Tag Archives: nonsubscription

Workers’ Comp and Due Process Don’t Mix

If attorneys and judges really want due process with regard to workplace injuries, then they should endorse the workers’ compensation (WC) alternative in Texas that we call nonsubscription. They won’t, even though nonsubscription is consistent with the Fifth, Seventh and Fourteenth Amendments to the U.S. Constitution — the amendments that identify due process as a key component of our national identity. The Fourteenth Amendment is very clear: “[N]or shall any State deprive any person of life, liberty or property, without due process of law . . .” In this legal context, employers are considered persons, so WC statutes mandating them to pay insurance premiums — regardless of fault — are violations of due process. That argument was so powerful it nearly prevented the original enactment of WC laws around the country a century ago.

Unlike WC, Texas nonsubscription never required employees or employers to fully surrender their legal rights to a system of special adjudication, so when employees sue their nonsubscribing employers, the cases are of the big-boy variety: tort. In Texas nonsubscription, we’ve seen about 100 judgments/settlements at or over the $1 million mark — much bigger than what WC constituents are used to. Moreover, our lawsuits in nonsubscription are processed in the civil court system, which is both a hallmark of due process and a reminder of what a day in court really looks like.

By contrast, WC disputes are typically relegated to administrative systems, where attorneys are sometimes tutored on procedure during hearings by administrative law judges. If this sounds like due-process-with-training-wheels, it’s because training wheels are necessary for everyone involved in the system (from lawyers and judges to regulators and legislators) to keep their balance as they attempt to negotiate two types of terrain at once. Due process can be thought of as a reasonably smooth legal pathway that’s been cleared for centuries by lawyers and judges. The special adjudication reserved for WC can be thought of as a smooth but abbreviated fast track that’s subject to change at the will of a legislature. But the fast track to fairness within the confines of WC is now littered with bumps and potholes because judges have permitted lawyers to drag due process procedures into a system of special adjudication that was never designed to accommodate them.

See also: Back to the Drafting Table on Work Comp  

To fans of due process, the nonsubscription system in Texas does say: “We will not deprive our employees and employers of their life, liberty or property unconstitutionally.” To fans of special adjudication, the WC system in Texas (and everywhere else) should say: “We understand why an expedited process for solving problems related to workplace injuries appeals to both employers and employees, and we can reduce costs, save time and improve outcomes for injured workers by minimizing attorney involvement.”

So if you are an employer or an employee committed to due process in the world of workplace injury, you should do everything possible to support Texas nonsubscription. But if you are committed to foisting due process concerns onto existing WC systems, you’re probably just a lawyer looking for a payday.

These Aren’t the Droids You Are Looking For

The lack of due process in unconstitutionally seizing property from employers is the obvious and gaping flaw that attorneys and judges don’t want to discuss when promulgating due process in all other areas of WC. They certainly don’t want to alter the funding of WC. Strict due process was a hurdle that WC couldn’t clear when the Grand Bargain was struck in the early 20th century. Due process almost destroyed WC then — and it threatens to destroy it today. Simply stated, strict due process and WC do not mix. This critical warning continues to fall on deaf ears as state Supreme Court Justices from New Mexico to Florida apply due process wherever it is convenient for the legal profession (but not necessarily where it is most critical for injured workers).

When forced to address this unconstitutional seizure issue, the legal community has, thus far, successfully used mind tricks akin to the one made famous by Star Wars’ Obi-Wan Kenobi. Lawyers want us to forget that reduction of legal friction was a key incentive for employers to abandon their due process concerns and accept the Grand Bargain in the first place. Each time a new generation of entrepreneurs asks, “Why do employers have to foot the bill for this whole sprawling WC system?,” legal spokespeople respond, “Everyone already agreed to this,” deftly deflecting through a sort of Jedi mind trick. And when the business owners who have done their research press the matter by asking, “But didn’t everyone also agree to bypass other areas of due process in favor of special adjudication within the confines of WC?” the legal spokespeople wave their hands and shake their heads very convincingly as they chant in unison, “No. That is not the argument you are looking for. ”

As with Kenobi’s lie, there’s no substance to the lawyers’ falsehood beyond the confidence with which they assert it, but the mind trick continues to work. “Well, I guess that isn’t the argument I am looking for,” you might hear from an exasperated CFO. “These attorneys have been trained in the law, so they must know. Carry on.

Those who lie about due process’ historical place within WC need to know that we are on to them. Their flawed arguments need some work.

See also: What Happened on the Oklahoma Option?  

Texas nonsubscription has provided a robust case study in what due process looks like for employers and employees alike. WC worked well under special adjudication for decades. But over the past half century, as layers of procedural due process have been added to WC’s inner workings, the legal community has cried foul about the lack of substantive due process — except it selectively disincorporated that whole funding-by-the-employer component from its argument.

I support due process in Texas nonsubscription.

And I support special adjudication in WC.

Let the legal community dictate what happens in nonsubscription. But let the legislature dictate what occurs in WC — which was the original deal. Mixing them has never worked.

Top 5 Things PCI Got Wrong on Work Comp

In June, the Property Casualty Insurers Association of America (PCI) published a report titled “Cost Shifting from Workers’ Comp Opt-Out Systems: Lessons from Texas and Oklahoma.” It claims to show how employers in those states are avoiding costs that should be covered by workers’ comp and that are instead paid by workers, their families, private payers and taxpayers. The report is part of a year-long, anti-competitive campaign that has been orchestrated with claimant attorneys who profit under workers’ comp and resist any move away from the traditional approach. The report shows little regard for the facts, applicable law or actual data on performance of alternatives to traditional workers’ compensation.

Here are five of the most significant bits of misinformation and misrepresentation:

1. No relevant data. The PCI cost shifting report boasts of using “verifiable and relevant data” and speaks to “the behavior of opt-out employers.” But the report fails to actually include any Texas or Oklahoma Option claims data, and the truth is that there is no evidence that PCI has even attempted to obtain such claims data.

2. No apples-to-apples comparison. PCI fails to consider the benefit plan payments, supplemental plan payments and negligence liability settlements and awards under Texas Option programs that are not available under workers’ compensation.

See also: 2016 Outlook for Property-Casualty

3. No mention that the majority of Texas workers are covered. PCI fails to acknowledge that the Texas Department of Insurance has determined that more than 95% of Texas’ workers are covered by either workers’ compensation or an injury benefit plan.

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Instead of criticizing responsible Texas and Oklahoma employers who provide injury benefit coverage for their workers, PCI should instead focus on the approximately 14 million — and growing — American workers across all states who have no work injury protection whatsoever.

4. No mention that proposed programs in other states have mandated benefits. PCI extrapolates from Texas to posit a false model for Tennessee and South Carolina. Option programs proposed in those states — unlike Texas — have mandated benefits. No bill has been introduced in either of those states to allow employers to “go bare.”

5. No acknowledgement of option program compliance with Medicare reporting and MSA requirements. Option programs normally pay full benefits before Medicare pays anything. The programs comply with Medicare quarterly, electronic reporting rules on open medical claims and liability settlements. The programs protect Medicare’s primary interest before settling claims with Medicare beneficiaries by setting aside a portion of the settlement funds to pay for future treatment.

Instead of using option programs as a scapegoat and pursuing the fatalistic view that savings by employers equate to cost shifting, perhaps the PCI should expend more energy on how to achieve better medical outcomes for injured workers through communication, employee advocacy, accountability and competition.

Option Program Success in Delivering Better Outcomes Is the Real Story

We will continue to advocate for a more positive discussion on how to achieve better medical outcomes. That should include a sincere discussion of the PCI board’s criteria for an acceptable alternative to workers’ compensation, which was approved in July 2015 and publicly introduced eight months later at the 2016 annual conference of the Workers’ Compensation Research Institute.

See also: Healthcare Reform’s Effects on Workers’ Compensation  

Workers’ comp options in Texas and Oklahoma have disrupted the industry with much-needed innovation and positive change. This has understandably created some dissonance and has rightly generated calls for proof. We welcome a review of real option program data, which amply demonstrates how highly respected industry players and employers are improving the lives of injured workers and reducing costs.

Who could be against that?

Fixing Illinois’ Outdated Workers’ Comp

The American workplace has changed dramatically since Illinois created its workers’ compensation system in 1911. But the workers’ compensation system, especially in Illinois, has not kept pace. Not only does the current system do a poor job of serving the majority of workers, especially parents and other workers who need flexibility to work hours outside the traditional workday and in off-site locations such as their own homes, but it also prioritizes the financial interests of groups such as lawyers and workers’ compensation doctors over the needs of both workers and employers.

The system needs to be reformed. Illinois policymakers should allow workers and employers to opt out of the state-run workers’ compensation system and to craft their own agreements around their particular circumstances – rather than forcing all workers and employers to adhere to rigid regulations that often no longer serve their purpose.

The early 20th century origins of workers’ compensation

At the turn of the 20th century, increasing numbers of Americans found themselves in new, hazardous working conditions in the jobs created by the Industrial Revolution. But few protections existed for workers who might be unable to support their families if they became injured at work. Workers’ compensation was designed to remedy that situation by providing medical care and income replacement to injured workers. The system, however, has not evolved to meet the needs of today’s workers and employers and is ill-suited to address the problems of the modern workplace.

Changes in the modern workplace

Far fewer people work in inherently risky jobs today. The industrial sector employed nearly a third of the workforce in 1900, but employed just 19% in 1999. And even today’s dangerous jobs have become less hazardous. Deaths per 100,000 workers fell more than 93% to just four by the end of the 20th century, down from 61 deaths per 100,000 workers at the start.

But workers also face new challenges. In the middle of the 20th century, just 30% of women were part of the workforce. That number has risen to nearly 60%. Increasing numbers of Americans must now balance work responsibilities with caring for a child or elderly relative: 82% of parents are in families where both parents work. Many employers have met those challenges by offering more flexible work environments such as telecommuting and flexible schedules. But workers’ compensation – a system supposed to protect workers – increasingly stands in the way of new work arrangements to meet workers’ needs.

See also: How Should Workers’ Compensation Evolve?  

Workers’ compensation was designed for an industrial workplace. Yet, it applies equally to a telecommuter working from home. A professor who slips on papers in his home office or an interior designer who trips on her dog can claim workers’ compensation.

That makes businesses less likely to give workers flexibility to work at home or, when employers do, to let workers set their own hours. A worker who answers email at night, after taking time to pick up children from school and prepare dinner, could still be considered in the workplace as though the distinction between work and home could be drawn as simply as when workers punched a time card. Employers have little control over possible costs if the employee is injured at home, and the broken workers’ compensation system gives employers an incentive to take away flexible working arrangements for fear of legal liability.

These problems are not unique to Illinois, but the Prairie State is unusual both in having one of the most costly workers’ compensation systems in America and in not having exemptions for small businesses or domestic workers. The absence of an exemption for domestic employees hurts increasing numbers of workers who must balance work with child or elder care. As with telecommuting, this can affect all workers, but it disproportionately affects women, who tend to spend more time caring for children. And, while not everyone can afford a live-in nanny, reducing impediments to hiring domestic help makes it easier for women to hold more senior positions.

Opting out of the state-run workers’ compensation system

While Illinois has one of the most restrictive workers’ compensation systems, Texas has one of the least restrictive, even allowing employers to opt out entirely. Critics of the Texas system allege this has led employers to cut services, but the evidence suggests employers prefer to save money by cutting areas prone to fraud, while often increasing benefits that employees value. Employers often provide better benefits than required for the same reason they offer flextime: to recruit the best employees at the lowest cost.

Special interests benefit from the current workers’ compensation system to the detriment of workers and employers

The government-imposed workers’ compensation system has also been far more susceptible to co-option by special interests. While workers and employers use the workers’ compensation system only when there is an injury, lawyers interact with workers’ compensation every day. As a result, although the workers’ compensation system is supposed to provide quick resolution to workers’ claims, the powerful lawyers’ lobby helped create a system that can stretch claims out over years. This costs businesses money and denies injured workers rapid settlement of their medical bills.

Medical providers, too, have benefited from a system that unnecessarily prolongs treatment and facilitates the overprescription of certain medications, including addictive opioids.

See also: The Pretzel Logic on Oklahoma Option  

Employers and workers both have an incentive to design a better system, but the false presumption that the government-run system is better prevents them from doing so. Interestingly, Texas employers who opted out of the state-run workers’ compensation system have all but eliminated opioid overprescription.

Fixing Illinois’ workers’ compensation system means government must step back and allow workers and employers to reach agreements that make sense in their specific situations – arrangements that suit the needs of workers and employers, rather than line the pockets of special interest groups benefiting financially from the current system.