Insurance companies rort workers’ comp scheme

A personal carer is so seriously injured that two surgical operations fail to correct a hand injury. The surgeon's post-operation report says: “The worker requires significant time off and work cover”. The independent medical doctor used by the insurance company twice suggests a timeline of 12–18 months for recovery, but the insurance company manipulates several medical reports and terminates the WorkCover arrangement. Emails from the insurance company provide evidence of the falsification: “I’m not sure it [sic] is strong enough to withstand conciliation but happy to write it [termination notice] up upon your direction to do so”.

In the same year, a prison officer is diagnosed with post-traumatic stress disorder (PTSD) after a hostage situation. In emails, the detached insurance company notes that the use of “may” and “should” in a psychological report is ambiguous enough for termination.

Linguistic gymnastics and other sordid practices from big insurance have been exposed in one of the Victorian Ombudsman's most damning investigations in decades. Submitted to parliament in September, the Investigation into the management of complex workers compensation claims and WorkSafe oversight uncovered a system that gave bonuses of $52 million last year and encouraged anti-worker conduct.

WorkSafe is the Victorian state body that manages the workplace safety system. Its responsibilities include enforcement of Victoria's occupational and safety laws, contracting out WorkCover private insurance for employers, rehabilitation for injured workers and managing the workers' compensation scheme.

Sparked by 370 complaints last year, a 37.2% increase in requests for conciliation and a spate of workers committing suicide, the Ombudsman assessed the “Big 5” of WorkCover insurance. A cache of evidence across 174 pages alleged that Allianz, CGU, Gallagher Basset, QBE, and Xchanging persecuted ordinary “police and prison officers, nurses, teachers, truck drivers and farmers”.

Victorian Ombudsman Deborah Glass found: “Agents unreasonably used evidence in decision making; maintained unreasonable decisions at conciliation; made decisions contrary to binding medical panel opinions; allowed employers to improperly influence their decision making; and provided inadequate internal review processes.”

Practices used to maximise millions of dollars in financial rewards were found to “compound worker injuries — not only to the detriment of the worker but ultimately to all of us who bear the social and financial cost”.

Indeed, the 2015 taxpayer-funded bonuses are excessive: Allianz $11,948,292; CGU$15,444,494; Gallagher Bassett $10,703,893; QBE $7,696,335; and Xchanging $7,006,716.

Historically, WorkCover was never so costly. Established by the 1914 Employee Injury Act, for more than a century WorkCover has been seen as a compulsory system of social insurance, harking back to the German social insurance of the 1700s and British mutualism of the 1800s.

At its heart, WorkCover is a $100 billion mutualism pool, providing compensation to injured workers. About 90,000 workers access the scheme each year. Increasingly, in the modern economy, complex cases of mental illness, stress and PTSD are on the rise.

Privatised and outsourced in the 1970s, state governments over the decades increasingly added neoliberal levers to WorkCover. Most nefarious is the remuneration model. Email evidence uncovered by Glass painted a system-wide conflict of interest, describing fabrication, stalling, report meddling or psychological bullying to yield considerable financial windfalls.

Glass writes of “management advising staff to do ‘everything they could’ to stop claims exceeding the termination timeframes associated with the financial rewards and penalties, emphasising that ‘any one of these claims could be worth $100K to the business’.”

Glass even exhibited the case study of “management providing monetary prizes to staff who terminated the highest number of claims”.

For ordinary workers thrown off WorkCover and into financial hardship, the pain and suffering is compounded by insurance companies.

In one sensitive criminal case, an insurance company received a significant financial reward from WorkCover for terminating payments to a sexual assault victim.

In a separate incident, an insurer gained a contract bonus from a termination, only to be subsequently sued after the mentally impaired worker took their own life.

The investigation also exposed the long-standing issues of conflict of interest between independent medical examiners (IMEs) and employers. IMEs receive remuneration from insurance companies and were found to have doctored what were supposed to be objective medical reports.

Employers, who dedicate entire HR teams to WorkCover cases, were illegally “influencing agents in their management of claims” and were instructed to “exert pressure on agent staff to make a certain decision on claims”. In one incident, Gallagher Bassett terminated a truck driver, based on requests from the worker’s employer who labelled the driver a “crook” and said it was “just the proof [they were] missing”.

Most dramatically, the investigation singled out WorkSafe as the driver of the unethical practices. WorkSafe rarely uses its powers to challenge big insurance practice, even when faced with overwhelming evidence. Embarrassingly, with 716 complaints in 2015, WorkSafe breached its own Code of Conduct and the Act with unfair decisions, untimely action and referring complaints to bodies with no role in WorkCover. Despite court findings of misconduct against insurance agents and IMEs, WorkSafe happily renewed their contracts.

In what could have been written by a bullying insurance company to a worker, WorkSafe CEO Clare Amies responded with a two-page letter, beginning: “I’d like to put on the record that the conclusions substantially overreach the limited evidence considered in the course of the investigation.”

While WorkSafe criticised the investigation’s sample size, Glass criticised WorkSafe for auditing only 8% of rejected WorkCover claims.

Puzzlingly, WorkSafe wrote: “WorkSafe accepts (17) recommendations to us. We will implement those which we have not already undertaken of our own volition”, but “does not support (2) recommendations to Government”, such as a review of the conciliation model.

Tabled to parliament inside the report, WorkSafe’s reaction has already sparked talk of sacking the WorkSafe Board. The investigation already has one scalp: QBEs WorkCover contract has been cancelled.

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