BOSTON, MA - The Massachusetts Supreme Judicial Court has ruled that Karen Sikorski, a teacher at Peabody High School, is entitled to receive workers' compensation benefits when she was injured while chaperoning students on a school ski trip. To access the slip opinion, go to http://www.massreports.com/CourtDecisions/.
MADISON, CT– Drug cost inflation in workers’ compensation is up 7.5 percent according to Health Strategy Associates’ (HSA) Sixth Annual Survey of Prescription Drug Management in Workers’ Compensation.
This increase came after five years of progressively lower drug cost inflation rates documented in HSA’s previous surveys. Workers’ compensation payers said the primary cost driver was utilization, citing such specific issues as the over-use of pain medications and physician prescribing patterns. To combat inflation, payers are increasing investments in analytics and moving towards step therapy and stronger clinical management of pharmacy.
“Payers are also calling on their Pharmacy Benefit Management (PBM) firms for deeper insight into pharmacy trends, better management of claimants with chronic pain issues, and stronger first-fill capture programs,” said Paduda.
Other concerns cited were per-unit cost increases, the predominance of single-source brands, and OxyContin rebranding. Physician dispensing continued to be an issue for payers with significant business in California and the southeastern , especially
Some respondents saw significant decreases in their drug costs with four participants reporting drops of nine percent or more from their 2007 costs. Unlike previous years, drug cost inflation trended lower at smaller payers than their larger competitors. “Smaller payers seem to be ‘faster to market’ with utilization controls, adjuster education and data sharing with their PBM partners,” Paduda noted.
For the fourth consecutive year, the survey was sponsored by Cypress Care, (www.cypresscare.com) a full-service national workers’ compensation PBM, and its successor organization, Healthcare Solutions, Inc. Decision makers and operations staff from eighteen carriers and TPAs, participated. Respondents’ 2008 drug expenses ranged from $1.2 million each to $148 million; respondents’ cumulative drug spend totaled $810 million, 19.3. percent of the total workers’ compensation drug spend.
Led by Joseph Paduda, Health Strategy Associates (www.healthstrategyassoc.com) is a national consulting firm serving insurers, employers and health care providers. Pharmacy costs and similar issues are covered in Paduda’s blog, www.ManagedCareMatters.com. For a copy of the survey results, which will be available after Jan. 15, contact email@example.com.
Source: Health Strategy Associates
SANTA MONICA, CA - California's workers' compensation insurance market will remain vulnerable to wide swings in performance unless changes are made to improve the predictability of costs, transparency of pricing decisions, regulatory oversight and consistency of the incentives facing different parties, according to a study issued today by the RAND Corporation and Navigant Consulting.
"We do not recommend that California reregulate worker's compensation rates," said Lloyd Dixon, lead author of the study and a senior economist at
RAND, a nonprofit research organization. "Rather, we offer recommendations to reduce the volatility of the market and the frequency of insolvencies, while realizing the benefits of a competitive market."
In 1995, the
California legislature allowed state insurers far greater flexibility in setting rates for workers' compensation insurance, which provides medical care and financial compensation to workers injured on the job.
But for reasons beyond price deregulation, the changes ushered in a period of great volatility. Insurer profits dropped dramatically during the second half of the 1990s, and 31 insurers out of the roughly 250 insurers who wrote these policies in the state failed—including some of the largest companies. Premium prices also fluctuated wildly.
"The workers' compensation insurance market has been like a roller coaster for more than a decade," said Bill Barbagallo, co-author of the study and a managing director at Navigant Consulting. "Volatility makes it harder for businesses to plan and threatens the ongoing health of the insurance market."
The fallout from the market volatility has been widespread. Employers ultimately will be assessed $4.9 billion to pay for the unresolved claims left behind by insolvent insurers and unpredictably high workers' compensation costs can discourage companies from moving to
California , according to the report.
Support for the study was provided by the California Commission on Health Safety and Workers' Compensation. It was conducted by the
Center for Health and Safety in the Workplace and Navigant Consulting, a specialized independent consulting firm providing dispute, financial, regulatory and operational advisory services to government agencies.
The study identified six key factors that contributed to the insolvencies and volatility over the past 15 years:
The study offers 29 recommendations that aim to increase the predictability of workers' compensation costs, enhance the transparency of the system, better align the incentives of the major players and improve the California Department of Insurance's oversight.
Examples of the suggested changes include requiring the California Department of Insurance to appoint and pay the actuaries that certify that insurers have set aside reserves that are adequate to cover the expected costs of claims. The study also recommends that the Workers' Compensation Insurance Rating Bureau publicly release the quarterly reports that compare the rates charged by each insurer with the expected costs of coverage.
The state-chartered State Compensation Insurance Fund also should report the relationship between rates charged and expected costs by policy-size category. The study also focuses on improving the performance of managing general agents, who often write and adjust policies on behalf of insurers. Contracts that insurers enter with the managing general agents should be augmented to give managing general agents a stake in the ultimate profitability of the policies.
The performance of the Workers' Compensation Appeals Board System also should be reviewed for the consistency of judges' opinions and for how closely judges follow the law. In addition, the California Department of Insurance should consider increasing the amount of capital that insurers must hold to protect against adverse events.
The study's findings are based on interviews with a wide range of stakeholders, detailed examination of eight insurer groups that became insolvent and eight that survived, a review of previous studies, and an analysis of data from the California Department of Insurance, the Workers' Compensation Insurance Rating Bureau, the State Compensation Insurance Fund, the California Insurance Guarantee Association, and the Conservation and Liquidation Office.
The study, "California's Volatile Workers' Compensation Insurance Market: Problems and Recommendations for Change," can be found at www.rand.org. Jim Macdonald of
RAND also co-authored the report.
The RAND Center for Health and Safety in the Workplace is dedicated to reducing workplace injuries and illnesses by providing objective, innovative, crosscutting research to improve understanding of the complex network of issues that affect occupational safety, health and workers' compensation. The center draws on the expertise within three research units of the RAND Corporation: the RAND Institute for Civil Justice, RAND Health and the RAND Infrastructure, Safety and Environment division.
Navigant Consulting, Inc. (NYSE: NCI) is a specialized independent consulting firm providing dispute, financial, regulatory and operational advisory services to government agencies, legal counsel and large companies facing the challenges of uncertainty, risk, distress and significant change. Navigant focuses on industries undergoing substantial regulatory or structural change including healthcare, energy and financial and insurance services, and on the issues driving these transformations. For more information, visit www.navigantconsulting.com.
About the RAND Corporation
The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world.
Soure: RAND Corporation
Lansing, MI (CompNewsNetwork) - In 2000, the plaintiff, a resident of Canada, was injured in
Maine. He sought
Michigan worker’s compensation benefits. In 2007, while his case was pending, the Michigan Supreme Court interpreted the worker’s compensation act’s statute concerning jurisdiction over out-of-state injuries, MCL 418.845, as giving Michigan jurisdiction over an out-of-state injury if the contract of hire was made in Michigan and the claimant was a resident of
Michigan at the time of injury. Karaczewski v Farbman Stein Co, 478 Mich 28 (2007). Should MCL 418.845’s jurisdictional standard, as interpreted in Karaczewski, be applied in this case? …[read more]
Nashville, TN (CompNewsNetwork) - The Tennessee Attorney General, Robert E. Cooper, opined on a question related to the constitutionality of a sole proprietor carrying workers' compensation insurance on him/herself. The question was:
Are the recent changes to Tenn. Code Ann. §50-6-113 effectuated by 2008 Tenn. Pub. Acts ch. 1041, requiring a sole proprietor to carry workers’ compensation insurance on himself, constitutional?
The governor responded …[read more]
Lansing, MI (CompNewsNetwork) - The plaintiff’s right arm was amputated when he reached into a soil screening machine, which had not been fully shut off, to clean it. The plaintiff claims that the company that supplied the machine is liable for his injuries, and that the company acted negligently when it removed a machine guard; that alleged negligence caused his injury, the plaintiff contends. The trial court concluded that there were disputed questions of fact, and it denied the company’s motion for summary disposition. The Court of Appeals reversed. Was the defendant’s allegedly negligent act of removing the machine guard a proximate cause of the plaintiff’s injury? …[read more]
Jefferson City, MO (CompNewsNetwork) - Shelter Mutual Insurance Company appeals the trial court's entry of summary judgment in favor of Jason Rice in the amount of $525,000 in uninsured motorist coverage under his Shelter policy. (Shelter paid Rice $75,000 prior to this action.) This Court determines that the policy is ambiguous; therefore, under settled
law, the ambiguity must be resolved in favor of coverage for the insured …[read more]
Richmond, VA (CompNewsNetwork) - The Virginia's Court Of Appeal's Judge, William G. Petty, wrote the following memo:
On March 25, 2009, the Workers' Compensation Commission issued an opinion reversing the deputy commissioner and holding that Harris failed to carry her burden to establish that her injury "arose out of and in the course of her employment." Harris appealed the commission's final order and contends that (1) the commission erred in finding that Harris failed to prove that her carpal tunnel syndrome was related to her employment, (2) the commission erred in finding that Dr. Krome and Dr. Owusu-Yaw were not sufficiently aware of the duties of Harris' job so as to offer an informed and persuasive opinion on causation, and (3) the opinion of Dr. Jay Gordon Burch should have been excluded from consideration as a matter of law …[read more]
ALBANY, NY - The New York State Workers’ Compensation Board has filed a lawsuit against CRM Holdings, Ltd., alleging that certain directors and officer breached fiduciary duties owed to trusts that the company operated, with damages exceeding $405 million.
Source: Business Insurance
New York - CRM Holdings, Ltd. (“CRM” or “the Company”) (Nasdaq: CRMH), a provider of a full range of products and services for the workers’ compensation insurance industry, today announced that it has received a “Notice of Imminent Enforcement Action” from the New York State Office of the Attorney General (“Attorney General”).
According to the Notice, the Attorney General intends to file civil claims against the Company, certain of its subsidiaries, and certain directors and officers to seek redress of allegedly unlawful practices, unless an acceptable settlement can be reached within five days. The Attorney General’s Notice follows over 19 months of investigation, during which time the Company has cooperated fully with the Attorney General’s office.
The Attorney General alleges that the Company and the other named parties engaged in fraudulent practices in connection with Compensation Risk Managers, LLC’s administration and marketing of workers’ compensation group self-insurance trusts in New York and in connection with the Company’s initial public offering completed in December 2005.
These practices are alleged to have violated New York’s Executive Law and Martin Act. The Attorney General is intending to seek injunctive relief, restitution, damages, penalties, and costs.
The Attorney General’s Notice indicated that it remains open to resolving the investigation without litigation and has provided the Company and the named directors and officers with five days to present acceptable offers of settlement.
The Company is disappointed by the Attorney General’s decision to bring the lawsuit and dismayed that the Attorney General’s office chose to disclose the Notice before the indicated window for discussion had expired. The Company denies the Attorney General’s allegations and believes that its business and management practices in connection with the
trusts were proper and that all material information was disclosed during its initial public offering. The Company believes that the Attorney General’s allegations are without merit, but is committed to resolving the Company’s legal issues in the best interests of its shareholders, employees, clients and other stakeholders.
Source: CRM Holdings, Ltd.
SACRAMENTO, CA - Just a month after rejecting an insurance industry request to increase the Workers’ Compensation Claims Cost Benchmark by nearly 25 percent, Insurance Commissioner Steve Poizner announced today that workers’ compensation insurance rates will be relatively stable and increase by an average of only 4 percent in 2010.
"This is great news for the small business owners across our state and proves that the double-digit increase I rejected was flat-out unwarranted," said Commissioner Poizner. "It’s unfair for the insurance industry’s inefficiency to lead to higher rates for employers who are struggling during the recession. This latest data reinforces my view that when forced, insurance companies have found a way to use tools already available to them to reduce costs and minimize rate changes."
Last month, Commissioner Poizner rejected a request for a 22.8 percent increase in the Workers’ Compensation Claims Cost Benchmark. It was the second consecutive request for a 20 percent or more increase in the benchmark that Commissioner Poizner rejected.
The Department of Insurance recently analyzed the rate changes requested by the top100 workers’ compensation insurance companies. These companies represent 97.1 percent of the workers’ compensation insurance market.
The analysis found that 59 companies have made new rate filings for next year. Companies who want to keep the same rates do not need to file for new rates. Of those 59 companies, four companies filed for rate decreases ranging between 8.4 percent and 1 percent, 13 companies filed for no overall rate change and the other 42 companies have filed for rate increases between 0.6 percent and 12 percent. The straight average rate increase for all 59 companies is 4.1 percent, and when weighted for market share, the premium weighted average rate increase is 4.0 percent. This last calculation does not include State Fund.
Dept. of Insurance
SACRAMENTO, CA - California Insurance Commissioner Steve Poizner today announced that Teresa Anne Lee, 45, of Prunedale was arrested Dec. 9 on suspicion of committing workers’ compensation insurance fraud, financial elder abuse and grand theft. She faces as many as five years in prison if convicted on all five charges.
"Workers’ compensation fraud is not a victimless crime," Commissioner Poizner said. "Insurance premiums rise to cover the cost of fraud and that means business owners across the state are charged more and have to hire less. Our department will find these suspects, arrest them and see that they are prosecuted and punished."
A California Department of Insurance (CDI) investigation alleges that Lee submitted a false workers’ compensation claim to the State Compensation Insurance Fund (SCIF) saying she fell off a ladder while employed at a
apartment complex. The investigation alleges that Lee faked her injury to obtain money.
According to SCIF, Lee has received more than $13,430 in total temporary disability payments and $6,912 for medical treatments.
The CDI investigation also revealed that Lee allegedly portrayed herself as a relative of the apartment complex’s owner to get rentals payments and deposits in her name. Lee allegedly collected $900 from three tenants, cashed the checks and used the money for her own personal use. It also is alleged that Lee used the name of the elderly owner to obtain utility services for her unit.
Commissioner Poizner oversees 16 CDI Enforcement Branch regional offices throughout the state. Approximately 1,900 insurance fraud-related arrests have been made by the Department of Insurance’s enforcement division since Commissioner Poizner took office in 2007 – more arrests than have been made during any other two-year period, under any previous insurance commissioner.
OMAHA, NE - As reported in the Journal Star, a Nebraska Court of Appeals has ruled that an illegal immigrant injured on the job is entitled to workers' compensation benefits.
Read the case here
ZURICH - The Wall Street Journal reports that Zurich Financial's $2.7 billion cost-savings plan for the next three years includes increasing its workers' compensation premium rates by 4.2% if interest rates fall one point.
WASHINGTON, D.C. - On December 7, 2009, the U.S. Supreme Court denied the petition for certioari in Cassens Transport Co. v. Brown, thereby upholding the Sixth Circuit's decision that allowed injured workers to file RICO lawsuits against employers and claims adjusters that deny their workers' compensation claims.
Read the docket
TUMWATER, WA – A Canadian doctor pled guilty to three counts of third-degree theft, after illegally collecting workers’ compensation benefits while working in Canada and the state of Washington for a medical device development company.
Dr. Roger C. Andersen, a resident of Ladysmith, British Columbia, was ordered to repay the Department of Labor & Industries (L&I) $232,790 for collecting workers’ compensation benefits from May 2004 through December 2007.
Dr. Andersen began receiving workers’ compensation payments in 1999 after an injury sustained while moving office equipment.
In May of 2004 he began working full-time as a consultant with a medical research company in Bothell. He was then hired full-time as a medical director from July 2005 through December 2007.
“Stealing from the workers’ compensation program drives up premium costs for everyone,” said Carl Hammersburg, manager of L&I’s Fraud Prevention and Compliance Program. “We work hard to make sure those who cheat the system are held accountable.”
State Dept. of Labor and Industries
SACRAMENTO, CA - California Insurance Commissioner Steve Poizner today announced the new appointment of Employers Compensation Insurance Company and the reappointments of California Casualty Insurance Company and Lawyers Mutual Insurance Company to the California Insurance Guarantee Association (CIGA) Board of Governors.
"We need a strong and robust guarantee association to handle claims should an insurance company go under," said Commissioner Poizner. "I look forward to working with them during their next term to implement many of the recommendations made during CDI's operational review released earlier this year."
CIGA operates under Sections 1063-1063.77 and Sections 11698.3 of the California Insurance Code, providing a mechanism for the payment of covered property, casualty, and workers' compensation insurance claims of insolvent insurance companies.
The CIGA Board of Governors is comprised of 13 members, consisting of nine insurer members and four members of the public. The insurance commissioner appoints all nine insurer members and at least five members of the board shall be domestic insurers, at least three of the members shall be stock insurers, and at least three shall be non-stock insurers. Of the four public members, two are appointed by the insurance commissioner; one business member and one labor member. Additionally, one public member is appointed by the president pro tem of the California Senate and one by the speaker of the California Assembly.
The term of appointment for the nine member insurers is three years with staggered terms. The members of the CIGA Board of Governors serve voluntarily and are not compensated for their services. They are reimbursed solely for expenses incurred, if and when requested. The CIGA Board of Governors meets quarterly in Los Angeles or
Stephen Festa is the senior vice president and chief claims officer for Employers Insurance Group. He's been with the company since 2004. He has more than 20 years of experience in the insurance industry and has held several executive-level claims positions in his career. He attended the
and also completed the Advanced Executive Education Program sponsored by the American Institute for Chartered Property Casualty Underwriters (AICPCU) and the
James Sevey is the executive vice president, managing director and general counsel of California Casualty Insurance and has been with the company since 1973. He is serving as CIGA's chair. Jim obtained a Bachelor of Science degree from
in 1971 and his law degree from
in 1978. He obtained his Chartered Property & Casualty Underwriter designation in 1988.
Thomas Ault is the president and chief executive officer of Lawyers Mutual Insurance Company and has been with the company since 1981. He's been the company's president and chief executive officer since 2003. Ault is a former president of the San Diego County Bar Association and is a graduate of
and the law school at the
Commissioner Poizner released an operational review of the California Insurance Guarantee Association earlier this year that included 83 separate recommendations to make CIGA more efficient. The operational review made 83 specific recommendations, including:
Dept. of Insurance
NASHVILLE, TN - Lt. Gov. Ron Ramsey announced today that the Tennessee General Assembly will not hold a special session this month to address a 2008 law, Public Charter No. 1041, which goes into effect January 1 and which will eliminate an exemption allowing sole proprietors and partnerships to opt out of carrying workers’ compensation insurance on themselves.
Source: Nashville Business Journal