Just as many employers are getting workers' and related costs under control, the COVID pandemic is introducing new hazards to the regulatory terrain. While claims are increasing for mental distress and pandemic-related accidents, state regulatory agencies are expanding coverage to a presumption of the workplace origination of infections, medical marijuana use, and other novel areas.
βWorkersβ compensation law is becoming more complicated for employers in many states,β says Jeffrey M. Adelson, general counsel at Adelson McLean. βThe regulations are undergoing change all the time.β
Adelson and other attorneys cite these areas of concern: β’
- Presumption laws for COVID infections
- Costly βlong COVIDβ care
- Mental health treatments
- Medical marijuana coverage
- Opioid effect on accidents
- Injuries by inexperienced replacement workers
- Independent contractor coverage
- Ergonomic injuries by home workers
- Comorbidities
- Mega claims
Many of the above concerns arise from, or are worsened by, the pandemic. βRecent regulatory and legislative trends at the state level continue to be led by COVID,β says Randy Sieberg, president of Workers Compensation Consultants. βSome states have enacted so-called presumption legislation, to the effect that workers are presumed to have contracted their COVID cases at the workplace.β Prior to COVID, he adds, the burden of proof was always on the injured worker for a workersβ comp claim. Now, it is often up to the employer to prove an infection happened somewhere other than the workplace.
LONG COVID
Also looming are costly claims for so-called βlong haul COVIDβ β a term referring to illnesses that linger for years. βI think itβs too early to tell what injuries or disease may ultimately result from COVID,β says Daniel C. Free, president and general counsel, Insurance Audit & Inspection Co. βThe infections could have long tail effects. Consider what happened with asbestosis or black lung disease. There are still cases out there materializing even though the basic exposure was eliminated a generation ago. So Iβm not sure Iβm ready to close the door on COVID, even if we vaccinate everybody.β
On the plus side of the COVID equation, claims are not as common as feared. βAll the piles and piles of COVID claims people were expecting never really happened,β says James J. Moore, president of J&L Risk Management Consultants, Raleigh, N.C. βWe were expecting six or seven times as many claims as we got in or that we know occurred.β
A big reason that claims havenβt mushroomed is that most employers have gone out of their way to protect their employees. And many employees are still working from home, reducing their chances of exposure. βMost employees are covered by some form of health insurance so even if they canβt establish that it happened at work, theyβre still covered,β says Free.
Another plus: Claims to date have not been all that costly. βThe average cost on COVID claims is less than $5,000,β says Dennis Tierney, national director of Workersβ Compensation Claims for Marsh, the insurance broker and risk advisor. βIn contrast, the average cost for a typical workersβ comp claim β combining medical and lost time β is about $20,000. It remains to be seen what the effect of costly COVID hospitalizations will be,β he adds. Recently, hospitalizations were running at 5% of cases, but 20% of that 5% took place in ICUs with costly 12-day average stays.
MENTAL HEALTH
COVID has led to other social conditions that affect workersβ comp. Among them is mental distress. Sieberg points out that some states have started to add workersβ comp coverage for post-traumatic stress disorder on the part of employees who were put into work environments that were never expected to be very hazardous but turned out to be so because of COVID. Examples of such jobs are those for which the worker interfaces with the public, but the regulations may embrace a larger universe as time passes.
Long absences from the traditional work environment can also lead to medical conditions. βMental health issues may increase among people who have been working from home for a long time without social interaction,β says Moore. βFacebook and LinkedIn only go so far. That may lead to the greater need for treatment and higher workersβ comp rates.β
A related problem: Employees who have migrated to home offices tend to grab the nearest desk and chair regardless of ergonomic concerns. Injuries result.
βEmployees who work from home can have workersβ comp claims,β says Free. βIf they can show that an injury was in the course and scope of their employment, it would be compensable. I could see an employer disputing it, but I donβt think it would go very far.β
What to do? Employers are taking action such as conducting virtual ergonomic reviews and providing cash allowances for better quality chairs and for furniture with adjustable keyboard and monitor positions. βSafety and risk management budgets have become very large,β says Moore. βSafety investment has increased exponentially for home offices because employers donβt want to end up paying out claims.β
DRUG ABUSE
Pandemic stresses have also led to a growing use of marijuana β and that can lead to impairment and workplace accidents. Yet proving impairment can be difficult. βIf somebody gets hurt at work, to dispute a workerβs comp claim, youβd have to establish that somehow there was a nexus between the personβs use of marijuana and the injury,β notes Free. βYouβd have to show they were high at the time they got hurt.β
The topic is more complicated if marijuana is being used to treat a medical condition in a state where it has been legalized for such purposes. βSome state legislatures and courts are struggling with the marijuana issue as it relates to workersβ comp,β says Sieberg. βIf marijuana is used in a treatment program and has a positive effect on an injured employee, should it be covered? In many cases, the answer is still unclear.β Employers need to consult with their attorneys for insight into the nexus between regulation and workplace practices.
Addiction to opioids, as well as usage of other drugs, can lead to workplace absences and illnesses that require medical attention. Employers are responding by introducing zero tolerance workplace drug policies. βMany companies have pretty strict rules about drug use today,β says Free. βThey donβt care what you do out of work, but if you come to work high or drunk or on drugs, they have the right to kick you off campus right away.β
Supervisors are also being trained in the difficult skill of spotting possible drug use. βSomebody can be an addict, but they donβt look wasted or like a drunk or stoned person,β says Free. βThey look normal. You donβt even know until they have an overdose.β
A related issue is that of overtreatment with drugs. The poor handling of workersβ comp claims can lead to drug addiction, so more employers are taking a hands-on approach to monitoring the prescriptions given to their personnel. βYou have to see where the moneyβs going and keep tight control of it,β says Adelson. βEvery employer needs to ask, βIf one of my people gets hurt, what process will we use to monitor the medical treatment?β You want to have the best control you can.β
COMORBIDITIES
COVID-produced stress has also sparked an increase in longterm health complications called comorbidities: the simultaneous presence of two or more medical diagnoses. Combinations of anxiety, substance abuse, hypertension, depression, obesity, diabetes and other conditions can lead to costly treatments that last for months or years. A recent study from the NCCI found that workersβ comp claims involving comorbidities have nearly tripled since 2000 and can be twice as costly as other claims.
Some employers are introducing wellness initiatives to mitigate the growth of comorbidities. A recent report from The Horton Group, an insurance, employee benefits and risk advisory firm, recommended addressing chronic health conditions and improving overall staff well-being to βreduce the severity of workersβ compensation claims and maintain low comorbidity rates.β
Closely affiliated with comorbidities are another workersβ comp headache: mega claims that typically incur losses of $3 million or more. βIn the context of workersβ compensation, a mega claim is typically a seven-figure claim resulting from some sort of fall or motor vehicle accident resulting in injury to the central nervous system or multiple injured body parts,β says Tierney. βWe have seen an uptick in these βmegaβ workersβ compensation claims over the last number of years for a number of reasons, and we continue to watch and see if COVID will add to this trend.β
βI would say technology and medical advancements are the main reasons why we are seeing an uptick in mega claims,β says Tierney. βNot only are injured workers more likely to survive severe injuries today due to these advancements, but they also often require more medical interventions, like organ transplants, to support their ability to fully recover. The medical costs associated with injury care continues to climb and will, in turn, continue to drive up the cost of workersβ comp claims.β
Another reason for the spike in mega claims: treatment delays.
βPeople are finally getting the medical treatment they need after avoiding going to the doctorβs office for so long,β says Moore. βIβve been seeing quite a few mega claims because people are delaying treatment for something, like back surgery for 18 months. By the time they get treatment, the condition is worse.β Mega claims can develop slowly when they arise from delayed treatment.
From the employerβs point of view, mega claims are expensive, complex and lengthy, noted the Horton report. βSuch claims can leave lasting impacts on your organization by way of hefty costs, lost time, and the potential for severe reputational damage.β The danger, though, may be largely avoidable. βItβs critical to ramp up your safety efforts to combat such claims β particularly when it comes to preventing falls, motor vehicle accidents, and struck-by incidents.β
Claims management can also play a crucial role. βAdvances in analytics and predictive modeling have helped insureds and insurers identify claims that have the potential to be βmegaβ a lot earlier in the process than in yearsβ past,β notes Tierney. βAs a result, claims are being managed and reserved for at a lot higher thresholds earlier in the claim lifecycle.β
INEXPERIENCED WORKERS
The pandemic has created one more headache for workersβ compensation administrators: The Great Resignation has created a vacuum in the nationβs work roles. βPeople not coming back to work can contribute to lower workersβ comp costs in the short run but higher costs later on as employers hire replacements more susceptible to injury,β says Free. βWhen employers restaff, they often take on new and inexperienced people. Because they lack the required skills and training, they end up getting hurt.β
The problem of unskilled workers escalates when the scarcity of individuals to train new recruits leads to instruction by Zoom. And that is exactly what is happening now. βWe are seeing a rash of claims from people who are operating a certain machine for the first time,β says Moore. βThe old rule of thumb tells us that 90% of accidents happen during the first week a person uses a machine. So weβre seeing a rash of claims because of the learning curves.β According to a recent survey from the Golden Triangle Business Roundtable in Texas, employees with less than five years of experience contribute to 43% of overall workplace injuries.
Such accidents can be particularly costly in riskier environments. βThe construction and manufacturing industries have the most problematic workersβ comp claims experience,β says Sieberg. βMany of the claims tend to be larger ones, and some are at the catastrophic level. A carpenter falling off a roof will likely incur significant injuries. Such a claim may cost the employer 20 or 25 points in experience rating. And that will continue on for a typical three-year experience period.β
POSITIVE TRENDS
Despite greater challenges in the workersβ comp environment, there is good news. A growing use of outpatient services is helping to reduce costs. So is the employment of telehealth and telemedicine β technologies that received tremendous boosts from the COVID pandemic.
βI expect telemedicine to become more and more common with employers,β says Sieberg. βIt allows for faster response time for injured workers to get in front of qualified medical providers without having to make appointments or travel to physician offices. It also helps with remote case management, easier access to medication, and quicker return to work by injured employees. The net effect can be a reduction in medical costs and ultimately in overall claims.β
And then there is a favorable trend in safety conditions. Employers have made great strides in reducing the risk of trips and falls, and in boosting ergonomics and increasing the safety of machinery. βWorkplace safety and claim management continue to be the two areas that an individual employer has the greatest control over when it comes to putting a cap on workersβ comp costs,β says Sieberg. βGood practices in both areas can save money.β
This article first appeared in the April 2022 issue of AQUA Magazine β the top resource for retailers, builders and service pros in the pool and spa industry. Subscriptions to the print magazine are free to all industry professionals. Click here to subscribe.