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Exclusions to Comp Policy Requires an Explicit Endorsement

Efrain Nevarez filed an Application for Adjudication of Claim alleging that he sustained an industrial injury as a result of a cumulative trauma through August 30, 2015, while employed by American Choice Van Lines and/or Go East Movers.

Coverage was denied by American Casualty Insurance Company based on “limited endorsements” contained in the policies. Coverage disputes are subject to mandatory arbitration under Labor Code section 5275(a), thus the issue was submitted for arbitration.

The arbitrator found that Go East Movers was insured by American Casualty Insurance during the alleged cumulative trauma period.

The arbitrator found that “[n]one of the limiting endorsements” complied with the statutory and regulatory requirements. The arbitrator also found that there was insufficient evidence that the employer engaged in fraudulent misrepresentation during the application process and there is evidence that American and its agents did not do their due diligence regarding the nature of the business of the insured prior to issuing the policy.

The arbitrator issued orders that the insurers shall be liable for the workers’ compensation benefits that may be awarded to the applicant and that the order does not limit defendant’s right to dispute the date of injury or the period of coverage for the injury. The arbitrator also dismissed the Uninsured Employers Benefit Trust Fund as a party defendant.

American Casualty Insurance Company petitioned for reconsideration of the Findings and Order. A WCAB panel essentially affirmed the arbitrator in the case of Efrain Nevarez v American Choice Van Lines et. al. (AD10407856 – March 2021)

American contends, in essence, that it was not required to exclude non-clerical employees because the policy only covered clerical employees.

Workers’ compensation policies provide coverage to all employees of an employer unless employees are explicitly excluded in the insurance contract with a limiting and restricting endorsement in accordance with regulations adopted by the Insurance Commissioner. (citations omitted)

American could not enter into a workers’ compensation insurance contract covering only some of an insured’s employees without complying with the Insurance Commissioner’s regulations. If an insurer contends that it has issued a limited policy, the insurer must provide evidence in the form of policy documents.

Therefore, American is incorrect that the policy could be construed to only cover clerical employees without an endorsement explicitly limiting the policy to those employees.

With respect to American’s contention that the arbitrator erred in failing to admit and consider evidence of employer misrepresentation and insurer due diligence, the evidence would only be relevant if rescission of the insurance contract was at issue and it was not at issue.

A workers’ compensation policy may be rescinded based on a material misrepresentation by the insured. (Southern Ins. Co. v. Workers’ Comp. Appeals Bd. (Berrios) (2017) 11 Cal.App.5th 961.) Rescission is a contract remedy that requires the rescinding party to give notice and restore or offer to restore everything of value obtained under the contract in accordance with a statutory procedure set forth in Civil Code section 1691.

However, in this case, American did not raise rescission as an issue and does not allege that it rescinded the insurance policy.

WCIRB Reviews Medical Cost Trends at Actuarial Meeting

The focus of the WCIRB Actuarial Committee meeting held on June 22, was a review of recent system medical costs, along with a comparison of the effects of the COVID 19 pandemic.

Summary of the Medical Severity Trends through 2020

Pre-COVID-19 (before 3/15)

– Overall medical severity per claim increased slightly (+4%)
Physician services, inpatient and medical-legal costs per claim increased despite a downward trend in prior years
Pharmaceutical costs per claim continued to drop (-14%) mostly driven by continuously steep declines in opioid costs (-42%)
Telemedicine services per claim increased at typical pre-COVID-19 rate (approximately 100%)

COVID-19 pandemic period (3/15 – 12/31)

– Overall medical severity per claim increased (+10%)
– – Increases in both service utilization and paid per transaction likely when shelter-in-place orders were lifted
– Increases in inpatient and outpatient costs per claim were driven mostly by higher paid per transaction
– Pharmaceutical costs per claim increased (+14%) mostly driven by increased use of non-opioids
Telemedicine services per claim increased by more than 50-fold

Legislative Cost Monitoring Update – SB 1160 UR Provisions

– During the two years after the SB 1160 UR provisions became effective:
– – Number of physical therapy visits per claim increased in the first 30 days, while utilization of other types of medical services decreased during the same period.
– – Physical therapy services were provided earlier. The median time from injury to first physical therapy in the first 30 days decreased by 17%, from 12 days for AY2017 claims to 10 days for AY2019 claims.
– – There was less utilization of physical therapy services 5 months after the first 30 days.
There is no indication of the SB 1160 UR provisions significantly impacting the cost of medical services through 6 months from the date of injury, and the increased medical severity is driven mostly by fee schedule updates.
– There is no indication of the UR provisions significantly impacting utilization review costs within two years of the reform implementation.

Summary of 3/31/2021 Experience (Excluding COVID-19)

– Almost 100% of market included – Main insights:
– – Loss development generally flat
– – Claim settlement rates continuing to decline
– – 1Q 2021 non-COVID-19 claim frequency up over 1Q 2020
– – Significant number of COVID-19 claims reported in first three months of 2021
– Projection methodologies are consistent with 9/1/21 Filing
– Projected loss ratio for September 1, 2021 to August 31, 2022 policies is 0.596 (same as 9/1/21 Filing)
– – Small increase (<0.005) from updated wage forecast
– – Small decrease (<0.005) from updated 2020 frequency trend

NY Resolves Opiod Litigation With J&J for $230M

The New York Attorney General announced an agreement with Johnson & Johnson – the parent company of Janssen Pharmaceuticals, Inc. – that will deliver up to $230 million to New York state.

In March 2019, the New York Attorney General filed the nation’s most extensive lawsuit to hold accountable the various manufacturers and distributors responsible for the opioid epidemic. In addition to J&J, the manufacturers named in the complaint included Purdue Pharma and its affiliates, as well as members of the Sackler Family (owners of Purdue) and trusts they control; Mallinckrodt LLC and its affiliates; Endo Health Solutions and its affiliates; Teva Pharmaceuticals USA, Inc. and its affiliates; and Allergan Finance, LLC and its affiliates.

The distributors named in the complaint were McKesson Corporation, Cardinal Health Inc., Amerisource Bergen Drug Corporation, and Rochester Drug Cooperative Inc.

The agreement resolves claims made by for the company’s role in helping to fuel the opioid epidemic and would allocate payments over nine years, with substantial payments made upfront.

The agreement also makes enforceable a bar stopping J&J and all of its subsidiaries, predecessors, and successors from manufacturing or selling opioids anywhere in New York, and acknowledges Johnson & Johnson’s exit from the opioid business nationally.

The cases against Purdue Pharma (and subsequently the Sackler family), Mallinckrodt, and Rochester Drug Cooperative are all now moving separately through U.S. Bankruptcy Court. The trial against all other defendants is currently slated to begin this coming week.

The Attorney General negotiated substantial injunctive relief securing the end of J&J’s manufacturing of opioids and their distribution across New York and the rest of the nation.  

The company will also provide the Office of the Attorney General with details of when the last of the inventory of opioids it has already shipped expires.

Additionally, J&J will be prohibited from promoting opioids or opioid products through sales representatives, sponsorships, financial support, or any other means; will not be allowed to provide financial incentives to its sales and marketing employees for the sale of these products; and will not, directly or indirectly, provide financial support or in-kind support to any third party that primarily engages in conduct that promotes opioids, opioid products, or products for the treatment of opioid-induced side effects.

J&J will additionally be forbidden from disciplining its sales and marketing employees for not hitting opioids sales quotas – one of the key motivators J&J and other companies had in marketing opioids so heavily to the American public – and will not be allowed to use, assist, or employ any third party to engage in any activity that J&J itself would be prohibited from engaging in pursuant to today’s agreement.

J&J will also be prohibited from lobbying federal, state, or local legislative or regulatory authorities about opioids or opioid products.

Finally, J&J will have to make additional information about opioids and opioid products more accessible to the public, including to patients, health care providers, and others. Part of how J&J will fulfill this provision is by sharing clinical trial data under the Yale University Open Data Access (YODA) Project to allow researchers qualified under the program to access the company’s propriety data under the terms of the project.

3M Healthcare Information Systems Improves Patient Care

As part of the Becker’s Hospital Review 11th Annual Meeting, Travis Bias, DO, Medical Director of Clinician Solutions for event sponsor 3M Healthcare Information Systems (3M HIS), shared industry insights and expertise with hospital leaders during a May 17 roundtable.

Physicians spend significant time performing nonpatient-facing tasks like documentation, that are necessary but ultimately take time away from one-to-one patient care.

Technology solutions powered by artificial intelligence can reduce the amount of time spent away from the patient, vastly improving both their experience, and the physician’s.

Five key takeaways:

1. The multiple demands on physicians can fracture their time and attention. Physicians are asked to do more than just provide patient care; they are tasked with capturing the clinical complexity of their patient population. Although the time spent on additional tasks can improve the overall efficiency and efficacy of the health system, it adds to the workload and stress of the physician. “We know the demands pulling the physicians in different directions are great,” Dr. Bias said. “Because of that, we have to be really clear about how their time is prioritized.”

2. Reducing unnecessary technology interruptions improves the patient and physician experience. Interruptions, especially those requiring task switching, can be extremely disruptive. Digital tools like the solutions offered by 3M HIS significantly decrease those interruptions by unifying and/or automating workflows. This frees up time for the physicians to focus on patient care.

3. Physician buy-in is critical for successful healthcare technology solutions. In order for a technology solution to make a meaningful difference, physicians need to be willing to use the solution. While executive leadership is a key factor in encouraging use, clinicians are most likely to use tools if they understand how they will benefit their jobs, and if the solutions are easy and efficient to use.

4. The pandemic may have removed the technology trust barrier. Healthcare providers and patients alike were forced to make a quick shift from in-person visits to telehealth visits. The successful and speedy adoption of telemedicine could prove beneficial for other technologies, removing any reservations or barriers commonly seen as healthcare systems roll out new solutions.

5. Digital transformation enables healthcare providers to improve delivery of care. Whether it’s tracking the patient journey throughout the health system, visiting patients through telemedicine or remote patient monitoring through wearable technology, digital solutions can improve the patient and physician experience. Digital transformation can meet patients where they are, identify gaps in care and improve the overall quality of care, benefiting the patient, the physician and the bottom line.

NCCI Reports $6000 Average COVID Claim Costs in 38 States

In early 2020, COVID-19 seemed like a potentially significant and disruptive event for the workers compensation industry. NCCI responded by authoring its white paper, COVID-19 and Workers Compensation: Modeling Potential Impacts (PDF) and creating the COVID-19 Hypothetical Scenarios Tool to help the industry evaluate potential direct cost impacts the pandemic may have on WC losses.

Leveraging the COVID-19 claims data that has been reported to NCCI so far, can bring the ultimate impact that the pandemic may have on WC costs more into focus.

Key Takeaways:

– – NCCI has observed $260 million of case-incurred COVID-19 WC losses, excluding self-insureds, for Accident Year 2020 in jurisdictions where NCCI provides ratemaking services.
– – NCCI estimates that COVID-19 claims, excluding self-insureds, have the potential to ultimately result in WC losses exceeding $500 million over the entire duration of the pandemic across jurisdictions where NCCI provides ratemaking services. (NCCI provides ratemaking services in 38 jurisdictions.)

As of year-end 2020, private carriers and state funds reported 45,000 pandemic-related claims to NCCI associated with $260 million in case-incurred losses – an average COVID-19 cost per claim of approximately $6,000. Note: This claim count total reflects those claims with a reported payment or reserve (i.e., a loss or expense reserve).

Most of the reported COVID-19 claims to date have associated costs less than $1,500 and almost 95% have costs less than $10,000.

Further, while larger claims – those with losses greater than $100,000 – represent about 1% of all COVID-19 claims, they account for approximately 60% of reported COVID-19 losses to date. Claims in this category are generally more likely to remain open for extended periods of time, involve older workers, require inpatient hospitalization, and involve more complications due to the existence of comorbidities.

To date, nursing/convalescent home employees, other healthcare workers, and first responders have collectively accounted for more than 75% of all COVID-19 claims reported to NCCI. Other workers in the restaurant, building operations, distribution systems, and retail industries have collectively accounted for an additional 14% of reported COVID-19 claims.

Historically, medical-only claims (i.e., claims without an indemnity, lost-wage component) have accounted for almost 75% of all WC claims. Interestingly, this claim-type distribution reversed when we examined reported COVID-19 claims.

Of all the reported pandemic-related claims with a payment or loss reserve, almost 75% have an indemnity component, while only 25% are medical-only.

Delta COVID Variant Spreading in California’s Unvaccinated

The Los Angeles Times reports that the Delta coronavirus variant is now the third-most common in California, new data show, underscoring the danger of the highly contagious strain to people who have not been vaccinated against COVID-19.

The variant makes up 14.5% of California coronavirus cases analyzed so far in June, up from 4.7% in May, when it was the fourth-most identified variant in California, according to data released by the California Department of Public Health.

Experts say the Delta variant poses a greater chance of infection for unvaccinated people if they are exposed. The variant, first identified in India, may be twice as transmissible as the conventional coronavirus strains. It has been responsible for the rise in cases recently in India, the United Kingdom and elsewhere.

But vaccinated people are well protected against infection and illness from the Delta variant. One recent study found that the full two-dose course of the Pfizer-BioNTech vaccine was 88% effective against symptomatic disease caused by the Delta variant and 96% protective against hospitalization.

Los Angeles County, the nation’s most populous, has confirmed 123 Delta variant cases – 49 of them among residents of Palmdale and Lancaster. Fourteen cases of the Delta variant were in people from a single household.

L.A. County data suggest that vaccines are still overwhelmingly effective in protecting people against the Delta variant, as well as other known variants. Of those 123 confirmed cases of the Delta variant in the county, 89% occurred among people who were not vaccinated against COVID-19, and 2% among those who were partially vaccinated. No one has died from the Delta variant in L.A. County.

The few fully vaccinated people who have been infected with the Delta variant “experienced relatively mild illness,” L.A. County Public Health Director Barbara Ferrer said.

Almost everyone who has died in L.A. County of COVID-19 has been unvaccinated. Data released by the county showed that 99.8% of COVID-19 deaths from Dec. 7 to June 7 occurred among unvaccinated people.

If you are fully vaccinated, you have a lot of protection,” Ferrer said, adding that for the “very small numbers” of people who contracted the Delta variant despite vaccination, “they really did not have serious illness. …This is a pandemic of unvaccinated people.”

The results of outbreaks of the Delta variant elsewhere also support the vaccines’ effectiveness.

Meanwhile, data released by California show that the percentage of the tested population who have antibodies to the coronavirus – a sign of immunity to COVID-19 – is also increasing.

Experts have estimated that 70% to 85% of a population needs to have immunity for a region to develop “herd immunity” to COVID-19, which interrupts the sustained transmission of the virus.

The Delta variant is also spreading nationwide.  From May 9 to May 22, the Delta variant made up less than 3% of analyzed coronavirus samples nationwide. But from June 6 to June 19, that proportion rose to more than 20%.

San Francisco First City to Mandate Employee Vaccinations

The Los Angeles Times reports that the city of San Francisco’s 35,000 employees will need to get vaccinated against COVID-19 or risk losing their jobs.

The new policy would make San Francisco the first major city and county in California to require COVID-19 vaccinations for its employees. Workers who refuse, or fail to provide a religious or medical exemption, could be terminated.

The mandatory vaccination requirement, which goes into effect once the vaccines have been formally approved by the Food and Drug Administration, extends to all city government employees, including police, firefighters, custodians and City Hall clerks. Teachers are not covered by this policy because they are school district employees. Earlier, San Francisco mandated that front-line workers in hospitals, nursing homes and jails be fully vaccinated against COVID-19.

Carol Isen, San Francisco’s director of human resources, said that employees will have until July 29 to report their current vaccination status to the city as a condition of their employment. Staff will need to upload their vaccination cards or documentation showing proof of vaccination through the city’s payroll system. Medical exemptions for employees who are ineligible for a COVID-19 vaccination must be verified by a healthcare provider. Religious exemptions will also be considered.

San Francisco enacted some of the nation’s strictest pandemic regulations and has the highest vaccination rate in the state, with at least 71% of eligible residents fully vaccinated, according to the city’s Department of Public Health. As of Wednesday, 55% of city employees have reported receiving at least one dose of a COVID-19 vaccine, according to the Department of Human Resources.

Not everyone is on board with the new policy. Theresa Rutherford, regional vice president of the Service Employees International Union Local 1021 chapter, said it threatens the livelihoods of front-line essential workers. The chapter represents more than half of all workers employed by the city and county of San Francisco.

At this point, Los Angeles County isn’t planning to follow in San Francisco’s footsteps, according to Public Health Director Barbara Ferrer. “We’d obviously be working very closely with our labor partners, with the Board of Supervisors and the CEO’s office on making a decision of that magnitude,” she said during a briefing Thursday. “You know, there’s about 110,000 county employees, so we would want to really have a healthy discussion with our employees and particularly with our labor partners about what’s the most sensible path forward.”

The University of California and California State University systems have announced they will be requiring all students, faculty and staff on their campuses to be vaccinated.

Research Shows New COVID Variant Spreading in US

Researchers have conducted a study showing that the B.1.1.7 lineage of severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) that emerged in the UK is now rapidly being displaced as the dominant strain in the United States by the variants of concern B.1.617.2 (Delta) and P.1 (Gamma) that emerged in India and Brazil, respectively.

A pre-print version of the research paper is available on the medRxiv* server, while the article undergoes peer review.

Since B.1.617.2 has displaced B.1.1.7 as the dominant variant in England and other countries, Alexandre Bolze and colleagues from Helix in San Mateo, California, set out to determine whether it is also displacing B.1.1.7 in the United States.

The B.1.617.2 variant was first identified in the United States on March 16th, 2021.

To examine the impact that the B.1.617.2 and P.1 variants of concern have had on the prevalence of B.1.1.7 in the United States, the researchers analyzed PCR and sequencing results of samples collected by the Helix laboratory across the country since April 2021.

The team’s analysis of polymerase chain reaction (PCR) and viral sequencing results collected from across the United States showed that B.1.1.7 is no longer responsible for the majority of new cases in the country.

The percentage of SARS-CoV-2-positive cases that were of the B.1.1.7 lineage dropped from 70% in April 2021 to 42% over a period of just 6 weeks.

Next, the researchers compared the Helix sequencing data by county with the county vaccination rates reported by the CDC.

The study showed that B.1.617.2 had a higher growth rate than P.1 and was growing faster in counties with a lower vaccination rate.

This revealed that the prevalence of B.1.617.2, which is more transmissible but less resistant to vaccination, is higher in counties with lower vaccination rates. By contrast, P.1, which is less transmissible but more resistant to vaccination, is more prevalent in counties with higher vaccination rates.

Moreover, while a study by Public Health England showed that full immunization (two doses) with the AstraZeneca or Pfizer-BioNTech vaccine remains more than 90% effective at protecting against hospitalization following infection with B.1.617.2, the efficacy following one dose is lower, compared with B.1.1.7 infection, says Bolze and colleagues.

The researchers say they expect that B.1.617.2 will soon become the dominant variant in the United States.

U.S. Supreme Court Rules Against California Union Organizers

The U.S. Supreme Court said California was violating the Constitution with a decades-old regulation that gives union organizers access to agricultural company land for part of the year to talk to workers.

Voting 6-3 along ideological lines, the justices said the 1975 provision, which grew out of the efforts of Cesar Chavez to give farm workers collective bargaining rights, infringed the rights of landowners.

The California regulation grants labor organizations a “right to take access” to an agricultural employer’s property in order to solicit support for unionization. Cal. Code Regs., tit. 8, §20900(e)(1)(C). The regulation mandates that agricultural employers allow union organizers onto their property for up to three hours per day, 120 days per year.

Organizers from the United Farm Workers sought to take access to property owned by two California growers “Cedar Point Nursery and Fowler Packing Company.

The growers filed suit in Federal District Court seeking to enjoin enforcement of the access regulation on the grounds that it appropriated without compensation an easement for union organizers to enter their property and therefore constituted an unconstitutional per se physical taking under the Fifth and Fourteenth Amendments.

The District Court denied the growers’ motion for a preliminary injunction and dismissed the complaint, holding that the access regulation did not constitute a per se physical taking because it did not allow the public to access the growers’ property in a permanent and continuous manner.

A divided panel of the Court of Appeals for the Ninth Circuit affirmed, and rehearing en banc was denied over dissent.

The U.S. Supreme Court reversed and ruled in favor of the landowners in the case of Cedar Point Nursery v Hassid.

The Takings Clause of the Fifth Amendment, applicable to the States through the Fourteenth Amendment, provides: “[N]or shall private property be taken for public use, without just compensation.

When the government physically acquires private property for a public use, the Takings Clause obligates the government to provide the owner with just compensation.

California’s access regulation appropriates a right to invade the growers’ property and therefore constitutes a per se physical taking. Rather than restraining the growers’ use of their own property, the regulation appropriates for the enjoyment of third parties (here union organizers) the owners’ right to exclude. The right to exclude is “a fundamental element of the property right.”

Riverside County DA to Lead EDD Fraud Task Force

The Riverside County Board of Supervisors signed off Tuesday on Riverside County District Attorney Mike Hestrin’s contract with the State of California to take the lead in handling investigations and prosecutions involving unemployment fraud.

According to the report in the Murietta Patch, in a 5-0 vote without comment, the board authorized the agreement with the California Office of Emergency Services, the terms of which are retroactive to Aug. 1, 2020, and will conclude on Dec. 31 of this year. A total $1.25 million is being awarded by Cal-OES.

DA’s staff is now tasked with overseeing the Pandemic Unemployment Assistance & Unemployment Insurance Fraud Task Force.

The funds allocated under the compact can be used for overtime expenses, hiring investigators, paying on-the-job expenses of city attorneys and area law enforcement officers while they build cases to present to the DA’s office, and equipment purchases required for investigations and prosecutions to move forward, according to agency.

The DA’s office is handling a growing number of fraud cases directly tied to jobless claims filed during the coronavirus public health closures. Some investigations are managed by the DA’s Bureau of Investigations; others are being spearheaded by municipal police agencies. Find out what’s happening in Murrieta with free, real-time updates from Patch.

The Riverside Police Department’s Economic Crimes Unit has been particularly busy. Earlier this month, the unit completed an investigation that uncovered the alleged theft of $316,500 in unemployment benefits from the California Employment Development Department. The 28-year-old defendant allegedly stole the identities of 13 people to withdraw the funds using state- issued ATM cards.

A report released on Jan. 28 by California State Auditor Elaine Howle estimated the EDD in 2020 disbursed at least $10.4 billion in benefits based on fraudulent claims, all of which were tied to the federal Pandemic Unemployment Assistance provided under the Coronavirus Aid, Relief & Economic Security Act.

The audit uncovered instances in which the Labor Department’s Office of Inspector General flagged nearly 3 million unemployment claims as likely connected to fraud, but the EDD failed to respond proactively.

Inmates incarcerated in multiple counties, including Riverside, are under investigation. The audit indicated more than $800 million in benefits were distributed to prisoners.