Early data guides employers on three key workers’ comp issues and COVID-19

Background: Divergent pressures on premiums

There’s been much speculation that workers’ comp will drive significant losses in the property/casualty industry as a result of COVID-19. On the one hand, there is the explosion of presumption laws that discard the basic tenet of workers’ comp that employees must prove they were exposed to the virus during the course of their employment and on the other hand, there are plummeting premiums driven by business closures and dramatic declines in payrolls.

In June, Arkansas, Illinois, and Michigan joined 13 other states in extending COVID-19 presumptive coverage and 12 other states are considering new laws or executive orders. The laws vary significantly, covering different groups of workers and some are rebuttable while others are conclusive. Some are retroactive, while others go into effect in conjunction with the order or law. Employers should keep up-to-date with these rules as they continue to evolve. The National Council on Compensation Insurance (NCCI) has a helpful tracker.

How this impacts premium will also depend on the state Rating Bureau’s position on including or excluding COVID-10 workers’ compensation claims on the experience mod. To date, the following states have adopted rules that exclude COVID-19 claims from the experience mod: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee,Vermont, Virginia, West Virginia, and Wisconsin.

Also, the costs of many existing claims are rising. The restrictions on nonemergency medical care have meant longer recovery periods and delayed surgeries for injured employees. Delays in adjudication have also extended the life of claims.

Countering this upward pressure on premiums is the dramatic decline in payrolls from furloughs, layoffs, reclassifications, and exclusions of money paid to employees who are not working. PPP dollars ran out at the end of June and employers who had to keep workers on the payroll to qualify, won’t have to keep them “employed.”

According to CalMatters, only 1,098 workers comp claims were filed in California in May, compared with more than 50,000 in January. Although some states have urged insurers to refund premiums, similar to what was done for auto insurance, reflecting businesses’ decreased exposure to workplace injuries during the COVID-19 pandemic, California became the first state to pass regulation requiring insurance companies to reduce premiums paid by employers for workers compensation insurance. This emergency regulation is effective July 1, applicable to all employers in the state, retroactive to the state’s March 19 stay-at-home order and expires 60 days after the order is lifted. The amount of refund has not been calculated.

While it’s clear that these trends dramatically alter the workers’ comp landscape, uncertainty abounds and it’s too early to determine the overall impact. However, early claims data shed light on what’s occurring now.

COVID-19 claims

In Florida, the Division of Workers’ Compensation reported that there were 3,807 indemnity virus-related claims filed as of May 31. About 45% (1,718) of the claims were denied. Health care workers and those working in protective services accounted for 83.3% of the claims. About 55% of the claims from protective service workers were denied and 30% for health care workers. Service industry workers represented 9.1% of claims, office workers 6.1%, and airline workers 1.5%.

While the data did not include medical-only claims, experts have said that most coronavirus claims involve time off from work. The claims amounted to more than $3.4 million in benefits paid so far, or about 3% of the total amount of comp benefits paid for all types of claims from January through May.

Florida has a limited presumption for frontline state employees including first responders, corrections officers, child safety investigators, members of the Florida National Guard, and others who are required to contact people infected with COVID-19.

In Ohio, a monopolistic state but one without a presumption rule, some 23% of claims were denied by the state-run comp program, and 35% of COVID claims were denied by self-insurers.

In Colorado, where a presumption law was introduced in the Senate on June 2, the state’s largest workers’ comp insurer, Pinnacol Assurance, reported to the Colorado Sun that as of mid-May, it had received nearly 1,000 coronavirus-related claims. “But it said the majority of those – 60% – were filed out of an abundance of caution and were dismissed after it was later determined that the worker did not contract COVID-19.”

Of the roughly 400 claims remaining, Pinnacol said it has agreed to pay out on the majority of them, with the average claim amount running around $13,000, The majority of claims has come from first responders and healthcare workers.

According to the article, a spokesperson for Pinnacol said that if the presumption for first responders, health care workers, food-processing workers, and grocery store workers who test positive for COVID-19 passes, there could be a 27 percent increase in workers’ compensation premiums for employers in those industries. If the presumption just applies to first responders and health care workers, the premiums in those industries would triple.

The state has received 1,425 claims, about 60% have been denied by employers and about 27% approved by employers. The remainder are still being processed and investigated. The claims submitted include six for worker deaths; one approved and five remain under investigation.

In California, more than 5,000 COVID-19 related claims were filed from January to May, according to CalMatters. More than 1,000 were denied, but that was before the Governor signed an Executive Order extending protections for essential workers infected on the job on or after March 19.

According to a report by the California Workers’ Compensation Institute that examined over 1,000 claims filed as of April 30, 35% were denied, 28% accepted, and the remainder under investigation. The primary reason for denial was negative results on COVID-19 tests (70%). Lack of exposure at work accounted for 15% of denials and other reasons included refusal to take a test, working from home, and lack of symptoms. About 41 percent of workers’ comp claims were made by health workers, with another 32 percent by first responders including police and firefighters.

In the blog, Managed Care Matters, Joe Paduda of Health Strategy Associates reports that 35 workers’ comp insurers, state funds, TPAs, and service providers and large self-insured/self-administered employers were surveyed on the impact of COVID-19 claims. Payers have received about 33,000 COVID-19 claims to date and accepted just over 20% of all claims filed. The most common reasons for denial are a lack of a diagnosis, no symptoms, and/or a negative test for COVID-19.

The good news is that only a few have been very expensive claims (>$200,000) involving ICU and ventilator care.

The survey also reported on the “non-COVID” effects:

  • a drop of 25% to 50% in new injury claims since the outbreak
  • slower return to work due to an inability or unwillingness to access care and/or adjudication processes
  • respondents’ estimate that 2020 will end with a 20% decrease in the total number of claims

Of course, the impact will vary by industry with disproportionate COVID-19 claims in public entities and healthcare, and small businesses, retail, hospitality, and travel hardest hit by declining payrolls.

Takeaway

It is premature to make predictions bases on this data, particularly since much comes from the early months when there was a shortage of diagnostic tests. However, it does provide guidance on how employers should proceed when faced with a COVID-19 claim.

  • Understand the state’s position on presumption.
  • Know what information the insurance company wants to process the claim and how to identify it as a COVID-19 claim. Share any information about the job/employee that may relate to a perceived lower or higher risk of exposure from the workplace.
  • Be proactive. Find out when the symptoms began and if the diagnosis has been confirmed. Determine if the worker had contact with a person known to be infected with COVID-19 and when and where that contact occurred. Determine if immediate family members are currently showing similar symptoms or recently traveled to any high-risk areas.
  • Ask what other employees the worker may have had close contact with recently and begin contact tracing.

Substance abuse and mental health issues surge

The data indicates that employers can face a surge in addiction, stress, depression, and mental health issues as employees return to work. Isolation, uncertain job security, family distractions, and a lack of access to traditional support networks have caused some employees to turn to alcohol or drugs. At least 30 states are reporting increases in fatal opioid overdoses amid the COVID-19 pandemic. The percentages of individuals who sought screening for anxiety and depression in May were 370% and 394% higher, respectively, than in January, reported the nonprofit, Mental Health America.

Prescriptions in the U.S. for anti-anxiety medications and antidepressants rose 10.2% and 9.2%, respectively, in March compared with March 2019 according to health-research firm IQVIA Holdings Inc. Sales of alcoholic beverages in March were up 55% compared with March 2019 according to marketing research firm The Nielsen Co., and at least one state with legalized marijuana, Washington, reported record sales during the pandemic.

For many employees, the issues are not going to go away when they return to work, affecting employees’ well-being long after the crisis has passed. And it can continue for those who work remotely. A survey by alcohol.org found that one in three Americans are more likely to drink when working from home. The National Safety Council (NSC) is urging employers to implement substance abuse policies and procedures as part of their return to work strategy and offers free resources for employee mental health and wellbeing. Such issues can be a serious threat to worker safety and cost tens of thousands in productivity losses, absenteeism and presenteeism, and workers’ compensation claims if employers do not plan ahead.

Remote workers and cybersecurity

Almost as quickly as the pandemic brought the world to its knees, cybercriminals seized the opportunity to attack the millions working from home. Phishing attempts, the largest source of ransomware, are quickly increasing. According to Net Diligence, the average ransomware cost is $229,000 and the cost of a cyber breach for small businesses (85% of claims) is $673,787 and $8.8 million for large businesses.

In addition, data protection and managed services provider, Digital Guardian, published a report created by aggregating anonymized telemetry from January 1, 2020 through April 15, 2020, via 194 global companies. It found a 122% increase in employees copying company data to USB drives, 74% of that data was classified. Also, a 79% increase in data egress via all means (email, cloud, USB, etc.). More than 50% of observed data egress was classified data.

The Cybersecurity and Infrastructure Security Agency (CISA), a department of US Homeland Security, recently announced key cybersecurity recommendations for employees working from home.

  • Update VPNs, network infrastructure and devices used for remote work – as all devices are variables.
  • Notify employees of increased phishing attacks and offer training/guidance.
  • Ensure IT Security teams are proactively monitoring logs/devices and are prepared for incident response/recovery.
  • Implement Multifactor Authentication (MFA) on all VPN connections and wherever possible.
  • Routinely test VPN network for limitations of mass usage.
  • Do not use Public WIFI, even with a VPN.

A white paper prepared by TechAssure, a not-for-profit trade association for insurance brokers that specialize in technology-related risks, offers additional tips:

  • On all devices that employees are using to access their work environment, Multifactor authentication (MFA) is critically important.
  • Alert employees that fraudulent websites and apps are appearing daily claiming to contain COVID-19 resources, safety supplies, etc.
  • Password management is key. Reusing passwords is common, which increases vulnerability if one account is hacked.
  • Picking up the phone can avert a disaster if something appears suspicious. The client/vendor will appreciate the extra steps to confirm the request.

Cyber insurance policies might provide valuable coverage to mitigate against the possibility of a costly cyber incident during a time when many businesses can afford it the least.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Highlights of the 2020 NCCI Symposium: focus on what coronavirus means for the workers’ comp industry

Each year, the National Council on Compensation Insurance (NCCI), which gathers data, analyzes industry trends and legislation and prepares insurance rate and loss cost recommendations holds an Issues Symposium. Needless to say, the virtual event differed from years past, which looked at recent trends to project future performance. Like everything else the pandemic touches, the unknowns make projections a formidable task.

State of the Line

Donna Glenn, NCCI’s chief actuary began with a look at where the industry stands, which was good news. Highlights of the State of the Line address include:

  • In 2019, the industry reported a combined ratio for private carriers of 85%, making it the sixth consecutive year that the workers’ comp line of business has posted an underwriting gain. The two most recent years, including the 83% combined ratio in 2018, showed the lowest workers’ comp combined ratio since the 1930s, according to the presentation.
  • Years of profitable underwriting and healthy reserves in 2019 in the workers’ compensation sector will help the industry weather coronavirus-related claims amidst lower premiums in the coming months.
  • Claim frequency continued to decline with average lost-time claim frequency across all 38 states that work with NCCI declined by 4% in 2019.
  • Looking at types of injuries, sprains and strains decreased more quickly than most – 5.4%.
  • For body parts, back injuries decreased more than other types. Head, brain, and face injuries increased and can be attributable to the increase in motor vehicle accidents, likely the result of smartphone use.
  • Average indemnity claim severity increased by 4% relative to the corresponding 2018 value, which was in line with wage growth.
  • Medical lost-time claim severity increased by 3%, which is trending faster than personal health care costs.
  • The average indemnity claim cost in NCCI states is $54,800, including $25,300 for lost wages and $29,500 for medical costs.

Unlike previous years, the past does not give a lens into the future. It’s unknown what level of claims insurers will face from the COVID-19 outbreak or how much premium will be lost as a result of high unemployment. The extent of presumption coverage in states adopting changes to workers’ comp laws will be a major factor.

Claim activity unrelated to COVID-19 is also unpredictable. Some employees may delay care or not report claims, and those with existing injuries could see their return to work and recovery hindered by fewer jobs and doctor check-ups. Fears over unemployment can cause workers to file claims over smaller and non-acute workplace injuries.

 

Coronavirus and the Recession of 2020-Impact on Workers’ Compensation

Dr. Robert Hartwig, PhD, CPCU, presented the pandemic’s effect on our economy and the workers’ compensation system. While the industry has entered the COVID-19 era in a position of significant financial strength, the impact of the pandemic is still unfolding and is unlike anything faced before.

The impact will vary by industry. Sectors hard hit by unemployment, such as hospitality, retail, manufacturing, and tourism will see large drops in premiums. At the same time, there will be upward pressure on costs, as more states pass presumptive laws and exclude COVID-19 claims from Experience Mod ratings. Workers’ compensation coverage will spike in severity and frequency for essential workers like those in healthcare.

The bottom line is that the workers’ comp line will be severely impacted given the reduction in payrolls, flattened wages, historically low interest rates, and stock market volatility. Dr. Hartwig estimated up to a 25% drop in workers’ compensation premium written. He noted insurers have received tens of thousands of claims related to COVID-19. There have been extraordinary efforts to stretch contract language to find coverage where none exists or none was intended – especially in workers’ compensation and business interruption.

 

Workers’ compensation research: demographics and medical services

NCCI also released reports prepared by two of its research experts. Latest Trends in Worker Demographics was presented by Barry Lipton, FCAS, MAAA, practice leader, and senior actuary at NCCI. Highlights include:

  • The number of older workers (65+) in the workforce continues to increase. This age group will see the largest growth between 2018-2028 (projected 6.1 million more workers), closely followed by those ages 25-44, who will see a projected growth of 4.8 million.
  • There has been an increase in accident frequency among older workers and they lose more time for work-related injuries. The average worker will lose eight working days for an injury, while those ages 65 and older, lose an average of 14 days. Falls, slips, trips and overexertion are major causes.
  • Short-tenured employees suffer a disproportionate share of total workplace injuries. New workers with under five years of experience account for a third of all injuries, but only make up a fifth of all employment. Workers with five or more years of experience account for another third of all injuries but make up half of all employment.

Raji Chadarevian, director of Medical Regulation and Informatics for NCCI, offered Gen rX-The Next Generation of Medicine. Highlights include:

  • In 2012, non-physicians made up 47 percent of all professional services. In 2018, that share has jumped to 59 percent. Non-physicians are composed of professions like physical therapists, physician assistants, and nurse anesthetists.
  • There’s a massive increase in telemedicine services in response to COVID-19. This trend, which the industry had been slow to adopt, offers potential cost savings and accelerated care.
  • Overall opioid use is on the decline, with the share of all prescription claims receiving opioids decreasing 38 percent from 2012-2018.
  • One out of every 42 chronic pain claims received mental health services in 2018, a 20% increase since 2012.
  • There were 23 physical therapy visits per chronic pain claim during the first year of injury in 2018, a 15% increase since 2012.

Employer takeaways:

  • Employers that have experienced a reduction in payroll should be proactive in working with their insurance agent to get the insurance company to adjust premiums now rather than waiting for an audit.
  • Employers must accurately document how their operation has changed and affected the classification of employees.
  • Given the high costs of indemnity claims, a strong recovery-at-work program and good hiring practices are cornerstones to lower rates.
  • Stay focused on all safety measures and maintain a strong risk profile. No one knows exactly how the expected massive increase in costs, coupled with the reductions in premiums, will be paid. Since many of the claims will be exempt from the Experience Mod rating, it’s reasonable to guess that it will come from rate increases. Expect to see a tightening market and more rigid underwriting.
  • Safety management and loss prevention can put extra focus on short-tenured workers and older workers.
  • When the unemployment rate was at record lows, employers relaxed hiring and onboarding practices. Employers in a position to take advantage of a surging labor market pool can make the best choices with good hiring practices.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Things you should know

Rating agency reports fifth year of comp profits but forewarns profits are not sustainable

According to Fitch Ratings Inc, the workers’ compensation market is on track for a fifth consecutive year of underwriting profits in 2019, despite recent weakening in market fundamentals. The industry’s statutory combined ratio fell to 86% in 2018, and has averaged 93% annually since 2015, according to the report. However, the report notes several factors that could result in a sudden deterioration in performance including an increase in claims frequency or severity, and new regulatory developments in key states, according to the statement.

NIOSH issues new banding guide for chemicals in the workplace

NIOSH has published a technical report intended to help control chemical exposures in the workplace. The NIOSH Occupational Exposure Banding Process for Chemical Risk Management details a strategy for managing the many chemical substances that don’t have an authoritative occupational exposure limit. Occupational exposure banding is a process that assigns each chemical to a category based on its toxicity and any negative health outcomes associated with exposure to it.

FMCSA seeks to delay two provisions in final rule on CMV driver minimum training

The Federal Motor Carrier Safety Administration is requesting delaying compliance of two provision, which were scheduled to go into effect Feb. 7, 2020. These include requiring training providers to upload certification information into FMCSA’s Training Provider Registry and a provision for state driver licensing agencies to “receive driver-specific [entry-level driver training] information.”

Comments are due Aug. 19.

Another court decision favors MAO right to sue under private cause of action provision

Medicare Advantage Organizations (MAOs) received a favorable ruling on a motion to dismiss the case, MSP Recovery Series, LLC v. Plymouth Rock, in Federal Court in Boston. Since 2012 no court has concluded that MAOs do not have at least some rights under the private cause of action provision.

Study finds adherence to evidenced-based medicine guidelines for lower back pain lowers comp costs

recent study in the Journal of Occupational and Environmental Medicine concluded there is a statistically significant trend in the relationship between adherence to ACOEM guidelines for the initial management of work-related lower back pain and decreasing claim costs. Medical and total costs trended lower by an average $352.90 and $586.20 per unit of compliance score respectively. No outlier cost claims were in the best guidelines compliance groups.

CMS proposed decision to cover acupuncture

The Centers for Medicare & Medicaid Services (CMS) issued a proposed decision to cover acupuncture for Medicare patients with chronic low back pain (cLBP) who are enrolled participants either in clinical trials sponsored by the National Institutes of Health (NIH) or in CMS-approved studies. Currently, acupuncture is not covered by Medicare. The goal of the proposed decision is to provide Medicare patients who suffer from cLBP with access to a nonpharmacologic treatment option and to determine the effectiveness.

NAHB offers resources on managing opioid misuse in residential construction

In response to the particularly heavy impact the opioid crisis is having on the construction industry, the National Association of Home Builders has introduced several free resources intended to help residential construction organizations combat the issue.

These include:

  • An executive training package, including a webinar and other downloadable materials, outlining why industry action is needed
  • Supervisor training packages on workplace interventions and preventing opioid misuse in the industry
  • Fact sheets on the risks associated with taking opioids, and identifying medical and nonmedical opioid
  • Resources on non-opioid alternatives to pain management
  • A state-by-state guide of locally available resources

Study identifies what professions have worst drivers

study of 1.6 million car insurance applications by Cambridge, Massachusetts-based Insurify Insurance Co., an auto insurance comparison website, found that bartenders, ticket sales representatives, and journalists had the most moving violations. The cause? These professions tend to work 55-60 hours per week and sometimes work weekends. In contrast, postmasters and music composers are the best.

Helping employees get more sleep improves productivity: review of research

Basic employer interventions such as educating workers about the importance of sleep and sharing strategies to improve it may result in better sleep habits, increased productivity, and reduced absenteeism, a recent review of research concludes. The studywas published in the April 15 issue of the Journal of Clinical Sleep Medicine.

New video for tower workers explores safe installation, maintenance of small cell antennas

new two-and-a-half-minute video from the National Association of Tower Erectors stresses hazard awareness for technicians who work with small cellular antenna towers on new or existing structures.

State News

California

  • The Workers’ Compensation Insurance Rating Bureau (WCIRB) released its 2019 State of the System report highlighting key metrics of the state’s workers’ compensation system.
  • The Division of Workers’ Compensation posted an order updating the Medical Treatment Utilization Schedule. Treating providers, qualified medical evaluators and agreed medical evaluators, and utilization review and independent medical review physicians can access the MTUS guidelines at no cost by registering for an account here.

Florida

  • The Division of Workers’ Compensation has finalized a rule that defines which injuries “shock the conscience,” as required by legislation passed more than a year ago. The eight injuries deemed to be shocking to the conscience are:
    • Decapitation (full or partial).
    • Degloving.
    • Enucleation.
    • Evisceration.
    • Exposure of the brain, heart, intestines, kidneys, liver or lungs.
    • Impalement.
    • Severance (full or partial).
    • Third-degree burn on 9% or more of the body.

    The Legislature will now be required to give final ratification because the rule is likely to cost municipalities more than $200,000.

Missouri

  • The maximum weekly benefit for temporary total disability, permanent total disability and death benefits rose to $981.65, effective July 1. Permanent partial disability rose to $514.20.

New York

  • Mandated comp coverage for farm laborers under the Farm Laborers Fair Labor Practices Act, which requires farm employers to provide workers compensation for laborers, institutes injury reporting requirements and offers laborers additional protections, takes effect Jan. 1, 2020.

Virginia

  • The Workers’ Compensation Commission released its 2018 Annual Report, which provides a summary of key initiatives, trends, and outcomes.

Wisconsin

  • Commissioner of Insurance approved an overall 8.8% rate decrease for businesses starting Oct. 1, the fourth consecutive year of decreases.


For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit 
www.StopBeingFrustrated.com

Things you should know

‘Safety at Heights’: ISEA launches campaign on fall protection, dropped objects prevention

ISEA’s SafetyAtHeights.org website provides educational resources for employers and workers, including:

  • Facts about dropped objects and workplace deaths and injuries
  • A list of job hazards that workers and employers should be aware of
  • Downloadable PDFs of ISEA and ANSI safety standards
  • Links to more than a dozen online safety resources

Proposed rule to amend trucker hours-of-service regs slated for publication in June

A proposed rule intended to add flexibility to the Federal Motor Carrier Safety Administration hours-of-service regulations for commercial truck drivers will be published in early June, according to a Department of Transportation regulatory update released in May.

ISHN magazine publishes 2019 Readers’ Choice Award winners for best PPE and safety equipment products

For the seventh year in a row, the Industrial Safety and Hygiene News published its Readers’ Choice Awards for the best occupational health and safety products from 2019.

Stressed out: Survey shows almost half of workers have cried at work

Work-related stress has driven nearly half of full-time employees in the U.S.to tears, results of a recent survey, 2019 Behavioral Health Report, show. Researchers from Ginger, an on-demand behavioral health services provider, assessed more than 1200 workers’ experiences with behavioral health and their employer-provided benefits. 48% of survey respondents said on-the-job stress has made them cry at work. In addition, 83% said they experienced stress at work at least once a week.

Among workers younger than 40, 45% reported “extreme stress” – defined as experiencing stress on a daily basis. Women were more likely to cry at work, but 36% of men acknowledged crying at work because of stress. Generation Z and millennials are more likely to miss work because of stress.

Reattaching to work before clocking in may improve engagement, health: study

Visualizing and planning for your workday may lead to better engagement and well-being, results of a recent study indicate.

Food truck safety resources spotlight propane hazards

WorkSafeBC has published a safety bulletin and blog post intended to help food truck owners and workers avoid hazards associated with propane tanks.

State News

California

  • Findings from The Workers Compensation Research Institute (WCRI) CompScope Benchmarks for California, 19th Edition, showed higher litigation expenses than other states. Total costs per all paid claims were higher than most study states for 2015 claims with an average of 36 months of experience, mainly driven by a higher percentage of claims with more than seven days of lost time.

Florida

  • Florida Gov. DeSantis signed into law a bill that allows firefighters diagnosed with any of 21 types of cancer to receive disability and death benefits outside of the workers’ compensation system. Senate Bill 426 will allow firefighters to receive medical treatment for their condition with no out-of-pocket expenses.
  • The WCRI CompScope Benchmarks for Florida, 19th Edition, shows that two 2016 Supreme Court decisions continue to affect the workers compensation system, but despite an uptick in indemnity benefits per claim, the comp system costs are in line with other states. The cost driver for the increase in indemnity benefits was a jump in lump-sum settlement payments per claim.

Illinois

  • The Workers’ Compensation Commission launched a new case docket website, which was built to work on mobile devices and tablets.
  • The Governor has signed into law Senate Bill 1596, which will allow tort claims to be filed after the state’s occupational-disease statute of limitation expires.
  • The WCRI CompScope Benchmarks for Illinois, 19th Edition, shows the average total cost of a workers’ compensation claim remained higher than most states, driven by high attorney involvement and high medical-legal costs. The report also shows more lump-sum settlements than most other states, and the share of claims paid in lump sums continues to rise every year.

Indiana

  • A new law, H.B. 1341, increasing the maximum penalty to $132,598 from $70,000 for each worker death resulting from an employer knowingly violating safety regulations, goes into effect July 1.

Massachusetts

  • Two key deadlines critical to the implementation of the Massachusetts Paid Family Medical Leave law (PFML) have been extended. Employers have until June 30, 2019 to provide written notice to covered individuals of their rights and obligations under the PFML. Also, businesses will now have until September 20, 2019 to file an application for a private plan exemption.
  • Massachusetts’ workers’ compensation fraud investigators in 2018 referred 256 cases for prosecution, the most ever in a single year, according to a local news station.

Michigan

  • Medical marijuana is now available to patients immediately after receiving online approval. The approval email may be used as a temporary substitute for a valid registry card in order to obtain their medication.
  • Michigan’s attorney general launched a new enforcement unit to prosecute worker misclassification and wage theft by employers.
  • Michigan State University College of Human Medicine has launched a campaignintended to raise awareness of work-related asthma.

Minnesota

  • The Workers’ Compensation Division released a draft of the latest implementation guideline for its electronic data interchange, which is expected to be mandated in August 2020.
  • Minneapolis’ Sick and Safe Ordinance extends to any employee who performs at least 80 hours of work per benefit year in the City of Minneapolis, even if his or her employer is not located within the city’s limits, the Minnesota Court of Appeals has held in Minnesota Chamber of Commerce v. Minneapolis.

Missouri

  • The Department of Labor and Industrial Relations Division of Workers’ Compensation (DWC) continues to expand the use of Box Account, a virtual mailbox. The Attorney General’s Labor Unit recently began using Box to file Answers to Workers’ Compensation Claims filed by injured state employees.

New York

  • New York City has enacted a law prohibiting New York City employers from requiring prospective employees to submit to testing for the presence of tetrahydrocannabinol (THC), the active ingredient in marijuana. The new law, the first of its kind in the United States, became effective on May 10, 2019.

Pennsylvania

  • The WCRI CompScope Benchmarks for Pennsylvania, 19th Edition, showed the average total cost of a workers’ compensation claim is among the highest of 18 states studied, with litigation costs a key driver of higher overall benefit delivery expenses.

Tennessee

  • A new amendment to Tennessee’s Healthy Workplace Act may offer employers protection from lawsuits for mental anguish. The new amendment became effective April 23rd when Governor Bill Lee signed H.B.856 into law expanding coverage to include private employers.

Wisconsin

  • By executive order, the Governor has authorized the creation of a joint enforcement task force on payroll fraud and worker misclassification. The DWD’s Worker Classification website is available here.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Things you should know

CDC: Half of workplaces offer health/wellness programs

Almost half of all U.S. worksites offered some type of health promotion or wellness program in 2017, according to a new study, Workplace Health in America 2017. This was the first government survey of workplace health promotion programs in 13 years.

Nationally, almost 30 percent of worksites offered some type of program to address physical activity, fitness, or sedentary behavior. Some 19 percent of worksites offered a program to help employees stop using tobacco products, and about 17 percent of worksites offered a program to address obesity or weight management.

FMCSA delays publication of proposed rule to amend trucker hours-of-service regs

The Federal Motor Carrier Safety Administration (FMCSA) has delayed until further notice the publication of a proposed rule intended to add flexibility to hours-of-service regulations for commercial truck drivers. The proposed rule remains under the Office of Management and Budget review.

NLRB gives employers greater discretion to limit union activity on their premises

The National Labor Relations Board (NLRB) recently issued a decision in UPMC Presbyterian Shadyside that reverses a longstanding precedent and holds that employers no longer have to allow nonemployee union representatives access to public areas of their property unless (1) the union has no other means of communicating with employees or (2) the employer discriminates against the union by allowing access to similar groups.

Study: Energy drinks take toll on heart health

Popular caffeine-packed beverages could affect heart rhythm, according to a new study. Research findings of a recent study published in the Journal of the American Heart Association (AHA) confirm the short-term risk consumers take when consuming energy drinks. Drinking 32 oz. of an energy drink in a 60-minute timeframe directly affected the heart rhythm of the study’s participants, a result bolstered by previous research.


State News

California

  • The Workers’ Compensation Appeals Board is planning to reorganize its Rules of Practice and Procedure, and is seeking comments from system users about other changes that it should consider. Comments can be sent to WCABRules@dir.ca.gov.

Georgia

  • A new law, the Georgia Long-Term Care Background Check Program will take effect Oct. 1, requiring nursing home and other long-term care workers to submit to extensive background checks.

Illinois

  • Illinois became the 11th state to legalize recreational marijuana.

Massachusetts

  • More changes to three key deadlines for the Paid Family Medical Leave (PFML) law.
    • September 30, 2019 – Employers and covered business entities are required to post a notice and provide written notice to their current workforce.
    • October 1, 2019 – Payroll withholdings begin for the October 1 to December 31 quarter.
    • December 20, 2019 – Deadline to file for a private plan exemption for first quarter contributions.
    • January 31, 2020 – First quarterly contribution payment due through MassTaxConnect.

Michigan

  • The governor issued an executive order creating a separate workers’ compensation appeals commission. The action separates the Unemployment Insurance Appeals Commission from the Workers’ Disability Compensation Appeals Commission.

Minnesota

  • Enacted detailed new recordkeeping requirements for employers, effective July 1, 2019, and wage theft protections for employees, effective August 1, 2019. For more information.
  • Department of Labor and Industry is urging all employers to examine their safety programs, after a spike in reported amputations this year.

Missouri

  • Department of Labor is offering confidential safety and health consultations aimed at helping employers build safer workplaces. Businesses must have no more than 250 employees at any one site, and fewer than 500 total employees, to qualify.

New York

  • The Workers’ Compensation Board formally adopted its drug formulary and prescribing rules for injured workers, set to go into effect Jan. 5, 2020.

Tennessee

  • Rejecting the strict “ABC” test adopted by its appellate court, that state has enacted a new law (H.B. 539) adopting a 20-factor test to determine employee-versus-independent contractor status. The new law becomes effective January 1, 2020.
  • An NCCI study found that prescription drug utilization decreased across all categories, regardless of whether they required prior authorization. After the Official Disability Guidelines Workers’ Compensation Drug Formulary was adopted, the utilization of N-drugs, which require prior authorization, dropped by 23.2%.

Virginia

  • On July 1, 2019, a new amendment to Virginia Code Section 8.01-413.1 will take effect, requiring all employers to provide copies of employment records to employees upon written request.


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Highlights of the 2019 NCCI Symposium

Each year, the National Council on Compensation Insurance (NCCI), which gathers data, analyzes industry trends and legislation, and prepares insurance rate and loss cost recommendations, holds an Issues Symposium. The theme of the program is always described in one word that describes the current workers’ compensation environment.

Bill Donnell, president and CEO, identified the 2019 word as “delivering.” “…we should never, never lose the thought that we deliver for injured workers. So this idea of delivering on a 100-year-old promise is a very powerful statement. It distinguishes workers’ compensation from other safety nets.” A short,compelling video, Back to Work: The Faces of Workers Compensation, told the story of how workers comp supported four employees to find the strength and commitment to recover from devastating injuries. Focusing on and motivating the person behind the injury is key to successful outcomes.

State of the Line

Presented by NCCI’s chief actuary, Kathy Antonello, highlights of the State of the Lineinclude:

  • Net written premiums for private carriers rose from 39.8 to 43.2 billion. Most of this increase can be attributed to tax law changes and carriers keeping the money onshore.
  • While payroll increased, this was offset by lower rates so the overall direct written premium was flat 2017 vs 2018.
  • Workers compensation combined ratios decreased 6% from 89% to 83%. 2018 was the lowest workers’ compensation combined ratio on record since the 1930s. This was attributed to the improvement in the underlying loss ratios as a result of underwriting discipline in a low-interest environment.
  • California, Illinois, and Florida saw an overall decrease in premiums as declining premiums offset increased payroll.
  • Overall reserve position for carriers is $5 billion redundancy. “A redundant workers’ compensation reserve position has not been observed in at least 25 years.”
  • In 2018, every NCCI state except Hawaii saw rate decreases. The most significant was Tennessee with a 19% decrease.
  • Indemnity claim severity in NCCI states increased 3%.
  • Medical lost time severity increased 1%.
  • Accident claim frequency decreased by 1%. This is the lowest decrease since 2011. The tight labor market, which means less qualified, younger, and more deconditioned workers in the workforce, could have contributed to the lower decline in frequency. Carriers also saw an increase in slip/fall claims due to the harsher winter in 2018.

Can this good news continue is a common question. While there is no way to predict the future, NCCI CEO Bill Donnell speculated that large swings might be mitigated by two factors. Improved analytics and faster access to data allow stakeholders to see the impact of their decisions and quickly make corrections, and investment in competencies around core processes, such as claims handling, underwriting, and reserving processes add to stability.

On the other hand, the regulatory landscape always has a big impact on the workers’ compensation world, as well as domestic and global affairs. Issues such as marijuana, opioids, opt-out, and post-traumatic stress disorder loom large in states, and the lack of infrastructure spending and a trade war with China could spell bad news for the comp industry looking forward.

Recent studies

Barry Lipton, Practice Leader and Senior Actuary for NCCI discussed a variety of recent NCCI studies .

Key takeaways:

  • Group Health (GH) vs. Workers’ Comp (WC) pricing: Costs for physician services are 77% higher in WC than GH. Price differences were mainly driven by the quantity of services not fees for service. On average, WC prices were about 12% higher per service than GH. However, WC performed 60% more services on similar injuries than GH.
  • NCCI Experience Rating Modification: Mods are good predictors of loss outcomes across all industries and Mod types. NCCI sees opportunities to improve predictive power and accuracy and is undertaking a major review of the system.
  • Mega claims: The number of mega claims (over $10 million) reported in 2017 and 2018 has dropped back down to long-term average values from an uptick in 2016. However, it remains a top concern and more studies are expected.

Physicians’ view of workers compensation

panel discussion highlighted the challenges physicians face in working within the workers’ comp system. There is a dearth of occupational medicine physicians in the US (3300) and occupational medicine is not part of education in most medical schools. Many treating physicians don’t understand the medical benefits of work and the effects on patients who are out of work for extended periods of time.

Both primary care and occupational medicine physicians have substantial recordkeeping requirements, discouraging specialization in these areas for other more financially rewarding areas. Moreover, case management time is often not billable. Payers and patients complain that they are not getting enough information. Too much time is spent filling out the forms on the computer, which often means clicking boxes rather than a narrative.

Quality of care, return to work, and medical outcomes do not get the priority they should. Network referral requirements can prohibit the best care options. Telemedicine is gaining traction in the group health setting but much less in workers’ compensation and some feel it is best used for follow-up in comp. Personal interaction can keep the return to work messaging on track.

Opioid use and excess physical therapy are the biggest cost drivers on workers’ compensation claims. Other factors include co-morbid conditions, mental disorders, and legal involvement.

Takeaway: Good occupational medicine physicians are a valuable asset. Take time to understand the challenges they face and the best way to work with them.

Other presentations

For more information.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Things you should know

2018 WorkComp Benchmark Study released

The sixth annual Workers’ Compensation Benchmarking Study Report by Rising Medical Solutions, Inc. focuses on key issues influencing medical management performance and the most potent strategies to address these issues.

BLS report: Fatal injuries remain over 5,000

The number of fatal work injuries dropped slightly in 2017 to 5,147 down from 5,190 in 2016. Fatal falls were at their highest level in the 26-year history of the BLS’s reporting, accounting for 17.2% of employee deaths, while transportation incidents again account for the most deaths with 2,077, or 40.4%.

In 2017, 15.1% of fatally injured workers were age 65 or over – a series high. The number of deaths among Hispanic or Latino workers rose 2.7% to 903 in 2017.

Report: Injured restaurant workers miss an average of 30 days

AmTrust Financial Services Inc., a provider of workers compensation insurance, took a deep dive into common restaurant injuries, lost time, industry loss ratio trends and how to implement loss control best practices in its report, Restaurant Risk Report. Cafés and coffee shops had the highest lost time, on average 45% more time lost than all other restaurant types. Wrist injuries are the biggest danger for coffee shop workers, with “barista wrist” resulting in an average of 366 days to return to work.

Study: Musculoskeletal injuries to long-haul truck drivers

Nearly half of all musculoskeletal injuries reported by long-haul truck drivers are to their arms, backs or necks – the majority being sprains and strains – according to a recent study conducted by researchers from the University of Alabama at Birmingham. Drivers most often were injured because of a fall (38.9 percent) or contact with an object or equipment (33.7 percent).

Of those injured, 53 percent required time away from work, at a rate of 355.4 incidents per 10,000 full-time workers, which is more than double those of other hazardous professions. The researchers said the study suggests the need for injury prevention and interventions and ways to improve recovery when injuries occur.

Report ranks states by risk of violence from Black Friday

A report ranking states by risk of violence during Black Friday was recently released by Reviews.org. Included in the report are the employers that have the most incidents during Black Friday.

State News

Florida

  • Department of Economic Opportunity announced that the statewide average weekly wage paid to injured workers by employers will be $939 starting Jan. 1.

Minnesota

  • A total of 101 fatal work-injuries were recorded in Minnesota in 2017, an increase from the 92 fatal work-injuries in 2016 and 74 fatal work-injuries in 2015. More information

Missouri

  • The Department of Insurance is recommending a 3.5 percent decrease in workers’ compensation insurance loss costs for 2019, the fifth year in a row rates will decrease.

New York

North Carolina

  • The Workers’ Compensation Research Institute’s (WCRI) Benchmark shows that medical payments per workers’ comp claim decreased significantly since 2013, falling 6 percent each year through 2016.
  • The Industrial Commission has finalized settlement agreement rules, The “Group 2” rules aimed to clean up some inconsistent language and streamline the settlement process, as well as clarify wording relating to attorney’s fees. The rules took effect Jan. 1.
  • The Commission approved Group 1 rule changes, which took effect Dec. 1. Medical motions, responses and appeals on medical motions must be submitted electronically and must include the opposing party’s position on the matter.

Pennsylvania

  • Insurance commissioner approved two loss cost reductions that together will amount to a 14.74% decrease, starting Jan. 1. Loss costs are one of many factors that determine premiums for workers’ comp insurance.
  • Department of Labor and Industry reported that the maximum compensation rate will rise by 2.3%, to $1,049 per week, starting Jan. 1. It’s website offers a chart to determine compensation based on the employee’s average weekly wage.
  • Department of Labor and Industry announced that it has adopted the Red Book, published by Truven Health Analytics, to determine the average wholesale price of prescription drugs.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Important takeaways from recent studies and reports

Outlook for workers’ comp is stable, but rising medical and legal costs and payroll threaten profits – AM Best Co. Inc.

Currently, AM Best has a stable outlook on the U.S. workers’ compensation industry, the largest component of the U.S. commercial lines segment. However, the well-known rating agency sees some threatening headwinds that can alter the industry’s course. In 2017, growing payrolls helped offset rate decreases and overall soft-market conditions, according to the report. The agency believes that the use of technology, which has provided greater insights into underwriting, pricing and claims decisions, has helped support the line’s health and will continue to do so.

Despite the positive results, AM Best believes the trend of declining rates likely will trigger profit margin compression, possibly as soon as 2019. Unemployment has decreased steadily since 2010; however, AM Best notes that long unemployment rate declines typically are followed by sharp spikes in unemployment, and believes that workers’ compensation writers should be prepared for a downside scenario as well.

In addition, while there has been a decline in loss frequency, medical cost inflation, as well as the potential for accelerating frequency if employers hire less-qualified candidates are a concern. Rising medical loss cost severity, the declining benefit from prior accident year reserve redundancies and high average settlements on cases stemming from attorneys’ growing involvement and litigation, also put pressure on pricing.

Employer takeaway: The report is good news about the stability of rates in the short term. It also provides insights as to how insurers will be evaluating risk. The continued growth of technology in underwriting and pricing means that a company’s risk profile is critical. Insurance companies have become quite sophisticated and rates will be based on their perception of your risk. The way to get the best rates is to improve your risk profile – not bidding and quoting. There are trends and claims that are red flags for underwriters, including claim severity, high medical costs, and excessive attorney involvement. If you have claims in these categories, it’s a good idea to document special circumstances as well as actions taken to prevent future occurrences.

Employee care concern and satisfaction -WCRI

An average of 10.5% of workers across 15 states never return to work as the result of a workplace injury, and an average of 16.7% reported difficulties getting the health services they wanted or their physicians requested, according to Comparing Outcomes for Injured Workers reports by the Workers Compensation Research Institute (WCRI). Telephone interviews were conducted with close to 10,000 injured workers from 15 states who were hurt at work between 2010 and 2014. The workers interviewed live in Arkansas, Georgia, Kentucky, Florida, Iowa, Indiana, Tennessee, North Carolina, Virginia, Minnesota, Michigan, Pennsylvania, Wisconsin, Massachusetts, and Connecticut.

Among the findings:

  • An average of 10.5% of workers across 15 states never return to work as the result of a workplace injury, and an average of 16.7% reported difficulties getting the health services they wanted or their physicians requested.
  • Between 12% and 21% of injured workers reported “big problems” getting the service they or their primary provider wanted, with 10 of the states falling in the 17% to 18% range. Pennsylvania had the lowest rate of 12%.
  • Between 11% and 20% reported being “very dissatisfied” with their care.
  • Thirteen percent of workers said they did not return to work for at least a month after their injury.
  • Between 6% and 11% of injured workers report a significant loss of income due to injury at the time of the interview.

Employer takeaway: The data reinforces the message that employers must be proactive and vigilant in managing workers’ comp. This is not new “news” – recovery-at-work programs, medical management best practices, and open lines of communications among all stakeholders are the cornerstones of a successful program.

First-ever industry breakdown of drug use in the American workforce – Quest

Quest, a leading drug-testing provider, announces the rate of positive drug test results annually based on an analysis of 10 million urine tests. The new data marks the first time Quest has broken it down by industry.

The rate of positive test results for illicit drugs was highest in retail (5.3%), health care and social assistance (4.7%), and real estate rental and leasing (4.6%) sectors in 2017, while the utilities (2.8%) and finance and insurance (2.6%) sectors had the lowest rates. Drug use by the workforce increased each year, and by double-digits over the two years between 2015 and 2017, in five of 16 major U.S. industry sectors analyzed. The highest rates were in consumer-facing industries.

Marijuana was the most commonly detected substance, with the highest drug positivity rate of all drug classes across the majority of industry sectors. Marijuana positivity was highest in accommodation and food services, at 3.5 percent in 2017, more than 34 percent higher than the national positivity rate of 2.6 percent for the general U.S. workforce.

Employer takeaway: With low unemployment and tight job markets as well as legalized recreational marijuana in many states, many employers have dropped pre-employment drug tests for positions that aren’t safety sensitive. The analysis suggests that employers can’t assume that workforce drug use isn’t an issue in their industry. Employers are responsible for ensuring the safety of workers, customers, and members of the general public and this is one of the more vexing areas. Review your written drug policies, clearly communicate expectations and company rules to all employees, and be sure supervisors know how to recognize signs of impairment.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com