Texas Governor Rick Perry likes to come up to my home state of Illinois to try and recruit employers to move to Texas, bragging how his state is friendlier to business (meaning less expensive to operate in). Now an article in Salon details one of those business friendly practices that is particularly insidious.
Texas is the only state in the U.S. that allows employers the option of "going bare" for Workers Compensation--that is, not buying insurance (or meeting obligations via other approved routes like self-insurance). It leaves the employer, technically at least, vulnerable to lawsuits from injured workers. But the Lone Star State employers who want to save money don't appear to have to worry too much about lawsuits from the crippled and maimed undocumented workers they leave without medical coverage.
They just say that their workers are "independent contractors" and thus responsible for making their own decision about whether or not to purchase WC insurance. And when those workers fall and break their backs, or lose a finger or hand, well, that's just pure capitalism in action, Texas style.
According to the article, the Texas legislature tried to correct these abuses--and got bushwacked, as they might say down there, and so the bill died on the vine.
Take a look at the full article here.http://www.salon.com/2013/06/14/how_do_they_sleep_at_night%E2%80%9D/
WorkComp Watch: News about Workers' Compensation Insurance, audits, classifications, coverage, and recovering overcharges.
Friday, June 14, 2013
Illinois Court Rules Gay Harassment Suit Barred by WC Exclusive Remedy and Human Rights Act
An Illinois appellate court has ruled that a gay man's suit against his employer for harassment over his sexual orientation is barred by the exclusive remedy provisions of the Workers Compensation Act and the provisions of the Human Rights Act.
Frederick Schroeder had filed suit against RGIS, Inc. alleging that a supervisor used derogatory terms about the man's sexual orientation in front of other workers. The suit also alleged that the company had him working extreme hours that left him emotionally and physically exhausted.
The court ruled that the worker could not sue for negligence because the Workers Comp Act and the Human Rights Act covered the situation.
Frederick Schroeder had filed suit against RGIS, Inc. alleging that a supervisor used derogatory terms about the man's sexual orientation in front of other workers. The suit also alleged that the company had him working extreme hours that left him emotionally and physically exhausted.
The court ruled that the worker could not sue for negligence because the Workers Comp Act and the Human Rights Act covered the situation.
New Fraud Fighting Tool in Florida
Florida has enacted a new statutory tool for reducing Workers Comp fraud. The new law, signed by the governor on June 7, creates a database system for tracking checks cashed at check cashing stores. The law requires reporting of data on all checks over $1,000.00.
These check cashing stores, it turns out, are believed to often be used in premium avoidance schemes by unscrupulous employers. More info can be found here.
Premium reduction or avoidance schemes by some employers put honest companies at a competitive disadvantage, and endanger workers who can be deprived of the protections and benefits that states have enacted via their Workers Compensation statutes.
These check cashing stores, it turns out, are believed to often be used in premium avoidance schemes by unscrupulous employers. More info can be found here.
Premium reduction or avoidance schemes by some employers put honest companies at a competitive disadvantage, and endanger workers who can be deprived of the protections and benefits that states have enacted via their Workers Compensation statutes.
Thursday, May 9, 2013
A Very Rewarding New Case
We just finished a case that I wanted to share, as it illustrates a number of aspects of our unique business. A while ago, we had a contractor just show up at our door unannounced. He had gotten a large bill for additional premium due to an audit, he had found us on the internet, and rather than call he decided to just stop by.
His policy had been for minimum premium when it had been issued, around $1,000.00. But the audit had now billed him for an additional $40,000.00 He made it clear to us that he could not pay this bill, and that unless we could somehow help he would be closing down his small business.
Fortunately, my son (and business partner) discovered that the audit premium was based upon a misunderstanding by the auditor about an independent contractor that had been used by our client. This delivery person had not been working for our client, but rather was working for the materials supply company that our client purchased materials from. But that materials company had insisted our client use this delivery person, and pay him separately. So when the auditor reviewed the books, he thought this delivery person had been someone who should be charged to our client's policy.
We were able to get documentation sufficient to clarify the true relationship, and that the materials dealer had its own policy--enough to get the insurer to reverse the $40,000 charge.
We didn't make a lot of money off this case, just a modest hourly fee, but the satisfaction derived from keeping a small business alive--that was immense.
His policy had been for minimum premium when it had been issued, around $1,000.00. But the audit had now billed him for an additional $40,000.00 He made it clear to us that he could not pay this bill, and that unless we could somehow help he would be closing down his small business.
Fortunately, my son (and business partner) discovered that the audit premium was based upon a misunderstanding by the auditor about an independent contractor that had been used by our client. This delivery person had not been working for our client, but rather was working for the materials supply company that our client purchased materials from. But that materials company had insisted our client use this delivery person, and pay him separately. So when the auditor reviewed the books, he thought this delivery person had been someone who should be charged to our client's policy.
We were able to get documentation sufficient to clarify the true relationship, and that the materials dealer had its own policy--enough to get the insurer to reverse the $40,000 charge.
We didn't make a lot of money off this case, just a modest hourly fee, but the satisfaction derived from keeping a small business alive--that was immense.
Friday, March 15, 2013
I May Be Psychic
I had no sooner made a post here about New York raiding the reserves of its Workers Compensation fund, and adding, as an afterthought that it was fortunate that Illinois does not have such a fund for politicians to raid, than I read that Illinois lawmakers are proposing exactly that, a competitive state fund for Workers Compensation.
H.B. 2919 has cleared the Illinois State House Committee on State Government Administration late Wednesday, it was reported. But I swear I hadn't seen the report when I made my earlier post.
While such a competitive fund could potentially offer employers a better alternative than the current Assigned Risk Plan administered by NCCI, there are sooooo many potential pitfalls with the idea that it is difficult to see a bright future for this proposal.
For one thing, the bill would have the Illinois Department of Insurance administer the fund. But the DOI has been suffering in recent years from a massive drain of experienced people--as the state encouraged long-term workers to retire.
And of course there is the bad example set in so many other states of politicians raiding the reserves of state WC funds to cover other budget shortfalls.
Stay tuned for more exciting action in Springfield as the interested parties line up.
H.B. 2919 has cleared the Illinois State House Committee on State Government Administration late Wednesday, it was reported. But I swear I hadn't seen the report when I made my earlier post.
While such a competitive fund could potentially offer employers a better alternative than the current Assigned Risk Plan administered by NCCI, there are sooooo many potential pitfalls with the idea that it is difficult to see a bright future for this proposal.
For one thing, the bill would have the Illinois Department of Insurance administer the fund. But the DOI has been suffering in recent years from a massive drain of experienced people--as the state encouraged long-term workers to retire.
And of course there is the bad example set in so many other states of politicians raiding the reserves of state WC funds to cover other budget shortfalls.
Stay tuned for more exciting action in Springfield as the interested parties line up.
New York Robbing Peter to Pay Paul
Governor Andrew Cuomo of New York has submitted a state budget that siphons off around two billion dollars from the New York Workers Comp fund (New York State Insurance Fund) into the general funds of the state. As a general rule, this is a very bad idea that has not worked out so well in other states that have tried it.
Appropriating the money set aside to pay the Workers Compensation claims that the fund is obligated to pay is just bad policy, but it's an inherent weakness of state administered Workers Compensation plans. The nature of the long tail of Workers Compensation claims means that money has to be put aside for those future costs, but a pile of money is always an irresistible temptation to politicians. So Cuomo can now boast that he has filled his budget gap without raising taxes--and all he had to do was rob money set aside for injured workers. That money will still be eventually needed, of course, and so additional rate increases on employers covered by the fund would seem likely. Thus, the governor's actions amount to a stealth tax on employers.
Thank God my home state of Illinois doesn't operate a state Workers Compensation fund. One shudders to think about how Illinois politicians would abuse such a kitty. Hopefully, they don't read this blog--I would hate to give them the idea.
Of course, a well run state fund could offer some genuine advantages to employers. But as this New York story illustrates, it can be difficult for politicians to let a state fund operate prudently.
Appropriating the money set aside to pay the Workers Compensation claims that the fund is obligated to pay is just bad policy, but it's an inherent weakness of state administered Workers Compensation plans. The nature of the long tail of Workers Compensation claims means that money has to be put aside for those future costs, but a pile of money is always an irresistible temptation to politicians. So Cuomo can now boast that he has filled his budget gap without raising taxes--and all he had to do was rob money set aside for injured workers. That money will still be eventually needed, of course, and so additional rate increases on employers covered by the fund would seem likely. Thus, the governor's actions amount to a stealth tax on employers.
Thank God my home state of Illinois doesn't operate a state Workers Compensation fund. One shudders to think about how Illinois politicians would abuse such a kitty. Hopefully, they don't read this blog--I would hate to give them the idea.
Of course, a well run state fund could offer some genuine advantages to employers. But as this New York story illustrates, it can be difficult for politicians to let a state fund operate prudently.
Tuesday, March 12, 2013
Former AIG Chief Suing U.S.
Never let it be said that Maurice R. 'Hank" Greenberg lacks chutzpah. Greenberg is the guy who cobbled together AIG out of various pieces of second-tier insurance companies, creating an insurance juggernaut that Wall Street loved for its dependable profits (but which was less beloved by many policyholders, I believe.) Greenberg was forced out from the company he created after Eliot Spitzer proved in court that AIG had been operating in an improper and illegal manner.
Greenberg lived to see Spitzer disgraced and booted from the governor's mansion, after someone got the FBI to uncharacteristically investigate and wiretap a brothel. But Greenberg had still been forcibly removed from his empire, just shortly before the Financial Products division of AIG hit the fan and threatened to bring down the world economy (at least, that's what the HBO movie said.)
Our federal government felt it had no choice other than to bail out AIG to the tune of $182 billion, as the insurer imploded in the wake of the 2008 financial crisis. You may remember those days, when AIG quickly became the most hated insurer in the observable universe.
Well, Mr. Greenberg has now filed suit against the United States government, alleging that the bailout was unfair to him and other investors, and unconstitutional to boot.
I don't like to pre-judge any lawsuit--it has been my experience that initial impressions of such things can sometimes be inaccurate. And while Mr. Greenberg may have been (at least according to some) an unscrupulous and tyrannical CEO, it doesn't automatically mean he is full of it in this instance.
Still, it sure feels unseemly.
Greenberg lived to see Spitzer disgraced and booted from the governor's mansion, after someone got the FBI to uncharacteristically investigate and wiretap a brothel. But Greenberg had still been forcibly removed from his empire, just shortly before the Financial Products division of AIG hit the fan and threatened to bring down the world economy (at least, that's what the HBO movie said.)
Our federal government felt it had no choice other than to bail out AIG to the tune of $182 billion, as the insurer imploded in the wake of the 2008 financial crisis. You may remember those days, when AIG quickly became the most hated insurer in the observable universe.
Well, Mr. Greenberg has now filed suit against the United States government, alleging that the bailout was unfair to him and other investors, and unconstitutional to boot.
I don't like to pre-judge any lawsuit--it has been my experience that initial impressions of such things can sometimes be inaccurate. And while Mr. Greenberg may have been (at least according to some) an unscrupulous and tyrannical CEO, it doesn't automatically mean he is full of it in this instance.
Still, it sure feels unseemly.
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