WCDefenseCA

As your humble blogger’s endless web of spies, informants, and double agents (collectively known as the internet), were bringing him reports of all the workers’ compensation doings going on in the world, an interesting gem was stumbled-upon.  It appears that a new study has been published regarding the shifting of expenses in workers’ compensation.

The research apparently included statistics from across the country, and looked at the costs absorbed by insurers and self-insured employers, as well as the overall costs shifted to third parties such as Medicare, Medicaid, and non-workers’ compensation insurance.  Lexis provides a nice summary of the study here.

Picture your typical worker contemplating a settlement proposal.  The worker knows that he or she is going to need some future medical treatment, but if a third-party is going to end up paying for it, perhaps those funds could be split between the defense and the applicant?

Your humble blogger has personally observed an in pro per applicant being advised that, if he had personal health insurance through his employer or through his spouse’s employer, perhaps he could bargain away the right to future medical treatment for cash-on-hand.  And in other cases, a very unhappy lien representative lawyer for a certain non-workers’ compensation insurance company sat as the other parties practically high-fived each other over reaching an agreement by shoveling medical expenses onto the third party.

It also seems to be common practice to shoot for a settlement figure two cents under $25,000 to avoid CMS intervention in a case, and allow the Federal Government to pick up the tab of future medical treatment.

Ethical issues aside, this isn’t a particular badge of honor as to the efficiency and sustainability of the workers’ compensation system.  One cannot operate a widget factory by stealing widgets from the more sustainable factories in the neighborhood.  Sooner or later, they’ll start locking their doors.

The study apparently found that almost $27 billion of $51.7 billion estimated in workers’ compensation costs for 2007 were absorbed by third parties.

We might all pat ourselves on the back, join hands with applicants’ attorneys and lien claimants, and laugh at those poor suckers picking up the slack for comp.  But, before we tap the kegs and light the cigars, your humble blogger, ever the pessimist, would just like to point out a small fact:  workers’ compensation is too expensive in its current state.  (Ok, NOW we can tap the kegs!)

Even with poor bystanders getting stuck with the bill, workers’ compensation is still too expensive and keeps losing money.  Reserves must consistently be replenished and the industry continues to suffer across the board.  What will happen when these third parties wise up and stop carrying half the Kool-Aid bottles that the comp world is drinking?

While the ship is still afloat, let’s drain some of the water in the decks instead of tying ourselves to more sea-worthy craft.