NCSI Scoop - 2021/Q3

NCSI Scoop THE NEWS FROM WASHINGTON | OBSERVATIONS - REMEMBERING THE BASICS | BASICS OF CAPTIVE INSURANCE COMPANIES | NCSI 2021 VIRTUAL CONFERENCE | 2020 STUDY SUMMARY | MARK YOUR CALENDARS

2021/Q3

NCSI

The News from Washington

The More Things Change, The More They Remain The Same

The Williams-Steiger Act of 1970 (The Occupational Safety and Health Act) in addition to creating OSHA also mandated a National Commission on State Workmen’s Compensation Laws. The Commission, appointed by President Nixon, conducted a comprehensive review of the various states’ workers’ compensation systems “in order to determine if such laws provide an adequate, prompt, and equitable system of compensation.” In its 1972 report, the Commission set forth five basic objectives for workers’ compensation programs: • Broad coverage of both employees and injuries and disease; • Protection against interruption of income; • Providing sufficient medical care and rehabilitation services; • Encouragement of safety; and • An efficient system for delivery of benefits and services.

The Commission further endorsed 84 recommendations, including 19 recommendations that were regarded as “essential”, finding that the “protection furnished by workmen’s compensation to American workers presently is, in general, inadequate and inequitable.”

In response to the Report, and showing concern about federal intervention, the various states and employers and insurers began efforts to meet the 19 essential recommendations. However, according to some commentators, by the mid-1980s, federal intervention seemed improbable and the motivation to respond to the National Commission’s recommendations faded. Representative Joe Baca (D-CA) introduced legislation in 2009 and on other several occasions to establish a “national commission on state workers’ compensation laws”, patterned after the 1972 National Commission established by the OSHA Act. Rep. Baca noted: More than 35 years have passed since our government took a serious look at the effectiveness of workers’ compensation laws. Access to proper benefits and medical care after on the job injuries is a right every American worker deserves. I am hopeful this legislation will bring us closer to updating and modernizing our state workers’ compensation laws to ensure they remain effective in this century.

Representative Baca’s bills did not come up for a vote.

Recently there have been assertions that the workers’ compensation systems are transferring costs from employers and insurers to federal disability benefit programs and that the state-based benefits are unevenly distributed and inadequate. See, for example, The Demolition of Workers’ Compensation from ProPublica and NPR; Does the Workers’ Compensation System Fulfill Its Obligations to Injured Workers? Last month, House Democrats began consideration of the Budget Reconciliation language

2 / N ATIO NAL CO UNC I L OF S E LF -I N S U R E RS’

Scoop which included on pages 114 and 115 of the bill funding for the Department of Labor for oversight of workers’ compensation programs relating to “claims activity, policy and standards development, and monitoring of state workers’ compensation programs.”

Doug Holmes is President of UWC – Strategic Services on Unemployment and Workers’ Compensation. UWC is the only country-wide association devoted exclusively to representing the interests of the business community on national unemployment insurance and workers’ compensation public policy issues. Doug has been a frequent speaker at NCSI events and keeps us advised of goings-on in Washington and elsewhere. Doug has commented on this recent legislative effort: “It is becoming clear that the Democrat majority in the House intends to enact legislation that would provide funding and new authority to the US Department of Labor Office of Workers’ Compensation Programs (OWCP) to monitor state workers’ compensation programs. Combining budget reconciliation language through the Education and Labor Committee with appropriations language, the OWCP would include the creation of a national commission. The description of the proposal is included in appropriations committee language as follows:

National Commission.-The Committee is concerned by an ongoing and systematic decline in the adequacy of benefits provided to injured workers under the State-based workers’ compensation system. Costs for disabling workplace injuries are being shifted to Federal programs, such as Social Security Disability Insurance, because of reduced coverage under State laws.

With the growth of the gig economy and misclassification of workers as independent contractors, millions of workers are falling through the cracks in State workers’ compensation systems. Given the impact to the Federal government, the Committee believes that State workers’ compensation programs should be monitored on an ongoing basis. Following the issuance of the report of the National Commission on State Workmen’s Compensation Laws in 1972, the Department prepared an annual report on the operations of State workers’ compensation programs, but ceased doing so in 2004.

Since then, there has been no reporting or analysis as State legislatures have passed, and governors have signed, significant legislation affecting the availability and adequacy of workers’ compensation. The Committee requests that the Department, through the Office of Workers’ Compensation Programs, include in the fiscal year 2023 Congressional Budget Justification an assessment of the resources necessary to reinstate OWCP’s monitoring of State workers’ compensation programs and preparation of an annual report.

The proposal for a new national commission appears to be similar to a proposal from Rep. Baca (D-CA) in 2009 that was opposed by business representatives, state insurance legislators and state workers’ compensation agencies as unnecessary. The issues identified in appropriations language have been rebutted many times since 1972. States have chosen to adopt some recommendations and decided not to adopt others. State WC programs have been successful in providing the appropriate support for individuals injured or becoming ill on the job for more than 100 years. There is no data to show that there is a causal connection between changes in state workers’ compensation and SSDI. The overlap between the benefit recipients is very small.

The language in the proposal may raise a Byrd Rule issue in the Senate, but if not it still raises a policy concern with federal overreach into state workers’ compensation. State workers’ compensation was created under state law before most federal programs providing disability assistance. It is effectively regulated on a state by state basis.

NSCI is following the legislation and will keep its members advised.

Q3 2021 / 3

Written by Buz Minor, Executive Director, NCSI

Observations - Remembering the Basics Two recent issues demonstrate that while there have been numerous refinements in the workers’ compensation laws over the years, there is nothing fundamentally new under the sun. First, some courts and legislative bodies appear to be perplexed by the question of how to address an injury sustained by a telecommuting employee. Taking a step back, the answer seems obvious. We recognize that workers’ compensation systems are designed to compensate work-related injuries and illnesses. Other forms of insurance may take care of problems common to the public. Now, workers’ compensation systems essentially address two questions: which workers should get into the system and how will they be treated once they are in the system.

A job for the legislatures, and to some degree the courts, is to create gatekeepers that determine when an injured worker will be allowed to enter the system. With regard to injuries, those gatekeepers commonly require

an injury to have been sustained in the course of and to have arisen out of the employment. While the concepts have been refined and fine-tuned to meet varying situations, the basics remain the same. “In the course of” is usually considered as doing something that benefits the employer. While there are odd situations such as picnics, sporting events and the like, determining when an activity is undertaken in the course of employment is usually not all that difficult. “Arising out of” seems to confound some with regard to telecommuting employees. In virtually all jurisdictions, there is a body of law defining what is meant by arising out of employment. Namely, did the work environment create a risk distinctive to the employment or was it a risk common to the public? In simpler terms, did the work increase the risk of the employee getting hurt? The workers’ compensation laws have addressed injured commuting employees, nonfixed situs employees, unexplained falls, employees on break, etc. While working

4 / N ATIO NAL CO UNC I L OF S E LF -I N S U R E RS’

from home will create different and, perhaps, challenging fact patterns, the principles will remain the same. As they have for years, adjudicators will look to see whether the work environment caused an increased risk of harm and, if so, a resulting injury would be compensated.

Second, national and state workers’ compensation systems seem to be all over the board with regard to compensating victims of COVID-19.

Again, however, this is ground that the workers’ compensation systems have covered. Work-related illnesses have long been compensated, even those illnesses that are common to the public.

Typically, it is under the characterization of the illness as an “occupational” disease. We note that an “occupational” disease is a disease with a modifier.

That is, an “occupational” disease does not mean any disease that is contracted in the course of employment, although contracted in the course of employment is an essential element of compensability.

An occupational disease is one where the work must create a greater risk of contracting the disease than the risk faced by the public and the risk presented by employment in general. The principles underlying the adjudication of claims for compensating healthcare workers who contract tuberculosis are instructive for adjudicating COVID-19 claims. We know that TB is a highly infectious disease and that it is not the product of a job process, such as is the case with coal miner’s pneumoconiosis. However, TB is a compensable occupational disease when contracted by healthcare workers because their employment environment creates a peculiar risk of contracting the disease vis-à-vis other employment environments and vis-à-vis the public in general.

So, where the work environment creates such a distinctive risk of contracting COVID-19, employees such as first responders and health care workers, among others, who contract COVID-19 at work should be compensated as other employees with similar diseases have been permitted to enter the workers’ compensation system.

Q3 2021 / 5

Courtesy of Sedgwick

Basics of Captive Insurance Companies: An Alternative Risk Financing Tool In today’s hardening insurance market, there is no shortage of news about captive insurance companies and their ability to subsidize or even replace traditional insurance.

Many articles assume the reader has a basic understanding of captive insurance company utilization and operation, but that is not always the case. In this paper, we take a step back and explain some of the basics of captives.

In this paper, the esteemed authors and experts, Max Koonce, Sedgwick Chief Claims Office; David Stills, Sedgwick Senior Vice President, Carrier and Risk Practice and Chris Mandel, RIMS - CRMP President & Managing Consultant from Excellence in Risk Management, LLC will share insights and the basics on determining whether a captive is right for your company.

Topics in the paper include: • A captive insurance company – defined • How does a captive work?

• Is a captive “right” for every company • Captive advantages and benefits

While a captive may or may not be appropriate for your company, risk professionals should have a basic understanding of the benefits and downsides of captive utilization.

Selecting the right partners for captive exploration, establishment, and management is essential. It is important to consider partner relationships early in the due diligence and feasibility processes.

6 / N ATIO NAL CO UNC I L OF S E LF -I N S U R E RS’

These selected partners will be able to guide the organization in the development of strategies and tactics necessary to prevent and manage losses over the long-term.

This will ultimately drive captive sustainability and success.

Click here to read the full paper.

NCSI, Welcome Back! we missed you.

Q3 2021 / 7

You Won’t Want to Miss the NCSI 2021 Virtual Conference November 16-17, 2021 For a little over 18 months now, the workers’ compensation professionals who comprise the membership of the National Council of Self-Insurers have been unable to meet and interact and enjoy the opportunities that the NCSI has provided at its conferences to renew friendships, make new business acquaintances, network, and enjoy the company of our colleagues.

The challenges brought on by the COVID-19 Pandemic have affected us all and have created different and sometimes unique challenges for the administration of a self-insured workers’ compensation program. To address some of these challenges, NCSI will offer a virtual conference over two and one-half days via Zoom. Sessions on both days will run from 8:30 am to 1:00 pm, Pacific Standard Time.

The conference will offer a number of featured presentations involving a variety of topics that will be of interest and will be helpful to the workers’ compensation professional.

For example, on our first day, Rachel Shaw, president and principal consultant of Shaw HR Consulting, will discuss the challenges of getting workers back into the workplace.

She will draw on her over 15 years of executive level HR experience.

On our second day, Max Koonce, Sedgwick Chief Claims Officer and noted national speaker, will discuss the state of the workers’ compensation industry during these unsettling and unique times. Here is a full listing of our topics and speakers.

The registration fee for the 2021 NCSI Virtual Conference will be: • • • • • •

NCSI Member in Good Standing (both days) - $100 NCSI Member in Good Standing (single day) - $55 NCSI Member in 2019 (both days) - $100 NCSI Member 2019 (single day) - $55 Non-Member (both days) - $160 Non-Member (single day) - $90

8 / N ATIO NAL CO UNC I L OF S E LF -I N S U R E RS’

We recognize that many of our members were unable to renew in 2020 due to the challenges caused by the pandemic. Accordingly, we are offering special rates for those whose membership lapsed.

We are actively seeking sponsors for the event from our professional partners and ask that you contact staff@natcouncil.com for more information about sponsorship opportunities, including a package sponsorship of the virtual conference and sponsorship of the 2022 Annual Conference. Also we, anticipate raffle prizes to be awarded at the conclusion of the conference, including free registration for the 2022 NCSI Conference which will be held at the Hyatt Regency at Gainey Ranch in Scottsdale, AZ.

AGENDA Tuesday, November 16, 2021

Wednesday, November 17, 2021

8:30 a.m. – 8:45 a.m.

Welcome Speaker: Buz Minor, Executive Director, NCSI

8:30 a.m. – 8:45 a.m.

Welcome Speaker: Buz Minor, Executive Director, NCSI

8:45 a.m. – 9:45 a.m.

“Mandatory Insurer Reporting: Evaluating Your Program Now to Stop Potential Civil Montrary Penalites Later” Speaker: Robert Sagrillo, President of National Accounts and Settlement Consulting, NuQuest

8:45 a.m. – 9:45 a.m.

“Truth About Lying” Speaker: Dalene Bartholomew, Vice President of Business Development, VRC Investigations

9:45 a.m. – 10:45 a.m.

“Pharmacovigilance: Protecting Your Employees” Speaker: Phil Walls, Chief Clinical Officer, myMatrixx 10:45 a.m. – 11:00 a.m.

BREAK 11:00 a.m. – 12:00 p.m.

“The Struggle is Real – Getting Employees Back into the Physical Workplace” Speaker: Rachel Shaw, President, Shaw HR Consulting 12:00 p.m. – 1:00 p.m.

“Regulatory Trends to Watch: COVID-19 Effects & More” (Pre-Recorded) Speaker: Michele Hibbert, SVP for Regulatory Compliance Management, Mitchell

9:45 a.m. – 10:45 a.m.

“Winning Big: Proven Methods of Successfully Handling and Resolving Medicare Conditional Payment Claims” Speaker: Melisa Zwilling, Shareholder, Carr Allison 10:45 a.m. – 11:00 a.m.

BREAK 11:00 a.m. – 12:00 p.m.

“State of the Industry” Speaker: Max Koonce, Chief Claims Officer, Sedgwick 12:00 p.m. – 1:00 p.m.

“The Cannabis Conundrum: Managing a Rapidly Chnaging Legislative Environment” (Pre-Recorded) Speaker: Brian Allen, Vice Preisdent of Govermental Affairs, Mitchell

REGISTER AT NATCOUNCIL.COM

2020 STUDY SUMMARY: Examining Organizational Resiliency, COVID-19 Impact on Claims Operations

As previously reported, the Workers’ Compensation Benchmarking Study from Rising Medical Solutions is a national research program that examines the complex forces impacting claims management in workers’ compensation today.

The 2020 study marks the first time claims leaders had the opportunity to respond directly to the perspectives of more than 1,200 frontline claims professionals who participated in the 2019 survey.

NCSI was pleased to have been able to provide you with a copy of this study and to have been asked to become involved. You will see that NCSI is thanked in the Acknowledgements section of the report for its involvement. Rising would welcome any feedback that NCSI members might have on the research and NCSI looks forward to our continued collaboration with Rising in the future. Here is a link to the full and comprehensive study.

In addition, here are some of the highlights of the Executive Summary from the Summary.

1 0 / NATIO NAL CO UNCI L OF S E LF -I N S U R E RS’

Executive Summary The rapid global spread of COVID-19 has quickly eclipsed other threats in both size and scope, creating a defining moment for organizations to leverage dynamic risk management and organizational resiliency. Risk management is often mistakenly thought of as a compliance function. Compliance methods work well for known or predictable risks, and the current crisis is anything but predictable.

Resilience requires that organizations execute risk management real-time and make a conscious commitment to anticipate, prevent, respond, and adapt to adverse events.

The high priority of global risk management, including employee health and safety, is critical to organizational resilience.

Organizational resilience requires preventative control, mindful action, performance optimization and adaptive innovation, along with paradoxical thinking which helps leaders shift beyond ‘either/or towards both/and’ outcomes.

Since 2013, the Workers’ Compensation Benchmarking Study has surveyed more than 2,100 claims leaders on their top operational priorities, challenges, and opportunities, as well as their strategies for improving claim outcomes.

The 2020 study examines what strategies organizations are implementing to improve claims operations and how organizations are leveraging the perspectives of more than 1,200 frontline claims professionals surveyed during the 2019 study and the similarities and/ or differences from current and prior survey research with claims leaders. Additionally, the study assesses the impact of the COVID-19 pandemic on claims operations, including how the pandemic is affecting claims management practices and what strategies claims organizations are utilizing to service and support employers, injured workers, and claims staff during these extraordinary times.

Q3 2021 / 11

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

MARK YOUR CALENDARS