Missouri Closes Workers Compensation Loophole: Protecting Co-Workers from Lawsuits

[tweetmeme] The Missouri Senate passed legislation recently that would effectively close a major loophole in Missouri Workers Compensation laws.   The following the Missouri chamber of Commerce’s press release detailing the legislation.

Missouri Chamber pleased with passage of workers’ compensation reform that protects Missouri workers

Yesterday, the Missouri Senate passed legislation, House Bill 1540, on a unanimous vote and was adopted by the House with a vote of 122-29.  The bill was sponsored by Rep. Tim Jones specifies that an employee subject to workers’ compensation provisions must be released from all liability for personal injury or death to a co-employee due to an accident or occupational disease.

Following reforms to the workers’ compensation system in 2005, the courts began interpreting the law in such a way that co-workers were no longer protected as the exclusive remedy for workplace accidents.  Already, millions of dollars in lawsuits and settlements have been paid out as more and more trial attorneys find ways to leverage this loophole.

This comes at a crucial time as the Missouri Chamber has heard reports of trial attorneys using the loophole to go after the personal assets of co-workers of employees who were killed at a Joplin business during last year’s tornado.

“Every possession that these individuals own that wasn’t taken by the tornado is now at risk due to a flaw in the law that trial attorneys are using to get rich,” said Daniel P. Mehan, Missouri Chamber president and CEO.  “We are getting pleas from businesses that are being bankrupted by a rash of co-employee lawsuits, but reports of this flaw and the tornado being used to line the pockets of lawyers on the backs of innocent workers reaches an all-new low,” Mehan said.

“Workers’ compensation served as the exclusive remedy for co-employees for decades until the changes to the law in 2005,” Rich AuBuchon, general counsel for the Missouri Chamber of Commerce and Industry, said.  “This loophole puts Missouri workers in the crosshairs of trial attorneys seeking big payouts for a cause of action that was not intended to exist.  No employee should be forced to worry about losing their home to a lawsuit based on an unintentional workplace accident.  The passage of this legislation will protect employees and employers throughout Missouri.”

The passage of this legislation was extremely difficult.  Despite this success other critical issues impacting our workers’ compensation system remain including a loophole that allows employees to sue in court for compensation of occupational disease in addition to receiving workers compensation benefits.  Also, Missouri’s insolvent Second Injury Fund remains unresolved.  The Missouri Chamber of Commerce and Industry will continue to work on these issues but with only three days left in the 2012 Legislative Session the issues remaining may not be resolved this year.

Missouri Court of Appeals: Workers Can Sue Employers for Occupational Diseases AND Collect Workers’ Compensation

[tweetmeme]The first line on the Missouri Department of Labor’s Workers’ Compensation webpage reads: “The Missouri Division of Workers’ Compensation administers the programs providing services to all stake holders including workers who have been injured on the job or been exposed to occupational disease arising out of and in the course of employment.” However in 2005 when Missouri last updated its worker’s compensation laws, it failed to include the term occupational disease in the exclusive remedy section of the workers’ compensation statute. Thus opening a big can of worms for Missouri employers.

In a recently published article written by Daniel Mehan, President and CEO of the Missouri Chamber of Commerce this “oversight” was highlighted as he noted that the Western District Court of Appeals ruled that workers’ compensation does NOT serve as the exclusive remedy for employees who may contract long-term, repeated exposure diseases. Transalation: Employees can sue their employers in civil court as an additional remedy to workers’ compensation. Both legal avenues are now seemingly concurrently open for employees in the state of Missouri.

The court case that prompted this ruling involved Monroe Gunter (Monroe Gunter v. KCP&L Greater Missouri Operations Co., et al., Case No. 10CA-CV01079) who worked for KCP&L for thirty-four years before he retired in 1988. He was diagnosed with mesothelioma in February 2010. The court held that Gunter‘s claims were not subject to the exclusivity provisions of workers’ compensation because they did not arise out of an―accident as that term is defined in the statute.

MISSOURI CHAMBER SAYS: UNCERTAINTY AHEAD

“For decades employees who filed a worker’s compensation claim were precluded from filing a civil lawsuit against the employer for the same injury leading to the worker’s compensation claim. It apears this long-standing rule of law is now gone for long-term, repeat-exposure occupational diseases.”

With Missouri’s Second injury fund already being frozen by Missouri Attorney General Chris Koster who stopped paying people who were granted permanent total disability awards by a judge, the opportunity for many of these cases to turn to civil courts for relief just opened up. Employers in Missouri should have alarm bells going off in their heads right now. If you, as an employer operate a facility that exposes or potentially exposes worker’s to chemicals or other agents that may cause long-term disease as a result of repeated exposures you may now be subject to civil litigation at the same time as being on the hook for worker’s compensation claims.

Since the Missouri Attorney General’s office stopped settling cases against the fund in 2009, more than 30,000 cases are now pending and about 700 cases are filed each month waiting to be adjudicated. Not counting those cases, the fund’s estimated liability for awards already approved by judges is $1 billion. With Social Security Disability being the sole source of income for virtually all of the injured workers not being paid by the fund one can only guess at the number of people who will strongly consider remedies through civil action against their employers.

LEGISLATIVE FIX NOT LIKELY ANYTIME SOON

It is up to the Missouri legislature to resolve this issue. As the Court ruled “The legislature is presumed to have intended what the statute says, and if the language used is clear, there is no room for construction beyond the plain meaning of the law.”  As noted in Mehan’s article, the Missouri Legislature failed to address this issue: a remedy was blocked according to Mehan “through work of trial attorneys wanting more litigation against Missouri employers to garner more legal fees on the issue.”   Thus placing Missouri employers in the unenviable position of being required to pay for workers’ compensation insurance knowing that workers can now seek civil action against them as well as filing for workers’ compensation benefits.

EMPLOYERS MUST PROVIDE A SAFE WORKING ENVIRONMENT

As a Missouri Employer it is now an imperative that you do everything to protect yourself from this risk. Including reviewing and updating your industrial hygiene safety programs, ensuring that all of your workers are protected at all times from dangerous or potentially disease causing agents in the workplace. Performing job hazard analyses (JHAs) for each specific job function, especially those relating to chemical storage, use and disposal. Consulting with experienced professionals in industrial hygiene and safety is a must for those employers without in house expertise. Training your supervisors and front line managers to recognize potential hazards and to effectively communicate the risk associated with those hazards to your workers, so they will take the necessary precautions to protect themselves is critical to protecting your organization against potential claims in the future.

Cost-Intensive Healthcare Providers and Attorneys Account for Majority of Worker Comp Costs

[tweetmeme]After analyzing five years of claim data from the Louisiana Workers’ Compensation Corp., or LWCC, from 1998 to 2002, the researchers found that a small group of physicians, only 3.7 percent, accounted for more than 72 percent of the workers’ compensation costs. These were termed cost-intensive providers, or CIPs.   This was the findings of a study by researchers at the Johns Hopkins School of Medicine, published in the January edition of the Journal of Occupational and Environmental Medicine. 

Amazing is the only word that comes to mind!  With all the talk of healthcare reform swirling this country, it seems that America would be taking a closer look at how worker compensation claims are handled.  Employers need to take note of this study and not simply read it in passing and shake your heads in disgust only to move on to the item in the paper (or online).  The study suggests that settling claims quickly is the best solution.  It is also important to realize that the researchers do say that “Across the board, we’ve found that most physicians practice prudently.”  Which is good news, but realize this; according to the study the involvement of an attorney and the duration of the claims—greatly impacted overall claim cost.   After analyzing 36,329 claims over five years, the study found that 2 percent of these claims accounted for 32 percent of the claim costs.

According to the Johns Hopkins Gazette article detailing this study, “A 2008 study found that attorney involvement was associated with consistently higher medical, indemnity and claim handling costs.  Of nearly 7,000 claims studied, 738 claims involved attorneys.  By the study closure, 97.7 percent of claims without attorneys had been resolved.  Of those with attorney involvement, only 57.5 percent had been closed. The study found attorney presence on a claim correlated with duration, and the duration correlated with higher cost.”

Moral of the story is to do everything you can to reduce the probability of injuries occurring in the first place, and if an injury does occur, stay in contact with your injured employees, ensure that they still feel like they are part of your corporate family!  Settle the claim, institute a return to work program and communicate with injured employee weekly.

Read more: http://gazette.jhu.edu/2010/01/19/workers%E2%80%99-comp-research-gives-insight-into-curbing-health-costs/#ixzz0hauhtCb5

The Importance of Pre-Employment Screening

[tweetmeme]By Teresa A. Long, Institute of WorkComp Professionals News Service

What you don’t know CAN hurt you when it comes to on-the-job injuries and workers’ compensation claims.  A company advertises a job opening for a worker to pack and load heavy boxes onto trucks. It would seem an easy position to fill.

But what if that applicant shows up with two good, strong arms and appears to be a perfect candidate for the job, but has a history of back trouble that resulted in a number of previous Workers’ Compensation claims? Not as easy to make the call this time. And virtually impossible if no pre-employment medical testing is put into place, particularly by a medical practitioner who understands the job requirements and what it takes physically to accomplish them.

With budget and personnel cut backs, many companies are also cutting back on pre-employment practices. Five years ago investing $300-$400 in a pre-employment physical, blood work, and drug testing was palpable. Today, when a company is looking for money to fix the office copier machine, maybe not as much.

But employers are also aware of the high-cost of Workers’ Compensation claims, which have them doing a high-wire act to make sure they hire the right employee for the job, while protecting the safety of their other workers (and in some instances, the public). The latter is especially important because failure to do so sends a silent message to their other workers that the company doesn’t care whom they hire, even if it impairs job safety. And in the workplace, a silent message can sound like a jet plane taking off.

Obviously, no employer wants to inherit an existing injury when putting someone new on the clock, only to see a slight aggravation in the line of duty become totally their responsibility. But the possibility always exists.

A perfect example is an ice cream manufacturer in Pennsylvania who saw his Workers’ Compensation Experience Modification Factor skyrocket to more then three times what it should be. The elevated Experience Mod was caused by several open claims, which were a direct result of improper or non-existent hiring procedures. The company did not conduct pre-employment background checks and physicals. This opened the door for at least two employees to come on payroll with existing soft tissue injuries to the back and shoulder, a condition further aggravated by the cold temperatures they encountered on the job.

Each state addresses the aggravation or exacerbation of a pre-existing condition differently. In most states, if the on-the-job injury exacerbates a pre-existing condition (even by 1%) it is considered to be a part of the payable injury. This is conditional upon the physician being able to say that within “reasonable medical probability” the pre-existing condition was and still is aggravated by the on-the-job injury.

But this isn’t always the case. Some states have adopted a more definitive way of separating occupational (on-the-job injuries) from non-occupational (pre-existing conditions). In Florida, Oregon, Massachusetts and (to a lesser degree) South Dakota, for an accident or aggravation of a pre-existing condition to be compensable (payable), they have included the definition of “coverage” to include a provision called major contributing factor. This means the condition the physician is treating has to be at least 51% related to the on-the-job injury.

For instance, diabetes is a very common pre-existing occurrence. If an employee injures a leg on the job and also has diabetes, the physician starts treatment for the leg condition and is also monitoring the diabetes. As long as the majority of the treatment (51%) is for the leg pain, it is payable under Workers’ Compensation. If there comes a time when the leg pain subsides and the diabetes is getting worse (51% of the treatment is now related to the diabetes), it should no longer be considered payable under Workers’ Compensation.

This creates added pressure on the physician to accurately assess the percentage contribution of the occupational injury relative to any pre-existing condition. In the above example, before the major contributing factor cause was enacted, the entire treatment for the diabetes would be payable under Workers’ Compensation as long as the leg pain continued to aggravate (or exacerbate) the diabetes. This would include any hefty costs that may be incurred for amputation (which is a common complication for uncontrolled diabetes) and any resulting permanent impairment or prolonged disability.

Another tricky area of pre-employment screening is determining if the applicant has a history of filing Workers’ Compensation claims. And-news alert-people will lie on their application in order to get a job they really need.

Under the Federal Americans with Disabilities Acts (ADA), employers cannot inquire about past Workers’ Compensation claims, nor can they refuse to employ someone who has filed past claims or whose disability or impairment has no bearing on whether or not they can perform the essential tasks they are being hired for. The job interview can only determine if the person can perform essential job functions, with or without reasonable accommodation. But that doesn’t mean you can’t ask about prior injuries, you just can’t ask before you hire the applicant.

In the end, it’s important for the employer to take all steps necessary to make sure they hire the right person for the job. And this can only be accomplished by implementing the proper pre-employment procedures. This includes using “post” job offer medical questionnaires, making sure that a qualified medical practitioner who understands the job requirements performs all medical testing, and dodging a legal minefield by remembering that applicants should be assessed only by their ability to perform the essential tasks at hand.

Teresa A. Long is Director of Injury Management Strategies for the Institute of WorkComp Professionals in Asheville, NC, the largest network of Workers’ Compensation professionals in the nation. Teresa was claims manager for 14 years for Walt Disney World and later was Vice President of Risk Management for Sarasota, FL-based Unisource Administrators, Inc. She can be contacted at 828-274-0959 and teresa@workcompprofessionals.com, http://www.workcompprofessionals.com



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Growing Workers Compensation Costs Challenge Public Sector

[tweetmeme]The latest OCCU-TEC Tip Sheet.  Growing Workers Compensation Costs Challenge Public Sector.  I encourage you to check it out.

Kansas Becomes First State in the Nation To Regulate Wrap-Up Insurance Programs

The following is a press release, I thought everyone would benefit from:

American Subcontractors Association, Inc., News Release

FOR RELEASE
June 19, 2009
Contact: Emily Yunker
(703) 684-3450, Ext. 1333
eyunker@asa-hq.com

Kansas Becomes First State in the Nation To Regulate Wrap-Up Insurance Programs

ALEXANDRIA, Va. — On May 21, 2009, Kansas Gov. Mark Parkinson (D) signed into law H.B. 2214, making Kansas the first state in the nation to mandate specific guidelines for coverage and participant rights under owner- and contractor-controlled insurance programs, commonly referred to as “wrap-up” programs. The American Subcontractors Association – Greater Kansas City worked tirelessly to pass the bill and to secure the governor’s signature. In the end, the bill won unanimous approval in the Senate on a 38-0 (yeas-nays) vote and approval in the House on a 115-4 (yeas-nays) vote.

“As with any groundbreaking reform effort, ASA-GKC put in a lot of hard work to get this legislation through. We hope that others can learn from our experience and work toward fair treatment under wrap-up insurance programs,” said ASA-GKC Government Relations Chairman Bill Miller, Building Erection Services, Olathe, Kan., who spearheaded the association’s effort.

As defined in the new law, a controlled insurance program is “a program of liability or workers’ compensation insurance coverage, or both, that is established by an owner or contractor who contractually requires participation by contractors or subcontractors who are engaged in work required by a construction project.” The law establishes requirements for wrap up programs generally, as well as for general liability and workers’ compensation coverage included in the programs.

OCIP and CCIP programs shall:
• Make quarterly reports on claims and losses.
• Replace or pay to replace participants’ coverage should the program be cancelled.
• Set a deductible maximum of $2,500 per claim and no per claim assessment.
• Disclose specific requirements for safety or equipment prior to accepting bids from contractors and subcontractors on a construction project.
• Allow monetary fines for alleged safety violations to be assessed only by government agencies.

General liability coverage included in wrap-up programs must include:
• Mandatory completed operations coverage through the life of the statute of limitations for claims.
• Protection from requirements for purchasing duplicative coverage for participants.
• Severability of interest (each company covered under the policy as if it were covered separately).
• Equal shared limits of liability between program sponsors and participants.
• No requirement that participants waive rights of recovery for claims covered under the controlled insurance program.

The law also mandates that workers’ compensation coverage included in OCIP and CCIP must cover all workers on the payroll. In the event that a worker is injured on the job, the worker can not be required to return to work unless he/she is certified as fit for work by a health care provider, or the employer has modified work available.

Finally, the law requires the Kansas Commissioner of Insurance to adopt all rules and regulations needed to implement the new law by Jan. 1, 2010.

Founded in 1966, ASA amplifies the voice of, and leads, trade contractors to improve the business environment for the construction industry and to serve as a steward for the community. ASA’s vision is to be the united voice dedicated to improving the business environment in the construction industry. The ideals and beliefs of ASA are ethical and equitable business practices, quality construction, a safe and healthy work environment, and integrity and membership diversity.

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American Subcontractors Association, Inc.
1004 Duke St.
Alexandria, VA 22314