Sunday, September 24, 2006

Cooking The Books, Part IV: Partnerships and Underreporting -- What It Means In California and Nationwide

Note: The entire four-part series can be read here.

In the last three installments of "Cooking the Books," we've described how KFM cooked the books by using "the carrot" to discourage workers from reporting injuries or illnesses, "the stick" to punish workers who do report injuries, how KFM's doctors and industrial hygienists collude with the company to ensure that injuries and illnesses don't get put on the Cal/OSHA Log, and how KFM benefits from the coverup.

Today, Part IV concludes the series by discussing how Cal/OSHA can't decide whether KFM's actions are good or bad, and what implications these underreporting has nationally.

Cal/OSHA: A Schizophrenic Enforcer/Defender

KFM’s creative accounting with worker injuries has been enabled by Cal/OSHA’s schizophrenic jumping between worker protector and employer defender.

Normally, federal OSHA would have jurisdiction over the parts of the job that were done on floating platforms. Federal OSHA would not give up its jurisdiction on work done on barges in the bay until Cal/OSHA agreed to.a “compliance assistance partnership” with KFM. Rick Rice, undersecretary of Cal/OHSA’s parent agency, defended the partnership in his reply to the scathing Bureau of State Audit (SBA) report by saying that “federal OSHA encourages them [partnerships] and expects State Plan states to engage in them.”

As guest-blogger ERM wrote in a series on recordkeeping problems last May,
Federal OSHA has been promoting voluntary partnerships for years, in an effort to induce companies to make safety improvements. OSHA lacks the resources to enforce everywhere, the reasoning goes, so the more it can encourage companies to comply voluntarily, the better for everyone. Being kinder and gentler to business is also in line with the political program of the Republican administration.
The compliance assistance agreement with KFM allows Cal/OSHA complete access to the work site, with prior notice to KFM, in return for KFM’s agreement to correct identified hazards found during a visit.

But a written partnership agreement, with explicit roles and rights for workers and their unions, was never formalized with KFM, which balked at signing any of the seven versions of the partnership text prepared by Cal/OSHA. Eventually Cal/OSHA gave up on a written agreement and has been operating on a “handshake” basis with KFM, but without any direct role for workers or any additional resources for monitoring the giant construction site.

The problem with the agreement, as CAPS, the union representing Cal/OSHA inspectors, noted in February 2006, is that
The Bay Bridge is an enormous, 10-year project that could keep a full-time team of inspectors busy morning, noon and night. Instead, Cal/OSHA has only had the resources over the last three years to send out individual inspectors on pre-announced, rotating visits about once every other week. The eight inspectors involved, and their supervisors, all have major responsibilities in their home offices, and none were dedicated full time to the bridge.
Moreover, bridge workers interviewed by the Cal/OSHA enforcement inspector in 2006 said that advance notice of Cal/OSHA compliance assistance visits prompted a rapid clean-up of the areas to be visited by the compliance assistance personnel, who were then treated to a “dog-and-pony show” substantially different from the work site’s normal activities.

At the same time that Cal/OSHA was citing KFM for recordkeeping violations, the agency was making a considerable to defend KFM in the media and with state auditors and legislators.

For example, when the willful citations against KFM were issued on the morning of Thursday, June 1st, 2006, Cal/OSHA did not issue a press release until the next day, a Friday, when media coverage would be minimal. The Cal/OSHA press release itself never mentioned that the citations issued were classified “willful” and most of the one-page release praised KFM.

When the Oakland Tribune ran another set of articles in August 2006 providing specific details on how worker injuries were under-reported by KFM, Cal/OSHA officials again leapt to the consortium’s defense.

Dean Fryer, spokesman for Cal/OSHA’s parent agency, told the Tribune:
This type of project involves extremely hazardous work and is very prone to causing serious injuries. The low rate of fatalities and serious injuries, which cannot be hidden and no one has alleged to have been hidden,
Actually, hiding the actual injury rate was exactly what Cal/OSHA says happened at the Bay Bridge and precisely why it issued willful citations to KFM. These are not just “minor paperwork violations,” but citations for a deliberate, willful suppression of reporting of serious injuries, at least four of which required major surgeries.

At the same time, KFM has appealed all three sets of citations issued by Cal/OSHA in enforcement inspections generated by two injury accidents and one complaint, as well as the June 2006 Willful Log 300 citations. The consortium has hired an expensive, very aggressive management law firm to fight all citations issued by its “partner.”

Cooking the Books: A National Problem

The problem of deliberate employer under-recording has become so serious that even George Bush’s partnership-crazy Fed OSHA has issued Willful citations to major Fortune 500 companies:

  • In June 2004, Federal OSHA issued a Willful citation (later changed to “unclassified”) and $70,000 fine to Weyhaeuser’s Truss Joint facility in Buckhannon, WV, for failing to record at least 38 injuries and illnesses on its Log 300. The citations “paint a picture of an organization where under-reporting of injuries and illnesses appeared to be a routine practice that was tolerated, and even rewarded, by company vice presidents,” according to Occupational Hazards magazine.

  • In October 2004, Southern California Edison under-reported workplace injuries and illnesses for the previous seven years and had to return $35 million in safety-related bonuses to the California Public Utilities Commission. “Edison found evidence that supervisors contacted outside medical personnel to influence treatment, change medical records or downgrade the seriousness of an injury. Other times, Edison said, its managers encouraged employees to dodge safety reporting requirements by undergoing physical therapy or using vacation days during recover,” the Los Angeles Times reported.

  • Also in October 2004, Federal OSHA issued two willful citations and $140,000 in fines to General Motors Powertrain Corp. in Massena, NY, for failing to record 98 instances of work-related noise-induced hearing losses and other injuries and illnesses. Eight other citations with $20,000 in fines were issued.

  • In November 2005, Federal OSHA issued three willful citations and $165,000 in fines to Fraser Paper’s Madawaska, ME, paper mills for Log 300 violations between 2003 and 2005. Fed OSHA found 59 instances of injuries and illnesses that were not records, 77 instances where recordable entries were not made within 7 days, and two years (2003 and 2005) for which incomplete annual injury and illness log summaries were certified as being complete.
In April 2006, the Wall Street Journal reported on a Michigan State University study that indicated the current method the government uses to track on-the-job injuries and illnesses may miss up to two-thirds of the total number of cases. “Researchers estimated that 869,034 work-related injuries and illnesses occurred on average each year in Michigan from 1999 to 2001, compared with the BLS [Bureau of Labor Statistics] estimate of 281,567 per year. Dr. Rosenman estimates that 75% of the injuries and illnesses missed by BLS resulted from employer underreporting,” the Journal noted.

Accuracy in Log 300 reports is important because these, along with other workers comp information, are used by employers to identify hazardous operations needing attention on the job, and by government agencies to set priorities for their limited research and enforcement resources. Moreover, injured workers, whose injuries or illnesses are not acknowledged by their employers, often cannot obtain needed medical treatment, rehabilitation and compensation.

As the publisher of the Oakland Tribune noted in its September 3rd, 2006 editorial:
If the safety record constructed by KFM is built on doctored injury reports, a facade of safety is created. If other firms follow the same practice, it means that an unknown number of work-related injuries and illness go unreported. That inflates safety and downplays injuries and risks. It’s deceptive, giving state officials and the public a false picture of workplace safety, which in turn can lead to more hazardous conditions and injuries.
What’s Next for KFM and Cal/OSHA?

Although KFM lost its bid to build the second phase of the Bay Bridge’s eastern span, the consortium will be working on site for several more years. The “compliance assistance partnership” with Cal/OSHA is still in effect, as are KFM’s various safety incentive plans.

Cal/OSHA, for its part, will now have to divide its limited resources between defending its citations against KFM’s “scorched earth” attorneys, and attempting to maintain a sporadic presence of non-enforcement personnel at the bridge to assist its “partner.”

One of the key findings of the February 2006 BSA report was that Cal/OSHA clearly needs additional field inspectors and resources to meet its mission and legal mandate at the Bay Bridge and throughout California.

In July, the state legislature passed a very modest $1.5 million budget augmentation to hire an additional 15 Cal/OSHA inspectors. But in August, Governor Arnold Schwarzenegger eliminated the funds earmarked for hiring on the grounds that new inspectors are “not necessary” as “workplace injuries and fatalities in California are well below the national average.”

Related Articles

"Cooking the Books" Series

Cooking the Books, Part I: Underreporting Worker Injuries at the San Francisco Bay Bridge, September 19, 2006
Cooking the Books, Part II: The Stick and The Doctor, September 20, 2006
Cooking The Books, Part III: The Industrial Hygiene Consultants and How KFM Benefits, , September 21, 2006

OSHA Recordkeeping Series by ERM

Part I: Learning From Enron: Why Accurate OSHA Recordkeeping Matters, May 15, 2006
Part II: At AK Steel, as at Enron, the Numbers Don’t Add Up, May 23, 2006
Part III: OSHA Recordkeeping: Who Will Audit the Auditors?, May 27, 2006

Confined Space Bay Bridge and Related Stories