NCSI Scoop - 2021/Q1

NCSI Scoop LESSONS LEARNED | OHIO REDEFINES “OPERATOR” FOR PENALTY COMPENSATION PURPOSES | SENATORS PORTMAN AND CARDIN INTRODUCE THE COMP ACT - S 653 | NCSI JOINS BUSINESS COALITION IN OPPOSING COVID PRESUMPTION IN FEDERAL LEGISLATION | MARK YOUR CALENDARS - 2022 NCSI ANNUAL CONFERENCE

2021/Q1

NCSI 2022 ANNUAL CONFERENCE Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, Scottsdale, AZ June 12-15, 2022

NCSI

Lessons Learned

The sign at the corner gas station announces a $500 signing bonus for any new hires. In addition to the value meals and specials pictured at the drive-through of the local fast food place, there is a posting of open positions for all shifts. The local bigbox home improvement store lists its available positions, as does a nearby nursery/ garden center. It seems everywhere you look, businesses are looking for people to hire. A fair question has recently been raised as to whether the federal stimulus

efforts have provided a disincentive for Americans to return to work.

On May 16, The New York Post’s Editorial Board wrote: “Th[e] ‘relief’ bill also extended the $300 weekly federal unemployment supplement to September 6, meaning nearly half of people getting checks make more money by staying home than going back to work. Employers coast to coast have cited it as a reason they’re having trouble hiring.” The day before the April jobs report was to be issued, Bloomberg noted that

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business leaders often blamed the stimulus checks and unemployment benefits for hampering their hiring efforts. The article went on to suggest that the results of the April jobs report “should offer new insight [1] into this mismatch” and [2] whether the stimulus is deterring growth. Well, the number of jobs gained was one-quarter of that which had been expected – it seems that new insight was indeed offered.

That information notwithstanding, the debate on the issue continues

Scoop

Written by: Buz Minor, Executive Director, NCSI

along predictable political lines and the purpose of this observation is not to join the debate. Rather, those who have worked in the workers’ compensation arena for even a relatively short while are well-aware of the relationship between extended benefits and return to work efforts and outcomes. Most people don’t choose to work because they are rich eccentrics. Rather, they work to earn money to pay for things needed or desired. We are mindful that workers’ compensation was designed to provide a partial replacement of economic loss; the negative consequences of its being a full income replacement system are obvious. Occasionally articles appear asserting that workers’ compensation benefits are too low in general and inconsistently provided among the states. Such assertions are typically long on anecdotes and short on data, seemingly unaware of the challenge inherent in striking a balance between providing fair and just compensation and discouraging a return to productive life.

Workers’ compensation professionals recognize the harmful impact that staying off work has on the individual.

The evidence is compelling that for most people, returning to work improves their general health and well-being and reduces psychological distress. Further, study after study has confirmed the inverse relationship between the length of time off work and the likelihood of return. The consistency seems to be that six

“Workers’ compensation professionals recognize the harmful impact that staying off work has on the individual. The evidence is compelling that for most people, returning to work improves their general health and well-being and reduces psychological distress.” months off work is the breaking point where employees have a 50 percent chance of ever returning to work. After a year off work, that number drops precipitously and continues to drop as the time away from work increases.

It is not surprising then that successful workers’ compensation programs emphasize return to, or remain at, work efforts. Employers use a variety of tools to keep injured workers on the job such as light or modified duty, assignment to work at charities, gradual return-to-work programs, blends of work and on-site therapy or rehabilitation; the list goes on and is as varied as the imaginations of employers’ disability management teams.

Workers’ compensation systems have also been fine-tuned through the years to recognize the importance of returning to work. For example, periodic medical examinations are typically mandated for injured workers who are off work and receiving temporary disability compensation to insure that they are not lost in the system. Compensated periods of rehabilitation are part of the design to help the injured worker return to the job of record or, if that is not possible, different employment. In Ohio and other jurisdictions there is a form of compensation – wage loss – that pays an injured worker two-thirds of the difference between pre-injury wages and the wages earned after returning to a lesser paying job. This tax-free benefit continues for up to four years and removes an economic disincentive from returning to work. There are many other examples of such programs in the different states’ workers’ compensation systems.

People who have spent at least a part of their professional lives in workers’ compensation have seen the deleterious impact that being off work for a significant period of time has on the injured worker. They have witnessed productive lives lost to protracted unemployment. From their personal experience, and as borne out by studies, the economic, health, psychological and social benefits of an injured worker’s return to work are indisputable.

The data supporting these conclusions are clear. Let us hope that those who crafted the original stimulus packages, and those who would continue stimulus benefits, are mindful of these well-recognized issues and concerns.

Q1 2021 / 3

“A hydro tester pressure tests oil and gas pipes for leaks.”

Ohio Redefines “Operator” for Penalty Compensation Purposes On April 8, 2021, a divided Ohio Supreme Court declined to disturb an Industrial Commission decision awarding penalty compensation to an injured worker for the employer’s violation of a specific safety requirement (VSSR). Under Ohio law, the Industrial Commission is empowered to award additional, penalty compensation as a percentage of the compensation payable in a claim where an employer failed to comply with a specific safety requirement promulgated by the Bureau of Workers’ Compensation and where the failure was the proximate cause of an injury. Penalty compensation is paid by the employer and is not insurable.

Such an award may only be challenged in court in an action in mandamus, in which the party complaining of the Industrial Commission decision must demonstrate that there was no evidence supporting the determination.

There was no factual dispute in the case: Mr. Drosnos was the operator of a machine called a hydro tester;

Mr. Roush worked as a test hand. The VSSR code requires that a means be provided to disengage a machine from its power supply within easy reach of the “operator.” A hydro tester pressure tests oil and gas pipes for leaks. The process involves two employees (the operator and the test hand) who work approximately 40 feet from each other at the opposite ends of the piece of pipe being tested. Each puts a cap on his end of the pipe. The operator stands at the controls of the hydro tester, where there is a means to disengage the machine from its power source. After putting the cap on his end of the pipe, the test hand retreats to a safe area during the pressure test. The operator attaches a hydro tester hose to the cap at his end and turns on the machine and the pipe is pressure tested. When the test has been completed, the operator releases the pressure and signals to the test hand to remove the cap from his end of the pipe. Apparently there was a problem with the machine or cap at

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the operator’s end. Mr. Roush, the test hand, misunderstood a signal from Mr. Drosnos, the operator, and attempted to remove the cap from the still pressurized pipe and was injured. He filed his VSSR application arguing that he was an “operator” and there was not a means to disengage the machine from its power supply within his easy reach.

A staff hearing officer (SHO) agreed and awarded penalty compensation without citing any case authority for his conclusion. He essentially found that because the test hand was an integral part of the operation, he was an operator. The matter was taken to the full Commission which upheld the SHO decision. The public member of the Commission dissented from the decision of the other two commissioners.

The employer took the matter to the court of appeals where a magistrate found that under clear case authority, being an integral part of an operation did not necessarily make someone an

operator. For example, a helper who loads material onto a conveyor or into a machine is not an operator, even though getting material into a machine is an integral part of an operation. The magistrate thus found that there was no evidence that the test hand was an operator and would have vacated the IC decision. On objections filed, two judges on the panel overturned the magistrate’s decision and reinstated the Commission’s decision. The third judge dissented commenting that the determination was “inconsistent with logic and common sense.”

The employer pursued the matter to the Ohio Supreme Court. The Court affirmed the appellate court’s determination finding, first,

that it was undisputed that the requirement of providing a means from disengaging a machine from power within easy reach of the operator was applicable to the hydro tester machine. The issue then became whether the Commission’s determination that Mr. Roush was an operator of the machine within the meaning of the specific safety code was supported by the evidence. The Court held that it was.

The fundamental flaw in the logic of the Industrial Commission and, consequently, of the courts lay in determining that Mr. Roush was an operator. Ohio employers are rightly troubled by the Commission’s ignoring two fundamental and well-settled principles applicable

to deciding VSSR claims. First, a specific standard must plainly apprise an employer of its obligations. Second, because such awards are in the nature of a penalty, the specific safety requirements are to be construed in favor of the employer. Neither principle was honored here. There were two employees: a test hand and an operator. Only Mr. Drosnos operated, touched, or was even near the machine. Mr. Roush was some 40 feet away from the machine and only touched the pipe that was being tested. The pipe was not a part of the machine. End of case, or so it should seem.

Ohio State Office Building

Q1 2021 / 5

Senators Portman and Cardin Introduce the Comp Act - S 653 On March 10, 2021, Senator Rob Portman (R-OH) and Senator Ben Cardin (D-MD) introduced legislation (S 653) seeking to clarify the law and payments to be made to workers’ compensation claimants who are also Medicare eligible. The clarification of the Medicare payment and Workers’ Compensation Payment Act of 2021 (Comp Act) is supported by a coalition representing a diverse group of stakeholders. The Comp Act will provide clear and consistent definitions for the Centers for Medicare and Medicaid Services (CMS) according to Douglas Holmes of UWC – Strategic Services on Unemployment & Workers’ Compensation. Mr. Holmes has advised stakeholders of the legislation in an announcement: A legislative solution is necessary to clarify the set-aside process and options available to the parties to a workers’ compensation settlement. The proposed statutory amendments establish a predictable, efficient process while also providing reasonable protection for injured workers and Medicare.

The proposal would: • Create certainty for calculating the amounts to be included in set-asides; • Provide a reasonable timeframe in which CMS is to review set-aside submissions; • Provide an appeals process for parties to CMS determinations; • Increase revenue to Medicare through optional direct payment of the total amount of the set-aside to be paid to Medicare.

NCSI agrees with Mr. Holmes that the proposal will benefit injured workers, insurers, employers and

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CMS by creating a system of certainty that allows the settlement process to move forward while eliminating millions of dollars in administrative costs that harm workers, employers, insurers and CMS. During the week of May 9, Rep. Mike Thompson (D-CA) introduced the Comp Act companion to S 653, HR 3124. Mr. Thompson was a cosponsor of a similar bill in the last congress (HR 4161). The Senate and House sponsors will likely make a joint request to the Centers for Medicare and Medicaid Services for any technical assistance and/or comment that CMS might have.

NCSI Joins Business Coalition in Opposing COVID Presumption in Federal Legislation On March 8, 2021 NCSI joined a business coalition opposing an amendment to the US Longshore and Harbor Workers’ Compensation Act that would have established statutory presumptions of coverage and compensability for illnesses that were not caused in the course of employment and did not arise and were not covered by the Longshore Act. The coalition was led by Douglas Holmes, President of the UWC-Strategic Services on Unemployment & Workers’ Compensation. In his letter to two House and two Senate committees, Mr. Holmes wrote:

[S]ection 2104 Subtitle B - Labor Matters in the proposed Concurrent Resolution on the Budget for Fiscal Year 2021, would establish a presumption of coverage and compensability under the Longshore Act to maritime employees who contract COVID-19 at any time between January 27, 2020 and January 27, 2023. Section 2104 would create a presumption that an employee who contracted COVID-19 is not required to show that the illness arose at work and provide medical proof of the illness. Particularly on a retroactive basis, this proposal violates long-established law, re-writes existing employer/insurer contracts, and raises constitutional issues.

Further, a no-fault workers’ compensation system is effective only if it is limited to illness and injury

“arising out of and in the course of employment.” Section 2104 would convert workers’ compensation from a system that provides benefits to workers suffering workplace injuries to a form of guaranteed income replacement for non-injured workers.

Extending the presumption for almost three years, until January 27, 2023, is impossible to justify since citizens are engaging in social activities outside of work. It is therefore unreasonable to assume an individual must have contracted COVID-19 at work. In some cases, employees are working from home in environments that are not within the control of the employer.

The longshore presumption was deleted pursuant to the Byrd Rule and the Senate version of the American Rescue Plan passed without the COVID presumption.

Q1 2021 / 7

June 12-15, 2022

With America beginning to open up, it is not too soon to start thinking about the NCSI 2022 Annual Conference. The program will kick off on Sunday, June 12, 2022, at the Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch and will run through Wednesday morning. As in years past the conference will feature a blend of medical, administrative and legal topics. A copy of the program agenda will appear on the NCSI website later. The NCSI Annual Conference has proven to be an important opportunity to renew friendships, make new business acquaintances, network and enjoy the company of workers’ compensation professionals.

Next year will be no different. Mark your calendars now.

2022 Annual Conference

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