Tag: 2021 News

A new series of studies, CompScope Benchmarks, 21st Edition, from the Workers Compensation Research Institute provides in-depth analysis of costs per claim and other performance metrics across 18 state workers’ compensation systems for claims with experience through March 2020 for injuries up to and including 2019.

“The CompScope studies can help policymakers and other stakeholders identify current cost drivers and emerging trends in a wide variety of workers’ compensation system components,” said Ramona Tanabe, executive vice president and counsel of WCRI. “The studies include experience on claims through March 2020, at the very beginning of the coronavirus (COVID-19) pandemic, so they are a good baseline for evaluating the impact of the virus on workers’ compensation claims.”

The 18 states in the study are Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin. There are individual reports for every state except Arkansas, Iowa, and Tennessee.

The state studies explore the time from injury to first indemnity payment, the average total cost per claim, the average payment per claim for medical care, and the average payment per claim for indemnity benefits, as well as how state results may reflect system features and processes.

The following are sample findings for some of the study states:

– – California: Total costs per claim with more than seven days of lost time in California have been mostly stable since 2010. In 2019, the most recent year in the study period, total costs per claim increased 4 percent, which was largely driven by a 6 percent increase in indemnity benefits per claim.
– – Florida: From 2014 to 2018, total costs per claim with more than seven days of lost time in Florida had been growing moderately at 4 percent per year at all claim maturities. In 2019/2020, this measure increased 8 percent, driven by faster growth in indemnity benefits and medical payments per claim in the latest 12-month valuation. Growth in costs per claim in Florida since 2014 was faster than in most states.
– – Georgia: Total costs per claim with more than seven days of lost time have remained fairly stable in Georgia since 2008 and were higher compared with other study states. Higher indemnity benefits per claim and litigation expenses per claim in Georgia were the main drivers of the higher-than-typical total costs per claim.
– – Illinois: Total costs per claim with more than seven days of lost time in Illinois have grown between 1 and 3 percent per year since 2012, based on claims with 12-48 months of maturity. This growth reflects small increases in medical payments per claim, indemnity benefits per claim, and benefit delivery expenses per claim.
– – Indiana: Total costs per claim in Indiana increased 3 percent per year from 2014 to 2019 for claims with more than seven days of lost time at 12 months of experience. Those results, however, mask underlying changes from 2014 to 2016 in the key cost components – medical, indemnity, and benefit delivery expenses (expenses for managing medical costs and litigation expenses allocated to claims) – related to provisions of House Enrolled Act 1320.

For more information on these studies, visit https://www.wcrinet.org/compscope-benchmarks-21st-edition.

The sections of the Social Security Act known as the Medicare Secondary Payer (MSP) provisions were originally enacted in the early 1980s and have been amended several times, including by the MMSEA Section 111 mandatory reporting requirements.

Medicare has been secondary to workers’ compensation benefits from the inception of the Medicare program in 1965. The liability insurance (including self-insurance) and no-fault insurance MSP provisions were effective December 5, 1980.

Workers’ compensation is a primary payer to the Medicare program for Medicare beneficiaries’ work-related illnesses or injuries. Medicare beneficiaries are required to apply for all applicable workers’ compensation benefits. If a Medicare beneficiary has workers’ compensation coverage, providers, physicians, and other suppliers must bill workers’ compensation first. If responsibility for the workers’ compensation claim is in dispute and workers’ compensation will not pay promptly, the provider, physician, or other supplier may bill Medicare as primary. If the item or service is reimbursable under Medicare rules, Medicare may pay conditionally, subject to later recovery if there is a subsequent settlement, judgment, award, or other payment.

The Benefits Coordination & Recovery Center (BCRC) consolidates the activities that support the collection, management, and reporting of other insurance or workers’ compensation coverage for Medicare beneficiaries. The BCRC updates the CMS systems and databases used in the claims payment and recovery processes.

The BCRC assists in the implementation of MMSEA Section 111 mandatory MSP reporting requirements as part of its responsibilities to collect information to coordinate benefits for Medicare beneficiaries on behalf of CMS.

Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA Section 111) adds mandatory reporting requirements with respect to Medicare beneficiaries who have coverage under group health plan (GHP) arrangements, and for Medicare beneficiaries who receive settlements, judgments, awards or other payment from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation.

Implementation dates were January 1, 2009, for GHP arrangement information and July 1, 2009, for information concerning liability insurance (including self-insurance), no-fault insurance and workers’ compensation.

CMS continues to update and implement the Section 111 requirements. New versions of the Section 111 User Guide will be issued when necessary to document revised requirements, and when additional information has been added for clarity.

On April 5, 2021, CMS published NGHP Section 111 User Guide (Version 6.3).

This Policy Guidance Chapter of the MMSEA Section 111 NGHP User Guide provides an overview of Section 111 related legislation and MSP rules, as well as information describing the policy framework behind the MSP liability insurance (including self-insurance), no-fault insurance and workers’ compensation reporting requirements mandated by Section 111 MMSEA.

The other four chapters of the NGHP User Guide (Introduction and Overview, Registration Procedures, Technical Information, and Appendices) should be referenced as needed, for applicable guidance.

According to an article by Fisher Phillips, recent California class and collective lawsuits are starting to reveal a particular trend of litigation where employees are claiming unreimbursed work-related expenses.

For instance, a Private Attorneys General Act (PAGA) action filed on January 15 in the Superior Court of Merced alleges that Foster Farms failed to provide and reimburse employees for the cost of personal protective equipment (PPE). Specifically, the employees allege that they were forced to purchase PPE such as masks, gloves, and hand sanitizer without reimbursement.

In their complaint, the employees argue that California case law requires employers to provide their employees with PPE, at the employer’s expense, and employees must be reimbursed for any such materials that the employees purchase if the employer fails to do so.

In another recent 2021 lawsuit, a class action filed in Orange County Superior Court, the employee alleges that Anyone Home, Inc. failed to provide reimbursement for her and other similarly situated employees’ home internet, home telephone, personal cell phone, personal computer, utility costs, office furniture, and insurance from July 2019.

In both of these cases, the employees allege they were required to purchase alleged necessary business expenses but not reimbursed for these purchases.

Both cases are at their infancy, and no court has made a ruling on the merits of the allegations raised in either case.

California Labor Code § 2802 explicitly requires employers to reimburse their employees for the necessary business expenses that they incur. Specifically, employees must be reimbursed for expenses that are necessarily incurred in direct consequence of their job duties or in complying with an employer’s directions. In general, the law only requires reimbursement of necessary and reasonable expenses; unnecessary or unreasonably exorbitant expenses need not be reimbursed.

Traditionally, most remote work expenses have not been reimbursable because most employers’ telecommuting and remote work programs were typically voluntary and not required.

However, in today’s COVID-19-regulated environment, remote work has become mandatory for many industries, therefore changing certain employers’ reimbursement obligations. When remote work is mandatory – even if ordered by California or local authorities – employees must be reimbursed for the necessary expenses they incur while working at home. The issue of whether certain expenses were “necessarily incurred” by an employee is subject to court scrutiny and various employer defenses.

Regrettably, the California Labor Commissioner’s office has failed to issue COVID-specific expense reimbursement guidance to aid employers in navigating this new vast remote work environment.

Applied Underwriters will be featured in episodes of an upcoming TV series called Back from the Brink.

The series, set for the fourth quarter of 2021 and the first quarter of 2022 on the Discovery Life channel, will be presented weekday evenings in prime time nationally.

Each episode will feature the real-life stories of individuals who suffered and survived near death accidents, but whose sudden, dire circumstances required an enormous degree of care from a cross-section of individuals and professionals working with unusual devotion to bring these victims back to enjoy a good quality of life.

Back from the Brink researchers identified several sources, including Applied Underwriters, because it has been regularly cited, including recently by the State of California, as a top performer in claims management.

Several of the episodes will be drawn from Applied Underwriters’ files, notably the stirring saga of an electrical lines worker who was electrocuted falling to his “near death” only to be rescued and brought back to life with the use of his limbs and a reconfigured face and neck through groundbreaking surgeries.

A second, compelling story is that of a severely injured lumberjack who fell 60 feet to the ground and was crushed by the tree he was cutting, only to be brought back to vitality by an amazing concert of a giving family, devoted clergy, and a talented, focused team of professionals.

The choice of Applied Underwriters’ experiences and successes in treating patients all the way through to the revitalization of their lives and capacities is a great source of pride for Applied, according to Steve Menzies, the Company’s Chairman: “The role that our Claims Department and others have played in the recovery of so many injured workers over the years is itself a deep source of gratification to the Company’s dedicated staff; that it is recognized and selected for airing, is a second source of great satisfaction to us all.”

Mr. Menzies continued, “Our philosophical approach is ‘service well beyond the letter of the policy and the financial resolution. We believe that our Company’s good soul is expressed in the treatment of claimants, especially injured workers who have had to come ‘back from the brink.'”

The program will look at the ways an injured person’s community of resources worked to overcome challenging odds, following changing courses and regimens as the patients recovered and reached the plateaus that marked progress, according to Mr. Menzies, who concluded: “We believe that the insurance industry does not get the credit it deserves for playing a role beyond simply paying claims fully and promptly, so we appreciate the angle that this show takes – demonstrating that recovery is a concerted effort of many committed professionals who, while concentrating upon one injured worker, martial resources from far and wide to bring to bear – all, with special determination and courage. We hope the series will present insurers in a more fittingly favorable light and have a great following. We are delighted to be a part of it.”

A commentary which was published in the VC Star anticipates a “once a decade” war over changes to the California workers’ compensation system.

According to the commentary, work comp “is so immense that it supports a permanent cadre of interest groups and their lobbyists who joust constantly over operational rules.”

Over the last half-century, a predictable cycle has emerged. Once a decade – or once a governorship – the five contending factions go to war, three of the five cut a deal to grab bigger slices of the financial pie, and push it through the Legislature. It takes a few years for the changes to impact the system and a few more for a new tripartite alliance to form for another battle.

It last happened a decade ago when Jerry Brown resumed the governorship 28 years after his first stint expired.

Employers and labor unions struck a deal, with the implicit blessing of work comp insurers, to curtail medical costs and use the savings to increase cash benefits for disabled workers and decrease employers’ insurance premiums.

The two factions left out of the deal – lawyers who specialize in work comp cases and providers of medical care, therapy and rehabilitation – howled. But with Brown’s blessing and the unions’ political clout, it was enacted.

It worked as planned, in fact too well in the eyes of the two left-out factions and labor unions, which complained that employers benefited more than their injured employees.

Insurance costs as a percentage of payroll have dropped by more than two-thirds from their peak in 2003, thanks to both the changes signed by Brown and those muscled through the Legislature a decade earlier by predecessor Arnold Schwarzenegger. That said, California employers are still paying the nation’s fourth highest work comp costs, according to Oregon’s annual state-by-state compilation.

So what now?

Last year, in response to the COVID-19 pandemic, the Legislature and Gov. Gavin Newsom decreed that some medical workers would have a presumption that certain illnesses would qualify them for work comp benefits without having to prove connections to their jobs.

This year, several bills would expand presumptions to other workers and other maladies. One, for example, would expand the presumption that San Diego’s lifeguards now have for skin cancer to include nine other illnesses. Another would expand the lifeguards’ skin cancer presumption to include game wardens and state park rangers. Still another would create an extensive slate of presumptions for nurses.

Medical care providers, who were on the short end of the last big work comp deal, want legislation to provide automatic inflation increases in their fees. Another bill would create a state-operated network of medical care providers for work comp treatment that would bypass employers’ provider networks.

These and other measures would directly or indirectly increase costs and/or re-slice the pie. The most important of the five factions is labor and if it forges an alliance with the medical and legal groups, chances of a major work comp overhaul are strong – right on the decennial schedule.