State Workers’ Comp News
Decision Puts Snag in New Operating System
Workers’ comp cases that began under the state’s court-based adjudication system cannot be decided under the newly created Workers’ Compensation Commission. The unanimous decision by the Oklahoma Supreme Court hampers plans to convert the judicial workers’ comp system to an administrative one, as mandated by recently initiated legislative reforms.
S.B. 1062 allowed some employers to opt out of the workers’ comp system. It also called for transitioning to an administrative dispute resolution system, with the current Court of Existing Claims to sunset in 2020.
But the high court said the commission does not have jurisdiction to consider claims for injuries that occurred prior to its Feb. 1, 2014, effective date.
The decision was one of the first major challenges to the new law and could have wide reaching ramifications for the Oklahoma workers’ comp system. There are an estimated 100,000 open cases before the CEC and some may take decades to resolve, according to experts. The high court’s decision means the CEC will need to remain in existence for the duration.
One workers’ comp observer said it would become “a mini nightmare for people managing comp claims in Oklahoma.” In his blog, From Bob’s Cluttered Desk, Robert Wilson, president and CEO of workerscompensation.com, said the decision raises questions for claims handlers.
“What happens to secondary claims?” Wilson wrote. “Let’s say for example that John Doe twisted his knee on January 31, 2014, and then hurts himself again on February 15, 2014. If the second injury is a re-aggravation of the first, well that is one thing; but what if it is determined to be a new and unrelated claim? Does Suzy Q. Adjustor now have to navigate two separate systems for the same claimant? And does that apply if the second injury was partially attributable to the first?”
Private Employers May See Another Rate Decrease
Better than expected claims frequency and severity are credited for a proposed 6.3 percent decrease in Ohio’s workers’ comp rates. The Ohio Bureau of Workers’ Compensation’s staff is recommending the board of directors approve the change for private sector employers at their meeting this month. Public sector employers saw their workers’ comp rates decrease in January.
If approved, the reduction would apply to rates starting July 1. It would be the eighth consecutive year in which rates were either lower or flat, according to a statement on the BWC’s website.
“If approved, the 6.3 percent reduction will result in an overall decrease in collected premiums of $91 million compared to premiums under the current rates. In aggregate, the premiums collected over the past four years would be $409 million less than would have been collected without recent reductions,” the statement said. “Private employers benefited from a 4 percent rate decrease in 2011, flat rates in 2012 and a reduction of 2.1 percent last year.”
Ohio has a monopolistic workers’ comp system. BWC Administrator/CEO Steve Buehrer said the bureau is pleased with its progress to provide the highest quality care and return-to-work services to injured Ohioan workers.
“The most successful employers are those that understand safe and healthy employees are instrumental to a strong bottom line,” he said. “Going forward, BWC will be intensely focused on the issue of workplace safety and educating employers about the benefits of investing in injury and illness prevention.”
The proposed rate reduction came as the bureau also announced it had approved a credit for employers. The total $1.2 billion is part of last year’s Billion Back plan, that included $1 billion in rebates issued last year. It allows the bureau to move to a prospective billing model without extra costs to employers.
Starting in July 2015 for private sector employers and the following year for public employers, billing will be done in advance of coverage, per the industry standard. Buehrer has said the change will result in an overall rate reduction of 2 percent in the private sector and 4 percent in the public sector.
Workers’ Comp Rates Decline
Officials say an emphasis on workplace safety is having a beneficial effect on the workers’ comp system. The Pennsylvania Departments of Insurance and Industry & Labor announced a 5.15 percent rate decrease, the third since 2012.
“More than 10,530 state-certified workplace safety committees have been established since March 1994, protecting 1,396,306 workers,” according to a statement on the L&I website. “Additionally, employers with workplace safety committees have saved close to $524.3 million in workers’ compensation premiums. These savings in insurance costs are due solely to the 5 percent premium discount provided to businesses that have these committees.”
The rate decrease was approved by the Insurance Department based on the Pennsylvania Compensation Rating Bureau’s annual loss cost filing. It is expected to result in annual savings of approximately $140 million with total savings for the last three years estimated to be $410 million.
“It is clear that employer safety programs produce tangible benefits and cost savings,” said L&I Secretary Julie Hearthway.