Industry Watchers React to Calls for Federal WC Intervention
“As members of Congress who are concerned about a pattern of detrimental changes to state workers’ compensation laws and the resulting cost shift to public programs like Social Security Disability Insurance, we are writing to express our interest in working with the administration to strengthen the safety net for workers injured on the job and improve the oversight of state workers’ compensation systems.” Thus begins a letter to U.S. Labor Secretary Thomas E. Perez from 10 ranking members of Senate and House committees, including presidential hopeful Sen. Bernie Sanders, D-Vt. The authors say their concerns stem partially from recent reports critical of the industry.
The reports from National Public Radio and ProPublica said benefits are not adequate to support and compensate injured workers. One recent report cited in the letter noted efforts to allow employers in some states to opt out of the traditional workers’ compensation system.
“The race to the bottom now appears to be nearly bottomless, as some states are adopting ‘opt-out’ laws which enable employers to set up their own ERISA-based workers’ compensation programs where employers can establish certain exclusions, heightened thresholds for casualty and abbreviated time periods for employees to report an injury,” the letter states.
“We would welcome a report from the department on how it will reinstate oversight of state workers’ compensation programs, what areas it intends to address, and whether added authorities are needed to better ensure that the interests of injured workers and taxpayers are protected.”
The members of Congress say the situation for injured workers has deteriorated since 2004 when the DOL ended a 32-year practice of reporting on states’ compliance with national standards recommended by a presidential commission. They say the DOL “should take a renewed interest [in] strengthening oversight of state workers’ compensation programs by using the agency’s expertise and authorities. In particular, we would welcome a report from the department on how it will reinstate oversight of state workers’ compensation programs, what areas it intends to address, and whether added authorities are needed to better ensure that the interests of injured workers and taxpayers are protected.”
Workers’ comp bloggers expressed skepticism about the chances of a total federal overhaul of the state-based workers’ comp system. However, they also suggested the increased scrutiny of the industry should serve as a wake-up call.
“Some of the people clamoring for Federal oversight do not, in my opinion, understand the fundamentals of workers’ comp,” wrote Robert Wilson, president and CEO of workerscompensation.com. “That is not to say our industry does not have flaws. We absolutely do. … We also have some culpability in the SSDI mess, as we are a prominent feeder system to that program.” He suggested the industry should revamp its attitude “and focus away from claims management towards that of recovery and return.”
Another blogger advised industry practitioners not to take offense “that some might like to see a federal review of state work comp or that there might be some heavy handed federal position taken. I don’t really see that happening any time soon,” wrote David DePaolo, founder, president, and CEO of WorkCompCentral.com. “But if reviews and discussions lead to better balance, more efficiency, greater understanding, then we’re the beneficiaries.”
Workers’ Comp Docket
Former New York Knicks Player Scores Benefits in California
New York Knickerbockers v. Workers’ Compensation Appeals Board, No. B262759 (Cal. Ct. App. 10/01/15)
Ruling: The California Court of Appeal held that the New York Knicks was liable for benefits to a former player under California law.
What it means: California has jurisdiction over a professional athlete’s workers’ compensation claim when a portion of the athlete’s cumulative trauma injury occurred within the state.
Summary: A former basketball player for multiple NBA teams filed a claim in California for a cumulative trauma injury arising out of and occurring during the course of his employment. While employed by the New York Knickerbockers, the player played one game in California and participated in practices and warm-ups for three games. The player had also been employed by a California team. The Knicks argued that it was not liable for benefits under California law. The California Court of Appeal held that the Knicks was liable for the player’s benefits.
The court found that California had a sufficient relationship with the player’s injuries to make the application of California workers’ compensation law reasonable. Although the Knicks argued that the player played only one game and participated in three practice sessions for them in California, the player played for a California team for a portion of the period of the cumulative injury. The court pointed out that while employed by non-California teams, the player participated in seven games and additional practices in California.
The court explained that employment by a California team during the period of the cumulative injury was sufficient to reasonably apply the California workers’ compensation law. The court pointed out that liability was limited to employers who employed the player during one year immediately preceding either the date of injury or during one year preceding the last date on which he was employed in the occupation that exposed him to the hazards of the cumulative injury. The Knicks employed the player during that one-year period.
Russian Roulette Not Within Scope of Employment
Kofaan v. Braile Mini Mart, 29 MIWCLR 73 (Mich. W.C.B.M. 2015)
Ruling: The Michigan workers’ compensation magistrate held that a worker’s death when he shot himself in the head at work while participating in a game of Russian roulette was the result of horseplay and fell outside the scope of his employment.
What it means: In Michigan, when determining whether a worker’s horseplay removes him from the course of employment, the fact finder must consider: the extent and seriousness of the deviation; the completeness of the deviation; the extent to which the practice of horseplay had become an accepted part of the employment; and the extent to which the nature of the employment may be expected to include some such horseplay.
Summary: A deceased worker’s parents sought benefits, alleging that the worker died as a result of an accidental gunshot to the head in the course of his employment at a gas station. Video and audio evidence from the gas station revealed that the worker was participating in the activity of Russian roulette when he shot himself in the head. The magistrate held that the worker’s death was the result of horseplay and fell outside the scope of his employment. His participation in the deadly activity barred the claim for benefits.
The magistrate pointed out that the activity of placing a gun to one’s head and pulling the trigger was not commingled with his employment. Also, there was no proof that this type of horseplay was accepted in the employment.
Interest on Death Benefits Accrues From Date of Worker’s Death
Flagship Transportation, LLC v. Estate of Keeling, No. 2015-CA-000718-WC (Ky. Ct. App. 10/02/15)
Ruling: The Kentucky Court of Appeals held that an employer was required to pay interest on death benefits from the date of the worker’s death.
What it means: In Kentucky, interest on lump-sum death benefits begins to accrue on the date of the worker’s death.
Summary: A driver for Flagship Transportation was involved in a motor vehicle accident while working. He suffered multiple injuries and died the same day. Three weeks later, the driver’s widow was appointed the administratrix of his estate. Flagship later paid lump-sum death benefits to the widow, plus interest from the date she was appointed to represent the estate. The parties disputed whether the estate was entitled to interest from the day of the driver’s death. The Kentucky Court of Appeals held that Flagship was required to pay interest from the date of the driver’s death.
Flagship argued that it was not obligated to pay the death benefits until the driver’s estate was opened and a representative appointed. Flagship argued that the driver’s estate did not exist until the widow was appointed as the administratrix of the estate. The court disagreed, explaining that the statute did not say that the payment was due when the administrator is appointed or when some other action in probate is accomplished. The statute states that the payment is due to the “decedent’s estate.” The court pointed out that the estate comes into existence at the moment of the death.
Because the driver’s death was the result of a work-related injury, Flagship became responsible for making the lump-sum payment to the estate at the moment of death. The court explained that the liability existed regardless of whether an administrator had been appointed to represent the estate and interest began accruing on the payment when it was due.
Worker’s Gradual Injury Connected to Safety Harness
PCL Construction Enterprises, Inc. v. Industrial Commission of Arizona, No. 1 CA-IC 14-0091 (Ariz. Ct. App. 10/01/15)
Ruling: The Arizona Court of Appeals held that a laborer was entitled to benefits for his gradual injury.
What it means: In Arizona, a gradual injury can be an accident within the meaning of the workers’ compensation law.
Summary: A laborer for PCL Construction wore a full safety harness for fall protection while removing forming materials used to hold concrete around an 18-foot tall tank. After spending the day removing forms and wearing the safety harness, the laborer noticed numbness down the front of his legs and on the top of his left foot. When the numbness continued, PCL sent the laborer for treatment. PCL denied the laborer’s workers’ compensation claim. The Arizona Court of Appeals held that the laborer was entitled to benefits.
PCL argued that the laborer failed to prove that his injury arose out of and in the course of his employment because he did not identify any event or incident that caused his symptoms. The court explained that a gradual injury can be considered an accident under the workers’ compensation law. Here, the laborer sustained a gradual injury, and the injury arose out of and in the course of his work while wearing a safety harness.
The court explained that although the doctors providing opinions could not connect the laborer’s symptoms to a specific work incident, the doctors connected the laborer’s symptoms to wearing the safety harness. The court also found that the medical evidence was sufficient to establish causation.
Worker to Receive Benefits for Injuries Sustained in Egg Toss Game
Heestand v. Cintas Corp. No. 2, 29 MIWCLR 64 (Mich. W.C.B.M. 2015)
Ruling: The Michigan workers’ compensation magistrate found a custodian was entitled to wage loss benefits for injuries sustained while participating in her company’s “safety day” activities.
What it means: In Michigan, when a worker is singled out by her human resources manager and prodded into participating in her employer’s “safety day” activities, her participation is not voluntary. Under these circumstances, an injury while participating in the safety day falls outside the exclusion of recreational activities from workers’ compensation coverage.
Summary: A custodian for Cintas testified that she was in the employee breakroom when the human resources manager invited her to participate in the employer’s “safety day” games. Cintas provided free lunch, encouraged participation in the games, and offered prizes. While stepping back and jumping to catch an egg in an egg toss game, the custodian hit a sign and fell. In awarding benefits, the magistrate noted there was a “thin line” between encouraging and expecting employees to participate in activities. The custodian felt somewhat obligated to join in the activities based on the personal direct request or invitation of the human resources manager. The custodian’s decision to accept this personal invitation showed her solidarity and willingness to comply with the employer’s request. Also, she was being paid during her participation in the games. These factors suggested that the activity was more occupational than recreational in nature. Therefore, the injury arose out of and in the course of employment.
The magistrate also found that the custodian was entitled to wage loss benefits for a total disability.
Employee Proves Shooting Event Constitutes Abnormal Working Condition
Cooney v. UPMC Presbyterian Shadyside, 30 PAWCLR 161 (Pa. W.C.A.B. 2015)
Ruling: The Pennsylvania Workers’ Compensation Appeal Board affirmed the workers’ compensation law judge’s decision finding that a case manager for a hospital sustained a compensable mental disability when an individual entered the building and began shooting.
What it means: In Pennsylvania, the fact that an employee receives active shooter training is not dispositive on the issue of whether a shooting at the workplace is a normal working condition.
Summary: The board affirmed the WCLJ’s decision finding that a case manager for a hospital sustained a compensable mental disability in the form of post-traumatic stress disorder, anxiety, depression, and emotional strain when an individual entered the building and began shooting. The board rejected the hospital’s argument that an active shooter was a foreseeable event that was anticipated at the facility, and therefore, the manager was not exposed to an abnormal working condition. The fact that the manager received active shooter training was not dispositive on the issue of whether the shooting was a normal working condition. The WCLJ found that what the manager experienced when the shooter entered the building was not a normal working condition for anyone even someone who had received active shooter training. The WCLJ pointed out that the shooter shot through the manager’s office door, and the police escorted her out through the lobby where she witnessed bullet holes in the walls and blood.
Case Sent Back to Determine When Worker Was Advised of Injury
Consol of Kentucky, Inc. v. Goodgame, No. 2014-SC-000305-WC (Ky. 09/24/15)
Ruling: The Kentucky Supreme Court sent a case back for the administrative law judge to determine when a miner was advised that he suffered from a work-related cumulative trauma injury and whether the miner filed his claim within two years of that date.
What it means: In Kentucky, for cumulative trauma injuries, the statute of limitations period begins on the date the injured worker is advised that he suffered a work-related cumulative trauma injury.
Summary: A coal miner for Consol worked in Kentucky until Consol stopped operations at the mine where he worked. Then he started working for Consol at a mine in Virginia. Later, the miner resigned and took an early retirement. Two years later, he filed a workers’ compensation claim, alleging that he suffered injuries to his upper and lower extremities and to his spine as a result of the cumulative trauma he suffered performing work as an underground coal miner. Consol argued that the miner’s claim was time-barred because he had not filed it within two years of the date he last worked in Kentucky. The Kentucky Supreme Court held that for cumulative trauma injuries, the statute of limitations period begins on the date the injured worker was advised that he suffered a work-related cumulative trauma injury. The court sent the case back for the administrative law judge to determine when the miner was advised that he suffered from a work-related cumulative trauma injury and whether the miner filed his claim within two years of that date.
The court explained that for cumulative trauma injuries, the statute of limitations period begins on the date the injured worker is advised that he suffered a work-related cumulative trauma injury. Here, the ALJ did not make a factual determination concerning when the miner was advised that he had a work-related condition. Therefore, the court sent the case back to the ALJ.
The court also pointed out that Kentucky did not have extraterritorial jurisdiction over any claim arising from a Virginia injury. However, in this case, the ALJ found that no injury occurred in Virginia.
When the Going Gets Rough, the Smart Come to Aspen Insurance
Sometimes, renewals don’t go as expected.
Perhaps your company experienced a particularly costly claim last year. Or maybe it was just one too many smaller incidents that added to a long claims history.
No matter the cause, few words are scarier to hear this time of year than, “Renewal denied.”
But new options are now emerging for companies that are willing to tackle their product liability challenges head-on.
Aspen Insurance’s products liability team – underwriters, loss control engineers and claims professionals – welcome clients who have been denied coverage from other, more traditional carriers.
“For our team, we view our best opportunities to be with clients who have specific problems to solve. In these cases, we leverage our deep expertise and integrated team approach to help the client identify root causes and fix issues,” said Roxanne Mitchell, Aspen U.S. Insurance’s executive vice president and chief casualty officer.
“The result is a much improved product or manufacturing process and the start of a new business relationship that we can grow for many years to come.”
“We want to work with insureds as partners, long after a problem has been resolved. We seek clients who are going to stick with us, just as we will with them. As the insured’s experience improves over time, pricing will improve with it.”
— Roxanne Mitchell, Executive Vice President, Chief Casualty Officer, Aspen Insurance
Of course, this specialized approach is not applicable to all situations and clients. Aspen Insurance only offers coverage if the team is confident the problems can be solved and that the client genuinely wants to engage in improving their business and moving forward.
“Our robust and detailed problem-solving approach quickly identifies pressing issues. Once we know what it will take to rectify the problem, it’s up to the client to make the investments and take the necessary actions,” added Mitchell. “As a specialty carrier operating within the E&S market, we have the ability to develop custom-tailored solutions to unique and complex problems.”
For clients who are eager to learn from managing through a unique, pressing issue, and apply the consequential lessons to improve, Aspen Insurance can be their best, and sometimes only, insurance friend.
The Strategy: Collaboration from Underwriting, Claims and Loss Control
Aspen offers a proven combination of experienced underwriting professionals collaborating with the company’s outstanding loss control/risk engineering and seasoned claims experts.
“We deliver experts who understand the industries in which they work, which is another critical differentiator for us,” Mitchell said.
Mitchell described the Aspen underwriting process as a team approach. In diagnosing the causes of a specific problem, the Aspen team thoroughly vets the client’s claims history, talks to the broker about the exposures and circumstances, peruses user manuals and manufacturing processes, evaluates the supply chain structure – whatever needs to be done to get to the root of a problem.
“Aspen pulls from every resource we have in our arsenal,” she said.
After the Aspen team explores the underlying reason(s) and root cause(s) producing the client’s problem in the first place, it will offer a solution along with corresponding price and coverage specifics.
“We have a very specific business appetite and approach,” Mitchell said. “We don’t treat products liability as a commodity.”
As noted, a major component of Aspen’s approach is that they seek to work with clients who are equally interested in solving their problems and put in the work required to reach that end.
Mitchell cited two recent client examples of manufacturers of expensive products that could endure large claim losses but had some serious problems that needed to be solved.
A conveyor systems manufacturer had a few unexpected large claims and lost its coverage in the traditional insurance market. The manufacturer never managed a product recall in the past, and Aspen’s loss control engineers dug into why several systems failed. Aspen also helped the company alert customers about the impending repairs.
Another company that manufactured firetrucks had three or four large losses, when telescoping ladders collapsed, resulting in serious injuries. The company’s claim history was clean until this particular product defect. When Aspen researched the issue, it found that the specific metal and welding used to make the telescoping ladders didn’t have the required torque to keep the ladders from collapsing.
Both companies worked with Aspen to correct the issues. Problem solved.
“It is so important that our clients are willing to actively engage in finding out what is causing their losses so they can learn from the experience,” Mitchell said.
Apart from the company’s problem-solving philosophy, Mitchell said, the willingness to allow qualified clients to manage their own claims is the second biggest reason companies come to Aspen.
“We are willing to work with clients who have demonstrated the expertise to handle their own claims — with our monitoring — rather than hiring a TPA,” she said. “It is a useful option that can save them money.”
Mitchell explained that customers who stay with Aspen for the long-term can be confident that Aspen will help them – whatever the challenge. For instance, if they need a coverage modification for a new product that they bring to market, Aspen can help make it happen. Mitchell noted, “We pride ourselves on the ability to develop custom-tailored solutions to address the complex and challenging risks that our clients face.”
Aspen’s desire to help solve difficult client problems comes with a caveat, but one that benefits both Aspen and the insured: It wants to move forward as a true partner – one with clear long-term relationship potential.
In a nutshell, Aspen’s products liability worldview is to partner with a manufacturer who is facing a difficult situation with claims or coverage, help them solve that problem, and then, engage in a long-term, committed relationship with the client.
“We want to work with insureds as partners, long after a problem has been resolved,” she said. “We seek clients who are going to stick with us, just as we will with them. As the insured’s experience improves over time, pricing will improve with it. This partnership approach can be a clear win-win.”
This article is provided for news and information purposes only and does not necessarily represent Aspen’s views and does constitute legal advice. This article reflects the opinion of the author at the time it was written taking into account market, regulatory and other conditions at the time of writing which may change over time. Aspen does not undertake a duty to update the article.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Aspen Insurance. The editorial staff of Risk & Insurance had no role in its preparation.