 Aloha, and welcome to Business in Hawaii with Reg Baker. We're a show that broadcasts live every Thursday from 2 to 2.30 at the Think Tech Studios in beautiful downtown Halalulu. We've got beautiful weather today, fog coming in this weekend, so if you're going to visit, visit it next week. Today is going to be a very interesting show. We do highlight successful companies and individuals and how they make it in Hawaii, despite the challenges. But we also bring on people that can talk a little bit about some of the issues and some of the challenges that business have and try to get a better understanding of what the issues are so that the business people can be more informed. Today is one of those days where we've got two individuals coming in and we're going to be talking about workers' compensation. I've got Dr. Scott McCaffrey who has got a very long resume and I'll let him address that. We also have an attorney, Matt Matsunaga, who also used to be a former state senator and has a lot of knowledge and a legislative side of Workers' Com. So both of them are going to be sharing their wisdom and their knowledge with us today and hopefully answering all those questions about Workers' Com. But let me start out with Dr. Scott. You've been involved with Workers' Com. Can you give us a little background of yourself? Well, yeah, Reg, thank you first for having me on the show and Matt as well. My resume isn't really that long. I'm kind of just a working class doctor who has now almost my 40th year in my career taking care of people. And I specialized in trauma early on as an emergency doctor. I did that for about 20 years. And then I opened a follow-up clinic for injuries of all types, of course in the day-to-day life on the planet Earth, most adults get hurt at work because that's where they are most active. So our patient panel right now is about 40% Workers' Com, about 20% auto injury, and the rest sports injuries, and of course people get hurt around the house sometimes. So we've been at this for quite a while. I was former chief of Ahmed at Kaiser and helped set their system up back in the 80s, way back in the day, but have spent the last 26 years out at what was St. Francis West, is now the new Queens West, beautiful campus out in West Oahu, and have been there for 26 years taking care of people injured. Well, that's still a pretty impressive resume. You've been helping a lot of people over the years. Not my first rodeo. Yeah. Yeah, that's very good. And I'm surprised. 40% of your practice is Workers' Com. Yes, that's how it breaks down for adults that get hurt. It's got to be one of the biggest percentages of any practice in Hawaii, is it? I don't know about that. There are other injury-oriented clinics several around. Of course, Kaiser, the program that I set up has, I think, 8 to 10 doctors. So they see a lot of folks, mostly, or usually those that are also associated with the Kaiser Health Plan. And that's basically what we're doing. It doesn't matter really, of course, where you work, if you get hurt, because Work Comp Insurance is a separate insurance entity, you can go anywhere you want in this state, at least for the first doctor. After that, you have to get permission to change doctors after your first change. Well, and that's some of the details that I'm hoping we can get into a little bit later. But Matt, tell me a little bit about yourself. You've been around for a while as well. Well, first of all, thank you very much, Reg, for having me on the show. And thank you for the wonderful lunch beforehand. Dr. Scott, you missed out on? I'm hungry. No, I'm not. I got a doggie bag. So I got involved in Worker's Comp from a legislative standpoint, maybe about five years ago, when one of my clients asked me to help them sort of navigate some of the Worker's Comp bills that were going through the ledge. And through that, I began to see some of the problems in the system. And I got the privilege of working closely with Dr. Scottie and other really compassionate minded physicians whose single purpose is to get the injured worker back to work, treat them and give them their job, give them their dignity back. And so that's how I've been involved. Very good. And I guess you mentioned some of the challenges. I mean, there's challenges in the system. Is that, I guess, something that you can talk about? Yeah, so let's go back to the start of Worker's Comp. And Hawaii was actually set up in 1915, even before Dr. Scottie began his practice. A little before my time. A little before your time. Not much, but a little. So in 1915, that's even before statehood. That is. Wow. Yes. And the concept was basically that you don't want every injured worker to sue their employer. Right? So instead, what you do is, hey, you got to give up the right to sue, but in exchange... For unsafe work practice. For an unsafe work environment. Right, right. Right, right. Thank you. Yeah. But in exchange, we're going to give you medical coverage, we'll take care of your injuries, and a set compensation amount. So that was the concept. And there's going to be a presumption that if you're injured, that it's presumed that you did it while at work, right? So that was the concept, but unfortunately what has turned into what was supposed to be more of a non-latidious nature and a non-latidious way of solving problems has turned very latidious. And just outside, we were talking to one of the staff members who was involved in a workers' comp system, how he had to get his attorney involved against the employer's attorney, and unfortunately that's where the system is going wrong. Right. And I think part of the problem that maybe leads to this litigious environment is that the way they go about setting the workers' comp rates and with experience, and is that how that works? Is that one of the processes? You know, I'm not sure if that's so much the key issue. For me, the key issues are, one, is don't drive the doctors out of the system. That's like driving teachers out of the educational system. Right. You need the doctors. Absolutely. Doctors make the process reasonably fair, you know, so the worker has a one-stop shop, doesn't have to drive 60 miles to go to a longs or CVS to fill the prescription, makes the, make the examination process as fair and as transparent as possible. Number three, let's pass on to the employer's, the savings that are resulting from the system and make sure it doesn't all go to the insurance companies for administrative costs and for profits. Give it back to the small businesses. Well, and you were showing me something at lunch. It was really amazing. Was it the amount of savings that has happened over the years? Yeah, it's crazy. From 94 to 2006, the amount of compensation costs paid by the workers' comp insurance companies went from $243 million down to $109 million, and yet the employer premiums only dropped from 362 million to 356 million. So they had over $100 million in savings, but no real reduction in premiums. Exactly. And that's got to change. Well, I basically agree with that, but if I could speak on behalf of insurers for a moment, there was a time in our history back to the territorial days and all the way up until about 1990, which is about the time that we started the Workstar Injury Recovery Center and doctors began to kind of specializing and focusing on work comp, up until that time premiums were going up and up, costs were going up and up. And during that pre-period, pre-1990 period, there was a fair amount of cheating and fraudulent behavior by some injured workers and using the system, working the system, whatever you want to call it. So it only takes a few bad apples to ruin the barrel. That caused a significant reaction then in the payers and the employer community to try to do something about it. As often happens, however, there was a bit of an overshoot in 1995 where they cut through a thing called the Hoku Alliance, for those of you who went back to that era. The Hoku Alliance funded and moved by insurers, and I believe the Chamber of Commerce was also a big push on this, and they cut doctors' fees over almost 50%, 52%, and only gave six weeks notice to do it by the end of the session. So it was really quite draconian, and in my opinion, the pendulum swung way too far, as often happens when, you know, people are trying to correct things that look a little out of control. But what that did effectively is drive out about 70 to 80% of the doctors that were taking care of injured workers, it drove them out, because they could no longer afford to take care of the injured worker. Injured workers are quite labor intensive, we're still in a paper system, by the way, and it is the 21st century, but these are heralding back to its roots and so forth. It still runs on paper, very inefficient, and because of the cost control efforts that were probably justified, to some extent, a way back when there were a lot of cheaters, now we've got a situation where attorneys, where there continues to be a lot of suspicion regarding injured workers, there's suspicion regarding doctors that are taking care of them as well, and it has caused, in my opinion, and I see this every day, an over-response and a hyper-effort at downward cost pressure, and an assumption that there are still a lot of workers out there just cheating. I don't see it. Because doctors have specialized, we have specialty clinics such as mine, we're like eagles, we're like hawks looking after and looking out for anyone who might be fraudulent and might be playing games, we aggressively promote light duty, which is a wonderful win-win, it cuts down on the lost time for the insurers, it also keeps the patient busy psychologically, they're not sitting home with their injury and pain, and it's a wonderful thing, I wish more employers participated in light duty, because it helps us really keep our cost down, and things are really mended a lot, to a point where we have shown a lot of efficiencies to the point that employer premiums for work comp over the last two decades have basically slid down and down, unlike the rest of insurance in healthcare, HMAA, HMSA and so forth, those premiums keep going up and up, so I want to give a shout to all of the people that work in work comp, the ones doing the heavy lifting on the front line, the doctors, the therapists, chiropractors and so forth, I think everyone's kind of gotten on board, but now we're trying to bring the payers and the employers on board to give each other a congratulation and to work on more efficiencies to make this the best program in the United States. Are we close to that? Not as close as I would like to see, I've been trying to help and trying to move toward efficiency reform for almost two decades, we've raised awareness, hence us sitting here able to discuss these issues right now, but I'm always calling out for more cooperation, for less actions by any parties that encourage an offense to attorneys met, but that do not encourage attorneys to have to get involved. What I find is these days that patients do not reach out for attorney help unless they feel threatened or under attack in some way, either through a denial of their care, forcing the patient to go to an insurance doctor, they call them independent medical evaluators, but many are not, they're quite biased against the patient and leaning heavily on the side of controlling and cutting costs and these kind of behaviors are actually paradoxically costing more money by far than they are saving, so these are the kind of things, we're trying to take the conflict out of this system because, and of course we're in the land of Aloha here, to work together cooperatively in the same canoe, paddling in the same direction, only makes sense and it's a way we can really, I think, take the work up system to the next level. Well it sounds like we're at least talking about it and hopefully moving in the right direction, but we do need to take a break here for a second, we're going to pick up this conversation, I want to loop back and talk a little bit about that light duty you mentioned, I want to get a better feel for what that means, but this is business in Hawaii with Reg Baker, we heard today talk about workers comp and trying to make sure that everybody has a clear understanding of what that is and what the issues are, so we're going to take a break, we'll be right back in about 60 seconds. Aloha, I'm Dave Stevens, the host of the Cyber Underground on Think Tech Hawaii, this is my co-host Andrew Lanning, the security guy. Every week at 5 p.m. we'll be discussing cyber security, the things to look out for and the things to do to keep yourself safe. Check us out on Think Tech Hawaii at 5 o'clock Friday, thank you. Hi, I'm Marianne Sasaki, we just completed another great episode of Life in the Law, and I'm here today with Jay Fidel, hi Jay. Hi Marianne. And what do we love about the law, Jay? There's so much to love about it, right? There's more to love about it all the time. No kidding. We have to be a nation of laws. We have to be a nation of laws and we have to be a diligent nation of lawyers and citizens. It's all about the rule of law, Marianne. The rule of law is alive and well and life in the law. Yes, it certainly is. Tune in every Wednesday from one to one-third on Think Tech. Aloha and welcome back to Business in Hawaii with Reg Baker. Today we're having a very passionate discussion on Worker's Comp and how important that is here in Hawaii for both the employers and for the employees. And we were just talking a little bit about some of the nuances of Worker's Comp itself and you mentioned light duty and it caught my attention. It's almost as if the companies had the option to participate in light duty or not. Am I understanding that correctly? Well, they do. They buy a premium or a policy with a Work Comp insurance carrier that doesn't, I've never seen one anyway, that mandates that they offer light duty or a certain amount or a certain number of positions. They're always encouraged by the insurance carrier because it's a marvelous way to contain cost. I as a doctor, bound to my hypocritical, both, I don't think of cost as my number one mission. My number one mission is to get that person better as quickly as possible. And as we were talking about break, the foundation of that, of course, is early, accurate diagnosis of the problem. The advent of 3.0 Tesla MRI scanning has revolutionized my field of medicine. We can look into the body better than Superman and it's kind of like Star Trek really anymore. Boy, if you've got a problem that still bothers a person after just a few weeks, once we scan them we can almost always identify the root of that problem. Now, we can't always cure it. For instance, an injured disc, a ruptured disc, or a tear in the disc, which is one of the, that's, you know, the central weight-supporting column of the body is the spine. Those are significant injuries, especially here in our islands, to folks that are in the trades and construction trades, which is, by the way, where most of the serious injuries happen, people that are lifting and bending and stooping and twisting and so forth. In the construction trades, we have an injury rate of pushing 20% for those that are active on site. Whereas clerical type work, legislative work, and so forth, or bankers, it's much, much lower, of course. And if a company does elect to go into late duty, that could result in a reduced premium and the worker gets to go back to work faster, but not at full, I guess, full duties. It's just a lighter duty and they do a little different type of work. You know, my understanding of that, and maybe Matt could add something to this, is that if you file a work comp claim as an employer, that you've got a three-year experience modification. That is, any money that is spent on that claim will then be charged back to you, at least at some percent of it, and it will affect your premium in an upward fashion for a period of three years. Is that your understanding, Matt? I'm not sure. And so in that way, yes, it does... Anything you can save as an employer on that claim will help you in not having to pay as high of a premium down the road for three years. And so by getting the employee back to work, that you don't have to pay for them to stay home, to actually be doing and contributing a little bit at the job. Yes, the employer continues to pay them at their usual rate, so that gets the insurance folks off the hook for paying their indemnity or their lost wages. It's called temporary total disability. And that is up to... It's up to $2,500 per month, it caps out. So if you're in a higher-paid trade, oftentimes there's no financial incentive for staying off work on a work comp entry. And that's changed somewhat over the years as well. So what other benefits are there to getting back to work sooner? Okay, so there might be some dollar savings, but there's got to be some emotional satisfaction to the employee and maybe even that could help healing process. Absolutely. The best study I've ever seen, and this was a safe way that did this study a couple of decades ago, is if one of their employees went out on an injury and couldn't come back to work because of their impairment that they had, if the Safeway Management or Human Resources just called every other day to say, how are you doing? We miss you. We miss you at work. That the recovery rate was significant. Wow. And the pain didn't... It actually reduced the patient's pain to know if somebody would call and care. Isn't that fascinating? A little bit of empathy goes a long way. What does it cost Safeway? Well, the time for someone to pick up the phone. Which is what, 60 seconds? Well, there's a cost to everything in business, but I think it is a good return on that one. Yeah, I think so. So we're very much encouraged that for all of the doctors that I associate with, as well as the doctors who are in the relatively new Work Injury Medical Association of Hawaii, WEMA, which we formed as a group of doctors trying to get everybody on board with best practices and to try to further efficient ties to delivery of care. And how long has that organization been trying this? I think it's just about four years now. Four years? Making progress? Well, I think we're having an impact. We just had a wonderful seminar that we hosted and put together called Work Comp 101 where we invited regulators, legislators, insurance folks as well as doctors and therapists to all come together and to start our number one, two and three heart burns in terms of what we as different stakeholders in the system have to wrestle with all the time. And our hopes is that by encouraging that dialogue and not just coming together to talk but also to listen that we can find some good win-win solutions to the problems that are still plaguing us. Just getting the discussion going is half the battle. It's good to be having these kind of talks. I think so. Now, Matt, I wanted to ask you. You kind of keep your eye on the legislation that's going on. I guess that's kind of like your Cooliana. How is things looking for this session? Anything going on that we should be aware of? At the beginning of the session, there were about 30 workers comp bills that we were keeping our Hawkeye eagle eye on. That's been pared down to about three to five. So it's been significantly reduced. I think the most important ones that are still alive are, one, trying to make the IME process a little bit more transparent. And IME is the independent medical exam in the workers comp process. And all this bill, originally, it was to try and make sure that the doctor that's doing IME is held to the same standard that he or she would have to a normal patient. That part got taken out of the bill and what's left in the bill now is to allow the injured worker to bring in a chaperone and to be able to record the IME exam if the IME physician allows that. So that's what's left. It's a good first step forward. Every 30,000 mile journey starts with the first step and we're hopeful that's going to pass. There's another measure that was aimed at this tactic called deny pending investigation, but unfortunately it doesn't look like that measure is going to pass. I guess it's nice to be making these steps. But if the steps don't happen often enough and quick enough, it could take a long time to travel this journey. What Dr. Scottie mentioned is that we're still on a paper system and I'm at least glad that the Department of Labor is pushing to try and modernize it, but we passed a bill last session that allows physicians to fax the workers comp treatment plan fax. It's 20 freaking 17. Am I allowed to say freaking? Do they make fax? First of all, explain to me. What's a fax? We try to have the bill include emails, but we were told that the system wouldn't accommodate emails in this age. There's a lot of negative inertia built into the system for a number of reasons. Back to the IME situation, what we're trying to do is get rid of the extreme IME opinion that is anti-patient, although it might have an immediate effect of allowing an insurer to cut off care if it's done in a draconian fashion. Some are, by the way, they fly in some people from the mainland that aren't even part of this medical community. Who chooses the IME? And they have a bias in what type of outcome they want from this. They absolutely do, unfortunately. If you come at a case with an assumption that somebody should be better and aren't, or that they're not trying, or the doctor's doing something wrong, you're going to seek out, I guess, an opinion that reinforces that. That's a captain obvious statement, by the way. It's a rhetorical question, but I'm happy to answer it. What we're after is a fair professional job that keep a case from turning into a train wreck because once if real pathology is denied or ignored and care is cut off, that pathology won't go away. It'll bubble around the system. The patient will then have to go to a hearing. If they lose, they might go to an appeal. And this process can take anywhere from a few months to a few years, actually. And it could get worse, couldn't it? If they're not treated correctly and interventions that don't happen can lead to what we call comorbidities or just worsening of the problem. Some of these cases, if we could have gotten surgery to them quickly and repaired the torn meniscus or the torn disc or whatever, we could have had the patient back to work, actually, in a functional capacity. We've got to keep in mind that's the goal. We want to keep the patient moving to the system. It is called worker's compensation. It's there to protect the worker to keep them from falling into destitution. These are really solid citizens in Hawaii that this happens to. They can lose their house. They can lose their wife or husband. And their lives really can come unraveled if that safety net called work comp is not there for them. And need I remind everyone about our growing homeless problem? I was just going to say, this could actually be adding to that homeless issue. And in my opinion, and Matt's probably got an opinion on this, paying enough attention as to where all these homeless come from originally. And because there had to have been a breakdown in our social safety net that at least started these folks down the road to a life of chronic pain, drug abuse, and on to what desperate people do, which is dishonest things and burglary and even violence. So really, that's one thing that I do feel very passionately about. We've got to make sure that the work comp system is working for the people of Hawaii. We don't have the luxury of not getting folks back into a productive mode. We don't have a state next to us where we can bus in more workers. There's nothing new about that story, by the way. We're all we got. So let's take care of our own. We can do it. We have the technology. But what's lacking, in my opinion, is more cooperation to get the job done right with less conflict and fighting and focusing on the outcome. So what we need to do is just keep the awareness out there. We've got some organizations that's doing this. Maybe we need to have more of these type of discussions going forward. But unfortunately, believe it or not, we've kind of run out of time. Matt, any closing comments you'd like to make before we wrap up? Just that the true measure of any society is how it treats its most vulnerable members and injured workers are clearly high and vulnerable members. So let's do the right thing, folks. Let's get in the canoe and let's all paddle in the same direction. That's good. Any final comments? Well, just to reiterate what Matt just said, we have an ability to fix this. I want to reassure insurers that might be watching this or employers that we are very cognizant that you guys are paying the bill and have to make ends meet. And we're happy to be partners in that. We're happy for you to listen to our reports from the front line because we're down on the front line doing the heavy lifting and listening and help support some of the solutions that we are proposing. Very good. Well, I appreciate you both having the time to visit with us today. Thank you. We had some really good information that was disseminated about Workers' Comp. This is business in Hawaii with Reg Baker. We broadcast live every Thursday from 2 to 2.30. We have information that might be useful to them as they manage and run their own businesses. So from Think Tech Hawaii and the studios in the Pioneer Plaza, until next week, aloha.