Medical Marijuana

Cannabis Reimbursement Trend Grows

Courts are increasingly leaning in favor of forcing payers to reimburse workers' comp claimants for medical marijuana.
By: | June 24, 2016 • 4 min read
med marijuana4

An insurer reimbursed workers’ compensation claimant Peter Mould for $4,600 of the $10,000 he has spent buying cannabis since obtaining a state medical marijuana program registration card nearly two years ago.

Mould said he expects reimbursement from American International Group for the remainder of $10,000, and payments for any future purchases of cannabis buds bought at a dispensary licensed under Connecticut’s 4-year-old medical marijuana program.

The Connecticut claimant’s case shares similarities with others across a few jurisdictions where insurers have reimbursed workers’ comp claimants for their purchases under state medical marijuana laws.

Those similarities include injured workers reportedly obtaining relief from chronic pain — a condition that torments sufferers and claims payers alike, often because it leads to the prescribing of dangerous opioid narcotics and the costly complications they cause.

Mould, 43, believes he is saving the worker’s comp insurer thousands of dollars for the costs normally driven by opioids that doctors prescribed for him following a 2011 workplace injury. The injury led to two cervical spine surgeries and “countless hours of physical therapy” that didn’t eliminate his pain and back spasms, Mould said.

“The medical cannabis absolutely helps,” said Mould who injured his neck by pulling up glued-down carpet while employed at a restoration company.  “I don’t take narcotics anymore because of medical cannabis.”

“Reimbursement, as opposed to direct pay, is a significant legal distinction that I think somewhat insulates the carrier or self-insured employer,” — Paul H. Sighinolfi, executive director and chair, Maine Workers’ Compensation Board

Cases of workers’ comp insurers paying for marijuana across the country likely remain few and isolated to states like Connecticut, Maine, Minnesota, and New Mexico.

But Mould’s attorney, George H. Romania of the Law Office of George H. Romania LLC in Hamden, Conn., expects many more such claims. Growing recognition of the harms caused by treating pain sufferers with opioids will drive more claimants to seek cannabis, he said.

Some state medical marijuana laws protect insurers from having to pay for the drug. But where the laws allow, claimants have found judges or hearing administrators supporting their requests for reimbursements.

In Maine, for example, administrative law judges have heard five cases with workers’ comp claimants requesting payment for cannabis purchased under the state’s medical marijuana program, said Paul H. Sighinolfi, executive director and chair of Maine’s Workers’ Compensation Board.

Three of those cases resulted in the judges ordering insurers to reimburse claimants for their purchases. All three cases involved patients suffering “intractable pain,” Sighinolfi said. Two of those decisions are under appeal.

The first case heard by Maine judges involved a worker who strained his back in 1989 while lifting an industrial garage door. His employer paid for treatment at several prominent hospitals. The pain persisted and he was diagnosed as suffering from complex regional pain syndrome.

He eventually consumed between 120-140 milligrams of OxyContin daily. He also received Dilaudid, another opioid, for breakthrough pain and periodically received for morphine injections.

In a “last-ditch effort,” his physician agreed he should see a doctor known to certify patients to Maine’s medical marijuana program.

By the time of his hearing to consider whether he should be reimbursed for purchasing cannabis, he was not consuming any narcotics, said Sighinolfi, who interviewed the injured worker’s physician. Instead, the claimant found relief by vaping cannabis three or four times a day.

The cannabis strain he vapes has been bred to so that it does not contain the ingredient that typically produces a marijuana high when consumed.

“This is a very believable guy,” Sighinolfi said of the claimant.

As first occurred in New Mexico two years ago, when claims payers in other states have been ordered to fund cannabis, it hinges on reimbursing claimants for their medical marijuana purchases. Judges evidently believe that requiring reimbursement insulates claims payers from federal law prohibiting the purchase of marijuana.

“Reimbursement, as opposed to direct pay, is a significant legal distinction that I think somewhat insulates the carrier or self-insured employer,” Sighinolfi said.

Trey Gillespie, assistant vice president, workers' compensation, for the Property Casualty Insurers Association of America

Trey Gillespie, assistant vice president, workers’ compensation, for the Property Casualty Insurers Association of America

But Trey Gillespie, assistant vice president, workers’ compensation, for the Property Casualty Insurers Association of America (PCI), disagrees. He argues that the reimbursement arrangements still force underwriters to violate federal law regulating financial services companies.

A few PCI members have voiced willingness to consider voluntarily reimbursing for medical marijuana, should studies show it indeed addresses chronic pain and can help eliminate opioid consumption.

But the federal classification of marijuana as a Schedule 1 drug currently hampers such research. The U.S. Drug Enforcement Administration is now considering changing that status and is expected to announce soon whether it will do so.

“What is needed are high-quality studies on the effectiveness of marijuana in the treatment of the diseases for which it is authorized in various states, whether we are talking about glaucoma, or chronic pain,” Gillespie said.

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.
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Risk Insider: Bill Minick

Cost Shifting: Candy Stores and Scapegoats

By: | June 15, 2016 • 3 min read
Bill Minick is president of PartnerSource, a risk management consulting firm specializing in workers’ compensation alternatives. He can be reached at [email protected]

Listening to a workers’ compensation insurance company trade group at a conference these days is like watching a kid in a candy store. They are so very happy and excited about the opportunity to deflect their own industry’s shortcomings to the evil “Option” to workers’ compensation.

Carefully avoiding any discussion of comparative data, they cast allegations of Option program operations and results that often have no factual or legal support.

A favored treat says that Option injury benefit plans shift costs to government programs more than workers’ compensation systems. Professor John Burton and others continue to point to fiscal challenges for the Social Security Disability Insurance (SSDI) Trust Fund due to (1) the shifting of responsibilities (i.e., “coordination of benefits”) from workers’ compensation, and (2) inadequate workers’ comp cash benefits.

However, this wide-scale, data-proven problem of cost-shifting within workers’ compensation systems has not been demonstrated within Option injury benefit programs.

In fact:

As confirmed by an independent, former NCCI actuary in the review of more than 160,000 claims over a 10-year period, Option programs have 75 percent fewer claims involving lost time from work for more than 7 days.

Until these fundamental, systemic failures to reasonably cooperate and practice evidence-based medicine are addressed, meaningful progress on cost-shifting by workers’ compensation to SSDI will not occur.

Also relevant is the fact that many (including almost all large) Option employer programs pay wage replacement benefits from the first day of disability, at a higher percentage of pay, and with no weekly dollar cap. This is far more generous than workers’ compensation systems.

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Recent trends also show the percentage of disability benefits in Option programs to be increasing, moving from 85 percent up to 90 percent or 100 percent of pre-injury pay.

Lastly, Option employers are now rallying behind injury benefit plan provisions making clear that benefits will not be reduced by or coordinated with benefits from government programs, such as social security disability or survivor benefits. Such changes are easy to make when any coordination of benefits with government programs has rarely occurred.

This ability of Option programs to bear more of the direct costs of occupational injury is the result of requiring more employee and medical provider accountability.

Workers’ compensation systems could also better address SSDI’s cost-shifting concerns if state legislatures would seriously consider the toll taken upon injured workers and the economy by:

  • Late reporting of known accidents and injuries
  • Delays and a lack of persistence in medical treatment
  • Failures to follow medical provider treatment instructions, and
  • Medical providers who do not obtain a comprehensive medical history, do not perform an adequate physical examination, do not review current and past diagnostic tests and imaging, and instead rely on speculative reasoning.

Until these fundamental, systemic failures to reasonably cooperate and practice evidence-based medicine are addressed, meaningful progress on cost-shifting by workers’ compensation to SSDI will not occur.

Instead, we will continue to see workers’ compensation insurance company trade groups (supported by some regulators and trial lawyers) search for scapegoats, while Option program sponsors emphasize the more common-sense pursuit of better medical outcomes and a higher level of social responsibility.

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Sponsored: Liberty Mutual Insurance

Commercial Auto Warning: Emerging Frequency and Severity Trends Threaten Policyholders

Commercial auto policyholders should consider utilizing a consultative approach and tools to better manage their transportation exposures.
By: | June 1, 2016 • 6 min read

The slow but steady climb out of the Great Recession means businesses can finally transition out of survival mode and set their sights on growth and expansion.

The construction, retail and energy sectors in particular are enjoying an influx of business — but getting back on their feet doesn’t come free of challenges.

Increasingly, expensive commercial auto losses hamper the upward trend. From 2012 to 2015, auto loss costs increased a cumulative 20 percent, according to the Insurance Services Office.

“Since the recession ended, commercial auto losses have challenged businesses trying to grow,” said David Blessing, SVP and Chief Underwriting Officer for National Insurance Casualty at Liberty Mutual Insurance. “As the economy improves and businesses expand, it means there are more vehicles on the road covering more miles. That is pushing up the frequency of auto accidents.”

For companies with transportation exposure, costly auto losses can hinder continued growth. Buyers who partner closely with their insurance brokers and carriers to understand these risks – and the consultative support and tools available to manage them – are better positioned to protect their employees, fleets, and businesses.

Liberty Mutual’s David Blessing discusses key challenges in the commercial auto market.

LM_SponsoredContent“Since the recession ended, commercial auto losses have challenged businesses trying to grow. As the economy improves and businesses expand, it means there are more vehicles on the road covering more miles. That is pushing up the frequency of auto accidents.”
–David Blessing, SVP and Chief Underwriting Officer for National Insurance Casualty, Liberty Mutual Insurance

More Accidents, More Dollars

Rising claims costs typically stem from either increased frequency or severity — but in the case of commercial auto, it’s both. This presents risk managers with the unique challenge of blunting a double-edged sword.

Cumulative miles driven in February, 2016, were up 5.6 percent compared to February, 2015, Blessing said. Unfortunately, inexperienced drivers are at the helm for a good portion of those miles.

A severe shortage of experienced commercial drivers — nearing 50,000 by the end of 2015, according to the American Trucking Association — means a limited pool to choose from. Drivers completing unfamiliar routes or lacking practice behind the wheel translate into more accidents, but companies facing intense competition for experienced drivers with good driving records may be tempted to let risk management best practices slip, like proper driver screening and training.

Distracted driving, whether it’s as a result of using a phone, eating, or reading directions, is another factor contributing to the number of accidents on the road. Recent findings from the National Safety Council indicate that as much as 27% of crashes involved drivers talking or texting on cell phones.

The factors driving increased frequency in the commercial auto market.

In addition to increased frequency, a variety of other factors are driving up claim severity, resulting in higher payments for both bodily injury and property damage.

Treating those injured in a commercial auto accident is more expensive than ever as medical costs rise at a faster rate than the overall Consumer Price Index.

“Medical inflation continues to go up by about three percent, whereas the core CPI is closer to two percent,” Blessing said.

Changing physical medicine fee schedules in some states also drive up commercial auto claim costs. California, for example, increased the cost of physical medicine by 38 percent over the past two years and will increase it by a total of 64 percent by the end of 2017.

And then there is the cost of repairing and replacing damaged vehicles.

“There are a lot of new vehicles on the road, and those cost more to repair and replace,” Blessing said. “In the last few years, heavy truck sales have increased at double digit rates — 15 percent in 2014, followed by an additional 11 percent in 2015.”

The impact is seen in the industry-wide combined ratio for commercial auto coverage, which per Conning, increased from 103 in 2014 to 105 for 2015, and is forecast to grow to nearly 110 by 2018.

None of these trends show signs of slowing or reversing, especially as the advent of driverless technology introduces its own risks and makes new vehicles all the more valuable. Now is the time to reign in auto exposure, before the cost of claims balloons even further.

The factors driving up commercial auto claims severity.

Data Opens Window to Driver Behavior

To better manage the total cost of commercial auto insurance, Blessing believes risk management should focus on the driver, not just the vehicle. In this journey, fleet telematics data plays a key role, unlocking insight on the driver behavior that contributes to accidents.

“Roughly half of large fleets have telematics built into their trucks,” Blessing said. “Traditionally, they are used to improve business performance by managing maintenance and routing to better control fuel costs. But we see opportunity there to improve driver performance, and so do risk managers.”

Liberty Mutual’s Managing Vital Driver Performance tool helps clients parse through data provided by telematics vendors and apply it toward cultivating safer driving habits.

“Risk managers can get overwhelmed with all of the data coming out of telematics. They may not know how to set the right parameters, or they get too many alerts from the provider,” Blessing said.

“We can help take that data and turn it into a concrete plan of action the customer can use to build a better risk management program by monitoring driver behavior, identifying the root causes of poor driving performance and developing training and other approaches to improve performance.”

Actions risk managers can take to better manage commercial auto frequency and severity trends.

Rather than focusing on the vehicle, the Managing Vital Driver Performance tool focuses on the driver, looking for indicators of aggressive driving that may lead to accidents, such as speeding, sharp turns and hard or sudden braking.

The tool helps a risk manager see if drivers consistently exhibit any of these behaviors, and take actions to improve driving performance before an accident happens. Liberty’s risk control consultants can also interview drivers to drill deeper into the data and find out what causes those behaviors in the first place.

Sometimes patterns of unsafe driving reveal issues at the management level.

“Our behavior-based program is also for supervisors and managers, not just drivers,” Blessing said. “This is where we help them set the tone and expectations with their drivers.”

For example, if data analysis and interviews reveal that fatigue factors into poor driving performance, management can identify ways to address that fatigue, including changing assigned work levels and requirements.  Are drivers expected to make too many deliveries in a single shift, or are they required to interact with dispatch while driving?

“Management support of safety is so important, and work levels and expectations should be realistic,” Blessing said.

A Consultative Approach

In addition to its Managing Vital Driver Performance tool, Liberty’s team of risk control consultants helps commercial auto policyholders establish screening criteria for new drivers, creating a “driver scorecard” to reflect a potential new hire’s driving record, any Motor Vehicle Reports, years of experience, and familiarity with the type of vehicle that a company uses.

“Our whole approach is consultative,” Blessing said. “We probe and listen and try to understand a client’s strengths and challenges, and then make recommendations to help them establish the best practices they need.”

“With our approach and tools, we do something no one else in the industry does, which is perform the root cause analysis to help prevent accidents, better protecting a commercial auto policyholder’s employees and bottom line.”

To learn more, visit https://business.libertymutualgroup.com/business-insurance/coverages/commercial-auto-insurance-policy.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.


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Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty, workers compensation and group benefits.
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