Chiropractic Claims Pain California Employers

Nearly everyone has an opinion about what ails California’s workers’ compensation system. Safeway Inc. is particularly sore about its chiropractic bills.

After a fall or strain, the grocer’s California workers visit their chiropractors an average of 40 times -- about four times as often as the company’s employees in neighboring Oregon and Arizona.

That’s a big reason why the chain’s average cost per claim in California dwarfs that of the other 19 states in which it operates, said William Zachry, vice president in charge of workers’ compensation for the Pleasanton, Calif.-based company.

“We have the same checkers and meat cutters and bakers in California as we do everywhere else in the country,� said Zachry, whose company is self-insured and employs 73,000 workers in the state. “The jobs are the same. The injuries are the same. But the workers in California are utilizing much more treatment .... It just doesn’t add up.�

One employee, he said, has had more than 400 chiropractic treatments since 1999, and several others have exceeded 300 visits. “We’re simply unable to stop it,� he said.

Chiropractic care is one of the costliest and fastest-growing components of California’s workers’ compensation system, part of an explosion in medical costs that has thrown the employer-paid insurance program into turmoil.

Last year, insurer payments to chiropractors totaled $235 million, nearly double the level of five years earlier, according to the Workers’ Compensation Insurance Rating Bureau of California, which compiles data on workplace injury claims. Chiropractors now command a bigger share of workers’ compensation dollars than any other medical specialty, generating more fees than even general practitioner physicians.

One reason injured California workers are visiting their chiropractors so often: Because they can.

In contrast to other states that have capped chiropractic visits or require a gatekeeper to approve usage, California has no limits on the frequency or duration of treatment. It’s also one of the few states that allow chiropractors to be an injured worker’s primary treating physician.

The result is that injured California workers who seek chiropractic treatment average 34 visits to their practitioners -- double the average in other large states, according to the insurance industry-funded Workers Compensation Research Institute in Cambridge, Mass.

“The whole system is designed to stretch out treatment for as long as possible,� said John Haecker, former workers’ compensation manager for Monterey Mushrooms Inc., a grower in Watsonville that has been battling rising costs. “The incentives are completely backward.�

Supporters of California’s nearly 15,000 licensed chiropractors say it’s money well-spent to have patients avoid addictive drugs, expensive surgery and other invasive medical procedures. Studies have shown that chiropractic treatment, in which practitioners manipulate the spine to eliminate subluxations, or misaligned vertebrae, can be a highly effective and economical tool to treat bad backs and related injuries.

“Patients typically choose chiropractic after they’ve tried everything else. But they stay with it because it works,� said Wayne Whalen, a spokesman for the California Chiropractic Assn.

Equipment operator Douglas Dover credits his twice-monthly chiropractic visits with keeping him on the job and off the operating table after he wrenched his neck 15 years ago. The Tracy, Calif., resident said the 20-minute sessions provide the only effective relief from persistent tingling in his thumbs and stiffness in his neck.

“I don’t think I’d still be on a backhoe without it,� said the 50-year-old utility company laborer, whose hundreds of visits have been fully paid by his employer. “It has kept me working. It’s good medicine.�

But whether it’s good economics is a subject of hot debate in California. Heavy use of chiropractic services has yet to result in overall savings in a system in which back injuries are the No. 1 source of claims.

Employers and insurers complain that its potential benefits are being lost amid excessive treatment, propelled by practitioners who are milking the one cash cow left to them in an era of managed care, as well as by workers content to let their bosses pick up the tab for chiropractic “maintenance� that can last for years. Fraud is hard to prove and expensive to prosecute, leaving many employers with little choice but to pay claims they suspect are inflated.

Some lawmakers are trying to limit chiropractic services for injured workers. Sen. Jackie Speier (D-Hillsborough), for example, has proposed legislation that would require an independent medical review panel, insurance company or self-insured employer to approve anything beyond 15 visits for each work-related injury.

Chiropractic fans say such restrictions would shortchange workers while punishing honest practitioners for the actions of a few cheats. But Speier and others say tough oversight is needed.

A full-page advertisement that ran in the Journal of the California Chiropractic Assn. lent ammunition to the profession’s critics, who displayed the ad at a workers’ comp hearing Speier hosted earlier this year.

The ad touted a seminar promising to show California practitioners how to “double or triple their income from the high-profit work comp market.� Placed by the seminar’s instructor, a Monterey County chiropractor, the ad referred to the California system as “the only golden goose that is really still laying the golden eggs� at a time when group health plans and private insurers are clamping down.

Critics cited the ad as evidence of systematic exploitation of California’s chiropractic benefits. Embarrassed by negative publicity, the California Chiropractic Assn. moved quickly to tighten its policy on advertising.

“It shouldn’t surprise any of us that bad actors are out there trying to rip us off,� Speier said. “The workers’ compensation system is the equivalent of a blank check.�

Chiropractic care isn’t the only factor driving the dramatic spike in costs and premiums that is threatening to shred the safety net protecting more than 14 million California workers. Some of the system’s woes can be traced to deregulation in the mid-1990s that allowed insurers to set their own rates for workers’ comp coverage, which all California employers are required to carry.

Fierce competition led to price wars and tumbling premiums for a time. But heavy financial losses ultimately forced more than two dozen carriers into insolvency. Tight supply has pitched the market into chaos, resulting in steep premium increases that some employers say are causing them to cut jobs or leave the state.

Even so, experts say that spiraling costs for medical care and disability payments are at the heart of the crisis. Insurer-paid medical costs hit $4.1 billion last year, with expenses for virtually every type of treatment surging even though the frequency of claims is declining. Those figures don’t include what was paid out by companies and municipalities that are self-insured. The total price tag of a workplace accident that causes an employee to miss work averaged just over $52,000 in 2002, nearly triple what it was in 1990.

All of that high-priced care isn’t leading to better outcomes, however. Compared to their counterparts in other large states, California workers are off work longer and have higher rates of temporary and permanent disability, even though their injuries aren’t any more severe. In addition, the state’s supposedly “no-fault� system is choked with litigation, adding hefty costs and lengthy delays. Workers in the state receive some of the lowest cash disability benefits in the nation, while employers pay by far the steepest premiums.

“By almost any measure, California’s system is dysfunctional,� said John Garamendi, state insurance commissioner. Garamendi is looking to medical providers as one of the first groups to start squeezing. Chiropractors have become a prime target, largely because of the surge in costs for chiropractic care. Like Speier, Garamendi favors gatekeepers to approve care beyond a certain number of visits, as well as clear protocols to provide boundaries for treatment.

Compromise legislation passed in 2002 to boost disability benefits for injured workers made it easier starting this year for employers and insurers to restrain medical spending prescribed by a worker’s primary treating physician.

Still, experts say there is little incentive for workers or their doctors to conclude treatment quickly in a system where there are no co-payments or other out-of-pocket costs for patients -- and where there is a crowded field of chiropractors.

More than one in six U.S. chiropractors are licensed in California, although the state is home to less than one-eighth of the nation’s population.

Employers and insurers can challenge what they believe is excessive treatment within the system’s administrative judicial system. But that’s an expensive, time-consuming process.

Monterey Mushrooms in Watsonville recently used a novel legal approach to win $1.7 million in restitution, damages and legal fees from husband-and-wife chiropractors who billed the company for more than 700 fraudulent claims between 1997 and 1999. In doing so, it became the first employer to apply a whistle-blower section of the California Insurance Code to the workers’ compensation system.

The case revolved around two medical corporations established by chiropractor Steven Thompson and his wife, Aster Kifle-Thompson. According to court records, the Thompsons set up these sham corporations, with medical doctors as ostensible owners, to meet California requirements that would allow them to convert their former chiropractic offices in Salinas and Seaside into full-service medical clinics.

In practice, court papers show, the medical doctors were absentee figureheads who leased their names and licenses to the Thompsons. One doctor lived in Texas, another in Hawaii. The judge concluded that the chiropractors called all the shots, contracting with other physicians to perform a wide range of treatments on their chiropractic patients to pump up revenue and inflate the workers’ comp bills of companies such as Monterey Mushrooms.

Thompson, whose chiropractic license was revoked in 2000 after a separate misdemeanor insurance fraud conviction, denies the allegations and said the couple will appeal the judge’s ruling from earlier this year. Kifle-Thompson continues to practice under a new medical corporation.

Monterey Mushrooms has yet to collect a dime on its award, which must first be finalized by the court, probably by the end of the summer.

Ray Selle, chief financial officer for Monterey Mushrooms, says that if he knew back then how costly and time-consuming it would be to pursue the case, he probably wouldn’t have done it.

“We’re in the mushroom business,� said Selle, whose company employs 1,500 workers in California, producing more than 55 million pounds of mushrooms annually. “That’s where our emphasis should be.�

Skeptical of the California Legislature’s ability to bring about any meaningful reform, he said his company is looking elsewhere to expand. The firm already employs more workers outside California -- 2,000 -- than it does inside the state. But their combined workers’ compensation expenses are nearly 40% less.

“I’d be foolish to put any more facilities or workers here,� Selle said. “The system is completely broken.�