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Tag: 2021 News

NCCI Reports Insurers Have Profitable Year With 87% Combined Ratio

The National Council on Compensation Insurance (NCCI) revealed in-depth data on the performance of the US workers compensation system in 2020. Because of job losses and shrinking payrolls during the pandemic recession, net written premium dropped 10% to $42 billion in 2020. However, private insurers posted a profitable calendar year combined ratio of 87, the fourth straight year with a combined ratio below 90 for workers compensation insurance.

The pandemic was the moment to rise to the challenge, and the workers compensation system did so with integrity,” said Bill Donnell, President and CEO of NCCI. “Our workers compensation system is fulfilling its noble mission to help injured workers.”

NCCI Chief Actuary Donna Glenn said, “The pandemic has been devastating for families, healthcare workers, and the economy. The workers compensation system has been strong and resilient. While net written premium dropped significantly during the recession, other financial metrics remain favorable, at or near historic highs. We have seen fewer COVID-19 claims than originally anticipated.”

Here are other key details included in NCCI’s State of the Line Report on workers compensation insurance:

– – Combined Ratio – The calendar year combined ratio is 87, while the reported accident year combined ratio is 100.
– – Reserves – The reserve position for private insurers remains strong, growing to a redundancy of $14 billion as of Year-End 2020.
– – COVID-19 Claims – Workers hurt by COVID-19 made more than 45,000 claims in 2020 with more than 95% of those claims costing less than $10,000. Carriers reported $260 million in total COVID-19 incurred losses in 2020.
– – Workers Hurt by COVID-19 – Hardest hit were workers in nursing homes, hospitals, clinics, and other healthcare settings along with first responders, which all together account for 75% of the claims.
– – COVID-19 Severity – To date, the costliest 1% of COVID-19 claims account for 60% of COVID-19 loss dollars.
– – Claim Frequency – Excluding COVID-19 claims, claim frequency decreased 7% in 2020, continuing the long-term lost-time claim frequency decline.
– – Claim Severity – While indemnity claim severity is expected to increase 3% in 2020, the average cost of the medical portion of a lost-time claim is expected to change between plus or minus 2%.

The complete workers compensation State of the Line Report and State of the Line Guide are available at ncci.com.

Glenn and other NCCI experts noted a series of issues on the organization’s watchlist, including the uncertainty of how workers with long-haul symptoms will fare and how quickly the recovery will drive an increase in payrolls and workers compensation premiums.

Travelers Wellness Survey Shows Pandemic Resilience

The Travelers Companies, Inc. announced the results of the Travelers Mental Wellness Checkup, a national survey of 2,000 employed adults across more than 10 industries. Most respondents reported experiencing some type of negative effect on their mental health since the pandemic began last year: 59% have worried about losing a loved one, 50% have suffered from loneliness and 37% said their level of personal stress has worsened.

However, respondents have remained resilient, as most reported that their mental state appears to be recovering, with 73% describing their current mental health as excellent or good – up from 67% in the early months of the pandemic.

“Understanding an employee’s mental health plays an important role in managing workplace injuries,” said Dr. Marcos Iglesias, Vice President and Chief Medical Director at Travelers. “The pandemic has likely affected the many psychosocial factors that can complicate the healing process and delay the time it takes to recover from a physical injury. It’s encouraging to see workers’ mental health trending back toward pre-pandemic levels because when employees are in a good mental state, they are safer, more productive and can often recuperate quicker if they do get hurt.”

Positivity and the use of coping mechanisms are likely contributing to the improving outlooks. When asked to name any “silver lining” they’ve experienced during the pandemic, most employed adults (84%) identified at least one of the following, including:

– – Having a job (41%).
– – Saving money (34%).
– – Working remotely (29%).
– – Ability to multitask between personal and professional responsibilities (24%).
– – Picking up a new hobby (20%).
– – Not commuting (19%).
– – Connecting with others virtually (15%).

Exercise and spending time with family were the top ways that respondents described managing loneliness and stress over the last year, followed by using social media, spending time with pets and reaching out to friends or co-workers. Coping strategies varied somewhat by age group: baby boomers were more likely to keep in touch with others, while millennials were more likely to turn to social media or a new hobby.

The survey also found a correlation between employer-provided resources and workers’ mental health. Thirty percent of respondents who believe their employer has provided ample mental health resources also reported that their ability to manage stress improved during the pandemic, and one-third (33%) noted that loyalty to their employer increased. Meanwhile, 42% of workers who feel their employer has not provided enough mental health support said their ability to manage stress worsened during the pandemic, and 29% said loyalty to their employer decreased.

Dr. Iglesias added, “It’s important to note that employers can positively affect the overall well-being of their employees by taking a more holistic view of their health beyond just physical safety.”

To download the report and learn more about the findings, including generation- and industry-specific differences, please visit Travelers.com/mentalhealth.

See’s Candies Wins Meal Break Class Decertification Victory

See’s Candies secured a victory when the California Court of Appeals rejected a proposed statewide employment class action based on alleged meal and rest period violations.

The lead plaintiff, Debbie Salazar, alleged claims for unpaid overtime, unpaid minimum wages, failure to provide rest and meal periods, failure to provide wage statements and to maintain payroll records, failure to timely pay wages on termination, and unfair and unlawful business practices under Business and Professions Code section 17200.

Salazar sought certification of two classes: a “single staffing class” and a “meal break class.” With respect to the meal break class,

Salazar acknowledges that See’s official meal break policy complies with California law. Salazar’s theory is that, despite that policy, See’s consistent practice was to deny second meal periods when shifts exceeded 10 hours. Salazar claims that she can prove this consistent practice, and therefore establish liability, through common proof.

In opposition to the motion, See’s argued that See’s did not rely only on the Scheduling Form to provide second meal breaks, but also provided employees with training on its policies and required its shop managers to implement those policies.

In support of its opposition, See’s submitted declarations from 55 employees, including both managers and shop employees. The managers testified generally about See’s policy of providing a second meal break for shifts over 10 hours. Most of the employee declarants testified that they were aware of this policy. More than half of the employee declarants had worked shifts longer than 10 hours, and almost all of these testified that they took second meal breaks during such shifts at least some of the time. Four employees testified that they occasionally chose not to take a second meal break so that they could leave work earlier or get overtime pay.

The trial court denied certification of the meal break class on two grounds. First, the court found that Salazar had failed to show that she could prove through common evidence that See’s had a consistent practice to deny second meal breaks. Second, the trial court found that Salazar’s proposed trial plan was inadequate to manage these individual issues.

The court of appeal affirmed denial of class certification in the published case of Salazar v Sees Candy.

Class actions are authorized “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court.” (Code Civ. Proc., § 382.) To certify a class, “[t]he party advocating class treatment must demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives.”

The community of interest factor in turn has three requirements: (1) common questions of fact or law that predominate over individual issues; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.

Class certification is generally inappropriate if liability can be established only through individual proof. When common issues predominate over individual issues, a class should not be certified if there is no way to manage the remaining individual issues “fairly and efficiently.”

Under the substantial evidence standard, the court of appeal must credit the trial court’s reasonable inferences, even if a competing inference could be drawn.

DWC Adds Anxiety Disorders to MTUS

The Division of Workers’ Compensation has issued a notice of conference call public hearing for a proposed evidence-based update to the Medical Treatment Utilization Schedule (MTUS), which can be found at California Code of Regulations, title 8, section 9792.23.8.

The conference call public hearing is scheduled for Friday, June 11, at 10 a.m. and members of the public may attend by calling 866-390-1828 and using access code 5497535#. Members of the public may review and comment on the proposed updates. Written comments must be submitted no later than June 11.

Please see the proposed regulation page for direction for submitting written comments.

The proposed evidence-based update to the MTUS incorporate by reference the latest published guideline from American College of Occupational and Environmental Medicine (ACOEM) for the following:

– – Workplace Mental Health Guideline – Anxiety Disorders (ACOEM April 30, 2021)

The proposed evidence-based update to the MTUS regulations are exempt from Labor Code sections 5307.3 and 5307.4 and the rulemaking provisions of the Administrative Procedure Act. However, DWC is required under Labor Code section 5307.27 to have a 30-day public comment period, hold a public hearing, respond to all the comments received during the public comment period and publish the order adopting the update online.

Sexual Exploitation by PTP Causes New Compensable Injury

The injured worker was employed by Applied Materials from 1996 until 2008. During that time, she claimed three industrial injuries: a specific injury to her neck and right upper extremity in 2001, a specific injury to her neck and both upper extremities in 2005, and a cumulative trauma injury to her neck, both upper extremities, and psyche ending on her last day worked in January 2008.

The worker later claimed that in 2013, she was sexually exploited by Dr. John Massey, (an anesthesiologist/pain specialist), the physician primarily responsible for the treatment of her industrial injuries after 2007. At the time, Massey was a member of the Bay Area Pain and Wellness Clinic (BAPWC). His license has since been revoked for his sexual misconduct by the California Medical Board.

She claimed that he touched her inappropriately on multiple occasions at his clinic and had sexual intercourse with her five times in her home. As a result of the doctor’s alleged misconduct, she claimed that she suffered a further injury to her psyche and was diagnosed with posttraumatic stress disorder (PTSD). Worker claimed her PTSD was industrial as a compensable consequence of the medical treatment her employer provided for all three of her industrial injuries.

Arrowood Indemnity Company was the workers’ compensation carrier for the 2001 specific injury claim. XL Specialty Insurance Company, as administered by Corvel Corporation was the workers’ compensation carrier for both the 2005 specific injury and the 2008 cumulative trauma injury claims.

Both insurers contended that Worker’s psychiatric injury resulting from her claimed sexual exploitation by Dr. Massey was not industrial because it was the result of a consensual sexual relationship and occurred at her home.

The case went to trial before a workers’ compensation judge in 2017. The WCJ found that all of Worker’s injury claims – including her depression, anxiety, and PTSD – were industrial, and awarded 100 percent permanent disability based on her PTSD alone retroactive to October 2010; found no apportionment; and concluded that the insurers were jointly and severally liable for the PD award since Dr. Massey treated all three of her industrial injuries.

In its June 2019 decision, the WCAB amended the amount of the weekly TD and PD rates as recommended by the WCJ, made an order regarding attorney fees that is not at issue here, and otherwise affirmed the WCJ’s findings and award.

The Court of Appeal affirmed the finding of psychiatric injury resulting from the sexual exploitation by Dr. Massey, but rejected the finding of total disability in the unpublished case of Applied Materials v. Workers’ Comp Appeals Board.

On the issue of industrial causation, the Court of Appeal concluded that the Worker met her burden of proving that her PTSD was a compensable consequence injury. It rejected Petitioners’ contention that the sexual conduct here was consensual, since as a matter of law a patient cannot consent to sexual contact with his or her physician (Bus. & Prof. Code, § 729, subd. (b)), as well as their contention that the PTSD is not compensable under the rules governing industrial injuries arising out of assaults by third parties.

It concluded that the 100 percent PD award must be annulled because: (a) the psychiatric reports that the WCAB relied on do not constitute substantial evidence since Dr. Sidle relied on an incorrect legal theory, the alternative path theory, that was rejected in Fitzpatrick, supra, 27 Cal.App.5th 607; and (b) Worker’s evidence was otherwise insufficient to rebut the scheduled rating for her psychiatric disability.

WCRI Reports on Rising Hospital Outpatient Costs

The Workers Compensation Research Institute (WCRI) released a new study, Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 10th Edition, which compares hospital payments for a group of common outpatient surgeries in workers’ compensation across 36 states from 2005 to 2019.

Rising hospital outpatient costs have been a focus for public policymakers and system stakeholders in recent policy debates in many states,” said Ramona Tanabe, WCRI’s executive vice president and counsel. “The study provides meaningful comparisons of hospital outpatient payments across states, as well as hospital payment trends in relation to reforms of hospital outpatient fee regulations.”

The following is a sample of the study’s findings:

– – Hospital payments per outpatient surgical episode in states with percent-of-charge-based fee regulations were 73 to 209 percent higher than the median of the study states with fixed-amount fee schedules in 2019. In states with no fee schedules, they were 61 to 130 percent higher.
– – Growth in hospital outpatient payments per episode among non-fee schedule states ranged from 25 percent in Iowa to 54 percent in Missouri, while the payments in the median fixed-amount fee schedule state without substantial changes in regulations increased about 4 percent from 2011 to 2019.
– – Variation between average workers’ compensation payments and Medicare rates for a common group of procedures across states ranged from a low of 38 percent (or $2,294) below Medicare in Nevada to a high of 502 percent (or $24,758) above Medicare in Alabama.

Payments for services provided and billed by hospitals are captured in this study. Professional services billed by nonhospital medical providers (e.g., physicians, physical therapists, and chiropractors), transactions for durable medical equipment and pharmaceuticals billed by providers other than hospitals, and payments made to ambulatory surgery centers are excluded. The study also provides an analysis of major policy changes in states with recent fee schedule reforms.

The study covers 36 large states that represent 88 percent of the workers’ compensation benefits paid in the United States. These states are Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.

For more information about this report or to download a copy, visit  the WCRI website. The report was authored by Olesya Fomenko and Rebecca Yang.

Central Valley Employer Faces $1M Premium Fraud Charges

41 year old Carolyn Plaza, who lives in Fresno, self-surrendered after a warrant for her arrest was issued on six felony counts of insurance fraud.

A criminal complaint filed on April 16 , alleges Plaza underreported more than $3 million in employee payroll in order to fraudulently reduce her company’s workers’ compensation insurance premium by nearly $1 million.

Plaza is the co-owner of Absolute Urethane, Inc., a construction contracting business serving the Fresno and surrounding Central Valley areas since 2006.

The California Department of Insurance began an investigation after receiving a tip from the State Compensation Insurance Fund alleging Plaza had manipulated payroll reports to avoid paying higher insurance premiums.

The Department of Insurance investigation uncovered that Plaza had provided false payroll records to State Fund for multiple policy years.

After comparing those payroll records to the records she reported to the Employment Development Department, the investigation discovered that Plaza underreported $3,146,863 in employee payroll over five years. Plaza’s underreporting resulted in a $985,091 loss in premium to State Fund.

Employers are required to maintain workers’ compensation insurance to cover their employees in the event of an accidental on-the-job injury. To ensure proper coverage, employers are required to accurately report the number of employees, job classifications, and the amount of payroll expended.

One of the common ways in which employers avoid paying insurance premiums is to underreport a business’s payroll by providing false payroll reports to their insurance company.

In this case, Plaza’s underreporting significantly lowered the premiums owed. Businesses that fraudulently lower their premiums benefit from an unfair market advantage, giving them the ability to charge less in labor costs, and thereby underbid businesses who pay the appropriate premiums.

Arraignment is scheduled for June 28, 2021, in the Fresno County Superior Court. The Fresno County District Attorney’s Office is prosecuting this case.

Bay Area Contractor Gets Jail Time for Comp Fraud

After years of firing employees when they requested medical treatment for work-related injuries, 71 year old Man Tat Szeto, the owner of MT Szeto Construction, admitted to committing felony workers’ compensation insurance fraud.

Worker’s compensation premium fraud occurs when an employer makes material misrepresentations to an insurance carrier about its claims history, payroll or risk classification of its workers, in order to obtain insurance coverage at less than the proper rate.

The construction company handles commercial, multi-family and residential construction projects throughout the greater San Francisco Bay Area.

California Contractors State License Board brought this case to the attention of the Santa Clara County District Attorney’s Office as a result of suspicious activity that occurred at a new residential construction project in San Jose.

In late 2018, multiple former employees reported that they had been fired after requesting medical treatment for injuries they had sustained while at work.  When an employee injured himself, rather than file an appropriate claim with the employee’s insurance company and risk an increase in premium, Szeto simply handed them cash and terminated them.

The employees who frequently worked upwards of 70 hours would be paid for only 40 hours, which is wage theft.

He avoided approximately $86,000 in premium payments to his insurer by underreporting employees and injuries.

To further his scheme, Szeto used the banking system to launder $165,000 to pay employees “off the books.”  Szeto was also charged with unemployment insurance tax fraud and money laundering.

Szeto’s plea agreement requires that he be placed on five years formal probation, serve nine months in county jail, and make restitution of approximately $250,000.

The Santa Clara County District Attorney’s Office, in coordination with the California Department of Insurance and the Department of Industrial Relations, investigated Szeto for nearly two years.

Newsom Reappoints Katherine Zalewski as WCAB Chair

58 year old Katherine Zalewski, who lives in of Richmond, has been reappointed to the Workers’ Compensation Appeals Board, where she has served since 2014 when she was appointed by Governor Brown, and as Chair since 2017.

Zalewski was Chief Counsel at the California Department of Industrial Relations from 2012 to 2014, where she was a Workers’ Compensation Administrative Law Judge and Advisor to the Division of Workers’ Compensation from 2009 to 2011.

Prior to her appointment as a Workers’ Compensation Judge in 2009, Ms. Zalewski represented insurers and self-insured employers in workers’ compensation matters throughout Northern California.

She was Senior Associate at Schmit Law Office from 2000 to 2009 and Manager and an Attorney at Pacific Coast Services from 1998 to 2000 and at Express Network and Direct Legal Support Services from 1993 to 1998. She was an Attorney at Kinder and Wuerfel from 1990 to 1993, at Finnegan and Marks from 1988 to 1990 and at Foreman and Brasso from 1986 to 1988.

Ms. Zalewski received her B.A. from the University of California, Berkeley in 1983 and her J.D. from Hastings College of the Law in 1986.

This position requires Senate confirmation and the compensation is $164,122.

Zalewski is registered without party preference.

Santa Ana PD Officer to Serve Six Months for Comp Fraud

Former Santa Ana Police Officer Jonathan Ridge was fired from the Santa Ana Police Department after admitting to worker compensation fraud.

Ridge pled guilty to several charges: one count of making a false statement to obtain compensation, and three counts of filing a fraudulent insurance benefit claim.

“Mr. Ridge’s criminal conduct is intolerable, erodes the public trust and violates the very oath he took to serve as a peace officer by the City of Santa Ana,” Santa Ana Police Department, Chief of Police David Valentin said in a statement via Twitter. “This conduct does not represent the ethical, principled, and hard-working employees of the Santa Ana Police Department.”

Ridge sustained an injury while on duty in pursuit of a suspect who was driving a stolen vehicle on Oct. 5, 2017. He then went on disability due to the injuries he had sustained.

While on leave in May 2018, Ridge had surgery to repair his injured wrist and his doctor recommended he stay out of work for up to six months. Ridge was cleared by his doctor to return to work in November 2018.

Ridge returned to work with several medical restrictions. However, the City of Santa Ana was unable to accommodate his restrictions despite having an extensive return-to-work program for injured employees. They continued paying Ridge’s disability payments, which comprised the full amount of working pay.

The Santa Ana Police Department began doing surveillance on Ridge in March 2019 after observing little to no improvement to his injury after 18 months off the job.

The investigation revealed that Ridge was engaged in activities beyond what his doctor imposed, including attending college classes weeks after his wrist surgery, taking a road trip to Utah, going to the beach and even riding a motorcycle.

Ridge received his full-time pay for over a year while not working despite being fully capable of returning to work.

“Workers’ compensation fraud costs honest, hardworking businesses and government entities more than $30 billion a year,” Orange County District Attorney Todd Spitzer said in a press release. “We cannot allow those who commit workers’ compensation fraud to go unpunished because the financial cost to government and private business makes the cost of doing business more and more difficult.”

The former SAPD officer was sentenced to six months in jail and two years of probation.