Wednesday, July 22, 2015

What is Hot in Workers' Compensation? At SAWCA 2015

The 67th Annual Convention of the Southern Association of Workers' Compensation Administrators (SAWCA) kicked-off Tuesday with its signature Regulator's Roundtable (TM). This annual conversation highlights the issues that are perceived as topical and critical by state regulators. 

There are 18 SAWCA jurisdictions; 13 had representative present on July 21. Regulators and/or judges from Colorado, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New Mexico, Oklahoma, Tennessee, Texas, Virginia, and West Virginia conversed for almost three hours in an open exchange of ideas. SAWCA President Roger Williams led the conversation in his inimitable style. The hot topics of the day included constitutionality of workers' compensation laws, misclassification issues, presumptions, recent developments with Medicaid, cyber-security, opiods, physician dispensing, mental claims, changes in the carrier marketplace, and more. 

Since we gathered last, there are new commissioners. It was great to meet Bob Gilliland of Oklahoma, Ryan Brannan of Texas, and Patrick Robinson of Louisiana. There were lots of familiar faces around the table also. 

On the constitutional front, an overview of the Padgett case from Florida led into a discussion of constitutional challenges throughout the country. Louisiana has recently had a portion of its statute held unconstitutional in a civil case in Baton Rouge. Louisiana has a medical review process to make decisions about entitlement to care and treatment, highlighted recently in Another Unconstitutional Statute - And it is not Florida. The Louisiana Comp Blog also has an excellent summary of that situation. The agency there awaits an actual judgement, but it seems likely that dispute resolution for injured workers may slow as this decision is considered on appeal or the process is re-worked. 

New Mexico has also had a recent constitutional ruling. The workers' compensation statute there provided coverage for many workers, but excluded agricultural workers. In June, the state's appellate court held that there was no basis for that distinction. As reported by In These Times, the court found the distinction "absurd." A market concern with this decision is the decision currently has retroactive effect. And it could create liabilities for employers, for which they cannot now retroactively purchase insurance. Claims may bankrupt or damage some business with no coverage for certain claims. The state's uninsured employer fund has joined in seeking further review, because claims could become its responsibility.

Tennessee has recently had a portion of its act declared unconstitutional also. There was a distinction regarding benefits available to workers who are in the country illegally. The Tennessee court concluded that this distinction is an attempt to legislate immigration policy, and therefore precluded by the fact that this is an enumerated power of the federal government. 

Oklahoma has seen constitutional challenges regarding the statutory amendments enacted in 2013. The change there has been profound. Oklahoma had a Court of Compensation Claims, which regulated workers' compensation, a mandatory system much like Florida's. In 2013, the state established a Workers' Compensation Commission with three commissioners to oversee a new administrative process more similar to other states', with administrative law judges. Simultaneously, Oklahoma made workers' compensation participation voluntary, at the discretion of employers. They can now "opt out."

Oklahoma discussed all that is changing and being challenged there. One of the interesting cases is Duck v. Morgan. There, the injured worker sought a path out of workers' compensation, seeking to sue in tort like Padgett did in Florida. At the same time, there are workers who are seeking to have the Oklahoma courts declare the statute unconstitutional on various grounds. A major focus according to Business Insurance is their contention that the new employer opt-out denies due process.  

Kentucky described a three year old decision by its supreme court determining that a statutory scheme for adjudicating black lung claims. The court concluded that treating those claims differently than other lung exposure cases created an improper equal protection distinction. Apparently, the language used by the court in that decision is being urged in other circumstances in which the Kentucky law treats claims differently. 

It is an interesting time for the constitution and workers' compensation. 

The issue of classification and therefore misclassification continues to occupy the forefront of workers' compensation. Disruptive technology like Uber is changing the way people get around. WorkCompCentral succinctly summarized the current trend towards Most Workers are Employees recently. Highlighting a series of cases in which the classification of employee was found appropriate in various industries like truck driving, entertainment, construction, real estate and more. 

Some of those businesses are reacting with further legal challenges. Others are moving to adjust their business model. An Internet based delivery service, Instacart, has elected to respond to recent rulings by offering some portion of their drivers part-time employee status according to WorkCompCentral. It is a partial solution, called the "employee option," currently offered in about half of the cities in which Instacart does business. It will be interesting to observe how these modern era "disruptive technology" companies adapt or react.

The discussion on Tuesday included much regarding classification and the federal Fair Labor Standards Act (FLSA). That law defines who is considered an employee for wage purposes. There was discussion of Virginia establishing a task force to work on misclassification. One complication expressed was the fact that various state agencies have various definitions of "independent contractor." These may or may not correspond with the FLSA definition. It may be that one is an employee for some legal purposes and a contractor for others. 

Presumptions are a topic for discussion in multiple jurisdictions. The presumptions for first responders began with firefighters and police officers. Various states have seen the financial exposure of these presumptions expand as other state employees are included in the first responder definition. Curiously, some states have interesting variations of both workers' compensation and presumptions. Tennessee noted that municipalities there can decide whether to participate in workers' compensation or not. An interesting twist on the opt-out discussion. Another twist to consider is the relationship possible between opt-outs in a broad sense and the so-called "carve-out" (discussed here) in a more constrained sense. 

Kentucky noted that there have been changes in the workforce recently. The Affordable Care Act has expanded the scope of Medicaid in some jurisdictions. This leads to more Medicaid recipients who are simultaneously in the workforce. Just as the federal government has begun to seek reimbursement when work injury costs are paid by Medicare, states like Kentucky have begun to seek such reimbursement when Medicaid provides care following a work injury. This will be a development that bears monitoring. 

Cyber security is a concern that seems universal. The news is full of hacks and breaches at various companies and agencies. States report that millions of "attacks" are being repulsed. NCCI noted that about 1,000 attacks or attempts to breach data occur daily, regarding its proof of coverage database. The consensus discussion was that states are doing a tremendous job of keeping data secure and safe in the face of these challenges. 

Opiods continue to be a challenge. Texas noted that its implementation of a pharmaceutical formulary has helped with control of narcotics. Some discussion revolved around the contention that WC has become an "addiction source," by introducing people to these drugs. When opiods are withdrawn, will there be assistance for those who have become dependent over time? Another perception is that as people decrease opiod use and their access thereto is limited, they may turn to illicit drugs like heroin; however, Texas denies that their experience has demonstrated the turn to illicit drugs. There is concern about dependence, and overdose and various deleterious effects of these drugs. 

Georgia is considering a formulary. California is working towards a formulary. In a post last summer I tried to make some sense of formularies. I still wonder how prevalent they will become in the world of workers' compensation. Every time I hear these discussions, I wonder if Florida will move that direction and whether it would be a positive for injured workers and employers.

Physician dispensing continues to be a curiosity. Various drugs were discussed Tuesday, and the prices that are related to them. Some prices are constrained by an established average wholesale prices (AWP); a medication may have been traditionally marketed in a 5 mg dose and 10 mg dose. Those dosages have AWP established by the manufacturers and at that price have been marketed to pharmacies across the country. 

Some prescribers are apparently forsaking these dosages in some instances and turning to new strengths like a 7.5 mg dose that has not been traditionally sold. There is no existing AWP for these new dosages and an AWP has to be established. Since this new dosage is not distributed widely, the AWP can be more carefully set, and in some cases is markedly higher for these new dosages. In some instances, it may even be many times higher than the stronger, already common, 10 mg dose. 

A WCRI study was mentioned, which found that these new dosages were prescribed primarily when the physician was dispensing, not when the physician was prescribing for filling at a pharmacy. The discussion suggested that some believe this raises questions about whether these new doses are prescribed because of their efficacy, compared with existing alternatives, or because of profit associated with them based on the newly established AWP. It is an interesting question and the discussion may continue. 

States are considering compensability of post traumatic stress disorder. Connecticut was recently in the news regarding its consideration of this after complaints by first responders who worked at the Sandy Hook disaster. Various states have different views on mental injury claims, the relationship to physical injuries, and compensability. This was a lively discussion wherein multiple jurisdiction representatives noted their state's distinctions and similarities regarding "mental" injury and requirements for relationship to physical injury, the so-called "impact rule." 

What causes most work accidents? A significant volume occur in automobiles. The discussion revealed that many such accidents occur, and then evolved into a discussion of distracted driving. We learned that cell phone use may be the equivalent of a .08 alcohol level. Voice texting may be just as distracting as typing while driving. It is apparently all more distracting than talking to someone in the seat next to you. 

Another disturbing concern with auto accidents is a perception that many  employees who suffer these are not wearing seat belts. One state related an incident in which a coroner was called out to an accident scene, and in the process of returning to the office s/he was killed in a vehicle accident while not wearing a seat belt. Commissioner Williams asked for a show of hands regarding who at the meeting wears seat belts regularly and the response was not unanimous. There apparently remains more to do in educating and encouraging the use of safety equipment. 

Finally, there was discussion of changes in the insurance market. Recently, Liberty Mutual announced its intention to withdraw from workers' compensation. Purportedly this is to seek greater return on investment in other market segments. This decision was compared with other carriers that are seeking to expand their participation in the workers' compensation market. Questions were raised as to why one company sees the market as one to leave while others see it as one in which to expand their involvement. The group reached no real conclusions on these seemingly incongruous decisions. 

In April I attended the NCCI in Orlando. Salim Ismail discussed disruptive technologies. He contends that Tesla built the first electric car because it could, as a new company with a stated vision supporting that course. He explains that when new ideas come up in a long-established company, with entrenched and existing products, the internal resistance to change can and often does kill the new idea. He contends that this is why GM and Ford did not produce the equivalent of the Tesla; and that a new entity, without the established corporate culture favoring some other paradigm, was required to bring this new idea to market. 

It is possible that this is true to some degree in the present insurance paradigm; that is, some new thoughts and ideas are perhaps more palatable or acceptable in newer or smaller carriers than they might be in an established entity with strong long-standing company cultures. Regardless of cause, it appears that change will continue in the carrier community. 

The regulator roundtable was an enlightening afternoon at SAWCA 2015. The next SAWCA roundtable will be on Monday, August 24, 2015 at the WCI in Orlando. Currently, there are 29 jurisdictions committed to participate in this roundtable, which will be moderated by SAWCA's own Judge Melodie Belcher of Georgia. For more information, visit or 


No comments:

Post a Comment