Hurt at Work? We Have Something for That....

Welcome to the Association of Insurance Compliance Professionals podcast. AICP serves the insurance compliance community by promoting relationships, exchanging information, and providing learning opportunities within a dynamic regulatory environment. You're listening too? Heard at work? We have something for that. Workers' compensation is an interesting niche of insurance related to on-the-job accidental injuries and occupational diseases for covered employees. Join host Rona Finkelstein, Senior Vice President and Chief Compliance Officer at Chesapeake Employers Insurance Company, as she sits down with Peter Strauss, Executive Director at Montana Self-Insurers Association, and Lindsay Meninger Esquire, Director of Legal Services at Chesapeake Employers Insurance Company, to discuss the creation of workers' compensation, the workers' compensation policy, employee-related benefits, as well as interesting defenses, declaims, and the many careers within workers' compensation insurance. And now, here's your host, Rona Finkelstein. Hi, I'm Rona Finkelstein, and I'm here with Lindsay Meninger and Peter Strauss to talk about workers' compensation insurance, a type of insurance that many people know nothing about unless they actually have been injured at work, or they are an employer, or they are practicing in the field. As you've heard, Lindsay and Peter have extensive workers' comp experience, and I'm very pleased that they've agreed to join me today to have a conversation about this very interesting area of insurance and their work in the field. So with that, I'd like to start with the basics. Peter, what exactly is workers' compensation insurance? Hey, Rona, thanks very much. It's a pleasure to be here. So workers' compensation is a unique kind of insurance coverage. There are no limits. It's not like your auto or your homeowner's policy. There are no dollar limits on this policy, and the coverage varies by state because it's based on the state's economy and the individual state's law. So the contract actually says we will provide benefits as required by that state law. How did this get started? I mean, it just seems like it's so different than other types of insurance. You know, it really is different. And it started back in the Industrial Revolution. If you think back to the turn of the last century, when we were introducing mechanization and electricity to the workforces, it was pretty darn dangerous, and people were getting hurt and killed left and right. Labor and business finally got together and said, "You know what? We've got to do something better. This can't be the right way to go." So they agreed that workers' compensation would be created, and it is a situation where the employees have access to the benefits, and the employers pay all of the premiums. So the employees don't pay a cent for that coverage. Lindsay, maybe you could talk a little bit more about that aspect of the coverage. Sure. It's really who's covered under the policy of workers' compensation. And so, you know, typically it's employees that are employed by the employer that has ownership of the policy, but there's always a few exceptions to that. So for instance, many students aren't covered if they're doing a volunteer or the law clerks or interns, and often independent contractors are not covered, which is kind of a way to say that somebody has their own workers' compensation insurance, or they're doing some other specialty that's not related to the employment that we are ensuring at that time. For instance, if you are a plumber and you have a workers' compensation policy, but while you were doing your plumbing work, you've messed up somebody's tile, where you would bring in the tile guy, and they would be an independent contractor because they have their own business, so you're just paying them to do that piece of the job. So that's called an independent contractor, and usually they have shown proof of insurance to the employer to do that work specifically. And there's lots of little factors and various factors for the states to look at through that. And then the policy covers accidental injuries and occupational diseases. So that's really two separate terms of our accidental injuries, think you fall down the steps at work, you just trip and fall down the steps that may be covered under your state. An occupational disease is more something related to the employment, and it's usually done by many occupational diseases are done by statute. So you're thinking about specific cancers related to being a firefighter from smoke exposures or hypertension if you're a police officer, because the stressful nature of your job. There's also occupational diseases related to carpal tunnel or shoulder issues from repetitive use. And many of those are covered under specific statutes in each space, but your workers' compensation policy likely covers various degrees of an accidental injury or an occupational disease. And that's a great point because each state is different. So when you were talking about occupational diseases, I was thinking about there's a state that actually covers maple bark dust disease. So obviously it's Vermont, but that's the only state where that coverage is applied. And different states have different rules. For example, I'm in Montana, and in Montana, agricultural workers are automatically covered, but they can opt out of the system. In Nebraska, which is also a ranching and farming state, agricultural workers are not covered, but they can opt into the program. So the laws vary by state, and they are unique to that individual state. And actually, there is at least one state where an employer does not have to carry workers' compensation insurance. Isn't that correct? That is. Yeah. So Texas, as the Texans say, is a whole nother place, and they are the only state where employers can opt out of the workers' compensation system. So in every other state, as a general rule, if you're working, you're covered. Lindsey identified there are some exceptions to that, of course, and there are, but then they vary by state. But in Texas, most employers do carry coverage, but they can opt out. Now, the key, and I'm going to let Lindsey talk a little bit about exclusive remedy because that's what it's all about in workers' compensation. The key is the exclusive remedy aspect of the coverage. That's right, Peter. So if you have an exclusive remedy, which we do in workers' compensation, the insurance carrier being us, in my case, we pay for your benefits, but that means that you cannot sue your employer for benefits too. That's part of workers' compensation, unless there are some few exceptions for negligence. But overall, the point is that workers' compensation insurance covers the employer for this injury. And so then the next question is, what is covered? What does the injured worker receive when they're injured on the job? And obviously, it varies on severity of injury, but you're looking at your medical payments, temporary total, which is usually the piece of your leaf that, while you're missing work to heal, you're paid temporary total disability benefits. You can also have temporary partial disability benefits because maybe you're in treatment, but you can work a half day. And that means the other half of your day is covered by workers' compensation. And then when you're finally finished all your treatment, you're usually entitled to permanency. And your permanency might be you're permanently partially disabled, so you have a little bit, your back is sore and you get a percentage of that, or you're permanently totally disabled, meaning you can no longer work. And in between there is vocational rehabilitation, meaning if you can no longer return to your job, workers' compensation will cover often. Vocational counselor and a time period to get you a new job that fits into your new job requirements that you can do. For instance, you used to do a heavy duty job, and now you're only able to do a light duty job. Vocational rehabilitation will find you a light duty job or get you the training you need to be able to handle a light duty job. We also do settlements in workers' compensation, and settlements can include just that permanency piece I discussed or include permanency and the medical piece. And that gets very complicated and no one probably is that interested in Medicare set aside today. So, there's two points that I want to add to what you talked about with the exclusive remedy. First, sometimes they can sue. It's got to be a gross negligence. It's not just a negligence standard. It's not just, "Hey, Joey punched me at work and I got hurt." It's got to be something that is more specific. It's got to be that the employer knew or should have known, as the lawyers say, that an injury or death would occur. And then the second part is while you automatically get benefits and you're right about the medical coverage and there's no copay, there's no deductible, dollar one coverage for reasonable and necessary medical care for that injury. It is limited to that injury, but there's no choice about the benefits. If you get hurt at work and you're covered, these are the benefits and they're laid out in state law. So, you don't have an option there. This is the package of benefits you must take. So Lindsay, you talked about settlements and I'm curious as to how long someone can receive like permanency benefits and what is the impact of a settlement? So in Maryland where I'm from, if you do not settle your claim, your medicals are available to you for life. But if you've stopped collecting the indemnity payments, there's temporary total or the permanent partial benefits, there is a timeline to continue to receive that. So the settlement of the claim kind of protects you from that problem where your statute of limitations has run. So the statute protects you but you get a lump sum of money, for example, in a settlement where you might get permanent partial benefits for a period of time. And then after that, can you continue to get benefits or are you stopped by that settlement? Well, it depends on the type of settlement, but usually settlements close your claim for that body part. And that's why we talk about the Medicare set aside because if you need additional treatment, that money should come from your Medicare set aside because otherwise Medicare is not once you just settle your workers' compensation claim and then have your back surgery, they cover your back surgery later in life that should have been related to your workers' compensation. So the federal government is paying attention to workers' compensation settlements and they're doing it more and more. We have things called conditional payments. So we are paying attention as an insurance company to make sure that later on the claimants aren't getting a letter that they owe more money and we're not getting letters that we owe more money in the settlements. So we are paying attention and it is difficult and interesting because it's always changing. And that would be a compliance aspect of workers' comp that insurers and claimants would have to pay attention to, as you said. Correct. Peter, did you want to add something to that? Yeah, speaking about the benefits, if you think about the words that Lindsay used to describe temporary partial, temporary total, these are temporary impairments preventing you from doing your full-time job. Think about permanent partial. For example, if you lose a finger, it ain't coming back. Permanent total. Permanent total disability means exactly what those words mean. And therefore, the benefits can be considered to be permanent for the rest of your life. In some states, they are, in fact, for the rest of your life. And of course, workers' compensation does provide fatality benefits as well, which are also permanent, unfortunately. So it sounds like workers' comp claims can be very expensive for the employer and insurer. And I know you both have been heavily involved in the handling of workers' comp claims. Can you tell our listeners or give our listeners some examples of how these claims can be successfully defended? Sure, I can take that one. So what I discussed earlier, that independent contract, you're not covered under the policy, so we owe you no benefits. That's kind of your basic one. But then we have a couple of defenses that we can use, including willfulness conduct, meaning you knew you should have known a rule from your employer, you broke that rule, maybe you've been written up even for breaking that rule, and then you were injured because of the rule that you broke, you're not necessarily going to get workers' compensation benefits in that state. There's also rules for intoxication, either alcohol or illegal drugs. Sometimes those rules will prevent you from being covered at all. Sometimes those rules will only prevent you from being covered for those indemnity payments, those extra payments or the time off of work, but it will pay for your medicals. There's several other little rules, going and coming from work are kind of interesting rules. If you're traveling for a conference, probably everything that happens on your way to that conference is covered in most states. Whereas if you're just going to work on a normal day, that's probably not covered. If you're walking from your work parking lot that they pay for into your building and you slip on ice, that is probably covered versus if you're parking on a public street and walking into work, that's probably not covered. So there's a lot of little details and a lot of little case law that's interesting. We also have fraud. The accident never happened. You said it happened. We didn't see it happen. There was no witnesses and you've gotten a fight with your employer the day before, and that is a lot of fact-based interesting cases that you can take to hearing. And then there's also fraud. Once you have an accidental injury, yes, you did slip on that ice going into work. Yes, the employer paid for the parking. Yes, you're a covered employee. But now you've been out of work for five months and what's going on? Well, what's going on is you have another job and we found it on social media or you have, often time, other employers are kind of upset that you're going out and they've tipped us off on the hotline that something else is going on and we've dug into that and we've found out. So we actually do use social media and other types of surveillance to make sure the claimants that are injured are still injured while they're out collecting benefits. I once had a case. It was a compensable motor vehicle accident. The man was staying out of work and staying out of work and we found on his social media that he was actually running a karate studio. And so we sent out our investigators. He was fully doing karate in the window, big karate moves. I wish I could tell you what they were, but I've never done karate and he was posting things on YouTube. So by the time I got to court, I had his social media posts. I had his YouTube videos and he was not able to get any more benefits and we were able to get a credit for benefits we had paid while he alleged that he was unable to drive the bus, but he could flip in the air. I mean, it was pretty amazing what he could do. And so that's the kind of fun part of WorkersCom in that there are ways to kind of make it, I want to say sexy because that's what it is. Let me tell you about Georgie the jet skier. I was working in Colorado a few years ago and this poor guy was a drywaller, you know, hanging sheetrock doing the mudding and taping. And oh gosh, this poor guy had so many back injuries. And you know, his doctor said he couldn't do anything. Well, Georgie was also a championship professional jet skier. And he won a race over the weekend and Channel 9 News Sports interviewed him. And we all said, Hey, that's Georgie. He can't be doing that. Georgie's now doing time. And the reason I could share this with you is because this came out in his criminal trial and it's public record. We also had a guy here in Montana, who was a floor waxer, you know, used the heavy machines. Right. Well, his buddies filmed one of his friends dropping the machine on his chest. And he made the machine. He set his friend up to drop the machine so he could get workers' compensation benefits. What we see here in Montana more often than not is a compensable claim come in right around hunting season. And somehow it just extends, you know, the Montana state slogan is do you get your elk yet? That's funny. So I do believe I know this because I've been in the field a long time to that workers comp is an interesting field. And I know you've both been in the field a long time. So something has kept your interest. So what is it that has really, you know, maintained your interest in workers comp? And if our listeners are wanting to pursue a career in workers comp, are there interesting entry level jobs available? Well, sure. And a lot of carriers as well as employers are starting more and more training programs so that you can come in with no experience, either for claims adjusting, premium auditors, risk managers, underwriting, you know, any number of different things for those who are more mathematically inclined, of course, getting into the actuarial side is really pretty cool. If you're a math person, I got in because, well, like everybody else, I needed work because I had to eat. And somebody was silly enough to say, okay, I'll pay you. And that was a good bit ago. But based on the individual state laws and how it varies, it's so very interesting. And Lindsay, I'm sure you have the same kind of experience. Every time my email dings or the phone rings, somebody on the other end of that line thinks that I can help make their day better and do something to help them. I agree. And there's always something new about workers comp. And each case is very fact specific. And so if you're trying cases, there's always something new to try or a different set of facts you're looking at. But, you know, two years ago, I wouldn't have been able to tell you, or I guess three years ago now, I wouldn't be able to tell you what a COVID claim was. And COVID took over workers comp because is it work related? Is your governor going to say it's work related? Does your law already provide that it's work related when you are exposed at work? So that opened up a whole new door for us. And also a whole different set of medical treatment we have never seen before, different doctors we had to work with. You know, I found myself being very good at understanding orthopedic injuries. Well, now I have to look at medicine again related to the heart and breathing and lungs, which other than a rare case of an asthma issue or a dust or mole claim, it was very limited for me. So every time you think you know it all, there's something else that pops up. Medical marijuana, for instance, you know, we just started really that probably 10 years ago, medical marijuana. And now 16 different states have case law and medical marijuana, and they're all different. Some of them allow it. Some of them don't income. Some of them say you can have medical marijuana, but the workers compensation insured doesn't have to pay for it because it's against the federal law, which also might change in the coming months. So you just never know what you're going to see or what's next in workers comp. And so although it started all the way back in the industrial revolution, it keeps on changing. And you know, another I think interesting job for workers comp or for insurance experience is that SIU department I talked about earlier. So we have private investigators that are going out and and looking at people and they're not just looking at our claimants. So also looking at our policy holder, because if we have a woofer with two employees and the website has them at 10,000 jobs, 10,000 being an over exaggeration, obviously, you know that their premium isn't right. And so we have SIU and premium audit trying to make sure that we're being treated fairly as the insurer for both the employers and the employees. And I think that's an interesting component. And also they have protocols that are coming from our insurance administration to follow, which is also tied to compliance as well, because the compliance department is overlooking at all the things we're doing. And we also have a big medical team in my company that's very interesting. So, you know, doctors, nurses, pharmacists that are helping us make sure the employees are treated well and are being treated so that they can get back to their jobs, hopefully. Yeah. And one thing we didn't talk about, and I know it's very near and dear to both of you guys is the law. Each state law is different. So if you're a law student and you get out of law school, workers' compensation attorneys are always in high demand and it doesn't matter what state you're in. That's for sure. Lindsay and Peter, I want to thank you both very much for joining me today for this conversation. It's been very informative about workers' compensation. And I want to invite you guys and our listeners to AICP's 2022 annual conference that will be held in Miami, Florida, yay, from September 18th through the 21st of this year. For more information, go to AICP.net. And I hope to see you all there. Thank you. Thanks, Rona. Thank you.