The Workers’ Compensation Insurance Rating Bureau of California has released its COVID-19 in California Workers’ Compensation – 2022 Update. This report details the characteristics of COVID-19 workers’ compensation claims in California and their impact on the state’s workers’ comp system.

As the economy has reopened and following the Omicron surge, COVID-19 claims continue to be a modest share of all indemnity claims.The winter surge from the Omicron variant peaked in January 2022 with almost 40% of reported indemnity claims from COVID-19. Beginning in February, COVID-19 claims dropped significantly but in recent months COVID-19 claims have been about 5% of reported indemnity claims.

Throughout the pandemic, the Health Care sector has had by far the highest proportion of indemnity claims involving COVID-19. Public administration, which includes some first responders, also had a high proportion of COVID-19 claims. Manufacturing had the second highest share of COVID-19 claims until late 2021. With the economy growing at the end of 2021 and into 2022, more COVID-19 claims were reported in the Accommodation & Food Services and Retail sectors than in Manufacturing.

More than one-half of COVID-19 claims were incurred by workers aged between 16-39, which is somewhat higher than the proportion of all indemnity claims incurred by younger workers. Almost 80% of COVID-19 death claims were incurred by workers aged 50 years or older compared to about one-third of all indemnity claims.

Far fewer COVID-19 claims are classified as medical-only claims than non-COVID-19 claims. More than 40% of COVID-19claims are indemnity claims with no medical losses incurred compared to less than 1% of non-COVID-19 claims. Most indemnity-only COVID-19 claims are relatively small and close quickly.

The vast majority of AY 2020 COVID-19 indemnity-only claims are small but there are a few large claims, mostly arising from fatalities, which are driving open COVID-19 indemnity-only claims to be costlier than non-COVID-19 claims.

Almost all AY 2021 indemnity-only claims have an incurred valueless than $5,000. A typical AY 2021 non-COVID-19 indemnity claim has incurred costs between $10,000 and $50,000 while a typical COVID-19 indemnity/medical claim has incurred costs less than $5,000. The share of COVID-19 claims over $500,000 is almost 5 times as high as for non-COVID-19indemnity claims.

Denial rates on COVID-19 claims have been higher than on non-COVID-19 claims as on average only about 8% of non-COVID-19claims are denied. Many COVID-19 claims are denied due to the lack of a positive test result for a COVID-19 infection. Generally, denial rates have been higher during the period Senate Bill No. 1159 has been in effect with its less expansive presumption of compensability than during the period the Governor’s Executive Order was in effect early in the pandemic.

For AY 2021 COVID-19 claims with indemnity and medical benefits typically have a shorter TD duration than do non-COVID-19 indemnity claims. Almost 90% of closed indemnity-only claims have a TD duration less than 2 weeks compared to 65% of AY 2020 claims at the same age.

Virtually all COVID-19 indemnity-only claims close quickly as they typically involve only short durations of TD with nearly all claims closed by 18 months. COVID-19 claims with both indemnity and medical on average close more quickly than non-COVID indemnity claims as more have relatively small incurred values.

Both indemnity and medical COVID-19 incurred losses have developed less since year-end 2021 than incurred losses on non-COVID-19 claims. This lower incurred loss development of COVID-19 claims has occurred because many COVID-19 claims close quickly and with only indemnity payments.

Following the passage of AB 5, California adopted the liberal ABC test to determine if a worker is an independent contractor or an employee. Companies must use a three-pronged test to prove workers are independent contractors, not employees.

For companies with workers outside of California, (perhaps remote workers), those employers need to review the law of the state where the employee works, or in some cases federal law. The analysis might now become more complex under proposed rulemaking just announced by the DOL.

The U.S. Department of Labor published a Notice of Proposed Rulemaking on Oct. 13 to help employers and workers determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act.

The proposed rule would provide guidance on classifying workers and seeks to combat employee misclassification. Misclassification is a serious issue that denies workers’ rights and protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over law-abiding businesses, and hurts the economy at-large.

The NPRM proposes a framework more consistent with longstanding judicial precedent on which employers have relied to classify workers as employees or independent contractors under the FLSA. The department believes the new rule would preserve essential worker rights and provide consistency for regulated entities.

“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” said Secretary of Labor Marty Walsh. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification.”

Specifically, the proposed rule would do the following:

– – Align the department’s approach with courts’ FLSA interpretation and the economic reality test.
– – Restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA.
– – Ensure that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors.
– – Revert to the longstanding interpretation of the economic reality factors. These factors include the investment, control and opportunity for profit or loss factors. The integral factor, which considers whether the work is integral to the employer’s business, is also included.
– – Assist with the proper classification of employees and independent contractors under the FLSA.
– – Rescind the 2021 Independent Contractor Rule.

The department is responsible for ensuring that employers do not misclassify FLSA-covered workers as independent contractors and deprive them of their legal wage and hour protections. Misclassification denies basic worker protections such as minimum wage and overtime pay and affects a wide range of workers in the home care, janitorial services, trucking, delivery, construction, personal services, and hospitality and restaurant industries, among others.

Before publication of today’s proposed rulemaking, the department’s Wage and Hour Division considered feedback shared by stakeholders in forums during the summer of 2022 and will now solicit comments on the proposed rule from interested parties. The division encourages all stakeholders to participate in the regulatory process. Comments, which must be submitted from Oct. 13 to Nov. 28, 2022, should be submitted online or in writing to the Division of Regulations, Legislation and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Ave. NW, Washington, DC 20210.

AI generally refers to the development of computer systems and algorithms to perform tasks historically requiring human intelligence. One form or type of AI is machine learning, which refers to the process by which machines use large sets of data to make better and better predictions. Some forms of AI can be used to automate certain aspects of decision-making.

The Blueprint for an AI Bill of Rights: Making Automated Systems Work for the American People was published by the White House Office of Science and Technology Policy in October 2022. This framework was released one year after the Office of Science and Technology Policy announced the launch of a process to develop “a bill of rights for an AI-powered world.” Its release follows a year of public engagement to inform this initiative. The framework is available online.

The Office of Science and Technology Policy (OSTP) was established by the National Science and Technology Policy, Organization, and Priorities Act of 1976 to provide the President and others within the Executive Office of the President with advice on the scientific, engineering, and technological aspects of the economy, national security, health, foreign relations, the environment, and the technological recovery and use of resources, among other topics.

The document commences by proclaiming that “Among the great challenges posed to democracy today is the use of technology, data, and automated systems in ways that threaten the rights of the American public. Too often, these tools are used to limit our opportunities and prevent our access to critical resources or services. These problems are well documented. In America and around the world, systems supposed to help with patient care have proven unsafe, ineffective, or biased. Algorithms used in hiring and credit decisions have been found to reflect and reproduce existing unwanted inequities or embed new harmful bias and discrimination. Unchecked social media data collection has been used to threaten people’s opportunities, undermine their privacy, or pervasively track their activity – often without their knowledge or consent.”

Thus the White House Office of Science and Technology Policy has identified five principles that should guide the design, use, and deployment of automated systems to protect the American public in the age of artificial intelligence.

– – Safe and Effective Systems: People should be protected from unsafe or ineffective systems.
– – Algorithmic Discrimination Protections: People should not face discrimination by algorithms and systems should be used and designed in an equitable way.
– – Data Privacy: People should be protected from abusive data practices via built-in protections and should have agency over how data about them is used.
– – Notice and Explanation: People should know that an automated system is being used and understand how and why it contributes to outcomes that impact them.
– – Alternative Options: People should be able to opt out, where appropriate, and have access to a person who can quickly consider and remedy problems they encounter.

This framework is accompanied by a technical companion – a handbook for anyone seeking to incorporate these protections into policy and practice, including detailed steps toward actualizing these principles in the technological design process.

The Blueprint for an AI Bill of Rights is non-binding and does not constitute U.S. government policy. Nonetheless the White House separately announced that several federal agencies will be taking action to advance the guidelines in the Blueprint.

For example, the following is related to protecting workers.

– – To protect worker’s rights, the Department of Labor has released “What the Blueprint for an AI Bill of Rights Means for Workers” and is ramping up enforcement of required surveillance reporting to protect worker organizing.
– – To protect workers with disabilities, the Equal Employment Opportunity Commission (EEOC) and the Department of Justice released antidiscrimination technical assistance and guidance on the Americans with Disabilities Act (ADA) and employment algorithms in May 2022, and the Partnership on Employment & Accessible Technology, funded by the Department of Labor, has released the AI & Disability Inclusion Toolkit and the Equitable AI Playbook.
– – To promote equal employment opportunity, the EEOC and the Department of Labor have launched a multi-year collaborative effort to reimagine hiring and recruitment practices, including in the use of automated systems.

In addition to the action taken for protecting workers, similar action is taken by federal agencies for Protecting consumers – Protecting students and supporting educators – Protecting patients and assisting health care providers – Ensuring fair access to housing:- Leading by example and advancing democratic values – and Guiding and supporting technologists and entrepreneurs.  Links in the Fact Sheet provide comprehensive details about the action taken by federal agencies on each of these additional protected areas.

Several states have also adopted similar regulations. And the California FEHC has published draft modifications to its employment anti-discrimination laws that would impose liability on companies or third-party agencies administrating artificial intelligence tools that have a discriminatory impact.

Medicare Advantage, a private-sector alternative to traditional Medicare, was designed by Congress two decades ago to encourage health insurers to find innovative ways to provide better care at lower cost. If trends hold, by next year, more than half of Medicare recipients will be in a private plan.

But a New York Times review of dozens of fraud lawsuits, inspector general audits and investigations by watchdogs shows how major health insurers exploited the program to inflate their profits by billions of dollars.

The government pays Medicare Advantage insurers a set amount for each person who enrolls, with higher rates for sicker patients. And the insurers, among the largest and most prosperous American companies, have developed elaborate systems to make their patients appear as sick as possible, often without providing additional treatment, according to the lawsuits.

As a result, a program devised to help lower health care spending has instead become substantially more costly than the traditional government program it was meant to improve.

Eight of the 10 biggest Medicare Advantage insurers – representing more than two-thirds of the market – have submitted inflated bills, according to the federal audits. And four of the five largest players – UnitedHealth, Humana, Elevance and Kaiser – have faced federal lawsuits alleging that efforts to overdiagnose their customers crossed the line into fraud.

The fifth company, CVS Health, which owns Aetna, told investors its practices were being investigated by the Department of Justice.

The health system Kaiser Permanente called doctors in during lunch and after work and urged them to add additional illnesses to the medical records of patients they hadn’t seen in weeks. Doctors who found enough new diagnoses could earn bottles of Champagne or a bonus in their paycheck.

Anthem, a large insurer now called Elevance Health, paid more to doctors who said their patients were sicker. And executives at UnitedHealth Group, the country’s largest insurer, told their workers to mine old medical records for more illnesses – and when they couldn’t find enough, sent them back to try again.

Each of the strategies – which were described by the Justice Department in lawsuits against the companies – led to diagnoses of serious diseases that might have never existed. But the diagnoses had a lucrative side effect: They let the insurers collect more money from the federal government’s Medicare Advantage program.

In statements, most of the insurers disputed the allegations in the lawsuits and said the federal audits were flawed. They said their aim in documenting more conditions was to improve care by accurately describing their patients’ health.

The increased privatization has come as Medicare’s finances have been strained by the aging of baby boomers. But for insurers that already dominate health care for workers, the program is strikingly lucrative: A study from the Kaiser Family Foundation, a research group unaffiliated with the insurer Kaiser, found the companies typically earn twice as much gross profit from their Medicare Advantage plans as from other types of insurance.

Many of the fraud lawsuits were initially brought by former employees under a federal whistleblower law that allows them to get a percentage of any money repaid to the government if their suits prevail. But most have been joined by the Justice Department, a step the government takes only if it believes the fraud allegations have merit. Last year, the department’s civil division listed Medicare Advantage as one of its top areas of fraud recovery.

In theory, if the insurers could do better than traditional Medicare – by better managing patients’ care, or otherwise improving their health – their patients would cost less and the insurers would make more money. But some insurers engaged in strategies – such as locating their enrollment offices upstairs or offering gym memberships – to entice only the healthiest seniors, who would require less care, to join. To deter such tactics, Congress decided to pay more for sicker patients.

Kaiser, which both runs a health plan and provides medical care, is often seen as a model system. But its control over providers gave it additional leverage to demand additional diagnoses from the doctors themselves, according to the lawsuit.

“The cash monster was insatiable,” said Dr. James Taylor, a former coding expert at Kaiser who is one of 10 whistleblowers to accuse the organization of fraud. At meetings with supervisors, he was instructed to find additional conditions worth tens of millions of dollars. “It was an actual agenda item and how could we get this,” Taylor said.