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THE BIG HURT

Get past the unending stream of annoying television ads and Amendment 11, the "Workers' Choice of Care" initiative, is essentially a labor-management dispute in which voters are being asked to act as arbitrators. Unfortunately, they'll have to make up their minds based largely on high-priced media campaigns rife with exaggeration, scare tactics and "Jorgie the Jet-Skier," Colorado's overexposed poster boy for workers' compensation fraud.

If passed, Amendment 11 would allow people injured on the job to choose their own "health-care providers," which would mean just about any practitioner, be it cardiologist or herbal healer, to whom workers would entrust their health and welfare. Under current law, Colorado employers have the right to assign workers a primary doctor, which is more narrowly defined as an M.D., dentist, podiatrist, chiropractor or osteopath.

The initiative, drafted by organized labor working in conjunction with workers' compensation attorneys, is neither a radical nor an original concept. At least fifteen states already give employees the right to choose doctors in such cases. But opponents say it could lead to increases in doctor bills and benefit payouts--and, consequently, to higher premium rates for workers' compensation insurance. Those fears prompted Colorado's business and insurance bigwigs to call a temporary halt to their own periodic bickering and form a united front in opposition to Amendment 11.

The amendment was born of distrust and a longstanding power struggle between business and labor, and the specters of fraud and greed continue to drive arguments on both sides. Proponents claim that passage of the amendment would keep unscrupulous employers and insurance companies from cheating workers out of benefits due them. Opponents say it would allow dishonest employees to join forces with unprincipled doctors and unethical attorneys to bilk employers. The two sides combined have spent well over a million dollars to wage the fight. And the truth is still as elusive as ever.

As of late August, the anti-11 forces, known as the Coalition to Save Colorado Jobs, had spent approximately $232,950 on TV commercials. Organized labor, whose TV ads began running last week, has budgeted about half that amount.

Labor's pro-11 ads are simple talking-head productions that at first sound a lot like promo pieces for personal-injury lawyers. "You or your family member might be hurt on the job," an actor begins, stressing that the present workers' compensation system offers "one doctor, no second opinion, no choice." But now, he continues, "it's up to us. It's your health. Shouldn't it be your decision?"

The ads, however, remain mum on the fact that, if passed, the amendment is likely to create an unholy administrative mess that will be left to the state legislature to untangle. It's a virtual certainty that attorneys and legislators will struggle to define the bill's vague language and to determine how it will affect existing law. "It will be a lawyers' feeding frenzy," says one doctor who specializes in the treatment of occupational injuries.

Meanwhile, the ads paid for by business tell viewers that Amendment 11 would allow "health-care cheaters" to decide who treats them for any injury, "even a fake one." One commercial shows video of Jorgie Dalegowski, a Lakewood drywaller, as he makes perfect turns on his Jet-Ski. Jorgie was the focus of an eight-part, KUSA/Channel 9 piece on workers' compensation fraud back in 1990. Though Jorgie had received almost a quarter of a million dollars in comp claims, he was still able to cavort on his Jet-Ski, a fact that enraged viewers. He will forever be known as the bad boy of workers' comp.

What the Jorgie ad fails to mention is that an insurance agency determined there had been no fraud in his case and that a judge concluded that his Jet-Skiing did not prove he was not entitled to benefits. Nor did the ad mention that Jorgie was certified as injured by doctors selected by his company's insurance carrier--not by a doctor he'd chosen himself. And a spokeswoman for the Colorado Department of Labor says the problem of workers' comp fraud has been exaggerated by the business lobby--which even then, she adds, has tended to point the finger in the wrong direction. "It's really less of an issue than I think the business community would suggest in terms of workers' committing fraud," says Rosemary Marshall.

In fact, according to Marshall, the majority of abuses are committed by employers, not employees. "When you look at the whole pie in terms of fraud in the system, maybe 42 percent of it is caused by employees and the rest is employer fraud," she says. Employers, for example, can cheat the system by refusing to take out insurance. They might misrepresent the number of workers they employ, says Marshall, or they might claim to employ "secretaries" when the workers are actually welders (who face more risk and thus require higher premiums).

 

"Yet," Marshall adds, "employee fraud is a Class 5 felony, and [when employers commit] fraud, they get a slap on the hand."

Ron Lundquist, for one, would like to see the two sides call a halt to their expensive grudge match and sit down at the bargaining table. Lundquist, who owns a drywall company and is Jorgie the Jet-Skier's former boss, sits on Governor Roy Romer's panel on workers' compensation, formed earlier this year.

"If management and labor would jointly go to the legislature with recommendations to make the system better," Lundquist says, "that's the way it should be. Workers' comp is between employer and employee. If we [the panel] had been meeting a year ago, 11 wouldn't be on the ballot." Instead, he says, a group of "outsiders"--primarily lobbyists and lawyers--are now stirring up trouble in Colorado.

Employers will probably end up spending more than $1 million to fight Amendment 11, Lundquist predicts. "Why can't that be used as a joint thing," asks the businessman, "to make a better workplace and create a better environment and better working conditions, rather than pay for all these ads?"

Jack Hawkins, president of the Denver Area Labor Federation, likes to begin his stump speeches about Amendment 11 by telling a story many Coloradans would prefer to forget. "On September 23, 1913," he says, "a couple thousand miners went on strike in a little town outside of Trinidad. One of the issues was a choice of doctor."

Seven months later, on April 20, 1914, the Colorado National Guard attacked the miners' tent colony near Ludlow. Twenty people, including women and children, died when the militia set fire to their tents. The incident is known as the Ludlow Massacre.

"That strike was never settled," Hawkins tells his labor-oriented audiences. "But we will settle it November 8. Because the old days of the company towns, the company store, the company doctor, the company pharmacy, that's over. That philosophy is the reason we're where we're at. It's our bodies, our choice."

Hawkins knows full well that "choice" is a loaded word these days. It has been at the center of discussions about both abortion and President Bill Clinton's health-care plan. And Hawkins believes it will work in labor's favor in the Amendment 11 debate--especially, he says, because opposition ads have shied away from explaining what the measure actually says. "They just say, `Here comes Amendment 11, the worst thing you can imagine,'" Hawkins says.

George Dibble, chairman of the Colorado Association of Commerce and Industry and a key Amendment 11 opponent, rejects Hawkins's contention that the business coalition is afraid to mention choice. He and other opponents simply believe the concept to be irrelevant, Dibble says. "Choice is not really the issue here," he says. "The issue is that workers' compensation is not comparable to other health insurance. The goal is to get healthy and get back to work. It's about keeping fraud out of the system."

The consortium of business interests fighting Amendment 11 can't trot out arguments that pack the emotional wallop of Hawkins's ghosts of dead children. Instead, the Coalition to Save Colorado Jobs promotes the idea that the measure will hit people where it hurts most--in the pocketbook. The Coalition quotes frequently from studies that predict increases of up to 30 percent in workers' compensation costs and forecast a snowball effect in which businesses will go under and as many as 26,000 Coloradans will lose their jobs.

"We're not opposed to choice," says Tom Daly, vice president of the Denver-based Van Gilder Insurance and a steering-committee member of the Coalition to Save Colorado Jobs. "But we are opposed to higher costs without a corresponding increase in quality of care." Treatment could suffer, Daly and his allies say, because the amendment would open the door to controversial new-age practitioners such as herbalists and aroma-therapists.

Denver attorney Neil O'Toole, a supporter of the amendment, says those claims are groundless. "They're suggesting that the system should be determined by their need to be paternalistic toward what is an insignificant amount of people," says O'Toole, who represents claimants in workers' compensation cases. "People act rationally when it comes to taking care of themselves. And you've got to realize that [an injury] has to be work-related. Someone's not going to say, `I feel negative ions in this place' and then go to Boulder to see an iridologist [someone who reads the iris to detect illness]."

"The problem with workers' comp," says a spokeswoman for the anti-11 forces, "is that you say the word and people's eyes glaze over." But esoteric though it may be, workers' compensation has an effect on every man, woman and child in the state, either directly or through the myriad costs and services that are inextricably tied to it.

 

A hundred years ago, workers who were injured on the job were largely out of luck (and out of work) unless they could prove their employers were negligent and thus responsible for their suffering. Even then, workers' only recourse was time-consuming litigation. For employers, that sometimes meant costly court fights and big settlements. Workers' compensation was designed as a compromise--a no-fault insurance policy to protect the employees and their employers. Colorado was on the leading edge of the new movement; in 1917 it became the second state in the country to enact a compensation act.

Under the new arrangement, businesses agreed to the concept of mandatory insurance and to pick up 100 percent of the tab for it; employees gave up the right to sue for negligence. In return, employees' medical bills were paid, they were entitled to receive a portion of their lost wages and, if permanently disabled, they were eligible for additional assistance. The hope was that the new system would cut attorneys and lawsuits out of the workers' comp picture.

Each state was free to design its own version of comp insurance. Colorado adopted payment "schedules"--something like a menu of injuries and accompanying payoffs--and gave employers the right to choose a doctor. But the state legislature also allowed for a broad interpretation of the terms "permanent partial disability" and "permanent total disability," categories that account for the most seriously injured workers and the most expensive claims.

Rather than discourage litigation, however, Colorado's system seemed to attract it. And there was plenty at stake. A partial permanent disability to an employee meant a payment of tens of thousands of dollars. If employees or their attorneys could prove loss of future wage-earning potential, they stood to receive hundreds of thousands more. "It was," says a Denver attorney who represents insurers in such matters, "a money-cranking machine."

Whether it was due to simple bad luck or skillful lawyers, Colorado insurers were in fact paying out big money to workers' compensation claimants. The National Council on Compensation Insurance, an actuarial firm funded by insurance companies, tracks workers' comp claims in 35 states. According to Peter Strauss, NCCI director of government affairs for Colorado, a 1990 study of closed claims showed that 18 percent of Colorado's injured workers declared that they had suffered a permanent total disability.

"That's absurd," says Strauss. "People aren't that fragile. That means they're never able to hold a meaningful job again. We'd expect 1 to 3 percent in other states. Eighteen percent was way out of whack."

Partly as a result of such claims, premium rates soared. By the late Eighties, annual double-digit rate increases were the norm. According to Vickie Armstrong, a lobbyist for the business-backed Workers' Compensation Coalition (and a former state representative from Grand Junction), expenses increased by 228 percent during those years. "Our businesses were dying on the vine," she says.

One way employers tried to keep a lid on costs was by sending employees to managed-care clinics, where doctors give discounted rates in return for large numbers of referrals. Insurers passed on the savings to employers--and employees complained that they were being rushed back to work by doctors with a pro-employer bent. Still, premiums continued to soar.

The ax fell in 1990, when NCCI proposed a whopping 38 percent rate increase for Colorado employers.

The prospect of another huge increase coalesced business owners. And in 1991, with the help of key state legislators, Senate Bill 218 was drafted into law. The bill was labeled as "workers' comp reform," but that was an understatement. According to Denver attorney Tom Kanan, who represents insurance companies, SB 218 represented "the most revolutionary changes since the system was enacted."

Business owners were delighted with the sweeping reforms. NCCI withdrew its request for the proposed rate increase and since has filed for decreases.

Organized labor, however, was none too happy. Though SB 218 streamlined the process, allowing workers to receive benefits more quickly than they had in the past, benefits were slashed. The bill did away with payouts for loss of wage-earning capacity. Benefit payouts for permanent partial disability were cut back severely. And the definition of permanent total disability was toughened so much, critics say, that it became nearly impossible to qualify for such benefits.

"I don't know of one person in the last three years who got [permanent total disability]," says Denver attorney Stuart Kritzer, who sometimes represents plaintiffs in workers' comp cases. "It used to be that you would receive it if you were unable to work at what you used to do. Now if you're a quadriplegic, you can be hired as a mattress tester and be ineligible."

 

The AFL-CIO and the Denver Area Labor Federation fought back, intensifying a battle with employers that continues today. Labor upped the ante by going the initiative route: The unions plan to put amendments dealing with labor issues or workers' comp on the ballot every year, if need be, until they get what they want.

The reason for the new strategy, says Colorado AFL-CIO president Bob Greene, is the legislature's pro-business tilt. "We can't even get a decent hearing on our bills," says Greene. "So we decided to take one issue a year. And I don't care if it takes forty years--we'll deal with them one at a time through the initiative process until which time the legislature decides to deal with people the way it should."

Labor's first experiment with the initiative process didn't go as well as hoped. But it did manage to get the business community's attention.

In 1992, the year following the passage of SB 218, labor put together the Safe Workplace Amendment. If it had passed, the measure would have allowed injured employees to sue for damages if employers knowingly maintained an unsafe workplace. Innocent though it sounded, the measure would have decimated the workers' compensation system--which, after all, was created in the first place to avoid litigation.

At first it looked as though the amendment would get on the ballot. Labor collected well over the necessary number of signatures needed to take the question to the voters. But big business stepped forward to challenge the signatures. Members of the Colorado Association of Commerce and Industry felt so strongly about the issue, says George Dibble, that they helped establish and fund the Coalition to Save Colorado Jobs. By October 1992 the coalition had received nearly $600,000 in contributions, most of it from large Colorado businesses but much of it from out-of-state insurance companies.

The business coalition was successful in its challenge, and the Safe Workplace Amendment never made it to the ballot. But organized labor wasn't finished. Just days after the 1992 election, the AFL-CIO and the Denver Area Labor Federation began campaigning to get Amendment 11 on the ballot. The groups filed the signatures with the secretary of state's office in August 1993. Only when it appeared that voters would get to vote on Amendment 11, says Greene, did business begin making overtures about getting a compromise bill passed in the legislature.

"They dealt with us because choice of care was hanging over their heads, over businesses' heads, and what the hell is the legislature if not dominated by business?" says Greene.

Greene says he was first approached about making peace by Vickie Armstrong of the Workers' Compensation Coalition. "In our discussions," he says, "I said, `Draft a bill to take care of [employee choice of doctors] and we won't need the amendment.'" Greene says he promised Armstrong that if she was successful in creating a reform bill that gave employees choice, the AFL-CIO would agree not to campaign on behalf of Amendment 11. "They refused to even talk about it," he says.

Business and labor were able to reach a compromise on other workers' comp issues, however, resulting in Senate Bill 199, which passed in the most recent legislative session. That bill made it easier for certain types of claimants to receive benefits and included language making it illegal for any employer, insurer or claimant to dictate the type and duration of treatment for injured workers. But it didn't give employees the right to choose their own medical providers.

Believing that the passage of SB 199 would eliminate labor's interest in Amendment 11, Armstrong proposed a second bill. That measure would have allowed people who put amendments on the ballot to withdraw them for cause, a radical departure from existing law. The measure was clearly designed to allow the AFL-CIO to yank Amendment 11. But labor refused to go for it.

"I told her she was crazy, she was nuts, that there was no damn way that we would support that bill," says Greene. "But she took this bill to the legislature anyway, and she said that if they passed [SB 199], that labor would withdraw the ballot initiative."

"That's nice rhetoric," Armstrong replies, "but I don't recall that. He never told me I was crazy. He said it [the second bill] was `an intriguing idea.'" She also says that she did not tell legislators the bill had the full support of labor, because Greene would never tell her what the union planned to do if SB 199 passed. But what she did have, she says, was a signed, "confidential" agreement with Greene stating that business and labor would form a joint position on 11. "And we believed that meant we would agree on a position," she says. "They saw it as that we could each take a [different] side. It was a matter of semantics."

 

Her bill to allow the removal of amendments from the ballot did not pass--thanks largely to the efforts of the Denver Area Labor Federation.

With the lines drawn for a confrontation on Amendment 11, both sides set about establishing war chests. The AFL-CIO contributed the bulk of the money for the pro-11 camp, anteing up about $100,000. According to reports filed with the Colorado Secretary of State's office, as of late August, the group also had received about $20,000 from workers' compensation attorneys and chiropractors.

The Coalition to Save Colorado Jobs received the largest portion of its contributions from big employers (Monfort kicked in $25,000), business groups (the Colorado Association of Home Builders gave $10,000) and large, out-of-state insurance companies: The American Insurance Association of Washington, D.C., donated $73,900; the American International Insurance Group of New York gave $12,800; and Continental Casualty Company of Chicago chipped in $26,800.

Despite their status as the key players in the workers' compensation system, doctors haven't kicked in a significant amount of money for either side. However, the Colorado Medical Society has come out against the amendment. Says Dr. John Hughes, chair of the medical society's Workers' Compensation Advisory Committee, "I think we're all agreeable that choice is a problem in the current system, but we think an amendment is a facile solution to a complex problem." The doctors' committee has proposed, instead, a system that would allow employees to select a doctor from a preselected list of physicians.

The campaign contributions posted so far have both sides sniping at each other. In debates with Armstrong and Daly, Jack Hawkins demands to know why out-of-state insurance companies care about what goes on in Colorado. Daly and his group suggest that the fact that chiropractors and plaintiffs' attorneys are interested in Amendment 11 smacks of self-interest.

The two sides also split over the amendment's alleged costs. Hawkins likes to pull out a Canadian study indicating that states limiting choice of health-care providers pay out 5 to 15 percent more in benefits than do states allowing for free choice. Employees, he suggests, get better faster when they're under the care of a health-care practitioner they know and trust.

Daly and Armstrong have their own studies to fall back on. One such analysis, performed by Denver's Tillinghast accounting firm at the behest of the state insurance commission, indicates that workers actually get better quicker when employers guide physician selection. The opposition also quotes extensively from a study done by NCCI, which maintains that costs in Colorado would go up anywhere from 10 to 30 percent if Amendment 11 passes. The insurers' trade group has taken those figures and extrapolated that up to 26,000 people could lose their jobs--the theory being that employers would have to lay off workers to stay afloat. That estimate has since figured prominently in television ads paid for by employers.

Organized labor is highly skeptical of NCCI's figures, noting that the actuarial firm is essentially an arm of the insurance companies. And NCCI is being sued by the attorney general of South Carolina and by private employers in North Carolina, Alabama and Texas for alleged price-fixing. The firm is accused of conspiring with insurance companies to overcharge employers on workers' comp premiums and of failing to report illegal overcharges to state regulators. Spokesmen for NCCI have termed the suits "totally without merit."

Even the Colorado business leaders now relying on NCCI figures in the anti-11 fight have accused the insurance group of making rate requests based on inaccurate statistics in the past. Last year, for instance, when NCCI filed a request for a 5 percent decrease in Colorado premiums for workers' compensation insurance, the business community howled, maintaining that the figures were skewed and that its members were owed more of a break. The insurance commission agreed with business owners and drove the decrease down to 7.8 percent.

And at this point, it may be illogical to rely on any study. In the end, acknowledges Martin Lewis, who helped prepare the Tillinghast study for the state insurance commission, nobody can really say what the financial impact of Amendment 11 would be.

"If Amendment 11 passes, naturally some people will switch and say that instead of having their employer designate [a health-care provider], `I'll use my own,'" says Lewis. "We don't know how many will switch. Nobody knows. That, in my opinion, adds a lot of uncertainty to it. It's just a very high-charged political thing, and both sides are pulling out all the stops.


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