“Those who do not understand their history are doomed to repeat it”
I will admit to being in unfamiliar territory here. As a conservative businessman who normally identifies with employer challenges and issues, I find myself on the opposite side of the aisle from many in the growing debate over Opt Out from traditional workers' compensation in this nation. However, my concerns are what they are, and they center around one very simple concept: There is a tremendous lack of transparency in the actual claims management process of companies who have opted out and are now handling workplace injuries under their own “private label” systems.
It is that lack of transparency that threatens not just employees within those programs, but the employers themselves as well as the communities in which they operate. I believe all are at increased risks that are either unappreciated or unrecognized by many.
I must clarify a few points. First and foremost, I absolutely understand an employer's desire to escape the workers' compensation system as it exists today. It is on many levels an expensive, bloated, burdensome and inefficient system that sometimes fails to meet the desired results, particularly where permanent injury or impairment is concerned. I also believe that most people are decent and honest, and at a high level view employers want to do the right thing for both company and crew. However, I would also posit that employers have long forgotten lessons of the distant past, and therefore have come to view comp as a one sided expense. They no longer realize or appreciate the protections afforded them by the Grand Bargain made more than one hundred years ago.
Oklahoma Opt Out, in theory, presents a solution to employers who wish to limit liability, streamline process and still take care of their employees. Advocates strongly maintain that is just what they are doing. In practice, however, Opt Out seems to be falling short of the lofty ideals set forth by its proponents. A review of the approved programs in the state doesn't really support the contention that Opt Out is better for all concerned. Attorney Bob Burke, by most standards the most active opponent to Opt Out in the State of Oklahoma, has compiled detailed reports on a number of specific approved company plans in the state. In a head to head comparison with benefits and rights offered within traditional comp, it turns out there is not really any comparison. The reports as written show a wide gap in coverage for employees placed under those plans.
I will be publishing some of those reports next week, but they really aren't the focus of this particular missive.
As I indicated, the primary focus and concern that I have is that lack of transparency. Insurance carriers and self insured employers (non Opt Out) have to report claim activity to the state, and are accustomed to the potential for audits of their claims management programs. Opt Out companies have no such obligation, and operate in this area with no oversight that I have been able to identify. That means we don't know how the Opt Out companies are executing and managing their plans. Whether the plan is good or bad, how it is actually deployed is paramount in assuring that proper care is given to injured workers.
After I wrote about the Oklahoma Opt Out company ResCare's initial denial of a claim over an alleged 3 hour delay in reporting to a toll free number, I got into a conversation on LinkedIn with Bill Minick, President of PartnerSource, one of the main forces behind the expanded push for Opt Out. I specifically addressed the transparency issue, and his response was to tell me:
I. Option “Checks and Balances” include (but are not limited to) annual state employer qualification requirements (in Oklahoma and proposed in other states); disclosure requirements related to an official plan document and summary plan description communicated to all covered employees in advance of injury, in language understandable by the average employee (including translation support); ERISA fiduciary and claim procedures (same that apply to virtually all private employer sponsored group health and retirement plans), including access to state and federal courts for wrongful denial of benefits, discrimination, wrongful termination or retaliatory discharge, or failure to provide information; state and federal reporting requirements and penalties; and state and federal regulatory administration and enforcement, including civil and criminal penalties.
In response to the specific claim activity “transparency question”, he wrote:
II. Reporting of claim activity: The above requirements (reflected in reems (sic) of state and federal statutes and regulations) include injured employee access to the benefit claim file, free of charge.
Minick went on to suggest reviewing several “published reports” as well as tell me that a number of reputable carriers and TPA's had the data I was asking about.
That still doesn't make it available to John Q. Public. I realize I am a simple minded boy from Durango, but all I could take away from the comments above was that “transparency” meant the employee had access to state and federal courts for wrongful denial of benefits, and they could see their file “without charge”. (To assure my own transparency on the issue, you can read the full discussion here. You must be a member of the Work Comp Analysis Group to access it). While proponents cite published reports that are long on theory, when it comes to actual available claims data the Opt Out industry is coming up short.
Even the limited info we have been able to glimpse out of this largely closed system reinforces a notion of secrecy and private operations. The denial letter sent by ResCare to employee Rachel Jenkins, which I mentioned earlier, contains a firmly worded “Confidentiality Notice”, advising the recipient that “unauthorized review, use or disclosure or distribution” of the letter's content “is prohibited”.
Specifically, it reads:
CONFIDENTIALITY NOTICE: This letter, including any attachments, is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use or disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender immediately and destroy all copies of the original message.
That, as far as I know, is something virtually unheard of in the workers' compensation sector. I have to wonder, what would the impact be of that language on a worker with a tenth grade education? Does it lend to openness and transparent procedures?
I didn't think so, either.
Former Congressman JC Watts, who by happenstance hails from Oklahoma, once quoted his grandfather as saying “Character is doing the right thing when no one is looking”. Our own experiences within the workers’ comp industry show us that some people, albeit a significant minority, lack character. When no one is looking, they may in fact do the wrong thing. That is not unique to our industry. It is merely unique to the human condition.
Therefore, when managing and impacting the lives of others, we must be open and accountable for our actions. We must be transparent in our words and deeds. We should be answerable for our actions, and in the absence of openness, the potential for abuse looms large. The lack of transparency in Opt Out spells trouble for all of us in the future.
Plans operated without integrity may result in improperly denied claims and other abuses. That will ultimately mean a return to the days of litigation and liability, strains on public support systems and lives ruined in the process. History will have come full circle, and we may once again find that we are back where it all began – and we will realize why workers' comp existed in the first place.
We need to fix what is broken in workers' comp, and there are many of us on that job today. Workers' compensation has more than 100 years of precedence and responsibility; as a system it can be revamped and improved. Leaving it for the secretive world of Opt Out will not accomplish any long term goal. Without transparency in claims activity, we are likely doomed to understanding our history by living it all over again.