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By LESLIE LAKE and JOSHUA CLIFTON, managing editor and editor, respectively, of Workers' Compensation Report newsletter, in which these stories originally appeared, as well as MELISSA TURLEY, a writer in the Washington bureau of cyberFEDS® Web site. Both are produced by LRP Publications, the parent company of Risk & Insurance®.

Human resources and workers' comp offices around the country are waiting to see how their obligations will change when the ADA Amendments Act is signed into law. The House unanimously adopted the Senate version of the bill on Sept. 17, and as of the publication date for Risk & Insurance®, President Bush was expected to sign the bill into law within days.

Experts predict that the legislation will impact the workers' comp field because more employees will meet the definition of disability and be entitled to reasonable accommodations for their impairments, including employees injured at work.

Disability advocates say that employers with return-to-work programs will have to focus on providing reasonable and effective accommodations for returning workers rather than questioning whether the employee meets the technical definitions under the ADA.

The bill expressly states that "the question of whether an individual's impairment is a disability under the ADA should not demand extensive analysis." Rather, the bill says the "primary object of attention" will be whether employers have "complied with their obligations."

The bill states that the amendments do not alter the standards for determining eligibility for benefits under state workers' comp laws, or under state and federal disability benefits programs. This means that the legislation does not change the definitions of "disabled" used in workers' comp and other benefits claims. These provisions would not protect an employer from a claim that it violated a duty to accommodate a workers' comp claimant under the amended ADA.

The legislation, which would take effect Jan. 1, 2009, also requires the Equal Employment Opportunity Commission to revise its regulations on the ADA. EEOC policy currently requires that a disability "significantly restrict" a major life activity, a standard Congress deemed too stringent because it creates too high a standard for employees. The EEOC said it will issue new regulations promptly if the bill is signed into law along with additional guidance for agency EEO staff.

Prior to the House approval of the Senate version of the bill, Commissioner Christine Griffin, who participated in an audio conference with the Great Lakes ADA Center on the topic, said an act of Congress would not be ignored.

"If there were a bill passed, I would imagine the EEOC would get very busy very quickly writing regulations and publishing a notice of proposed rulemaking that would have a comment period."

The EEOC would also issue guidance to ensure EEO staff and investigators understand the changes so they can guide employees who file claims through the process, Griffin says.

The legislation would require employers to make disability determinations without regard to mitigating measures, such as medication, medical supplies, hearing aids and assistive technology.

"The mitigating measures piece is astounding," Griffin says. "That alone would be a huge victory."

When the ADA was originally passed, it helped people who needed reasonable accommodations. But "erosion" of the ADA by the Supreme Court raised questions about who qualifies as disabled, she says. Consequently, more people with conditions such as epilepsy or diabetes were only protected under the "regarded as" prong.

With the passage of the legislation in Congress, Griffin predicts a shift back.

"I think people (at the EEOC) are pretty excited about getting to the work of determining discrimination and not spending all their time deciding whether someone fits under the prong of being disabled or the 'regarded as' prong," she says.

Both the House and Senate bills exclude vision impairments correctable by eyeglasses from the definition of disability, but the Senate bill adopts a business necessity test for vision standards similar to the standards set forth by the 9th U.S. Circuit Court of Appeals in Bates v. United Parcel Service, Inc. This means that employers would have to prove a reasonable business necessity for imposing vision standards on employees and applicants.

The EEOC may also dedicate resources to training employees about their rights under the revised law.

"The people who are covered by civil rights law are its enforcers," Griffin says.

THE FUTURE CONSIDERATIONS

Andrew Imparato, CEO and president of the American Association of People with Disabilities, says the proposed Senate bill makes clear that only people with true disabilities will be entitled to reasonable accommodations.

As a result, many predict there will be more litigation addressing "regarded as" disabilities if the legislation passes.

The legislation stipulates that a perceived impairment would not need to limit a major life activity in order for the employee to be covered under the "regarded as" prong. However, agencies would not be required to accommodate "regarded as" disabilities.

The Society for Human Resources Management's Michael Layman, who worked with the disability community on the legislation, says it "remains to be seen how litigation will evolve."

"The 'regarded as' clause has been expanded or clarified depending upon your view," Layman says. "Effectively, an individual who finds he was discriminated against because of being regarded as having a disability will have a cause of action under this statute. The bill also clarifies that accommodations will not need to be made for regarded as impairments. (SHRM) thinks that is an important clarification of current law."

THE FREQUENCY QUESTION

Meanwhile, workers' compensation claims frequency continued to decline in 2007, according to a recent report from the National Council on Compensation Insurance. However, researchers say the magnitude of the decrease was much smaller than it had been in the previous two years.

According to the NCCI study, the 2007 drop in claim frequency extended a trend that started in the 1990s. But while claim frequency improved by nearly 7 percent in each of the previous two years, researchers says preliminary results indicate a more modest decline of 2.5 percent for 2007.

NCCI says a key issue facing employers and workers' comp insurers is whether the large declines in claim frequency that began more than a decade ago are likely to continue. According to the report, virtually every major employment category examined has experienced marked declines. However, the latest review of claim frequency and severity shows that, while claim frequency is down, indemnity and medical severities continue to rise.

In the course of updating its annual study to reflect the latest frequency and severity results, NCCI says a new dimension has been added. Claim frequency changes for permanent total claims, the costliest 1 percent of lost-time claims, were examined in the latest study.

Researchers identified several key findings in the report. Among the highlights, NCCI found that:

--Significant declines in frequency were seen across the board. Over the last five years, researchers say there were significant declines in total lost-time claims frequency for all industries, geographic regions and employer sizes. In order to further analyze the claim frequency results, NCCI used the "Statistical Plan for Workers' Compensation and Employers Liability Insurance" data in states for which the group provides ratemaking services. Policies expiring in 2002 were compared to policies expiring in 2006.

Researchers say it was evident that all major industry groups have shared in the claim frequency decline over the time period studied. The decline ranged from 14 percent to 20 percent. According to the study, it was also apparent that industry groups experienced significantly different levels of claim frequency, when measured against payroll.

The most notable example, NCCI says, was office and clerical, where the number of claims per $1 million of wage-adjusted payroll was much lower than that in any of the other industries. Researchers say it comes as no surprise that an office environment would generally experience fewer claims per payroll dollar or per worker than other industries, such as contracting or manufacturing.

According to NCCI's 2006 study, the difference between industries is substantially reduced when claim frequency is measured against premium, rather than payroll, since premium charges are generally lower in low-frequency industries.

--Cost of claims offset drop in frequency. Offsetting the drop in claim frequency was the increased cost of a claim. According to the study, indemnity and medical costs of a claim continued to increase. However, the researchers say the annual increases in average indemnity costs per claim have tapered off significantly in the last six years.

While indemnity severity rose by an average 8.6 percent between 1996 and 2001, the study found that the average annual increase since then has been 3.3 percent. This includes an NCCI-estimated increase of 4 percent for 2007. In part, researchers say this easing in the growth of indemnity severity reflected the limited growth in wages during and following the recession of 2001.

--Permanent total claims have increased. According to the study, permanent total claims have increased significantly over the last three years. The rise in permanent total claims was evident across industries, regions and payroll sizes. Although permanent total claims generally make up less than 1 percent of lost-time claims, researchers say they are the most costly claims, accounting for approximately 10 percent of lost-time costs.

--Permanent total claims have resulted in increased indemnity and medical severities. Because permanent total claims are the most costly, researchers say the substantial increase in these claims has driven up average lost-time claims costs. By measuring the relative increase in permanent total claims and accounting for their proportion of costs, NCCI says it was possible to estimate the impact that their increase has had on indemnity and medical severities.

Between 2004 and 2006, researchers say the increase in permanent total claims has added approximately 1.5 percent per year to annual indemnity costs. A similar analysis was performed on medical costs. According to the study, NCCI found that between 2004 and 2006, the increase in permanent total claims has added approximately 2.5 percent to 3 percent per year to annual medical costs.

THE DRIVERS?

A previous report by the National Council on Compensation Insurance, "An Analysis of Factors Affecting Changes in Manufacturing Incidence Rates," examined factors underlying the long-term decline in frequency since the early 1900s. According to the group, the key drivers of claim frequency include:

--Global competition and advances in automation, technology and production. For example, this includes the increased use of robotics, increased use of modular design and construction techniques, increased use of power-assisted processes, advances in ergonomic design, and the proliferation of cordless tools.

--The business cycle. Researchers say economic expansions can result in hiring less-experienced workers.

--Demographics. According to NCCI, older workers tend to have fewer workplace injuries.

--More and better job training.

--Continued emphasis on workplace safety.

--Improved fraud deterrents.

October 15, 2008

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