These Workers’ Comp Regulatory Trends Are Changing the Future of the Industry

Regulatory trends can leave a lasting impact on workers’ comp. The economy and technological advancement are two ways in which the industry is changing. But that's not all.
By: | November 7, 2018 • 4 min read

Regulatory trends and changes within policy can have a far-reaching and lasting impact on workers’ compensation. Both the economy and technological advancement are just some ways in which the industry is changing. But that’s not all.

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The gig economy, the growing opioid crisis, use of artificial intelligence, changing attitudes on recovery approaches and the constitutionality of workers’ comp law are molding the way comp professionals and regulators talk about the industry.

“The genesis of this topic came from conversations in the workers’ compensation regulator community and those conversations where about the future of workers’ comp,” said Abbie Hudgens, the administrator of the Bureau of Workers’ Compensation of the State of Tennessee Department of Labor and Workforce Development.

“The future of work is changing,” added Frank R. McKay, the chairman and chief appellate court judge of the State Board of Workers’ Compensation in Georgia. “We see that jobs have already disappeared. There’s a shift from the industrial age to a technical revolution.”

Hudgens and McKay will be speaking on this changing regulatory landscape on Dec. 5 during the National Workers’ Compensation and Disability Conference® & Expo (NWCDC) in Las Vegas at the Mandalay Bay.

They will be joined by Jennifer Wolf Horejsh, executive director of the IAIABC, where she works to find solutions to reduce harm and aid recovery from occupational injuries and illnesses. The NWCDC session is called “On the Horizon: Policymaker Perspectives” and will cover how the regulatory environment continues to evolve alongside health care, technology and employment changes. It will be a panel discussion, open for questions from the audience.

“There’s a lot going on in the regulatory community that can have an impact on the workers’ comp space and its employers,” said Hudgens. “I’m hoping for interesting questions from the audience. It gives us the opportunity to learn from each other.”

Two Hot-Topic Regulatory Trends to Watch

1) The Gig Economy

The gig economy is a major trend on Hudgens’ radar: “It’s an issue we see emerging right now as employees leave the standard model of working for companies and are working for themselves. They don’t have the protections ‘regular’ employment provides.”

It also leads to questions surrounding what makes a person a gig worker versus an “employee.” Hudgens pointed to a series of bills put through by the company Handy. In these bills, Handy, which links gig employees who provide home-based cleaning and handyman services to consumers, proposed that gig workers should be considered freelancers or independent contractors. So far, at least eight states have introduced these bills and three states already signed them into law.

This hurts workers in that they no longer have access to the labor protections employees have, including workers’ comp benefits.

“And there are instances where persons considered independent contractors by a company are actually employees according to state law,” said Hudgens. “There’s a changing environment of the working economy in general. Employers may be outsourcing instead of handling work internally. Regulators are having an increase in the problem of employers not following the law and not providing workers’ comp for their legal employees.”

She said this is particularly true in construction, where honest employers are paying for workers’ comp, unemployment insurance, FICA taxes and safety measures while others are writing their employees off as independent contractors to avoid those same payments and gain a competitive edge.

2) Artificial Intelligence

For McKay, the introduction of artificial intelligence (AI) into the workplace is a regulatory trend to watch.

“We’re seeing it in our own industry,” he said, referring to Fukoku Mutual Insurance in Japan. There, the company decided to let go of 34 adjusters in favor of AI workers with the hope of increasing productivity by 30 percent.

“It’s a big issue in the workers’ comp industry, because a lot of jobs disappearing are manual labor type jobs,” McKay said. “If we look at the history of the country, the history of workers’ compensation, a hundred years ago we went from agriculture to the manufacturing. Now it’s manufacturing to the technological age.

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“The future of workers’ comp is actually already here. We all carry a smartphone now. It’s amazing what you can do without involving another person.”

McKay did add that AI and other technological advances still have their pros, primarily in cost:benefit analyses. His worry stems from the possibility of human jobs becoming obsolete. Are the number of jobs going to shrink due to growing AI acceptance in the workplace?

“We need to see where we are now as an industry and where we’re headed and anticipate the needs of people in the future. That’s something we’re going to have to figure out.”

Hudgens, McKay and Horejsh will evaluate these issues and other policymaker actions expected to emerge across the country during their session at NWCDC 2018. &

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]