May 2012
In the summer of 2011, I wrote an article about wage and hour litigation that identified some of the existing trends with wage and hour settlements and the implications those legal actions were having on coverage. Similar to the conditions at the time of that article, wage and hour claims continue to be a problem for clients and insurers alike. Wage and hour claims arise when salaried employees sue their employers for uncompensated work hours. The alleged underpayment can arise from uncompensated overtime, misclassification of employees as exempt or non-exempt, working on personal time and other situations.
According to the NERA Economic Consulting study titled, "Trends in Wage and Hour Settlements: 2011 Update," the average settlement amounts for wage and hour claims are declining over time. However, as the following table shows, the average awards are significantly greater for wage and hour claims than for typical employment practices claims.
Stressful conditions and times, regardless whether they are work-related or personal, always lead to a higher likelihood of injury and/or illness. This will become the problem of the employer even if the illness or injury is not a Workers' Compensation claim.
The intersection that is made up of protected leave, voluntarily granted leave, financial support products and disability protection is the nightmare of many a business owner and Human Resources department. This is where business owners must expand their consideration of what is "risk management" to include these types of concerns.
There are ways employers can help to mitigate this potentially dangerous confluence of events, but many employers wait until too late to take those steps:
1. Educate your managers, supervisors and HR representatives about how to handle any potential or actual claim for leave or disability. This may seem like a "well, duh," but it is frequently put off or completely overlooked. It is usually the frontline supervisor who has the first inkling that a problem may be arising and she/he should be very clear on what to listen/look for as well as what to do with the information once she/he has it. The supervisor/manager should be provided with appropriate response language to inquiries, statements and threats related to such concerns.
2. Be certain your HR representative has all the tools necessary to manage these overlapping issues and is getting regular information on changes. Professional societies, legal firms, insurance brokers, consultants and various websites have a wealth of information to assist with updating on this changing landscape. Business owners should proactively ask how their HR department is keeping abreast of such items and invest, if necessary, in support services and products.
3. Insert yourself into the process where necessary. Frequently, the employee is reassured when the owner or executive of the company gets involved in a caring way. Express concern and assuring the employee that the company wants her/his situation to be handled as compassionately as possible. It is important, however, to remember not to make promises that are specific about outcomes. Things like "We are going to make everything work out for you" can be very problematic when the situation gets more complicated, and it would be a problem for the business if you attempted to do that.
Lisa goes into labor as Aaron, Bryn and Derek meet with programming genius, Sergei Lenov (Mark Gantt) at his cabin in the woods. With hours left, the gang tries desperately to get the final pieces together to present their new plan to their mysterious investor.
With everyone on board with Jack and Bryn's plans, the group just needs two small pieces of the puzzle: money, and a possibly insane Russian genius who lives somewhere in the woods. What could be easier? Special guest star Guy Kawasaki!
Who exactly is making a large financial promise to the family?
In 2011, M Financial published a bulletin taking a look at both the how to and the importance of assessing the overall strength of life insurance carriers. As the bulletin points out:
"The life insurance industry is among the most heavily regulated industries doing business today. In an effort to protect policyholders, life insurance companies are subject to conservative rules and requirements that involve, among other factors, how companies manage their finances and support the products they issue to customers ... Embedded within life insurance policies are long-term, intangible financial promises not found with most other financial or consumer products."
The challenge then becomes how to interpret the ratings and understand what the differences mean. When weighing the company selection decision, the implementation stage of a life insurance strategy, it is critical to be sure that advisor bias be removed from the equation. Ratings are one way to address this. The critical factors that need to be addressed, as the bulletin highlights, are:
The Insurer's Business Profile, or Why Is This The Right Company For This Client (Market) And This Strategy?
The business profile factors are intended to capture those characteristics that reflect the life insurer's presence in the market. These factors are more subjective than are the financial factors. Insurers that have sustainable competitive advantages in terms of market position and brand, distribution, and product focus and diversification, can be expected to be able to maintain and enhance future profitability and financial strength.
- Factor 1: Market Position and Brand
- Factor 2: Distribution
- Factor 3: Product Focus and Diversification
Jack has a plan to win the competition and save his friends' startups. The problem? No one trusts him, no one likes him. Special guest star Julie Warner.
The recent proliferation of employee benefit group captives has pulled together two sets of people in the insurance industry that have traditionally been in separate silos — "benefits people" and "Property & Casualty people". These two worlds have collided as benefits captives pull from two fairly distinct skill sets. My own experience was largely with Property & Casualty captives until about a half decade ago where it began to lean increasingly towards the benefits side. If you've spent time on 'both sides,' you've probably realized how different the two worlds are — ranging from terminology to coverage types. This article is an attempt to explain the benefits world to someone who understands workers' compensation.
The Coverage
A workers' compensation policy covers all the payments (medical and indemnity) associated with accidents that occur during the policy period. These claim payments can stretch out over five to ten or more years. If a worker slips and falls and injures their back, the policy in force at the time of the accident covers all future payments related to the injury.
A benefits policy covers the costs for the medical and pharmacy claims that occur during the policy period. A "paid" contract requires that the claim is also actually paid within the policy period and an "occurrence" policy provides an extended period for claims to be paid (which is often three to six months). Since it is nearly impossible to tie an illness back to a particular date or occurrence, a benefits policy is written to cover all claims within the policy period, regardless of when an illness manifested itself.
Think about how a severe back claim is treated differently by the two policies. Assume the back injury is the result of an accident in Year One. Further assume that there will be a surgery and physical therapy in Year One, and an additional surgery, more physical therapy, and pain medication in Year Two. With the workers' compensation policy, both surgeries and all other costs are covered by the single Year One policy. With the benefits policy, Year One policy pays for the first surgery and Year Two policy pays for the second surgery.
Last week, I was in the process of finalizing some miscellaneous tasks before a recent trip out of State to visit some clients. One of the last pieces of mail I pulled from my in-box to read was a stack of six subpoenas from Aquarius Duplication*. They were seeking records from locations that our office had subpoenaed just a few months earlier. Our prior subpoenas had been served on opposing counsel, with a card that gave him the option to request copies of all records at our expense. It was never utilized.
The attorney had not contacted us regarding service of these records. The applicant had not sought treatment from any of the six locations since our subpoena. And to top it all off, the subpoenas were not timely served and had been served on a different attorney in a different office who had no relation to the case at all. Slightly irritated, I placed the stack in my "to do" pile and headed to the airport. It was my intent to file an objection and Motion to Quash the subpoenas.
To pass the time on my flight, I brought a copy of an April publication of the Workers' Comp Executive with me. Imagine my surprise when I read not one, but two articles dealing with copy services and copy/subpoena costs. One article included an interview of the CEO of Aquarius Duplication, Mr. Star Sign*. I read that Mr. Star Sign is also head of a new organization to help express the concerns and address the rights of various providers, most notably copy service companies and interpreters.
The California Workers' Compensation Services Association (CWCSA) is an organization with a primary list of clients that are "applicant-oriented" service providers. He stated in the article that the goal of the association is to provide a different perspective in the ongoing debate about various services and providers, most notably, copy services. Mr. Star Sign noted that many who participate in the Workers' Compensation arena do not understand particular issues copy service companies must deal with. He was concerned about frequent denials for services, and the fact that his line of business carries a high level of accounts receivable due to non-payment and objections.
He was participating in the legislation process to give a voice for his side of the legal process in Workers' Compensation. It should be noted that there are murmurs of the development of a fee schedule for copy and subpoena services. When reading his comments, I did admire his attempt to explain that the services his company provides are necessary, efficient, and cost-effective.
Mr. Star Sign paints a good picture, but he misses some key issues in the battle between defendants and copy service providers. There are examiners, Third Party Administrators, and insurance carriers that are slow to process bills and who improperly deny payment. However, I contend that the majority of the issues that result in liens and litigation are not due to the defendant. I say that knowing full well that someone who will read this will assume my position is such, due to my work as a defense attorney. Fair enough. I contend that my experience as a claims examiner for nearly seven years and my work as a defense attorney have allowed me to form a solid perspective on why there are so many litigated copy service liens. I have seen countless subpoenas and copy service bills over the years. I have paid many. I have objected to many as well. I have litigated many liens. My experience has also allowed me to see the tricks, tactics and downright improper techniques in which copy service companies copy records and then demand payment.
Derek gets slapped with a lawsuit and seeks help from his attorney Josie Lanning (special guest star Julie Warner). Jack loses his only client and most of his friends.
Christine Baker, the new California Director of Industrial Relations (DIR), has hit the ground running. She recently announced a series of statewide fact-finding meetings with the intent of hearing from all sides of the workers' compensation community. I was able to attend the Los Angeles session and listened to severely injured workers relate how poorly the system has provided for them.
There were also comments by insurance company claims professionals relating stories about how convoluted the system really is. We heard from healthcare professionals on the abuses they are seeing under the Utilization Review system which it seems has taken on a life of its own. And of course we heard from employers on everything from rising costs due to the lack of control over the medical delivery system to the outright fraud being seen when an employee is terminated for valid reasons and an industrious attorney files a cumulative trauma claim. It was to this issue I directed my remarks, and I thought it appropriate to share them with you in this article.
It is time to revisit and re-evaluate the value of this statutory condition (L/C 3208.1), which is rapidly becoming yet another undue burden on both employers as well as the workers' compensation system. Cumulative trauma claims are currently being used, and in many instances abused by disgruntled employees who are no longer on the payroll. By filing post-termination cumulative trauma claims, employees are circumventing the legitimate needs of businesses to make personnel decisions based on the employer's current financial situation and needs.
One need only look at the increase in cumulative trauma claims that are being filed after an employee has been laid off. While there has been no specific injury that they can point to, many are now claiming that "work" has worn them out and that they are therefore entitled to even more money than that which was bargained for as a part of their employment agreement.
I would not argue that there are not real and viable events that can lead to a compensable situation. Asbestosis would be the best example of a condition that was unknown to either management or their employees for many years. Litigation over asbestosis has been ongoing since then, and I believe that the compensation awarded to injured workers in such cases is justified.
However, when an employee who is hired to do a job that produces no discernible injuries and who has been laid off for legitimate, non-discriminatory reasons is able to work around the system by claiming a cumulative injury, it is time to reassess the value of that part of the Labor Code. We must decide if both parties to this equation are being properly served. Or, is this an abuse of the system that has been allowed to fester too long?
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Dave Dias
David Axene
Jeff Pettegrew
Jennifer Weathersbee
Mark Webb