The United States Constitution's statement that "all men are created equal" is one of the basic principles of our country. Yet, in the world of workers' compensation, all claims are not equal.
Under all workers' compensation statutes, the employee has the burden to prove that their condition "arose out of employment." In other words, the employee must show that work caused the injury or condition for which they seek benefits.
Currently, however, 43 states have some type of workers' compensation presumption law for first responders (like police, firefighters and EMTs). These laws cover conditions such as heart disease, cancer and blood-borne illnesses. Under presumption laws, such conditions are "presumed" to be caused by the employment, and in some instances, the presumption is not rebuttable. Instead, the burden is shifted to the employer to prove that something other than work caused the condition.
Presumption laws assume that first responders, for instance, have a greater incidence of certain conditions than the general population. Yet conflicting studies exist on the validity of this assumption. For example, in 2009 the National League of Cities released a study that failed to document a link between firefighting and most forms of cancer. Shortly thereafter, the International Association of Fire Chiefs released a study that questioned the validity of the National League of Cities findings.
I recently moderated a panel discussion at the Public Risk Management Association
(PRIMA) annual conference on strategies for handling police officer and firefighter presumption claims. The panel featured four public-entity risk managers from around the country and a prominent California defense attorney. The focus of the panel was not whether presumption laws are justified--rather the costs of such claims and the ability to defend against them.
Legislators need to be made aware of the costs associated with these laws. One panelist, Karen Caterino, risk manager for the state of Nevada, indicated that her state's average "heart" claim where the worker receives permanent total disability costs on average $1.2 million. One city in Nevada has undiscounted presumption liabilities of approximately $495 million.
The costs go beyond actual claim payments. The panelists pointed out that, when the presumption laws shifted these conditions into workers' compensation, no corresponding drop occurred in their group health benefits. Employers of workers subject to these presumptions are still paying group health rates based on the risk factors of the total population. While the actual costs of the treatment paid under workers' compensation is higher than the premiums paid under group insurance, this essentially means this group of employers is paying for coverage of the same risks twice.
Additionally, because claims can be filed several years after the end of an employee's employment, public entities face an additional challenge in budgeting for presumption claims. The statute of limitations for filing a presumption claim in California is now five years from last employment. In Nevada, there is no statute of limitations for a presumption claim.
Katharine Peeling, insurance manager for Montgomery County in Maryland, explained at PRIMA that her employer relies upon actuarial modeling based on past experiences to forecast future costs. Yet this method is still difficult because medical costs continue to rise, particularly for workers' compensation claims.
For states with relatively new presumption laws, actuarial modeling doesn't always work, like in Colorado With no historical losses to utilize in an analysis of presumption claims, an employer has no reliable basis upon which to forecast future claims costs.
Defending presumption claims is no easy task also. Claims administrators tend to be "too complacent," as panelist Diana Rich, workers' compensation program manager for California Joint Powers Insurance Authority, pointed out. They feel it is impossible to overcome the presumption, so why make the effort.
Presumption claims can, however, be defended. In defending against a presumption claim for cancer, say, it is important to know the possible causes and latency periods for specific cancers, explained, Norin Grancell, an attorney with the firm Grancell, Lebovitz, Stander, Rubens and Thomas in California.
Another area used to dispute presumption claims is exposure records. Take that 90 percent of firefighter calls are medical calls. With firefighters working two to three 24-hour shifts per week, they could conceivably work for 20 years and never once fight a structure fire.
Presumption laws have significantly expanded over the last 10 years. States with existing presumption laws are expanding such laws to cover additional conditions and workers. California now has a back injury presumption for police officers due to the weight of their gun belts. This expansion is expected to continue into the future.
What's more, California is now considering expanding presumption laws into the private sector by providing a presumption for hospital workers for blood-borne illnesses. This expansion would create increased exposure for employers, and create yet another example of all claims not being equal.
MARK WALLS is assistant vice president of claims for Safety National, as well as founder of the Work Comp Analysis Group on LinkedIn.
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July 13, 2011
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