Workers Comp. and Unemployment

Breaking news from California:

The Workers' Compensation Insurance Rating Bureau (WCIRB) made it official and submitted a mid-year filing for a 9.1% increase in the pure premium advisory rate that Insurance Commissioner Dave Jones approved less than six months ago. The proposed July 1 increase follows the 37% increase that Jones approved for January 1 that was hidden by the change in benchmarks for pure premium rates that was made at his request....

The Bureau insists that an increase of this magnitude is necessary to combat the continued deterioration in the claims experience, as well as an uptick in claim frequency in the 2010 accident year. Much of the increase will also go to pay for the higher loss adjustment expenses carriers are incurring fighting liens and litigating permanent disability claims. Projected ALAE costs are up to $11,403 per indemnity claim for the 2011 accident year compared to $10,698 the year before.

A 9.1% increase a half year after a 37% increase is just crazy.  This tends to confirm three issues I have written about before:

  1. People are filing workers comp claims as a substitute for or a supplement to unemployment.  Our company has seen a significant increase in people "coincidentally" suffering an injury on one of the last few days, and particularly the very last day, before they are to be laid off.  Only such fraud explains an increase in claims when economic activity is way down, particularly when more dangerous professions like construction employment fell much more than office employment in the recession.  We have also seen, by the way, an increase in frivolous labor lawsuits in CA coincident with the economic decline.  A year ago I had an employee in CA tell me that she had attended a brainstorming session the night before among several of my ex-employees trying to generate ideas for ways to sue our company.  I can't wait for an improvement in the economy when the returns of working are higher than the returns of brainstorming ways to extract money from our company via the legal system.
  2. California in general does a bad job of policing workers comp. fraud.  Woe to the employer that actually attempts to question an outrageously suspicious claim.  Last time I tried to do so in CA I got slapped with a lawsuit.
  3. All states do a terrible job policing permanent disability claims.  I hire a lot of older workers.  I can't tell you how many people show up at my door trying to be paid under the table because they don't want to endanger their permanent disability by having a record of getting paid for doing very physical outdoor work for us.  They assure me they are 100% capable to do heavy physical labor.  Since I don't pay anyone off the books, they end up finding work elsewhere.   Many of you may not believe such people exist, but I have met a number of folks who consider getting a permanent disability, or at least something a doctor will testify is a permanent disability, the equivalent of hitting the lotto.  I have even been sued by a woman for submitting testimony to the social security administration that might have harmed her chances of getting a permanent disability ruling.  The lawsuit stated that if she was denied the disability payment after I testified that I had seen no evidence of any limitations in what she could do on the job,  that I should be liable for paying her the lifetime amount she would have gotten.  So I wimped out and withdrew my testimony and let the taxpayers pay her rather than farting around with a lawsuit.
  • Mark

    Worker compensation is a major problem for all employers (except, in my opinion, highly unionized companies that are subsidized by the rest).

    The number one problem in my state, Minnesota, is that the "injured" employee is in control of the medical care, not the employer. Therefore, they can select doctors, or even chiropractors, that will give them the best "diagnosis" and disability claims, as well as keep them out of work for as long as they can.

    The medical practitioners are complicit in the issue because they know they can charge 10 times more in worker comp cases than other injuries.

  • IGotBupkis, Channeler of the Intellectual Giants of the Left

    >>> Many of you may not believe such people exist

    Yeah, and there's no voter fraud, either. The Truth Fairy? Exists but is the victim of a government coverup. Ditto Santa Claus. How else to explain all those Santas that show up around Xmas time? I mean, ONE of them HAS to be the Real Thing. And don't even GET me on the subject of the Easter Bunny....

  • Mark2

    This hit the news in Southern CA a few days ago

    "A Los Angeles firefighter who was discovered moonlighting as a mixed martial arts star while on workers compensation disability leave now faces what may well be his most vexing opponent: the L.A. District Attorney’s Office. ..."

    http://www.businessinsurance.com/article/20120411/NEWS08/120419972

  • Ted Rado

    Every program that is designed to help people winds up as a con game. A great reason to minimize them.

  • Brandon Berg

    So do you keep a blacklist of workers whom you would never consider rehiring because of their participation in these kinds of shenanigans? How long is it?

  • An Observer

    Another reason claims have gone up is that illegals believe they can't be deported if they have a pending workers comp case. I don't know if that's true but I know they think it.

  • Mark

    "So do you keep a blacklist of workers whom you would never consider rehiring because of their participation in these kinds of shenanigans? How long is it?"

    Applicants for employment should be required to give you information about any disability claims they have previously made, and if they have a prior finding of disability that they did not disclose, partial or otherwise, all of their worker compensation claims should be dismissed.

    My experience as a small business owner is that:

    1. 75% of all worker compensation injuries occurred while the employee was not following company policies or work rules (yet we still pay). The policies and rules are designed to prevent injuries (yet we still pay).

    2. AS I stated above, the medical community is in completely in the bag for worker compensation claims. They actively seek them and if a patient presents an injury they deliberately twist the situation to make it a worker compensation claim. The reason for this, with work comp, they can bill 10 times the amount for each injury. If you injured your back playing softball, you would probably spend less than $100 on medical treatment and never miss a day of work. Have the same "injury" at work, you will run up a $10,000 bill and miss as much work as possible.

    3. 20% of worker comp claims are pure fraud. I had an employee get beat up by her husband. He pounded her face black and blue, broke her nose, and separated her shoulder. She went to the chiropractor who only wrote up the shoulder injury and convinced her to report it as a work comp claim. Luckily, she had showed up for work with visible injuries and was sent home, and it was documented. Otherwise, we would have paid out again.

  • http://sailorette.blogspot.com Foxfier

    I know my mom made the mistake of trying to honestly use the workman's comp system.

    My folks are ranchers. Mom keeps working because the work has to be done-- this is the same woman that walked roughly twenty miles from the accident that shattered her collar bone. It doesn't matter if she pops motrin like it's candy, she WILL be there to do what has to be done.

    Because she didn't stop working, her claim for the destroyed knee was rejected. Even though the experts basically said "yes, this knee was clearly injured...how the hell did you WALK IN to my office?!?"

    Yet we know a half-dozen people that brag about how they cheated into major payments from the WC system. Ugh.

  • http://sailorette.blogspot.com Foxfier

    An Observer:
    Another reason claims have gone up is that illegals believe they can’t be deported if they have a pending workers comp case. I don’t know if that’s true but I know they think it.

    I also don't know if it's true overall, but I suspect it's true in some areas-- the publicly stated reason for why Washington State is cracking down on WC claims (...in their own way...mostly by making it too much of a pain for folks who WANT to work) is the story about an illegal who was committing ID fraud and working on a construction site, then went in to work on a Sunday before they were going to lay everyone off for the winter and 'fell off' a ladder. Which he had to move to a dangerous spot. From memory, but you get the idea.

  • Matt

    C'mon Warren, take one for the team and hire the cons, then pay them on record just to see what happens.

  • Orion

    As an employer I can attest that its not just the state of California. Fortunately I haven't had to lay anyone off in a long time, but the last time I fired someone they went to workers comp for repetitive stress-8 months after they were let go. Incidentally, they were fired for getting into a physical fight, with blunt objects, on my factory floor. And they wont their unemployment appeal!!

  • Mark

    "And they wont their unemployment appeal!!"

    Another huge problem is unemployment and the way that is handled.

    Think about the unemployment appeal. WHo is making the decision? The State. But the state has a vested interest in that decision. If they cannot find you liable for the unemployment they have to pay it themselves.

  • Steve W from Ford

    I don't know that I can add much other than to confirm that fraud is rampant in the Washington State workmans compensation system as well as with unemployment. It is unfortunate but one of the joys of moving into semi retirement is that I no longer have to deal with the Industrial Insurance system scams and the unemployment fraud that were a near daily occurence when we had a large employee base.
    I guess I was naive but I used to believe that the state system wanted to root out fraud. I was disabused of this over the years as I saw that the state run system intentionally made it as difficult as possible to challenge fraudulent claims while making the claims process as easy as possible for the employee. The potential liability made it necessary to just go with the flow which really grated on me. I never got used to the fact that people who had worked less than one full shift for our company could claim, and be granted, disability for work related carpal tunnel for which our experience rating was then charged.
    The public may complain about the high cost of government but they pay no attention to the components system intentionally made it as difficult as possible to challenge fraudulent claims while making the claims process as easy as possible for the employee. The potential liability made it necessary to just go with the flow which really grated on me. I never got used to the fact that people who had worked less than one full shift for our company could claim, and be granted, disability for work related carpal tunnel for which our experience rating was then charged.
    The public may complain about the high cost of government but they pay no attention to the components that go to make up those costs.

  • sean2829

    I guess its not just the US which has some unusual worker comp claims. Here is one from Australia where a woman was injured having sex with an aquantance while on an overnight trip. http://www.news.com.au/business/worker-injured-during-sex-gets-compo/story-e6frfm1i-1226333292525 I wonder how they will have to re-write the employee manual as a result of this.