Wednesday, February 25, 2009, 09:23 PM - Understanding the CA WC systemDaddy, how was your day at work?
Great day at the bagel shop, son. I got promoted today. Now I'm the Senior VP of dough making!
Sounds like a Saturday Night Live skit. But it's not.
That's an example of what has been going on in a scam some have devised to avoid having California workers' comp coverage.
Pic-A-Bagel, based in San Diego, refused to pay the senior VP of dough maker's injury claim. The worker had asked to become a corporate officer and had no real ownership interest in the franchise. Pic-A-Pay lost at the WCAB, which rejected its ruse.
The theory: make everyone a corporate officer. Even workers in service jobs such as restaurants, roofing, security, and housekeeping. Avoid having to pay comp premiums. Wrap yourself in purple prose about protecting the viability of small business.
VP of bottle washing. Controller of ticket taking. Director of gutter cleaning.
The folks who thunk this up are not named John Belushi, Tina Fey and Eddie Murphy.
Dimwits or sharks? Whatever your take on them, they are a San Diego firm called ConAPA. Here's their website:
Attorney General Jerry Brown has now filed a lawsuit against ConAPA, seeking a permanent injunction and $300,000 in fines.
The jig is coming to an end.
Here's the LA Times piece on the lawsuit:
http://www.latimes.com/news/local/la-fi ... 5852.story
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Tuesday, February 24, 2009, 05:08 PM - Political developmentsI've always thought the San Francisco Chronicle was an underrated paper.
True, on workers' comp and labor issues the paper has never been a leading investigatory force. But overall the paper has many strengths. Other than the Sacramento Bee and the LA Times, it has the best coverage of California politics.
But traditional media in this country is in free fall.
Today comes word that the Hearst Corp is considering closing the Chronicle. Unless there are labor concessions and severe cutbacks, Hearst says the paper will be gone.
Here is the piece:
http://www.sfgate.com/cgi-bin/article.c ... &tsp=1
Monday, February 23, 2009, 04:47 PM - Political developmentsNothing surprises us anymore.
Special ops forces training and operating in Pakistan? Yes. A nuclear Iran this year? Quite possibly. GM and Chrysler need billions to keep going through the spring? Yup.
Stress testing? No, it's not for your heart, dummy. It's for your bank. Nationalize Citibank and Bank of America? Maybe.
World records falling. At Carnaval in Rio's Sabadrome, new records are set. One model wears nothing but a 1.2 inch cloth patch, breaking last year's record of a 1.5 inch patch.
Speaking of records, how about a $60 billion record? I'm referring to the news reported by CNBC today that AIG may soon report the largest loss in U.S. corporate history.
So...(obligatory yawn).....AIG insurance will report a loss this week as high as $60 billion? (Yawn).
My, oh, my, how jaded we've become as leading institutions crumble around us. Lots of froth still working its way out of the system.
Word came today that AIG will be coming back to the U.S. Treasury, asking for MORE bailout TARP funding.
Let's do a short recap for what has occurred with AIG. AIG, of course, is the corporate parent of a number of subsidiaries which write large amounts of California comp coverage.
All together, the U.S. may have as much as $152 billion on the line with AIG through various bailout mechanisms, the Capital Purchase Program and the Systemically Significant Failing Institutions Program (SSFI). The support money started last September- to the tune of an $85 billion loan- and in November 2008 $40 billion in exchange for AIG preferred stock.
Since then, AIG has been auctioning off various subsidiaries, from auto insurance lines to Asian life insurance and Thailand credit card operations.
But the unwinding of the company appears to be going poorly. CNBC's report said that the company is considering bankruptcy and has retained possible counsel for that. The stock is down approximately 98%, to 53 cents today.
Meanwhile, AIG continues to operate. Its subsidiaries that write California workers' comp business-none of which have been sold yet-continue to be active in the Golden State.
The GAO, the Congressional watchdog agency (the U.S. Government Accountability Office) has been examining claims by ACE Group and Liberty Mutual that AIG is destabilizing the insurance market, engaging in aggressive price cutting and excessive risk taking. A GAO report is due by March 31.
But events may be overtaking AIG and the GAO. If CNBC is correct about a $60 billion loss, AIG does not have much time to dismember itself and reinvent itself.
It's not clear that the Obama administration can or will continue to prop up the company, which is only one of many top institutions that are drowning. Nationalizing banks may be one thing, but nationalizing insurers is another.
AIG may not be too big to fail after all.
Where bankruptcy would leave the comp insurance subsidiaries is anyone's guess. If the parent company somehow manages to break into assets held by those subsidiaries (which are regulated by state law, many in Pennsylvania), it will be bedlam for CIGA and the California insurance market.
I hope that's not structurally possible, and that I'm wrong.
But I would never have predicted a 1.2 inch patch in Sambadrome, or U.S. military trainers in another South Asian country 55 years after
Dien Bien Phu.
Graham Greene is probably turning in his grave right now.
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Friday, February 20, 2009, 11:06 AM - Understanding the CA WC systemThree.
Workerscompzone recently celebrated its third birthday.
Doing the blog has been a fun ride for this Tar Heel turned Californian.
In 2007, when I started blogging, I knew that California already had a number of excellent subscriber-based resources on workers' comp. For years the California Workers Comp Reporter (CWCR) has published a distinguished monthly analysis of legal and regulatory developments. The Appeals Board Reporter has also been an excellent source of information for workers comp professionals.
Later,workcompcentral.com joined the fray, giving the comp community daily access to the latest state and national developments. LexisNexis created its Workers' Compensation Law Center (in 2008 I was named by them as one of Top 25 workers' comp blogs in the USA).
And the Workers Comp Executive has been a terrific source of information, focusing on developments that affect the industry. No list would be complete without mentioning the Executive's columnist "Publius" , which was a major influence in my decision to start the blog in the first place.
But I wanted to do something a little different from the others.
When I started this I had several goals:
-contemporaneous commentary about important developments in California workers' comp law
-documenting the realities of comp law practice from the trenches
-giving voice to the frustrations and concerns of many disabled workers
-relating the concerns held by various attorneys and judges in the "comp community"
-monitoring the comp system studies done by various state agencies and stakeholder think tanks
-following key developments in California's political process which have implications for workers comp
As I got deeper into the blogging process I found myself occasionally venturing into related issues that affect California"s disabled employees. Unions. Healthcare reform. Issues surrounding the UI/SDI safety net. FEHA. Immigration and employment. Sacramento shenanigans. General cultural madness.
It's been very helpful to have an excellent set of colleagues on my side at Boxer & Gerson. Unlike most workers' comp applicant firms, we have
an employment law section and a civil trial lawyer section, both of which have been great resources for the blog. Thanks to them for putting up with me adding the blog to my regular caseload.
The past few years have been tough for many disabled workers, but from the standpoint of the law itself, it's been an exciting time. Creative lawyering is in abundance, and the law is in flux in many aspects even five years after the 2004 SB 899 reforms.
I've tried to take the big view, looking at what works and what doesn't work under the system. Having practiced in the system for about 30 years, I've pretty much seen the pendulum swinging in every direction.
Reforms and re-reforms. Reforms which sometimes had unforseen and unintended consequences.
Periods when providers and lien claimants went wild.
Periods when employers felt they had little voice. Periods when workers felt they had little voice.
Quiet periods. Periods where the system was like the Wild West.
Periods when insurance carriers were bleeding money. Periods when they were rolling in dough like pigs at the trough.
What about the blog's future?
I look forward to giving you more commentary as time goes on. If I don't challenge you-and perhaps even infuriate you from time to time-then I'm not doing my job. If you're looking for a blog for the politically correct, this is not the space for you.
Writers do best when they write about what truly interests them.
As I've done this for awhile, I've realized I enjoy doing it most when I can sometimes put comp in the big picture context of the economy and the culture. Two years ago, who, other than NYU's Doctor Doom (Nouriel Roubini), would have imagined the depth of the economic meltdown we are now seeing? I happened to be visiting New York and Wall Street last September when A.I.G. was melting down. Seeing that focuses the mind.
From time to time I'll post from abroad. My wife owns a business supplying Asian paper mills with recycled fiber and pulp from North America and Western European suppliers. Carrying her bags on her business trips gives me a chance to see the world of international trade up close. I'll try to continue giving periodic perspectives from those places.
I get a lot of e-mail from workers looking for advice about their particular situations. Unfortunately, I can't practice law via e mail through the blog.
But if you are a "comp community" person or a system stakeholder, I welcome your tips (confidential if you choose) , gossip, reactions, rebuttals, corrections, or whatever. Is there something you think needs to be addressed or exposed? My e mail for blog purposes is email@example.com
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Wednesday, February 18, 2009, 04:42 PM - Political developmentsWorkers' comp generates a lot of public cynicism.
Studies showing billions of dollars lost to employer premium and classification fraud fall mostly on deaf ears.
Taxpayer TARP bailouts for the corporate parents of California comp insurers are in public focus, but not tied back to the comp system in the public's mind.
But a story like that of the octuplets' mom and her workers' comp injury has "great legs", as they say. Nadya Suleman (who collected over six figures in comp benefits) may have a legitimate workers' comp case, but if you ask the average person on the street whether her claim is legit or not, you'd probably get quite an earful.
That may not be fair to Ms. Suleman, but the public wonders.
The cynicism is fueled by articles such as the following, which is found on Time Magazine's website. It's an op-ed piece by Dr. Scott Haig, who notes that outcomes-and motivation-in workers' comp sometimes seems different than for non-industrial patients.
Haig's piece paints injured workers with a broad brush. Haig fails to note that many workers fall far behind monetarily while they are off work. Some succumb to an economic and social tailspin they can never recover from. And if those same workers were hurt due to the negligence or unsafe workplace of an employer, they are barred from pursuing a civil damages lawsuit.
But here's the link to Haig's argument:
http://www.time.com/time/printout/0,881 ... 98,00.html
Other items worth mentioning:
The California 2nd District Court of Appeal (6th Division) has now scheduled oral argument on March 11, 2009 in Vilkitis v. WCAB. Vilkitis involves issues similar to Benson, i.e. did the 2004 reform act, SB 899. obliterate the decades old Wilkinson doctrine that allowed some multiple injury dates to be rated for permanent disability as one? The docket for the case is here:
http://appellatecases.courtinfo.ca.gov/ ... no=B209235
In a post last week I noted that I'd been told by various WCAB staff that EAMS was "down" for an extensive period. I've now been contacted by Peter Melton, the DWC's public information officer for EAMS (for newbies, that's the new WCAB computer system). I'll share his perspective with you.
Melton says that EAMS experienced sporadic outages for a day and a half, starting February 9. Some users had trouble logging on and performing tasks. Melton's e-mail tells me that the problems were sporadic and did not affect all sites. ( It's not clear to me how many sites were affected)
Some users were apparently able to use the system during the two days and Melton notes that it's incorrect to say the whole system was down for two days. He indicates that "this was the first major technical challenge with the system since it went live last August".
Also, Melton observed that "It's important to note that EAMS did not crash or lose any data".
That's good news.
Meanwhile, all eyes on Sacramento. What will eventual resolution of the budget mean for the comp community? To follow the budget high drama in Sacramento, tune in to the twitter from KQED's John Myers:
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