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Employers that authorize workers’ compensation medical care cannot rescind or modify the authorization for treatment already provided, according to legislation California Gov. Arnold Schwarzenegger has signed into law.

Assemblywoman Bonnie Lowenthal, D-Long Beach, introduced A.B. 361 on behalf of the California Chiropractic Association, according to a legislative analysis of the bill that the governor signed into law during the weekend.

The governor also signed a bill removing a December 31 sunset date from a law that allows employees to designate in advance the doctor who would treat their workers’ comp injuries.

Some employers opposed S.B. 186, introduced by state Sen. Mark DeSaulnier, D-Concord, because it allows a pre-designated physician to refer injured workers to specialists outside employers’ provider networks.

Schwarzenegger also signed A.B. 483, introduced by Assemblyman Joan Buchanan, D-San Ramon. It requires the California Workers’ Compensation Rating Bureau to establish a Web site that allows the public to identify whether an employer is insured for workers’ comp claims.

Filed by Roberto Ceniceros of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Even after a successful vote in the Senate Finance Committee on Tuesday, October 13, that attracted one Republican, Democrats face challenges in putting together enough support to push abroad health care reform bill through Congress this year.

The Senate panel approved a measure, 14-9, that addresses most aspects of the health care system—mandating that individuals obtain health insurance and ensuring that it cannot be denied because of illness or pre-existing conditions.

Sen. Olympia Snowe, R-Maine, the only committee Republican to support the bill, cautioned that she was only trying to move the legislative process forward.

“My vote today … doesn’t forecast what my vote will be tomorrow,” Snowe said.

Observers were hanging on Snowe’s decision because she has been the only congressional Republican so far to indicate willingness to support any of the health care measures that have come through three House and two Senate committees.

Several Finance Committee Democrats also outlined reservations about the panel’s bill, which had been in development for months and required eight legislative days of committee markup. They supported the measure in order to advance to Senate floor debate, where they plan to offer amendments to shape a final bill.

Most Finance Committee Republicans asserted that the measure was too costly and represents a government takeover of health care.

“We can now see clearly that the bill continues its march leftward,” said Sen. Charles Grassley, R-Iowa and ranking Republican on the panel.

The House labor, tax and commerce committees as well as the Senate health committee all approved bills over the summer that feature an employer mandate and so-called public option, or government-run health care plan for people under 65. The Senate Finance bill does not include either provision.

The bills contain similar insurance market reforms. Each House measure tallied more than $1 trillion over 10 years, according to the Congressional Budget Office.

The Senate Finance bill would cost $829 billion and reduce the deficit by $81 billion, the CBO said. In a September speech to Congress, President Barack Obama said that a health care bill must not add “one dime” to the federal deficit.

The successful Finance Committee vote was a breakthrough for the issue of comprehensive health care reform, which has now made significantly more progress than an attempt early in the Clinton administration 15 years ago.

But the biggest obstacles remain, as Democratic leaders now meld their various bills into one measure in each chamber.

That process gives Snowe pause. Over the course of the 4½-hour Senate Finance meeting, she emphasized that the combined Senate bill must adhere to the deficit-reduction parameters of the Finance Committee’s measure in order to maintain her vote.

She urged that the CBO conduct a cost analysis of the merged bill before the Senate takes final action, a demand that could push Senate floor debate off until late October.

The omnibus Senate bill will be cobbled together largely by Senate Majority Leader Harry Reid, D-Nevada; Sen. Max Baucus, D-Montana and chairman of the Finance Committee; and Sen. Christopher Dodd, D-Connecticut, of the Senate health committee.

Snowe will be watching closely. “I’m going to take it step by step every day,” she told reporters after the Finance Committee vote.

In addition to keeping Snowe on board to maintain at least minimum bipartisan support, Democrats must hold their own side together. The Senate Democratic caucus totals 60, exactly enough to squelch a filibuster.

But Democratic health care fissures surfaced during the Finance Committee vote. Sen. Charles Schumer, D-New York, said that he will fight to add a public option on the Senate floor.

“To cut costs, we must have a public option in the final bill,” he said. “It will hold the feet of insurers to the fire.”

Schumer also said that he will work to change the excise tax on high-cost insurance plans contained in the Finance Committee bill. That 40 percent levy is one of the primary ways that Baucus seeks to contain health care costs.

Sen. John Kerry, D-Massachusetts, expressed concern about the lack of an employer mandate in the committee’s bill and said that he would push for one during debate in the full Senate.

But Baucus said his bill is balanced and provides the best chance to achieve a filibuster-proof majority.

“We need 60 votes,” he told reporters after the Finance Committee meeting. “That’s the real imperative here.”

—Mark Schoeff Jr.  

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Though she was the only Republican to vote for the Senate Finance Committee’s health reform bill, Sen. Olympia Snowe of Maine sounded a note of ambivalence that reflects the feelings of many employers.

“My vote today is my vote today,” she said. “It doesn’t forecast what my vote would be tomorrow.”

That reserved endorsement could summarize the caution many employers also are taking toward the Finance Committee’s bill.

“It’s a very mixed product,” said Neil Trautwein, vice president of the National Retail Federation. “We want reform, but we are extremely concerned by what’s currently on the table.”

Even health insurance industry association America’s Health Insurance Plans offered a tepid endorsement of the finance bill.

“While we agree with the objective of the current proposal, we are concerned about its workability and cost,” said AHIP president and CEO Karen Ignani.

While employers cite admiration for much in the bill, they too have criticized the committee’s decision to water down the requirement that all individuals carry health insurance.

Health insurers have agreed to stop their longstanding practice of denying people coverage based on pre-existing health conditions on the basis that all individuals be required to purchase insurance. The effect would be that policies for young and healthy individuals would offset the cost of caring for sicker and older patients.

The Finance Committee bill, however, includes a reduced penalty for individuals who decide not to carry insurance.

As it stands, the penalty would be phased in over five years beginning in 2013, when there would be no penalty. By 2017, the penalty would be $750 per adult. Most experts say that is not enough to compel young people to buy insurance.

A report this week by PricewaterhouseCoopers and funded by the health insurance industry said the Finance Committee proposal would increase health care costs faster than under the current system. The report said that between 2010 and 2019, the cumulative increase in the cost of a typical family policy under the current proposal will be about $20,700 more than the current system would cost.

While the report has been criticized by Democrats, health economist Jon Gabel said it is correct in pointing out the impact a weak individual mandate could have on health care costs. A weak mandate, he said, will encourage people to game the system.

“It would be better legislation if we do have stronger penalties on people who choose not to buy health insurance,” said Gabel, a senior fellow at the National Opinion Research Center. “If I’m healthy, I can wait until I’m sick to buy health insurance.”

If the Senate does not strengthen the requirement that all individuals purchase insurance, employers may view the Finance Committee’s plan in the same light as the House’s health reform bill, which includes a public plan option that has been maligned by the health care industry and many employers.

Referring to the House bill, James Gelfand, senior manager for health policy at the U.S. Chamber of Commerce, said, “We want that bill to die.”

—Jeremy Smerd

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The following scenarios are strictly prohibited by Internal Revenue Service rules implementing the Genetic Information Nondiscrimination Act:

• Any group health plan that provides a premium reduction to employees who complete a health risk assessment prior to enrollment that includes questions about family medical history.

• Any group health plan that requests employees to complete a health risk assessment prior to enrollment that includes questions about an individual’s family medical history, but does not offer a reward.

• Any group health plan in which certain individuals completing the health risk assessment become eligible for a disease management program based on their answers to questions about family medical history.

• Any group health plan that waives its annual deductible for individuals who complete a health risk assessment after enrollment that does not include any direct questions about family medical history but asks, “Is there anything else relevant to your health that you would like us to know or discuss with you?”—the answers to which may divulge genetic information.

The following scenarios are permissible under the IRS rules:

• Any group health plan that requests enrollees to complete two distinct health risk assessments after and unrelated to enrollment: one that doesn’t include questions about family medical history but offers a reward; and one that includes family medical history questions but offers no reward.

• Any group health plan that waives its annual deductible for individuals who complete a health risk assessment after enrollment that includes the question, “Is there anything else relevant to your health that you would like us to know or discuss with you? In answering this question, you should not include any genetic information. That is, please do not include any family medical history or any information related to genetic testing, genetic services, and genetic counseling or genetic diseases for which you may be at risk.”

• Any group health plan that normally provides coverage for mammograms only for women 40 and older may choose to extend coverage to younger women who demonstrate they are at increased risk of getting breast cancer, such as through genetic testing or a family history of the disease.

A federal judge approved an $11 million settlement October 8 in a class-action lawsuit against Kelly Services Inc. by temporary workers over vacation pay and payment notices, according to a filing with the U.S. District Court for the Northern District of Illinois Eastern division.

Class-action members include current and former temporary workers in Illinois who did not receive vacation pay between January 1, 2002, and December 31, 2008, according to the settlement’s final approval order filed with the court.

In addition, the settlement includes temporary workers in non-clerical and non-professional positions between January 1, 2006, and August 27, 2007, who did not receive wage and payment notices as required by the Illinois Day and Temporary Labor Services Act.

According to court records, $10 million was allocated to a fund for vacation pay allegations and $1 million was allocated to a fund for payment notice allegations.

Kelly did not admit wrongdoing in the settlement.

“There was no admission on our part of any violations of the statute, nor were there any findings of a violation by the judge or the court,” said Jim McIntire, vice president of public affairs at Kelly. “It was a settlement that in our view reflects the very considerable expense of ongoing litigation and we acted to avoid those continuing expenses.”

Named defendants in the class-action suit were Estella Arrez and Erica Alonso, according to court filings.

Arrez worked for Kelly from December 2005 through October 8, 2006, at Caterpillar Inc., according to the complaint in the suit. Alonso worked for Kelly from June 11, 2003, through July 22, 2004, at several sites.

Chicago Public Radio reported the suit involved 96,000 temporary workers and that it was one of the largest wage-and-hour cases in Illinois history.

—Staffing Industry Analysts

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An employee is entitled to an “inference” that her injuries are work-related because Xerox Corp. failed to produce medical records from a work-site facility she visited, a New York appellate court has ruled.

The decision Thursday, October 8, by the 3rd Judicial Department of Appellate Division of New York Supreme Court in Deana Curtis v. Xerox et al. stemmed from a claim filed by a data entry employee who, after 33 years at Xerox, stopped working in 2005 because of severe pain and swelling in her hands, fingers and wrists.

During hearings in 2006, Curtis testified she visited her employer’s “plant medical department” and a workers’ compensation judge ordered Xerox to produce medical records from the visit. Xerox did not produce the records, but the judge ruled later that she had not established that her injuries were occupation-related.

In 2007, the New York State Workers’ Compensation Board rescinded that decision and ordered Xerox to produce the records. But Xerox then alleged the records did not exist, court records state.

A series of hearings ensued and the board found that Curtis was entitled to an “inference” that the medical records exist and they show a diagnosis favorable to her.

The employer appealed and the appellate court ruled  that even without the inference, substantial evidence existed to find that the claimant “sustained a work-related occupation disease.”

The court also ruled that despite repeated direction to produce the medical records, the employer failed to do so. Therefore, it was appropriate to draw an inference in favor of the employee, the court ruled.

Filed by Roberto Ceniceros of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The pending rule changes around Roth IRA conversions present a huge business opportunity for financial advisors to have deeper conversations with clients, according to a new survey by Charles Schwab & Co. Inc.

Starting January 1, people making more than $100,000 annually will be eligible to convert their traditional individual retirement accounts or 401(k) plans with previous employers into Roth individual retirement accounts. Currently, only those who make less than that amount a year are eligible to convert.

However, 61 percent of Americans surveyed by Schwab who made more than $100,000 annually were unaware of the Roth conversion rule changes, while only 14 percent of these 400 individuals said they could explain the rule changes.

As a result, 71 percent of the people polled said they would be likely to consult with a financial advisor on Roth IRA conversion issues.

“Advisors have a chance to initiate a conversation on a topic that for many clients is very confusing,” said Scott Slater, managing director, business consulting, in Schwab’s advisor services division.

The rule changes also gives financial advisers an opportunity to talk to clients about their entire financial portfolios, to which they might not ordinarily have access, said Howard Schneider, president of Practical Perspectives, a research and consulting firm in Boxford, Massachusetts.

“This isn’t just about how the advisors can manage the portfolio and earn the client an extra 100 basis points,” Schneider said. “This rule change provides advisors with a great entry into a deeper discussion about what clients want in retirement.”

Filed by Jessica Toonkel Marquez of InvestmentNews, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The case of a former Starbucks marketing executive who allegedly violated his noncompete agreement to accept a job with Dunkin’ Donuts may be the best example of one truism: Employees go to work for competitors all the time.

But if a company takes precautions, including a noncompete agreement, appropriate conditional severance and putting competitors on notice, that can’t happen, right?

Well, it did happen, at least according to Starbucks, which is seeking injunctive relief of $75,000, and damages to be determined, from Paul Twohig, who left the company in March and is now brand operations officer at Dunkin’.

According to Starbucks’ filing, Twohig first joined the Seattle java giant in 1996 and left in 2002.

He returned to the company in 2004 on the condition that he sign an 18-month noncompete agreement that, according to the suit, bars Twohig from participating in “management or control of any business which is in direct competition with Starbucks’ business within a 50-mile radius.” Twohig left the company in March 2009 and was given “substantial severance pay.”

At the time, according to the suit, he was senior vice president of retail operations for the Southeast division, with job responsibilities including “formulating business strategies to grow Starbucks business and respond to competitors, including Dunkin’ Donuts.”

Dunkin’ has boldly proclaimed its competition with Starbucks on several occasions, including offering discounted beverages during Starbucks’ closure for its latte retraining session of 2008, and with the “Dunkin’ Beat Starbucks” taste-test campaign, which launched last October and recently returned to the airwaves.

According to the suit, Twohig contacted Starbucks requesting release from the noncompete agreement in August so that he could accept a position at Dunkin’.

Starbucks said it then contacted Dunkin’s senior vice president of human resources, Christine Deputy, who is also a former Starbucks employee, and informed her that Twohig was still contractually bound to a noncompete agreement. Last week, Starbucks uncovered “through periodic internet searches,” it said, that Twohig had accepted a job at Dunkin’.

A call to Twohig’s office was not immediately returned. Starbucks attorney Brad Fisher, of Davis Wright Tremaine, did not immediately return a call for comment.

“We are hopeful that Dunkin’ Donuts and Twohig will unwind this situation,” Starbucks spokeswoman Lisa Passe wrote in an e-mail. “We are open to hearing from them to resolve the situation in a way that protects Starbucks’ interests.”

At least publicly, Dunkin’ wants no part of this.

“Dunkin’ Brands is not party to any lawsuit with Starbucks,” Dunkin spokesman Andrew Mastrangelo said in a statement. “Certainly we are aware of the situation, but we do not feel it is appropriate to comment.”

So what are Starbucks’ chances of prevailing?

A company’s ability to enforce a noncompete, said Larry Drapkin, a lawyer with Mitchell Silberberg & Knupp in Los Angeles, depends a lot on which state you’re in.

Noncompete agreements aren’t usually enforced in California, but they do stand a better chance in Washington state, where Starbucks executed the agreement and filed its lawsuit. It also helps if the employee accepts a hefty severance as part of the agreement, and you’ve put your competitors on notice that the departing executive is under a noncompete agreement.

“The issue of noncompetes [is] huge because there are countervailing pressures,” Drapkin said. “On the one hand, companies are attempting to protect their commercial and competitive advantages, including intellectual property and trade secrets. On the other hand, in many states there are public-policy considerations that are intended to protect the ability of employees to work and take other jobs, and not curtail employment opportunities.”

Ann Brown, a creative recruiter who runs Chicago-based Ann Brown Co., described the Twohig situation as “flagrant.”

“This is flat-out ‘Oh man, you’re crazy if you do that,’ ” she said. “Then again, you can’t prevent someone from working. But if it’s that obvious, it’s really kind of crazy. I’ve known people who have tried to take a job within a competing holding company and had to wait a year to go there.”

Filed by Emily Bryson York of Advertising Age, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Employers must comply with a new law on parity for mental health care benefits next year, but may have to do so initially without the aid of federal regulations.

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 requires employers to provide the same coverage for mental health and substance abuse disorders as they do for other medical conditions in their group health care plans.

The law, which goes into effect for most group plans on January 1, 2010, succeeds an earlier statute that banned discriminatory annual and lifetime dollar limits but allowed health care plans to discriminate in other ways, such as imposing annual limits on the number of covered visits to mental health professionals, while having no limits for other medical conditions.

However, federal officials say regulations won’t be ready until January at the earliest.

“We are committed to ensuring access to these critical services, and it is our goal to issue regulations by January 2010 that will address the key issues,” Department of Health and Human Services Secretary Kathleen Sebelius wrote in an October 2 letter to Sen. Al Franken, D-Minnesota.

Sebelius said federal agencies have received more than 400 written comments in response to an April notice requesting input from the public on key issues associated with the law.

Among other things, federal regulators sought comment on which provisions in the law require regulatory clarification, how out-of-network coverage for mental disorders differs from out-of-network coverage for other medical disorders, and whether special consideration should be given to small employers.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Dear Spread Thin:



Your riddle is a more like a puzzle box with intricate paths, subtly designed into the surface required to open it—a puzzle, by the way, spreading well beyond the Pacific Rim.

I think your description of the problem, however—”plagued by poor levels of commitment”—is very apt.

When I was in China less than a year ago, HR and staffing professionals uniformly pointed to high turnover (30 to 40 percent) among middle managers as the No. 1 issue affecting their companies’ plans for growth, as well as concern over sustaining company performance. As a consequence, nearly all firms were resorting to counteroffers—promotions and money primarily—in a doomed attempt to improve retention. This short-term mentality has unintended consequences that you’ve described very well. Seeing how consistently their colleagues are rewarded by obtaining external job offers and parlaying them into promotions and raises, other career-minded employees are following suit. They see little alternative to periodically interviewing for an extra internal move, whether or not it makes any sense for the business.

I recently surveyed 100 of my U.S. colleagues and found that 97 percent are using counteroffers as a retention strategy—just not as liberally (yet) as their Asian counterparts.

In my opinion, the problem cannot be solved by escalating the compensation and titles without regard to profits. It can be solved by focusing on the core needs of a growing professional class in the Pacific Rim. There, as you know well I’m sure, the importance and expectation of rapidly escalating income and promotions are inextricably linked to family and mentors (to whom a high level of commitment is required).

If, for example, the successful completion of a project were to be followed by a great celebration where all the members of the team (not just management) were feted and their families were involved and they received significant bonuses, it would be clear where the honor (and commitment) lay.

If real profits are shared with employees, and especially if those profits include high regard for safety and social responsibility, there would be alternatives to this too-rapid ladder climbing. If leaders of multinational corporations continue to make 600 to 1,000 times an entry-level professional worker’s salary, however, employees are going to feel as if management isn’t committed to them—so why should employees commit to the company?

Your firm may be very different (I certainly hope so). Therefore it is essential that you break the cycle by:

1) Branding your company’s “difference” as part of the interviewing process. Tell stories in each interview about how employees are honored in ways that give their family great face in the community, not solely by compensation and promotion. Show real career maps and then commit to them.

2) Describe during the offer what a counteroffer is—how it may meet short-term career goals (for more money or prestige) by accepting it, but how long-term success may be lost forever by accepting short-term deals. Use this approach to pre-empt counteroffers. Never make a counteroffer after, only before.

3) Reduce to near zero your company’s use of counteroffers when your people leave. And if you do make a counteroffer, make it public to the rest of your workforce. That way, either they will have to be explained as an exception and business necessity or, as will likely be the case, they will be reduced even further as an embarrassment.

4) Develop a very aggressive alumni program to build relationships with all alumni so that they can refer candidates or return themselves. Celebrate every returning employee. This means that when someone leaves you treat them as if they are going away for a short time to learn new skills and return.

5) Publicize your programs in the industry and act as if it puts your company head and shoulders above competitors, who must resort to bribery to keep theirs.

SOURCE: Gerry Crispin, CareerXroads, Kendall Park, New Jersey

LEARN MORE: Sometimes, sweetening the pot to keep a valued employee may turn other things in your company sour.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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