The workforce is transforming with millions leaving their jobs in the Great Resignation (also known as the Big Quit or the Great Reshuffle). And according to a report by Healthesystems.com, this has created a cascade of ripple effects, some of which bear considerations for the workers’ compensation industry.

The term “Great Resignation” was coined by Anthony Klotz, a professor of management at University College London’s School of Management, in May 2021, when he predicted a sustained mass exodus.

It is an ongoing economic trend in which employees have voluntarily resigned from their jobs en masse, beginning in early 2021. Possible causes include wage stagnation amid rising cost of living, long-lasting job dissatisfaction, safety concerns of the COVID-19 pandemic, and the desire to work for companies with better remote-working policies. Some economists have described the Great Resignation as akin to a general strike.

According to a PricewaterhouseCoopers survey conducted in early August 2021, 65% of employees said they were looking for a new job and 88% of executives said their company was experiencing higher turnover than normal. A Deloitte study published in Fortune magazine in October 2021 found that among Fortune 1000 companies, 73% of CEOs anticipated the work shortage would disrupt their businesses over the next 12 months, 57% believed attracting talent is among their company’s biggest challenges, and 35% already expanded benefits to bolster employee retention.

Even before the pandemic, the workers’ comp industry faced an impending talent shortage and now that problem has grown worse. Two of the hardest-hit roles happen to be two of the most crucial roles at claims organizations: claims adjusters and IT specialists.

Based on results from Healthesystems’ 2022 Workers’ Compensation Industry Insights Report, workers’ comp professionals now view the changing workforce/workplace as the number one factor impacting resiliency in workers’ comp, with 71% of workers’ comp professionals ranking the changing workforce as their top industry concern.

While there are some universal solutions a workplace can offer to attract and maintain employees – such as competitive compensation and benefits – there are industry-specific matters that workers’ comp must address.

According to the Report, many adjusters are reaching retirement age and there is a shortage of new talent entering the industry. The high level of stress associated with the role, outdated claims technology, and a lack of overall industry appeal to young professionals are all contributors.

Creating a clear career path and a picture of the unique expertise that can be gained from the workers’ comp industry – expertise that can be leveraged later in either a different industry or in a higher position – could be beneficial for attracting new talent to an industry that is not necessarily an obvious or sought-after career option for college graduates.

Additionally, younger workers have high expectations for the user experience of technology, and workers’ comp has historically lagged behind the consumer experience. Technology should be intuitive, easy to use, and should empower day-to-day decisions to reduce burden and the perceived complexity that comes with the insurance industry.

There is a larger lack of IT talent that is holding back overall technological growth across all industries – and workers’ comp is no exception. The current shortage of IT talent is the main factor holding back IT automation and half of digital workplace technologies in the works. With more and more companies offering remote work for technology positions, competition is fierce for these talented individuals.

Claims organizations can prioritize cloud and security technologies to allow for remote work when possible to entice IT workers. Claims organizations can also leverage partners and/or programs that already have the technological infrastructure in place to help them achieve connectivity goals within their workers’ comp medical management programs.

As modern workplaces continue to evolve in light of the COVID-19 pandemic, so too must workers’ compensation claims organizations in order to achieve optimal outcomes. Yet, standing in the way are deeply entrenched challenges that more than 3,300 claims leaders and frontline professionals have brought to the forefront in previous Workers’ Compensation Benchmarking Study research.

“Eight years of data shows – to succeed in the face of core claims challenges – organizations need to transform legacy processes, mindsets, semantics, and ingrained cultural practices. Specifically, our data shows that those claims organizations with superior outcomes are also those who are further along in this transformation process,” said Rachel Fikes, chief experience officer and study program director at Rising Medical Solutions. “With this in mind, our latest research brought together claims leaders from diverse organizations to dig deeper into exactly how they are evolving to outpace their peers.”

The ninth annual study draws upon first-person, focus group research for its latest report, with over 30 industry executives gathering this past December to examine real-world strategies organizations are using to overcome the foremost barriers to claims management mastery. Participant companies represented a national cross-section of self-insured employers, regional and national carriers, state funds, and third party administrators.

With claims, clinical, and medical management perspectives, the research exercise generated expert guidance payers can use to drive success by: (1) surmounting the repeatedly ranked top obstacles to achieving desired claims outcomes, (2) moving from tactical to strategic, cultural change in the execution of employee-centric claims models, and (3) operationalizing social determinants of health (SDOH) best practices.

Focus group research topics were chosen based on prior study data and the resulting report contains three (3) concise lists of potent recommendations, including key claims strategies to:

– – Improve return-to-work options, drive incentives across stakeholders, and engage injured employees
– – Equip frontline professionals with optimal interventions, while addressing the stigma of psychosocial issues and mental health conditions
– – Overhaul communication practices to increase employee trust and reduce litigation
– – Redesign claims best practices to include an end-to-end, cultural focus on the employee-centric model
– – Utilize frontline claims professionals in employee-centric model design, implementation, and training to create ownership and accountability
– – Improve outcomes based on a total worker health model, including training on SDOH risk factors that go beyond the walls of the workplace, such as housing instability or food insecurity
– – Leverage community resources and social interventions for injured employees with potential health disparities

As in prior years, the new 2021 Report is available to all industry stakeholders without cost or obligation as a contribution to the workers’ compensation industry. It may be requested here.

The Workers’ Compensation Benchmarking Study is a national research program examining the complex forces impacting claims management in workers’ compensation today. The study’s mission is to advance claims management in the industry by providing both quantitative and qualitative data. Through survey research with claims leaders and practitioners nationwide, the program generates actionable intelligence for claims organizations to evaluate priorities, challenges, and strategies amongst their peers.

The Coalition Against Insurance Fraud was created in 1993 and remains the nation’s only consumer advocacy organization devoted to educating and protecting American citizens from the cost and damage of insurance fraud.

The Coalition consists of more than 260 organizations committed to the fight against insurance fraud. These organizations include federal and state agencies, insurance regulators, legislative and insurance trade associations, state attorneys general, prosecutors, law enforcement agencies, the majority of America’s leading insurance carriers across all lines of insurance, and select companies and law firms assisting in fighting insurance fraud.

In 1995, the Coalition released an estimate of the cost of insurance fraud in the United States as being $80 billion every year. The $80 billion impact has remained the most often cited insurance fraud statistic across the nation. An 81.5% inflation rate, would convert the 1995 estimate into a 2022 cost of fraud in the United States at $145 billion!

Thus the Coalition just published an updated study this month. Colorado State University Global’s White Collar Crime Task Force (WCCTF) was the research arm spearheading this new study.

The 2022 Coalition research project focused on two areas of workers’ compensation fraud to determine their final figure, premium fraud and claim fraud.

Workers’ compensation claim fraud was determined by first developing a cost of fraud in the state of California and then using census data to predict the cost of fraud countrywide.

The baseline used was a $3 billion estimate that was derived by Frank Neuhauser of the University of California Berkeley who performed a study on the Underground Economy and Payroll Fraud. The Coalition’s Workers’ Compensation Task Force used the $3 billion figure and then assumed California’s population is 12% of the total United States population (based on 2019 Census Data), the formula was developed to determine the final cost. According to the United States Census data, in 2019, the U.S. population was 328 million and California was 39.5 million; thus, California occupies 12% of the total U.S. population.

$3 billion (fraud in California) x 8.3 (California is 12% of the USA population), translates into a metric of 100 divided by 12 = 8.3. Thus $3,000,000,000 x 8.3 = $24.9 billion claim fraud in the United States.

The WCCTF concluded that workers’ compensation fraud totaled $9 billion in premium fraud plus $25 billion in claim fraud, for a grand total of $34 billion in workers’ compensation fraud in the United States.

The report continued to analyze the costs of fraud in other lines of insurance in the 46 page report and arrived at the following estimates:

– – Property and Casualty Fraud. The WCCTF estimates that the current cost of Property and Casualty fraud in the United States is $45 Billion.
– – Workers’ Compensation Fraud. The WCCTF estimates that workers’ compensation fraud totals $34 billion in the United States.
– – Premium Avoidance or Misclassification. The WCCTF estimates premium fraud in the United States is $35.1 billion.
– – Healthcare Fraud. The WCCTF estimates healthcare fraud in the United States is $36.3 billion.
– – Medicaid and Medicare Fraud. The WCCTF estimates Medicaid and Medicare fraud in the United States is $68.7 billion.
– – Life Insurance Fraud. The WCCTF estimates that life insurance fraud in the United States is currently $74.7 billion.
– – Disability Fraud. The WCCTF estimates that the current cost of disability fraud in the United States is $7.4 billion.
– – Auto Theft. The WCCTF estimates auto theft in the United States is $7.4 billion.

Using these estimates, the WCCTF estimated the total annual cost of insurance fraud in the United States to be $308.6 billion annually. Comparing that to the 1995 inflated adjusted estimate of $145 billion, the new estimate is more than a 100% increase in the costs of insurance fraud in the United States.

Alex Romero sustained fatal injuries as a result of a motor vehicle accident in which he was involved on October 26, 2016. It is alleged that, at the time, Romero’s attorneys claimed he was driving on an errand intended to benefit the alleged employer, Paul Story dba Kar Tunez.

Paul Story worked out of his home garage in Modesto. He engaged in auto stereo installation as a “side business” since he was 13 years old. Story also rented space at a warehouse on Bitritto Way in Modesto and stored tools there. He testified that Romero stored tools there as well. Prior to October, 2016, he had no employees, but that he “partnered” on projects with Romero.

When business improved, he had people helping out — which included Romero, Story’s wife, Patty, and several other individuals.Story testified that . . . when he did a job with Alex Romero, they would split the proceeds. When they worked together, it was because they wanted to “do something good for ourselves.” Alex Romero was “like family” and lived with Paul Story and his family off-and-on for “a few years.”

Text messages occurred between Romero and Story referring to Romer’s potential assistance to Story occurred two days before the accident On October 24 Story texted that he had “some pepole w anting to see some stufff” and offered to pay Romero “20 or better per person” for his help. Romero replied he was free for “about 2 hours.” Romero did not receive a reply so later he texted “Hey you want me to go or no.”
The final reply from Story on the topic was “ill take care of it thanks anyway.”

On the afternoon before the accident, Story noticed his jigsaw was missing. He assumed Romero had borrowed it. She sent Romero a text “Were the [ ] is m y jigsaw!!!!” but Romero did not reply. The jigsaw was discovered in Romero’s trunk after the accident, and Story later retrieved it at the police station.

Thereafter, none of the text messages between applicant and Story reflect any request or expectation that applicant would assist Story in any way. Story had no idea where Romero was going at the time of the accident and could not recall if they spoke before the accident.

Alex Romero’s mother, Margaret King testified that on the day he died, Romero was en route to the Kar Tunez shop, and that Romero was never self-employed. In fact, he refused to start up his own business even though she encouraged it. Romero’s older brother, Steven testified that his brother was working for Paul Story at the time he died and was not doing any work outside the work he had with Paul Story and Kar Tunez.

Anthony Miranda’s — an individual with no familial relationship with the Romero family, and at whose direction the speaker project was commenced — contradicted the testimony of Margaret King and Steven Romero that there was an employment relationship between Alex Romero and Paul Story.

The WCJ found that there is no evidence establishing that applicant’s accident occurred in the course of employment. The WCJ ordered that applicant take nothing on his claim. Reconsideration was denied in the panel decision of Romero v Story & UEBTF – ADJ10821128 (July 2022)

In his Opinion on Decision the WCJ said “No one credibly testified that Story summoned Nieves Romero to the shop. No one credibly testified that Romero was performing a special errand for Story at the time of his death on October 26, 2016. . . . Applicant, represented by Margaret King, had to make a showing of employment. No such showing was made here.”

On the credibility issue of the The WCAB panel said the WCJ determined that “Margaret King’s and Steven Romero’s testimony on that subject was not credible. We accord these determinations great weight because the WCJ had the opportunity to observe the witnesses’ testimony at trial and the record is otherwise without evidence of considerable substantiality that would warrant rejecting them.”

In terms of proof of an employment relationship the panel said “the applicant bears the burden of proving that he rendered service for the defendant, whereupon the burden shifts to the defendant to rebut the employment presumption.” In this case applicant contended the evidence raised this presumption. However the panel went on to say “we concur with the reasoning of the WCJ that the evidence fails to show that applicant was rendering service to Story when he sustained fatal injury.”

Following the California Northridge earthquake, California passed hospital seismic safety legislation.Senate Bill 1953. It was introduced on February 25, 1994 and signed into law on September 21, 1994. The law establishes a seismic safety building standards program for California hospitals built after March 7, 1973.

By January 1, 2030, owners of all acute care inpatient hospitals are required to demolish, replace, or change to nonhospital use, all hospital buildings that are not in substantial compliance, or seismically retrofit them so that they are in compliance with the standards. With roughly seven years left to comply, it is estimated that nearly two-thirds of California hospitals have yet to meet 2030 requirements, according to the Hospital Association.

According to a 2007 RAND study, the law was very controversial. Because of the age and engineering of the California hospital infrastructure, it is projected that the seismic safety goals will require reconstruction of about 50 percent of the current hospital floor space.The 2007 report said that the “pace of SB1953 compliance has been slow. Based on historical rates of construction and permit filings with the California Office of Statewide Health Planning and Development (OSHPD), about half of the SPC-1 hospital infrastructure will not comply with the 2008/2013 deadlines for SB1953, and many may not be able to comply with the final 2030 deadline.“

This backstory leads to a story just published by the Los Angeles Times about a “Backroom deal broken to change earthquake standards in California hospitals collapses.”

According to the Times, a secretive deal between a group of hospitals seeking to weaken seismic upgrades at medical centers and an influential union looking to increase the pay of employees collapsed on Tuesday, just days after it was made public.

“The last-minute alliance between Service Employees International Union-United Healthcare Workers West and the California Hospital Assn. infuriated other unions, which accused the unlikely pair of making a backroom deal that skirted the legislative process and put patients, healthcare workers and communities at risk.”

In a hospital association memo obtained by The Times, the group said the deal with SEIU-UHW came together quickly and followed years of stymied attempts to delay a state law that requires hospital buildings to have earthquake upgrades by 2030. Hospitals estimate that those upgrades will cost $100 billion, a tab they say is likely to result in closures across the state.

Before the deal emerged, the hospital association and SEIU-UHW had been locked in a fierce battle over raising the minimum wage in Los Angeles County for hospital workers. The agreement between the two would have required lawmakers to sign off on the deal before the end of the legislative session Aug. 31.

The California Hospital Assn. sought a seven-year delay to the 2030 requirement and to limit the standards to hospital buildings that provide emergency services, according to a draft of the proposal obtained by The Times.

In exchange, unions would see the minimum wage for healthcare workers raised to between $19 and $24 an hour beginning Jan. 1, with the higher pay going to workers in counties designated as urban or semi-urban. Pay would have increased by $1 an hour in 2024, bringing the hourly minimum wage for some workers to $25.

SEIU-UHW on Tuesday accused the hospital association of walking away from “a conceptual agreement” over labor-related provisions. In response, the union announced that it would instead pursue the statewide minimum wage for healthcare workers that it sought in the deal through the state Legislature or a ballot measure.