex” that ProPublica took to task, where DePaolo really questions the need for and philosophy of this part of the workers’ compensation system.

“Cost containment is an apt term if we, as an industry, are willing to accept its definitional reality – that the intent of cost containment is to save money for those who are paying it out,” DePaolo wrote in his article.

“Let’s stop with the fantasy that cost containment is for the benefit of injured workers. It’s not. Otherwise it would be called something else. That cost containment paradoxically results in medical treatment that should cause better outcomes is not the paramount reason for these businesses.

“We all know that – so let’s stop trying to pretend that it is something which it is not.

“If the services are intended to benefit injured workers then there should be a better term for those services that should reflect that beneficial treatment,

“Maybe we’re misunderstood. Maybe our good intentions aren’t appreciated.

“But maybe cost containment really is an accurate term – and at whose expense?” 

Cost containment appears to be both big business and big money, from the extensive ProPublica article. Here are two paragraphs that explain the spoils that people could win or received at just one of the “more than 150 workers’ comp conferences a year.” 

“… For three days in November, hundreds of vendors wooed insurers and employers with lavish after-hours parties, giveaways of designer handbags, photos with Olympic gymnast Kerri Strug, and free rides in orange Hummer limousines. … Vendors gave away Apple watches, bottles of bourbon, and a Vespa scooter. There were free massages and shoeshines, a superhero caricature artist, more than one mentalist, and a live alligator named Spike.”

After all this excitement, the ProPublica article explains how much of workers’ compensation premiums that insurers in California spent on overhead – 36 percent – and how “the amount of money that insurers spend on medical cost containment programs has more than doubled from $197 million in 2005 to $471 million in 2014, according to the state workers’ comp ratings bureau.”

Some people involved in the fancy exposition included the following, quoted from ProPublica.

“There were companies that provide networks of doctors and companies that review medical bills, firms that provide expert medical opinions and firms that specialize in complex claims. There were defense lawyers, data processing firms, rehab facilities, surveillance companies, outside claims shops, occupational medicine clinics, pain management services, translators, schedulers, headhunters and associations promoting other conferences.

“There were labs that test injured workers’ urine for illegal drugs. There were even labs that test urine to ensure workers are taking the prescribed drugs instead of selling them.”

Now, because of the profit potential in “cost containment” (this is a phrase that should make people groan, as I did), “private equity firms have gone on a buying spree,” according to ProPublica, resulting in little-known players outside the workers’ compensation system becoming “powerful players in determining the future of how injured workers are treated.” 

“Increasingly, though, decisions to deny care aren’t being made by workers’ employers or insurers, but by these myriad claims administrators, managed care companies and cost-containment firms. Some industry observers say the firms have added a layer of cold bureaucracy to an already complicated system,” according to the ProPublica article.

I could provide more quotes and details from the articles, but as I wrote initially in this post, both the ProPublica and DePaolo’s articles are essential reading material for those who care about workers, how society treats workers, and who helps workers, especially when they’re injured. Because the system that’s supposed to help those who get hurt at work, workers’ compensation, is often bloated, confusing, and full of those (like folks working in cost containment) whose focus isn’t necessarily to either help injured workers heal, get back to work, or move on with their lives, but muddle the process instead.

We cannot match the resources of the “workers’ comp industrial complex,” but our cause to serve injured workers by getting them the prompt, quality medical treatment they need and deserve is just, and we must keep fighting the good fight!

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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