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9 Months on: COVID and Workers’ Comp

The COVID-19 pandemic has been with us for over nine months now, with no end in sight. During this time, we conducted several Out Front Ideas COVID-19 Briefing webinars and The Path Forward virtual conference. These educational events were designed to provide risk managers and others in the industry with a better understanding of how COVID-19 was hitting our industry. As more time passes, the impact on workers’ compensation is becoming more evident. However, we are still in the early stages of developing claims, and it will be some time before we have clarity on the full impact.

What has changed? Frankly, everything—how the industry handles claims, the types of claims submitted, how medical treatment is provided, staffing models, and the list goes on. Today’s workers’ compensation is different from what it was before the pandemic started, and it is not likely to revert to the exact model we had before March 2020. 

Defining Workers’ Compensation

First and foremost, the definition of a workers’ compensation claim has been fundamentally changed. When workers’ compensation started over 100 years ago, it was to cover traumatic workplace accidents, things that happened at a specific date, time and place. 

Over time, workers’ compensation expanded to cover occupational diseases. These diseases could be traced to exposures that were particular to the workplace and associated risks — a chronic disorder caused by work activities or environmental conditions in the workplace. In many states, workers’ compensation expanded to cover injuries occurring gradually. As a result, repetitive trauma/continuous trauma claims are now a significant cause of injuries and workers’ compensation claims in some states. 

Front and center today are infectious diseases. Workers’ compensation was not designed to cover a global pandemic. But claims for an infectious disease could be covered under workers’ compensation if there was an increased risk due to employment, and there was documentation of exposure and a diagnosis. Tens of thousands of workers’ compensation claims for COVID-19 have been covered nationally under this standard. And now we have states enacting presumptions that COVID-19 is work-related for specific occupations. These presumptions fundamentally change one of the basic tenets of workers’ compensation, the burden of proof. Typically, the affected employee would be responsible for proving that exposure happened in the workplace and that the employee is at higher risk for exposure than the public. With presumptions, employers are left responsible for proving that exposure did not occur in the workplace, which can be extremely difficult.

With these changes, one of the more frequently asked questions in the industry is, does COVID open the door for future infectious disease coverage under workers’ compensation? We participated in a Southern Association of Workers’ Compensation Association (SAWCA) regulatory roundtable discussion earlier this year, and the consensus from the panel was, yes, that door is now open.

Reinsurance

Workers’ compensation is a statutory coverage. Carriers cannot exclude specific causes of loss like other insurance coverages can. After the 9/11 terrorist attacks, the reinsurance market responded by excluding terrorism from workers’ compensation treaties. Now we see reinsurers exclude infectious disease and pandemic from coverage. Because the carriers writing the coverage cannot exclude that risk, carriers are left exposed to unlimited liabilities. There has been talk of a federal pandemic reinsurance program, similar to the Terrorism Risk Insurance Act (TRIA) with terrorism. But those talks are very preliminary. 

See also: Companies’ Biggest Unrecognized Risk

Payroll

Tied closely to the workers’ compensation industry is employer payroll. Fewer people working means fewer premiums, and the payroll in certain sectors is down significantly. The question is, when will this bounce back? Recently, the CEO of one of the largest hotel chains in the world said it would be at least 2023 before the company returned to 2019 occupancy levels. Major airlines are predicting decreased demand through at least 2022. 

But the impact is going beyond the travel industry. As many office buildings around the nation remain mostly unoccupied, all the ancillary businesses around those buildings are affected — restaurants, retailers, dry cleaners, parking garages, etc. Brick and mortar retailers that were already struggling are facing an increasing challenge. Thousands of businesses will ultimately close forever. 

When will the economy bounce back? When will we see 2019 employment levels again? Those are two huge unknowns facing the workers’ compensation industry. 

Claims Volume

Because fewer people are working in some industries, there are fewer claims. In April 2020, third-party administrators (TPAs) reported that their claims volume was down close to 50%. While that volume is bouncing back, it remains below 2019 levels. 

This decrease in claims hurts all workers’ compensation industry vendors that depend on volume, including TPAs, medical networks, medical providers, case managers and even defense attorneys. This reduced revenue may eventually lead to more industry consolidation. 

Not all claim volume is down. First responder claims are increasing more than ever before, with both the pandemic and civil unrest resulting in thousands of new injuries. Healthcare industry claims are up, as well. Some retailers, including supermarkets and big box stores, have expanded their payroll to keep up with demand. Trucking, shipping and delivery businesses have also expanded payrolls. 

Catastrophic injury claims have not decreased during the pandemic because the types of industries where there are higher incidences of such claims have kept working, such as construction, trucking and public entities. Violent attacks against first responders have also increased with the civil unrest around the nation. 

Data Accuracy

The foundation of the insurance industry is the law of large numbers and predictability. Years of accumulated data is analyzed by actuaries to determine the expected claims for the future. How has COVID-19 changed this? Unquestionably, there has been delayed medical treatment and extended disability on existing claims. The big question is, to what degree? It will take years for this change to flow through actuarial development triangles.

The pandemic has likely affected the benchmarks you used to measure your workers’ compensation programs. Employers need to reset their starting point when evaluating the effectiveness of their loss prevention and claims handling programs. 

COVID-19 Claims

As time passes, we are starting to understand better the types of claims the industry is seeing from COVID-19.

Safety National’s data shows the most affected industry group, as expected, is healthcare. However, closely behind healthcare is first responders, with police officers, firefighters and paramedics. According to the National Fraternal Order of Police, 247 law enforcement officers have died from COVID-19 through the end of October. The public entity piece is missing from the bureaus’ analysis because most of these entities are self-insured.

At this time, Safety National’s data also shows that the total number of death claims reported for employees below age 55 is almost the same as for employees over age 65. However, there are 48 times as many claims in the under-55 age group.

Sedgwick has handled over 45,000 COVID-19 workers’ compensation claims for clients. 78% of those are closed, with an average paid of $1,050. 54% of the claims had no payments made. 

Healthcare accounted for 57% of Sedgwick’s COVID-19 claims, with public entity, retail, services and food/beverage rounding out the top industry groups. 

Sedgwick claims show almost an equal distribution of claims by age group between 30 and 40 years old, up to over 60 years old. However, the average incurred in the over-60 age group is close to double any other age group. Over 71% of the death claims were for employees 51 or older. 

Overall, most of the COVID-19 claims by the workers’ compensation industry are relatively minor. However, death claims and claims with extended ICU hospital stays can have total incurred values over $1 million. 

One big question is, how will these claims develop? Will we see continued medical complications develop? Will we see permanent partial and permanent total disability claims?

See also: 4 Post-COVID-19 Trends for Insurers

The Path Forward

One way in which the workers’ compensation industry has adapted to the pandemic environment is with the increased use of telemedicine. Sedgwick still sees telemedicine on over 10% of claims. Before COVID-19, telemedicine utilization was on less than 1% of claims. 

Return to work has been a more significant challenge with business restrictions, which could increase costs on existing claims. Sedgwick data showed a 21% increase in TTD paid on active claims from March-September compared with 2019. 

Finally, carriers have to develop new models to estimate their potential exposure to future pandemics. Without question, COVID-19 will continue to affect the workers’ compensation industry significantly into 2021 and beyond.

Kimberly George with Sedgwick and Mark Walls with Safety National host the “Out Front Ideas” educational series. You can view their archived sessions here.

Strategies to Reopen Your Business Safely

As states reopen, businesses will have to grapple with the challenges of creating a safe environment for both workforce and consumers. Employers have to address a range of issues, like how to mitigate workplace transmission of COVID-19, what workforce challenges to prepare for and how to demonstrate to consumers that they can safely shop at the business.

I enlisted the help of the following three public health experts to discuss best practices for reopening businesses safely:

  • Dr. Scott Benson — associate professor, Division of Public Health and the Division of Infectious Diseases | University of Utah
  • Dr. Steven Lacey — professor and chief, Division of Public Health | University of Utah School of Medicine
  • Dr. Kimberley Shoaf — professor and associate chief, Community Engagement | University of Utah

Facility Hazards

Water intrusion and mold. If a building has been left unattended or with a skeleton crew, water intrusions may go unnoticed and result in mold growth. A certain amount of heat load is typically expected with people in the building, and, without it, water and lack of heat can contribute to mold. 

Water systems. Most large buildings have cooling towers and other evaporative cooling systems. With water not circulating in these systems, naturally occurring legionella bacteria can grow. Turning systems back on can create exposure to the bacteria. Talk to facilities personnel about purging and disinfecting water systems before reactivating. 

HVAC systems. Higher ventilation rates, zone pressurization of fresh air and systems that run longer can help protect employees. Talk to the building manager about optimizing airflow patterns and directional flow to keep contaminated air away from employees. Enhancements such as upgrading to MERV-13 filters to capture viral particles, ensuring that relative humidity ranges between 40% and 60%, will further control exposures to the virus. 

Cleaning and disinfection. Despite the use of these terms interchangeably, there is a significant difference between the two. Cleaning uses a detergent to remove dirt physically from the surface but does not kill all germs. Disinfection is the destruction of those germs at a high percentage, rendering them incapable of reproducing. For guidance on the most effective disinfectants in fighting the SARS-CoV-2 virus, refer to the EPA’s List N

Preparation for a Returning Workforce

Establish an Infectious Disease Preparedness and Response Plan. Characterize potential routes for exposure, task-specific risk factors, available control strategies and a plan for communicating expectations with employees and customers.

Follow location-specific guidelines. Use resources like federal, state and local guidelines to determine the parameters for your office’s readiness. States vary significantly in terms of their guidelines for reopening, so, if you have locations across the nation, be aware of the differences. Some locations will require a smaller percentage to return to a physical workspace, so have a phasing plan prepared.

See also: Firms’ Priorities During Pandemic  

Understand employee risks. Exposure potential will vary greatly depending on job type and other factors. Follow CDC guidelines, and communicate with your HR team to understand which individuals may be at higher risk. 

Know how to handle a sick employee. If someone comes to work sick or falls ill while at work, you need to have a plan to safely isolate and move them out of the workplace while maintaining their confidentiality. Provide onsite responders with the appropriate training and personal protective equipment (PPE) to protect them from potentially sick employees. 

Understand changes to sick leave policies. The Families First Coronavirus Response Act (FFCRA) extends coverage under certain circumstances for employers with fewer than 500 employees but more than 50. If your organization is not a part of the FFCRA coverage, flexibility with paid sick leave and extended family and medical leave is crucial to your response. 

Prepare your communication strategy. Communicate your pandemic response to your employees and the general public. Use resources like social media channels, call centers, text messages, emails and recorded video messages to make your response widely known.

Protecting the Workforce and Consumers

Worker social distancing. For this to be effective, you need compliance from your workforce. Communicate with your employees why it is critical to protect their health as essential members of the business. The goal should be to enable a minimum of six feet of space between individuals. To make it easier to comply, create gender-neutral and single-occupancy bathrooms and close off common gathering areas. 

Consumer social distancing. Just like with your employees, communication with consumers is key to the effectiveness of social distancing. Use passive prevention through design and engineering controls, like arrows on flooring and easy-to-read guidance. Use preferred mechanisms like contactless delivery and curbside pick-up. Separate your entry and exit with barriers between them, directing traffic away from each. Create physical barriers (cough and sneeze guards) at high-contact points, like checkouts and drive-thrus, and limit credit card or cash transactions and encourage no-touch checkouts.

Personal protective equipment (PPE). Providing necessary PPE to your workforce is crucial to their safety, but it is essential to understand the different types. N95 respirators protect the wearer and should be reserved for healthcare workers at the highest risk of exposure because they are in short supply. Surgical masks protect those around the wearer and are generally used by healthcare workers and other frontline workers at higher risk of exposure from their job. Cloth face coverings help slow the spread of the virus, and the general public is encouraged to wear these. 

See also: Access to Care, Return to Work in a Pandemic  

Hand hygiene. Make it easy to maintain hand hygiene by stocking paper towels in the bathroom, keeping a trashcan close to the door to discard paper towels and making hand sanitizer readily available. 

Employee education and communication. Provide your employees with the information they need to comply with guidelines. Ensure all information complies with OSHA guidelines and is consistent. Explain the benefits to your employees and consumers.

To listen to the full Safety National webinar on this topic, click here. View the complete library of Safety National’s webinar topics here.

Workers’ Comp Issues to Watch in 2019

We kick off 2019 by discussing 20 issues the workers’ compensation community should be monitoring. Our list includes both employee benefits and workers’ compensation issues, as these two areas inevitably overlap. Later in the year, several of these topics will be developed into individual “Out Front Ideas with Kimberly and Mark” webinars.

Just because an issue is not on our list does not mean it’s not important. Our goal is to highlight issues that we feel need more attention. Thus, while opioids are an important issue, we do not discuss them here because they are already receiving tremendous national attention.

Healthcare 2020

Two years into this administration, the Affordable Care Act remains the law, although lawmakers and the administration have reshaped parts of it through legislative, regulatory, budgetary and legal actions. Healthcare was a leading campaign conversation during the midterm elections in 2018, and expect it to top the list in the 2020 presidential election..

As of Jan. 4, all but 14 states have adopted Medicaid expansion. This is something we expect to continue into 2019.

Addressing the cost of prescription drugs will be a priority in 2019. While we are a long way from bipartisan consensus on how to address the pricing challenges, big pharma is bracing for smaller, but significant, regulatory changes.

Finally, physician-led accountable care organizations (ACOs), have continued to do well and are likely to increase in 2019. ACOs reward providers for desirable patient outcomes.

Legislative Watch

The 2018 elections may have a big impact on the workers’ compensation landscape in 2019.

There were eight states where the party of the governor changed in the November 2018 elections. Many do not fully appreciate the impact this can have on workers’ compensation, however, these governors appoint the workers’ compensation regulators and administrative law judges. These positions have a very significant influence on the practice of workers’ compensation in their respective states.

In 2018, there were over 100 national bills introduced to expand presumptions for first responders. Many of these bills pertained to post-traumatic stress disorder. We expect a similar trend this year. One newer area of emphasis that we expect to see is a push to continue death benefits for surviving spouses of first responders after remarriage.

In terms of specific states, we are closely monitoring the following for potential workers’ compensation legislative activity in 2019.

California

Bills to erode costs savings provisions in the workers’ compensation statutes pass the California legislature every year. The question is: Will incoming Governor Newsom veto those bills like the past two governors did? Governor Newsom is also very focused on creating universal healthcare for California residents, which could have a significant impact on workers’ compensation.

Illinois

The Democratic Illinois legislature and Republican Gov. Rauner battled for his entire term over workers’ compensation. What will happen when Democratic Gov. Pritzker takes office?

Alabama

In May 2017, a circuit judge ruled that Alabama’s workers’ compensation statutes were unconstitutional because of the caps on weekly benefit and attorney fees. Since then, a bipartisan task force has been working to develop reforms to workers’ compensation statutes that would address the areas that the judge felt were unconstitutional while, at the same time, preventing significant cost increases for employers. It remains to be seen whether legislative action on the task force recommendations will happen in 2019.

Federal

With the solvency of Social Security being a significant concern for the federal government, we have been waiting for Social Security to start looking into potential shifting from state workers’ compensation programs to their program. This appears to be happening now. There are currently 15 states that have a “reverse offset” allowing workers’ compensation benefits to be reduced if the person is receiving both Social Security Disability (SSDI) and workers’ comp. In all other states, SSDI gets the offset. Legislation could quite possibly take away this reverse offset.

See also: Why So Soft on Workers Comp Fraud?

Psychology of Pain

Treating pain is much more complicated than prescription medication and physical therapy. Pain has biological, psychological and emotional factors — often approached through what we refer to as the biopsychosocial approach to pain or the biopsychosocial model. When patients focus on pain, pain worsens. Anxiety, fear and a sense of loss of control contribute to pain. Research shows treating anxiety and psychological support reduces pain and the use of pain medication. And while we know that the psyche has a tremendous role in pain, few patients receive treatment for the emotional and psychological aspects of pain.

Worldwide, the need for more effective pain treatment has led the pain treatment community to promote comprehensive treatment of pain and multidisciplinary pain care. Unfortunately, access to skilled providers and comprehensive pain care is a challenge in many parts of America. In addition, receiving payer approval for care is equally challenging.

Understanding a patient’s response to pain earlier in the claim offers an opportunity to create a meaningful, holistic treatment plan. If the initial pain assessment reveals the patient has a high level of subjective pain complaints with limited objective findings, there is a likelihood the patient will end up in chronic pain in the future.

Here are a few suggestions to consider regarding the psychology of pain and workers’ compensation:

  1. Create a pain philosophy as part of your claims program. Engage the entire cross-functional claims team in the development of the program, including claims, clinical, legal, employer, occupational and orthopedic providers. The pain philosophy and associated documents become part of the client service instructions.
  2. Implement pain assessment tool(s); initial and continuing assessments are available
  3. Outline care pathways for holistic pain treatment
  4. Because patient-centered care is key to success, communicate clearly and often with the injured worker, Transparency and empathy are important.
  5. Identify a pain psychologist or clinical pain expert to consult, as needed, on pain cases and help guide the more complex cases
  6. Create a feedback loop or grand rounds approach to bring stakeholders together on a regular basis and assess the pain philosophy, outcomes and opportunities for improvement.

Politics of Permanent Impairment

When the AMA 6th Edition Impairment Guidelines were issued, experts hailed them as a significant improvement in the evaluation of physical impairment. But they have also led to litigation around the country as plaintiff attorneys challenge the constitutionality of the guidelines because they can produce lower impairment ratings.

This leads to the question that states need to be asking: What is the purpose of the impairment guidelines in their state? If the purpose is to provide a measurement of objective physical impairment, then the AMA 6th Edition is the best tool for this. But, if the purpose of the impairment rating is to provide a PPD award that considers more than just objective impairment, then the AMA Guidelines alone are not the proper tool. The AMA Guidelines measure physical impairment, not loss of access to the labor market, potential loss of earning capacity or other subjective elements that have nothing to do with recovery from the physical injury.

Social Determinants of Health

In patient care, addressing social determinants of health is as important as the quality of the care that a patient receives. Social determinants of health are the conditions in which people are born, live, work, play, worship and age that factor into overall health. Social determinants of health include socioeconomic status, education and literacy, access to healthy foods and health services and social and physical environments. Increasingly, payers and health care providers are interested in more holistic care, with the goal of improving health outcomes.

Economy’s Impact on Workers’ Compensation

We are at record low levels of unemployment, and wages are climbing. Higher employment and wages mean higher payroll. Higher payroll leads to higher workers’ compensation premiums.

Higher employment rates also mean we have more workers in the workforce who are not adequately trained and may not be in good physical condition. Because of this, some carriers are starting to notice a slight uptick in accident frequency rates. It will be interesting to see the data presented at the 2019 NCCI Annual Issues Symposium to see if we are, indeed, starting to see an increase in frequency rates.

Twenty states increased their minimum wage as of Jan. 1. Higher wages could lead to more payroll and associated premiums. In addition, in states with a wage loss benefit, a higher minimum wage means decreased wage loss awards.

Employee Health Models

Benefits continue to be a talent attraction and retention tool for employers. Chief human resources officers understand that the health of an employee is directly related to productivity. The health and wellbeing of the employee population lead to productivity and, in turn, directly correlate to top- and bottom-line performance of the organization. Employee health models are evolving with employer-purchased care. This is happening because health insurers are not negotiating and managing costs in a way that employers can manage models directly.

Direct primary care (DPC) is a small, but fast-growing, movement of doctors who do not accept insurance and, instead, charge a monthly membership fee. Employers engaging direct primary care believe in the primary care health model from a treatment perspective and care coordination. Doctors have the incentive to prioritize prevention and provide high-quality, coordinated care. It is a cost-effective, value-based care model that avoids the fee-for-service traditional pricing model.

The National Business Group on Health estimates that over 50% of employers report having some form of value-based care in their health insurance program. Although we are hearing more about value-based care in workers’ compensation, be mindful of the difference between bundled pricing and value-based programs. “Value-based” care should have a quality care component and cost factor. “Bundled pricing” is a cost savings model.

Telemedicine is common in employee health benefits today. Over 95% of large employers offer telemedicine solutions. While adoption varies, consumers who use telemedicine typically report a high level of confidence and satisfaction in their care.

Mega Claims and Rates

Industry data reports that the number of claims over $5 million incurred is increasing, and the size of individual claims is also increasing. It was not that long ago that a $5 million claim was a rarity, and catastrophic injury claims tended to top off around $10 million to $15 million.

However, a combination of factors are leading to the increase in these numbers, including accident survivability, an increase in auto accident frequency and advancement in medical treatment. Carriers are now seeing individual claims as high as $40 million, and these long-tail costs have a significant impact on premium rates.

In terms of forecasting workers’ compensation premium rates for 2019, overall the outlook is that rates will remain fairly flat, with some states seeing slight rate decreases. However, both A.M. Best and Fitch have cautioned that increasing medical and litigation costs are eroding workers’ compensation carrier combined ratios and that 2019 will likely be closer to a break-even combined ratio than the last three years. If the data, ultimately, shows that accident frequency is increasing, that would be another factor that would affect the marketplace.

Leave of Absence

State and local laws, the talent war and employee expectations are leading more employers to implement leave-of-absence programs. Employers offering paid leave report that the benefit helps with employee retention and reduces costs related to turnover and employee training. Another contributing factor to leave policies is the federal Tax Cuts and Jobs Act of 2017, which contains a tax credit for employers that provide qualifying types of paid leave to full- and part-time employees.

As more leave programs exist, the coordination of leave administration with job accommodations and workers’ compensation continues to be an issue to watch.

Impaired Workforce

As we enter 2019, legal marijuana is more available than ever. In October 2018, recreational marijuana became legal in Canada. After the November elections, there are now 10 states and the District of Columbia with legal recreational marijuana.

In 2019, state legislatures in Connecticut, Illinois, Minnesota, New Hampshire, New Jersey, New Mexico, New York, and Rhode Island are all expected to consider legalizing recreational marijuana.

What does all this mean for employers? Some percentage of your workforce is possibly impaired at work. The challenge for both employers and law enforcement right now is that the science of marijuana has not caught up to the social reality of legal marijuana. There are no widely accepted standards or standardized tests to determine if someone is impaired from marijuana.

Talent Training and Development

As an industry, we are experiencing an unprecedented amount of turnover due to the aging workforce. With turnover comes the need to train and prepare the next generation of claims handlers. It is important that we carefully examine training programs to ensure that they are adequately preparing people with the necessary skill sets to handle claims. Not only are statutes and rules important to learn, but soft skills are more important than ever. Rules and regulations are trained consistently, and system training is extensive, but soft skills training is lacking and, often, absent.

Workplace Violence

Workplace violence continues to get worse. We are not talking about mass shootings, which are rare. Instead, our focus is the day-to-day threat of violence faced by many workers.

Physical assaults on the job are a growing problem in many industries – especially healthcare, K-12 schools and retailers. Most are not aware of how bad the problem is becoming because it is not widely reported. Some workers feel the violence is part of the job, so they don’t report the incidents. In addition, businesses and schools don’t want customers and the community to think they are unsafe, so they don’t talk about the problem.

We cannot begin to fix the problem of workplace violence until we acknowledge the extent to which it is happening and talk about the societal causes of the behavior. This is a very complex problem for employers.

Unconscious Bias

In recent years, the discussion of diversity and inclusion has become mainstream. Conferences and conference sessions on the topic flood our inboxes, and many of our organizations have hired diversity officers. While the discussions are important and meaningful, we also must spend time digging into ways that we can train our staff to be more inclusive. One such way is to tackle the topic of unconscious bias.

Unconscious biases are learned stereotypes that are automatic, unintentional and deeply engrained in each of us. Because many of these prejudices exist beyond the conscious level and are a result of being brought up in a culture that harbors biases, we must first acknowledge that they, in fact, exist. Simply learning about our hidden biases is not enough. We must train colleagues to identify these biases and build skills to overcome them.

Employee Classification

The determination of whether a worker is an employee or an independent contractor is a challenge that has been around since the start of workers’ compensation. This issue is getting more attention now because of the gig economy. States and the U.S. Department of Labor are very focused on this issue.

This is a very complicated problem for employers. The rules regarding what constitutes an independent contractor not only vary by state, but “independent contractor” can also be defined differently under a state’s workers’ compensation than under wage and hour rules. In addition, IRS definitions of independent contractor are often different than the state regulations.

The Sharing Economy

When we speak of the sharing economy, organizations like Uber, Lyft and AirBnB come to mind. However, the biggest potential impact of the sharing economy in workers’ compensation comes in the form of data.

Larger companies used to have a tremendous competitive advantage because they had access to so much more data, which enabled them to make more informed decisions. However, many insurtech companies are data aggregators, gathering information from multiple sources and compiling it into something useful that can be analyzed and acted on. The wide availability of data is a benefit to startup and smaller companies because it can help to level the information playing field. More data enables better analytics and better decision-making.

Globalization of Risk Management

We live in a global economy and, as a result, risk management is becoming more globalized. Employers with operations in multiple countries are well aware of the challenges associated with globalization, including complying with a growing number of laws and regulations. However, even businesses that do not have physical operations in other countries can be subject to international laws and regulations if they have an online presence or work cowith vendors in other countries.

See also: How Should Workers’ Compensation Evolve?  

The Consumer Experience

Organizations placing a high priority on consumer experience and engagement are changing the way they create and design products, address customer service issues and measure experience and engagement across stakeholders. These organizations often discuss design thinking as a strategy for innovation. “Design thinking” involves internal and external stakeholders, satisfaction and engagement levels and efficacy and quality. How often do you find injured workers at a conference sharing their experience with the system and claims process? Do injured workers have a voice at the table regarding processes and communications in which they are involved? Would turnover and employee satisfaction improve for claims organizations if the claims adjuster had a central role in workflow and product design?

As we consider the future of work, talent attraction and retention, evolving from process to an empathetic engaging industry, we believe emphasis on the consumer experience is paramount to success.

Measuring Success

The adage, “what gets measured gets done,” is also true in the workers’ compensation industry. But the question becomes, are we measuring the right things?

We are excited to once again be moderating the opening panel at the WCI conference in Orlando in August. This session will be a discussion among employers, industry leaders and regulators on measuring success. What metrics are important, and what is obsolete? How can we drive the desired outcomes by adjusting the way we measure success? We hope you will join us in Orlando this August at the WCI conference for this session to hear what stakeholders think about this issue.

Future of Work

The future of work is an important conversation for all of us to consider in 2019. When you think of the future of work, what comes to mind? Machine learning, automation, technology, digital? How are our work cultures changing?

Employees today want to feel connected – connected to each other, connected to their community and connected to passions. Employees also want to perform purposeful work and to feel valued.

As workplaces evolve, our industry will also need to evolve to attract and maintain the workforce of the future.

Natural Disasters

Without question, we are experiencing more frequent and more catastrophic natural disasters than ever. Last year, we saw a record hurricane hit the Florida panhandle and wildfires in California destroy entire towns.

Disaster planning and response are an essential part of a risk manager’s job. However, the significant and devastating nature of the natural disasters requires evaluation of current risk management programs. Risk managers need to build in contingencies for contingent plans and need to factor in what would happen if there was a significant and lengthy disruption in your supply chain. We need to be thinking of the unthinkable and preparing for it before it happens.

To listen to the complete Out Front Ideas with Kimberly and Mark “Issues to Watch” webinar, which was broadcast on Jan. 8, please visit: http://www.outfrontideas.com/archives/

Workplace Violence: Assessment, Response

Workplace violence is a daily threat to workers in many industries. Aside from mass shootings, which grab headlines, more than 2 million workers are victims of violence every year.

The issue is a challenge for employers striving to maintain a safe working environment for their employees. By understanding the scope of the problem, the underlying reasons for violence and the types of violence that threaten specific industries and workplaces, organizations can make a significant impact on reducing incidents against their workers.

During a recent “Out Front Ideas with Kimberly and Mark” webinar, we had two prominent experts join us to discuss this very challenging issue:

  • Bub Durand, practice leader of medical group support services for Kaiser Permanente’s Northern California region
  • George Vergolias, PsyD, vice president and medical director for R3 Continuum

Scope of the Problem

OSHA defines violence as any act or threat of physical violence, harassment, intimidation or other threatening disruptive behavior that occurs at the work site. That includes everything from threats and verbal abuse to physical assaults and even homicide.

Many employers, however, are wary of even discussing the issue out of concern that people will view their particular companies as being overly violent. In fact, several potential speakers in retail and other industries we approached to join our panel declined for this very reason.

Despite their reluctance, we know that the workplace has increasingly become the site of violence, especially in certain industries.

Healthcare

Healthcare is the industry that generates more attention than any other with regard to violence – and with good reason. The most recent government statistics show there are 7.8 cases of serious violence per 10,000 employees, which far exceeds any other industry, and that number is likely much lower than the reality.

Many healthcare facilities, especially in high-risk areas such as emergency departments and Level I trauma centers, are routinely the sites of violent outbursts. Patients or their families attack providers all too frequently. Many of these workers have come to believe violence is just part of the job. Unfortunately, those in a position to change this often foster that culture. We may soon see an increase in the numbers of incidents reported, due to mandates for increased reporting, especially in California.

Schools

Mass shootings at schools have been getting lots of attention. However, not talked about is the fact that schools are increasingly the site of daily violence or threats by students against teachers and staff.

For example, one of the nation’s largest school districts reported a 10% increase in violence-related claims in the past five years. With incurred losses of $19 million, these claims represented 15% of the total and 12% of the system’s incurred losses. The numbers do not include many of the threats and harassment incidents, which often go unreported.

One reason for the increased number of violent incidents reported in schools may be the increased awareness of the issue and the potential for remedies, both legal and administrative. Another is the implementation of zero-tolerance policies that require or strongly recommend reporting. One more is the increase in kids acting on their emotions, more so than they did in past years.

Overall, workplaces have seen an uptick in homicide rates in recent years, even though the rate in the general population has decreased. Some experts speculate that may be due to increased stresses facing workers, such as financial pressures.

Social media may play a role in increased violence in the workplace, because it seems to empower some people to act in ways they normally would not. This sometimes spills over into real-world, face-to-face situations.

On a positive note, efforts to reduce violence in the workplace are paying off. While homicides among government employees increased 30% between 2003 and 2013, the rate decreased 30% in the private sector.

See also: Broader Approach to Workplace Violence  

Types of Violence

Developing violence-prevention programs requires knowing the type(s) of violence to determine the best approach. For example, gender may be part of the equation. Men are more likely to be killed at work during robberies, especially in retail establishments, while women are more likely to be victims of domestic violence.

Domestic violence is one category that is often not adequately addressed in the workplace. Many employers believe that, because the potential perpetrator is not an employee, he is not a threat to the workplace. Statistically, it is a very real problem that should be considered and included in violence prevention plans.

In fact, violence can be initiated internally or externally. It may be started by an employee within the company, or externally by a customer, former employee, vendor or someone connected with an employee.

There are also emotional vs. predatory incidents of violence. Knowing what drives each incident category is important to help prevent it.

  • Emotional violence generally occurs as a reaction to a threat or fear. An example would be two boys ready to duke it out in school. Neither actually wants to fight, but they also do not want to be humiliated, so they pretend they are ready. Diffusing this situation can be done by intervening and stopping both of them equally.
  • Predatory violence involves forethought, rather than being reactionary. A sniper is an example of predatory violence. Preventing these situations is much more complex.

Temporary States vs. Emotional Traits

Some attacks occur because the person is temporarily in a highly emotional state. It could be an emotional reaction, a psychotic episode or a drug-induced state. A permanent trait, on the other hand, means the person has a personality factor that is driving him to act in a demeaning or abusive manner. Those traits are more consistent and predictable over time.

An example of someone in a temporary state would be a father who has just been told his wife was killed and his child is in surgery following an auto accident, and he speaks very little English. His inability to fully communicate, and his efforts to see his son in the emergency room, could easily lead to a violent outburst. Security personnel might be inclined to handcuff the man, per protocol. However, such a situation can be diffused by understanding why he is acting the way he is and getting a language interpreter to speak with him calmly.

It is important to understand the context of the violence and not assign permanent traits to someone who is only in a temporary state. That can sometimes be tricky, especially if a zero-tolerance policy is in effect and mandates that security personnel handcuff any violent perpetrator. If someone is acting out in hostility, especially if it is atypical behavior for that person, asking questions can help prevent an incident. This can be especially effective in the case of students at school; pulling the person aside to find out what is driving his actions is often effective.

Assessing the Risk
There are many ways to determine the types and levels of risk to an organization.

  • Traditional assessment. One approach includes a traditional security risk assessment of the grounds, the physical security environment and the security practices and policies, using specific metrics and historical performance of law enforcement and risks in the local community as factors.
  • High-risk area assessment. As Bob explained, a new California law addressing workplace violence in healthcare has led Kaiser Permanente to conduct additional assessments of its facilities. One involves looking at high-risk areas, such as emergency rooms. The type of risks present there could include family members worried about patients who have been brought in, or patients left waiting because their injuries are not life-threatening, and they become impatient and agitated. These assessments look at the safety and physical security practices along with engineering controls.
  • Administrative and workplace controls. These focus on ways to distinguish employees from visitors. Kaiser Permanente, for example, requires workers to wear ID security badges from the waist up.
  • Employees’ knowledge. Part of assessing risk is to determine whether staff members know what to do at the first sign of a threat; do they know the security code to call, and what to expect as a response? Employees also are assessed to make sure they understand they may sometimes have to call in outside law enforcement and must know how to do that.
  • Physical layouts. A patient who presents a danger to himself and is brought in involuntarily needs to be placed in a safe room. The assessment would look for any dangerous objects in the area the person could use to injure himself. Staff members are quizzed to ensure they understand what needs to be removed from such an area.
  • Remote worker assessment. Many healthcare or hospice workers go to an offsite home or other location. Because the risks are often unknown in those environments, employees need to understand what to do. For example, the worker could ask whether there are any firearms in the home.

It is also important to assess both safety and security because they are different. Security would include a door in a particular location of the facility that serves as an exit, that visitors cannot enter. However, a worker who props the door open, even briefly, defeats the purpose. Employers need to promote a culture of safety within their organizations, as well enhancing security.

See also: New Idea for Active Shooter Incidents  

Training

The best workplace violence policies mean nothing if people are not trained on them. Employees need to clearly understand what to do in a given situation. Training should be conducted at least annually and with any new hires, and employees should be given competence testing regularly. Staff members need to be clear on the expectations of security personnel or they increase their own risk of becoming victims of violence. Proper training also improves legal defensibility.

An important point to emphasize in training is to examine the threats to each particular work site and each specific area of a work site. While the same policy may apply, there may be different priorities depending on the risks and the employees. A one-size-fits-all approach should be avoided.

It is also important for the trainer to understand what the policy says before starting the training. A zero-tolerance policy is different from others. Unfortunately, some companies seek training before a policy is fully developed.

In addition to training staff on policies, management must adhere to it. Otherwise, they risk creating a toxic work environment if someone reports a concern that is ignored.

The trainer needs an adequate amount of time to perform effective training. It is imperative to make sure employees fully understand the policies and procedures.

Threat Responses

There are a variety of ways for employees to mitigate violent threats in the workplace:

  • Be aware. Being aware of the surroundings, how the worker is feeling and how the other person is feeling is important. The other person is likely feeling agitated, so the worker must be able to stay composed.
  • Understand/do not judge. Where possible, engaging the person can prevent a violent incident. Workers can try to find something they like or have in common with the person.
  • Explain the consequences and alternatives. Angry people are not thinking clearly. Nor are they thinking about how actions will affect their lives or families. Calmly explaining the ramifications can help.
  • Change the tone of voice. Speaking calmly to an agitated person may help reduce his anxiety.
  • Avoid provoking. Telling the person to “just calm down” could make him more angry.

The goal is to help redirect the person so he slows down and begins to think more clearly.

Top OSHA Trends Facing Employers

OSHA is in something of a holding pattern while it awaits a new administrator. Nevertheless, now is not the time for employers to let their guards down.

The agency has operated under the acting leadership of Loren Sweatt since July 2017. The president’s October nomination of Scott Mugno, vice president of safety at FedEx Ground, to be the next OSHA administrator continues to be delayed amid political wrangling. With many career agency personnel in place, enforcement looks similar to the Obama administration in many ways.

Overall Trends

“Confusion, compliance and anticipation” is the phrase that best sums up OSHA during the first year-and-a-half of the new administration. There have been delays in enforcement and effective dates for some regulations; however, OSHA has not retreated from inspections or enforcement activities.

Expectations for a more business-friendly environment under the Trump administration have yet to materialize, although there have been signs that there will, ultimately, be moves toward deregulation and less aggressive enforcement.

No long-standing regulations have yet been repealed, which is not surprising, given the lack of a permanent leader and the fact that OSHA regulations cannot be revoked solely for economic reasons.

However, we have seen activity on regulations that were already in process. They are among the clear indications that the Trump administration plans to take a different tone than the Obama administration:

2-for-1 Requirement. The president’s signature on Executive Order 13771 requires agencies to eliminate two regulations for every one promulgated.

Rule changes. The president employed the rarely used Congressional Review Act to repeal 14 regulations, including:

  1. The Volks Act. The president effectively overturned the rule that made recordkeeping requirements a continuing obligation for employers. Essentially, OSHA had the ability to enforce recordkeeping requirements for five-and-a-half years, rather than six months.
  2. Fair Pay and Safe Workplaces Rule. The president signed a resolution that blocked the Obama-era rule requiring federal contractors to disclose and correct serious safety and other labor law violations.

Rule movement. Several OSHA rules have been moved to “long-term actions” or completely eliminated from the administration’s first two regulatory agendas.

  • 1. Removed from regulatory agendas:
    • Vehicle backing hazards
    • Updates to chemical permissible exposure limits (PELs)
    • Comprehensive combustible dust rule
    • Hearing protection in construction
  • 2. Moved to long-term actions, essentially putting them on an indefinite delay:
    • Workplace violence
    • Emergency preparedness and response
    • Process safety management (PSM) rule reform
    • Infectious diseases in healthcare

Another signal of the Trump administration’s intentions toward deregulation is the changing of the name “Regulatory Agenda” to “Unified Agenda of Federal Regulatory and Deregulatory Actions.”

See also: Health Consumerism, Stress Management  

Controversial Initiatives

Employers need to be aware of several regulations in the pipeline to ensure they understand and comply with the requirements.

Electronic Recordkeeping

OSHA’s effort to improve tracking of workplace injuries and illnesses requires certain employers to electronically submit data they are already required to keep. But there has been significant confusion and consternation over the standard. One issue is the implementation schedule.

There are clear indications that OSHA intends to amend this rule to ease some of the requirements on employers. As it appears now, the deadlines are:

July 1, 2018: Employers with 250 or more workers, and those with 20 – 249 employees in “high-hazard industries,” must electronically submit information from their 300A annual summaries of work-related injuries and illnesses.

March 2, 2019: Every establishment must submit information from their 300A summaries. The rule has been fraught with controversy and questions, such as:

  • Where will OSHA put the information? There are concerns that employers’ information may become publicly available. However, if the agency opts not to collect the 300 logs and 301 forms as expected, that concern would be eliminated.
  • How will OSHA use the information? With data on fatalities, amputations, hospitalizations and other factors available on computers, OSHA compliance officers could determine inspection priorities based on that information. But there are indications that the Trump administration may back off from the forceful enforcement mentality.

OSHA’s about-face: The agency recently announced that employers in all states must electronically submit their data for calendar year 2017 by July 1. This caught many by surprise, as several states with OSHA-approved state plans had not yet updated their recordkeeping requirements and employers in those states were under no such requirements. Additionally, the announcement means that the states involved are now under a greater regulatory compliance burden.

Silica

OSHA established a new eight-hour weighted average PEL on silica for affected industries. The construction sector was first up in September, although the agency delayed enforcement for one month.

The agency will begin enforcing the rule for general industry on June 23, including training requirements. While there is a chance the deadline will be delayed, employers should nevertheless be prepared to comply.

Fall Protection

The Walking/Working Surfaces Rule has caught many employers by surprise. The rule went into effect in January 2017, and OSHA is strongly enforcing it.

To date, OSHA has cited and imposed hefty fines on at least 12 employers for violating the rule, despite having no associated injuries. For example:

  • One employer was penalized $114,000 for failing to ensure each surface could support a maximum load.
  • Another was fined $36,000 for failure to guard unprotected sides and edges at a height of at least four feet.

Despite some confusion surrounding this rule, we can expect OSHA to inspect and cite companies for violations. Employers should research how they are affected and what they need to do.

Beryllium

As of May 11, affected employers were required to abide by new PELs and short-term exposure limits.

On a positive note, the agency recently clarified that the rule only applies to areas where there are significant amounts of beryllium, rather than just trace amounts. That will save on business compliance costs, and it eliminates some of the vagueness of the rule.

Enforcement

The public shaming via press releases under former OSHA Administrator David Michaels subsided in 2017, but there seems to be a renewed effort in 2018. One recent example was the announcement of a $40,000 fine imposed for trenching operation violations that OSHA officials discovered while doing a drive-by of a construction site.

Additionally, there has been an unexpected slight uptick in inspections in 2017. Combined with the congressionally mandated increase in penalties in 2016, it means employers need to pay attention. Again, the increased number of inspections may be due to the fact that career OSHA personnel are operating with no official leader.

Look-back period: This is an issue to watch closely, to see if the administration may decrease the look-back period for violations that OSHA can use for repeat violations. The previous three-year period was expanded to five years during the Obama administration. Also during the Obama administration, repeat violations were cited more frequently and with higher fines. A recent court ruling in New York said the look-back period is non-binding. That does not bode well for employers that have enhanced their programs and are doing the right thing, only to have the agency cite them for violations that occurred years ago.

Another change under the previous administration was the consideration of workplaces as being under the same corporate umbrella. Previously, workplaces were deemed individual, stand-alone establishments, regardless of the parent company.

We believe the administration will eventually roll the look-back period to three years and consider workplaces to be individual establishments again. However, this may not happen until late this year or beyond, as these changes likely will not be an immediate priority for the new OSHA administrator.

Compliance Assistance

We have seen a clear focus lately on helping employers comply with OSHA regulations, rather than the “enforcement, enforcement, enforcement” effort of previous administrations. There have already been announcements of new alliances between OSHA and various industries or organizations, including one with the Board of Certified Safety Professionals. We expect efforts to provide more assistance and guidance to continue, possibly through the use of “letters of interpretation” to change the tone to one of more compliance assistance.

The Voluntary Protection Program (VPP) was not a favorite of the previous administration. It was viewed as too easy to get in, and difficult to expel companies. But the Trump administration already held a stakeholders meeting to discuss revitalizing the program. Topics included ways to:

  • Encourage participation
  • Ease entry
  • Enhance the benefits
  • Engage network members

One concern, however, is whether there will be enough funding to support these compliance assistance programs. Positions that were eliminated two years ago would need to be resurrected.

State Plans

Twenty-two states have their own OSHA-type programs, and there has definitely been an increase in activity — especially in some of the blue states. California, for example, has hired a number of enforcement officers. That state is also implementing a workplace violence standard for healthcare and an injury prevention rule for hotel and housekeeping. Additional proposals in California may be approved. Washington and Oregon are also taking steps that are stronger than the federal OSHA requirements.

One concern for employers is the patchwork of compliance among states that are failing to meet OSHA-required deadlines. Maryland, Arizona, Hawaii, Utah and Wyoming, for example, have not adopted a silica rule, despite the requirement to do so by late 2016. Even if these states lack appropriate funding, they could easily adopt the federal rule — but have chosen not to. We may see the agency step in as it did with the electronic recordkeeping rule recently.

See also: Healthcare: Need for Transparency  

Dates to Remember

Employers need to ensure compliance for the following:

Beryllium — March 12: Employers had to comply with the majority of requirements.

Silica — June 23: 

  • General industry and maritime employers must be in compliance with all requirements except action-level triggers for medical surveillance; they must also offer medical exams to employees with exposure above PEL for 30 days or more in a year.
  • Construction employers must comply with methods of sample analysis.

Electronic Recordkeeping — July 1: 

  • Companies with 250-plus employees must electronically submit 300A data.
  • Certain high-risk establishments with 20 – 249 employees must submit 300A forms.

Cranes and Derricks — Nov. 10: Crane operators must be certified

Walking/Working Surfaces – Nov. 19:

  • New fixed ladders greater than 24 feet must be installed with fall arrest or ladder safety systems.
  • Existing ladders greater than 24 feet must be equipped with cage, well, personal fall arrest systems or ladder safety systems.
  • Replacement ladders and ladder sections must be installed with fall arrest or ladder safety systems.