Lawyers, Competition, and Roles (10)

People are talking about workers' compensation, perhaps more today than ever. This is the tenth in an 11-post series (links to the first nine are at the end of this post), that attempts to overview various perspectives heard from system observers and participants. The point is that discussion is good, and if this series generates debate and interaction, all the better.

Lawyers in the systems 

This concern is tied to the perception that systems are persistently adversarial. The involvement of attorneys may purportedly be motivated by a number of factors. Lack of reliable and understandable education regarding system benefits and process, and distinctions from more familiar systems such as health insurance may lead to injured worker dissatisfaction. The complexity of a system, and frustration with comprehension of statutory and regulatory provisions may discourage and confuse injured workers. 

Delays in delivery of medical care, whether treatment or diagnostic testing, may likewise cause consternation, confusion and dissatisfaction. Certainly, learning of complex legal classification issues surrounding compensability, such as employment status may lead a worker to seek advice. The expectations of full recovery and non-attainment of that end may drive injured workers to distrust of or lack of confidence in physicians and care regimen. 

The resulting dissatisfaction with system, provider, or care may drive injured workers to seek change in the form of different providers, different specialties, and different or more invasive care. Worker perceptions about the calculation and adequacy of benefits may encourage them to seek expert assistance. Thus, the very nature of the various systems may inexorably create situations that:

(1) are difficult to understand

(2) do not communicate realistic expectations

(3) produce results inherently, which do not meet preconceptions

(4) encourage workers to engage and rely upon attorneys 

In these regards, various voices do not see attorney involvement as inexplicable. 

There are those who perceive an inherent conflict in attorney representation of injured workers. They note that many injured workers lack independent financial resources to compensate attorneys providing expert assistance with navigation of the systems. As such, injured workers are dependent upon proceeds from benefit awards to pay counsel. 

In many instances, the systems constrain and restrict the amount of attorney fees payable. (There are jurisdictions that apply caps to attorney fees. Others restrict the type of benefit obtention upon which fees may be charged. Others constrain fees to a defined percentage of benefits recovered). Critics see a potential conflict in which an attorney may be inclined to pursue additional benefits or treatment in order to enhance the value of a worker’s case, and thus increase the total value for, or from which, fees could be paid. 

Some believe that the proliferation of unsuccessful treatments such as spinal fusions and opioids have been driven by the desire to obtain expensive care in those regards, to the detriment of the worker. They see the detriment both in the delivery of these doubted modalities and the related disability. In regards to the disability, this may be temporary, while such care and treatment is debated and delivered, or may be permanent based upon the eventual “impairment” or “disability” being enhanced by the very care sought. 

A related concern voiced regards settlement of workers’ compensation cases. Some perceive that settlement is a preferred conclusion for attorneys. In the instance of litigation or dispute, an attorney may invest significant time and effort. When that concludes, an administrative provision of benefits could result in that attorney receiving small incremental payments against the ultimate fee amount over a period of months or years. 

Alternatively, reducing the benefit provision to a lump-sum payment provides the injured worker with resources both to manage her/his future care and “disability” or “impairment,” and to pay attorney fees in a similar lump-sum. Some contend that this creates a conflict between the worker and the attorney. 

Some perceive settlement as ill advised in any context. They see injured workers as unlikely to effectively manage the proceeds of a settlement in any event. They also perceive the end result of settlement as a closure of employer liability that places undue and inappropriate burdens on other benefit systems including group health, Medicare, Medicaid, Veterans’ Administration and Social Security. They term such an effect “cost shifting.”

The issue of incentives is thus implicated in the attorney/client relationship. This is not necessarily limited to those representing injured workers. There is a similar perception voiced regarding the defense of workers’ compensation claims. Some perceive that attorneys encourage employers and carriers to resist voluntary provision of benefits because those attorneys are compensated well for the litigation that ensues. These critics believe that the resistance by carriers generally reinforces the adversarial nature of the systems, the assumptions and opinions of injured workers, and the perceptions of regulatory complexity.

Competition between states 

The twentieth century economic development was influenced by state competition for industry, and deployment of economic incentives for business location and relocation. States made direct financial contributions to attract business in various forms, including cash, taxation relief, and infrastructure development. Issues regarding costs of business were newsworthy, with states being lauded or derided upon the standard of being “business friendly.” State’s laws and regulations were characterized and those perceptions or labels were marketed in the efforts to both draw and retain jobs. 

Workers’ compensation is a regulatory system in each state. As perceptions of workers’ compensation systems were discussed, the regulatory burden and comparative cost of workers’ compensation were included. In 1994, Oregon (Current study at http://www.cbs.state.or.us/external/dir/wc_cost/about_the_study.html, last visited January 1, 2017) began studying comparative cost of workers’ compensation, and has published its analysis biannually since.  

The insurance rates resulting from various state constructs exhibit wide differences. In the 2016 report, workers' compensation rates ranged from $0.89 per $100 in payroll in North Dakota, to a high of $3.24 in California. These rates exhibit significant deviation from the median, $1.84 per $100 in payroll. Through its study and publication, Oregon sought to highlight the comparative cost advantage of workers’ compensation in that state, thus encouraging business to locate or relocate there. 

The reporting effectively rated all jurisdictions, and likely encouraged competition for comparative advantage. Such competition would perhaps be primarily legislative, focused on the volume and duration of benefits delivered. The cost of benefits available or delivered would affect the degree of overall risk to a carrier and thus the price of an insurance product to cover the potential losses indemnified. 

Similarly, jurisdictions perceived potential cost advantages in procedural process. States have been perceived as altering process and procedure to decrease delay in claims, adjudication and appellate processes. Though various degrees of reform have been exhibited, some jurisdictions have radically modified processes. Most have abandoned jurisdiction of constitutional trial courts over benefit disputes, adopting administrative processes instead. With administrative transitions, most recently in Oklahoma and Tennessee, only Alabama retains a constitutional court trial process. 

In addition to premium cost advantage, states perceived the potential for decreasing burden and cost through regulation. There is a perception that state regulatory agencies responsible for workers’ compensation, insurance licensing, and adjusting have propagated significant regulatory reforms. Deregulation is perceived as streamlining procedures and administrative burdens, and thus costs. Various states have engaged in purposefully limiting the growth of regulation or actively pursued reduction in regulatory burden. 

Roles and delineation 

There are a multitude of decisions that are critical in the course of a workers’ recovery. Identifying the timing and importance of such decisions is a focus of this report. Contributors to the conversation generally agree that mismatches occur in the systems, in which decisions are inappropriately delegated to individuals who lack the expertise therefore. While these individuals may not be appropriate for particular decisions, each is in fact appropriate for some decisions. The criticism is not lack of expertise or competence in a general sense, but a disconnect between an individual’s training/expertise, and a particular decision. 

In the course of many claims, there will be medical treatment decisions required. Some critics contend that all such decisions should be made by medical experts, and not by claims experts, risk experts or adjudicators.  

Similarly, there are decisions regarding employability. While it is generally accepted that physicians must make decisions regarding physical (what amount can be lifted or carried, how much walking, sitting, or standing is medically acceptable following injury and/or recovery) and perhaps emotional ability, some contend that doctors should not render opinions as to whether a patient is or is not employable, "can" or "cannot" work. 

There seems to be a general consensus that worker’s compensation efficacy would be enhanced if systems included clarity regarding the appropriate roles and responsibilities for various professionals. If there were significant consistency in this regard between various jurisdictional systems, that may provide relief from challenges of regulatory complexity, beliefs, benefits, and competition. There is also some belief that such delineation and consistency could assist with staff retention, decrease adversary conflicts, and decrease attorney involvement through system consistency and simplicity. 

Other posts in this series: 

Conversations

(2) Benefit adequacy, Regulatory complexity, Delays in treatment even if compensable

(3) System failures, Incentive is different in WC and group health, Systems are persistently adversarial 

(4) Staffing and training of the workers’ compensation professions, Permanent partial compensation, Opt out movement

(5) Injured workers beliefs - not informed or uninformed assumption, Treatment protocols, a benefit or a burden, Perceptions and education

(6) Vocational rehabilitation, Ability versus disability, Methodology of claims handling

(7) Medical ignorance, The critical point in a claim, People who are acting inappropriately

(8) Misclassification, Unrealistic expectation of full recovery and youth, Federalization

(9) A new national commission?, Employee participation in the conversation, Occupational disease

(10) Lawyers in the system, Competition between states, Roles and delineation 

(11) Single payer, Outliers, Conclusions

ABOUT THE AUTHOR

David Langham is the Florida Deputy Chief Judge of Compensation Claims. He blogs weekly regarding system issues, regulations and decisions. He has published many articles and delivered more than 1,000 professional speeches.

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