November 2011
On July 16, 2003 in Santa Monica, California, a private passenger vehicle drove through a farmers market contacting vendor displays and pedestrians before stopping. The accident resulted in the deaths of 10 people, and 63 others obtained minor to severe injuries. The driver occupant was uninjured.
According to the National Transportation Safety Board (NTSB), the probable accident cause was failure of the driver to maintain control of the vehicle resulting from unintended acceleration. The National Transportation Safety Board's Highway Accident Report also said the lack of a barrier system to help protect pedestrians in the Santa Monica's Farmers Market from errant vehicles contributed to the accident severity.
The above incident is clearly an unfortunate tragedy resulting in bodily injuries and loss of life, significant property damage, and subsequent lawsuits.
This article will provide a risk management strategy for managers of farmers markets to assist in hazard recognition, thereby increasing property protection and public safety.
History Of Farmers Markets
The U.S. Department of Agriculture (USDA) has estimated the number of farmers markets has increased 79% exceeding 3,100 nationally from 1994 to 2002. In 2004, the number topped 3,700. The U.S. Department of Agriculture has no Federal enforcement or regulatory authority over farmers markets. It maintains a national database of market locations (inclusion is voluntary), and the database does not specifically record safety issues affecting farmers markets. Discretion of local authorities decides on market place location, permitting requirements, and applicable traffic control plans to ensure the market safety.
Regulatory Requirements
In California, the State's Department of Agriculture certifies farmers markets. The state has over 300 Certified Farmers Markets (CFM's) with 80 domiciled in Los Angeles County limits. Only certified farmers, governmental entities, or nonprofit organizations can operate a Certified Farmers Market within the state. Each individual vendor and market's operator must receive certification from their respective county's agriculture commissioner. Regulatory agencies' requirements vary in each state, county, and city regarding food and agriculture health and safety codes.
Farmers Markets Are A Valuable Part Of The Community
Farmers markets provide communities with nutritious, fresh, affordable, and local farm products, allowing farmers to increase profitability by directly selling to consumers. In 2000, 19,000 farmers sold their produce exclusively at farmers markets resulting in a larger share of direct profit to farmers.
Consumers also enjoy the opportunity to buy fresh, high-quality products direct from farmers at competitive prices. Farmers markets also foster food and community linkages by helping children to learn where their food comes from, bringing neighbors together, and permitting families to talk directly with farmers and growers who produce their food.
Using National Stone Sand and Gravel Association Resources For Enhanced Safe Production For Employers
At the end of the day, a company's rules, regulations, policies, procedures and implementation programs are only really successful when they can clearly be seen and understood from the vantage point of the hourly, "boots-on-the-ground" workers.
As safety professionals in the mining industry, we recognize that the ability to provide shareholder equity and return on investment while delivering a product that meets both client and governmental agency specifications is both daunting and challenging. Yet, there is an adrenaline rush when we can meet customer delivery schedules and still keep the plant productive and safe. This goal requires not only expertise and demonstrated commitment from top management, but also throughout the organization all the way down to the "boots-on-the-ground" employees. It is evident that a process-oriented, people-focused approach is needed to ultimately meet the company's imperatives and expectations as set forth by its board of directors.
The opportunity for mining professionals to deliver on these goals relies on the integration of various industry resources that make it possible to promote consistency, uniformity and objectivity in a corporate environment. At the end of the day, a company's rules, regulations, policies, procedures and implementation programs are only really successful when they can clearly be seen and understood from the vantage point of the hourly, "boots-on-the-ground" workers. The process becomes the art and science of safe production for the company. This article outlines practical ways to use National Stone Sand and Gravel Association resources for enhanced safe production to impact all levels within the company — but especially the hourly workers.
At a Harvard Commencement Address in 2001, former U.S. Secretary of the Treasury Robert Rubin stated, "Individual decisions can be badly thought through and yet result in success, whereas, alternatively, exceedingly well thought-through decisions might result in a lack of success ... But, over time, more thoughtful decision making will lead to better results, and more thoughtful decision making can be encouraged by evaluating decisions on how well they were made rather than on outcome."
This idea speaks to the law of unintended consequences, and leads to the importance of governmental rulemaking and its impact on our hourly employees.
In recent weeks we have seen an uptick in mergers and merger/acquisition rumors. Cigna's acquisition of HealthSpring, rumors about Aetna and Humana, United's supposed interest in Coventry and others seem to be fueling these rumors. So why is there so much activity, especially recently?
In a typical or normal economy, companies consider acquisition or merger when they see marketplace bargains or alternative approaches to more quickly achieve their objectives than growing their own operations. To buy or to grow has been the major question facing leadership. The marketplace pressures health plans for continued growth, particularly in the publicly traded sector which emerges as a major driver when growth isn't as spectacular as desired.
Today's health plan economy is not typical or normal. On the positive side, health care trends seem to be subsiding somewhat surprisingly while major changes with unknown impact from healthcare reform loom out in 2014. Rumors of mergers among the major players have been out there for many years. Consolidation has been expected, but the major catalyst for change has been health care reform. The marketplace wisdom seems to assume that bigger is always better. No one is satisfied with their growth history especially when there is a larger competitor out there. Whether or not that competitor is doing a better job, the pressure to be larger is far too enticing. Leader plans that want to fill in their presence in thin markets look for other plans that have a deeper presence.
The Internal Revenue Service (IRS) has implemented a new program to allow taxpayers who have misclassified workers as independent contractors to voluntarily reclassify the workers as employees with minimal tax liability. This is a voluntary program. To be eligible, a taxpayer must:
- have consistently treated the workers as non-employees;
- have filed all required Forms 1099 for the past three years;
- not currently be subject to an audit by the IRS, the Department of Labor (DOL) or a state government agency; and,
- if previously audited by the IRS or the Department of Labor on this issue, have complied with the results of that audit.
To participate in the Voluntarily Compliance Settlement Program (VCSP), the taxpayer must complete an application which will be reviewed by the IRS for verification of eligibility. The taxpayer must agree to prospectively treat the workers as employees for future tax periods and agree to a three-year extension of the statute of limitations on an assessment of employment taxes during the first three years (resulting in a six-year statute of limitations). The taxpayer will be required to pay 10% of the employment tax liability (calculated at reduced rates) for the most recent tax year only and will not be required to pay interest or penalties. The taxpayer will not be subject to audit with respect to worker misclassification for prior years. The taxpayer must enter into a closing agreement with the IRS to finalize the terms of the VCSP and pay any amount due.
Keep in mind that this program does not affect other potential liabilities of an entity that has misclassified workers as independent contractors rather than employees. The California Employment Development Department (EDD) may still impose tax liability under California law for misclassification. Additionally, there may be overtime that was not paid or other violations of federal or state employment laws. There may also be liability or other consequences if it is determined that these workers should have been included in pension or health and welfare benefit plans.
The challenging economy continues to be a drag on many company's financial resources. Cash flow pressures are causing companies to come up with ways to reduce expenditures and preserve capital. Among these measures is the trend to pay for workers' compensation on a pay-as-you-go basis.
Pay-as-you-go offers a number of benefits for clients. Because the premiums are received consistently, many insurance companies are waiving the large upfront deposit. In addition, clients pay premiums each pay period based on actual wages, not a fixed or stipulated amount. Audit surprises are generally minimized as well because premiums are paid throughout the year based on actual payroll not an estimate.
Clients generally liked the idea of pay-as-you-go but lacked the payroll systems to easily integrate the reporting with the participating carriers. To fill that gap, large payroll companies jumped in to provide this solution, but with one caveat: the client had to abandon their current agent relationship and transfer the relationship to an insurance agency owned by the payroll company.
On the surface, it seems to make sense to combine the two with one company. After all, workers' compensation is a percentage of payroll, much like payroll taxes, so why not have the company that handles the payroll taxes do this as well? Unfortunately, some companies have learned the hard way that this arrangement hasn't always been to their benefit.
This is the second in a two-part series on pain management and the true cost of compound medications. The first part in the series can be found here.
Issues With Quantity And Distribution
It is difficult to determine the quantity needed to constitute a day's worth of medication, as an amount needed per individual is incredibly subjective. Therefore, current medication distribution could be for amounts much larger than are needed, resulting in waste, as well as an increased price in medications based on quantity. Shipping and handling creates yet another problem. Included with the reimbursement price of a medication is a dispensing fee, which is a set rate depending on if the medication is name-brand or generic. There is no fee schedule or even recommended reimbursement for shipping and handling. Shipping and handling is generally only seen when medications are mass produced from pharmacies out of the area (mail order) and then shipped to injured workers based on prescriptions.
How are these prescriptions making their way to pharmacies not accessible by the injured worker? The likely source is from the prescribing doctor, which raises ethical questions. Does the doctor have a fee agreement or financial interest in the pharmacy? Does the pharmacy conform to California state law and have a current license to dispense medications? Are the employees of the pharmacy properly trained and approved to package and ship medications? Answers to these questions are difficult to answer, and pharmacies do not want to answer them.
Financial Issues
As previously stated, one need only to trace most medical "fads" back to one single item: money. Who can make money from the medical treatment, and more importantly, who is making money from the medical treatment? California Labor Code § 139.3 precludes physicians from referring patients for certain services if the physician or his immediate family has a financial interest with the entity that receives the referral. These "self referrals" are nothing new to the industry. For example, the introduction of surgical centers for outpatient procedures into the Workers' Compensation arena brought with them a plethora of doctors who grouped together or invested in various surgical centers. Within a short amount of time, surgery centers were found in all major metropolitan areas throughout the entire State. Fortunately, assemblyman Solorio's bill goes to great lengths to address this problem, adding prescription and pharmacy services to the growing list of items not allowed to be referred out when there is a financial interest.
This is the first of a two-part series on pain management and the true cost of compound medications. The second part in the series can be found here.
In the world of Workers' Compensation, medical treatment is provided with traditional methods as well as current medicine trends or "fads." "Reasonable and Necessary" medical treatment afforded under the Labor Code can steer off course when popular/trendy medical treatment and procedures replace time-tested and proven forms of medical care. One such unproven trend are compound medications. Compound medications do have their advantages and can be considered reasonable medical care. However, they have evolved from a useful medication alternative into multiple problems that require expensive and needless litigation. Why? The answer is simple: money.
It is the opinion of the author that compound medications made their entrance on a large scale due to the demise of another trendy medication phenomenon, repackaged generic medications. In 2007, California instituted a change to their fee schedule which largely eliminated differential pricing on repackaged drugs. As a result, repackaged drug prices dropped sharply, resulting in a rapid decline in their use. Shortly thereafter, compound medications began to appear as an alternative to other medications use. Compounds are not a new modality for providing pain management and other needs though their use has exploded in the past few years.
The Overall Cost
Pharmacy and medication treatment already constitute a large percentage of all costs in Workers' Compensation medical care. With the addition of compound medications, the problem has expanded to epic proportions. A recent study by Rand Corp. at the request of the California Commission on Health and Safety and Workers' Compensation (CHSWC) found that payments for these medications accounted for 12% of all drug costs in the first quarter in 2009 alone. Payments from 2006-2009 totaled $29 million over three years. State Compensation Insurance Fund (SCIF) payments in 2009 totaled $28 million.1 Further California Commission on Health and Safety and Workers' Compensation analysis also found that approximately 25% of all treatment liens at all Workers' Compensation Appeals Board offices involve pharmacies and/or dispensed drugs.2 The numbers continue to increase over time. The amount of liens clogging the Workers' Compensation Appeals Board was a large enough problem to force Judge Frank of the Los Angeles Workers' Compensation Appeals Board to hold conferences in late 2010 to address the possible mass consolidation of liens involving these medications, in an attempt to control lien filings and litigation.
The California State Assembly has also become involved in an effort to reign in the rapidly expanding use of these medications and the problems associated with their billing. Assemblyman Jose Solorio (D- Santa Ana) recently introduced AB 378, which has been signed by Governor Brown. AB 378 adds pharmacy goods and compound medications to the list of medical services for which it is unlawful for a physician to refer a patient for treatment if they or immediate family members have a vested financial interest in the facility that receives a referral. The bill also establishes maximum reimbursement amounts for compound medications and would require billing be done at the ingredient level. Further, the bill places limits on reimbursement for physician-dispensed pharmacy goods.
The overall cost of these medications is not limited to the cost of the actual medication. Health risks, issues with billing and distribution and physician compensation make compound medications an expensive and often unreasonable modality of medical care.
Now effective January 1, 2011, certain businesses in the United States are required to implement a written Identity Theft Prevention Program to detect warning signs (so called Red Flags) and to implement processes to quickly mitigate the impact of Identity Theft and to stop further instances.
On December 8, 2010, the Red Flag Program Clarification Act of 2010 passed in The House of Representatives. The Clarification Act limits the definition of a “creditor” under the Fair Credit Reporting Act to only those entities that use consumer reports, furnish information to consumer reporting agencies, or advance funds to or on behalf of a person. By using this definition, The Act now excludes law firms, health care practices, retailers, utility companies, telecommunications firms, automobile dealerships, and other small businesses from complying with the Red Flags Rule. The purpose of the revision is to ensure that the Red Flags Rule covers creditors who pose the highest risk for identity theft. The clarification is significant for health care entities, lawyers, accountants, other professionals, and small businesses that will not be subject to FTC regulation for any violation of the Red Flags Rule.
Question: What Businesses Must Comply With The FTC Red Flag Rule?
The Red Flag Rule applies to businesses deemed to be either "financial institutions" or "creditors" and that have "covered accounts." Of note is the FTC's broad definition of "creditor" entities and "covered accounts." These terms are broadly defined to include many types of businesses, across many industry classes.
"Creditor" — was originally defined in the Act to include any organization that "regularly defer(s) payment for goods or services or provides goods or services and bills customers later," including but not limited to lawyers, accountants, healthcare providers and telecommunication companies, etc. (See 15 U.S.C. § 1681a(r)(5); 15 U.S.C. § 1691a(d); 15 U.S.C. § 1691a(e).) The definition also applied to those entities that provide loans or extend credit such as finance companies, mortgage brokers, retailers and car dealerships. The definition went one step further to include any entity that regularly engaged in the decision to extend, renew or continue credit, such as a third-party debt collector. The Clarification Act limits the definition of "creditor" to a person who obtains or uses consumer reports in connection with a credit transaction, furnishes information to consumer reporting agencies in connection with credit transactions, or advances funds based on the recipients' obligation to repay.
"Covered Account" — this term is lynch-pin to whether an entity is required to comply with the Red Flag Rule. Any "financial institution" or "creditor" with either: 1) consumer accounts that permit multiple payments or transactions, or very importantly, 2) has any other account that presents a reasonably foreseeable risk of identity theft must implement a written Identity Theft Prevention Program.
Receiving the call from the claims adjuster was not what I wanted to hear. After an accepted mild back strain, I, the permissibly self-insured employer am informed of continued physical therapy two times/week for 6 weeks as well a prescription for opioids to treat the chronic, yet unresolved pain. This injured worker has been off work for more than 6 months, with work restrictions that cannot be accommodated due to the collective bargaining agreement, and escalating claim costs. Frustrated, I ask the claims adjuster what the options are for claim resolution. Sadly, it appears to be business as usual until the doctor determines a stay in maximum medical improvement. We have been down this road before. An injured worker, an open claim, more medical treatment and I feel as if I have lost the key to open the lock to break the chain that binds. We conclude the call with a diary to discuss next week after the physical therapy is underway.
Business Insurance Associate Editor Matt Dunning in its 9/25/11 Business Insurance magazine stated the opioid problem began with about 20 states relaxing laws that had discouraged doctors from treating "chronic, non-cancer pain" with opioid prescription pain medications, an occupational medicine expert said.
The trend, which began in the late 1990s, allowed "extreme permissiveness" in increasing opioid doses prescribed to injured workers, said Dr. Gary M. Franklin, medical director for the Washington State Department of Labor and Industries and a research professor in the departments of Environmental and Occupational Health Sciences and Medicine at the University of Washington in Seattle.
Consequently, the increased use of opioids to treat workers' compensation injury claims is creating challenges for employers in resolving claims with injured workers with chronic pain. Medical, indemnity and prescription costs continue to rise and employers are looking at ways to limit liability, close claims and get the injured worker back to work.
One of the opportunities for California employers is the use and understanding of Medical Treatment Utilization Schedule (MTUS) and American Medical Association guidelines in the treatment and utilization of medical procedures in the claims handling process. Utilization review is also a venue to help employers have appropriate medical treatment given for the injured worker.
Supply chain failure is the most common failure in a company’s operations in a disaster, and managing your supply chain is the key to competing successfully. However, there are ways to minimize your risks.
This is Part 2 of a two-part series on supply chain risks. Part 1 can be found here.
In Part 1 of this series, we discussed the current challenging business environment, with increasing operating risks, growing demand and supply uncertainties, new supplier and outsourcing alternatives, increasing product and service complexities, more demanding and diverse customers, globally interdependent operations, and continuing cost pressures. We learned that more than 80 percent of businesses are unprepared for their supply chain risks.
The continuing disaster in Japan has demonstrated the supply chain vulnerabilities that even major corporations face. Auto manufacturers such as GM, Toyota, Nissan, Honda, Renault, BMW, Daimler Peugeot, Fiat and Volkswagen; electronics giants Sony Ericsson, Apple, Toshiba and Hitachi; and aerospace leader Boeing are among the companies that were forced to curtail or halt production of some products in the wake of the devastating earthquake/tsunami/nuclear plant leak.
So, what should a business do to begin making its supply chain disaster-ready? Start by asking these critical questions:
- What risks and vulnerabilities do we face at each step in the supply chain?
- How can we design our supply chain structure to minimize risks we cannot manage?
- How fast can the supply chain respond to changes and at what costs?
- How can the conflicts, constraints and capacity limits of growth plans be managed?
- How and where is complexity impacting the supply chain, and what can be done about it?
Insurance Thought Leadership aggregates best practices from highly respected experts in their field. Insurance Thought Leadership provides knowledge and experience at a time when its needed most, times of sweeping change and market uncertainty.
Whether it’s Healthcare, Worker’s Compensation, Property & Casualty, Auto, Sophisticated Life Insurance designs, Directors & Officer’s, Safety, Risk Control or other Claims Management, Insurance Thought Leadership promises to deliver the most relevant mind share the industry has to offer.
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Dave Dias
David Axene
Jeff Pettegrew
Jennifer Weathersbee
Mark Webb