Recent articles in the Los Angeles Times and an excellent article by Rachel Brahinsky in the San Francisco Bay Guardian discuss California’s failing workers compensation system and the victims it’s leaving behind, particularly those suffering from repetitive strain injuries (RSIs) like carpal tunnel syndrome and back injuries.
As we’ve discussed many times before, the California Workers Compensation system was a mess: direct cash payments to workers were at or below the national average, but California employers paid the nation's highest rates for coverage due to the high number of claims that were filed and higher medical costs in California. In California and around the rest of the country, workers comp carriers started raising rates when they started losing investment money in the stock market troubles earlier this decade.
When Arnold was elected Governor, one of his first pledges was to "reform" the system. But instead of addressing some of the real causes of the problem (primarily mismanaged insurance companies, high health care costs – and workers suffering preventable injuries on the job), he bullied the California legislature into passing legislation addressing his interpretation of the problem. As Brahinsky describes,
The actor turned pol insisted the problem was litigation-happy attorneys and the injured workers themselves – a group he painted as cheats and scammers. Only by strictly limiting cash payouts to workers and keeping the attorneys at bay could he right this upside-down program – a system so shaky that more than 20 insurance carriers had gone belly-up in recent years.
But the real story behind workers' comp is still unfolding. Just days after the new law kicked in last April, life began to change dramatically for injured Californians. Once-routine medical visits were heavily scrutinized as potential crimes. Insurance companies started saying no to just about everything – according to doctors, workers, and attorneys I interviewed – almost as if they were testing the limits of the new law.
Several surgeries and court appearances later, Harlan has a stomach-grinding $40,000 debt on the credit cards she's used to support herself while the insurance company delays her health care.
Although Arnold declared the reform a success, the fact is that the system has almost completely broken down because no one really knows yet how it’s supposed to work, according to the Times:
Because of the uncertainty, insurers have been slow to slash rates on workers' comp policies, although a premium reduction recommended by a key ratings bureau last week gave hope that significant savings may not be far off — achieving a prime goal of Gov. Arnold Schwarzenegger when he shepherded the overhaul through the Legislature in April.As the society moves increasingly toward a service economy, the biggest slice of work related injuries is repetitive strain injuries. Schwarzenegger’s plan was to address those injuries – not by preventing them, but by making sure that compensation for its victims didn’t cost too much. And with other cutbacks in the social safety net at the state and federal level, RSI sufferers are facing a perfect storm of neglect. Brahinsky, who herself suffers from an RSI, describes how
Meanwhile, an estimated 100,000 workers' comp cases have been stalled as doctors rewrite medical evaluations to meet the new, more stringent standards mandated by the law. And sparring over what now constitutes appropriate medical treatment and who should pay for it has forced injured workers to wait a year or more for their cases to be reviewed by independent medical specialists.
Throughout the state, trial postponements rose 21% last year as lawyers balked at settling, and orders to take cases off the calendar — in effect setting them back to square one — rose by a similar percentage.
Meanwhile, with more workers' comp claims going to trial, it now takes 93 days to get a case into court in Santa Monica, 55% longer than a year ago and almost twice as long as in 2003.
He's allowing insurance companies to rely on a set of medical guidelines doctors say don't acknowledge pain as a factor when determining how injured a person is. RSI sufferers will still get some temporary treatment under the new law, but the new time limit imposed on benefits ignores the reality of chronic pain. In his zeal to cut costs, the governor is relying on guidelines that insist on objectively measurable physical changes, and pain is sometimes impossible to witness from the outside.And discounting pain isn’t the only significant change made in the law:
Repetitive strain injuries emerged as an epidemic in the mid-'90s, propelled by the tech boom. Since then they have taken a steady toll. In 2002 repetitive motion was the fourth-highest cause of injury on the job, costing at least $2.8 billion nationally in health care and lost work hours, according to Liberty Mutual, an insurance company. The top injury cause was overexertion, a category that includes a lot of RSIs as well, costing $13.2 billion.
Without much help from workers' compensation, the ranks of office employees working wounded is likely to swell – as is the number of them applying for state-funded disability payments, welfare, and Medicaid. So the insurance companies will save, but someone will have to take on the burden. Exacerbating the problem is a lack of federal recognition: under former president Bill Clinton, the federal Occupational Health and Safety Administration agreed to ergonomic standards to force employers to create safer work spaces, but President George W. Bush's OSHA repealed them.
At the same time, the social safety net is under attack, both by the governor – who wants to cut welfare grants and trim pensions – and by Bush. The moves to change personal bankruptcy laws and privatize Social Security are especially ominous for injured workers.
Although pain won't be fully acknowledged by workers' comp insurers, people will still be struggling. One RSI sufferer told me he goes through periods where he can't even sit and read because his neck aches. His whole life is arranged around the injury: groceries have to be carried in small bags, dishes often don't get done, and he can no longer drive a car for more than an hour. His work has slowed to a painful pace: his body lags behind his mind, leaving him depressed. Meanwhile, he's been refused disability benefits and has to continue working through agonizing pain. "I feel like I'm living in a cage," he said.
It limited compensation for lost wages, gutted the state's job-retraining program, gave insurance companies the right to strictly manage medical treatment, and – perhaps most significantly – slashed the amount of money an injured worker can get to pay for the medical costs that will come with a lifetime of disability. Rules being promoted by workers' comp chief Andrea Hoch have made these changes even more severe.
Lajes hurt herself more than a year ago, just before the reforms. She told me that in addition to a chest-wall injury from the meat-room tumble, she has carpal tunnel syndrome in her wrists that she thinks comes from her years as a checkout cashier. Now, Lajes said, she's in fairly constant pain. "Whenever I grip, push, or shove, my hand and elbow hurts," she said. Her insurance company won't pay for carpal tunnel surgery because of a dispute over what caused it. Her regular doctors will turn her away the moment she says the injury is work-related. So she may not ever have surgery that could help her heal.
Surrounding Lajes were rows of anxious people, some pawing through medical reports, others just waiting, with dead looks on their faces. The smell in the place was strong – many of these folks had been camped out here since 8:30 a.m., and it was now well past 2 in the afternoon.
So who’s benefiting from these changes? One guess:
So far the reforms have been kindest to insurance firms. Financial reports at the end of 2004 showed they were pulling in dramatically higher profits – just eight months after the law's passage.(AIG, Berkshire Hathaway and Warren Buffet are currently being investigated by NY Attorney General Elliot Spitzer for wide-ranging corruption)
AIG, the largest private carrier in the state, reported $11.05 billion in profits for 2004 – up 19 percent from 2003. The California Applicants Attorneys Association, which represents lawyers for injured workers, reports that this is in spite of a dramatic 1,300 percent increase in payout by AIG for hurricanes, earthquakes, and tsunamis. Another one of the big guys, the Zenith National Insurance Co., also saw income rising. The CAAA's review of Zenith's books shows workers' comp income shooting up 250 percent, from $29.3 million in 2003 to $104 million last year.
From this perspective, the "reforms" start to look more like a massive corporate-bailout scheme: keep rates unregulated and give the insurance companies the right to cut costs any way they can. Some smart investors may have seen the bonanza coming: billionaire Warren Buffett, one of Schwarzenegger's top financial policy advisers, opened a new line of workers' compensation insurance just a few months after the law was signed, through his company Berkshire Hathaway.
Meanwhile, the cost of insurance has dropped slightly for business owners – about an average of 16 percent – and prices may come down again later this month. But many businesses, particularly small companies or those with high-risk employees, are reporting little to no change, and some are even seeing rate hikes as insurance companies get creative with their billing plans.
The good news is that injured workers are fighting back. A group injured worker and their allies have formed a group called Voters Injured at Work which is planning a series of demonstrations against Schwarzenegger. The next demonstration will coincide with an April 19 legislative hearing on the impact of the comp reforms. California’s Workers Memorial Day on April 28 will also focus on workers comp reform. Labor and injured workers groups are organizing a demonstration at the state capitol.
"My doctor, who did two surgeries on me, told me I better close the case because the laws are going to change," he said, shakily supporting his heavy frame on two wobbling canes in the crowded waiting room.
"They're just throwing me a bone. I'm going to trial," he said. "I'm 61 years old and got five more years to retirement. Who's going to hire me without a driver's license and with crippled legs?"