As you may already know, the Second District Court of Appeal recently issued their decision on this case which involves in part, the admissibility of non-Medical Provider Network doctor's reports. This was initially an unpublished decision. However, plaintiff's counsel petitioned the court which did in fact publish the opinion giving it precedential status. In other words, it could be cited in other cases with the same or similar issues.

In its simplest terms, it says in part that an injured employee may be treated by his/her own non-Medical Provider Network physician pursuant to Labor Code (L/C) 4605 for diagnosis, treatment and attendant reports. The case goes on to acknowledge that the employee is responsible for the payment of these services and that any reports generated by the non-Medical Provider Network doctor are admissible. However, the case was remanded to the trial court to deal with the admissibility as well as other issues left unsettled by the Workers' Compensation Judge at the time of trial.

However, as you will see below, I am pleased to report that the defense strategy we developed allowing employers to use the current Medical Provider Network system to its fullest advantage was adopted by the Legislature in the recently passed SB 863. This was due to the amendment to Labor Code 4605 as discussed below.

Background
The current Labor Code 4605 was first enacted in 1917 as a part of the then Insurance and Safety Act. Sec. 9(a) of that act is most interesting from a historical perspective in that it reads:

Such medical, surgical and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches and apparatus, including artificial members, as may reasonably be required to cure and relieve from the effects of the injury, the same to be provided by the employer, and in case of his neglect or refusal seasonably to do so, the employer to be liable for the reasonable expense incurred by or on behalf of the employee in providing the same: provided, that if the employee so requests, the employer shall tender him one change of physicians and shall nominate at least three additional practicing physicians competent to treat the particular case, or as many as may be available if three cannot reasonably be named, from whom the employee may choose: the employee shall also be entitled, in any serious case, upon request, to the services of a consulting physician to be provided by the employer: all of said treatment to be at the expense of the employer. If the employee so requests, the employer must procure certification by the commission or the commissioner of the competency for the particular case of the consulting or additional physicians; provided, further, that the foregoing provisions regarding a change of physicians shall not apply to those cases where the employer maintains, for his own employees, a hospital and hospital staff, the adequacy and competency of which have been approved by the commission. Nothing contained in this section shall be construed to limit the right of the employee to provide, in any case, at his own expense, a consulting physician or any attending physicians whom he may desire (my emphasis). The same general language as to responsibilities is now found in L/C 4600(a); 4601 and 4605.

The reason this section is important is that Section 9(a) pre-dates Labor Code 4616, the Medical Provider Network statute. As such, any attempt prior to SB 863 to harmonize the rights of the employee to seek their own doctor at their own expense against the later-enacted Medical Provider Network statute would have to give precedent to the later-enacted labor code section (L/C 4616).

Labor Code 4605 Amended By SB 863
However, all of that was changed with SB 863 which amends Labor Code 4605 in such a way that makes clear the admissibility and subsequent value of any non-Medical Provider Network generated reports:

"Section 4605 of the Labor Code is amended to read:

4605. Nothing contained in this chapter shall limit the right of the employee to provide, at his or her own expense, a consulting physician or attending physicians whom he or she desires. Any report prepared by consulting or attending physicians pursuant to this section shall not be the sole basis of an award of compensation. A qualified medical evaluator (QME) or authorized treating physician shall address any report procured pursuant to this section and shall indicate whether he or she agrees or disagrees with the findings or opinions stated in the report, and shall identify the bases for this opinion."

Strategy For The Use Of Labor Code 4605 And Medical Provider Networks Going Forward
Employers and their claims administrators (carrier or Third Party Administrator) must aggressively assert and maintain their medical control over any new claim reported under their Medical Provider Network to make this strategy work.

First, employers need to be sure that the required Medical Provider Network notice to each employee and the Labor Code required general postings are complete and well documented.

It is important to note that SB 863 also made significant changes to 4616, the Medical Provider Network statute. However, even with these changes, an employer's best defense will continue to be quality documentation regarding policies and procedures on their handling of the Medical Provider Network notification and enforcement process which will block applicant attorneys' (A/A) attempt to seize medical control for failure to comply with the statute.

Consulting And Attending Physicians
The important question raised by Valdez dealing with the use of Labor Code 4605 by applicant attorneys as a means to get their non-Medical Provider Network doctors reports admitted has been resolved. Labor Code 4605, as amended, has clarified clearly and concisely to who and how the non-Medical Provider Network doctor(s) reports are to be submitted and used.

As noted above, "A qualified medical evaluator or authorized treating physician shall address any report procured pursuant to this section and shall indicate whether he or she (my emphasis) agrees or disagrees with the findings or opinions..." You will note that only a qualified medical evaluator in a non-Medical Provider Network claims environment or the "authorized treating physician" which in the case of a Medical Provider Network is the Primary Treating Physician (PTP) have control over the use of such pro-offered reports.

Recommended Procedure Under Labor Code 4605 As Amended

1. As a first step, I recommend that the injured employee be informed, as part of the employer's or claims professional's acknowledgment of the claim, that a valid Medical Provider Network is in place and that the employee's cooperation is expected.
2. The same initial notice should also state "that the employee is free under Labor Code 4605 to seek their own consulting or attending physician, at their own expense." They will be told at that time that if they do avail themselves of this option under Labor Code 4605, their consulting or attending physician's medical reports will be tendered to the Primary Treating Physician (PTP) for this injury who, under the Medical Provider Network statute, is the controlling doctor (Labor Code 4061.5). Under this scenario, the consulting or attending physician's report will be submitted to either the qualified medical evaluator or Primary Treating Physician to be used as he/she deems appropriate.
3. At the same time, the normal Medical Provider Network process will be enforced as is current policy. Demand will be made that the employee continues to be seen for diagnosis and treatment by a Medical Provider Network doctor. If there is a dispute as to diagnosis or treatment by either the applicant's attorney or the L/C 4605-obtained consulting report, that dispute will be handled under the Medical Provider Network's 2nd, 3rd and if necessary, the Independent Medical Review process and NOT through a Panel Qualified Medical Evaluator.
4. We will also be requesting from the employee an acknowledgement, under penalty of perjury that the employee has already paid or understands that he/she is the ultimate responsible party for paying their L/C 4605-obtained physicians as well as any other related bills for treatment, testing and other costs.
5. We will object to any liens from the consulting physician and will recommend they bill the injured employee directly.
6. Should the employee continue to refuse to be seen by our Medical Provider Network doctors and treat with the non-Medical Provider Network physician, then a Notice of Suspension of Benefits will be sent to the injured employee, his attorney (if there is one), and the non-treating physician. The notice will inform all of the above that all benefits including both Temporary Total Disability and medical treatment are suspended under Labor Code 4053 for failure to comply with a written demand. It will go on to say that the suspension can be lifted by the injured employee simply showing up at our Medical Provider Network doctor for diagnosis and if necessary, treatment.
7. Under this scenario, employers and their carriers or Third Party Administrators will be able to use the full weight of the Medical Provider Network process while, at the same time, dealing with non-Medical Provider Network procured medical diagnosis and treatment. This will help keep the employee within the Medical Provider Network and, if handled in a swift and judicious manner, help hasten a timely closure of the claim.

A recent press release states, "The California Secretary of State announced today that a ballot initiative to require health insurance companies to publicly justify and get approval for rate increases before they take effect has qualified for the 2014 ballot." The release goes on to state, "the initiative would require health insurance companies to refund consumers for excessive rates charged as of November 7, 2012 even though voters will not vote on the initiative until a later ballot."

The President of Consumer Watchdog stated, "Californians can no longer afford the outrageous double-digit rate hikes health insurance companies have imposed year after year, and often multiple times a year. This initiative gives voters the chance to take control of health insurance prices at the ballot by forcing health insurance companies to publicly open their books and justify rates, under penalty of perjury. Health insurance companies are on notice that any rate that is excessive as of November 7th 2012 will be subject to refunds when voters pass this ballot measure." This effort was supported by State Senator Dianne Feinstein and California Insurance Commissioner David Jones.

Is there more to the story? Is there something else we should be considering? Is it really this obvious that this is solving a major concern or problem?

As with most sensational statements, there is far more to consider as it relates to the affordability of health insurance. As a professional actuary for more than 41 years, I am afraid there is far more to this story than has been described by the proponents of this initiative. The remainder of this article will address some of the most obvious issues.

Do Carriers Intentionally Price Gouge Their Customers?
Although there always seems to be exceptions to the norm, carriers set rates based upon their historical costs and a reasonable projection of what might happen in the future. These rates are developed by professional actuaries who are subject to Guidelines for Professional Conduct that govern their analysis and review methodologies.

Rates are not made subjectively, but rather based upon extensive analysis of what costs have been. Actuaries spend endless hours reviewing the claims experience, analyzing utilization and cost levels, developing estimates of inflationary trends, analyzing operating costs and carefully projecting what future rates will need to be in order to cover costs and produce needed margins. When prior rates are inadequate, premium rates are increased on particular plans to avoid losses.

This process is very systematic and based upon detailed actuarial analyses. This process is not arbitrary or capricious, but can be challenging for some product lines. I know of no competent carrier that intentionally tries to gouge its customers, but rather the opposite. Carriers work hard to find ways to provide the greatest value to their customers and keep rates as low as possible.

Why Do Premium Rates Go Up So Much?
There are many reasons why rates increase but the most prevalent reason is the high cost of health care. Most of the premium goes to pay health care bills. Under health care reform at least 80% - 85% of the premium goes to pay for health claims. The carrier has little control over these costs other than their efforts related to negotiating discounts and in the impact of their care management activities. The carrier is subject to the prices charged by health care providers. Hospitals charge what they want to charge and carriers try to keep these down by negotiating and maintaining discounts from billed charges.

Since the government sponsored programs pay deeply discounted prices for Medicaid and Medicare members, sometimes below actual cost of care, the carriers are subject to a significant cost shift, paying prices much higher than their governmental counterparts. When providers increase their prices, carrier costs automatically increase. Other than the limited impact of regulation on prices for Medicaid and Medicaid patients, there is no oversight of what providers charge for their services. The fear by providers of the pending impact of health care reform and how it will expand the Medicaid population has resulted in some dramatic increases in provider charge levels to carriers.

In addition to the increases in provider costs, premium rates increase for other factors which include:

• Aging: as members age, their costs increase as much as 1.5% - 2.0% per year
• Selection bias at time of lapse: there is a strong tendency for a bias in lapsed or terminated members. The healthier members tend to lapse more quickly than others since they are more easily able to find alternate coverage. This tends to increase average costs about 1% - 1.5% per year, especially on individual and small group coverage.
• Impact of underwriting: As individuals are reviewed by carriers for medical conditions at time of enrollment, more healthy individuals are enrolled. As time passes, the impact of this underwriting selection wears off and as a result the average costs increase by as much as 2% - 3% per year.
• Deductible leveraging: As costs have increased over the years, individuals have preferred higher deductible programs to keep their costs down. Effective trend rates are higher on higher deductible programs based upon a concept known as deductible leveraging, even though the underlying trend is identical to that for a lower deductible program. For example the effective trend for a $3,000 could be a third larger than for a lower deductible. For example, for an underlying trend of 10%, the leveraged trend for a $3,000 deductible is 13.2% or 3.2% greater than what is expected.
• Utilization trend: In addition to changes in what providers charge, the actual rate by which patients consume services is higher each year, by as much as 1% - 1.5% per year. Some services increase more rapidly.
• Unit costs vs. CPI: National CPI statistics for health care are based upon a common market basket of services and do not reflect a reasonable norm from which to expect health care services to follow. Recent CPI statistics show a general economic trend of no more than 3%, with their medical statistics showing 5% - 6%. Carrier trends have been even higher for many reasons including the above factors.

The Unique California Situation
In most states the insurance commissioner has the authority to regulate rates carriers use for some of their products. Historically in California, the commissioner's authority was somewhat limited. They required filing of some rates, but did not have the authority to stop a carrier from using a proposed rate or rate increase. They were able to exert some pressure, many times strong pressure, to stop a carrier from large rate increases, but if a carrier wanted to proceed they usually had the right to do so.

In recent years, the department resorted to some public pressure, some negative PR, and essentially threats to the carriers. The proposed initiative gives them the "authority" to do something meaningful, not just veiled threats. So as far as that is concerned, it is good to give more real enablement to do something meaningful to hold all carriers accountable for their actions. I do not believe there is any real concern about carrier behavior, at least among the major players.

The Real Issue
It's always better to deal with the real cause of the problem, not just undesirable symptoms. If headaches are caused by a brain tumor, it is better to fix or remove the tumor, not just take a stronger pain killer. If the Insurance Rate Public Justification and Accountability Act is to fix the healthcare cost problem, then it is taking action on a symptom of the problem, not the real cause.

As discussed above, there are multiple reasons why health insurance premiums increase. Regulating the carriers alone doesn't solve any of the underlying problems. It restricts the behavior of one of the middlemen. It doesn't get to the core problem. It definitely will have an impact, but if not kept in check, will create perhaps even greater problems, potentially driving some carriers out of the market and perhaps transferring more of the problem to additional government bureaucracy.

Although the author is not a big fan of increased government regulation, some regulation or legislation focused on the prices providers are able to charge for services might be more beneficial. At least the major driving force of premium rate increases would be more stable and controlled which would keep premiums more in line.

Proposed Solution
Although fraught with additional challenges, my favorite solution to the provider charge driver is a shift from today's system which has different prices for different payers to a system where all payers pay the same price (i.e., called the all-payer system). No matter what type of coverage a person has, the carrier/administrator would be charged the same price. This means that there would be no bias against government payers vs. private sector payers. This would increase the cost for the government for Medicaid, but would substantially reduce what the private sector pays.

Our firm's analysis shows that setting the prices at Medicare payment levels for all patients would actually be a close proxy for a reasonable price. Private sector prices would drop in most markets by 15% - 17%. Medicaid prices would be increased to a reasonable Medicare payment level. Providers would have no reason not to take any patient since each patient brings the same revenue.

This would also level the playing ground for managed care plans and carriers since network differences would be eliminated. The plans could compete on more important items such as care management effectiveness, clinical efficacy, comparative effectiveness, and quality of the provider network.

Under this approach, Medicare would be the agency essentially regulating the reasonableness of prices. Significant administrative costs would be eliminated from both the carriers and the providers.

There would be a cost to the various states for raising the price they have to pay for Medicaid beneficiaries since they often have to pay 50% of the cost of these patients. Some of this could be offset by some increased federal payments from the savings generated in the system.

Bottom Line
California's proposed initiative is interesting but probably not as big of a deal as it could be. Here's hoping for some "real" legislation that could save more of us more "real" dollars and eliminate some of the administrative costs of the current system.

It's a safe bet that claims will not have a happy ending if the treating physician has a history of being associated with poor claim outcomes. In fact, physicians rated poorly in analytic studies based on past performance are 100% predictive of high costs and inferior outcomes in future claims where they are involved. The question is, how can those providers be identified so they can be avoided?

Applying Analytics
Whether the cause of poor performance is misunderstanding Workers' Compensation or deliberate fraud, the claim results will be dismal. Nevertheless, in order to analyze provider performance, one must know where to find the data, what to look for, and how to apply the knowledge gained from analysis to achieve improved results.

Data can offer a clear picture of actual provider performance. Evaluating physician and other provider performance is a matter of scrutinizing the data using industry research to learn what to look for. In fact, leveraging published industry research is the way to skip the laborious and expensive regression analyses and other predictive modeling methods.

Industry Research Reveals What To Look For
Exposing substandard providers is a matter of integrating and analyzing the data to understand the course of the claim and the providers who were involved. Selecting the data items to monitor can be guided in the first instance by industry research. Organizations such as the National Council on Compensation Insurance, the California Workers' Compensation Institute, and the Workers' Compensation Research Institute continually publish their research based on data they collect from members. These organizations offer research regarding medical issues causing cost escalation in the industry, and usually make results available from their individual websites.

Search
Academia and other organizations produce and publish research, as well. The best way to access other research is to use Google or other search engines to find research studies regarding specific issues and interest areas. For instance, if the concern is low back pain, simply use Google to find research and scholarly articles on the topic as it relates to Workers' Compensation.

Indicators Of Performance
When the indicators of performance are identified, they can be tagged in the data to analyze individual providers. Providers associated with a preponderance of negative indicators will fall into the lowest class category. On the other hand, those whose results are exemplary will rise to the top — best in class.

Where To Find The Data
Billing data tells the story of diagnoses, treatments and the billed amounts. However, billing data by itself is never broad enough in scope to evaluate providers because it tells only a part of the story. Claim adjudication level data tells another part of the story. It describes the actual paid amounts, return to work, the amount of indemnity paid, and whether legal was involved. But there is more.

Analyzing Pharmacy Benefit Management data is imperative. Overuse of prescribed narcotic pain relievers is now a major concern in Workers' Compensation medical management. Prescribing excessive opioids is unconscionable, but the guilty are often not identified and avoided as they could and should be.

Provider performance should be scored by claim outcome combined with costs and other factors. Unless the initial injury was catastrophic, return to work following a workplace injury is often a function of medical management that should be measured. Analyzing multiple data indicators from disparate data sources is powerful in describing physician performance. It is also objective and fair.

Integrating The Data For Analysis
Any one Workers' Compensation data source by itself is inadequate for the purpose of evaluating provider influence. Only the broad scope of data concerning a claim can provide a clear picture of the claim and provider culpability in outcome. Therefore, collecting the data from its various sources (billing or bill review, claim adjudication systems, and pharmacy data), then integrating current and historical data are crucial steps in provider performance analytics. The next steps are identifying, evaluating, and monitoring the data elements that are indicators of performance both from the medical and Workers' Compensation viewpoints using research as a guide.

Link Analytics To Operations
Analytics results of any variety that remain in graphic form, in a brochure, or pinned to a wall are useless in the effort of actually containing costs. The findings must be functionally applied to operations to make them actionable. Information regarding best (and worst) in class doctors identified through the methods discussed here must be made available to network managers and others in a usable form. Moreover, the information should be specific, current, dynamic, easily accessible, and contain objective supportive detail. The work of analytics is not complete until its results are operationalized and actionable.

On July 26, 2012, a federal judge in Las Vegas ordered Prospect Airport Services, Inc., a provider of wheelchair assistance services to airline passengers, to implement extensive measures to prevent future sexual harassment.

After agreeing to a monetary settlement of $75,000 in a lawsuit brought by the the Equal Employment Opportunity Commission, Prospect refused to agree to any prospective relief to prevent future harassment. The Equal Employment Opportunity Commission petitioned the court for an injunction and order directing compliance.

The judge issued an order prohibiting Prospect from further violating Title VII as it relates to sexual harassment for a period of five years. Prospect must develop a policy and procedures for handling reports of sexual harassment and an effective investigation process for all harassment complaints. It must also "appropriately discipline management and human resources staff for failure to comply with such procedures and provide annual sexual harassment training to all supervisory employees."

The Equal Employment Opportunity Commission will monitor compliance and can haul Prospect into court again for any failure to comply with these orders or for damages based on new harassment incidents.

The Equal Employment Opportunity Commission had charged the company with failing to address complaints of unrelenting sexual advances toward a male passenger services assistant by a female co-worker. The employee, whose wife had passed away, received sexually suggestive notes and unwelcome advances. He rebuffed the advances and brought the notes to the attention of a general manager who made light of the situation and failed to stop the harassment. There was no effective company policy at the time to address the issue.

Over the course of a year, the harassment escalated to a near-daily basis, including offensive remarks by co-workers about his sexuality due to his rigorous rejection of the sexual advances. Despite his repeated complaints to management, the hostile work environment ended only when he resigned.

The Equal Employment Opportunity Commission's press release states: "Today the court has spoken to affirm the importance for all employers to have effective policies and procedures in place to prevent discrimination in the workplace ... A strong policy, meaningful training and a swift response to complaints help to contain an existing hostile work environment or to prevent one from arising."

Under California's Fair Employment & Housing Act (FEHA), failure to "take all reasonable steps to prevent discrimination or harassment from occurring" is a separate unlawful employment practice.

In a precedent-setting decision against a small law firm, the Fair Employment & Housing Commission (FEHC) determined that the Department of Fair Employment & Housing (DFEH) can prosecute an action for such failure, even when the underlying claims of harassment and retaliation aren't proven.

In DFEH vs. Law Offices of Jeffrey Lyddan, the Fair Employment & Housing Commission determined that Lyddan's statements, gestures and cartoons directed toward a paralegal, while often in bad taste, did not rise to the level of objectively severe and pervasive harassment that interfered with her ability to perform her job duties. Nevertheless, it supported a "stand alone" action by the California enforcement agency for failing to take all reasonable steps to prevent harassment from occurring. Without actionable harassment or retaliation, such a claim may not be actionable by a private litigant in a civil action.

The Commission found that Lyddan failed to maintain an anti-harassment policy, did not attend harassment training, and failed to order a fair and impartial investigation into the paralegal's charges of harassment presented in her email when she resigned. Therefore, Lyddan was liable for failure to take all reasonable steps to prevent harassment from occurring.

California's Fair Employment & Housing Act requires "effective remedies" that will both "prevent and deter" discrimination. This is why the Equal Employment Opportunity Commission and the Department of Fair Employment & Housing require employers to adopt significant future anti-discrimination practices and conduct widespread training as part of their settlement agreements.

The affirmative duty to prevent future harassment goes beyond sexual harassment to other hostile environment claims, including disability, as is seen in Espinoza v. Orange County, in which an employee was awarded more than $850,000 after harassment by his co-workers and indifference by the County to his complaints.

Failure to prevent future discrimination is also a separate unlawful employment practice in disability discrimination lawsuits. The Department of Fair Employment & Housing has obtained settlements and Commission decisions with affirmative requirements for expanding reasonable accommodation procedures, adopting preventative practices and training in several pregnancy and disability discrimination actions in the last 18 months.

In DFEH v. Acme Electric, the Fair Employment & Housing Commission handed down the largest award in its history to a sales manager with cancer when his employer violated California's Fair Employment & Housing Act by ignoring the duty to engage in a good faith interactive process, refusing to reasonably accommodate his disability and "failing to take all reasonable steps necessary to prevent discrimination from occurring."

Prevention Strategies

• Update your discrimination prevention policies and periodically audit their enforcement — even before someone complains.
• Make sure your complaint procedures have accessible avenues for employees to report harassing work environments.
• Conduct an immediate neutral fact-finding investigation with every internal discrimination complaint, even when it is raised by a departing employee, because the alleged behavior may still occur with others.
• Update your disability processes to comply with the broad interactive process and reasonable accommodation requirements imposed by California's Fair Employment & Housing Act. California law mandates that leaders receive harassment prevention training every two years.
• Provide training for front-line supervisors on the standards for preventing discrimination or retaliation against employees who seek reasonable accommodations or take leaves of absence for medical conditions and/or disabilities.

Cost Retention and Safety Enhancement: Protecting Your Assets

While construction activities are fluctuating due to the current economic situation, general, heavy/highway and specialty contractors continue to face increasing consumer and regulatory demands and requirements to provide a safe, healthy and secure work environment for their employees.

However, the consequences of theft and lack of security in the workplace are not always understood. Several states have contractor-based trade associations who partner with law enforcement, e.g. the Construction Industry Crime Prevention Program (CICP), which monitors, participates and assists contractors in protecting your assets.

To test your knowledge, Take the Crime Quiz

True or False:

1. Substance abuse is an important factor contributing to crime.
Unfortunately, True. The Construction Industry Crime Prevention Program has been notified that some construction firms have relaxed their hiring standards, including substance abuse polices, because of the severe labor shortage. Employee theft accounts for around 85% of a firm's theft problem. One employee with a substance abuse problem can be a firm's entire theft problem in addition to creating a safety problem on the jobsite.

2. Attitude has nothing to do with theft on a jobsite.
False. Rationalization and opportunity are two of the leading factors in employee theft. The common rationalization from some employees is "The contractor leaves all these tools, generators and equipment unprotected, because they are so rich. Obviously they don't care. Besides, I need a drill at home." Congratulations, you have just had a theft.

Most construction firms provide the opportunity for theft if there is poor or no inventory control at a jobsite, lack of inventory accountability, no one is watching payroll checks, or the firm is willingly handing out replacement tools and materials.

3. So long as employees are working and getting paid, the job is getting done.
True. However, job quality and efficiency can be compromised. Thefts and vandalism can rise in direct relationship to how employees are treated. It is always wise to review your layoff and termination procedures and see that they are carefully and calmly carried out.

Terminations alone account for some of the worst vandalism cases identified by the Construction Industry Crime Prevention Program. The Construction Industry Crime Prevention Program historically had taken a close look at these cases and in each one, the employee was terminated in front of his peers by an angry site manager. While one can sympathize with the site manager's frustration — so often justified — but it can cost him/her dearly in the long run.

All jobsites should be made extra secure, locks changed, and an obvious tightening of security implemented following a difficult termination or layoff.

4. Using Tailgate Safety Meetings to discuss crime incident is detrimental and takes away from production on the jobsite.
False. Many contractors have controlled thefts by using a safety meeting as the basis for discussion. Routine and/or regular discussion of vandalism and theft can control the issue and raise awareness among the employees.

Ask for employee input. Treat the person with the best crime prevention tip of the month with a gift certificate. The majority of employees are honest, but they often perceive the company's attitude as "not caring" because it is never discussed.

5. Posting signage to deter theft or a reward poster is beneficial.
True. Many crimes and theft have been uncovered because of postings and utilizing safety meetings to discuss items such as these. If you belong to a Construction Industry Crime Prevention Program, pass out reward fliers. Ask anyone with information to call the CICP hotline and remind them they can remain anonymous. State that losses are going to be investigated, and make a point of assigning someone the responsibility of securing the jobsite. Be obvious about looking through debris piles and control debris. A clean jobsite presents a concerned, careful attitude that will also send strangers on down the road to look for easier pickings.

6. Crime problems are not an issue in construction.
False. If you don't think you have a crime problem, it probably isn't being tracked. Check with your Safety representative, Risk Manager, Insurance loss control representative or claims adjuster to verify just how much this exposure is causing a problem.

Your safety rep, insurance representative, risk manager, law enforcement and the Construction Industry Crime Prevention Program can share with you various ways in which to lower your loss exposure as well as retain efficiency, productivity and replacement costs.

7. The majority of jobsites are cased during the day, especially for equipment.
True. Crime statistics reveal the job is cased throughout the day, especially for items which return a high dollar value on the black market.

All strangers should be challenged, and all visitors should be required to sign in at the job trailer or with the site manager and the rule must be enforced. Contact your CICP organization for appropriate signage to reduce your liabilities after hours. Signage, as offered by the Construction Industry Crime Prevention Program, offers a round-the-clock emergency crime hotline that is visible and well known to law enforcement and the public. This is a good deterrent.

8. Crime is preventable.
True. Keep padlocks closed at all times. Use only case-hardened padlocks and if you must use chain, it should be case-hardened as well. Check to see that padlocks are closed in recessed covers on bins.

With increasing insurance premiums, contractors cannot afford to ignore the long range implications of crime if they want to improve their bottom line and reduce their liabilities.

9. A suspect, including strangers, often returns to the scene of the crime.
True. They want to gauge the reaction on the jobsite. As Andy Warhol says, everybody has 15 minutes of fame. For contractors, indifference, no "tightening up," and/or a business-as-usual attitude only escalates the suspect's confidence and your theft problem.

Unfortunately, the repeated crimes of contractors' job trailers or tool bins being broken into is an indication of a repeat offender. Besides, they get needed tools every time.

In 2001, California Youth Authority inmates informed the Construction Industry Crime Prevention Program of Northern California that they often vandalized a site and returned early in the morning to watch the site manager "yell and cuss," knowing there would be little or no follow up. This reactive approach to theft gave the offenders the confidence to start up equipment, move it around, and cause more damage.

Proactive approaches to deter crime, theft and vandalism includes handing out reward fliers, addressing crime issues at tailgate meetings, tightening up on inventory control, and security. Motion sensor lights hooked up to alarms are also effective, especially when wired to come on in unexpected areas.

10. Crimes, vandalism and thefts are part of doing business, and insurance covers the losses.
False. Case studies revealed one contractor had sustained a $400,000 judgment. A juvenile raced his motorcycle all over their jobsite, causing major damage. He crashed the bike, resulting in him becoming a paraplegic. The judge ruled they did have "No Trespassing" signs, but they did not have enough!

Three 4- and 5-year-old children started up a backhoe in Berkeley. It took five patrol cars to get them stopped as they crashed into street barricades and generally caused havoc and panic for the residents.

The company was very fortunate: they were not sued by the neighbors, nor by the children's parents for leaving the backhoe with the keys in it outside the locked gate. In addition, the news media did not "showcase" the contractor on the six o'clock news for endangering children who live in a low-income neighborhood. Fortunately, the only injuries sustained were to the equipment.

A contractor's risk manager went pale when the Construction Industry Crime Prevention Program informed him that a drug addict, according to his statement, "needed a ride home" and drove one of their backhoes five miles over county roads, parking it near his house.

The possibilities of a tragedy in these scenarios is very real. Negative publicity, impact to public relations, associated costs and headaches do not need to be outlined for any risk manager, superintendent or owner. Even though the examples listed above are not your employees, the exposure and risk is out there. The bottom line is that the company loses money, injuries occur, and the liability is great, unless you take strong preventive measures to minimize this.

11. If your tools and equipment cannot be positively identified, in most cases the thief is the winner.
True. Mark all tools and equipment with the driver's license number of a principal operating owner in a firm or clear company identification. Employees should be required to do the same. Take inventory. If your site managers can't tell law enforcement or your insurance company what is missing following a theft and/or provide serial numbers, the thief is the winner. However, take caution, blue spray paint and somebody's initials on a bunch of hand tools does not qualify as "positive identification."

Tally your Score
So, how did you score in protecting your assets? Hopefully, 100%. Yet, if not, there are resources to help you. Contact your trade association, your state/regional Construction Industry Crime Prevention Program, and your loss control representative. These organizations can assist you in physical site surveys, law enforcement liaison and recovery of your assets. Be smart and get involved in cost retention and safety enhancement.

Musculoskeletal Disorders (MSDs) represent 28% of all recordable OSHA injuries and account for 33% of the total cost of work-related injuries. Each recordable OSHA musculoskeletcal disorder involving lost time results in an average of 20 or more lost work days, compared to 9 lost work days for all other recordable injury types. Since the enactment of OSHA in 1970, the regulations have evolved to increasingly focus on the reduction of job hazards potentially leading to fatalities, amputations, and other serious injuries. Accordingly, a significant decline in the number of those types of injuries is evidenced in OSHA's records. However, muskuloskeletal disorders and other "soft tissue" injuries continue to plague workers and their employers with no indication of decline.

In fact, all indications point to an increase in muskuloskeletal disorders given that the percentage of workers ages 55-64 will increase by 36% during the next 5-year period while the percentage of workers under the age of 25 will decline. Obviously, older workers are more susceptible than younger workers to work-related muskuloskeletal disorders because of decreasing functional capacity due to degenerative conditions, pre-existing conditions and old injuries. Also troubling about this muskuloskeletal disorder injury forecast is the fact that older workers require longer recovery periods, inevitably driving up direct medical and disability costs. Indirect costs include overtime, training, and lost productivity related to injured workers' inability to perform their normal work. According to OSHA, for every $1 of medical-only claims, employers sustain $4.50 in indirect, uninsured costs.

Safety is an investment in future profitability for every employer and the well-being of every worker. However, an employer must exercise caution in its safety programs so as to avoid OSHA's anti-discrimination policies. Recently, Richard Fairfax, OSHA's Deputy Assistant Secretary, issued a memo addressing employers' safety incentive programs and suggesting that some such programs are merely a pretense to save workers' compensation costs and actually resulting in discriminatory disincentive policies and practices. Fairfax's memo emphasizes that a worker's reporting of a claim is a protected act, and identifies four approaches that potentially expose the employer to discriminatory practices:

1. Taking disciplinary action against injured workers;
2. Penalizing injured workers for failure to timely report an injury;
3. Penalizing injured workers for violation of safety rules; and,
4. Implementing certain performance incentive programs.

Under OSHA, Section 1904.4 (Recording Criteria) the employer must ascertain whether a work-related injury or illness has occurred, and if so, record the appropriate report with OSHA. If the employer is uncertain about whether an actual injury or illness has occurred, the employer may refer the worker to a physician or other health care professional for evaluation. The employer may then consider the health care professional's opinion in determining whether a recordable injury or illness exists.

One vehicle to objectively identify work-related injuries is the Electrodiagnostic Functional Assessment (EFA) Soft Tissue Management baseline program. The Electrodiagnostic Functional Assessment Soft Tissue Management baseline program is the proven non-discriminatory solution to OSHA compliance in the area of muskuloskeletal disorders. This program involves pre-injury soft tissue testing of workers that provides an objective baseline for later reported muskuloskeletal disorder injury claims. When the post-loss Electrodiagnostic Functional Assessment is compared to the baseline EFA, objective evidence is generated to determine if there is an acute injury arising out of the course and scope of employment. If no change is documented, there is no claim and thus, no reportable OSHA incident. Furthermore, no state or federal statues are triggered if evidence shows no sustained injury.

Conversely, if a change is documented, the employer is alerted to a recordable OSHA injury, and can reliably report the muskuloskeletal disorder in compliance with OSHA. More importantly, the Electrodiagnostic Functional Assessment further provides recommendations for site-specific and appropriate muskuloskeletal disorder treatment, resulting in quicker worker recovery, expeditious return-to-work, efficient compliance with OSHA's work readiness requirements, and, ultimately, limiting the employer's exposure and costs.

For more information about the Electrodiagnostic Functional Assessment Soft Tissue Management baseline program, contact the author at MReaston@emergedx.com or 702.234.1014.

Just when you thought that everything was settling down, the "Slither-Ins" from the Dark Side have once again reared their ugly heads. The latest and ongoing attempt to seize control over your claims goes like this:

Employers currently have a minimum of 30 days within which to control the medical treatment of an injured employee. This remains true unless the employee has correctly "Pre-designated" his or her Primary Treating Physician before the injury. If you are smart enough to have a Health Care Organization (HCO) in place, you have a minimum of 90 and possibly 180 days of absolute medical control over the claim. Or, if you have put a Medical Provider Network (MPN) in place, you have cradle-to-grave control over the medical treatment of your injured employee if it is handled correctly by both you and your insurance carrier.

Your ability to retain control is a given unless you do not follow the rules regarding the treatment of an injured employee. It is in the initial stages of the claim that you are most vulnerable and subject to having your control taken away by an attorney/doctor team from the dark side if you do not strictly follow the letter of the law. However, do not despair as we have once again been forewarned of their latest tactic and are ready to meet them head-on.

You Have To Open The Mail Every Day
The current law (L/C 5401) says "Within one working day of receiving notice or knowledge of injury under Section 5400 or 5402, in which an injury results in lost time beyond the employee's work shift at the time of injury or which results in medical treatment beyond first aid, the employer shall provide, personally or by first class mail, a claim form and notice of potential eligibility for benefits."

This is the first place that the applicant's attorney is going to try to get you. If you have not provided the Workers' Compensation Claim Form (DWC-1) to the injured employee, they will claim that you failed to follow the law and will attempt to seize control regardless of the medical control program you have in place. It is therefore important that this requirement be strictly adhered to by the person within your organization who you have designated as being responsible for watching your workers' comp claims.

Next, current law (L/C 5402) says "Within one working day after an employee files a claim form (DWC-1) under Section 5401, the employer shall authorize the provision of all treatment,... for the alleged injury and shall continue to provide the treatment until the date the liability for the claim is accepted or rejected..."

In a previous article, I recommended that each of you change your policy regarding how you deal with the DWC-1 when there is an injury. I stated that it is "best practice" for you to have the injured employee complete the top part of the DWC-1 in their own handwriting at the time of the injury. This gives you a record of what allegedly happened (in the employee's own words) and signed by them. If you receive an amended DWC-1 later from an attorney, we then have a basis to object to the added body parts.

You should then fill in the bottom half of the DWC-1 and give them a completed copy. Under this scenario, you have complied with the labor code and can then either accept the claim or delay it while you investigate the incident to see if it really is work related. The need for this approach has become clearer with the current filing of claims we are seeing.

In a recent claim, the employer's failure to timely provide treatment caused him to lose control of a claim that was covered by his Medical Provider Network. The first the company heard from the employee was through a fax sent by an attorney. The rule on receiving notice by ax is the same as if it comes by mail, i.e. you add 4 days to the notice.

So, if you were to receive a fax on Thursday, you add 4 days and the following Monday becomes your official notice date. Several lawyers have tried to use the date of the fax as their official notice trying to gain medical control because the employer did not act timely in getting the injured employee in for treatment. The law is clear that in order for the date of a fax to be effective as notice, both parties must agree in writing for the fax notice to be effective. So watch these carefully and call if there is ever a question.

Another employer also received a letter from the injured employee's attorney which contained a DWC-1 for his alleged specific injury along with another DWC-1 for a cumulative trauma (CT) claim. The forms were mailed to the employer and not the claims examiner. The letter sat on a desk for several days and was not dealt with in a timely manner. The person designated to handle the company's workers' comp program had not been properly trained in the new rules so that the attorney's letter sat for 4 days on her desk before she decided that it might be important enough to open and should be forwarded to their carrier.

Because of the delay in dealing with the alleged injury, medical control over the claim was lost. The employer had failed to authorize treatment (L/C 5401) within 24 hours as required by the statute as well as failing to have the employee seen by a doctor within 3 days as required by the Medical Provider Network statute (L/C 4616). So what is the message here?

If you have not already done so, review your internal policy regarding how you handle claims, especially the provision of dealing with the DWC-1 form when there is an injury. I again strongly recommend that you have the employee fill out the top part of the form first and you do the same for the bottom section giving a completed copy of the form back to the employee and documenting that you did so.

Next, you must open your mail and deal with it every day. This is the only way that you will protect yourself from attacks from the Dark Side.

This is Part 1 in a two-part series about what employers should expect from their insurance brokers. Part 2 in the series will be forthcoming soon.

Setting The Stage
The world of health care finance is changing and the role of the health insurance broker is changing just as rapidly. The role of a trusted advisor is more important than ever. Health benefits for any size employer demand a benefits professional who has the client's best interests at heart. Employers must explore current benefits offerings and demand a package best suited to their needs.

Voluntary benefits, self funding, and Consumer Directed Health Care are just a few of the many options every employer must discuss with their broker. Many employers are also demanding that their brokers account for their income.

The days where brokers were paid a commission by the carrier and counted on a regular double digit raise simply by telling the employer to re-enroll are gone. Some carriers are changing their compensation model. Instead of paying a percentage commission they are paying per head, also known as a capitation model. This model eliminates the automatic pay raise brokers have been experiencing and forces brokers to explore other options to replace lost revenue.

Employers should insist on a written agreement outlining the broker's commissions and the services they will receive. A good broker will help an employer design a plan, market the plan to carriers, and analyze the costs and benefits of suitable plans. Beyond that, some brokers may handle open enrollment, resolve billing and claim issues, and help communicate with employees, but it's essential to clarify such expectations up front.

If your company is self-insured or experienced-rated, retain a competitive broker group to periodically conduct an independent market pricing comparison. You will pay a consulting fee for such services, but the initiative may result in significant savings.

Discussions regarding containing health care costs have traditionally focused on educating and influencing the employee consumer of health insurance. But now, as soaring costs and growing complexity have become the norm, employers too need to educate themselves in order to understand how brokers are compensated and how they can reap the most value from the employer-broker relationship.

Technology As Differentiator
Just as the Internet has empowered consumers, so has it empowered health insurance brokers. While once the task of acting as conduit between insurance company and policyholder required long administrative hours, computers now allow broker and insurance company to instantly transfer information.

Still, time saved by computer must be made up by competing for a limited and educated client base. The new technology has in part driven a trend towards specialization: brokers are marketing themselves as specialists in a given industry. One might be the specialist in non-profit health insurance while another may specialize in the travel industry. This allows brokers to be aware not just of policy options but also of the typical wants, needs and budgets of a given industry.

What directions technology will propel the industry will be revealed only with time. One thing that remains clear is that Americans do not want to worry about their health coverage and will look to experts for help securing the best service at the right price.

Every broker has the best service and every broker offers the best products, just ask them. What differentiates a broker is their technology. Not only the technology a broker uses in their office but more importantly the technology the broker provides to the employer groups. Most brokers are very reactionary. They provide technology to their clients only when the client demands it. All parties — employers, employees, Third Party Administrators, carriers, and brokers — must utilize technology tools.

Benefits administration software, COBRA administration tools, HRIS, and consolidated billing services are just a few of of the technology tools used by brokers and their clients. The days of brokers providing quotes and enrollments are over.

In the next article in this series, we will explore in more detail how top brokers are using these technologies to run their business.

• inadequate capability: physical/physiological — mental/psychological
• lack of knowledge
• lack of skill
• stress — physical/physiological — mental/psychological
• improper motivation

1. endangers the health, safety or welfare of the workers, the environment or the public;
2. precipitates a higher rate for insurance coverage; and/or,
3. threatens to distract the focus of the workers away from production of the job task.

• Achieve contact with each conflicting party.
• Boil down what the presenting problems are.
• Cope with the problems by developing plans of action.

1. Attending behaviors. Attitude and actions of concern must be shown. This involves good body posture, appropriate meeting place, manners, eye contact, etc.
2. Listening. Excellent listening skills must be demonstrated-not verbally forcing the issue of resolution on others. Facilitators should listen to complaints without judging each party, indicating to them that an objective, neutral ear is listening. This will disarm those in conflict and influence them to sit down and work out a solution.

• What do the participants want to see happen?
• Who or what can help them?
• What else can be done to help out?
• How is the plan to be carried out?
• What evaluation is to be done to tell how the plan is doing?