These days, when I think of regulations and regulatory compliance, I’m reminded of the Joni Mitchell song “Both Sides Now.” If you replace "life" with "regulations," my perspective becomes clearer.

Jon Wroten

I’ve looked at life from both sides now
From up and down and still somehow
It’s life’s illusions I recall
I really don’t know life at all

Previously, as the chief regulator responsible for the largest self-insurance marketplace in the nation, I had to consider regulations while underwriting new self-insurers, overseeing market conduct and enforcing compliance and solvency standards for California’s 7,000 self-insured employers, their 4.6 million covered employees and more than $22 billion in risk exposure. This position demanded a comprehensive understanding of regulatory frameworks and their practical applications.

Today, in the private sector, I am regularly considering the application of and compliance with regulations as they apply to and impact my firm’s clients, groups we manage and prospective self-insured employers we work with.

From these two very different viewpoints, I believe I have a unique perspective when looking at regulations. Sometimes, I feel as if I’m bilingual when discussing the nature and impact of regulations, saying the same thing and then translating the meaning of the words into a viewpoint from one side or another, much like two different languages.

What is similar on both sides is a desire to safeguard the public, return injured workers to full function, eliminate unnecessary costs from the system and have an efficient system that works effectively for everyone, with minimal friction. I believe most regulators and employers could agree with this. However, this is where the conversation becomes interesting. The ways to achieve these goals are viewed very differently by the regulatory and regulated communities.

The common goal shared by both sides is to protect workers and provide an effective and efficient system to advocate and support injured workers and to quickly return them to full function and their lives. The challenge is how best to accomplish this goal, since both sides see varied paths to getting there.

The regulatory community needs to create a framework to administer and enforce the operation of the system. Additionally, regulators these days are highly focused on collecting data and metrics in order to report on progress and defend their efforts when called into question by lawmakers, media, the public and various stakeholders within the system. In some instances, this data adds value, informing us where improvements are needed or have been effective. However, there is a lot of data collected for data’s sake that adds little or no real value but creates tremendous effort and cost on those required to collect and report it. This tremendous effort and cost is felt by the employers and their TPAs, and the regulators.

The employer community would like to provide the benefits and have the injured workers and their loved ones progress back to normalcy, yet they see continuing layer upon layer of bureaucracy as a burden that does not always directly support the goal of advocating and helping their employees. In some instances, the system actually impedes this goal and effort. A question appropriately asked is, “How does completing report after report actually improve an injured worker and return him to full function?” As with all large groups, most employers want to do the right thing. However, there are a few that attempt to game the system.

These few are used to justify the need for large parts of the system being designed to catch them, while impacts are imposed on the many, such that it can become hard at times to remember the original purpose and goal — that the workers’ compensation system is designed to serve — and the problem it seeks to solve.

Outside influences, benefits and service providers, the legal community and others have opinions and want a voice in how more than $60 billion spent each year on workers’ compensation is regulated and directed. These pressures and influences work on the system and can ultimately have an impact on how regulators oversee and regulate the system and stakeholders.

Bridging the perspectives and communications divide is challenging, with each side being committed to the same goal while seeing the path to achieving it from vastly different perspectives. When I taught business, I always explained to my students that business is an art, not a science. A science might be more like accounting, where there is one right answer: One plus one equals two. In business, there are many paths that will get you to a goal, some more effectively than others, but there's rarely a single "correct" approach to achieving a desired outcome.

Workers’ compensation is very much like this. There are many different paths. The question is, have we taken the right one? The system has evolved over the past 100 years. Is the real solution to have layers upon layers of bureaucracy and reports to track metrics and data? Does this really return an injured worker to full function and advocate for his wellbeing, or does this just create a lot of effort to attempt to quantify the problem while adding little value?

I believe fewer streamlined regulations focused on caring for and delivering benefits to the injured worker would be a step in the right direction. What do you think?

Jon Wroten is senior vice president at The PATH Alliance and managing director of California Risk Advisors LLC. He was previously chief of the Office of Self-Insurance Plans for the State of California.