Thursday, April 12, 2012, 09:29 PM - Political developmentsAs recently announced, the Workers' Compensation Insurance Rating Bureau
has now filed a formal request with California's Insurance Commissioner, seeking an increase in the purely advisory workers comp rate known as "pure premium".
This is the announcement from the Oakland-based WCIRB:
"Today, the WCIRB submitted a July 1, 2012 Pure Premium Rate Filing (Filing) to the California Department of Insurance (CDI) recommending an increase in advisory pure premium rates effective July 1, 2012. The advisory pure premium rates proposed for the 494 standard classifications currently in effect average $2.51, which is 4.1% more than the corresponding industry average filed pure premium rate of $2.41 as of January 1, 2012. The advisory pure premium rates contained in the Filing represent the anticipated cost of losses and loss adjustment expenses expected to be incurred on policies incepting on or after July 1, 2012. Insurers may, and often do, file and use rates other than the advisory pure premium rates proposed by the WCIRB or the advisory pure premium rates approved by the Insurance Commissioner. "
Claiming that system costs continue to escalate, the WCIRB states:
"The proposed change in advisory pure premium rates is the result of continued adverse loss development on recent accident years as paid indemnity and paid medical loss development continues to deteriorate. Other factors contributing to the indicated increase include: (1) the continued growth in allocated loss adjustment expense (ALAE) per claim, which the WCIRB believes is largely the result of an increased volume of liens and increases in litigation related to permanent disability claims, (2) increased levels of indemnity claim frequency on the 2010 and 2011 accident years that is in part attributable to an increase in cumulative injury claims, and (3) the sluggish pace of California's economic recovery and the reductions in the economic forecasts of future wage inflation for 2012 and 2013 which place upward pressure on advisory pure premium rates."
Here is a link to the WCIRB filing, filled with graphs and charts:
Insurance Commissioner Dave Jones will be scheduling a hearing on the filing.
Whatever Jones does with the pure premium rate, insurers will be free to raise rates if they so choose. Some will probably raise rates by more that the WCIRB benchmark, and some by less. After all, California still has a very competitive insurance marketplace.
With widespread unhappiness among workers and physicians surfacing in the DWC roadshow "listening tour", the current squeeze becomes more and more apparent.
How can benefits to workers be increased and medical costs tamed in a way that does not further frustrate workers and drive physicians from the system?
Wednesday, April 11, 2012, 09:28 PM - Political developmentsCan a worker or a group of workers sue an employer or insurer in Federal court, alleging a violation of the federal RICO statutes?
Are aggrieved workers' limited by the exclusive remedy of state workers' compensation systems, or may they pursue an action in Federal Court under
18 United States Code Sections 1961, 1962 and 1964? That's the RICO statue, actually known as the Racketeer Influenced and Corrupt Organizations Act.
That has been the issue in a long-running legal battle in Michigan, where employees of Cassens Transport Company have attempted to pursue a lawsuit under the RICO statute.
To my knowledge, no California plaintiff has attempted such an approach.
The plaintiffs in Cassens have alleged that Cassens, which was self Insured but adjusted by Crawford, solicited fraudulent and biased medical reports.
Doctors hired by Crawford were alleged to have received substantial sums of money for doing "cut off" reports, using electronic and mail communication "in furtherance of this fraud" that was said to fraudulently and dishonestly deny workers' comp benefits. Cassens is alleged to have used doctors to do evaluations who were not competent in the relevant specialty.
The RICO complaint filed by six Cassens workers describes a variety of ways in which Cassens and Crawford were said to have conspired to deny legitimate claims, often contracting for bogus medical evaluations and ignoring or refusing to obtain objective evaluations from qualified specialists.
This litigation has taken repeated twists and turns in the courts, but so far the case has eluded defense attempts to squelch the legal theory forever.
At several points in time it appeared the effort to use RICO to challenge workers comp practices would come to naught.
But now the effort appears to have risen from the crypt.
This week the U.S. Court of Appeals 6th Circuit in a 2-1 opinion (with Judge
Gibbons dissenting) reversed dismissal of the lawsuit by the Federal District Court and remanded the matter back to the Federal District judge for further proceedings. Thus, the possibility of a RICO action under certain circumstances remains a possibility.
At least for now.
The 6th Circuit panel noted that:
"We hold that the Supremacy Clause prevents the Michigan legislature from preempting a RICO remedy by declaring its worker’s compensation scheme to be exclusive of federal remedies. An expected entitlement to benefits under the WDCA qualifies as property, as does the claim for such benefits, and the injury to such property creates, under certain circumstances, a RICO violation."
The 6th District Court summarized the procedural history of the case this
"On June 22, 2004, the plaintiffs sued Cassens, Crawford, and Dr. Margules (except that Thomas did not sue Dr. Margules), alleging violations of RICO and intentional infliction of emotional distress. Each plaintiff seeks monetary “damages measured by the amount of benefits improperly withheld . . . , plus interest as provided by law, all tripled in accordance with RICO, together with attorney fees and costs as provided by law.” R. 1 (Compl. ¶¶ 21, 29, 46, 65, 74). The district court dismissed the case under Federal Rule of Civil Procedure 12(b)(6) for failure to allege reliance on the defendants’ fraudulent misrepresentations. Brown v. Cassens Transp. Co. (Brown I), 409 F. Supp. 2d 793 (E.D. Mich. 2005). A divided panel of this court affirmed. Brown v. Cassens Transp. Co. (Brown II), 492 F.3d 640 (6th Cir. 2007). The Supreme Court vacated our judgment and remanded the case in light of Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (2008), which held that civil RICO plaintiffs do not need to demonstrate reliance on defendants’ fraudulent representations. Brown v. Cassens Transp. Co., 554 U.S. 901 (2008). On remand, we held that the plaintiffs had pleaded a “pattern” of unlawful activity. We also held that the McCarran-Ferguson Act, 15 U.S.C. § 1012, did not reverse preempt RICO claims because the WDCA was not enacted to regulate the business of insurance and, in any event, RICO would not
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 4 “invalidate, impair, or supersede” the WDCA. Brown v. Cassens Transp. Co. (Brown
III), 546 F.3d 347, 363 (6th Cir. 2008), cert. denied, 130 S. Ct. 795 (2009).
On remand, the district court denied the plaintiffs’ motion to amend their complaint and dismissed their claims under Rules 12(b)(6) and 12(c). Brown v. Cassens Transp. Co. (Brown IV), 743 F. Supp. 2d 651 (E.D. Mich. 2010). The district court determined that the WDCA provided an exclusive state remedy via the WCAC that foreclosed federal RICO claims; that monetary losses stemming from lost benefits were personal injuries that were not injury to business or property; and that the damages were too speculative to support standing. The plaintiffs have appealed.
Meanwhile, three similar cases, all brought by one of the attorneys who represents the plaintiffs in this case, have been dismissed by various district judges. Lewis v. Drouillard, 788 F. Supp. 2d 567 (E.D. Mich. 2011), appeal docketed, No. 11- 1325 (6th Cir. Mar. 14, 2011) (held in abeyance by 6th Cir. Apr. 15, 2011, Order pending the resolution of Jackson and this case); (Jay) Brown v. Ajax Paving Indus., Inc., 773 F. Supp. 2d 727 (E.D. Mich. 2011), appeal docketed, No. 11-1391 (6th Cir. Mar. 28, 2011) (held in abeyance by 6th Cir. June 6, 2011, Order pending resolution of this case); Jackson v. Sedgwick Claims Mgmt. Servs., Inc., No. 09-11529, 2010 WL 931864 (E.D. Mich. Mar. 11, 2010), appeal docketed, No. 10-1453 (6th Cir. Apr. 4, 2010)."
In its opinion the 6th Circuit panel focuses on whether the devaluation of a statutory expectancy to workers comp' benefits amounted to an injury to property within the meaning of the RICO statute.
Representing the plaintiff workers is Marshall Lasser of Southfield, Michigan.
Here is a link to the April 6, 2012 Brown v. Cassens decision:
http://www.ca6.uscourts.gov/opinions.pd ... 95p-06.pdf
The issue may eventually work its way back up to the 6th Circuit and even the U.S. Supreme Court again.
But for now there is a possibility that a claimant could state a valid cause of action under Federal law for egregious employer or carrier behavior.
Potentially, that's big.
Sunday, April 8, 2012, 09:15 PM - Personal injury and WCDear Roger Goodell:
You have a thug in your midst. Whatcha gonna do?
In a week where sports enthusiasts were focused more on the impending baseball season and The Masters at Augusta, your NFL football league managed to get on the front pages.
But not in a good way.
Commissioner Goodell, you've had your hands full dealing with reckless play, including head butting.
Concussion-caused dementia claims are a workers' compensation tidal wave that may hit your league.
But to think that it was the policy of at least one New Orleans Saints coach to encourage players to injure other players?
Whatcha gonna do, Roger? Yes, I know that you already placed Gregg Williams on indefinite suspension.
But the real test will be whether you are going to announce a suspension that will last for years. Or forever.
Players were being targeted for injury. Bounties were given.
For those folks who missed the news this week, here are quotes (noted by Vittorio Tafur in the San Francisco Chronicle) taken from an audio recording done by documentary filmmaker Sean Pamphilon of New Orleans defensive coordinator Gregg Williams, speaking to the Saints team about an impending game with the San Francisco 49ers:
re 49ers receiver Kyle Williams:
"We need to find out in the first two series of the game, that little wide receiver, No. 10, about his concussion. We need to ... put a lick on him right now. He needs to decide. He needs to ... decide."
re 49ers receiver Michael Crabtree:
"We need to decide whether Crabtree wants to be a fake-ass prima donna, or he wants to be a tough guy. We need to find out. He becomes human when we ... take out that outside ACL."
re 49ers running back Frank Gore:
"We've got to do everything we can in the world to make sure we kill Frank Gore's head. We want him running sideways. We want his head sideways".
My law partner Michael Gerson at Boxer & Gerson represents many NFL players in their workers' comp cases.
But workers' comp may not be the sole remedy some of these players will have if they can show evidence which has now been revealed about the Saints' coaching program.
Civil tort liability may be an appropriate remedy in some circumstances. Civil tort liability against coaches, players, and owners who have knowledge of and acted upon a program of intentional injuries.
Even in a violent spectacle such as football, there is a line which has been crossed.
Listen to this disgusting audio and decide for yourself: should Williams be banned for life?
Wednesday, April 4, 2012, 08:53 PM - Political developmentsThey will.
They, the Workers' Compensation Insurance Rating Bureau of California, will do a mid-year filing seeking an increase in the "pure premium rate". This requested change in the advisory, non-binding comp rate will be done in a rate submission that will be flied with California's Insurance Commissioner Dave Jones within the next several weeks.
Here is the statement released by the WCIRB today:
"Earlier today, the WCIRB Governing Committee met to review the Actuarial Committee analysis of December 31, 2011 experience (See April 2, 2012 Wire Story Actuarial Committee Continues Review of December 31, 2011 Experience) and determine whether the WCIRB should submit a mid-year pure premium rate filing."
"The indicated July 1, 2012 average pure premium rate based on the methodologies recommended by the Actuarial Committee is $2.51 per $100 of payroll. This indication is 7.7% above the average pure premium rate of $2.33 proposed by the WCIRB in the January 1, 2012 Advisory Pure Premium Rate Filing. "
"The continued deterioration in the indication since the last filing was largely due to increases in loss development on the 2010 accident year, increasing allocated loss adjustment costs, and lower forecasts of wage growth in the still-sluggish California economy. "
"The Governing Committee expressed concern about the ongoing escalation in several key system cost drivers and, as a result, directed the WCIRB to submit a July 1, 2012 advisory pure premium rate filing reflecting the indicated pure premium rate of $2.51 per $100 of payroll. "
"The WCIRB anticipates submitting the filing by April 13, 2012. The filing and all related documents will be available in the Regulatory Filings section of the WCIRB website (www.wcirbonline.org) and the WCIRB will issue a WCIRB Wire Story once the filing has been submitted to the California Department of Insurance. "
While it is not a surprise to many observers that carriers would seek to hike comp rates (something that has already been happening with some carriers) until recently it appeared that the WCIRB might forgo a mid-year filing.
Insurance carriers are not required to track the pure premium rate, so some carriers will hike rates less than or more than the 7.7% requested pure premium hike , which itself is subject to the scrutiny of the Insurance Commissioner. Former Insurance Commissioner Steve Poizner rejected repeated requests for large hikes in the pure premium rate, and Jones is likely to look carefully at this rate filing.
Here is a link to the slides from the WCIRB's April 2, 2012 Actuarial Committee Meeting, detailing trends in claims and loss expenses, medical loss trends, indemnity loss trends, claim severity by region, etc etc:
Jones is likely to schedule a hearing on the rate filing, giving interested stakeholders another avenue to raise questions about the filing and actuarial assumptions.
This proposed advisory increase will add further fuel to the brewing debate over the future of California's comp system.
If benefits to workers remain mired at levels that are around 60% lower than before SB 899 (documented by Frank Neuhauser of UC Berkeley), medical costs and medical containment costs continue to rise, and premiums start to rise, the pressure will really be on to do something to shed costs.
Saturday, March 31, 2012, 09:14 AM - Political developmentsIs the future of the healthcare system in the USA dependent on whether a handful of Supreme Court Justices think Obamacare expands federal power to the point that the government can force you to eat broccoli or buy a cell phone?
So it would seem. That's scary.
What result the Supreme Court reaches is of great importance to many of California's injured workers. After an injury, many of those workers lose insurance coverage. And even if they can find individual coverage-which many can't-the cost is likely to be prohibitively expensive.
The forced broccoli purchase argument was at the heart of what by all accounts was a disastrous session at the Supreme Court this week, as the Solicitor General struggled to make the case distinguishing how the mandate to purchase insurance can be viewed as consistent with some limits on federal power.
It set up a bizarre situation where even detractors of the law seem to agree that Congress could tax to set up a healthcare system (?single payer?) but where they question a mandate to purchase insurance in the private market.
Which of course lo and behold is a Republican idea that had been advanced by the Heritage Foundation.
And at one time by Mr. Romney.
This is our Alice in Wonderland politics.
But requiring individuals to purchase insurance is not like requiring them to buy broccoli or drink cod liver oil or cell phones or flashlights.
Unlike those other items, individuals without healthcare coverage put a direct financial burden on all of us as citizens and taxpayers. They'll seek care eventually and we all pay. At the county level, the state level and yes, the interstate level.
But given the interstate nature of the healthcare market, it's hard for individual states to enact a comprehensive solution that works.
As Law Professor Jeffrey Rosen notes in The New Republic:
"The Supreme Court endorsed an argument along these lines when it upheld Social Security in 1937. In Helvering v. Davis, which should have been front and center during the health care oral arguments, Justice Benjamin Cardozo wrote that a state might have resisted providing broader benefits or coverage to its neighbors out of fear that it would become “a bait to the needy and dependent elsewhere, encouraging them to migrate and seek a haven of repose.” For this reason, the Court viewed income for the elderly as a national problem that needed a national solution. In the same way, affordable health care—unlike guns in schools or violence against women, subjects traditionally regulated by state and local criminal law—is an essentially national problem."
Here is a link to an article by Duke University Law School Professor Neil S. Siegel which outlines the legal underpinnings of the notion of collective action federalism:
http://scholarship.law.duke.edu/faculty ... ship/2386/
Floyd Norris, chief financial correspondent of the New York Times and International Herald Tribune, has an interesting take on the dispute about the mandate. Norris suggests that if the justices are so disturbed by the mandate, then there should be an "opt out" provision along with a "do not treat provision".
Here's the argument Norris makes:
"if someone is morally offended by the idea of buying health insurance, he or she should be given counseling about the risks but then allowed to decide.Persons who decline insurance would be allowed to provide details of how they intended to pay for care otherwise, if they wished to do so, and to name a person who would be responsible for paying for the care if the patient were unable to direct payment, much as many people now have health care proxies.Anyone who chose not to have health insurance, and not to indicate how they would otherwise pay, would be put on a “Do Not Treat” list. Hospitals could simply refuse to offer any treatment, respecting the person’s wish to make his or her own decisions free of an intrusive government trying to keep them alive.I doubt many people would sign up for such a system, but it would certainly overcome the alleged constitutional flaw in the current health care law.Some people might be concerned that such a system would amount to voluntary euthanasia or assisted suicide. But surely they would put aside such qualms when they understood this was necessary to preserve our freedom not to be forced to buy something we do not wish to purchase."
Presumably Norris would support subsidies for those who wanted to purchase insurance but could not pay the full boat.
But for those who can pay and simply refuse, his idea is intriguing.
We'll know how all this turns out in a few months.
Meanwhile, California's injured workers should take a moment to reflect on how they have a dog in this hunt.