Tag Archives: case law

State of Workers’ Comp in California

At the 2015 California Workers’ Compensation & Risk Conference, this panel of industry stakeholders weighed in on the overall condition, including cost drivers and legislation, affecting California’s workers’ compensation system:

Moderator: Mark Walls, VP communications and strategic analysis at Safety National

David North, CEO at Sedgwick

Kevin Confetti, deputy chief risk officer at University of California

Ann Schnure, VP risk management, claims, at Macy’s

Dawn Watkins, AIC, PHR, ARM, director integrated disability management at LA Unified School District

Julius Young, partner at Boxer & Gerson

Richard M. Jacobsmeyer, founding partner at Shaw, Jacobsmeyer, Crain & Claffey

The first question was: How does the California’s workers’ compensation system compare with other states?

California ranks #1 in costs compared with the rest of the U.S. California simply has more claims that cost more money. That is why California is the most expensive and complicated state.
Every time California changes a law, the system gets more complex. What influences workers’ comp is far more than just the laws, though. The social norms are different in California. It is a unique culture of employment that affects everything. There are a lot of things that employers and the healthcare community do that are driving these costs.

Why are claims costs so expensive in the Los Angeles basin vs. the rest of California?

Injured employees are transferred away at a larger rate from the primary treating physician of the employer’s choice. There is a very different treatment pattern compared with other states, and this medical treatment is driving costs for employers. Litigation rates are higher, which is part of the culture in that area. Very often, LA attorneys try to take medical control and send the injured employees to the doctors that the attorneys prefer. Attorneys and physicians who have had long-lasting relationships are referring almost exclusively to each other. Attorneys are aggressively advertising to injured workers, and workers are responding.

What else is driving workers’ compensation costs in California as a whole?

Once an employee gets an attorney referral, it is out of the employer’s hands. The employer no longer has the authority to properly take care of the injured worker. California is the only state where, if you do not like what you are paid, you file a lien. This has nothing to do with the quality of care for the injured worker. The root of so many of these issues is the doctor community in the state. Maybe the doctors need to be trained on billing and medical treatment utilization schedule  (MTUS), but it’s believed that some may be billing higher than the fee schedule to see if someone will actually pay the higher rate billed. The most important person in workers’ comp is the injured worker. We should be spending all the money that employers pay on things like bill review on helping the worker heal. Too much of the costs that employers pay are not going to the injured worker.

What concerns do you have about current legislation and case law affecting the system?

We, mistakenly, have allowed legislation to tell us how to comply. It has become much more about the process rather than helping an injured worker get better. Doctors will say how they think they should treat, but have to send the case through utilization review, which sometimes contradicts the doctor’s opinion. This deflates that injured worker’s confidence on whether he is getting the best care. It is possible that doctors are not trained on the MTUS and keep trying to push things through the system that shouldn’t be. We should focus on how to better train doctors on the system. The system is so complicated. What employers need to do is try to stop the employees from getting into the system. We need to intervene fast. Get the employees good, quality medical care quickly and eliminate the potential for them to get stuck in the system.

How do you improve the quality of benefits to injured workers in California?

The least-likely employee to file a claim is the employee who thinks her employer cares about her. Employees are much less likely to litigate cases if the employer is providing them with good care and communication. That’s the gold standard for trying to decrease litigation. It is so important for employers to reflect on how they are treating their injured workers. Are you treating them like a member of your team or just another expense? Often, they are afraid that they are going to lose their job. Let them know what workers’ comp is and what they should expect. It is so complicated. Make sure they are well-informed and understand that return to work means they are not going to lose their job because of an injury. Claims examiners in California have a tough job. We need to hire smart people and give them appropriate workloads. They are the glue that holds everything together. California currently has a shortage of qualified adjusters, and it is a large problem. The industry, as a whole, needs to contribute to this issue so we can get quality people interested in this career path.

Debunking ‘Opt-Out’ Myths (Part 5)

Option programs in Texas and Oklahoma produce substantially less litigation than workers’ compensation systems do, which provides a powerful endorsement for states considering such programs.

A look at litigation for workers’ compensation and option programs must consider three main exposures: (1) claims for employer liability, (2) claims that the law violates the particular state’s constitution and (3) claims for wrongful denial of benefits.

Claims for Employer Liability

Public policymakers have long understood that it is not fair to require employers to pay a high level of statutorily mandated injury benefits and also be exposed to legal liability damage claims regarding the cause of injury. There are several approaches available to state legislators in striking that balance in a workers’ compensation system or an option to workers’ compensation, but each approach must reflect this inverse relationship between the extent of an injury benefit mandate and the extent of employer exposure to liability.

Employer exposure to liability has been almost entirely removed from workers’ compensation systems because of extensive benefit mandates that include medical coverage for life. However, the option to Texas workers’ compensation takes the opposite approach. It has no injury benefit mandates but exposes employers to broad liability for negligence.

That formula will be pursued by few, if any, other state legislatures because of the risk that certain irresponsible employers would provide no injury benefit coverage to their workers. However, the Texas option liability exposure does provide an additional incentive for employers to focus on workplace safety. It also provides employers with an incentive to make a strong commitment to take care of the injured employee’s medical and indemnity needs.

Employer liability exposure under the Texas option is real. There have been more than 80 liability settlements or judgments of $1 million or more. This unlimited risk of liability is ever-present.

However, option programs experience less than half as many disputed claims as the Texas workers’ compensation system (which is widely acknowledged as the one of the best-performing systems in the U.S.). The tiny percentage of disputed option claims is, primarily, because of legal requirements to fully communicate all rights and responsibilities (at program inception and continuing) in language that employees can understand — a requirement that is quite hard to find within any workers’ compensation program.

Option programs are also legally required to use claim procedures that ensure a full and fair review of benefit claims, including access to state and federal courts.

Yet only 1.5% of Texas option claims have any attorney involvement, and less than one in 1,000 liability claims actually go through formal litigation. So, this liability exposure has a positive impact on workplace safety, while still proving to be manageable and fully insurable in a highly competitive option marketplace.

It took more than a decade for the insurance industry and case law development to create the current balance that is delivering injury benefits to more than 95% of Texas workers through either workers’ compensation or option injury benefit plans. The existing Oklahoma option and the proposed Tennessee and South Carolina options all mandate some level of injury benefits and reduce employer exposure to liability to simplify the public policy debate and avoid this long period of industry maturation.

Constitutional Challenges

In existence for more than 100 years, the Texas option has never faced a challenge on constitutional grounds. Texas courts have long respected an employee’s right to work, employer rights to tailor employee compensation and benefits and the legislature’s right to determine an appropriate balance between mandated injury benefits and employer liability exposures.

The Oklahoma Supreme Court has now twice rejected lawsuits challenging the constitutionality of the Oklahoma option in 2013 and 2015. Oklahoma trial lawyers have filed more than a dozen lawsuits at the Oklahoma Supreme Court challenging the constitutionality of the 2013 workers’ compensation reforms. Oklahoma courts may further consider different provisions of the option law, but attorneys from the claimant and defense bar now agree that the Oklahoma Employee Injury Benefit Act is here to stay.

Oklahoma and Texas employers can freely move into and out of the workers’ compensation system at any time. So, even if the Oklahoma option is ever stricken down on constitutionality grounds (as unlikely as that prospect is), the law provides a 90-day grace period for employers to move back into workers’ compensation, without penalty. Similar provisions are in the pending Tennessee and South Carolina legislation.

Claims for Wrongful Denial of Benefits

Day-to-day legal challenges by injured workers regarding their rights to benefit payments are a normal feature of all workers’ compensation systems, and the same is true of option injury benefit systems. It is an unfortunate fact of life that, as with any line of insurance business, not every claim will be handled well. But as we have seen in Oklahoma over the past year and in Texas for more than two decades, dramatically fewer claims are disputed by injured workers under option programs.

Twice as many Texas workers’ compensation claims for benefits are disputed as compared with Texas option claims. This is true even when combining all injury benefit plan disputes and employer liability disputes under the Texas option.

Option opponents love to allege these programs only save money by failing to fully compensate injured workers. But, if this were true, why do we see fewer disputes in option programs?

Option program savings are achieved through more employee accountability for injury reporting, earlier diagnosis, persistent medical care from the best providers and more efficient resolution of fewer disputes. Option programs help ensure that employers and injured workers are communicating, engaged at the table (with or without legal counsel) and working together for better medical outcomes and return-to-work. This model must be contrasted with employers and injured workers routinely fighting through the complexity contained in thousands of pages of workers’ compensation statutes, regulations and case law that necessitate attorney involvement for basic system navigation.

A large cadre of workers’ compensation claimants and lawyers can be found in the hallways and hearing rooms of the Oklahoma and other state workers’ compensation commissions and courts on any given day. But there have been few day-to-day Oklahoma option benefit challenges. Oklahoma option programs now cover more than 22,000 workers, and almost every claim that has arisen over the past year has been fairly and efficiently resolved through the injury benefit plan’s claim procedures — essentially the same claim procedures that have applied to private employer group health and retirement plans across the U.S. for more than 40 years.

Over the span of 26 years in Texas and the past year in Oklahoma, not one state or federal employee has ever been hired to specialize in the oversight or administration of the approximately 50,000 option injury program claims that are successfully resolved every year. In contrast, tens of millions in taxpayer dollars are spent in many states every year to oversee and administer day-to-day workers’ compensation claims.

As further testimony to employee appreciation for the full disclosure of their rights and responsibilities under option injury benefit plans and the customer service they receive, not a single workforce in the past 26 years has organized a union as a result of the employer electing an option to workers’ compensation in Texas or Oklahoma. For workforces that are already unionized, their members and leadership appreciate the fact that option programs routinely pay a higher percentage of disability benefits, with no waiting period and no (or a higher) weekly dollar maximum.

Plus, disability benefits are paid on the employer’s normal payroll system, which allows employers and injured workers to seamlessly continue deductions for group health, retirement, child support and union dues. Successful Texas option programs have been in place for many, many years that cover textile, communications, food and commercial workers, teamsters and other collective bargaining units.

Conclusion

With liability exposures clarified and injured workers clearly more satisfied and getting better, faster under option programs in Texas and Oklahoma, legislators and employers in other states no longer need to “wait and see.” Single-digit annual cost savings can still be achieved through traditional workers’ compensation reforms, but option-qualified employers are seeing strong, double-digit cost reductions. Option programs support tremendous productivity, reinvestment and economic development gains for injured workers, employers and communities.

So, in spite of rhetoric from trial lawyers trying to survive and from their allies in the workers’ compensation insurance industry who fear free-market competition, there is no reason why workers’ compensation option legislation and program implementation should not be pursued by state legislators and employers as fast as their other priorities permit.

Your Device Is Private? Ask Tom Brady

However you feel about Tom Brady, the Patriots and football air pressure, today is a learning moment about cell phones and evidence. If you think the NFL had no business demanding the quarterback’s personal cell phone—and, by extension, that your company has no business demanding to see your cell phone—you’re probably wrong. In fact, your company may very well find itself legally obligated to take data from your private cell phone.

New Norm

Welcome to the wacky world of BYOD—bring your own device. The intermingling of personal and work data on devices has created a legal mess for corporations that won’t be cleared up soon. BYOD is a really big deal—nearly three-quarters of all companies now allow workers to connect with private devices, or plan to soon. For now, you should presume that if you use a personal computer or cell phone to access company files or email, that gadget may very well be subject to discovery requirements.

Security & Privacy Weekly News Roundup: Stay informed of key patterns and trends

First, let’s get this out of the way: Anyone who thinks Tom Brady’s alleged destruction of his personal cell phone represents obstruction of justice is falling for the NFL’s misdirection play. That news was obviously leaked on purpose to make folks think Brady is a bad guy. But even he couldn’t be dumb enough to think destruction of a handset was tantamount to destruction of text message evidence. That’s not how things work in the connected world. The messages might persist on the recipients’ phones and on the carriers’ servers, easily accessible with a court order. The leak was just designed to distract people. (And I’m a Giants fan with a fan’s dislike of the Patriots).

But back to the main point: I’ve heard folks say that the NFL had no right to ask Brady to turn over his personal cell phone. “Right” is a vague term here, because we are still really talking about an employment dispute, and I don’t know all the terms of NFL players’ employment contracts. But here’s what you need to know:

Technology and the Law

There’s a pretty well-established set of court rulings that hold that employers facing a civil or criminal case must produce data on employees’ personal computers and gadgets if the employer has good reason to believe there might be relevant work data on them.

Practically speaking, that can mean taking a phone or a computer away from a worker and making an image of it to preserve any evidence that might exist. That doesn’t give the employer carte blanche to examine everything on the phone, but it does create pretty wide latitude to examine anything that might be relevant to a case. For example: In a workplace discrimination case, lawyers might examine (and surrender) text messages, photos, websites visited and so on.

It’s not a right, it’s a duty. In fact, when I first examined this issue for NBCNews, Michael R. Overly, a technology law expert in Los Angeles, told me he knew of a case where a company actually was sanctioned by a court for failing to search devices during discovery.

Work Gets Personal

“People’s lives revolve around their phone, and they are going to become more and more of a target in litigation,” Overly said then. “Employees really do need to understand that.”

There is really only one way to avoid this perilous state of affairs—use two cell phones, and never mix business with personal. Even that is a challenge, as the temptation to check work email with a personal phone is great, particularly when cell phone batteries die so frequently.

The moral of the story: The definition of “personal” is shrinking all the time, even if you don’t believe Tom Brady shrank those footballs.

For further reading: here’s a nice summary of case law.

Telecommuting: The Future Office or an Insurance Nightmare?

Some employers view telecommuting as the cure-all to reduce fixed costs associated with real estate and to lure prospective employees to their workplace. Questions have persisted in the minds of some about the pros and cons of telecommuting. From the risk management standpoint we need to ask: Do we really understand the potential risk ramifications of telecommuting?

Telecommuting can be defined as the practice of employees working out of their private residences on a regular basis (once a week, twice a week, or more). With advances in technology (e-mail, computer networks, fax modems/machines, phone systems, etc.) telecommuting continues to increase at a steady rate. This virtual office atmosphere (being able to be connected essentially anywhere) has significantly increased the number of employees who can perform their jobs effectively from home. Tens of millions of Americans work at home on a regular basis.

The Benefits

  • Millions/billions saved in real estate costs including heating/cooling/electrical, etc.
  • Increased productivity to the company — employees are allowed to work at their own pace/environment with fewer interruptions.
  • Environmental benefits from less fuel consumed and less pollution.
  • Shorter commute times for those who still go to offices as a result of fewer vehicles on the road.
  • “Flex” time for family commitments and increased employee satisfaction.

It is also necessary to provide work-at-home employees with the same safe environment given to office employees. Each employer is required by OSHA to provide employees with a safe work environment regardless where the “work” is located. There was a proposal by OSHA to require home-office inspections but it was quickly dropped.

Challenging Insurance Issues

  • When are (are not) employees working?
  • If an employee slips and falls, was the employee working or taking out the trash?
  • What happens if an employee goes to the grocery store during the workday and becomes involved in an auto accident?
  • What if the employee is attacked in their own home during working hours?
  • Who pays for equipment and furniture?
  • Who pays for equipment and furniture if it is damaged in a fire or stolen?
  • What if a fire is caused by excessive electrical requirements of computers, fax machines, copy machines, and other business equipment?

Many of these issues are handled on a case-by-case basis depending on jurisdiction. While it seems clear that there is liability associated with injuries that occur in the home office, it is less clear how you can prove work-relatedness or non-work-relatedness. When accidents happen there are rarely any witnesses. Case law is being developed to address some of these issues but most cases are still decided based on the individual circumstances.

The property damage/loss issues need to be established as company policy. Most employers do not provide deluxe home offices for their employees. Many do provide an assortment of equipment (computers, phones, fax machines, etc.) to help the employee stay connected with the workplace. These items are business equipment and probably not covered by the employee’s insurance policies.

Employee Perceptions
Some employees are very comfortable telecommuting and being away from their fixed, corporate office. Others are concerned about their ability to work with the constant distractions of their home and family. Still others do not have or want to make room in their homes for a home office environment. There are valid concerns about staying visible to their co-workers and their management. Many employees feel isolated and not “part of the team.”

The flexibility that telecommuting allows is unquestionably of great value to many employees but it is not for everyone. The positive goodwill generated by the telecommuting environment often encourages employees to work longer and have a better opinion of the company.

Ergonomics
A majority of telecommuters are computer users. After all, it is technology that has enabled many employees to become telecommuters. The ergonomic concerns for home office workers must be addressed to minimize this significant risk factor. Employee education and training is the most effective tool. Home office inspections by trained ergonomists are usually not completed due to the cost involved and the perception of invading the privacy of the employee.

Many employees are not inclined to personally spend the money required for the proper equipment. If their employers do not provide the equipment, the employees use whatever equipment they have. This includes working at fixed height tables with non-adjustable chairs …. generally an ergonomic nightmare.

Educational efforts should be focused on the importance of having a good chair and adjusting the chair and workstation surface to minimize awkward postures. Excellent ergonomic training materials are readily available.

The issue of laptop computers must be addressed in your ergonomics program. A laptop is not designed for regular use – the keyboard is too small and either the keyboard or monitor screen will be in a poor position with respect to allowing neutral postures. Laptop uses should be provided docking stations with separate monitors and keyboards. At a minimum, employees should have a separate keyboard and mouse such that the laptop monitor can be raised to an appropriate level to allow for neutral postures.

The importance of exercise and stretching can not be overstated for computer users. The affects of non-occupational activities (such as additional computer use or video game playing) must also be stressed during educational efforts.

Security Issues
From a risk management perspective, another important aspect to consider is network security. Dial-up connections are inherently less secure than the network connections in the office. Remote users often neglect back-up storage of critical information. These issues need to be addressed through your business continuity and information technology plans. Also, business interruption exposures may exist at home and between office networks from undetected viruses or lack of anti-virus protection programs.

Telecommuters can be a significant component of your business continuity plan (BCP) . If your central office location is destroyed it typically does not impact the telecommuters workspace. Alternate computer networking arrangements are still critical. To be truly effective, your BCP must include a risk assessment at each home office location.

Telecommuting Safety Program
No matter how small or large your organization may be, every employer needs to establish a Telecommuting Safety Program. Such a program might include the following:

Objective
To reduce the frequency and severity of work-at-home accidents and incidents by informing telecommuters of their safety and health rights and responsibilities.

Program Elements
A. Employee training
B. On-site hazard assessment
C. Safety and health consultation
D. Accident investigation
E. Provision of appropriate safety and health devices
F. Contract with employees authorizing home visits

Employee Responsibilities
A. Conduct in-home inspections
B. Complete training
C. Report all incidents

Evaluation Mechanisms
A. Incident rates
B. Incident report forms
C. Workers’ compensation claims
D. Employee feedback

Specific Questions to Consider

Home Inspections

  • Is there a functioning smoke detector in the employee’s home?
  • Are there two or more means of exit/egress from the work area?
  • Are aisles/passageways in the work area clear at all times?
  • Are work area properly illuminated?
  • Are electrical cords/wiring adequately loaded/grounded?

Ergonomics

  • Is the workstation properly adjusted?
  • Have employees been trained on ergonomics?

Air Quality

  • Are gas fired appliances provided with exhaust vents?
  • Has indoor air been tested/evaluated for humidity, moisture, radon, carbon monoxide/dioxide, etc.?

Incident/Accident Investigation

  • Have company policies been established and implemented stating who will perform home inspections and incident investigations to address potential “invasion of privacy” issues?

Company Responsibilities

  • Has training been provided in home inspections, ergonomics, fire hazards, trips/falls, etc.?
  • Are computer equipment and office furniture provided and set up to meet employee needs?

Employee Responsibilities

  • Have employees completed all work-at-home training programs?
  • Do employees follow all established policies regarding home inspections and incident/accident reporting?

Evaluation

  • Has an annual evaluation of the Telecommuting Safety Program been performed?
  • Does comparison of telecommuting vs. office incident rates justify continued telecommuting?

Conclusion
Telecommuting is here to stay. There are too many benefits for employers and employees. As risk management and insurance professionals we need to acknowledge the risks presented by telecommuters and identify and implement corrective actions to minimize our exposure.

Authors
Dirk Duchsherer collaborated with Steve NyBlom (CSP, CPEA, ARM, ALCM) in writing this article. Steve is the Assistant Administrator of the Risk Management/Insurance Practice Specialty and is a Vice President with Aon Risk Services in Los Angeles, CA.