Maine to audit Wal-Mart State officials "want our dance with this organization to end," when it comes to workers’ compensation controversy BY CHRISTIE TOTH
	Wal-Mart’s 'hidden cost' to Maine   The count is in, and Wal-Mart tops the list of Maine employers with workers qualifying for public assistance. According to a one-time tally covering the month of May 2005, the Wal-Mart Corporation had 751 employees who qualified for taxpayer-funded programs such as MaineCare, food stamps, and Temporary Assistance for Needy Families (TANF) to make ends meet. Hannaford, the state’s largest retailer, had the second-highest number of qualifying workers, and trailed Wal-Mart by nearly 18 percent, with 527 employees eligible for public assistance. No other employer had more than 170 workers qualifying for assistance in May. That employer was L.L. Bean. The Department of Health and Human Services performed the count to fulfill a Freedom of Information Act request; because of the way the Department tracks data, it was an arduous manual process, and unlikely to be performed again. Michael Norton, spokesperson for DHHS, cautions that the Department is "not putting out any interpretation of what the numbers mean or do not mean." DHHS included Maine’s top 20 employers in the tally, and counted each employee who qualified for one or more of Maine’s public assistance programs. Many individuals who qualify for at least one of the three core programs, MaineCare, food stamps, and TANF, also receive other assistance, such as Child Care or Transitional Transportation. The tally did not count how many children and spouses of employees were on public assistance. Although the DHHS count has limitations, its suggestion that Wal-Mart employees rely disproportionately on public assistance echoes findings in other states. In Florida, 12,300 Wal-Mart employees and their dependents are enrolled in the state’s Medicaid program. Massachusetts spent nearly $3 million last year providing health insurance coverage for Wal-Mart employees and their dependents. In Arkansas, Wal-Mart’s home state, 3971 of its employees rely on some form of public assistance. According to a 2004 report by the Democratic staff of the Committee on Education and the Workforce in the US House of Representatives, a hypothetical 200-employee Wal-Mart would cost taxpayers $420,750 a year for use of public programs such as healthcare, housing, school lunches, and energy assistance for Wal-Mart employees and their dependents. In some states, Wal-Mart even distributes instructions to workers on how to apply for public assistance. "Wal-Mart is imposing a significant hidden cost on Maine taxpayers," says Stacy Mitchell, a Portland-based senior researcher with the Institute for Local Self-Reliance. "As the Legislature struggles to fill the gaps in the state budget, we can hardly afford handouts to the world’s largest corporation." Tracking the cost to taxpayers of Wal-Mart’s rock-bottom wages does not, however, have to be a one-time, indirect tally. The state of Massachusetts compiles an annual report on every employer in the state with more than 50 public health beneficiaries. This report includes the number of employees and dependents on public healthcare, whether the employer offers healthcare benefits, and the cost to the Commonwealth of providing that healthcare to the company’s employees. Eleven other states are considering similar legislation. State Representative Arthur Lerman (D) proposed legislation last April in Augusta modeled on the Massachusetts law. Lerman’s bill did not pass. — CT

"The leopard has dropped a few spots," said Rodney Hiltz, gesturing at the Wal-Mart lawyer, "but it’s still a leopard!"

Hiltz is one of six directors on Maine’s Workers’ Compensation Board. The leopard is Claims Management, Inc. (CMI), the wholly owned subsidiary through which the Wal-Mart Corporation administers its workers’ compensation insurance in Maine. The spots are Notices of Controversy, or NOCs.

The state of Maine requires workers’ compensation insurers to file either a MOP (Memorandum of Payment) or a NOC within 14 days of an injured worker’s claim. MOPs indicate that payment has been made without controversy, while a NOC signifies that the employer is contesting the worker’s claim.

Wal-Mart has been under review by the Board since mid-2004 for possibly contesting an unreasonable number of claims. In the first three quarters of 2004, Wal-Mart filed NOCs on nearly 94 percent of worker claims. Its figures were "off the charts," according to Workers’ Compensation Board staff, and the Board made it clear to Wal-Mart that it expected to see improvements in the number of NOCs in the fourth quarter report.

That report was submitted for the Board’s approval at their quarterly meeting on July 12, with Wal-Mart legal representative J. R. Wildman in attendance. Steven Minkowsky, Deputy Director of Monitoring, Auditing, and Enforcement, informed the Board that in the fourth quarter of 2004, Wal-Mart filed three MOPs and 50 NOCs, compared to an average of five MOPs and 76 NOCs in the three previous quarters. Fewer spots, but the same old leopard, holding at a denial rate of just over 94 percent. By comparison, Hannaford, a larger retailer than Wal-Mart in Maine, filed 19 MOPs and six NOCs in the fourth quarter.

Minkowsky also announced that his office would be serving Wal-Mart with a letter of engagement in the next two to three weeks, and that CMI should prepare for an on-site audit this fall. In addition to concerns over Wal-Mart’s high number of NOCs, he has received seven Complaints for Audit regarding Wal-Mart in the last year and half.

Complaints for Audit are an official channel for reporting wrong-doing on the part of an insurer. Complaints may be filed by anyone related to a workers’ compensation case, including the injured worker, a Board staff member, the employer, or a medical examiner. Such complaints help resolve the particular case and also serve as an indication of the potential for broader compliance issues to the Office of Monitoring, Auditing, and Enforcement.

"Seven complaints is clearly an outlier," says Minkowsky. "We typically receive only one or two complaints a year for any single company."

One of the Complaints for Audit filed against Wal-Mart was submitted by a hearing officer — a judge who hears litigated workers’ compensation cases. "That’s the first time that’s happened since [I came to this position in] 1999," says Minkowsky. "The hearing officer heard medical reports from both the injured worker’s physician and the company’s physician, and both sides agreed that it was a work-related injury." In the no-fault workers’ compensation system, such a clear-cut case should never have made it to hearing.

The hearing officer cited questionable claims handling and unreasonable denial. Other Complaints for Audit have come from a board advocate (the state-provided legal counsel for the injured worker), a mediator, Wal-Mart employees, and a constituent referral from a US senator. These complaints include charges of unreasonable denial, as well as concerns over claims handling and the calculation of weekly benefits.

After pointing out the drop in NOCs in the fourth quarter report, Wildman emphasized Wal-Mart’s commitment to working with the Board. He maintained that Wal-Mart’s high percentage of NOCs has been due to managers filing NOCs for incidents in which the employee was not seeking medical treatment. Wildman gave the example of a spider bite.

"A store associate will come up to their supervisor, and say, ‘You know, this part of my elbow here is really itchy. I think I might have been bitten by a spider.’ And he’ll say, ‘Well, do you need any medical treatment for that?’ ‘No, I’m just telling you.’ So they don’t seek any kind of medical treatment. They’re not seeking workers’ compensation benefits. But they do report an incident, which we log at CMI."

Wildman said that CMI was working to clear up these issues of over-reporting.

Director Hiltz, who is also President of the United Steel Workers Local 9 at the Sappi paper mill in Skowhegan, and a member of the Maine AFL-CIO’s Executive Board, was not impressed by Wal-Mart’s improvement in the fourth quarter. "An alcoholic who cuts back one or two beers a day, but still drinks a case and a half, is nowhere near recovery."

"We need to see a real change in practice. You can’t just change the suit in front of us." Hiltz complained that Wal-Mart had sent different representatives making the same promises to every quarterly meeting. "I want our dance with this organization to end."

At the heart of the issue is whether Wal-Mart’s troubling MOP and NOC figures, which have remained consistently aberrant from the industry average over a year of monitoring, are really due to the clerical problems, as Wal-Mart insists, or if workers with actual on-the-job injuries are having their claims contested unreasonably.

"Wal-Mart and Claims Management, Inc. are devoted to doing what is right by our Associates and to complying with State law," Wal-Mart spokesperson Sharon Weber said in a written statement to the Phoenix.

"CMI’s previous high statistics with regard to the filing of Notices of Controversy were driven by CMI’s desire to be in compliance with Maine workers’ compensation regulations. Going forward, CMI has put into place internal measures which will help ensure that Notices of Controversy are filed in a manner consistent with the Board of Workers’ Compensation’s expectations."

The figures for the first quarter of 2005 have not yet been officially released, but Minkowsky indicates that Wal-Mart’s numbers for that reporting period are still unsatisfactory.

"The high number of cases denied by Wal-Mart is not proof of wrong-doing," says Minkowsky. "The quarterly compliance reports are a tool. They serve as a red flag to us that there might be a compliance issue with a particular insurer. The Complaints for Audit are also a tool. Whether Wal-Mart is actually engaging in questionable claims practices or unreasonable denial will be determined in the on-site audit."

If Minkowsky’s auditors find that Wal-Mart is violating the state’s workers’ compensation laws, the consequences could range from fines and a corrective action plan, to rolling back Wal-Mart’s certification to self-administer in Maine.

Christie Toth can be reached at cmtoth@gmail.com