Ontario Labour Critic calls for Competition with WSIB

One might assume legislation that makes a Canadian WCB the exclusive workers’ compensation provider would extend some certainty to that status. Recent developments in other jurisdictions could dispel that assumption.

A few years ago, West Virginia was an exclusive state fund workers’ compensation insurer. Today, it faces competition from private insurers in that state. The New Zealand Accident Compensation Corporation is about to have its exclusivity removed for the workers’ compensation portion of its mandate.

Ontario’s Workplace Insurance and Safety Board (WSIB) has been under financial pressure for some time. It currently has an unfunded liability of about 47%. In other words, WSIB has about half (53%) the money it needs to cover the liabilities—the health care, permanent disability and other benefits injured workers are entitled to.

The way out of this hole is not easy. Clearly, reducing the number and severity of workplace injury and disease cases is part of the solution but unlike BC, which has the main legislated responsibility for occupational safety and health, WSIB is only one player in the prevention role. The Road to Zero strategy requires substantive and continuous reductions in the injury rate in order to have any impact on the unfunded liability.

Other options for WSIB include increasing premiums and cutting benefits. With current premiums among the highest in Canada, there is little appetite for any increase in premiums. In a sense, employers in the WSIB system are already experiencing an intergenerational transfer of costs. The unfunded liability of today is predominantly a result of injuries that occurred in the past. Slashing benefits would clearly hurt those who already are bearing the entire human and much of the financial costs of work-related injury, illness and disease.

What about improving the return on investments? As every investor knows, investments that offer higher returns carry increased risk of large losses. With market volatility and economic uncertainty the way they are today, becoming more aggressive with investment strategies is probably not a great idea.

Recently, the Labour Critic for the Official Opposition in the Ontario legislature introduced a private members Bill to open WSIB to competition. Randy Hillier, who recently sought to lead the Progressive Conservative Party of Ontario, saw his Bill 219 debated in the legislature on November 19, 2009. An explanatory note contained in the Bill states:

The Bill amends the Workplace Safety and Insurance Act, 1997 to allow an employer, at any time, to opt to participate in an insurance plan that is offered by a private-sector insurer, instead of the insurance plan established under the Act, if the alternate plan offers benefits to the employer's workers that are comparable to those offered by the insurance plan as it exists under the Act as of the date that the amendments to the Act come into force. To exercise the option, an employer is required to file a notice with the Workplace Safety and Insurance Board containing the particulars specified in the regulations made under the Act.

As with most private member Bills, this proposed legislation was defeated after some debate. It is clear that the idea of opening the WSIB to competition has resonated with some. While research would suggest that competitive workers’ compensation systems are, on average, higher cost for employers, it is likely that the large unfunded liability in Ontario will keep this issue alive for some time to come.

Ergonomic Considerations for Older Workers

The idea of fitting the job to the worker is not new...but the increasing numbers of older workers in the workforce requires a fresh look at workplace standards and design.

Older workers may have very different needs from their younger counterparts. Many tables that record body measurements and ratios are based on military populations and may not be representative of the working population in general or of a particular worksite with many older workers.

What sort of considerations should one make for older workers? In a recent presentation J.M. Haight offered the following advice:

Consider older workers limitation in workspace and task design:
· Improve illumination
· Reduce heavy lifts and elevated work
· Design smooth solid flooring
· Remove control panel and computer screen clutter
· Reduce noise levels
· Focus on error reduction tools such as three way communication
· Additional time spacing between task steps
· Increase decision making time
· Reduce necessary reaction time
· Understand accommodations being made
· Educate, Educate, Educate

The Australian Public Safety Commission produced a similar
checklist of strategies and activities for an aging workforce
(Australian Public Service Commission, 2003):

Improve work task design
· Promote employees’ control over their work depending on agency needs and employee preferences
· Reduce physical loads
· Ensure good visibility of task-related information
· Improve posture
· Set reasonable work rate standards, production targets or workloads

Improve job design and work organization
· Avoid monotony, short cycle times
· Improve work scheduling
· Allow flexibility in taking rest breaks
· Allow individuals time to adapt to new tasks
· Support flexible employment conditions

Improve the physical work environment
· Minimise glare
· Ensure good lighting levels
· Minimise noise levels
· Eliminate hazards that may cause slips, trips and falls
· Make allowances for working in heat and encourage sun-safe behaviour

Support and improve people’s performance capacities
· Develop best practice performance standards
· Improve training programs
· Develop and maintain support systems
· Improve employee morale and expertise

Interestingly, this resource follows each strategy with specific recommended activities and provides a small bibliographic reference section to support each recommendation.

Zurich, another large insurer, recently published an even more elaborate listing of practical steps (Zurich Services Corporation, 2008). The listing includes engineering and administrative solutions for physical, physiological and psychosocial changes.

With same level falls (slips, trips and falls) identified as a major source for injuries in older workers, the slips, trips and fall prevention program evaluated by Bell et al. (Bell, J. L., Collins, J. W., Wolf, L., Grnqvist, R., Chiou, S., Chang, W.-R., et al. Evaluation of a comprehensive slip, trip and fall prevention programme for hospital employees. Ergonomics , 51 (12), 1906-1925) is a good resource for ergonomic strategies that have collectively been validated in a healthcare setting. The main intervention strategy elements are:

· Keep floors clean and dry
· Prevent entry into areas that are contaminated
· Use slip-resistant shoes
· Keep walkways clear of objects and reduce clutter
· Provide adequate lighting in all work areas including outdoor stairwells and parking garages
· Secure loose cords, wires and tubing
· Eliminate outdoor surface irregularities
· Eliminate indoor surface irregularities
· Check stairs
· General awareness campaign

There are other resources like Designing for Older Adults: Principles and Creative Human Factors Approaches is one such reference (Fisk, Rogers, Charness, Czaja, & Sharit, 2009). Another is “Extra-ordinary” Ergonomics: How to accommodate small and big persons, the disabled and elderly, expectant mothers and children (Kroemer, 2006) where Chapter 6 is specifically about designing for aging.

These general guidelines and resources are a start. For any particular jobsite, safely fitting the actual job tasks to the the workers who actually perform them deserves consideration.

Ergonomics and Demographics

Last week I completed a graduate course on Ergonomics (OCCH 505b offered through the School of Environmental Health at the University of British Columbia). The class consisted of about a dozen students, mostly working towards a Master of Science degree in Occupational and Environmental Hygiene. The instructor was a professional ergonomist with a great background in academic, regulatory and private practice areas. The content and discussions were a great way to spend three hours every Monday evening over the last three months.

The course content covered the range of topics you might expect and a few that might not immediately jump to mind. One area we discussed was how the changing demographics of society and the labour force will require ergonomic considerations for older workers.

Demographic changes are clearly having an impact in the labour force. The average age of workers in the labour force is rising. More people are deciding to participate in the labour force well beyond the age of 65. In the US, most of this population is opting for full time work—a clear shift from the trends we saw only a decade ago. Despite these trends, there was surprisingly little research-validated data on specific ergonomic recommendations for the older workforce.

There is no standard definition of what we mean by older workers. In some research, particularly in manufacturing and construction, age 40 or 45 is used to differentiate the older worker population. In other literature, workers over the age of 55, 64, or 67 may be used to define the older population.

The research lists changes that occur to our body and mind as we age. Not everyone ages at the same rate but many common changes are important to consider when designing or fitting the job to the worker:

• 
  · stiffness Increases
  · range of motion and flexibility decrease
  · Hearing declines particularly at upper frequencies
  · metabolism slows and weight gain often occurs
  · tire more easily and take longer to recover
  · eye movements may become impaired
  · colour perception may change
  · more light may be required for fine work tasks
  · floaters and veils can appear and persist in the field of vision

Not everything about aging is bad. Some things improve with age. These include verbal and general knowledge. Age is associated with increased happiness. A recent study found a positive association between age and safety perception. Older workers have the best perceptions on safety, highest job satisfaction levels, greatest compliance with safety procedures and recorded the lowest work-related accident/injury rates.

Some researchers and insurers are beginning to provide important information for the protection older workers. I’ll provide some resources in my next post

Workers' Compensation and Social Security Disability Insurance

I spent part of last week in Washington, DC at a seminar sponsored by the National Academy of Social Insurance and the U.S. Social Security Agency. The seminar focused on the fact that many of the clients served by both workers’ compensation (WC) and social security (SS).

My role in the conference was to provide a Canadian perspective and some insights into how Canadian public policy makers are dealing with the overlap between workers’ compensation and social security. More importantly, my hosts were interested in the innovations Canadians are bringing to the return-to-work priority both systems share for the clients who may be able to overcome the barriers to gainful re-employment in the labour force.

The research is pretty clear: early intervention improves return to work outcomes. Typically, access to services to assist in an early return to work (RTW) is more associated with workers’ compensation than Social Security Disability Insurance (SSDI) or Canada Pension Plan-Disability (CPP-D). Consequently, public policy that increases the scope of coverage for WC tends to increase access to programs and services of this population that would not otherwise have such access. Since many of those who are outside the scope of WC coverage (for example, some jurisdictions exclude, domestic workers, out-workers, farm labourers and self-employed from coverage) are workers who may have limited access to alternative employment, any expansion of WC coverage that includes these populations has the potential to help some of the most vulnerable workers return to work.

In my presentation, I noted that some jurisdictions have mandatory reinstatement provisions in their WC legislation. These provisions require an employer to take an injured worker back to employment. Some jurisdictions go further and require the employer to accommodate the worker to the point of “undue hardship”—a significantly higher test than mere ‘reasonable accommodation’. The big stick of legislation is not unique to some Canadian jurisdictions. Many Australian jurisdictions, for example, require employers to return injured workers to employment.

Since WorkSafeBC’s legislation contains no direct mandatory reinstatement provision, other approaches are emphasized. For example, WorkSafeBC offers a rebate of premiums to employers who qualify for a Certificate of Recognition. After substantiating through an audit that a firm has a prevention program in place that exceeds the regulatory minimum and has an injury management/Return to Work program in place, the firm may qualify for a 15% rebate. This can provide a substantial carrot to get and keep the attention focused on primary prevention and disability management that may help all workers—not just those who may suffer a work-related injury.

In the question and answer session, I was asked how WorkSafeBC is financed and how this compares with the typical US workers’ compensation insurer. I noted that WorkSafeBC is the exclusive insurer of work-related injury, the sole adjudicative authority, policy maker, workplace health and safety regulator and inspectorate for the province (like OSHA in the US). WorkSafeBC is funded by premiums that average about $1.56 per $100 of assessable payroll and that premium covers all WorkSafeBC’s functions (in the U.S., the quoted base or book rate may not reflect assessments or levies that finance research, oversight, appeals, and state-OSHA costs).

In follow-up questions, I was asked what I meant by assessable payroll. In many places, workers’ compensation rates apply to total payroll as opposed to the limit WorkSafeBC and most other Canadian WC boards place on payroll per person (currently $68,500). If we stated WorkSafeBC’s premium in terms of total payroll, we estimate the rate would come in at about $1.33 per $100 of payroll.

It was clear from the interest expressed in questions both during and following the session that many of the researchers in the audience were intrigued with the apparent low cost, relatively high benefits and strong return-to-work outcomes achieved in British Columbia for our workers and employers. If you are interested in seeing the presentations from this event, you will find them posted on the past events section of the NASI.org site...look for the November 18, 2009 seminar listing.

What does Workers’ Compensation owe Francois Bareme?

Every workers’ compensation system has some way of deciding what payment a worker should receive for permanent disability. Some systems are based on impairment or non-economic loss while others are based on disability with its implied economic loss calculated in some manner or other. Still others are based on a combination of the two concepts. Commonly in workers’ compensation, schedules of disability exist that relate impairment or disability to some standard. In Canada, we might refer to these as Disability Schedules. In several European sources, I noted that these schedules were called “Baremas” . I wondered about the origin of the word and was fascinated by what I found.

In medieval times, Germanic law related the loss of an arm or an eye to the ‘wergeld’ or ‘manngeld’, the compensation that was to be paid to the family for the killing of a free man. Even pirates had schedules in the articles that governed their enlistment. In Under the Black Flag: Exploits of the most notorious pirates, Don Carlos Seitz lists the articles from a 1723 voyage under Captin John Phillips; one article reads:

If any Man shall lose a Joint in time of Engagement, shall have 400 Pieces of
Eight; if a Limb, 800.

Enter the French mathematician, Francois Bareme [or Barreme] (1638?-1703). He created and published many mathematical tables for ease of use and consistency in commerce. The French word for a ready-reckoner, barême or barrême, is a reference to him. Bareme took the sums that were commonly used for the loss of body parts and restated them as a percentage of the compensation that would be granted for compensation for the death of a free man. Subsequently, such listings of body parts and percentages in many personal injury compensation schemes became known as Baremas. Today, the most complex Barema would be the AMA Guides. In Spain, the Baremo, as it is known, is a mechanism that allows users to consistently evaluate bodily injury and assess compensation for victims of motor vehicle incidents (for permanent disability systems, it uses a point system to calculate a rating from 0 to 100 that determines the compensation).

The scale and method of calculating compensation varies with the barema used and the jurisdiction. I recently wanted to know how various systems might rate the loss of an eye. Since some jurisdictions are not limited to just workers’ compensation, these may not be strictly comparable but I thought the variation was interesting. In WorkSafeBC’s Permanent Disability Evaluation Schedule, and industrially blind eye is evaluated as a 16% disability, enuculeation at 18%. In Belgium, total loss of vision in one eye is rated at 30% disability. The English Barema uses 40% while the French use 25% and in Iceland, the loss of vision in one eye is rated at 20%. There is even a wide variation in Scandinavia with the loss of vision of one eye rated at 20% in Denmark and Norway and 14% in Sweden while the actual loss of one eye is rated at 20% disability in Denmark but 25% and 17% in Norway and Sweden respectively.

Of course, the final result for the injured worker will be based on more than a percentage of disability. A low percentage of a high wage rate may provide a greater benefit than in a system where the maximum wage rate is pegged at a low level.

There is no one right percentage of disability to apply in this example. What is right for one jurisdiction is not necessarily right for another. The impact of the loss of an eye in one society (and its related economy) may be quite different than in another. That said, the equity is critical. Bareme’s intent in creating tables was to standardize and eliminate error—a goal that still applies today.

Workers' Compensation and a Uniform or Flat Assessment Rate?

I received a call last week about funding workers’ compensation systems. The caller asked why we don’t just charge one rate for all industries. For those of us in North America or Australia, this notion may seem odd since our systems all have different rates for different industries based on some sort of classification system. On the other hand, those covered by Canada Pension Plan-Disability or Social Security Disability Insurance in the US are familiar with the idea of a single contribution rate paid for an insurance. For workers without workers’ compensation coverage, CPP-D or SSDI may be the only insurance they have for work-related injury that precludes them from earning. Is there any good reason for having assessment rates that varies by industry? Are there any advantages to having a single rate system?

First, let’s talk about the rating systems we have. In BC, the average WorkSafeBC assessment rate (premium) is $1.56 per $100 of assessable payroll. Industries with higher costs pay more: Heavy construction, steep slope roofing, steel frame erection are at the high end, around $12 while financial institutions, computer software design and production pay between $0.08 and $0.13 per $100. Having a rate structure has implications. There are costs for creating and monitoring the classification system, assigning firms to various classification units and managing the inevitable conflicts that can occur as a business changes or argues that it should be classified in a (usually lower) classification.

A single rate system, on the other hand, requires none of these costs. Canada Pension Plan contributions are calculated as a simple tax on payroll (currently the employer and the worker each pay 4.95% of earnings for CPP). That’s it. Simple. But is it fair? In one sense, it is equal treatment for all and for non-work related causes of severe and prolonged disability, it likely is fair. Each of us bears a risk for serious disease that could debilitate us from work so it makes sense that all should share equally in the cost.

Doing the same for a workers’ compensation scheme has been proposed. Sir Owen Woodhouse proposed a flat rate for employers for their part of the New Zealand Accident Compensation scheme back in 1967. In defense of Woodhouse, his concept extended well beyond work-related injuries and in the context of a no-fault universal scheme of social insurance, the uniform rate idea is attractive.

I am unaware of any system in Canada, the US or Australia that have implemented a flat rate system. In Canada, the issue of a uniform assessment rate was considered by Sir William Meredith who writes:

It is the purpose of my draft bill to empower the Board in determining the roportions of the contributions to be made to the accident fund by employers to have regard to the hazard of each industry, and to fix the proportions of the assessments to be borne by the employer accordingly, and not to require that the proportions for each class or sub-class should be uniform…

So, in practice, workers’ compensation systems use classification systems that result in different rates being assessed for different industries according to ‘hazard’ which includes the human and financial costs associated with the wage structure, frequency and severity of injuries that occur within an industry. A uniform rate, it may be argued, would be tantamount to a subsidy. In the BC example noted above, a uniform assessment of $1.56 would be very attractive to steep slope roofers and would be a significant cost burden to financial institutions whose assessments would be used to offset the costs in sectors where injuries were more frequent and/or costly.

Similar arguments apply within sectors and are often used as a justification of experience rating or rate modification…but that is a discussion for another day.

Seasonal Agricultural Workers and Workers' Compensation

Last week I attended a symposium on health and safety issues for farm workers with a focus on those entering under the Canada as Seasonal Agricultural Workers Program (SAWP) from Mexico. I have been tracking the workers’ compensation issues raised by the entry of British Columbia into this program about five years ago.

What we know about this group of workers is that they are vulnerable on several levels. Language, culture, limits on the ability to meet with others in the community, long hours, fear of removal, limited knowledge of rights, isolation due to location are but a few of a long list of factors that make this population among the most vulnerable of workers. While these workers have the same rights under workers’ compensation laws and the Occupational Safety and Health Regulation, fully exercising those rights may be hindered by the these factors.

What we heard from the researchers confirmed what we already know: many temporary foreign workers are reluctant to report injuries and violations of the Regulation. Addressing the factors that contribute to this situation isn’t easy but is important.

Letting these workers know about their rights isn’t simply a matter of sending out a booklet or posting a page on the internet (although these actions help to some degree). Unlike other worker populations, workers under SAWP, other programs or even working without legal authority will, by definition, tend to be ‘new’ workers (new to Canada, new to the jobsite, new to tasks they will be performing). As we know from other research, newness itself increases risk (see IWH brief on this topic). Finding ways to better address the needs of this vulnerable group will be a growing challenge as the number of workers in this category increases.

In other forums, I have heard about innovative practices and approaches to serving agricultural workers, particularly temporary foreign workers from Mexico. In Washington state, Spanish radio vignettes have been designed and broadcast with plot lines and dialogue that mirror health, safety and compensation rights. In Ontario, all SAWP are covered by the provincial medical plan (OHIP) without the typical waiting period. In BC, WorkSafeBC and FARSHA have developed materials, delivered training and increased services designed to reach these workers on jobsites throughout the province.

One additional point came out of the symposium that is worth noting. The general category of ‘farm worker’ includes several vulnerable worker types. Canadian citizens and permanent residents may be subject to the same language and cultural barriers as workers under the SAWP groups (Mexico and the Caribbean); Refugee claimants with authority to work will have additional barriers as will other workers who may have no legal status at all in Canada. For the sake of all these vulnerable workers, new approaches may be necessary to educate these workers about the workplace risks they face, how to protect themselves and how to exercise their rights, protections and compensation.

What will drive the Future of Workers' Compensation?

Last week I was at the AWCBC Learning Symposium. The theme of the event was “Time Capsule” and I was asked to speak about the future of workers’ compensation.
My talk outlined three categories of forces that are driving change in workers’ compensation:

• Factors that are substantially beyond our direct control like economic cycle, demographic shifts, and broad societal trends.
  
• Public policy decisions that we do not necessarily control but which we may influence. This category includes the areas of who is covered, what is covered and the degree to which workers’ compensation and prevention are aligned and integrated.
  
• Decision we make and direction we take that are substantially within our control.
  

The details of these forces and the analysis behind them are beyond the scope of this blog but there are some clear themes that emerge that may be summarized by the following points:

1. Economic cycles, demographic shifts and societal changes will continue to impact workers’ compensation systems—outside our direct control but with predictable consequences. We need to take that step and have ready analysis of the effects of past recessions and expansions on investments, employment, injury volumes, injury rates, duration of disability, etc.
   
2. The scope of coverage will trend toward universal coverage and greater prevention responsibilities—something we may anticipate and be involved in. In jurisdictions with less than 80% of the employed labour force covered by workers’ compensation laws, the trend will be toward greater inclusion within scope and the evidence of work-relatedness will increase in what is covered. Here workers’ compensation systems can play a vital role in identifying where coverage should be extended for the mutual advantage of workers, employers and the broader society.
   
3. Occupational Diseases will drive our legislative, regulatory, policy and practice directions particularly in the area of
   • Stress, Psychological Injuries
   • Fatigue, human factors
   • New materials and processes
   • Old materials, new applications
   • New workplace relationships, participants
   • New zoonotic disease, new vectors
   

Based on this third point, Expansion of what and who is covered is likely.

I also extended my analysis to capture a other changes workers’ compensation systems could anticipate. The first was Harmonization. Workers’ Compensation and Prevention coverage, policies, and practices will trend toward greater similarity. Next was Integration, by which I mean workers’ compensation systems will trend toward an expanded mandate and the responsibility for prevention. I added an obvious prediction around Automation. Our work will be increasingly technology enabled… and dependent…even the parts of our work that require high levels of personal interaction. This is both a blessing and a curse since this dependence becomes one of our greatest vulnerabilities.

In some ways, my final prediction is an extension of the others. Cooperation will become a key driver in workers’ compensation. Strategic alliances, direct partnerships, shared resources such as systems and call centers will grow among workers’ compensation agencies and between individual agencies and their stakeholder partners.

In the future, the future that we must enable, we will see what Malcolm Sparrow calls the "Character of Harms" as a driver of what we do internally, externally and most importantly across traditional boundaries.

I can only add my biggest fear: that 20 years from now, workers’ compensation and prevention personnel will look back on what we are doing now and ask: What were you thinking? What did you know—or should have known—and why didn’t you act?

Workers' compensaiton state funds: Are they comparable to private insurers?

Workers' compensation insurance is ubiquitous in developed nations but how that insurance is delivered varies greatly. In most of the world, workers' compensation is part of social insurance structures. In Canada, the United States, and Australia workers' compensation is generally legislated by individual states or provinces. In Canada, every province and territory has a workers' compensation act as does the federal government. The same holds true in the U.S. and Australia in that each state and the federal government has legislation governing workers' compensation. Options for administration delivery of workers' compensation, covery a wide spectrum from [mostly] private workers' compensation insurance markets [with varying degrees of state oversight and regulation] to [mostly] state delivery models.

In Canada, there is only one model: provincial workers' compensation boards or commissions each the primary insurer in their respective jurisdictions. Some people refer to this model as the "exclusive state fund" model or "monopolistic state fund" model. The latter is less accurate in that many jurisdictions allow for private disability insurance over and above the workers' compensation coverage and to serve populations outside the scope of coverage offered by the state.

In the U.S. there are two main types of state funds (each with two main subtypes): Exclusive state funds (with or without a provision for self insurance), Competitive state funds (which compete with private insurers across a broad market or who serve a more limited market of specific sectors and often acting as the insurer of last resort). In the U.S. there are about 25 state funds, four of which would be considered exclusive state funds and closest to the Canadian boards and commissions.

Are state funds comparable in terms of efficiency with their private insurance counterparts? This question is frequently raised, usually with the supposition that exclusive state funds will somehow be inefficient and therefore have higher costs. Defenders of state funds note that some state funds were create precisely because of private insurance market failures. They note that several states created competitive state funds to create a more vibrant market and to ensure all those who need (or were required by the state to carry) workers' compensation insurance would have a place to go. In order for state funds to compete, like any other competitor in a market place, they must face similar costs and obstacles as their competitors. If they were inefficient, by definition, they would be less competitive and lose market share. For exclusive state funds, the economies of scale and scope, absence of costs associated with gaining or retaining market share, and the presence of almost perfect information on risks and costs in the market are often cited as offsets any inefficiencies inherent in exclusivity.

One of the premier consulting firms in the industry, Conning, recently completed a study on state funds in the U.S. A summary of their findings is available at this link. The summary notes:

Workers' compensation state funds currently write a quarter of insured workers'
compensation net written premiums. Although sometimes thought of as a "market of
last resort," despite their higher loss ratios, state funds' financial results are on par with the industry as a whole....As we show in this study, the primary mission of state funds is support of their local economies. This includes not only promoting fair access to insurance, but also the maintenance of a safe and productive workforce. Their ability to provide effective loss prevention and control services, and link the outcomes directly to insured costs, has helped state funds succeed in their mission.

This finding adds to the weight of evidence in favour of the competitiveness of workers' compensation state funds. And the advantages of the state fund model in meeting other public policy objectives --particularly in regards to workplace safety/prevention [see my earlier post]--continues to make the creation and maintenance of such funds a viable alternative to a purely private market for workers' compensation.

Each model has its advantages and disadvantages; clearly each jurisdiction has something to learn from the full range of models out there.

Information Exchange: Learning and Sharing in Workers' Comp

It has been an interesting couple of weeks for me. We had an expert in workers’ compensation from Michigan visit our offices, a telephone meeting with vocational rehabilitation experts in South Australia, an internal request for a contact in Sweden, and a data request for a project involving workers’ compensation in Victoria Australia, New Zealand and British Columbia. Then we had a visiting delegation from Russia. Last week I was on a panel with German representatives from the International Social Security Agency (ISSA) speaking to an audience of Canadians, Germans, Australians, Canadians, Americans and a representative from Taiwan.

No one jurisdiction has a monopoly on good ideas. When looking for alternative policies or programs, seeing how other agencies have attacked similar issues can both inform your decision-making and act as an early warning system for problems that might be encountered.

The act of collecting data and policy alternatives from others, however, imposes certain obligations on the requester. First, a basic understanding of the context of each country’s workers’ compensation environment is essential. Who is covered, what is covered, how does the OH&S role / prevention mandate integrate with the workers’ compensation mandate, how are disputes handled—all are questions that need to be asked and the answers understood before the data can be properly assessed and interpreted.

The other obligation is reciprocity. If I ask you about your system, your results or how you approach a particular policy, it stands to reason that you may want to ask similar questions about my system, results or policy. Often, answering such questions will take time and resources when you can least afford them. It is important to realize that the same will be true when the tables are reversed.

I am constantly blown away by the cooperation and generosity of others in helping me understand their systems. Wherever possible, I try and reciprocate. Rarely do I find that my requests for information are ignored or dealt with in a perfunctory way.

My point in this blog is simply this: we live in an information age where data is plentiful but meaningless without context. That context can only be gained by asking questions, learning from others and sharing insights and knowledge. And it’s a two way street.

So, to all of you who end up answering my requests for information, thank you!

Workers' Compensation Funded Status and Funding Policy

Last time I wrote about why funding status is important. The recent economic crisis has had an impact on the funding status of many workers’ compensation systems. Since most use fair value accounting, many saw the value of assets at the end of 2008 and hence their funding levels decline dramatically.

Funding status is typically defined as assets (including reserves) over liabilities with 100 representing a ‘fully funded’ position. Using published Annual Reports from individual workers’ compensation funds in Canada, the funding levels for 2008 looked like this:

• [corrected Jan 18, 2010]
• WorkSafeBC 115.5%
• WorkSafeNB 87.7%
• WHSCC Nfld 77.3%
• WSIB Ontario 53.5%
• WCB PEI 89.2%
• WCHSB Yukon 105.2%
• WCB Sask 101.8%
• WCB Alberta 111.7%
• WCB NS 59.9%
• WCB MB 106.6%
• CSST 69.9%
  

Funding status using this measure is not the same as the ‘funding policy’. Alberta, for example, has a funding policy where “the Accident Fund is considered fully funded when it is within the Funded Ratio target range of 114% to 128%”. Saskatchewan and BC have alternative funding policy measures that are more complicated. Current funding status of both systems, if expressed using the standard calculation discussed above, would be greater the 100%.

To get around the differences, the AWCBC publishes key statistical measures for all Canadian boards using a standard calculation (total assets divided by total liabilities times 100) to generate a ‘Percentage Funded’ standardized statistical measure. These are compiled annually and reported on their website. Because of timing of release of information, however, the results are usually published about eleven months after the calendar/fiscal year end. As of this writing, the results for 2007 are the most recent ones available at that site.

The point here is that there is no one ‘right’ funding policy or strategy. When comparing systems, you need to look beyond the published measure a system may post. The standard calculation helps put the systems on an equalized basis but the funded percentage may not tell the whole story

Workers' Compensation and Unfunded Liabilities

A relatively new workers’ compensation officer asked me to explain ‘unfunded liability’ and why this would be a concern to a workers’ compensation system. The officer’s interest arose from a reading of the Ontario WSIB Annual Report for 2008 which stated:

Due mainly to the investment loss, the unfunded liability has increased to$11,469 million at the end of 2008. This is $3,375 million higher than at the end of 2007, when it was $8,094 million. The WSIB’s funding ratio has decreased by 12.9 percentage points to 53.5 per cent on December 31, 2008, from 66.4 per cent at December 31, 2007.

Funding workers’ compensation systems requires a longer view than most insurance systems. Injuries in one year may not be fully resolved within that year. In fact, many cases will require medical treatment, rehabilitation, and medical aid expenditure for decades. Permanent disability cases may also require funding for many years. Add in the cost to administer the claim and expenditures over time and it is plain that the true total cost of a claim will not be known for many years. For the workers’ compensation insurer, these future costs are ‘liabilities’.

Since payments against a claim will be made over time, workers’compensation insurers can estimate the amount of money they need today to make those payments into the future. Amounts that will be paid in the future are ‘discounted’ so they can be stated in current dollars. Using actuarial principles, past experience, and some assumptions about investment returns the insurer can place a ‘present value’ on the cost of the claim at or near the time the injury occurred. This present value is also known as the incurred cost of a claim. As long as the insurer has collected enough in premiums to cover the incurred costs of all claims, receives the investment returns expected and experiences costs over the lifetimes of the claims as expected, the insurer will have just enough money to cover all the costs associated with all the claims that arose in a given year. The idea is simple: premiums collected from current employers in a year should be sufficient to cover the cost of the work-related injuries incurred in that year.

Of course, things do not always go as planned. The costs of medical treatment may increase at a rate greater than expected. Investment returns may be less than expected. By comparing the current present value of all claims to the current value of all assets that may be used to pay those claims, an insurer can determine its funded status. If the value of its assets equals the present value of its liabilities, the system is ‘fully funded’. If there are more liabilities than assets, the system is under-funded and is said to have an ‘unfunded liability’. If the valuation of current assets is made when the market for those assets is depressed, the size of any unfunded liability will be larger than on a day when the market is elevated.

So,what if there is a large and persistent unfunded liability? Not necessarily. The situation may improve with higher investment returns, actions to achieve lower patterns of expenditure such as improved return to work outcomes and better health outcomes with lower disability. If these don't work, at some point the unfunded liability must be funded. Assuming benefits are held constant and patterns of disability do not change, the only other source available to cover the unfunded liability of past claims will be premiums or assessments paid by current employers. In effect, using premiums or assessments to offset an unfunded liability is an inter-generational transfer of the cost of work-related injuries from employers in the past to current employers.

There are other measures of financial health of a workers’ compensation system but the funded status is one of the most common in Canada. The AWCBC includes funded status in its report of key statistical measures. The 2007 results for all Canadian boards are the most recent funding ratios available without going to individual annual reports.

A new lecture series at SOEH

September in North America tends to be associated with the end of summer vacations, a return to school, and the resumption of routines. For me, I am back from a summer break that included several conferences and speaking engagements and am heading back to university for an evening class (on ergonomics) and attendance at a weekly midday seminar series that many of you may find of interest. For a student of workers' compensation and OH&S, this last item is of real interest.

For the past few years, the School of Environmental Health (SOEH- the new, shorter name for the School of Occupational and Environmental Hygiene) at the University of British Columbia has offered a free Friday Seminar Series. Anyone can drop in on campus or connect via the internet for a weekly hour-long seminar on topics related to occupational and environmental health.

Not only are the seminars interesting in themselves, attendance either in person or online can earn Certification Maintenance credits for a number of professional associations (ABIH, CRBOH, BCRSP have pre-approved the series and other associations may grant credits upon application). As an added bonus, past sessions are archived and freely available on line for anyone who wants to review them.

As with any online system, there can be glitches but I have participated in these seminars from Australia, New Zealand, Hawaii, the eastern and southern US and from about half the provinces in Canada with minimal difficulty. The “live classroom support” is supported in part through funding provided by WorkSafeBC, a longtime partner of SOEH.

Check out the series at the following link. http://www.soeh.ubc.ca/Seminars/default.stm

Workers' Compensation and the US Healthcare Debate

I’ve been traveling in the US for the past few weeks. I had a speaking engagement in Washington DC and then attended the AASCIF conference in Portland, Maine. Wherever I went, the main topic of conversation was the US Healthcare reform and inevitably, I would be asked about how the system works in Canada and how Workers’ Compensation fits in with the Canadian model.

First, the concern over healthcare costs in the US workers’ compensation community is high. At the AASCIF conference, several speakers noted that healthcare now represents 60% of the benefit spending of workers’ compensation systems in the US. In Canada, indemnity benefits still far exceed health care costs (Healthcare accounts for about 26% of benefit expenditures [excluding claim administration] at WorkSafeBC).

In the US, I am told there is some suspicion that some workers without healthcare coverage feign a work-related injury to obtain healthcare and indemnity benefits for non-work injuries. With about a third of Americans lacking medical insurance, the impetus for such supposition is obvious. Yet, in Canada where there is universal healthcare coverage, the same reasoning would support a conclusion that such misapplication of workers’ compensation benefits to cover healthcare is unlikely.

For work-related injuries, workers’ compensation insurers in Canada are first payers just as they are in the US. While Canadian workers’ compensation insurers benefit from the lower costs that prevail in a single payer system, the healthcare costs of work-related injuries must still be reflected in the cost of workers’ compensation insurance to the employer.

It is important to note that any work-related injury or disease healthcare costs not paid by workers’ compensation will usually be paid by the provincial medical insurance plan. Since healthcare is actually funded by more than the nominal healthcare premiums paid by individuals and families, work-related injuries that are not covered by workers’ compensation are a burden on taxpayers and a subsidy to business or work that gave rise to the injury or disease.

As the debate over healthcare reform continues, it is possible that workers’ compensation will be included in at least some of the proposals. The status quo with workers’ compensation as the first payer for work-related injury and disease is conceptually the easiest and most direct method for workers protection. Failure to capture the full healthcare cost of work-related injuries and disease would remove an important incentive to invest in worker safety and health.

Workers' Compensation: Recovery and Return to Work (RTW)

In my view, Prevention and Rehabilitation/Return-to-Work are the two main pillars of workers’ compensation; the ‘compensation’ part is just what we do after prevention fails and before the worker returns to work.

I view the early, safe and durable return-to-work (RTW) of an injured worker as the hallmark of a successful health outcome for an injured worker. Many workers and employers are under the mistaken impression that RTW should only occur after the worker is ‘back to normal’ or ‘100% recovered’.

To help correct this impression, I often use this recovery curve diagram to depict how the workers’ compensation system works. It shows the level of health functioning (H0)the worker has prior to the work-related injury and depicts the sudden, drastic drop in health function caused by the injury. During the initial post-injury period, the worker is Totally Temporarily Disabled(TTD). As the worker recovers, there will be a point where the worker is no longer TTD but is Temporarily Partially Disabled, (TPD). During this phase of the recovery curve, many workers actually return to work. As any practitioner of Disability Management will tell you, returning to work can be an effective therapy. For many workers, the demands of their regular jobs may be met at a level of health functioning lower than (H0). This makes sense since few jobs require a worker to be at the peak of their functional health capacity to adequately and safely perform their duties.

Recovery continues until the worker reaches a medical ‘plateau’ or what some call ‘maximal medical improvement’. Most compensation systems require that temporary disability payments cease once the worker’s condition plateaus but in practice about 90% of workers return to work prior to that point.

If the worker has permanently lost some functioning, (an amputation of the hand, for example) the worker will never return to the pre-injury level (H0). A new maximal level of health functioning will be established (H1). Conceptually, the difference between H0 and H1 is a permanent functional impairment. Depending on the workers’ compensation system, this impairment may result in a permanent partial impairment based on function or translated into a Permanent Partial Disability (PPD). As long as the level of health functioning is above the requirements for the worker’s particular job, the worker can RTW; if there are parts of the job that demand more than the current level, job modifications or other strategies (like providing lifting devices, restricted duties, or shorter shifts) may allow the worker to RTW during TTD).
RTW to the accident employer is usually the best alternative. Some systems (Ontario and Victoria Australia are two examples) require employers to take injured workers back into employment while others (British Columbia and Washington State for example) do not have such ‘mandatory reinstatement’ provisions in their legislation.

Promoting early, safe, and durable return-to-work is a priority for most workers’ compensation systems. WorkSafeVictoria recently posted videos for workers, employers and agents that continue that jurisdiction’s long-standing tradition of encouraging RTW. These videos are worth a view.

Workers’ compensation and Social Insurance Disabilty

In much of the world, workers’ compensation is part of larger social insurance schemes. In Canada amd the US, social security systems are separate from workers’ compensation but there can be overlaps in coverage and varying treatments on the benefits payable.

On the contribution side, workers and employers are generally required to contribute to a social security system. In Canada, that system is called the Canada Pension Plan (CPP) in most of Canada and the Quebec Pension Plan (QPP) in that province. In the US, the Social Security system fulfils this role. Each of these plans has its own provisions for cases involving disability. In the case of the Canada Pension Plan, an individual with a condition that is ‘Severe and Prolonged’ may be eligible for a benefit from CPP Disability.

A worker who develops a debilitating condition not related to work may collect from the appropriate social insurance plan. Where the condition or injury that gave rise to the disability is work related, the worker may or may not have eligibility under both the social insurance disability plan and the appropriate workers’ compensation legislation.
Where workers’ compensation and social insurance are both potential payers, there are three main public policy alternatives:

• Fully stackable- the worker may collect from both plans
• Fully integrated- the worker collects full entitlement from one plan (the ‘first payer’) and an amount equivalent to the full entitlement from the other plan less anything payable from first payer
• Partially integrated- The worker’s entitlement to one plan is reduced or ‘offset’ by some portion of the entitlement of the other insurance.

Currently, workers in British Columbia experience a partially integrated system whereby WorkSafeBC deducts 50% of the applicable CPP disability benefits from a worker’s permanent disability award where the injury occurred on or after June 30, 2002. Of course, this only applies if the worker is eligible for CPP Disability. Workers with a job-related injury in Quebec, however, go to the CSST (Quebec’s workers’ compensation system) and cannot apply to the Quebec Pension Plan.

In the US, the offset usually works the other way around. According to the National Academy of Social Insurance’s fact sheet of the topic:

An offset for concurrent receipt of workers’ compensation was contained in the original 1956 Social Security disability program, eliminated in 1958, and reinstituted in 1965. The 1965 Social Security Amendments required that Disability Insurance benefits be reduced when the worker is also eligible for periodic or lump-sum workers’ compensation payments, so that the combined amount of workers’ compensation and Social Security disability benefits does not exceed 80 percent of the worker’s average current earnings. The combined payments after the reduction, however, will never be less than the amount of total Social Security disability benefits before the reduction …Under the 1965 law, the Social Security disability benefit will not be reduced if the state workers’ compensation law or plan provided for a reverse offset (a reduction of the workers’ compensation benefit of a worker also receiving Disability Insurance).

Each of the public policy alternatives has its pros and cons. There is no one right way to provide workers compensation and social security benefits. It is important, however, to be mindful of the interplay between the two systems when considering either a change in public policy or comparing benefits across jurisdictions.

What's Climate Change got to do with Workers’ Compensation?

As Al Gore’s “An Inconvenient Truth” aptly displayed, climate change has consequences for all of us. Most of us are workers so it follows that climate change will have consequences for workers’ compensation and prevention organizations.

Last week, the U.S. government released a new global warming report entitled "Global Climate Change Impacts in the United States.” It lists some of the likely consequences of climate change. As you read each of these, it is easy to imagine occupations that will feel the brunt of the change in a way that will influence safety and health. I’ve selected a few consequences and added a few but you may have others:

Heavy downpours - Occupational risks associated with flooding, washed out roadways, impaired visibility for drivers and others on highways, undermining of rail and bridge supports, silt debris buildups, contamination of water runoff.

Heat Extremes- Occupational risks associated with deformation of rail tracks, overheating of vehicles, delays and dangers in road building and repair, softening of asphalt, changes in lift properties of aircraft

Drought areas expand- increased wildfires, decreased visibility (blowing smoke, dust).

More intense hurricanes- storm surge danger, increased risks to safety and rescue workers, disruption in supply systems, dangers due to weakened manmade and natural structures (trees).

Health impacts- increase in occupational heat stress, exposure to waterborne diseases, poor air quality leading to exacerbation of underlying asthma, diseases transmitted by contact with insects and rodents new to the area.

The impacts on human health will also impact workers who are caregivers. These workers not only face the direct effects of the climate change but the indirect effects of caring for others impacted by heat, cold, flood, ozone/air quality, waterborne and zoonotic diseases.

The report provides detailed analysis for each geographic region. For the Northwest, the area just south of British Columbia, the report suggests increases in winter precipitation and decreases in summer precipitation, changes in snowpack, stream flows, sea level, and forests. The report cites the BC pine beetle experience:

The mountain pine beetle outbreak in British Columbia has destroyed 33 million acres of trees so far, about 40 percent of the marketable pine trees in the province. By 2018, it is projected that the infestation will have run its course and over 78 percent of the mature pines will have been killed; this will affect more than one-third of the total area of British Columbia’s forest.

The consequences for industries and workers dependent on the forests are obvious.

Most of the trends listed are already well underway. Creating greater awareness of the risks that come along with the consequences of climate change—and what to do to mitigate them—needs to be a priority.

Wellness and Workers' Comp

A recent column in the Insurance Journal, entitled "Workers' Compensation Industry Worried About Obesity Claims", raised the issue of one chronic condition and triggered thoughts about others. Many workers with underlying conditions are in the workforce. They carry on their tasks and duties competently. Many observers do not even know they have an underlying health condition. Diabetes, hypertension, asthma and many other conditions do not interfere with their other work duties but can have an impact on recovery if the workers is injured.



Obesity is one condition in this category. Many of us are over our ideal weights and we are told this may impact our health but what about our safety and recovery after injury. A recent Duke University study found:

...obese workers filed twice the number of workers' compensation
claims, had seven times higher medical costs from those claims and lost 13 times more days of work from work injury or work illness than did non-obese workers. ...and obese workers in high-risk jobs incurred the highest costs, both economically and medically.

The full study (Ostbye, Dement, and Krause "Obesity and Workers' Compensation: Results From the Duke Health and Safety Surveillance System" Arch Intern Med. 2007;167(8):766-773) is available on line.

The Duke study raises an important general question for workers' compensation and prevention organizations: What role, if any, should workers' comp and OH&S organizations play in promoting workplace wellness?

Findings like those from the Duke study suggest workers' compensation and prevention organizations have a vested interest in the overall wellness of workers. By inference, assisting workers to address non-work-related health issues like obesity, lack of exercise, and work-life banance could reduce the number of workplace injuries serious enough to result in claims as well as the duration and associated medical costs of those claims.

The link between wellness and controlling workers' compensation costs is what's behind WorkSafe Victoria, Australia's $218 million investment in WorkHealth. The program includes workplace-based 'health checks', access to advice, and education programs to help workers reduce their risk of chronic disease.

The idea behind this strategy appears sound. It is an investment in societal change with local benefits to the workers and employers in the long run. It is thinking outside the traditional workers' comp box and will be fascinating to watch.

Metals, arsenic, dusts and fibres: Workers’ Compensation and Prevention concerns

I’ve written about the International Agency for Research on Cancer (IARC) in an earlier blog post. IARC recently released a reassessment of the previously classified Group 1 carcinogens to identify additional tumour sites. The assessment will be published in apart C of Volume 100 of the IARC Monographs.

A news story in The Lancet (Vol 10 May 2009) carried a table that lists Group 1 agents, Tumour sites for which there is sufficient evidence in humans and other sites with limited evidence in humans as well as the established mechanic events that lead to cancers in humans. Among the Group 1 agents are metals and their compounds (Arsenic, Beryllium, Cadmium, Nickel), Asbestos, Erionite, Silica Dust, Leather dust and Wood dust.

While the more or less usual associations between Asbestos and Lung Cancers, Silica and Lung Cancers, and Wood dust and nasal cavity are displayed in the table, the column on “other sites with limited evidence bears note. The connections between Prostate cancers and both Arsenic and Cadmium, for example, may be significant.

What occupations are likely to be exposed to these substances? In some cases, the industry and occupation will be obvious. It may be, however, that too little is known about where these exposures are occurring. It raises questions about the responsibility workers’ compensation and prevention agencies have in alerting industries and occupations of the potential risk to workers. Medical surveillance mechanisms may be needed and perhaps active information initiatives to ensure both prevention and compensation priorities are met.

For more information, I recommend a close review of the links noted above.

What about Pain and Workers' Compensation? (Part 2)

I know when I injured my foot (acute pain) and when I suffered from recurrent migraines (chronic pain), work was very often out of the question. Even with medications (and sometimes because of them), the mental resources taken up dealing with the pain meant I had little capacity for other activities including work, school and even family.


The reality of pain related to work injuries means that many workers for some time post injury are unable to do anything except deal with their injury. While many workers' compensation insurers will insist they do not compensate for pain, one look at their medical bills they pay will prove otherwise. At WorkSafeBC, I looked at the medications we paid for in 2006 and found seven of the top 20 claims were narcotic analgesics and accounted for 50% of the dispensed drugs paid for on accepted claims.

When pain becomes a chronic part of a permanent disability, workers' compensation legislation, policy and practice have taken varying approaches to 'objectify' pain so it can be compensated.

In British Columbia, the Rehabilitation Services and Claims Manual Volume II
section 39.02 describes two types of 'Chronic Pain':

• Specific chronic pain - pain with clear medical causation or reason, such as pain that is associated with a permanent partial or total physical or psychological disability.
  
• Non-specific chronic pain - pain that exists without clear medical causation or reason. Non-specific pain is pain that continues following the recovery of a work injury.
  

Where a WorkSafeBC determines that a worker is entitled to compensation for chronic pain, an amount equal to 2.5% of total disability may be granted.

California takes a different approach. In case of permanent disability, the worker may be awarded from 0 to 3% of whole person impairment for pain.


In the American Medical Association's Guides to Evaluation of Permanent Impairment, 6th Edition, [AMA Guides, 6th] 'Pain-related Impairment' uses a 15 question questionnaire that generates a point rating based on ten points per question. Those with 70 or fewer points are considered to to have no or mild pain and receive nothing. Those with 71 to 100 points are considered to have moderate pain and receive 1%; Severe (101 to 130 points) get 2% and Extreme 131 to 150) receive 3%.


Deciding on some percentage for impairment due to pain is one thing but how that translates into the real world of work is another. There appears to be no one best way to assess let alone obviate the effects of pain. Many workers' compensation authorities will authorize pain management programs for the most severe cases.


Advances in science, medicine and statistics are likely to improve our measurement of pain and provide more insights into its causes. New techniques and medications will be developed to manage pain. Each advance has the potential to help injured workers but there are likely no simple pathways to a perfect system for assessing and compensating for pain.

What about Pain and Workers’ compensation? (Part 1)

Pain. We all experience it. It can be mild or debilitating. Sometimes it can be controlled by medication but often, even with medication (or simply because of the medication) activities of daily living are just not possible.

With pain being such a common experience that accompanies injury and many illnesses, I thought I would look at how workers’ compensation systems deal with pain. The first place I looked was at the legislation and I was surprised that most workers’ compensation acts contain no direct reference to pain. Some make reference to “pain and suffering” but only in terms of what workers’ compensation systems will do with third party awards by courts for “pain and suffering”.

Nova Scotia’s Workers’ Compensation Act does make reference to Chornic Pain:

10A In this Act, "chronic pain" means pain
(a) continuing beyond the normal recovery time for the type of personal injury that precipitated, triggered or otherwise predated the pain; or
(b) disproportionate to the type of personal injury that precipitated, triggered or otherwise predated the pain,

and includes chronic pain syndrome, fibromyalgia, myofascial pain syndrome, and all other like or related conditions, but does not include pain supported by significant, objective, physical findings at the site of the injury which indicate that the injury has not healed.

So one Act tells us what Chronic Pain is and what Chronic Pain includes but not what pain is. Without a definition of pain in legislation, I looked to the medical and health profession. The International Classification of Disease (ICD9) has a code series for pain(338) and chronic pain (338.2) as well as chronic pain due to trauma (338.21) and ‘chronic pain syndrome (338.4). Again, that classified it but does not really define pain per se. As far as definitions go, I found many but one for pain and one for Chronic Pain that seem representative:

• Pain: An unpleasant sensory and emotional experience associate with actual or potential tissue damage or described in terms of such damage (International Association for the Study of Pain - IASP)
  
• Chronic Pain: pain that persists six months after an injury and beyond the usual recovery time of a comparable injury; this pain may continue in the presence or absence of demonstrable pathology. (Brock Smith, Report of the Chair of the Chronic Pain Panels [to the Workplace Safety and Insurance Board - WSIB], August 2000)
  

Most of us can identify with this definition of pain and most are likely to accept the later even without direct experience.

So, pain is real, even if it is not defined in legislation. And it is all too real to those suffering from work-related injury, illness and disease. How do workers’ compensation systems deal with pain? That’s a topic for the next post in this series.

Novel H1N1 Influenza A [swine flu] and Workers' Comp

The novel Influenza A/H1N1, also called “swine flu”, is in the news and may be a serious threat to human health but what, if anything, does this have to do with workers’ compensation authorities? Any statutory agency concerned with compensation and prevention has at least three aspects of its role to consider.

Like every other employer, it takes people to carry out the tasks and duties of the agency and workers’ compensation organizations have an over-arching responsibility for workplace health and safety. The beginning stages of an outbreak may not be the ideal time to be thinking about that role but it is critical that employers set expectations and communicate, in a timely and clear way, information and expectations to their employees. Questions will arise like “what do I do if I come in contact with someone who likely has the flu?” and “What should I do if a fellow staff member is showing flu-like symptoms?” are bound to arise. If you haven’t thought about these issues in advance, getting a coherent program in place is not only prudent, it is generally your responsibility as an employer. A good example of employee/contractor occupational health communication on this topic is the NASA notice on its website. In their policies discussed in a May 1 teleconference , the following actions were discussed
– “Send home” policies
– Liberal use of telecommuting [for 5 days]
– Self identification following travel to swine flu affected areas

Many workers’ compensation agencies have either a formal or informal prevention mandate. WorkSafeBC, for example, is the regulator, promoter and inspectorate for occupational health and safety in the province. Resources like the web page on Influenza which outlines the employer responsibility and the slideshow/video which provides practical guidance on proper hand washing are great examples of what needs to be done. The specific announcement for healthcare workers and employers regarding respiratory protection is a particularly useful and direct document for those who are among the most likely to be exposed to this biological agent.

Then there are the workers’ compensation claims that may arise. During the early stages of an outbreak, the nexus between the work and the illness may be easily and conclusively shown. Contact with the indentified index case or one of the chain of isolated cases or clusters where that contact arose in the course of and out of the duties related to the job are likely enough for a workers’ compensation claim to be accepted. Quarantine of otherwise healthy individuals may be advisable and even enforced by a health authority but it misses the essential requirements for a workers’ compensation claim.

Once any disease becomes community based and that direct connection between work and the development of disease is lost, the likelihood of a claim for compensation diminishes. The common cold is rarely an acceptable work-related illness because it is, well, common—in the community. The current novel Influenza A/H1N1 is not yet at that stage but there is a chance it could become community based where the risk of contracting the disease is about the same for everyone.

The latest Influenza A/H1N1 may not be the next serious pandemic virus but it already serves as a wakeup call for employers and workers’ compensation authorities to prepare and test plans for a local cluster in the office to a community outbreak or a full blown pandemic.

Thoughts on the IAIABC ACC in Baltimore

This post is a little behind schedule. I was in Baltimore last week at the IAIABC All Committee Conference and wanted to say something profound about one of the topics covered at that event. We discussed so many things: The impact of recession and recovery on workers’ compensation systems, self-insurance and bankruptcy implications for workers’ compensation regulators, plans for the 2009 convention, and the co-hosting of the 2010 International Forum on Disability Management in LA.

Each of these items could have easily filled a blog post (and might at some point in the future). As I started to write I realized there was a fundamental question being answered by mere fact that such a conference was happening: What is value of attending such multi-jurisdictional events?

In the grips of a recession, the obvious costs were the on the minds of many and prevented some from attending. To be sure, airfare and hotels and conference registrations cost money. Then there are the opportunity costs of having senior policy makers and administrators devoting their time and energies to activities outside their jurisdiction. Over and above these costs are the usual hassles of travel and inconvenience of being separated from family for a week. Despite these costs, powers that be weighed the costs and decided the benefits were of greater importance. Those in attendance at this conference were there because of intentional choices based on the premise: the benefits far outweigh the costs.

So what are the benefits? Conferences like this one provide valuable insight and information of immense value: early warnings, new ideas, feedback on what works and what doesn’t, intelligence on emerging trends and context for understanding developments elsewhere in workers’ compensation and prevention. And beyond the official agenda, the informal discussion and contacts create new networks to support information sharing and understanding.
These benefits have value. Those that attended learned first-hand about the challenges, successes and failures of those dealing with real life workers’ comp issues—lessons that may justify actions worth millions of dollars to a system or prevent the human costs associated with work-related injury, illness and disease. The organizations that chose to send delegates, participate in committee work and contribute to the dialogue obviously get that. And those who get it but are prevented from attending for other reasons contribute in other ways (participation via conference call and discussion forum, for example) and receive at least some of the benefits that way.

Increasingly, policy makers are being asked how their jurisdiction stacks up against others or what the implications of a new law or regulation introduced in another area might be in their own jurisdiction. The price of the ‘free’ information needed to answer those questions is participation in and support of organizations like IAIABC, AASCIF and AWCBC and the committees that are the driving force behind their work—a cost that is well worth the investment.

Why Timeliness of Payment matters in Workers' Compensation

Timeliness of payment matters. Injured workers and their families have financial commitments for mortgages, tuition, groceries, car payments, and the myriad of expenses we all carry. According to one source, 55 per cent of Canadian workers always or usually live paycheque to paycheque just to make ends meet. Since most families live with small cash reserves, breaks in income continuity due to a work-related injury or illness only add pressure at a time when the injured worker should be focused on recovery.

Recently, the New York Times ran a series of stories on workers’ compensation in the US. One sidebar showed the percentage of claims receiving first payment within 21 days of injury 2004-5. At the ‘best performance’ end of the scale were jurisdictions like Massachusetts, Wisconsin and Texas where about half the claims received first payment within 21 days of injury.

The closest similar statistic for Canada is provided by the Association of Workers’ Compensation Boards of Canada (AWCBC). The timeliness standard is expressed as the ‘Average Calendar Days from Injury to First Payment issued’. While not a perfect parallel to the data quoted in the NY Times, Alberta, BC, and Saskatchewan report averages between 20 and 23 days for 2007.

WorkSafeBC has a target of 17 days average time from injury to first payment issuance. Its current performance is a little higher than that. Put another way, more than half WorkSafeBC’s cases entitled to wage loss benefits are getting their first payments within 17 days of injury.

Several jurisdictions have taken steps to make certain there are no breaks in earnings for injured workers. In BC, many employers (accounting for more than 20% of first payments) continue wage or salary to the injured worker and WorkSafeBC reimburses the employer to the benefit level the worker would be entitled to. In some Australian jurisdictions, employers are responsible for the first week (or two) of benefit before the insurance kicks in.

The point is simply this: timeliness matters. Workers’ compensation involves making tough decisions and tough decisions take time to investigate and consider; knowing that most workers can’t wait more than one pay cycle underscores the need for a ‘sense of urgency’ in the design and administration of workers’ compensation systems.

Why the Oregon Workers’ Compensation Premium Rate Ranking matters

The 2008 version of the Oregon Workers' Compensation Premium Ranking Study is now posted. It is worth a read even if you don’t do business in Oregon. (A summary is also available).

Without repeating the study, the basic goal is to inform stakeholders as to how Oregon’s workers’ compensation premium rates would compare with those of other jurisdictions. Oregon takes great care to make the comparison realistic and valid for Oregon. Oregon’s researchers select fifty of the most important classifications (representing about 68% of the payroll) and then seek rates from other jurisdictions for the same or similar rating classifications. Finally, Oregon researchers develop a representative index premium based on this data for each state and determine where Oregon ranks on the resulting list.

The Oregon study matters to more than just Oregonians. For any cluster of states with a similar mix to each other, the relative ranking of one state may help identify efficiencies or problems. A ranking among the lower-cost jurisdictions not only means a lower cost for employers, it may also reflect a lower cost of injuries to workers. Since severity and frequency are major cost drivers, changes in ranking (particularly in states with similar benefit structures and practices) may reflect changes (or differences) in the prevention environment as well.

It is important to note the following about the Oregon premium rate study:

• The selection of classifications is based on what is important in Oregon.
  Classifications are based (primarily) on NCCI definitions.


• The weightings used to develop the rates are based on Oregon payrolls (although the major classes are usually within the scope of coverage in all jurisdictions-- clerical, sales, education, medical offices, restaurants, retail stores, hospital, auto repair, trucking)


• Expense loading factors, or loss cost multipliers are accounted for.
  

The study result is an ordered ranking of index premiums. The median index premium rate is $2.26 per $100. Oregon, ranks 39th on the list of 51 included in the study with an index premium rate is $1.98 per $100 (83% of the median rate).

This is important information particularly for those in Oregon but remember it is Oregon’s rate ranking using Oregon payroll weights. If a jurisdiction has a similar industry and payroll mix to Oregon, the study may provide general guidance on the competitiveness of rates; if a jurisdiction has a very different mix, the comparability is likely of less value. Washington state’s ranking on the same list is 38th at $1.98 but this is based on Oregon’s weights, not Washington’s. Although one might assume some reasonable comparability between Washington and Oregon, it is conceivable that Washington could actually have a lower ranking (less costly premium) if Washington’s weights were used in the comparison.

The study does not include jurisdictions outside the US. British Columbia publishes rates [see WorkSafeBC.com] and it is possible, therefore, to generate a similar ranking based on Oregon weights. Such an exercise would show BC with rates near the lowest in the Oregon ranking. Since rates are based on a percentage of payroll, changing exchange rates are not a factor in the comparison. Put another way, if Oregon had WorkSafeBC’s premium rates for the industries and payroll weights used in this study, the result would be an index premium at the bottom of the current list.

Why would BC rank so much lower than Oregon on this scale? It may have something to do with the nature of the classification system. BC’s assessment rates are more industry based than NCCI classifications (which are more occupationally based). Lower health care costs in Canada may be a factor. Lower administrative costs, effective case management and vocational rehabilitation/ Return to Work initiatives, effective prevention initiatives, economies of scope and scale, and [perhaps] lower costs for disputes may all play a role in lower premium costs (assuming similar benefits and practices).

The bottom line is that BC, Washington and Oregon would have relatively low index rates if directly compared using the Oregon methodology, a result that benefits the economies of all three jurisdictions.

What's worrying workers' comp insurers: Part II

As part of my international scan of top issues worrying occupational safety/health and workers' compensation authorities, I've been listing the top issues clusters. In this post, I am continuing that list to round off the top dozen areas of concern.

• 6. Hearing, Noise and Ototoxins: This cluster is about the impact of work-related factors on hearing. Several sources noted increases in hearing-related claims and in the emerging science of substances and other agents in the workplace that may contribute to hearing loss. This area has implications for both prevention and compensation policy.




• 7. Pandemic, New Pests and Diseases, Zonotic vectors, Infections and Parasites: Changes in climate and travel as well as antibiotic-resistance are captured in this cluster. There is growing concern over the impact these factors could have in the workplace. Prevention strategies are stressed but contingency planning is advised. Several insurers also raised the issue of how they and their prevention counterparts would operate in conditions of an outbreak (would staff even come to work) so business continuity planning is also advised.




• 8. Respiratory and dermatological issues: Asthma is a growing concern and endotoxins [causing fever, acute toxic effects, allergies, organic dust toxic syndrome (ODTS), chronic bronchitis, and asthma-like syndromes, or lead to lethal effects such as septic shock, organ failure and death] are noted and forecasted to increase by several authorities particularly in Europe. With the growing population of asthmatics among youth, the potential for exacerbation of pre-existing conditions are increasingly likely as young workers enter and become the future workforce. Work environments that were not a problem for most workers a decade ago may pose a serious health threat a decade hence.




• 9. Foreign workers: Legal or not, short or long term, skilled or not--the numbers of foreign workers are increasing in Europe, Canada, the US and Australia. Language and culture are only two of the many barriers that may inhibit prevention and may account for a lower than expected access to workers' compensation. Reaching this audience, providing education and access will vary by vulnerability of the population but will almost always take greater effort than for similar citizen and legal permanent resident populations.
  


• 10. Musculo-skeletal injuries (MSI): This cluster was raised by several sources. Linked to the obesity issue, demographics, and changing work systems (involving greater repetitive actions) these injuries are and will continue to lead the list of work-related injuries. Ergonomic regulation may be part of the answer but new approaches to MSI are needed.




• 11. Terrorism: Chemical, biological, radiological, nuclear threats may be directed at more than workers but workers are likely to be injured in any terrorist attack and its aftermath. Workers were injured and killed while in the course of their employment in several terrorist attacks. Whether domestic or foreign perpetrated, workers and their families will suffer. What worries insurers is just how wide and deep the impact might be.




• 12. Cancer (emerging work-related causes and under-reporting of): As you saw in my previous posts, cancer is likely work-related to an extent far greater than recognized. That IARC study I cited [in my post from January], shift work was implicated as a probable human carcinogen. A few weeks ago, Denmark accepted 40 claims for breast cancer from flight attendants and nurses with long histories of shifts that interfered with circadian rhythms. [See this BBC story for a good lay overview].

There were other issues: human performance enhancement, synthetic biology, work relationships, fatigue/human factors to name a few. This list of issues may signal areas workers' compensation and prevention authorities ought to be looking at more closely--not simply because of the dollar costs implications--but because prevention can actually make a difference in protecting workers. It is the right thing to do.

What's worrying workers' comp insurers? Part I

Recently, I was asked to present a 'global scan' on what is worrying workers' compensation insurers and occupational health regulators. Working in a small department in a medium sized statutory agency, I rely on a lot of published reports from a lot of sources. The following is a Top Issue Clusters list based on this reading:

1. Psycho-social factors/Mental illness/ Stress/ Bullying/ Returning vets: The mind is often injured in the course of employment or in recovery but the harm is no less 'real' than a broken arm. This cluster highlights the growing awareness of pscyo-social issues as workplace factors. European and Australian sources were more likely to highlight these but North American jurisdictions are increasingly recognizing the role workplace stresses play in direct injury and indirect harm. Veterans returning from Afgahnistan, for example, may be suffering from unrecognized post traumatic stress that, when combined with yet another stresser in the worplace, may develop a servere reaction. Whether recognized by workers' compensation authorities or not, insurers and regulators are cleardly worried about this issue.


2. Nanotechnology/Nanoparticles: Seven of the reports I surveyed for this presentation cited this cluster in their top issues. More and more nano-scale products and agents are being used in the workplace and surprisingly little is known about the potential health impacts. Several sources drew parallels to asbestos and how it was used for many years even after it was known there were going to be health impacts. Some ask, "Are nanoparticles the new asbestos"?


3. Obesity: How is this work-related? Several references pointed out that the workforce is now populated with many individuals who are clinically obese and research shows that these individuals are more likely to be injured and, once injured, are likely to have longer recoveries, more complications and greater degrees of residual disability. Some jurisdictions are going so far as to add programs and initiatives more focussed on wellness as part of thier prevention strategies.


4. Chemicals/Substance in processing/solvents/Asbestos: As with the special case of nanoparticles, concern over the use of other substances in production or processes (other than the actual production of such substances) was raised by at least five workers' compensation insurance-oriented reports. Who is tracking the agents and their health effects? And even if we are not sure of the effects, who is tracing the exposures now? We know with asbestos that we may see health effects fify years from now. Will employers with records of exposure be around in a half century?


5. Aging/Demographics: The one presentation I have been asked to give more often than any other is on this topic and it was clearly 'top of mind' for many workers' compensation and prevention agencies. Even in the recession, the impact of structural demographic forces in the labour force are relentless. Young workers will enter the workforce, older ones will retire and some will die while in the labour force. These are facts and while some can modulate certain life events (when to start a family or retire) the demographic clock will continue to be a major factor in prevention strategy and workers' compensation cost control.

There are more issues worrying workers' compensation insurers and prevention agencies... and those are a topic for anther post.

Workers' Compensation Fraud

In every recession, workers' comp agencies increase diligence on compliance issues.

• Firms are required to register for and obtain workers' compensation, declare the type of work they do, report accurately their payroll, and submit premiums accordingly.
• Workers are expected to participate in their own recovery, be honest about the extent of their injuries and disability, declare earnings from employment and return to suitable and available work when it is safe to do so either as part of their rehabilitation or recovery.

Most workers and employers play by the rules but some don't. The evidence of alleged worker violations of these rules are sometimes much heralded in videocasts; employer non-compliance and outright fraud doesn't lend itself to video journalism but it is often larger than the collective value of alleged worker fraud and abuse. Provider fraud, supplier fraud and even internal fraud within insurers are not unheard of. What's important is to acknowledge the potential for such frauds and put in place the controls necessary to mitigate against that potential. The process must be dynamic. New fraud's are perpetrated and new means of detection and control are always required.

How much fraud is out there? In the words of one Australian parliamentary 2003 report:

The Committee could not quantify the significance or otherwise of fraud within any sector without sound data, which is presently not available. While fraud may not be common, when it does happen in workers’ compensation schemes it does have costs and it is very expensive. [Australian] House of Representatives Standing Committee on Employment and Workplace Relations, "Back on the Job: Report into aspects of Australian workers’ compensation schemes", 2003 page xx

In the big scheme of things, the actual amount of fraud is probably a very low percentage of premium or benefit costs. One workers' compensation chair is quoted as calling fraud 'insignificant' [Peter Criscione, "Instances of workplace fraud in Ontario insignificant: WSIB chair", Brampton Guardian, Thursday March 5 2009] . Having said that, any amount of fraud means that those playing by the rules are disadvantaged by those intentionally breaking them. That disadvantage means closer scruitiny, audits, delays while facts are checked, and even surveillence and investigation.

For there to be fraud, there must be intent. Intentionally under-reporting payroll, suppressing claims or misrepresenting classification for the purpose of paying the appropriate premium are obvious and well documented fraud cases from the employer side. Worker fraud cases usually involve collecting full workers' compensation benefits for temporary total disability while still working. Supplier and provider fraud cases can involve billing for services not rendered.

Workers' compensation fraud is not a victimless crime. The victims of such frauds are not really the workers' compensation insurers. Instead, the victims are those who play by the rules--the workers, employers and providers/suppliers of services. Workers receive more scrutiny of their claims, employers are subject to more audits and must bear the costs not being covered by those fraudulently under-reporting payroll. Everyone pays for the oversight and increased administration and controls. Programs like WorkSafeBC's Report Fraud line and Washington State's Labor and Industries fraud initiative are just two programs that seek to level the playing field and protect the system for those who need it and play by the rules

Workers' Compensation fraud is a sad but real aspect of every workers' compensation system. Compared to the billions collected and paid, the amount lost to fraud may be low but in tight economic times, even small amounts have significant costs --not just to the bottom line.