By: Dr. Brian Grant, Founder and Chair, Medical Consultants Network (MCN)
Many years ago, a colleague taught me the concept of Moral Hazard (MH) and its application to injury claims. The definition of MH in essence is a situation where a person is protected from risk in some manner and as a result behaves differently in certain situations. More broadly, I find it useful to think about MH in the context of how a particular system’s presence may impact the behavior of reasonable and normal individuals. Readers of this column should understand that what follows is theoretical and not meant to imply conclusions in any specific event.
Many important, widely accepted and well-intended systems that define the livelihoods of many who read these columns are fraught with MH implications. Consider workers’ compensation. It was created to provide relief and support to those injured on the job and has evolved to include medical care (for job related conditions), indemnity payments to cover time loss from work, vocational rehabilitation, and in some cases pensions for those determined to be unable to return to work in any capacity.
To better understand MH in this system, first picture the individuals who receive workers’ compensation benefits as well as those who work within the system, including doctors, lawyers, employers, and claims managers. Clearly some injured workers would suffer greatly in the absence of benefits. Their injuries and the resultant impairment are disabling. They fully participate and engage in efforts on their behalf and use the benefits available wisely, and without benefits of some sort would certainly suffer. Others, on the other hand, might work despite an injury, experiencing the injury event in a less severe manner with fewer physical complaints, taking less medications and otherwise be relatively unaffected by the injury event. Absence of compensation potential might mean more caution on the job by employee and employer alike if it is recognized that the results of an injury could mean economic disaster for either.
If employers bore the cost of injury—rather than a carrier bearing the cost—they might be highly motivated to keep injured employees at work in some capacity and otherwise alter their behavior. Doctors who did not have a workers’ compensation system to turn to for payment might not attribute particular injuries to the workplace, and in the absence of perhaps the largest MH of all— health insurance—would negotiate with patients directly for the most cost efficient and effective assessment and care, since at least some of the parties might be motivated to behave in a manner that is economically rational, and press issues that they currently have little motivation to challenge. The presence of insurance frequently removes the need for any of the principal parties to behave rationally, however necessary it may be for society at large to attack the resulting issues of cost and effectiveness. Much of the health care debate in the US can be framed in the context of competing interests and moral hazards.
When I have evaluated claimants over the years for injury and disability claims, I try to understand what is going on psychologically and socially while assessing the level of actual incapacity. Often I find it useful to consider the MH concept in my formulation . After taking a history of the injury and a social history of the individual’s function over time, I may ask myself if in the absence of the policy covering their injury or their disability, would this person likely be behaving differently, such as remaining at work, , or would they present with the same impairment claim? If my conclusion is that the system appears to have a profound effect on the claimant’s actions and behavior, I may offer that opinion in my report and it may as a result assist in addressing causality and overall claims management and outcome.
About Dr. Brian Grant
Brian L. Grant, MD is the founder and chair of Medical Consultants Network (MCN). He is Board certified in general and forensic psychiatry. He is a 1974 graduate of the University of Michigan and received his MD from Michigan State. His post-graduate training was completed at the University of Washington, where he holds the position of clinical associate professor. Among his many interests are workplace function and the medical and social drivers that impact it.
MCN was founded in Seattle in 1985 and currently has offices in eight states to serve our clientele nationwide. MCN provides medical judgment services including independent medical evaluations and peer reviews. Clients include insurance, legal, health care, and government entities. MCN operates with a highly structured and scalable information system backbone and leads the industry in technology and leadership. The company contracts with over 16,000 consulting physicians in all fifty states to perform assessments.