An InsuranceJournal article reports on a new Workers’ Compensation Research Institute study indicating that states with set fee schedules tend to have lower hospital outpatient costs than states that have not adopted a fee schedule.  

The study included one interesting comparison between the Sunshine State and the Golden State. California and Florida both enacted fee schedules at the same time, but Florida’s fee schedule was based on a percentage of the charges, rather than California’s “ambulatory payment classification”. As a result, California controlled the growth of medical costs with more success than its Eastern counterpart.

Lien claimants will regularly bill more for services than they should.  They know the rules and the maximum reimbursement, but they do this anyway hoping to pressure a settlement.  Don’t let them get away with it!

Here is a list of links to various California Code of Regulations sections discussing the fee schedule as it applies to various categories (durable equipment, inpatient hospital services, etc.)  Make sure that the lien claimants are not overcharging for their so-called “services.”  If when they do, either through bill review or just applying the appropriate fee schedule, set the beginning point of negotiations at the adjusted amount for their charges.

And, apparently, go California!

According to a press release by the Department of Industrial Relations, the first day of 2012 will see the launch of a new “task force,” named in such a way as to forever doom it to confusion with an illiterate group of left-handed supremacists – the Labor Enforcement Task Force (LETF).

LETF will include the DIR, Employment Development Department, Contractor’s State License Board and several others.  The stated goal is to cut down on the “underground economy” of unreported labor and the attached uninsured employees.

No doubt this is the result of earlier noises coming from Sacramento, promising to combat take the $7 billion of the underground economy and bring it once more into the light of the Golden State.  The effectiveness of this new unit will be revealed in the months and years to come, no doubt.

The press release fails to explain where California found funding for this new unit, but your cynical blogger’s guess places the source squarely in the bottomless well of California’s employers.

Honest employers in California always plot that dangerous course between Scylla and Charybdis.  Although LETF may cut down on the Scylla of a competitor’s lower overhead (reached through overhead cuts such as the illegal treatment of workers’ compensation insurance and tax obligations), the danger of Charybdis, an over-regulating and over-litigating workers’ compensation system, remains firmly present on every employer’s horizon.

To my dear Letfists – Bonne Chance!

Adjusters and defense attorneys should, and often enough do, work together to resist the frivolous or inflated claims that clog up and discredit California’s workers’ compensation system.  It’s a relationship that requires trust, hard work, and cooperation from both sides.  When the claim is made that any defense attorney is inflating or “padding” his or her bill, the entire defense community suffers.

In accordance with your humble blogger’s reluctance to name names, I will decline to point out the defense attorney making the accusation or the defense firm being accused – but the allegation has been made by a former attorney-employee of a defense firm that said firm required 3000 hours to be billed annually per attorney.  Furthermore, this accuser alleges that he was required to over-bill his clients to reach that goal, and in failing to do so was released from service.  The American Bar Association has an article on this story here.

The employer-defense firm has denied the allegations and, understandably, is reluctant to reveal the intricacies of its billing and employment practices.

Your wise and understanding blogger has limits to his knowledge – only the plaintiff-employee and defendant-employer know the truth, if any, behind these allegations.  But as a member of the defense community, I feel at least some comment is necessary.

A rabbi in Davis, CA, once told me that when he came home from school one day, his father slapped him and said that people in the community had seen him smoking.  He protested, saying that it wasn’t true, at which point his father slapped him again saying “it’s bad enough people are saying it, you want it to be true as well?”

My experience as a defense attorney has shown me the meaning of loyalty to the client.  The defense community, at least the attorneys I have interacted with, are dedicated to eradicating the appearance of impropriety, let alone the impropriety itself.  I am sure that there are countless hours there that have gone unbilled precisely because of a fear of appearing to “pad” the bill.

If these allegations are true, and I, again, most certainly hope they are not, then the practices of that firm are not the norm.

Picture yourself in any store, or at the service counter of any business.  Whatever products you’re looking to buy or services you’re looking to retain are going to come with a price tag.  That price will tell you a lot about what happened before that loaf of bread made it to your grocer shelf or before that auto-mechanic could schedule your car maintenance.  Somewhere along the line, production costs, taxes, transportation fees and everyone’s paycheck all came into play.

So how much of your carton of milk goes to waste and abuse?  Would each package of dozen eggs be 30 cents cheaper if not for the burning of public dollars?

The reason I bring this up is because the California Workers’ Compensation Rating Bureau just hired a new president, William J. Mudge.  The WCIRB website does not disclose Mr. Mudge’s salary, but the Workers’ Comp Executive reports that the last president of WCIRB, Robert Mike, was paid $490,784 during his last full year as president.

For reference, the President of the United States is paid $400,000 per year and the Governor of California makes $173,987.  So where does the WCIRB get its funds, such that it can so generously compensate its president?

Well, California law requires all insurance companies to be members of a rating organization, and California’s rating organization is the WCIRB.  (See Labor Code section 11750 et seq.)  So, even though the WCIRB describes itself as a “private, nonprofit association comprised of all companies licensed to transact workers’ compensation insurance in California” it is essentially a quasi-government entity.  The WCIRB is then funded by the membership fees and assessments of its “members.”

Imagine if California passed a law saying that (1) everyone must visit an absolutely excellent and well written blog once a day; and (2) California’s excellent and well written blog is wcdefenseca.  Granted this would be an excellent and prudent law, but none the less, there is something a little fishy about it.  Here, you have every insurance company in the state forced into “membership” with this organization, which then takes its “non-profit” income and gives its president almost $500,000 in a yearly salary.  Really? Non-profit?

But, if it’s the insurance companies that are being robbed, who cares?  Right?  I mean, it’s not like tax dollars are being wasted – this is the WCIRB and California, not the city council of Bell!  Well, we should care – all of us.  When we think back to how that loaf of bread made it to the grocery shelf, some of the money we’re paying for it went to cover the increased workers’ compensation insurance costs of the grocer and the bread-baker.  And their increased workers’ compensation insurance premiums went to their respective insurance companies, who in turn had to pay more membership fees into the WCIRB so that the president of this non-profit organization could make more than the President of the United States.

On the other hand, maybe the gas station where you’re filling up didn’t get its costs inflated by this sort of behavior because they self-insured…