Public Risk April 2015 by Moire Marketing Partners

Published by the Public Risk Management Association

www.primacentral.org

APRIL 2015

A Hidden Challenge in

WORKERS’ COMPENSATION

Interagency Agreements:

THE RISK MANAGEMENT CHALLENGE

TIPS FROM THE TRENCHES

Everyone else is doing it. WHY ARENâ&#x20AC;&#x2122;T YOU?

Enterprise risk management is everywhere we turn these days. Universities are using it. Corporations are using it. And now, more and more public entities are embracing ERM. PRIMAâ&#x20AC;&#x2122;s new training will teach you to implement an enterprise-wide approach to risk in your entity using the ISO 31000 standard. This three-part training will be held in cities across the United States. For more information, visit primacentral.org/ermtraining.

Volume 31, No. 4 | April 2015 | www.primacentral.org

The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration. PRESIDENT Regan Rychetsky, ABCP Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission Austin, TX

CONTENTS

PAST PRESIDENT Betty Coulter Director of Risk Management and Insurance University of North Carolina at Charlotte Charlotte, NC PRESIDENT-ELECT Dean Coughenour, ARM Risk Manager City of Flagstaff Flagstaff, AZ

6 A HIDDEN CHALLENGE IN WORKERS’ COMPENSATION

Amy Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN Scott Moss, MPA, CPCU, ARM-E, ALCM P/C Trust Director CIS Salem, OR

By Joe Jarret

Tracy Seiler, ARM-P Director of Risk Management Services Texas Association of Counties Austin, TX

15 TIPS FROM THE TRENCHES

Terri Evans Risk Manager City of Kingsport Kingsport, TN Scott Kramer Risk Manager Montgomery County Commission Montgomery, AL

By Dr. John Robinton

10 Interagency Agreements: THE RISK MANAGEMENT CHALLENGE

DIRECTORS Ed Beecher Risk Manager City of Pompano Beach Pompano Beach, FL

NON-VOTING DIRECTOR Marshall Davies, PhD Executive Director Public Rick Management Association Alexandria, VA

By Justin R. Farhang, Esq.

EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org

ADVERTISING Donna Stigler 888.814.0022 • donna@ahi-services.com Public Risk is published 10 times per year by the Public Risk Management Association, 700 S. Washington St., #218, Alexandria, VA 22314 tel: 703.528.7701 • fax: 703.739.0200 email: info@primacentral.org • Web site: www.primacentral.org Opinions and ideas expressed are not necessarily representative of the policies of PRIMA. Subscription rate: $140 per year. Back issue copies for members available for $7 each ($13 each for non-PRIMA members). All back issues are subject to availability. Apply to the editor for permission to reprint any part of the magazine.

IN EVERY ISSUE 4 News Briefs | 19 Advertiser Index | 20 Member Spotlight

APRIL 2015 | PUBLIC RISK

Further your public sector risk management education without leaving the office! This Webinar series features top presenters delivering knowledge right to your desktop!

PRIMA’S RISK MANAGEMENT

WEBINAR SERIES PRIMA’S 2015 RISK MANAGEMENT SERIES IS FREE FOR MEMBERS! Visit www.primacentral.org/webinars today to register for individual webinars or for the entire program!

M AY 1 3 | 1 2 P M – 1 : 3 0 P M

MARKETING YOUR INSURANCE PROGRAM SPEAKERS: Carleen Patterson, ARM-P, CIC, CRM, Deputy National Practice Leader, Aon Risk Solutions and Lori Gray, Risk Manager, Prince William (VA) County DESCRIPTION: Every year, your broker will ask you for a laundry list of information in order to obtain insurance quotes for the lines of coverage you need. Why is this information needed every year? Why do they ask you the same questions year after year? Why is changing carriers recommended? Why are your premiums up by 10, 15 or 20 percent? Why don’t you know about these increases beforehand? As a risk manager, your participation is critical to the outcome. The goal of this Webinar is to develop your understanding of the marketing process and your role in it. AT T E N D E E TA K E AWAYS :  Understand why marketing your program is important  Identify the various steps in the process, what information is necessary and why  Establish goals for the marketing process and communicate those goals to your broker W H O S H O U L D AT T E N D :  Risk managers  Risk analysts  Finance professionals  Human resources professionals

For more information, or to register, visit primacentral.org/webinars.

Message from PRIMA President Regan Rychetsky, ABCP

THE ELEPHANT IN THE ROOM

n 1999, I was asked to speak at the PRIMA Annual Conference in San Diego on the subject of subrogation. I had just been hired as the risk manager for the Texas Department of Human Services and this was my introduction to PRIMA. I had only heard of the organization, but did not know much, if anything, about it. I attended the conference, presented my session, but had to leave the following morning. I was truly impressed by the open nature of the people with whom I came into contact. Everyone was friendly, very helpful and willing to share ideas, stories and lessons learned on a wide range of topics related to risk management. I was amazed at the diversity of responsibilities risk managers have from entity to entity. Although there is diversity of responsibilities, one always seems to be consistent…workers’ comp! Workers’ compensation seems to always be the ‘elephant in the room.’ The question is always, “How can we reduce our workers’ compensation claims and associated expenses?” Before you meet with the city council, school board, state agency commissioners or similar groups within your entity to try to explain how you will successfully achieve this task, keep PRIMA members in mind when you prepare your strategy. There are many successful workers’ compensation experts within PRIMA that are willing to share their lessons learned and best practices to help you mold your program without re-inventing the wheel. In the spirit of sharing, this month’s Public Risk offers practical information related to workers’ compensation. Two articles are highlighted this month. One titled Workers’ Comp: Tips from the Trenches offers us insight on

navigating the intense world of the workers’ comp appeals board. You’ll hear from an attorney who does this every day. The second article, A Hidden Challenge in Workers’ Compensation, speaks to the electromyography (EMG) and nerve conduction studies (NCS) and examines the quality-or lack thereof- of these tests; and looks as several case studies. Switching gears, I was blessed to have visited the Medal of Honor Museum in Patriot’s Point, South Carolina, on board the aircraft carrier USS Yorktown. It was an emotional experience reading the stories of these brave men and women who exhibited exceptional courage in the face of insurmountable odds. I also visited the USS Laffey a destroyer commissioned in 1944 that was struck by five kamikazes and three bombs…and did not sink; earning her the nickname “The Ship That Would Not Die.” Both are sobering reminders of the risks faced by our military forces.

Workers’ compensation seems to always be the ‘elephant in the room.’ The question is always, “How can we reduce

Please thank our veterans and those currently serving our military forces.

our workers’

Regards,

compensation claims and

Regan J. Rychetsky, ABCP 2014–2015 PRIMA President Director, HHS Enterprise Risk Management and Safety Texas Health and Human Services Commission

associated expenses?”

APRIL 2015 | PUBLIC RISK

News Briefs

NEWS

BRIEFS SAFETY AGENCY PROBES FIRE TRUCK STEERING PROBLEMS

MASSACHUSETTS GOVERNOR SAYS EARLY RETIREMENT PLAN WILL SAVE MONEY

U.S. safety regulators are investigating reports of steering problems that could affect up to 1,500 Pierce fire trucks nationwide, reports the Salt Lake Tribune.

Gov. Charlie Baker's early retirement proposal for state workers will add nearly $50 million a year to the state's share of the Massachusetts pension system, but administration officials argue the overall budget savings will more than make up for it, reports the Boston Herald.

The National Highway Traffic Safety Administration says the probe covers trucks made since the 2004 model year. The agency says it received a complaint in January from a fire department that a driver had trouble steering a truck and never felt in control. Mechanics found problems in the ball joints, which connect wheels to the steering system. Also, the agency cited media reports of wheels falling off trucks three times in the Baltimore area. No injuries were reported. In November, the company recalled 135 trucks because suspension parts can fail and wheels could fall off. The agency says it will determine the size of the problem and how risky it is. The Unified Fire Authority has some Pierce fire trucks, but most of its fleet is produced by Seagrave Fire Apparatus, said battalion chief Clint Mecham. Salt Lake City Fire Department spokesman Jasen Asay said two of its fire trucks originally were thought to be impacted, but an inspection by a technician from Ross Equipment, the local Pierce representative, determined they were fine. “An outside inspection company came to our fleet shops and conducted a full inspection. They found that our apparatus were not affected and the unit they inspected was fine and within specification,” he added.

“This is a responsible plan that pays for an increase to the unfunded pension liability—prior plans didn't do that,” Secretary of Administration and Finance Kristen Lepore told the Herald. “It's a responsible way to achieve significant savings to help close the budget gap.” Baker hopes to convince about 4,500 state workers—out of the 13,641 eligible—to take early retirement as he seeks to close an estimated $1.5 billion budget gap. The plan would allow workers to tack on five “free” years to their state service, or subtract them from their retirement age. The entire plan would add $48.75 million a year to the state retirement system's unfunded liability. But Baker administration officials say the overall plan will save $178 million a year in the state budget, even after factoring in the added pension costs and other related expenses. Baker plans to file a bill with the details, along with his fiscal 2016 budget. But Beacon Hill leaders were reluctant to immediately support the plan. House Speaker Robert A. DeLeo noted previous early retirement proposals were dismissed because they delivered only short-term savings, not a long-term boost. “Having said that, I'm going to wait and see exactly how the governor words it in his particular budget,” said DeLeo. “It may be something that works, and I'm hopeful that it will be. So what I'm saying is that I think the devil will be in the details.” Senate President Stanley C. Rosenberg said he also wants to dive into the specifics. “As of right now I haven't seen enough of the details to embrace or dismiss the governor's proposal on early retirement,” Rosenberg said. “I look forward to learning more once the legislation is filed, examining all aspects of the plan, and discussing it with the members of the Senate.”

PUBLIC RISK | APRIL 2015

W W W.PRIMACENTRAL .ORG

TINY TOWN OPENS FIRST GOVERNMENT-OWNED POT SHOP Of all the steps taken since Washington legalized marijuana, North Bonneville's might be boldest, reports the Tribune News Service. The town of about 1,000 in Skamania County, which sits on the Columbia River about 40 miles northeast of Portland, is becoming the first government in the nation, and perhaps the world, to own a recreational marijuana store. The Cannabis Corner, a renovated pole barn off Highway 14, opened in March. It is the first marijuana store in the county. For North Bonneville, it's been a long journey. The town had to create a separate government offshoot, the North Bonneville Public Development Authority (NBPDA), to operate the store. The agency's structure is similar to Seattle's Pike Place Market Preservation and Development Authority. The NBPDA's five-person board had to find private investment to fund the pot shop and rearrange itself when three board members dropped out. Then, the NBPDA had to prove to the Liquor Control Board it was independent from the city and capable of managing a store. “We never lost hope,” said Tim Dudley, a NBPDA board member. “We knew it was going to take longer.” The plan appeared doomed when The Cannabis Corner's application was denied by the Liquor Control Board, which said a nearby park was too close to the potential pot shop. Turns out, it was an RV park. After some political wrangling, the liquor board issued the town a license. Why would North Bonneville go to all this trouble? Creating a public-development authority “allows the city to do something a little more entrepreneurial,” said Jay Reich, an attorney at Pacifica Law Group who often works on public/private partnerships. It could be lucrative for the town. If visitors flock to The Cannabis Corner, the board will funnel profits into the community through grants, Dudley said. Because The Cannabis Corner is operated by a government, it will have a distinct advantage: It won't pay federal tax. “Our costs are lower and our ability to provide cannabis at a lower cost is there,” said John Spencer, a management consultant on the project.

If the operation fails, North Bonneville City Attorney Ken Woodrich said, the City Council can choose to dissolve the NBPDA and end the experiment. “At first, I admit I was skeptical,” said Woodrich. “But the more I thought about it, the more sense it made ... the residents will get a collateral benefit from this store being operated in this community that they wouldn't otherwise see.” Woodrich said the city is not directly liable for the pot business and doesn't have oversight of the business. The workers at The Cannabis Corner won't be city employees. Dudley said private investment also shields North Bonneville from risk. “If this venture doesn't work, taxpayers of the city aren't out a dime,” said Dudley. He said building out the store, supplying it and paying initial wages cost about $280,000, paid entirely with private investment money. Foes of the store say the risks are not simply financial. “Our fear is that (marijuana) gets into the hands of kids,” said Susie Strom, a drug- and alcohol prevention coordinator in Skamania County.

APRIL 2015 | PUBLIC RISK

A Hidden Challenge in

WORKERS’ COMPENSATION By Dr. John Robinton

PUBLIC RISK | APRIL 2015

W W W.PRIMACENTRAL .ORG

n workers’ compensation, electrodiagnostic tests known, as Electromyography (EMG) and Nerve Conduction Studies (NCS), are invaluable tools in determining the existence and extent of muscle and nerve damage in injured employees. For example, if an injured worker is suspected of having a back injury or carpal tunnel syndrome, a treating physician would likely order an EMG or NCS to confirm the diagnosis. EMG and NCS then provide the physician with a roadmap to treat the injury, and it also rules out other potential medical conditions.

However, the industry may not realize that there are no barriers to entry in this field. Essentially, any licensed provider is allowed to perform an EMG or NCS. As a result, outcomes can vary widely from physician to physician due to their training, experience, and the accuracy with which these tests are performed. In this article, we present a study that examines quality—or lack thereof—in these tests. We will look at several cases that illustrate how these tests can go awry, and how this can lead to inappropriate treatment plans. Finally, we’ll cover what can be done to ensure quality EMG and NCS, including provider credentialing, ongoing monitoring, and obtaining second opinions.

STUDY RESULTS CONFIRM UNRELIABILITY AMONG TESTS In workers’ compensation, a significant percentage of providers who perform EMG and NCS have not undergone any type of evaluation, qualification, or credentialing process. As a result, tests performed by these uncredentialed or non-prequalified providers may not be medically useful in determining the next step in treatment. In 2009, a study was presented at the annual American Association of Neuromuscular & Electrodiagnostic Medicine (AANEM) meeting, which confirmed this hypothesis. The study reviewed 140 reports to assess the medical usefulness of EMG and NCS reports performed by providers who had not undergone a pre-qualification process. Each report was graded by an American Board of Electrodiagnostic Medicine board certified neurologist who was also certified in clinical neurophysiology. Failure to satisfy “medical usefulness” was determined by factors that included, but were not limited to: a lack of adherence to AANEM guidelines, incomplete examination information, and data inconsistency and unreliability. Out of the 140 NCS/EMG reports reviewed, 68 percent were considered not medically useful. As a result of this quality review, surgeries were cancelled in a number of cases, and repeat studies were requested by other physicians. Among workers’ compensation claims, it’s estimated that approximately 40 percent of providers performing EMG and NCS are not qualified to administer consistently accurate examinations. Obviously, this can impact the accuracy of a diagnosis, as well as a claim’s overall costs and outcomes.

A PATIENT EXAMPLE Perhaps the clearest, most compelling way to examine this diagnostic challenge is to look at an actual patient example. In this particular case, an injured worker claimed to have sustained a back injury during an unwitnessed fall. The provider who performed the initial EMG did not undergo a pre-qualification process to very his credentials or the quality of his EMG reports. His test results asserted that the patient required back surgery. The surgery was performed, but it did not alleviate the patient’s pain. Instead, the surgery actually made the patient’s condition worse. Since the patient was still experiencing significant pain, a second EMG was performed. This time a credentialed provider performed the examination. This meant the provider met a rigorous set of qualifications and his medical reports were confirmed to meet quality standards. This second test revealed that the patient had a diabetesrelated condition, which caused the pain and which would not have been compensable under workers’ compensation.

ELECTRODIAGNOSTIC TESTS Electromyography (EMG): In this test, the physician inserts a small needle into the muscles to assess general health of the muscle and to test if the nerve supplied to that muscle is intact. Muscle activity is evaluated both while the muscle is at rest and during voluntary contraction. Nerve Conduction Studies (NCS): These exams are essentially a quantitative measurement of nerve function. A mild electrical stimulation is applied directly over the nerve(s) in increasing strength to elicit a response from motor and sensory nerves.

However, due to the initial inaccurate test results and the inappropriate surgery, the worker was categorized as permanently and completely disabled with projected costs of more than $2.5 million dollars over the life of the claim. Since the workers’ compensation insurer had authorized the back surgery, it was liable for the full cost of the claim. In short, this example illustrates some key EMG testing challenges: • Use of a provider who lacked proper training and credentials. • In the initial EMG, the wrong muscles were studied.

APRIL 2015 | PUBLIC RISK

A Hidden Challenge in Workers’ Compensation

• Inaccurate test results led to a misguided treatment plan, unnecessary surgery, and a costly permanent disability claim. • Poor quality of care for the injured worker.

PROVIDER CREDENTIALING AND QUALITY REPORT STANDARDS Although the quality of EMG and NCS providers varies widely, the good news is there are guidelines and solutions to help workers’ compensation programs ensure the medical usefulness of their test results. • Today, specialized diagnostic networks utilize a rigorous credentialing process to ensure that EMG and NCS providers meet and continually adhere to quality guidelines. This credentialing process includes a clinical review of sample tests to ensure adherence to report standards. With this pre-qualification process, the network identifies and selects only quality, qualified neurologists and physiatrists to perform all exams. • An ongoing quality program continually monitors providers to ensure ongoing adherence to quality guidelines and reporting standards. Through this monitoring, deficiencies can be detected and corrective action can be outlined so providers can improve outcomes.

This type of quality delivery model for EMG and NCS in workers’ compensation is essential. In addition to improved diagnosis and better care for injured workers, the cost savings delivered from a quality-driven program can be significant in light of today’s skyrocketing medical costs.

GETTING A SECOND OPINION If payers are in doubt of EMG or NCS, or about to authorize an expensive procedure, such as a surgery, they should consider getting a second opinion. By requesting a second opinion, an organization can confirm that the EMG or NCS was appropriately performed, and that the test results are medically useful, reliable, and accurate. Let’s look at an example of how a second opinion can help ensure quality: A 34-year-old carpenter reported experiencing hand pain and occasional weakness in the fingers of both his hands. The patient was sent for an initial evaluation. It’s important to note that the EMG and NCS were performed by a provider whose qualifications had not been assessed or verified. The test results supposedly revealed the presence of abnormalities consistent with carpal tunnel syndrome. The patient was given a trial treatment of splinting, but little improvement was experienced. At that point, surgery was recommended. However, the claims adjuster assigned to the case was aware of the variability in quality among EMG and NCS providers and ordered a second opinion to verify test results. The second set of tests was performed by a provider who was credentialed and served as a leading specialist in his community. He determined that the initial test results and

PUBLIC RISK | APRIL 2015

W W W.PRIMACENTRAL .ORG

If payers are in doubt of EMG or NCS, or about to authorize an expensive procedure, such as a surgery, they should consider getting a second opinion. By requesting a second opinion, an organization can confirm that the EMG or NCS was appropriately performed, and that the test results are medically useful, reliable, and accurate.

diagnosis of carpal tunnel were incorrect. Although the test observed abnormalities consistent in a carpal tunnel case, there was information that indicated the study was not performed appropriately. In fact, it was likely that the initial study was performed on a hand that was “cool” in terms of temperature—a factor that can affect the accuracy of results. This case shows that many providers are untrained and inexperienced in the many variables that can affect the accuracy of EMG and NCS test results, including but not limited to these factors: • A test may be performed too early, when it should take place 17 days after an injury. • The wrong nerves or muscles may be studied. • Electrodes may be placed incorrectly. • EMG and NCS providers may fail to monitor limb temperature, which must be 32 degrees centigrade or higher for upper extremities, such as the hands. For this patient, a second set of tests was performed at the correct temperature. The results indicated normal activity. In other words, carpal tunnel did not exist. In the end, the patient was determined to have early manifestations of rheumatoid arthritis. Given an oral medication, the patient’s symptoms cleared up, and he was able to resume work without experiencing any additional symptoms.

ENSURING QUALITY: NOW & INTO THE FUTURE Neurological injuries present significant challenges—chief among them is finding a quality EMG/NCS practitioner who can provide accurate test results. This article has given examples in which poorly trained, unqualified providers conducted an initial EMG and NCS, which led to an inaccurate diagnosis and inappropriate recommendation for surgery. In the first case, the insurance company was on the hook for a $2.5 million disability claim, but in the second case, by using a second opinion with a quality credentialed provider, the insurance company saved more than $38,000 for the cost of surgery, rehabilitation, and time-off from work. The advantages of working with quality EMG and NCS providers are numerous, with reliable test results leading to an accurate diagnosis, appropriate treatment plan and quality care for injured workers, as well as cost savings, improved outcomes, and early return-towork results. Dr. John Robinton is a neurologist based in Montclair, New Jersey, and medical director of neurodiagnostics at One Call Care Management.

The cost of the medication and medical treatment for rheumatoid arthritis was unrelated to any type of workplace injury, and as a result, all the costs were covered by the patient’s general health insurance.

APRIL 2015 | PUBLIC RISK

INTERAGENCY AGREEMENTS:

THE RISK MANAGEMENT CHALLENGE By Joe Jarret

PUBLIC RISK | APRIL 2015

W W W.PRIMACENTRAL .ORG

THE CHALLENGE THE SCENARIO IS A COMMON ONE: A crisis arises, a call goes out for help and agencies respond. At first blush, dispatching a couple of utility trucks, or police cruisers, a few employees or other assets to another public entity in times of crisis and need appears to be a simple, straight forward action. However, the savvy risk manager who digs a little deeper soon learns that such actions or decisions can be complex because they combine political, economic, legal, humanitarian, workersâ&#x20AC;&#x2122; compensation and other dimensions. Although it is assumed that, when various agencies converge on a disaster site they possess a cooperative posture or mindset, one should not assume that these same agencies are all on the same proverbial page. It is not uncommon, especially when in crisis mode, to learn that agencies are coordinating in one area, competing in another, and engaged in outright conflict in a third. Nothing can cause ill will between agencies faster than squabbles over money, indemnity, authority, etc. Further, few things raise the ire of elected officials and the general public than interagency squabbles that precipitate into costly, often unnecessary lawsuits. Enter the interagency agreement.

INTERAGENCY AGREEMENTS The concept and practice of agencies providing mutual assistance in times of crisis is nothing new. As far back as 1979, Ronald R. Canham noted that coordination between agencies is the most expedient and economical way for agencies to gain access to much needed resources.1 However, the use of interagency agreements designed to promote such mutual aid or collaboration is a relatively new tool in the risk managerâ&#x20AC;&#x2122;s toolbox. In a report to the Federal Emergency Management Agency (FEMA), the National Emergency Management Association (NEMA) observed that while many local jurisdictions have agreements in place, they vary widely across the country and are often informal arrangements. Further, the Emergency Management Assistance Compact (EMAC), a state-tostate mutual aid agreement that facilitates inter-state resource sharing during emergency situations, is primarily concerned with agreements among and between states, not localities. That is not to say EMAC is unconcerned with local issues as evidenced by the fact that it touts the importance of the model intrastate mutual aid agreement developed by NEMA and designed to render state politicalÂ subdivisions a part of their respective statewide mutual aid system. As risk managers are aware, there are three characteristics of crisis management that distinguish it from the normal decision-making process. First, the amount of time available for deliberation is comparatively short. Therefore,

it behooves entities to have in place well-established, proven agreements designed to produce the timely deployment of assistance. Second, decisions concerning the level of response to a complex emergency must be coordinated and implemented in an integrated manner in the field. Third, complex emergencies often involve agencies that do not normally interact with one another until there is an emergency. Based on the aforementioned, one would assume that the presence of formal, written interagency agreements would be a given. Nevertheless, many agencies still rely upon informal agreements that fail to address key issues such as liability, scope of service to be provided, etc. According to a 2009 NEMA survey, more than 30 states have formal intrastate mutual aid agreements or legislation in place. In a nutshell, such agreements generally define the entities that are covered, the responsibilities of the persons authorized to enter into the agreements, the procedures by which aid may be requested or provided and the processes to be used. However, that same level of cooperation cannot be said of political subdivisions like cities, counties, towns and parishes. Because it is not uncommon for a beleaguered city or county to seek assistance from a public entity not so burdened, it stands to reason that a formal, written agreement be available for both entities to execute. More often than not, local governments require, at the outset of a crisis, emergency responders in the form of law enforcement officers, fire fighters, emergency medical services personnel,

APRIL 2015 | PUBLIC RISK

Interagency Agreements: The Risk Management Challenge

physicians, nurses, other public health personnel, emergency management personnel, public works personnel, and those persons with specialized equipment operations skills or training or any other skills needed to provide aid in an emergency. Although both affected agencies recognize the possibility that dispatched emergency responders can suffer serious bodily injury or death, more often than not, little attention is paid to issues such as liability and compensation. Further, the assisting agency is frequently uninformed of the potential hazards that await their people. Add to this a failure to identify and, where applicable, inventory the services, equipment, supplies, personnel and other resources committed to the requesting agency and you end up with a mini-crisis within a crisis.

TERMS & CONDITIONS Of the myriad of examples and instruments that presently exist from which a risk manager may draw is the Government Accountability Office (GAO) report to Congress entitled “Key Considerations for Implementing Interagency Collaborative Mechanisms.”2 This document provides some timely information for entities that do not have a working interagency agreement in place. Specially, the GOA recommends that, when clarifying roles and responsibilities of participating agencies, the agreement should: • Clarify whether leadership will be shared between one or more agencies, as well as the roles and responsibilities of affected personnel • Clarify which agency will act as a lead agency and who within the lead agency will be in charge by name or position • Clearly define short-term and long-term outcomes • Determine the best way to track and monitor progress toward the short-term and long-term outcomes

PUBLIC RISK | APRIL 2015

• Outline a means by which assisting personnel are recognized and rewarded • Provide for common terminology and definitions Further, the agreement should determine: • How leadership will be sustained over the long-term • A commitment that the assisting agency has the ability to commit requested resources. Needless to say, cooperation and collaboration among public sector entities must take place at multiple levels. While interagency collaboration may begin with senior management, the process must actively involve the risk manager and other leaders to insure that policies designed to provide and accept assistance are embedded in an entity’s SOPs.

A WORD ABOUT THE MILITARY Because emergency relief efforts are often considered quasimilitary operations, it’s worth taking a look at how the U.S. military views interagency agreements. In recent years, the military has relied upon Political-Military Implementation Plans or pol-mils. These plans are designed to: • Help build interagency consensus on the key elements of an operation • Assist in synchronizing individual agency efforts • Enhance the transparency of planning among different agencies • Help ensure that all key issues are raised during planning. According to the National Defense University, the process of developing a pol-mil plan brings a new level of analytical rigor to interagency planning by looking at interagency relations in a more systematic way.3

W W W.PRIMACENTRAL .ORG

Managing risk in our cities, counties, schools, states and tribal nations presents unique challenges, and PRIMAâ&#x20AC;&#x2122;s Annual Conference is the only conference dedicated to YOU: public sector risk management professionals.

Join us in Houston as we convene thought-leaders from the industry to recharge, refresh and energize risk management!

EARLY BIRD RATES END IN APRIL!

Interagency Agreements: The Risk Management Challenge

Needless to say, cooperation and collaboration among public sector entities must take place at multiple levels. While interagency collaboration may begin with senior management, the process must actively involve the risk manager and other leaders to insure that policies designed to provide and accept assistance are embedded in an entityâ&#x20AC;&#x2122;s SOPs.

Having a comprehensive writing may seem to be over burdensome if not an impediment to recovery efforts, however, it is not uncommon for relations between agencies to become strained because the roles, responsibilities, and compensation of people asked to provide the assistance become muddled. This quickly becomes apparent during a crisis, as each scenario calls into action a different sets of actors requiring different sets of formal and informal guidelines designed to govern relief efforts. By relying upon a detailed interagency agreement that clearly and concisely outlines the duties, responsibilities, and assumption of risk of all parties concerned, the risk manager can insure that help is available when her or his entity needs it or stand ready to assist others in need. Joe Jarret is an attorney, mediator, and former public risk manager who lectures for the University of Tennessee, Department of Political Science

END NOTES 1 Canham, Ronald R. Interagency coordination and rapid community growth. Western Rural Development Center, Oregon State University, 1979. 2 (GAO Publication No. 12-1022). 3 Interagency Management of Complex Crisis Operations Handbook, National Defense University, 2003

PUBLIC RISK | APRIL 2015

W W W.PRIMACENTRAL .ORG

By Justin R. Farhang, Esq.

APRIL 2015 | PUBLIC RISK

Tips from the Trenches

icture if you will, a 12' x 12' room with eight mismatched chairs of varying quality and age. A prison-wrought table or two sits in the middle of the room, covered in sheets of white paper forms. Now add 30 people to the room, all talking at once and occasionally shouting applicant’s names into the air in varying degrees of despair and frustration. Your mission: navigate the throng, locate the single page of paper that belongs to your case and put your name on it—securing a chair in the process if you can—in a Twilight Zone version of “musical chairs” meets “pin-the-tail on the donkey.”

Now that you’ve signed in for the hearing, the real work begins! Welcome to the local district office of the Workers’ Compensation Appeals Board and to the glamorous life of a defense attorney trying to close your case. I have met many risk managers who have never been to the Board and a few who have. Risk managers are hardworking individuals, usually wearing multiple hats in their organization, with little time for field trips down the rabbit hole. They are focused on the macro view of their respective domains: loss runs, claim frequency, claim severity, average costs per claim, denial rates, litigation rates, total incurred per $100 of payroll, etc. All data that shows they are directing their troops through the minefields to safe ground. If the risk manager is in the command center, the defense attorney can be nowhere but the trenches. Being there affords us the luxury of focusing on the micro aspects of claims. We see the small (and hopefully not growing) percent of litigated claims where something went wrong and come to us with the directive from above to fix the problem, fast. We all know the maxim that the longer a claim remains open, the worse it gets. I add for everyone, including the injured worker. So what is happening on the ground and preventing us from closing cases and more importantly, what can we do to fix it? When a new case comes across my desk, the first question is always, “Why is this litigated?” Is it a truly bogus claim? Is the applicant looking to retire with a disability-sponsored parachute? Did an adjuster’s Monday morning caffeinedeprived attitude send the applicant running into the arms

PUBLIC RISK | APRIL 2015

of a grinning yet sympathetic attorney? Most importantly, did we get the denial wrong? Once we identify the basis for the claim being litigated, we can choose a much shorter path to closure by tailoring our litigation strategy to the real issues. At the end of the day, we are dealing with injured employees and our job is to get them better. The second question I ask is, “What is the venue?” Just knowing which district office you will be in, which judges you will be before and which opposing counsel you will be facing, can provide great insight into the trajectory of the claim. Many in the industry don’t realize that venue is not automatic. Provisions of the Labor Code allow venue to be changed for multiple reasons, including good cause, convenience of witnesses and if the venue chosen was based solely on the applicant’s attorney’s principle place of business. A transfer of venue can often lead to faster resolution, but the opportunity is often overlooked or missed entirely. My third question, when taking a case to the Board, is what type of hearing do you want? I am often instructed by my client to file for an “expedited hearing” on some issue or another, even when inappropriate. Usually the adjuster is trying to emphasize they want a speedy resolution. However, expedited hearings are limited to specific issues and selecting the type of hearing has broad implications on the case and different hearings serve different purposes. The main hearings available include: Status Conference, Priority Conference, Mandatory Settlement Conference (MSC) and Expedited Hearing. A Status Conference is the equivalent of inviting applicant’s attorney to have a cup of coffee and chat about a pending

W W W.PRIMACENTRAL .ORG

issue, usually because you cannot get them to respond by letter, phone, or carrier pigeon. Without agreement between the parties, a status conference cannot move directly to trial and usually the parties must reach some informal agreement to resolve the issue, or continue the matter to an MSC. The MSC is the workhorse of the pre-trial hearings. It is good for almost every disputed issue, it results in the preparation of the pre-trial conference statement which has binding issues and trial exhibits listed and most importantly, it cuts off discovery. However, it is perilous to obtain an MSC if you are not in fact ready to complete each and every one of those items. A Priority Conference is a favorite of the bold, as it is limited to issues of injury AOE/COE. This means you believe legal defense (such as a post-termination or initial aggressor) applies to your claim and you are ready to try the case and win on that defense alone. The subsequent trial will either clear the employer of liability, or put them on the hook. However, an early win means quick closure and less medical treatment build-up. An Expedited Hearing is just that, expedited. You show up and try the case. There is no intermediary hearing, no delays and you can get a quick decision. However, Expedited Hearings are limited by statute to the following issues: medical treatment, medical provider networks and entitlement to temporary disability. From the defense side, this hearing is most often used to enforce treatment within a medical provider network. Now that you’ve selected the appropriate venue, the right type of hearing and perfected the sign-in two-step at the hearing, what next? The focus should always be on claim resolution and each of the thoughts above relate directly to settling cases. Each hearing above is an opportunity to close a claim down. Each change of venue is an opportunity to move the opponent out of his comfort zone and should be taken as an opportunity for the parties to take a deep breath and realistically assess the value of the claim. One of the biggest roadblocks to resolving claims is effectively managing expectations on both sides of the fence. At the inception, applicants think they will recover enough to retire on and the defense believes they’ll get a slam dunk take-nothing at trial. When reviewing a claim, I try to realistically value both the exposure to my client, the cost of “winning,” and what it will take to actually resolve the case early. Oftentimes, applicant’s counsel is doing the same and there is room for early resolution. The trouble usually comes in obtaining authority. Occasionally, I have the opportunity to resolve a claim at the time of referral, or at the applicant’s deposition. This means that there is little medical reporting to go on and undeveloped defenses—what we can affectionately call the “grey area.” So when I ask for $5,000–$10,000 to resolve the claim early, some clients balk because, well, we all report to someone up the chain. During the training seminars at which I’ve spoken, I offer the following deal to my audience: If I can close out each and every one of your open, litigated claims, for $10,000 a piece, would you accept? By show of hands, 100% have taken the deal so far. That’s because on the macro level, the deal makes absolute sense. The costs of litigating a claim to resolution (even if you win!) usually rise to that level. I’ve seen single medical reports that make $10,000 seem a bargain.

CALENDAR OF EVENTS PRIMA’s calendar of events is current at time of publication. For the most up-to-date schedule, visit www.primacentral.org.

WEBINARS 2015 • May 13 – Marketing Your Insurance Program • July 15 – Ergonomics & Injury Prevention • September 16 – Social Media Horror Stories: Don’t Become One! • November 18 – Employment Practices Liability: Mitigating Risks

PRIMA ANNUAL CONFERENCES June 7–10, 2015 PRIMA 2015 Annual Conference Houston, TX George R. Brown Convention Center June 5–8, 2016 PRIMA 2016 Annual Conference Atlanta, GA Hyatt Regency Atlanta June 4–7, 2017 PRIMA 2017 Annual Conference Phoenix, AZ Phoenix Convention Center June 3–8, 2018 PRIMA 2018 Annual Conference Indianapolis, IN Indiana Convention Center

ENTERPRISE RISK MANAGEMENT: APPLYING THE ISO 31000 STANDARD Intro Workshop Dates & Locations April 14 – Baltimore, MD July 15 – Reno, NV September 29 – Savannah, GA Implementation Workshop Dates & Location May 7 & 8 – Baltimore, MD August 10 & 11 – Reno, NV November 18 & 19 – Savannah, GA

The question then is why, on the micro level, does it not make sense? The top contender is emotion. Removed from the cold, hard statistics, parties become emotionally invested

APRIL 2015 | PUBLIC RISK

Tips from the Trenches in individual claims and determined to push the case farther than is warranted. Applicants feel they have been wronged, mistreated or slighted by their employer and just want to get even. Employers feel that they are being used, played or attacked without any basis and want to fight it out. At times like these it’s best to take a step back and ask, what is the purpose of the workers’ compensation system? By design, it is to get injured workers better and back to work and to shield employers from civil liability. If that means paying a little up front to heal a wounded ego, before the applicant becomes addicted to opioids and incapable of returning to their pre-victimization mentality, aren’t we doing the right thing? If it means avoiding some of the unreasonable costs associated with developing a claim, why not? Both parties benefit. The applicant, exposed to the miraculous healing powers of a settlement agreement (better than water from Lourdes!) is recovered

and the employer gets to close the claim. Both parties move on, catharsis achieved! Sadly, we don’t live in a world where universal claim resolution is possible. However, many claims can be resolved given the right opportunities, the right incentives and the right attitudes. Otherwise, they risk slipping through the cracks and down the rabbit hole -becoming decade-long nightmares to no one’s gain. Using some of the most basic tools in the box like venue, selecting the right type of hearing and exploring settlement opportunities early and often can occasionally surprise both sides with a mutually beneficial outcome. With that lofty and noble goal in mind, this attorney heads back to the trenches. Justin R. Farhang, Esq., is a shareholder in the Long Beach office of Kegel, Tobin & Truce, APC, a southern California workers’ compensation defense firm.

LEARN IN YOUR OWN TIME WITH

PRIMA PODCASTS! PRIMA’s Podcasts are a quick and convenient way to learn on-demand and on your own time!

Meant to provide you with information on specific topics important to the public risk management sector and hot topics, PRIMA Podcasts are the perfect way to fit in education and training into your busy schedule.

Check www.primacentral.org for new Podcasts! 18

PUBLIC RISK | APRIL 2015

CURRENT PODCAST TOPICS INCLUDE: School Risk Management Workers' Comp Best Practices

AND MORE!

W W W.PRIMACENTRAL .ORG

Advertiser Index

ADVERTISER INDEX Genesis Underwriting Management Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Back Cover Munich Reinsurance America.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Back Cover

Has your entity launched a successful program? An innovative solution to a common problem? A money-saving idea that kept a program under-budget? Each month, Public Risk features articles from practitioners like you. Share your successes with your colleagues by writing for Public Risk magazine! For more information, or to submit an article, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

FIND US ON FACEBOOK!

Keep up with whatâ&#x20AC;&#x2122;s happening at PRIMA and connect with your risk management peers! Visit us at www.facebook.com/primacentral.

APRIL 2015 | PUBLIC RISK

Member Spotlight

CINCINNATI MAKES DIABETES MANAGEMENT A ROUTINE PART OF ITS WELLNESS PROGRAM Each month, Public Risk features a member who has gone above and beyond in a feature column titled “Member Spotlight.” Do you know someone who deserves recognition, has made a contribution or excelled in their profession?

iabetes is a leading cause of heart attack, stroke, blindness, kidney failure and amputation. It also leads to more sick days and less productivity on the job. The American Diabetes Association estimated the total cost of undiagnosed diabetes in 2012 was $245 billion, including $176 billion in direct medical costs and $69 billion in reduced productivity. In order to combat these startling statistics, the Risk Management department for the City of Cincinnati, Ohio, instituted an employee diabetes and hypertension coaching program to motivate and encourage city employees and their spouses who have, or are at risk for, diabetes and hypertension.

If so, we’d like to hear from you for this exciting column, as PRIMA shines the spotlight on its members. To be considered for the Member Spotlight column, contact Jennifer Ackerman at jackerman@primacentral.org

“The diabetes and hypertension coaching program was incorporated into the city’s Healthy Lifestyles Wellness Program, in partnership with Kroger Pharmacy and Bethesda Healthcare,” said Deborah Allison, risk manager for the city. “Employees and spouses who participate in Healthy Lifestyles can each earn up to $500 a year in financial incentives. Participation in the diabetes and hypertension coaching program earns each participant $100 toward their annual incentive.”

or 703.253.1267.

In addition, Allison said, employees and spouses who participate in the program receive their diabetes, hypertension and cholesterol-related medications for free. Participants in the program meet with a Kroger pharmacist 3-to-4 times per year. During these coaching sessions, employees not only have their biometric and disease-related screenings, but the can also ask questions, get advice, learn how to read grocery labels and go on a tour of the grocery store to learn where to find healthy options.

“Nobody wants to share with their co-workers whom they see on the elevator every day, the personal health and medical issue that they are facing,” said Allison. Risk Management’s responsibility is to guide the overall direction of the program, approve billing and invoices, and most importantly, market the program to city employees. The program has been successful, though just how successful is hard to quantify. “Though we believe this program has realized substantial cost savings, sometimes these savings are difficult to capture,” said Allison. “The city’s third-party health care administrator (Anthem) was able to report the comparisons between 2013 and 2014. In 2014, the medical costs for employees and dependents associated with type 2 diabetes decreased by over $68,000!” “Managing the rising cost of healthcare is a critically important issue for large public sector self-insured entities throughout the country,” said Allison. “To make a significant financial impact, the city had to do more than educate and provide resources. We had to offer real financial incentives to our employees to regularly manage their disease in a way that makes proper maintenance part of a lifestyle—not just a temporary change to earn a reward.” To learn more about the City of Cincinnati’s diabetes and hypertension coaching program, contact Deborah Allison at Deborah.allison@cincinnati-oh.gov.

Managing the rising cost of healthcare is a critically important issue for large public sector self-insured entities throughout the country…

PUBLIC RISK | APRIL 2015

“

The city utilizes a third-party wellness provider (Bethesda) in order to maintain employee privacy.

Deborah Allison, risk manager for the city

W W W.PRIMACENTRAL .ORG

winning team

Safety measures

4.0 GPA

Achieve A+ results in your risk management report card From the sports field to the classroom, achievement matters. Our workbook combines knowledge, experience, and creativity to develop custom risk transfer solutions and risk management strategies that protect your assets, your school and your students. Letâ&#x20AC;&#x2122;s achieve A+ results in your risk portfolio together. Learn more at www.munichreamerica.com/alternativemarket

Not if, but how Products and services provided by Munich Reinsurance America, Inc. Princeton, New Jersey

Going Above and Beyond “Sometimes I have to go above and beyond—literally. “Traveling the Alaskan bush to over 150 cities, boroughs and school districts is daunting, but I love what I do. Helping our members is hugely rewarding. They aren’t just risk partners, they’ve become personal friends. “To protect them from risk and losses, we rely on Genesis for reinsurance. When we encounter a little turbulence — or worse— it’s comforting to know we can trust their specialized expertise and top notch security. “With Genesis, we can always count on safe landings no matter what risks cross our path.”

Visit our website at www.GenesisInsurance.com

— Kevin Smith, Executive Director Alaska Municipal League Joint Insurance Association

General Star Indemnity Company is an eligible surplus lines insurer in all states, the District of Columbia, Puerto Rico, and the Virgin Islands. It has the status as an unlicensed insurer in California and operates under NAIC Number 0031-37362. Insurance is placed with the General Star Indemnity Company by licensed producers and, for risk that qualify, by licensed surplus lines brokers.

Genesis Management and Insurance Services Corporation, 120 Long Ridge Rd, Stamford, CT 06902 A.M. Best A++ XV

S&P AA+

A Berkshire Hathaway Company