Tuesday, December 7, 2010

Are the costs of workers’ compensation funded solely by employers?

I am not often asked, “Who pays for workers’ compensation?”  because most people think they already know the answer.  Most people think employers pay the full cost of work-related injury, illness and disease through premiums paid to a workers’ compensation insurer.  The true costs, however, are borne much more widely.

Workers pay the biggest price.  The loss of health, function, range of movement and even life itself is a huge cost that must be figured into the equation.  Families, friends, dependents, community members, and neighbours also bear the costs in terms of tangible losses in their lives.  In some provinces and states, workers also have to bear the first few days (for example, two-fifths of a week in Nova Scotia, three days in Washington State) as a waiting period.

In some jurisdictions the costs are also borne in part by the state.  For some cases, the appeal structures, prevention programs,  rate approval authorities, insurance commissioners, advocacy and ombudsman offices are often paid out of general revenues of the state or province.  Certain states fund these, in whole or in part, by direct assessments over and above the premiums charged to employers. 

In Oregon, for example, a charge of $0.028 (just under three cents) is collected from workers and employers for every hour —or part of an hour— worked, to fund cost-of-living increases to permanent disability and survivor recipients.  The workers and employers split this charge; workers generally pay this as a payroll tax or deduction and the employers match and remit the total to the state.  To augment federal funding, the state’s Occupational Health and Safety program assesses employers a straight 6.4% premium tax (2011; up from 4.6% in 2010). 

New Mexico assesses workers $2.00 and employers $2.30, per quarter, to fund the operation of the New Mexico Workers’ Compensation Administration (WCA), which regulates, adjudicates, and provides education and assistance services to the workers’ compensation system.

California recently announced its assessments for 2011 as follows:

  • WC Administration Revolving Fund Assessment/User Funding   0.014721             

  • Uninsured Employers Benefit Trust Fund Assessment                   0.004101         

  • Subsequent Injuries Benefits Trust Fund Assessment                   0.001776          

  • Occupational Safety & Health Fund                                                  0.002467            

  • Labor Enforcement & Compliance Fund                                           0.002315            

  • WC Fraud Account Assessment                                                          0.004348              

That totals 0.029728  or about 3% in assessments paid as a tax on premiums.  Self-insured employers have to pay assessments that currently total about 5.5%. 

Employers in many Australian jurisdictions are responsible for the first week or two of wage-loss benefits—a kind of employer deductible—and the first $592 of medical costs.

WorkSafeBC has no waiting periods, no employer deductibles, and no additional assessments over the published rates.  Workers still bear the cost of injury, loss of function, perhaps visible scarring or invisible pain.  Employers nominally pay the premiums but ultimately workplace injury, illness and disease are borne by all of us in the prices of goods and services we consume, the productivity of our workforce and even our standard of living.  We all bear some of the costs… All of us bear the responsibility to make work-related injury, illness, and disease unacceptable. 

Friday, November 26, 2010

Does a vision statement really mean anything in a workers’ compensation organization?

Most public and private organizations have a corporate “vision” statement.  Some people view the creation and use of a vision statement as another one of those things you are supposed to do that doesn’t really matter on a day-to-day basis.   If the vision statement is simply a perfunctory piece of prose, then it is dispensable.  On the other hand, if the vision statement is truly a shared conception of the ultimate future your organization is striving for, then a vision statement is a crucial element of your strategy. 

Working in Corporate Planning, I get to look at a lot of vision statements.  Some vision statements are famous.  Jack Welch, the former CEO of General Electric lead his organization with the following vision statement “To become the most competitive enterprise in the world by being number one or number two in every business in which we compete.”

Other vision statements are less transformational and more directive.  Hewlett Packard has the following vision statement:

"To view change in the market as an opportunity to grow; to use our profits and our ability to develop and produce innovative products, services and solutions that satisfy emerging customer needs."

Amnesty International's vision is of “a world in which every person enjoys all of the human rights enshrined in the Universal Declaration of Human Rights and other international human rights standards.”

Vision statements can certainly be inspirational and are usually aspirational—a state that is wished for involving a stretch from the present.  Workers’ compensation systems generally get their mandate from legislation but it is the leadership (usually the board of directors) that establish the organization’s  vision.  WorkSafeBC’s vision statement clearly fits the inspirational/aspirational category: 
“Workers and workplaces safe and secure from injury, illness, and disease”

It is certainly aspirational (we aren’t there yet)  and  is very descriptive of the world we are striving for.  

WorkSafe Victoria is focused on the worker:  “Victorian workers returning home safe everyday”.

WorkSafeMT "... envisions a future without injury, illness and fatality in Montana's workplaces"

If you really believe in that vision, then the programs and initiatives you design will be aligned with and contribute to that vision. (If an initiative does not align, you really have to ask “Why are we doing this?”)

These last three vision statement are very different from WorkCover Queensland’s vision “To excel in workers’ compensation insurance” and  WorkCover Western Australia’s vision “ A workers’ compensation scheme valued by all.”  When you think about these two vision statements, the programs and initiatives you might design will likely have different features and emphasis than the previous three.    

Vision statements crystallize the future state of nature your organization is working toward.  Actually getting there requires commitment, goals, objectives, strategies and programs (including projects and initiatives).  Each part of the organization has its own mission with its own plans and projects that are aimed at contributing to the overall strategy.  Aligning vision, mission,  strategy and actual operations is critical to performance. 

If you have a favourite vision statement, post it and tell us what makes it great.

Monday, November 15, 2010

Aren’t "Safety" and "the Absence of Injuries" the same thing?

In the last 30 years, I have probably been asked this question in one form or another about a hundred times. If you think the question is just playing with semantics, you might want to think again. In workers’ compensation and occupational safety and health terms, "safety" means control of recognized hazards to achieve an acceptable risk. The "absence of injury" is a pretty straightforward and seemingly concrete concept. It is supposed to mean that workers involved in a process have not been injured. It sounds objective because we can count injuries. If injuries amount to zero, one might be tempted to say the employers and workers involved in the process have been working safely. This might or might not be true.

The first problem is the definition of injury. Most of us would accept that the amputation of an arm is an injury—a reportable, recordable, countable work-related injury. Perhaps fewer would classify a slice of an index finger that requires no stitches as a reportable injury or recordable injury. As you can see, how you define injury or what you qualify as a reportable or recordable injury may change what you mean by the absence of injury and what that implies about safety.

And therein lays the second problem: even with a broad and agreed upon definition of what constitutes a work-related injury, the absence of injury or a low count of injuries may say little or nothing about safety. When a piece of plate iron drops and strikes a worker’s foot, the only difference between a broken little toe and an amputated foot may be a matter of centimetres. In order for the iron plate to injure the worker, there was likely a failure in design, work procedures, supervision and training. In most such cases, it takes a defect in each of these safeguards and an alignment of these defects that results in the worker being injured. It is in examining the injury trajectory that safety (or the lack thereof) can be determined. The truth is, most unsafe work situations do not result in injuries; an injury may provide a reason to determine the defects in the safe work procedures, design, supervision and training/education that existed before the worker was harmed.

"Safety" and "the absence of injuries" are not synonymous terms. Any well-run safety program is going to want to know about all the injuries and all the near misses but more importantly, will be focused on the leading indicators of safety (adherence to safe work procedures, identification of hazards, interactions with specific safety-oriented content between supervisors and workers, etc.). The investigation of injuries and near misses will reveal where the defects were (and maybe still are) and how they aligned to allow a hazard to reach through the safeguards and barriers to harm the worker. Fixing the active and latent defects in the barriers, defenses and safeguards will arguably increase safety.

Safety is not fall protection or Personal Protective Equipment (PPE) or any other piece of equipment or protective gear. Safety is not the absence of injury (although effective safety is intended to have that result). Safety is an attitude, a disposition, a belief, a value. Safety is maximized when the defects in the design, safe work procedures, supervision, and training/education are minimized. It is because safety and the absence of work-related injury, illness and disease are not the same thing that prevention continues to be our top priority.

Monday, October 25, 2010

How would you design a completely new workers' compensation system?

I was asked a few weeks ago how I would design a workers’ compensation system.  I’ve actually given this a lot of thought over the years and have come up with some principles that I believe would optimize a new workers’ compensation system in a society similar to the Canadian context.   

Before you even glance at the following statements, let me make one point crystal clear.  I am not advocating any existing system change to adopt any of the following items. This is just a conversation starter intended to help in a ‘green field’ exercise.   Each item in the list is in some way dependent on others so the list is intended to be applied in its entirety to a hypothetical jurisdiction. 

Remember, these are my personal opinions based on my own experiences and observations; these items are not intended to be a statement of direction for WorkSafeBC or a prescription for any other existing system. 

Let me also add that each item here could fill pages of discussion and analysis.  I would be happy to discuss any one of them. 

Finally, the list is not comprehensive.  There are lots of other items that I would add for the design of a complete system but that is beyond the scope of a personal blog.

Keeping that in mind, here are my top dozen design criteria/features for such a hypothetical new workers’ compensation system in a society similar to Canada:
1.        Prevention orientation:  This has to be at the top of the list.  Employers would be required to report all work-related injuries to the agency within three working days.

2.       Universality:  Every worker and employer should be within the scope of coverage… and all work-related injuries, illnesses and diseases should be included within scope.  This takes away workers’ rights to sue but creates a comprehensive no-fault coverage system.

3.       Integrated: Given the universality of coverage, it makes sense to combine and integrate the compensation and prevention (consultation, education, promotion and compliance enforcement) functions.  It also makes sense to have the rate-making and financial authority integrated into this model.

4.       Accessibility:  workers and employers should have instant electronic access to information about their claim or claims, be able to communicate, and transact all business with the workers’ compensation insurer without temporal, language, bureaucratic or other barriers.

5.       Actuarially based:  full funding (capitalization of costs) for injuries should be maintained by injury year (premiums should cover all incurred costs including prevention and future administration).

6.       Comprehensive:  All medical diagnostic, treatment, and rehabilitation (physical, social, psychological and vocational) should be covered.  This ensures that the costs of injuries are born by industry and not the taxpayer.  It also is consistent with the current Canada Health Act, which does not include payments made by a workers’ compensation system in the definition of an insured health service.

7.       Supporting of the worker-employer relationship:  all claims of less than 8 weeks should be paid directly to the worker by the employer (at the prescribed rate).  The employer would be reimbursed by the workers’ compensation agency dollar-for-dollar for all wage-loss benefits paid to the worker through week six of the claim.

8.       Supportive of complete claims reporting:  Experience rating would not apply to claims of less than 8 weeks duration; this creates an incentive for firms to report all injuries (employers get to recover what they spend on wage-loss benefits they paid the worker) while retaining the experience rating that most employers feel adds a fairness to the system for those with poor performance.

9.       Encouraging of early and safe Return-to-Work:  Employers will be directly responsible for wage-loss costs payable in week 7 and 8 of every claim.  Experience Rating will apply for claims of greater than 8 weeks duration.  These features provide incentives for early return to work and accommodations consistent with Disability Management procedures.

10.   Value the injury of all workers equally:  Experience rating based on duration of disability not cost.  This avoids the criticism that most experience rating systems are cost-driven and thereby devalue injuries to low wage earners.

11.    Compensate long term claims equitably:  Permanent Disability (not impairment) to be roughly comparable for workers with similar age, gender, education, industry, and occupational backgrounds relative to their counterparts without work-related injury.

12.   Credibility and independence in all classifications:  Pools of firms with similar risks should be self sustaining for the costs they incur.  Very limited possibilities for cross subsidization and re-insurance.

I repeat, these features are the general parameters and very brief rationales for a new system and are not intended to be a roadmap for reform of any particular system.  Any system is a product of its history, societal values, politics, and even geography.   The present design of any system is responsive to a particular environment.  I am not injecting these ideas into any particular reform process. 

I have conveniently left off how dispute resolution mechanisms would operate, how premium rates would be established and what one would do with exceptional cases (this is only a blog post, not a thesis).    

Perhaps you have your own ideas.  I would be interested in how you would design a system if you were starting from scratch.

Tuesday, October 19, 2010

What drives Duration... and what can we do about it?

Duration of disability is a complex measure within workers’ compensation systems.  Duration has natural drivers such as age (it takes longer to recover as we get older), injury type (more severe injuries take longer to recover), and even obesity (obese of workers as a group take longer to recover than non-obese workers with similar injuries) can drive duration higher.  We can’t do much about these drivers once an injury takes place. 

After an injury, there are some things we can do to speed recovery and militate against excessive duration.  We have strong disability management programs that can speed return-to-work (assuming the programs are well staffed, the staff well trained in DM principles, and stakeholders are willing to support DM efforts).  There are guidelines for expected recoveries and programs that encourage early and safe return to work (research literature shows that work is actually good as therapy and contributes rather than works against good health).  Medical science and physiotherapy have advanced dramatically over the last century and each of these can contribute to more rapid recover and return-to-work outcomes. 

External factors put pressure on duration.  In a slowing economy, durations tend to rise.  This makes sense since workers not on wage-loss benefits are likely in a position to carry some of the extra load at no direct or current cost to the payroll.   Rising and hot economies tend to contribute to shorter duration.  Workers are enticed to return to work and are more likely to be accommodated by their employers in these circumstances.  

Access to healthcare can also delay recovery.  If it takes a year to get an MRI and six months to see a surgeon, you can bet that duration statistics will rise.   

Despite these factors, it appears some general measures of duration of disability from work-related injury have remained remarkably stable over time.  In Sir William Meredith’s Final Report, Meredith muses “…it may, I think, fairly be assumed that the great bulk of the accidents for which compensation would be payable under the proposed law will incapacitate the workman for short periods—84 per cent probably for less than fourteen weeks.

I looked at WorkSafeBC claims with an injury date in 2008 where there was at least one day away from work.  WorkSafeBC pays wage-loss benefits beginning the day following the day of injury so our way of counting may not fully match with Meredith’s assumption.  That said, his projection looks pretty good— 85.14% of time-loss claims with an injury date in 2008 had durations of less than 14 weeks

One factor contributing to the relative stability of duration is the common denominator of human biology and physiology.  Healing times have not really changed over the last 100 years for many conditions.  Fractures still take the same time to mend; lacerations take about the same to heal.  Yes, we have antibiotics and new technology.  These save lives.  Many victims of severe injury would not have survived in Meredith’s time. They survive today… but their recovery and return to work can take a lot longer.

I’ve also looked at duration by age category. Over the last couple of decades for which I have data, the average duration for 20-24 year olds or 35-40 year olds has barely changed.  What has changed is the demographic mix with older workers now dominating the distribution of injured workers.   This change in mix is another factor that will continue for some time to put upward pressure on duration. 

Of all the factors listed, effective disability management is the leading candidate to counter the upward pressures on duration.

What can we learn from German Premium rates a century ago?

Premium or Assessment Rates in workers’ compensation are a unique comparator.   Because they are normally presented in North America and Australia as $x.xx per $100 of (assessable) payroll, it is trivial to convert this to a standard percentage (x.xx%).  A percentage is independent of currency so it is possible to compare jurisdictions in different countries without worrying about exchange rates. 

Time series of assessment rates may also tell a story.  Since rates are ultimately based on incurred costs, rising rates usually indicate rising costs within the sector covered by the premium or assessment.  This holds true for most systems.    For example, rates may rise if experience shows that injuries are  resulting in increases in severity.  Other explanations are also possible.

I recently resurrected some notes I had copied from Sir William R. Meredith’s Interim Report on Laws Relating to the Liability of Employers (1912).  In that report is a table of Premium rates for employers in their industry ‘mutual funds’.  As you may recall, the German system at the time consisted of employer mutual insurance funds for workers’ compensation organized by sector. Bismarck proposed the system in the early 1880s and the time series in Meredith’s interim report covers the period 1886 to 1908.  Many of the rates changed over the time series.  This is understandable because the first year would have been an estimate.  Over time, as experience was gained, more accurate estimates of cost could be made. This would lead to more accurate premium rates. 

Meredith notes that the German rates include a nine to ten percent margin above the cost rate to establish reserves funds to cover unforeseen contingencies such as “the entire wiping out of the industry or its inability to meet its payments in a period of financial depression”.  There is a lesson there for many systems.

How much have things changed since then?  The following chart lists the Assessment Rates for Germany for selected sectors in 1886 and 1908 (bars) with the current (2010) WorkSafeBC premium rates (points connected with a line).

Looking only at the German rates, one can see that most rates rose over the first two decades.  By comparison, using our modern classifications with some adaptations (like substituting ‘Aircraft Automobile Assembly’ for ‘Carriage factories’), about half the rates are near or below their German counterparts’ 1908 levels.  This is understandable with respect to some sectors such as sawmills where technology has made amazing progress in terms of safety and health.  Other sectors have increased in costs. The explanations here might relate more to increases in scope of coverage (to include occupational diseases such as asbestos-related conditions in shipbuilding). 

 Comparing systems is always problematic and comparing different systems more than a hundred years apart is an admittedly dubious enterprise.  It is natural, however, to ask how the rates of one system compare to another particularly at the industry level even if widely separated by time; most of us need that perspective as a starting point.  What surprised me was that premiums today are not drastically different than they were a century ago.  I don’t believe that the cost of workplace injuries should be considered merely a cost of production.  That said, what is striking about the chart is how similar the range of rates appear.  

What were the hot topics at IFDM and IAIABC?

A few weeks ago,  I attended the International Forum on Disability Management (IFDM) and annual convention of the International Association of Industrial Accident Boards and Commissions (IAIABC) in Los Angeles.   This was a great opportunity to hear from other systems about the hot issues, successes and challenges facing systems in the US and other jurisdictions.  The following is sampling of what I heard:

  • Dame Carol Black spoke about her review and report of the UK system for compensating for work injuries.  She has been instrumental in changing the focus in that country to conform to the principles of Disability Management.  It was fascinating to hear how engrained the system of ‘sicknotes’ was in legislation and practice.  As simple and fundamental as it may seem to us, the move away from this terminology to ‘fit notes’ and a focus on ability has been a big challenge for the country and the transition is still underway.

  • The German Social Accident Insurance system (DGUV) is celebrating its 125th year as a Bismarckian workers’ compensation system.  It has also undergone a major consolidation from more than twenty industry-specific mutual systems to nine.  They are also facing the same sorts of issues we are seeing in North America including a rising tide of occupational diseases and an increase in psychological injury cases. 

  • In New Zealand, the Accident Compensation Corporation (ACC) is a relatively young system of just 34 years.  It covers work and non-work injuries that involve lost earnings.  Interestingly, the change in accounting standards (known as IFRS) is creating a new challenge for the system that is driving a lot more attention on long-term claims.  The new accounting standard requires the government to carry the expected lifetime cost of claims as a liability.

  • Munich Re, the largest reinsurer highlighted its major concerns for the future.  Its criteria acknowledge risks like nanoparticles and nanotechnology but did not list them because they cannot yet quantify a cost impact.  Of the items that they can make some estimates on, obesity, the aging labour force, the use of temporary foreign workers, psychological injuries, and long latency occupational diseases topped the list. 

  • On the IAIABC side of the agenda, a presentation from the National Council on Compensation Insurance (NCCI) highlighted obesity.  Their economist concluded that there were marked differences in outcomes for obese and non-obese workers who sustain similar work-related injuries.  Their analysis of members’ workers’ compensation claims found that injuries sustained by obese workers are more likely to result in permanent disabilities and the range of medical treatments and costs are greater for obese claimants. 

  • Tungsten Inert Gas (TIG) welding was highlighted by the IAIABC as an emerging issue with respect to its apparent linkage to Parkinson’s disease.  There was speculation that this sort of occupationally-specific exposure-linked health condition may well work its way into presumptive clauses in the near future, in part because of pressure elsewhere on medical costs.

  • Medical costs came up again in a discussion of the required switch in the US from the medical coding system known as ICD-9 to ICD-10.  The change is mandated now for October 1, 2013 having been pushed back several times.  The reporting has implications for workers’ compensation systems.  There is no general equivalent matching that can be applied to ‘crosswalk’ old codes to new ones.  The example used suggested that the code for the amputation of a finger go from one code to more than twenty. 

  • Finally, we got a preview of data to be released in the Oregon Department of Consumer and Business Services'  Workers’ Compensation Rate Ranking Survey.  This survey is completed every couple of years.  It lists a series of classifications that are the most costly from a workers’ compensation perspective in Oregon.  It then applies the rates from other states to that set of classifications and payrolls from Oregon.  The result is what the average rate would be in Oregon if Oregon had the other states’ rates.  The study should be released in the coming weeks and will likely receive some media attention. 

That’s a small portion of what was covered.  In the coming weeks, I will have more details on some of these issues. 

Tuesday, September 14, 2010

How many occupational health and safety inspectors should there be in a jurisdiction?

Asking how many OH&S inspectors are needed is one of those tough questions I get time and time again. My answer is always the same: it depends. Every jurisdiction has to look at its own mandate, legislation, industry mix and population. A jurisdiction that is geographically small (or densely populated) will likely need fewer inspectors than a jurisdiction covering a large, sparsely populated geographic area. A jurisdiction with a high rate of serious injury may require more inspectors than one with a much lower rate of serious injury.

The International Labour Organization ( ILO ) publishes a recommendation regarding the ratio of inspectors to population. In a recent report, it made this comment:
Article 10 of Convention No. 81 calls for a “sufficient number” of inspectors to do the work required. As each country assigns different priorities of enforcement to its inspectors, there is no official definition for a “sufficient” number of inspectors. Amongst the factors that need to be taken into account are the number and size of establishments and the total size of the workforce. No single measure is sufficient but in many countries the available data sources are weak. The number of inspectors per worker is currently the only internationally comparable indicator available. In its policy and technical advisory services, the ILO has taken as reasonable benchmarks that the number of labour inspectors in relation to workers should approach: 1/10,000 in industrial market economies; 1/15,000 in industrializing economies; 1/20,000 in transition economies; and 1/40,000 in less developed countries

Strategies and practice for labour inspection GB.297/ESP/3 297th Session Geneva, November 2006

The ILO published data posted below shows that many jurisdictions fail to come close to these ILO recommended levels:

[caption id="attachment_142" align="alignnone" width="300" caption="ILO Ratio of Active Population to Inspector"]ILO Ratio of Active Population to Inspector[/caption]

The ratio of 1 inspector for every 10,000 active population (employment, or employed labour force) for industrialized jurisdictions like Canada, the US and Australia is just a guideline. Australia and New Zealand publish ratios for their respective jurisdictions. Data in Canada and the US are harder to come by. Where data exist, it is often difficult to verify what is included and excluded from each component of the ratio.

For WorkSafeBC, I use the 2009 count of field inspectors and investigation officers to ‘employment’ for December 2009 as published by BC Stats. This is imperfect for many reasons. This would include among workers those working in mining and communications (outside WorkSafeBC’s occupational safety and health mandate but within the workers' compensation mandate); the calculations also exclude Mines inspectors and Labour Standards inspectors (inspectors that might be included in some calculations). I suspect every jurisdiction would face similar challenges in preparing their ratios.

Keeping these caveats mind, I have gathered some of Inspector-to-Worker Ratios below:

California 1 : 69,613 (a)
Washington State   1 : 32,141 (b)
Oregon 1 : 22,239 (c)
Queensland, Australia 1 : 12,000 (d)
New Zealand  1 : 12,000 (d)
New South Wales, Australia  1 : 10,000 (d)
Victoria, Australia  1 : 9,000 (d)
British Columbia  1 : 9,100 (e)

Based on the range of jurisdictions in this short list, BC and the Australian jurisdictions have ratios nearest the ILO recommendation.

I have noted the sources for each of the ratios posted below. If you have a better or more recent source, or another similar ratio from an additional jurisdiction, please feel free to post a comment.

(a) California Department of Industrial Relations, Division of Occupational Safety and Health (DOSH), September 2, 2010

(b) Washington Department of Labour and Industries, September 2, 2010

(c) Oregon Department of Consumer and Business Services, Occupational Safety and Health Agency (OR-OSHA)

(d) Calculated from data in Indicator 14 for year 2007/8 Comparative Performance Monitoring Report, 11th Edition, Dec 2009

(e) Calculated from 2009 data on actual number of officers (249) and covered employed labour force as reported by BC Stats December 2009 (2.266 million)

Monday, September 13, 2010

Demographic impacts on workers' compensation

Earlier this week I had an opportunity to speak about demographics to a Lunch n’ Learn audience at the Richmond offices of WorkSafeBC. This is a broad topic with implications for all of us: our families, our economies, and the world of workers’ compensation. There are global trends but the impacts are local –some are even personal—and cannot be ignored.

All of us are getting older individually—that’s obvious. What makes this time in our history so interesting is how the various age categories are distributed. One writer noted that more than half the people who have ever lived beyond the age of 65 are alive today. In developed countries, 70 million people will retire in the next 25 years…and be replaced by just 5 million young people entering the labour force.

So, what are the local impacts? Glancing at our Statistics book for 2009 provides some interesting facts:

· The average injured worker was over 40 years of age—a new record.

· More than 34% of claims first paid last year went to female claimants—another record.

· The percentage of claims first paid to workers under 25 fell to just 14% of our total volume and represented just 10% of our serious injury claims;

· Nearly 15% of claims first paid were to workers over the age of 55 and they account for 17% of our serious injury claims.

Graphing the distribution of time-loss work injury claims by age in BC, we can see a clear shift over the last twenty odd years. This shift is not just a function of changes in the provincial population profile.

Clearly, injuries to younger workers have declined. We have made gains in making workplaces safer for younger workers, technology has made jobs safer, our Regulation now requires specific safety orientation to new workers—all those initiatives have contributed to the decline in injuries in younger age categories. The age group 45-49 now has the highest number of claims. This increase in injuries to older workers is not a temporary phenomenon; we are likely to see more injuries to some older workers (and some very old workers) in the coming years.

This shift will continue to put upward pressure on duration. Older workers take longer to recover and often have pre-existing co-morbid conditions that may make recovery more complex. The risk of fatal injury actually increases with age.

None of this is really ‘news’. The predictions have been out there for years. The human body has not changed much with respect to its time to recover following injury. It stands to reason that a workforce with older workers getting injured will tend to have overall longer recoveries.

What are we to do in the face of these demographic trends? The fundamentals are the same:

· prevent injuries,

· rapid first aid when injuries occur,

· accurate diagnosis,

· effective and timely treatment and rehabilitation,

· consistent connection between the worker and the employer,

· timely safe and durable return to work.

The fundamentals, however, need to be responsive to the realities of the population of injured workers. Strategies tailored to young workers have been effective; a similar approach to reach older workers and women will hopefully have similar positive results.

Monday, August 23, 2010

What's behind the headlines about 'Fewer Worker Fatalities'?

There have been a lot of headlines lately about the lower number of injuries. One headline read “ U.S. Worker Fatalities fall 17% to record low” [Bloomberg August 19, 2010 ]. The improvement over past years is certainly welcomed but in the U.S. that still means 4340 work-related fatalities. The headline also misses the fact that construction spending in the US fell by 15% over the same period.

As an aside, it is important to remember that the U.S. counts work-related fatalities is very differently from the way WorkSafeBC and many other reporting agencies report similar statistics. The U.S. Bureau of Labor Statistics (BLS) has a system called the Census of Fatal Occupational Injuries (CFOI). Certain work-related fatalities are excluded from CFOI. For example, occupational diseases are excluded. Deaths due to work-related heart attack or stroke are considered occupational diseases and are excluded. Fatal work injuries to workers under 16 are also not included in this database. In contrast, all these categories of work-related fatalities are included in the WorkSafeBC index.

Another difference between the U.S. data and what we typically see in Canada is the number of homicides and suicides that occur at work. These are included in CFOI. Last year, homicides in the CFOI numbered 521 [80% due to shootings] while suicides accounted for 237 of the fatalities in this dataset.

Returning to the impact of the recession on workers’ compensation, it is true that injuries have declined both in absolute numbers and in rate. The decline in numbers is to be expected: if no one works, there can be no work-related injuries. The decline in injury rate is more complex and is part of a trend that has been going on for some time in most countries, states and provinces. NCCI in the U.S. notes that claim frequency continued to decrease in 2009: down 4 percent (cf. reductions of 3.4 percent in 2008 and 3 percent in 2007). According to NCCI’s research, recession was predicted to put additional downward pressure on frequency, because the work force still working during the recession gains in experience and is less prone to injury.

Many articles have noted the increase in ‘severity’ during the recession. Unlike WorkSafeBC that has a special definition for ‘Severe Injuries’ most jurisdictions simply use duration of disability as a measure of severity. The idea that a recession would extend recovery makes intuitive sense. In a robust economy, most workers return to their accident employment well before reaching maximal medical recovery. In a recession, there may be fewer employers clamoring for injured workers to return and workers are more likely to remain on claim until they are nearer to or reach a full recovery (or a point of maximal medical improvement), which is their entitlement under most workers’ compensation systems.

As we come out of this recession, most analysts are predicting a modest recovery rather than a rapid expansion. Given that scenario, one can expect that severity/duration will decline slowly and the number of injuries will increase. We can anticipate upward pressure on the provincial injury rate partly due to recoveries in higher risk sectors and partly due to the ‘churn’ as businesses deal with modest expansion (new hires) and an acceleration in the retirement rate due to the underlying demographic impact as older workers grow in numbers and are replaced as they retire.

Friday, August 6, 2010

Why is Ontario's WSIB phasing out its LMR program?

A few weeks ago, Ontario’s WSIB announced a major change in direction for its Labour Market Re-entry (LMR) program [roughly equivalent to WorkSafeBC's Vocational Rehabilitation Services].  The change will phase out the use of external providers and create a new Work Reintegration Program inside the WSIB. 

First a little background.  Back in 1997,  Ontario moved to a ‘self-reliance’ model; most employers were mandatorily required to accommodate an injured worker in a return to work with the accident employer.  The legislation also imposed a duty on the worker to cooperate toward this end.  For workers who could not return to their accident employer, the LMR program became the option.  The LMR program was to be delivered in the community by external professionals so in 1998, the internal disability case management and vocational rehabilitation functions of the WSIB for cases that could not return to their accident employer were outsourced.

In 2009, WSIB contracted an outside consulting agency to conduct an audit of the LMR and other Return-to-Work (RTW) services.  The report recommended changes to the program to make it more consistent with the leading practices of other jurisdictions (including WorkSafeBC).  This report, stakeholder consultations and a value for money audit showed that the re-training programs were not having the desired effect.  The lack of a link between re-training programs [employability] and effective labour market re-entry [employment] was identified as one root cause.  The absence of direct WSIB involvement in LMR actually hindered return to work and the effectiveness of LMR programs. 

The solution?  WSIB will phase out its use of external providers and will establish an internal role for ‘Work Reintegration Professionals’ who will actively “provide injured workers with a sound assessment and, if needed, high-quality, credible training that will -- to the best of the WSIB’s ability -- equip them for return to work.”  Clearly, the move is toward achieving better RTW outcomes and higher wage replacements for injured workers.

The new Work Reintegration Program is expected to be fully in place by the end of 2010.  According to the WSIB,
The new Work Reintegration approach will support:

  • Increased simplicity of communication and co-ordination of services between WSIB and workers,

  • Increased clarity of accountability,

  • Greater assurance of workers getting the service they need, when they need it,

  • Increased consistency of services provided in similar circumstances, and

  • Improved management of expectations and a reasonable level of investment within clear cost parameters.

You can read background on all this on the WSIB website .

Tuesday, August 3, 2010

My inbox after vacation

I’m back from a break and have been catching up on developments in the world of workers’ compensation. Here are a few highlights from the my inbox over the last few weeks:
 Washington State’s Secretary of State has certified Initiative 1082 that would open the workers’ compensation insurance market in that state to private insurance. The Initiative would also eliminate the portion of the premium paid by workers (a feature that may have attracted some workers to sign on to the petition). While 18% of a sample of the signatures in support of the initiative being placed on the ballot were ruled inadmissible, the required minimum of valid signatures was achieved so the provision will be on the ballot in November.

Arizona’s governor signed into law a provision that will take the Arizona State Compensation Fund from a public competitive state fund to a private entity. It currently has about a third of the market in that state. The move will allow the new entity to expand operations into other states.

Alberta’s Employment Minister, Thomas Lukaszuk, announced his department will post safety records of all companies in Alberta. What exactly will be posted has not been revealed but speculation in the media suggests workers’ compensation lost-time claim data (presumably counts and dollars) will be part of what is published. The move is intended to improve safety for workers in that province. Press reports attribute the following statement to the Minister:
"Today is a new day for occupational health and safety in the province of Alberta. This is the day when status quo is no longer acceptable. The hammer is coming down on those who persistently fail to comply with safety laws.”

Tennessee proposed a law that would require all construction service providers to be included in the scope of coverage unless specifically exempted—a procedure that is open to certain sole proprietors and others but with a catch: the firm must be registered and the exemption must be applied for (subject to fees) before an exemption card good for two years is issued.

President Obama has taken aim at the safety and return to work performance of federal agencies and executive departments. Under the acronym POWER (Protecting Our Workers and Ensuring Reemployment) departments are expected by

• Reducing total injury and illness case rates
• Reducing lost-time injuries
• Analyzing lost-time injury and illness data
• Increasing the timely filing of workers’ comp claims
• Increasing the timely filing of wage-loss claims
• Reducing lost production day rates
• Speeding return-to-work in cases of serious injury or illness

Vermont has increased the penalties for firms who are required to register and carry workers’ compensation coverage but fail to do so. Such firms will now be required to close immediately and a fine of $250 per day issued until they are in compliance.

I'm always interested in unique developments in workers' compensation and prevention.  Feel free to send any you come across to me.  As always, if you have any comments or insights, leave a post and add to the blog.

Monday, July 5, 2010

What influences will drive WC fund investments?

The AWCBC Congress was held last week in Halifax. This event is held every two years and brings together delegates from all the Canadian workers’ compensation boards and commissions. Are such gatherings worth the cost and effort? In this case, the program content certainly made this a good investment for those who could attend. There were many great sessions presented by many experts but the highlight for me was the first address.

The keynote speaker, Jeff Rubin, provided an unscripted, succinct, insightful, provocative examination of the trends that triggered the recent world recession and will undoubtedly impact us in the years to come. Since workers’ compensation systems in many jurisdictions manage large investment funds to pay benefits to workers injured in the past, his insight was extremely important. He correctly predicted the run up in oil prices in the last decade and convincingly links that price climb to the financial turmoil that followed.

Where are we heading? Rubin believes we are at or near peak oil so the world consumption of oil will shift. North America will use less; China and India will use more… much more. You and I will learn to love mass transit, cycling and living in or closer to home. The Hundred Mile Diet will become more fashionable out of simple, practical economics: the cost of fertilizer and transportation will make bringing food from farther away more expensive. As oil hits $150 a barrel, papayas from Mexico will be too expensive for much of the Canadian market. He notes that as the price of oil ford to $100 a barrel, the cost of making steel will make domestic production once again competitive with anything China can deliver to the North American market.

What does the recent BP gulf disaster mean? Rubin acknowledges the devastation on the people and the environment. Ultimately, BP will pay the price and that may mean the end of BP. Fundamentally, however, Rubin thinks the markets—not regulators—that will make deep-water oil an uneconomic risk. Will anyone who buys BP’s deep water assets be able to afford the insurance for another disaster. In a way, the BP fiasco has pushed a lot of ‘reserves’ effectively out of reach.

As oil increases in price, the Canadian dollar will rise. There will be ups and downs but the general direction for both appears to be upward.

If what Rubin has to say is true, the world we live in is indeed going to get a lot smaller... and the implications for investments, employment and labour are huge. Add to this the demographic changes and the future will be very different than our past.

Tuesday, June 29, 2010

Demographics and Maritime Safety

Last week I was in New Orleans and the National Maritime Safety Association (NMSA) conference. My role was as a speaker on demographic effects and this gave me an opportunity to look at some of the demographic changes that are impacting the industry in the US and beyond. Demographics is a term that just means population characteristics (gender, age, occupation…). The association is interested in that range of activities that are involved in and about the shipping, terminal services, stevedoring and related businesses.

  • The population of dockworkers and drivers working from terminal operations in the US has some interesting characteristics. As a group, according to one California study, they have a heart disease death rate that is higher than the rest of the population—49% higher for drivers and 32% higher for dockworkers.

  • In the UK, a recent study listed the fatality rates of ‘dockers and stevedores’ at 28 per 100,000. That would make this cluster of occupations the second most deadly in the UK.

  • A report out of New Zealand noted that the current average age of ‘Able Seamen’ is 54 years. It also noted that 72% of this group has 30 years of work experience at sea, and 17% with more than 40 years’ experience at sea. The demographic issues are pretty clear: Who will replace these workers as they age and leave the industry?

  • An Australian report noted that there is a skill shortage for occupations related to their ports. It warned of a drastic depletion of skills due to the ageing workforce; moreover, the population of young people who would be available to fill those jobs is being offered many other alternative career paths.

The bottom line for this industry (and many others) is that there are going to be fewer young workers and many more older workers. Older workers may well stay beyond the ages of retirement in the past to fill the demand. It also means that many older workers will be in specific jobs they might not otherwise have performed in the past. As one attendee at the event noted, during the recession, many of the first workers to be laid off were the younger ones. This meant that many older workers had to do jobs that they had not done in years and jobs that had changed due to technology. As we know, new workers (even if they are older workers) in new jobs are generally at higher risk of work-related injury.

Two presentations at the event were of particular interest. The first was from a firm called Flight Level Solutions. The founder and leader of this group was a military fighter pilot and the team he works with includes an astronaut. They specialize in Crew Resource Management, a training approach that is origins in flight operations but is now being applied to diverse areas such as healthcare, public safety and manufacturing. The basic premise from a prevention perspective is that “Safety is a by-product of Standardized Execution”. The parallels to Six Sigma, Lean and TQM are obvious but the emphasis on cognitive and interpersonal skills is substantially higher in CRM. In the wake of the PB disaster, this approach may offer another avenue toward safety.

Finally, I was really impressed with the work being done by Louisiana Immersive Technologies Enterprises  for the Louisiana Department of Transportation. The technology demonstrated was a 3d interactive environment in which learners had to correctly position flag persons around a curve using a typical gaming controller. I subsequently found a brief article on the net. The speaker identified a couple of differences among learner groups. Learners who were gamers (mostly younger but not exclusively) immediately ‘got it’ and could apply what they had learned in lectures to this virtual world simulation. Others took a while to get the hang of it. With the gaming industry now exceeding the revenues of the film industry, the population of those who know how to game and operate in these immersive environments is likely to grow. There may be many more applications for this sort of learning in the future.

So demographics and maritime safety are linked both in the impact that demographic changes are going to have on the industry and on the technologies and training that will be needed to reach/teach/enable workers in the next couple of decades.

Friday, June 18, 2010

Will Washington state have the next Workers’ Comp system to allow competition?

In Washington State, the Department of Labor and Industries (LNI), is the publicly run workers’ compensation insurer and occupational safety and health authority for the state. It is one of only four remaining ‘exclusive’ state fund workers’ compensation insurers in the US. Exclusive state funds are the closest cousins of Canadian workers’ compensation boards and commissions. If the current campaign to get an initiative on the ballot, Washington’s LNI as it is called, will lose its exclusive insurer status and other insurers will be permitted to enter the market and compete for the sale of workers’ compensation insurance.

Citizen-based initiatives are relatively rare in Canada. In BC we have the example of a campaign to get a referendum in front of the electorate regarding the Harmonized Sales Tax. Initiatives are more common in the US. In Washington state, to take an initiative to the people ( that is, to get a proposal on the ballot for the next election), an initiative proposal must be filed with the state and then, within prescribed time frames and get endorsements from a specified number of registered voters. This year, the threshold is 241,153 signatures by July 2, 2010.

According to the information filed with the state, I-1082 has the following purpose:
This measure would permit certification of private insurers as industrial insurance insurers, and authorize employers to purchase state-mandated industrial insurance coverage through an “industrial insurance insurer” beginning July 1, 2012. It would establish a joint legislative task force to propose legislation conforming current statutes to this measure’s provisions, and would direct the legislature to enact such supplemental conforming legislation as necessary by March 1, 2012. It would also eliminate the worker-paid share of medical-benefit premiums.

The full text of the initiative is available at the following link:


Proponents of the initiative have a website www.safeourjobswa.com and opposition groups to the initiative have posted their arguments on a variety of websites and blogs including several union sites such as http://ibew191.com/node/443 and http://www.wslc.org/reports/2010/May/18.htm#Tuesday .

If the intent of the initiative sounds familiar, it should; this initiative has a similar intent to the Bill debated in the Ontario legislature late last year. As you will recall, that Bill sought to allow private insurers to enter the Ontario market and compete with WSIB for the sale of workers’ compensation insurance to employers in that market. (See my earlier post). In Canada, the US and Australia, when dissatisfaction with an exclusive state fund rises, so do the calls for privatization and competition despite strong evidence that private or competitive models will be no less costly or efficient.

Direct comparisons between Canadian Boards and individual states are difficult but from a number of research studies and analysis we can say that over the long run, the Canadian model delivers higher benefits to workers and lower costs to employers than the typical US system. We also know directly from research carried out by the late Terry Thomason and John F. Burton, that exclusive state funds (which included the BC and Ontario boards) consistently provided lower costs to employers over a two decade time frame than either purely private markets or markets where there was competition permitted with a state fund.

It remains to be seen if the proponents of I-1082 will achieve the required number of signatures. If they do, the initiative will appear on the November 2010 ballot. Whatever happens in Washington State (or Ontario), the best defense any exclusive system can mount against such initiatives is to provide incredibly customer-focused, efficient service to all our stakeholders and to work with them to reduce the human and financial costs of work-related injury, illness and disease.

Tuesday, June 8, 2010

Does the basis of calculating WC benefits influence reporting of claims?

If you miss time from work due to a temporary total disability, the amount you receive from an insurer will determine if you can put bread on the table and pay the rent. The quantum of compensation varies with the type of insurance.

Although we do not think of ‘sick leave’ as a form of insurance, in many ways it is like an insurance plan. Sick leave credits or allocations are often earned and may or may not have any residual value upon termination or retirement. In most cases, sick leave provides 100% of wages and is taxable. Sick leave plans are generally free of ‘deductibles’.

For those without sick leave plans as described above, Employment Insurance generally offers some sick leave benefits. In Canada, these amount to 55% of gross up to an insured maximum and all benefits are taxable. There is generally a two week waiting period before benefits may be paid under an EI claim.

Workers’ compensation is a form of insurance. The benefit rate for short term disability varies by jurisdiction. WorkSafeBC provides 90% of net earnings (where net equals gross earnings minus appropriate [mostly mandatory] deductions for employment insurance premiums and Canada Pension Plan contributions as well as applicable federal and provincial income tax) and compensation is tax free. BC does not have any waiting periods so benefits are payable from the day following the day of injury.

Not all workers’ compensation systems compensate at the same level. Most US states set the basis for compensation at 66 2/3% of gross earnings. A sampling of other jurisdictions reveal a range of alternatives—generally higher than the 67%:
• Maine uses 80% of worker’s ‘spendable’ earnings (or net wage after tax)
• Connecticut and Rhode Island uses 75% of worker’s spendable earnings
• Texas uses 70% of the worker’s pre-injury weekly in most cases
• Washington State’s compensation varies by marital status and number of dependents so the range is from 60% for a single to 75% (spouse adds 5% and each dependent 2%).

Most states have a waiting period of 3 to 7 days although most systems offer a ‘retroactive period’ such that the worker will be reimbursed for the waiting period if the wage-loss extends beyond (typically) 14 to 28 days.

Canadian jurisdictions generally compensate temporary total benefits at a higher level than their US counterparts. WorkSafeBC’s 90% compares well with other Canadian jurisdictions:

• Ontario, Prince Edward Island and New Brunswick use 85% of net
• Nova Scotia uses 75% of net for the first 26 weeks and 85% after that

Waiting periods are not common in Canada but do exist in New Brunswick (3 days), Nova Scotia (2 days) and PEI (3/5ths of weekly wage loss benefits to the worker.

While workers have an incentive to claim workers’ compensation benefits over EI for work-related claims, the same may not be true for work-related injuries.

Beyond the fact that waiting periods and departures from 100% of net earnings shift some of the costs of injury to injured workers, the level of compensation may influence reported injury rates. Take the case of a worker who suffers an injury that will result in two weeks away from work and a loss of $1000 net earnings (2 weeks at $500 per week). If the worker has access to a sick leave plan, the worker will likely receive 100% of usual net earnings or $1000. If the worker claims workers’ compensation benefits in a jurisdiction with a 3 day waiting period and an 85% of net benefit rate, the benefit will be $595. In a jurisdiction with no waiting period and a 90% of net benefit rate, the benefit will be $900. If the worker has the option of claiming either sick leave or a workers’ compensation benefit, it is clear that the sick leave route will minimize the burden of the injury the worker must bear. The propensity to not claim under workers’ compensation will increase (at least for shorter duration claims) the greater the financial cost the worker must bear.

This is another example where reported injury rates must be interpreted in context. As a general rule, one would expect jurisdictions with waiting periods and lower replacement of net earnings levels to experience lower injury rates for at least shorter duration injuries.

Tuesday, June 1, 2010

What's new in Canadian Research on Work and Health?

I spent part of last week at the Canadian Association for Research on Work and Health (CARWH) conference in Toronto.  The conference theme was Worker Health in a Changing World and participants included about 300 researchers from across Canada with some from the US and even Australia.

So, what was preoccupying the researchers at this event? There were so many threads, it is hard to pull them all together but here is a short list of topics that might give you a hint of the range discussed in sessions or presented in poster sessions:  asbestos, shiftwork/nightwork, vulnerable workers and those in precarious employment, stress, the heath of truck drivers, pesticides and cancer, effectiveness of OHS training and education, trends from Ontario's high risk firm intervention progam.

As with any multi-stream event, there is no way any one person can see or hear all presentations so it is a bit unfair to highlight some topics over others.  That said, I was really impressed by a couple of presentations that I did attend and think you will find them of interest as well. 

For those of you who work with larger employers, there was a great example from Fraser Health.  Shannon Atkins demonstrated how an internal call centre approach reduced the time for filing employer reports.  From the paper abstract, "Results to date are impressive. Form 7 submission timeline reduced from an average of 16.9 days to 1.72 days, with a mode of 0.04 days. Claim duration has been reduced from 49.2 days pre-call centre to 36.5 days."

Another fascinating presentation was "Long-duration claims – what is driving increases in duration and locked-in claims in Ontario?".  Sheila Hogg-Johnson's analysis showed that both duration and locked-in claims increase coincidentally with January 1998's Bill 99 legislative and policy change.  Now work is going in to examining exactly why. 

Several speakers discussed qualitative research examining topics like Joan Eakin's "The stigmatization of injured workers: The construction of "unworthiness" in the compensation process".  The care and concern for workers generally was reflected in every presentation.

Cameron Mustard's  work on comparing BC and Ontario long-term care injury rates and durations was preliminary but demonstrated the great power in using large data sets from different jurisdictions to ‘tease out’ differences (and that may lead to new approaches for fewer injuries and shorter duration).

One of the most insightful comments from the two days was contained in a presentation by Genevieve Baril-Gingras from Laval. She and a dozen other colleagues reviewed the occupational safety and health law in Quebec by examining its provisions with those of other jurisdictions elsewhere in Canada and the world. Their findings resulted in a set of recommendations, each one backed by what they found from the science and experience elsewhere.  And each recommendation was based on a proven provision in place in one or more of the other jurisdictions examined.  Clearly, there will be lessons for other OHS and workers' compensation agencies in this paper.

Beyond the findings and the recommendations, her presentation contained one line that really impressed me. She said: "Academic freedom = Responsibility".  Researchers need the freedom to gow where the research leads them, and if it leads them to conclusions that are uncomfortable or inconvenient, researchers still have a responsibility:  to tell it like it is. 

Just how research will be used by legislators and policy makers will depend on many factors.  The likelihood of making the best public policy decisions, however, depends on accurate, well researched information.  I'm glad there are people out there who take that responsibility in the study of work and health so seriously. 


Tuesday, May 25, 2010

To include or exclude Professional Sports Competitors from Workers' Compensation Coverage

Who should be covered by workers’ compensation?  In the beginning, coverage was limited to primarily industrial workers but most systems have expanded who is included within the scope of coverage.  In some cases, inclusions are accomplished by specifically identifying the industries (or occupations) to be covered in legislation.  In others, as in British Columbia, the legislation simply defines a principle (inclusion) and the specifics of any exemptions (exclusions) are defined by policy decision. 

Of jurisdictions with universal coverage, the rationale for inclusion is pretty straight forward.  From a prevention perspective, inclusion of all occupations provides an opportunity to strengthen the barriers, safeguards and defenses against personal injury and disease related to earning a living.  By engineering, substitution and administrative controls, the risks that would otherwise harm the worker can be minimized if not entirely eliminated... and the cost of workers' compensation premiums may provide an incentive to invest in these protections (or an added penalty for failing to).

Further, inclusion means all workers have equivalent protections. From a workers’ compensation perspective, insurance for (hopefully) rare events is provided and crystallizes the likely risk of a rare large financial claim or suit to the employer;  the premium and experience rating for a particular employer with workers in and about an industry serves as an added and (more or less) constant pressure to invest in prevention.  A further rationale is that mandatory inclusion prevents the costs of injury (and necessary healthcare) from being externalized to the public purse.

For jurisdictions with exclusions from universal coverage, the rationale may be more complex.  One rationale may be that the risks are very small and the costs of any actual injury or disease arising from the work very low so the benefits of insurance are negligible.  Other jurisdictions suggest that industries with ‘equivalent’ coverage may be exempted from the provision.  Sometimes, exclusion from some aspects of the workers’ compensation plan can be achieved by ‘carve outs’  and to a certain extent, self insurance with self administration, although this avenue is usually allowed only if the firm is large enough, financially stable enough, and ‘safe’ enough in the eyes of the jurisdictional regulator.  It may be necessary to include all firms under prevention standards but the workers’ compensation coverage by this logic would be optional.  On one hand, this should increase the firms motivation to protect workers since they will bear the costs of a suite or suitable settlement.  Unfortunately, this does not protect the taxpayer (in Canada at least) from the potential costs associated with health care and those who may not receive a speedy settlement (or never get the chance).   Exempting an industry or occupation, therefore, should intentionally consider these consequences. 

Professional sports competitors in hockey, football, winter sports like skiing are obviously poor candidates for inclusion.  The inherent risks and latent defects in the safeguards, barriers and defenses that would otherwise protect them from harm are numerous.  It is hard to think of regulating maximal exertion on razor-sharp blades while carrying long sticks  and making body checks safe without taking these essential elements out of professional hockey.  And on the insurance front,  who would you pool the risk of mixed martial arts competitors with?  In these sports, the economic model of what you can get ‘workers’ to do, is really an economic expected value one.  The pay and contracted benefits are going to have to convince the sports competitor (and his agent) that the residual risks of competing are being properly anticipated and compensated while the ownership (and those setting the rules) are going to have to make assurances sound enough to likely fend off potential suits.

Is there a case for their inclusion of sports competitors? Aside from the inherent externalization of necessary health care  costs to the public purse (or  a violation of the Canada Health Act principles if the sports team ownership pays for those services) and the principle of universality on its own,  I don’t think so.  That said, I don’t see any rationale for excluding coverage for the team coach, trainers, managers and other staff.  Their work and risks are not dissimilar from recreation facility staff, fitness instructors and equipment managers in many other sectors (schools, universities, private gyms, community recreation facilities). 

 I would be interested in your views.

Thursday, May 13, 2010

Are all reported Injury Rates (IRs) equivalent?

I look at a lot of reports and see a wide variation in the reported injury rates among what should be similar jurisdictions. What accounts for these differences? In some cases, there are wide differences in the ‘mix’ of industries covered. You can expect a jurisdiction with a large service sector and small primary resources and construction sectors to have a lower injury rate than one dominated by construction, mining and forestry. That aside, variability can also have a lot to do with definitions.

The AWCBC reports an Injury Frequency statistic based on the following definition:
Number of new lost-time claims for assessable employers per 100 workers of assessable employers

Note the definition depends on what is counted in the numerator (lost-time claims) and what is used as the denominator (workers of assessable employers). AWCBC also defines Lost-time Claims in this way:
A lost-time claim is a claim where an employee is compensated for a loss of wages following a work-related injury (or exposure to noxious substance), or receives compensation for a permanent disability with or without any time lost in his or her employment (for example, if an employee is compensated for a loss of hearing resulting from excessive noise in the work place).

So, another source of variability is in what is reported as compensated. If a jurisdiction has a waiting period or actively promotes ‘stay at work’ programs, claims involving loss of wages will be lower in that jurisdiction than in a similar jurisdiction without a waiting period or significant stay-at-work program.

In a previous blog, I noted the difference in reporting requirements. In addition to those issues, the source of the statistic also needs to be considered. In the US and Europe, most published data is based on Occupational Safety and Health data. In the US, OSHA has specific definitions for what is reportable and these ultimately have an impact on the reported IR. Further, within the reportable cases, there is a distinction between ‘days away from work’ cases and those where ‘alternate duties’ are assigned. While most workers have workers’ compensation coverage in the US, most published IRs are not based on claims.

At WorkSafeBC we report a Provincial Injury Rate in accordance with the AWCBC definition. For BC, where 93% of the employed labour force is covered, this is a pretty reasonable estimate of the provincial IR. Note, however, that it reflects assessable employers only. It does not include, for example, the injuries that occur within the Provincial Government public service as the Provincial Government is not an assessable employer. In provinces with lower covered populations and higher proportions of non-assessed employers, what is reflected in the IR may be far less representative of the provincial injury rate.

Finally, the IR that is reported in some other jurisdictions excludes from the numerator claims (or work absences) of very short duration. WorkSafeBC’s Injury Rate is an IR0 (claims involving at least some wage loss) and the US generally uses IR0 (reportable cases involving days of work absence) although some reports use IR3. In Australia, where one week of work absence is the threshold for a claim in most jurisdictions, their reported claim rates would be equivalent to IR5 or IR7 (depending on the basis for compensation being 5 or 7 days).

So, when you are looking at injury rates in other jurisdictions, dig a little deeper and understand the inherent differences before drawing any conclusions. For the record, WorkSafeBC’s Injury Rates are as follows:
IR0: 2.34, IR3: 1.75, IR5: 1.50, IR7: 1.35 (In the 2009 Annual Report, the Provincial Injury Rate [IR0] is reported as 2.37, the best estimate available at the time of publication).

Saturday, April 24, 2010

The Core of COR (Certificates of Recognition)

The Certificate of Recognition (COR)Program is a relatively new feature of some workers’ compensation / prevention systems. Designed primarily as an incentive for employers to implement and maintain a robust safety and health management system that meets a set of criteria established for the employer’s particular industry, these programs are generally voluntary, time-limited before having to ‘renew’, and involve external audits.

COR programs are offered by several jurisdictions in Canada but I can find little in the way of formal published research on the benefits and costs associated with COR. To complicate matters, there is no ‘standard’ for COR certifications (although some jurisdictions are recognizing CORs from other provinces).

A COR program is usually offered by the agency responsible for prevention and may carry benefits for the firm in terms of lower workers’ compensation premiums. In Alberta, COR is offered by Alberta Employment and Immigration. Firms must undergo an audit by a Certifying partner. Qualifying firms are expected to achieve a pass on every element in the audit and an overall score of 80% or better. The elements examined relate to the Health and Safety Management System.

The Yukon and Nova Scotia have introduced programs under the name COR. Many larger firms use COR as a pre-requisite for subcontractors and providers

In British Columbia, a COR program is offered by WorkSafeBC. Certifying Partners offer audits but the goal goes beyond meeting required OH&S primary prevention standards. The COR program in BC recognizes and rewards employers who go beyond the legal requirements of the Workers Compensation Act and the Occupational Health and Safety Regulation by taking a best practices approach to implementing health and safety management systems. Firms who also meet standards for return-to-work (RTW)/Disability Management programs can obtain an additional rebate. Achieving COR status for both area can net the employer a 15% rebate on premiums.

In WorkSafeBC’s case, the benefits to the employers who qualify for COR go beyond the rebate. Theoretically, these employers should have fewer defects in their safety programs, fewer violations of safe work procedures, and lower costs associated with work-related injuries. Workers in such firms theoretically benefit from safer workplaces, strong adherence to safe work procedures by co-workers and other persons in the workplace, and improved prospects for a safe and durable return to work. The COR certification may also give qualifying firms an advantage in competitive bid processes.

As I said, there is little in the way of formal peer-reviewed research on the benefits of any COR system currently in place. One administrative review was recently conducted by the Auditor General of Alberta. The AG found:

Half of those employers that persistently fail to comply with the OHS Act also continue to hold a valid Certificate of Recognition (COR), 4 and continue to have elevated injury rates among their workers. In short, although these employers do not comply with OHS orders, and their workers are much more likely to get injured on the job, these employers continue to receive Partners in Injury Reduction financial rebates and use their COR to bid on contracts with major companies in such industries as construction, and oil and gas.

As more COR programs are established and have had time to operate for several years, more independent formal research will tell us if these programs are yielding their planned benefits for workers and employers.

Monday, April 12, 2010

Does leadership really matter?

Does leadership really matter? I’ve always believed the commitment of an organization’s leadership to safety and health makes a difference. The more I look at the impact effective leadership has on safety and health in different organizations, the more certain I am of the answer to this question.

I think of leadership from a functional perspective. In this context, effective leadership is about achieving the leader’s desired outcomes through the actions of others because others share the leader’s vision. Autocratic, dictatorial leaders can and do achieve outcomes through others, but not because their followers share any common vision or commitment to the leader’s vision. Charismatic leaders can often achieve their desired results, too, but followers of such leaders tend to act out of loyalty or commitment to the charismatic leader rather than the ideal or outcome the leader desires.

Effective leadership in the health and safety context depends on something other than the charisma or dictates of the organizational leader. It depends on a real commitment—the understanding, internalization and action—of those at the top of the organization that is shared down to the operational front line. It depends on communication—the tangible and consistent message that safety and health priorities are the priorities of the leadership. It depends on vision—a clear articulation of the desired state.

I recently heard David Eherts- VP Chief Safety Officer Sikorsky Aircraft and Joe Grabinsky- Chief Union Environmental and Health Steward at Sikorsky speak about Sikorsky’s safety and health culture. Their corporate mission statement “We pioneer flight solutions that bring people home everywhere…every time” was put in context with their health and safety view. They described the culture on the shop floor as one where “we take care of each other”. They have “The Safety Dollar Program”, a safety and health reward program based on positive reinforcement and recognition for employees doing the right things when it comes to working safely and taking care of each other. The rewards are cash credits to items from a designated web store where the credits can be exchanged for safety-related items for the home, car, kids, and even pets. This culture has lead Sikorsky to reduce its lost time injury rate from 4.0 [per 100 FTEs] in 2004 to just 0.9 in 2010.

That talk was delivered at a two day event at Maersk North America’s President’s Safety Council meeting in Charlotte, NC. Maersk shares the view that safety and health culture is critically important to corporate success—including profitability. This was their ninth annual event that focuses Maersk leadership( the presidents of their group of companies, operational leaders, and some front line managers) on nothing but health, safety and the environment. In front of their chair, Russ Bruner, and their colleagues each president spoke of their operations’ progress and listened to presentations from others like Sikorsky on how to take their HSE performance to the next level. Maersk’s “Drive to Zero” campaign has seen their OSHA reportable injury rate fall from 9.53 [per 200,000 hours of employment] in 2003 to just 1.64 in 2009, and their time loss injury rate drop from 8.0 to 0.38 over the same time frame. It was amazing to see the commitment to safety from the top management to management at the shop floor level at Maersk. In that room, there was a palpable excitement about HSE and a sincere belief that attaining a zero reportable injury rate was both achievable and in the best interests of workers, shareholders and customers.

Firms like Sikorsky and Maersk demonstrate that leadership matters when it comes to health and safety. In Canada, a growing number of firms are putting health and safety at the top of their priority lists. The signatories to the CEO Health & Safety Leadership Charter are another group of employers who are giving life to these ideals.

“Leadership and learning are indispensable to each other” [from a speech John F. Kennedy was to deliver on the day he was assassinated]. If you know an organization that epitomizes safety and health leadership, share their success, post their story and help others to learn how leadership can make a difference.

Thursday, April 1, 2010

Raising OSHA Penalties

I was at a Health, Safety and Environment conference in North Carolina this week and some of the side discussions centered around what motivates employers to more complete compliance with OH&S regulations and standards. As I noted in my post February 4 post, some firms have a very strong safety culture but others –particularly those who should know better—factor the perceived cost of compliance against the perceived probability of non-compliance being detected times the estimated costs (dollars, reputation…) of the sanction. It appears DAVID MICHAELS, US Department of Labor Assistant Secretary for Occupational Safety and Health has been thinking about this, too.

In testimony before the US House of Representatives Subcommittee on Workforce Protections on March 16, 2010, Dr. Michaels supported legislation [the Protecting America’s Workers Act or PAWA] that would, among other things, significantly increase the cost of sanctions. He noted:

Safe jobs exist only when employers have adequate incentives to comply with OSHA’s requirements. Those incentives are affected, in turn, by both the magnitude and the likelihood of penalties. Swift, certain and meaningful penalties provide an important incentive to “do the right thing.” However, OSHA’s current penalties are not large enough to provide adequate incentives. Currently, serious violations — those that pose a substantial probability of death or serious physical harm to workers — are subject to a maximum civil penalty of only $7,000. Let me emphasize that — a violation that causes a “substantial probability of death — or serious physical harm” brings a maximum penalty of only $7,000. Willful and repeated violations carry a maximum penalty of only $70,000 and willful violations a minimum of $5,000.
Currently, the average OSHA penalty is only around $1,000. The median initial penalty proposed for all investigations in cases where a worker was killed conducted in FY 2007 was just $5,900.

He went on to compare these penalties with those in other areas and violations.

The current penalties do not provide an adequate deterrent. This is apparent when compared to penalties that other agencies are allowed to assess.For example, the Department of Agriculture is authorized to impose a fine of up to $130,000 on milk processors for willful violations of the Fluid Milk Promotion Act, which include refusal to pay fees and assessments to help advertise and research fluid milk products. The Federal Communications Commission can fine a TV or radio station up to $325,000 for indecent content. The Environmental Protection Agency can impose a penalty of $270,000 for violations of the Clean Air Act and a penalty of $1 million for attempting to tamper with a public water system. Yet, the maximum civil penalty OSHA may impose when a hard-working man or woman is killed on the job — even when the death is caused by a willful violation of an OSHA requirement — is $70,000.
In 2001 a tank full of sulphuric acid exploded at a Motiva refinery. A worker was killed and his body literally dissolved. The OSHA penalty was only $175,000. Yet, in the same incident, thousands of dead fish and crabs were discovered, allowing an EPA Clean Water Act violation amounting to $10 million — 50 times higher.

If you have a few minutes, you might want to review the full text of his testimony. I found the testimony compelling. It will be interesting to watch the development of the PAWA.

Thursday, March 25, 2010

The not-so-exclusive remedy

A recent Ohio Supreme Court decision prompted some thoughts about workers’ compensation as the ‘exclusive remedy’ for work-related injury, illness, disease and death.

In Canada and most of the US, we think of workers’ compensation as being the exclusive remedy, that is, compensation for work-related injury or disease is limited to the wage loss, permanent disability and medical compensation defined by the workers’ compensation law and policy in force in a particular jurisdiction. Injured workers (or their survivors in fatality cases) are not permitted to seek other remedies for the work-related losses; for example, a worker is prohibited by law (statute barred) from suing the accident employer or another worker. (Of course, if a third party is at fault, there may be a right of action that may be taken as an alternative to compensation or pursued by the workers’ compensation authority as a subrogated right). The Ohio case reminded me that some states allow for exceptions to the exclusive remedy rule.

In the Ohio case, legal precedent in that state and a change in the Ohio tort law five years ago defined an exception to the exclusivity of workers’ compensation. It allowed a worker to both collect workers’ compensation and pursue an action against an employer if, and only if, the worker could prove the employer acted with “deliberate intent” to harm. The statute reads (in part) as follows:

R.C. 2745.01, effective April 7, 2005,
(A) In an action brought against an employer by an employee, or by the dependent survivors of a deceased employee, for damages resulting from an intentional tort committed by the employer during the course of employment, the employer shall not be liable unless the plaintiff proves that the employer committed the tortious act with the intent to injure another or with the belief that the injury was substantially certain to occur.

(B) As used in this section, ‘substantially certain’ means that an employer acts with deliberate intent to cause an employee to suffer an injury, a disease, a condition, or death.

(C) Deliberate removal by an employer of an equipment safety guard or deliberate misrepresentation of a toxic or hazardous substance creates a rebuttable resumption that the removal or misrepresentation was committed with intent to injure another if an injury or an occupational disease or condition occurs as a direct result.

The section clearly puts a high test on what would be an intentional act intended to or substantially certain to injure a worker. The examples in paragraph C anchor the intent of the provision to very plausible but likely very rare situations. And the Ohio Supreme Court certainly confirms a very narrow access to the exception.

Similar exceptions to the exclusive remedy exist in some other states for cases of reckless or wanton disregard for the safety of the worker. According to Larson’s, Ohio, Louisiana, North Carolina, Connecticut, Oklahoma, New Jersey, South Dakota, and Texas—now employ a “substantially certain” standard.

In Australia, access to common law remedies still exists in most states (but not in SA or NT and limited access in Victoria and ComCare). In Queensland there is an unrestricted worker right to seek common law damages against an employer for breach of duty or negligence. One report says common law claims represent just four percent of all claims, but 40 percent of claim costs. That state has a discussion paper proposing a narrowing of access to common law by adopting a 10%-15% threshold in whole body impairment.

Social justice reasons are sometimes given for allowing exceptions to the exclusive remedy rule. Some see access to common law remedies for serious harm resulting from intentionally or substantially certain harm as a mechanism to deter such behaviors and improve worker safety. On the other hand, many view exceptions to the exclusive remedy as an erosion of the Historic Compromise.

In isolation, each of these arguments may have merit, however, I am of the view that you cannot look at any single feature of a system—including exceptions to the exclusive remedy rule-- in isolation. This is less a form of cultural relativism and more a position that accepts more than one arrangement of public policy features can achieve similar if not exactly equivalent outcomes.

I am certain others will have strong views for or against exceptions to the exclusive remedy rule so feel free to post them.