Category Archives: Workers Compensation

The gig economy’s impact on workers compensation insurance

 

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The gig economy, or independent contract work has been around for centuries. Before the Industrial Revolution, and for some years after, most workers were self-employed or worked in small businesses.

Recently “gig work” has received a lot of buzz due to the rise of technology companies such as Uber, Lyft and TaskRabbit that electronically mediate contract work.

The National Council on Compensation Insurance (NCCI) closely examined the gig economy and nontraditional work arrangements in its 2019 Q2 Economic Briefing. Since workers in nontraditional arrangements rarely receive the same benefits as wage and salary workers, this issue has obvious relevance for workers compensation.

Some of the key takeaways from the Briefing include:

  • There is mixed evidence about the rise in alternative work. Large surveys have found little change in self-employment and alternative work in the last 10–20 years, but administrative data (such as tax records) shows these types of work arrangements are growing. The evidence suggests little change in the number of Americans in alternative work arrangements as their primary source of income but increasing numbers of people engaging in alternative work arrangements to generate supplemental income.
  • Today about 30 percent of adults in the U.S. are engaged in some type of informal or alternative work, and lawmakers continue to take notice and investigate ways to regulate workers and companies in this growing sector.
  • About 4.5 percent of households earned some income from electronically mediated work between April 2017 and March 2018—three times higher than the percentage in the first 12 months of the study period, October 2012 to September 2013. Two-thirds of this 4.5 percent had no income from electronically mediated work in the past month—most people only did electronically mediated work occasionally.
  • The risk of workers compensation leakage is likely to rise during and after the next recession, whenever that may occur. (Electronically mediated work was in its infancy during the Great Recession.) When firms shed payroll in a future downturn and workers have difficulty finding traditional jobs, then the labor supply for nontraditional work will increase. At the same time, cost-cutting firms will have incentive to experiment. If firms and at least some workers favor new arrangements, then payroll lost in a recession is likely to shift to nontraditional work during recovery.

 

 

I.I.I. Report: Patchwork of state marijuana laws causing headaches for employers, insurers

Today Illinois Governor J. B. Pritzker is reportedly going to sign into law a bill that legalizes recreational marijuana in the state. That makes Illinois the eleventh state (plus D.C.) to legalize marijuana for adult use.

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But as medical and recreational marijuana legalization spreads, concerns about what this means for workplace safety and workers compensation continue to grow. What is the impact of legal marijuana on workplace safety, employer duties and obligations and workers compensation insurance?

Today, the I.I.I. published a report that examines the current state of the issue. (Download the report here.)

Haze of confusion: How employers and insurers are affected by a patchwork of state marijuana laws” dives into the following questions:

  • How does marijuana intoxication work and how might it impact workplace safety?
  • What accommodations, if any, are employers expected to provide for workers that use marijuana?
  • Does workers compensation insurance provide benefits to injured employees testing positive for marijuana? What about reimbursement to injured workers for medical marijuana?

Unfortunately, none of these questions have straightforward answers. Every state’s laws and regulations governing these issues are different, not to mention that federal law prohibits marijuana outright. To complicate matters further, state laws and regulations are constantly changing. Employment and insurance activities once prohibited are often now permitted – or required.

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Legal marijuana isn’t going away. Employers and insurers will continue to grapple with a rapidly changing environment, perhaps for years to come.

To learn more, download the report here.

It’s safe to work in (not on) marijuana

There’s a pervasive myth out there that the marijuana industry is an unregulated Wild West populated by desperadoes and mountebanks out to score a quick buck.

But even a passing familiarity with how the industry operates in states with legal recreational and medical marijuana should be enough to dispel that myth. Marijuana operations are subject to extremely strict licensing requirements and regulatory oversight. Every player in the marijuana supply chain is tightly controlled – from cultivators to retail stores to, yes, the buyers themselves.

In fact, a recent analysis from workers compensation insurer Pinnacol Assurance suggests that the industry’s strict regulatory oversight may also be the reason why it’s a safe industry to work in.

Pinnacol’s analysis looked at Colorado claims data for marijuana workers. There were 350 injuries in 2018, most of which were strains, cuts, and slips and falls. Pinnacol concluded that the industry is relatively safe when compared to similar job-types in Colorado.

In addition to tight regulations, the analysis suggests that Colorado marijuana operators are also increasingly focused on safety and risk mitigation.

But working in marijuana is different from working on marijuana. Working stoned is probably a bad idea. You can read more about marijuana and employment issues here.

WCRI releases 2019 workers compensation law compendium

This week, the Workers Compensation Research Institute (WCRI) published its latest edition of workers compensation laws in the U.S. and Canada, which includes regulations and benefit levels as of January 1, 2019.

Per WCRI:

In Canada and the United States, workers’ compensation is entirely under the control of sub-national legislative bodies and administrative agencies. The differences between jurisdictional laws and regulations can be subtle and this survey gives you the ability to understand those differences.

WCRI members can download the report here.

For the more casual readers out there, check out our page on workers compensation and how it works.

The future of telemedicine and workers’ compensation insurance

You can’t talk about workers’ compensation insurance these days without mentioning “telemedicine” at least once. It should therefore come as no surprise that telemedicine was given its own panel discussion at the 2019 Workers’ Compensation Research Institute’s (WCRI) Annual Issues and Research Conference.

(In case you don’t know, the American Telemedicine Association (ATA) defines telemedicine as the “remote delivery of health care services and clinical information using telecommunications technology.” Think of an app that lets you video chat with a doctor, for example.)

The potential benefits of telemedicine to patients, providers, and employers could be immense. Improved access to healthcare services. Fast, personalized care. Treatment efficiencies. Reduced costs. Dr. Stephen Dawkins of Caduceus USA put it this way: “It’s crystal clear, as a provider, that telemedicine is a tsunami that will change the paradigm of medical care.”

Indeed, as Dr. David Deitz of Deitz & Associates noted, telemedicine is almost the perfect storm of improved healthcare services – and is already experiencing exponential growth in the commercial health sector. Citing the ATA, he noted that there were an estimated 1.25 million telehealth visits in 2016 alone – and that some sources estimate that over 400 million of U.S. medical visits could have been telemedicine encounters.

But has telemedicine made inroads into workers’ compensation?

Dr. Deitz pointed out that there is “essentially no quantitative data on [telemedicine] use in workers’ compensation.” Furthermore, he argued that there are several open questions when it comes to telemedicine: what are the appropriate regulations and reimbursement models? Is there a quality trade-off for telemedicine versus in-person encounters? Are there any privacy or cybersecurity concerns?

Kurt Leisure, vice president of risk services for The Cheesecake Factory, offered some preliminary answers when describing his company’s new telemedicine program for worker injuries, implemented in February 2018.

According to Leisure, the program basically works as follows. An injury occurs. If urgent, the injured worker proceeds directly to urgent care or the emergency room. If it’s non-urgent, the worker calls the company’s nurse triage system for preliminary care. If the phone call isn’t enough, the worker has the option of being escalated to a telemedicine program on their smartphone.

What have been the results so far? Generally positive, with the program leading to $153,000 in hard dollar savings in 2018. But Leisure did note that there are still wrinkles that need to be ironed out. Identification of telemedicine candidates during the triage phase needs improvement.  Employee trust in the program could also improve.

But the injured workers seem to approve of the program. “Overall, I’m really excited, there’s a lot of upside potential just in our initial program,” Leisure said. “I think it will explode over time.” One particular benefit of telemedicine could be keeping workers and employers out of the courtroom. “We think the litigation rate is going to drop significantly” with widespread and effective telemedicine, said Leisure.

Indeed, despite some open questions about workers’ compensation adoption of telemedicine, the panel agreed that the industry would benefit tremendously. “Telemedicine basically gives you a conduit through which you can achieve better case management,” said Dr. Dawkins.

WCRI Annual Conference: Opioid Crisis Still Very Much Top of Mind

Unsurprisingly, the opioid crisis was a major topic of conversation at the 2019 Workers’ Compensation Research Institute’s (WCRI) Annual Issues and Research Conference.

Workers’ compensation insurance has been particularly affected by the crisis. Opioid use can, perversely, increase a worker’s risk of disability. Opioid use can lead to dependency, which results in increased dosages and higher costs. Dependency can lead to abuse; abuse can result in on-the-job performance impairment and further injuries – or it can delay a worker’s ability to return to work. In the worst case scenario, abuse leads to addiction and death.

These are just some of the reasons why opioid use can significantly increase the costs of workers’ compensation claims.

The crisis continues

The Centers for Disease Control and Prevention (CDC) found that 70,327 people died from fatal drug overdoses in the U.S. in 2017.

That’s up from 63,632 in 2016 and 23,518 in 2002, a three-fold increase in absolute terms in 15 years. But of course, the U.S. population grew over that time – and the death rate per 100,000 people is also alarming, rising from 8.2 in 2002 to 21.7 in 2017.

Source: Centers for Disease Control and Prevention

More alarming yet, the opioid epidemic continues to drive a significant portion of total drug overdose deaths. 47,600 people died from an opioid-related drug overdose in 2017, making up fully 68 percent of total overdose deaths. That’s up from 11,920 in 2002.

Source: Centers for Disease Control and Prevention

As Dr. Alan Krueger of Princeton University noted, the problem is most concentrated among men and women with lower levels of education: “Americans with diminished economic expectations are particularly vulnerable to the opioid epidemic.”

But no one is immune, he added. “Essentially no group has been spared from this crisis in the U.S.”

Blue-collar trades especially impacted

Dr. Vennela Thumela of the WCRI presented recent findings about the correlates of opioid abuse and overdose. She found that mining and constructions workers were most impacted, representing the highest percentage of opioid prescriptions among all workers receiving pain medications. Higher rates of opioid prescriptions also correlated with workers who are older, male, and live in rural areas.

Dr. Letitia Davis, of the Massachusetts Department of Public Health, found Massachusetts-specific evidence agreeing with Dr. Thumela’s findings. The highest opioid overdose death rates in the state are for construction/mining workers and farming/fishing/forestry workers. Construction workers overdosed at six times the rate expected based on average experience.

In fact, per Dr. Davis, 24 percent of all opioid deaths in the state between 2011 to 2015 were construction workers.

The costs are staggering

Dr. Krueger put it bluntly: “This is a human tragedy.”

It has also been a tremendous tragedy to the U.S. economy. Dr. Krueger cited a 2017 Council of Economic Advisers (CEA) report, which estimated that in 2015 alone, the economic cost of the opioid crisis was over $500 billion – or 2.8 percent of GDP. Dr. Krueger noted that the number of opioid-related overdoses in 2017 increased by at least 50 percent since 2015 – implying a cost in 2017 alone of about $750 billion.

As Dr. Krueger put it, “We have not done enough to address the scale of the crisis. Even if it has reached a peak, it has reached a peak of an unacceptably high level.”

REMINDER: WCRI ANNUAL ISSUES AND RESEARCH CONFERENCE

Looking for an excuse to brush up on your knowledge of workers’ compensation insurance and maybe catch a Cactus League baseball game? Look no further.

The Workers Compensation Research Institute (WCRI) is holding its 35th Annual Issues and Research Conference on February 28th at the Renaissance Phoenix Downtown in Phoenix, AZ. (You can register for the conference here).

Particularly interesting will be a session on the opioid crisis and its impacts on workers’ comp. WCRI will present its findings on correlates of opioid prescribing practices to injured workers, which could help predict which injured workers are likely to receive opioids.

Another important agenda item you won’t want to miss is the “State of the States” session, in which WCRI will discuss performance measures for various state workers’ compensation systems.

Anyone working to improve workers’ compensation systems or seeking to manage a changing environment would benefit from attending these and the other sessions in the conference agenda.

WCRI Annual Issues and Research Conference

The Workers Compensation Research Institute (WCRI) is holding its 35th Annual Issues and Research Conference on February 28th at the Renaissance Phoenix Downtown in Phoenix, AZ. Anyone working to improve workers’ compensation systems or seeking to manage a changing environment would benefit from attending.

Some of the highlights from the conference agenda include:

  • A keynote address by world-renowned economist Alan Krueger on the future of work, the impact of technology on the economy, and how the opioid epidemic has affected the labor force participation rate
  • The latest research on opioid prescribing to injured workers
  • A panel discussion of Washington State’s community-based program that brings together medical providers, employers, and injured workers to help ensure timely, effective, and coordinated services
  • The challenges and opportunities of telemedicine
  • A discussion of some of the latest findings and trends seen across WCRI’s core benchmark studies, including WCRI’s 18-State CompScope™ Benchmarks reports, a multistate benchmarking program that measures the performance of a growing number of state workers’ compensation systems

Past attendees have said that the WCRI’s is the one conference that offers an “independent point of view that covers the entire spectrum of works compensation” and that it is “a great place to learn and a great place to network.”

Click here to learn more about the conference agenda or to register.

 

An analysis of workers comp exposure to California earthquakes

The earthquake risk exposure for California’s workers comp market is huge, as nearly every worker in the state is covered. By contrast only about 10 percent of Californians have residential earthquake insurance.

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has recently partnered with Risk Management Solutions, Inc. (RMS), on a report quantifying the earthquake risk faced by California workers’ compensation insurers.

The timing of an earthquake event emerged as one of the critical factors when assessing the risk to employees. Recent earthquakes such as the Loma Prieta and the Northridge happened during off-peak hours; had the timing been different, the human impact could have been much worse. As expected the highest concentration of employees coincides with the highest hazard regions.

Commentary by I.I.I. chief actuary published in law review

Commentary on workers compensation insurance by I.I.I Chief Actuary James Lynch is being published in the upcoming issue of the Rutgers University Law Review.

Lynch’s piece, “Comment to Economic Incentives in Workers’ Compensation: A Holistic International Perspective,” was written in response to an article by Stanford Professor Alison Morantz and others. The two spoke at a 2015 conference about the Grand Bargain in workers compensation.

Speakers discussed whether recent events were jeopardizing the so-called ‘Grand Bargain’ – workers forfeit their right to sue for on-the-job injuries in exchange for predictable benefits from a no-fault system. Professor Morantz’s article compared social safety net programs (including workers comp) worldwide and “discusses several mounting pressures that are jeopardizing the capacity of the U.S. workers’ compensation system to carry out its intended goals.”

In his response, Lynch noted that much of the current research in U.S. workers compensation “involves finding ways to reduce incentives that drive costs higher with no discernable benefit to the worker.” One example cited: When New York doctors book surgery for comp patients in New Jersey, they charge an average of $4,954, or 266 percent more than if the same surgery with the same surgeon took place in New York. (The I.I.I Blog featured this research two years ago.

Neither Morantz’s nor Lynch’s article was online as of February 16, but both should become available at the law review website soon.