2015 Workers' Comp challenges for employers: takeaways from 2014

A review of the past year in Workers' Comp points to challenging times ahead for employers. While some are new looks at old issues, here are ten trends that are likely to impact employers in 2015:

Insurance companies have changed their expectations of loss prevention
The increasing availability and use of data combined with eight unprofitable years for workers' comp insurers means insurers have changed the way they assess the quality of an account. For the first time since 2006, the industry is projected to be profitable, according to the National Council on Compensation Insurance (NCCI). This expected improvement is not only a result of projected increases in premium but also a reduction in losses, which are a result, in part, of increased scrutiny. There is an underwriting focus on a company's unique exposures and capacity to manage the risks. The expectation of a strong loss prevention program is now the norm.
Takeaway: Insurance companies have sent a resounding message to employers that they need to understand their cost drivers and have strong loss prevention programs in place that reduce the frequency and severity of claims, effectively manage medical costs, and return employees to work as soon as medically possible. Otherwise, they will be considered poor risks and will not receive competitive pricing and policy offerings.
Temporary and part-time workers need to be treated like full time employees when it comes to safety
Today, many companies are attracted by the ease and flexibility of engaging temporary workers or of using a larger part-time workforce to reduce group health premiums. New and inexperienced employees tend to have more workplace injuries and some high profile cases, including the deaths of temporary workers on the first day of their job, spurred OSHA to issue recommended practices that highlight the joint responsibility of the staffing agency and host employer.
According to OSHA, "Whether temporary or permanent, all workers always have a right to a safe and healthy workplace. Staffing agencies and host employers are joint employers of temporary workers and both are responsible for providing and maintaining safe working conditions."
Takeaway: Proper training must be provided to all employees, regardless of their status. Carefully drawn contracts that clearly identify the specific responsibilities of the staffing agency and host employer, such as who is providing the PPE, conducting site-specific training, and so forth is critical when engaging temporary workers. Injuries or illnesses suffered by such workers must be recorded on the OSHA 300 injury and illness log form, and, in most instances, it is the host employer that must complete this form, so a process must be in place to get the necessary information from the staffing agency.
Uncertainty surrounds medical marijuana and workers' compensation
Although 23 states and the District of Columbia have passed laws regarding medical marijuana and four states and D.C. legally allow the recreational use of the drug, it remains a Schedule I drug under the federal Controlled Substances Act of 1970. The issue for employers is three-fold. First, if an employee licensed for medical marijuana use can be fired as a result of a positive drug test; second, if an injury occurs as a result of an impairment can the employee collect workers' compensation; and third, if insurers can be required to pay for medical marijuana when prescribed for treatment of a work related injury.
State laws vary, but few provide explicit protections for patients and supreme courts in Montana, California, Washington and Oregon have upheld companies' decisions to fire employees who test positive for cannabis use. Many are closely watching the case of Brandon Coats vs. Dish Network L.L.C., now before the Colorado Supreme Court, involving a quadriplegic licensed to use medical marijuana who is challenging his termination after testing positive for legal off-duty use of medical marijuana. If the decision bucks the trend of favorable decisions for employers it could have national implications.
The cases involving impairment and medical marijuana use vary by state, since some states require the employer to prove that the intoxication or impairment was the sole cause of the injury in order to deny the claim. Intoxication defenses are also complicated because marijuana can stay in a person's system for months and there is no agreed upon standard as to what constitutes intoxication. Therefore, it is extremely difficult for employers and workers' compensation courts to determine whether an employee was actually impaired at the time of an injury.
There have been few decisions relating to covering the costs of medical marijuana for the treatment of a work related injury. One of the first decisions was in New Mexico this year, Gregory Vialpando v Ben's Automotive Services and Redwood Fire & Casualty, which awarded coverage for medical marijuana.
Takeaway: The conflicts among state and federal laws, the lack of definitive medical information, and the risks posed to workplace safety make medical marijuana a legal quandary for employers. Employers should begin by carefully reviewing their policies to be sure that any change in the state law has not affected the intent of the policy. Policies can be written broadly and include language that permits something that is "legal under state law".
Some employers with no tolerance drug policies have inserted a paragraph in employee handbooks stating that they are aware of the legalization, but that it hasn't changed their drug policy. Employers that are tolerant of alcohol consumption or prescription drug use should revisit their policies and address the issue of marijuana.
Beyond reviewing and updating policies, employers need to stay abreast of changing legislation and case law, as there is more to come.
EEOC sets its sights on wellness programs
Today, many employers recognize that the health of their employees is an economic necessity and fine tune wellness programs with a strategic focus on improving the health of the workforce over the long term. Yet, employer wellness programs are subject to myriad federal and state laws and it was only a matter of time until the battle lines were drawn.
The Equal Employment Opportunity Commission (EEOC) has brought three actions this year targeting employers whose workplace wellness programs exceed the agency's informal threshold of voluntary participation for individual employees. Employer advocacy groups criticized the agency for taking legal action without first issuing formal guidance on workplace wellness programs under the federal nondiscrimination statutes it enforces, including the ADA and GINA. Others argue that the EEOC's actions conflict with the Affordable Care Act (ACA).
Takeaway: The ACA encourages wellness programs and allows employers to charge differential premiums to workers who choose not to participate in workplace programs or fall short on certain health outcomes. The EEOC's actions clearly send a conflicting and frustrating message to employers that have spent considerable time and money making sure their wellness programs comply with the ACA. While it was good news that a Minnesota district court denied the EEOC's request for a preliminary injunction against Honeywell (most recent case), the final outcome is unknown.
Until further guidance is provided, employers should review their plans, focusing on the types of alternatives they offer to employees to receive full credit for participating, making sure they comply with what is known about all relevant laws, and changing the plan, when needed.
Trust in the workplace is key predictor of outcomes in workers' comp
It's always a good feeling when a long-held tenet is supported by research. Certified WorkComp Advisors (CWCA) consider the employer/employee relationship a primary influence on claim outcomes, including duration, return to work, litigation and ultimately the cost of the claim. Staying in touch with injured employees, responding empathetically to the injury and making them feel like a valued part of the organization is paramount.
Predictors of Worker Outcomes are eight reports by the Workers Compensation Research Institute (WCRI), an independent, not-for-profit research organization based in Cambridge, Massachusetts. The study found that trust in the workplace was one of the most important elements in the duration of a disability and the time to return to work.
Takeaway: Management and front-line supervisors must establish a relationship of trust with their workers and have an empathetic response to injuries. If the worker feels needed in the workplace and is motivated to return to work, claim costs will be lower.
Update on obesity: little progress
Obesity certainly isn't new to the list of workers' compensation challenges, but 2014 studies shed light on the scope and nature of the problem. The study, Prevalence of Obesity by Occupation Among US Workers, based on the National Health Interview Survey 2004 - 2011, and published in the Journal of Occupational and Environmental Medicine, comes to several sobering conclusions.
Although prevalence of obesity steadily increased from 2004 through 2008 across gender and race/ethnicity, it leveled off from 2008 through 2011. This may sound good, but the study went further than previous research and analyzed the prevalence of obesity by occupational group and along gender and race/ethnicity lines. Prevalence of obesity in relatively low-obesity (white-collar) occupations significantly increased between 2004-2007 and 2008-2011, whereas it did not change significantly in high-obesity (blue-collar) occupations. The study posits that the sedentary nature of the workplace is a factor. Non-Hispanic black female workers in health care support (49.2%) and transportation/material moving (46.6%) had the highest prevalence of obesity.
A similar study published in the American Journal of Preventive Medicine found associations between long work hours, hostile work environments, and obesity. Still another study found absenteeism among obese workers in the United States costs employers about $8.65 billion each year.
Takeaway: White collar employers need to take note that obesity and its associated comorbidities such as diabetes and high blood pressure is a challenge that now cuts across all industries and occupations. While education and personal responsibility are critical elements of any program designed to reduce obesity, changes in the work environment are also critical. Making healthier food choices available, encouraging walking, promoting physical activity during breaks, offering weight management programs, monitoring hours, reducing stress and hostility, and advancing a culture of wellness will help employers reduce the medical and productivity costs related to obesity.
Opioids: some progress, much to do
While the industry's focus on curbing opioid prescribing has had results, opioid abuse remains a major problem in the work comp arena. On a positive note, 2014 saw a reclassification of prescription painkillers like hydrocodone (Vicodin), a tightening of the American College of Occupational and Environmental Medicine's (ACOEM) guidelines for the use of opioids in safety-sensitive jobs, and some state law changes controlling physician dispensing and prescription drug monitoring programs. Overall, this has helped limit the inappropriate use of opioids for new claims, but has done little to resolve the problem of long-term use and legacy claims. A 2014 WCRI study found the vast majority of longer-term opioid users don't receive recommended follow up testing that reduces the chance for opioid abuse.
Takeaway: Many employers do not experience opioid cases regularly and as a result they slip through the cracks. For employers, the opioid issue is best viewed in the overall context of how care is being delivered to the injured worker. The importance of working with physicians who are trained in occupational medicine, understand the issue and seek pain management alternatives, know the value of returning workers to their job as soon as possible, monitor through drug testing and psychological evaluations, and do not dispense drugs, can not be overstated. Some employers successfully supplement this with nurse case management to eliminate questionable prescription costs, identify the red flags of drug abuse, and reduce medical costs.
OSHA enforcement and "public shaming" on rise
OSHA's average proposed fine for a serious violation, the number of inspections in which proposed fines exceed $100,000, and the percentage of inspections resulting from complaints are up in fiscal year 2014. OSHA also made sweeping amendments to its Injury & Illness Recordkeeping regulations, which go into effect January 1, 2015.
Takeaway: The new rule will increase the number of incident inspections that OSHA conducts in 2015, which means more citations. Furthermore, OSHA plans to publicize all reports of fatalities and severe injuries on its public website, regardless of the circumstances. While this unfairly lumps all fatalities and severe injuries together, employers should recognize that public shaming is one aspect of OSHA's strategy.
Advances in technology make choices daunting
While some may argue that workers' comp has been behind the curve when it comes to technological advances, the impact on the industry is significant. 2014 witnessed the growth of mobile apps, locational technologies, wearable monitoring devices, telemedicine, advanced analytics, predictive modeling, technologies in personal protection equipment, and more. When used appropriately, these advances can lead to better outcomes and results.
Takeaway: Technology is an effective way to lower the cost of risk. The challenge for employers is not to be seduced by the latest and greatest, but to think strategically from prevention to medical care to claims processing to return to work. They need to develop a clear roadmap of how to leverage technology and focus resources, without creating HR and IT conflicts.
Uncertainty dominates national legislative landscape
The Affordable Care Act (ACA), immigration and the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) all have major implications for workers' comp. There's uncertainty surrounding all three and naturally this causes discomfort. There's a tendency to be reactive and focus on compliance requirements, rather than long-term goals.
Takeaway: While many feel the odds are in favor of an extension of the TRIPRA, the dysfunction in Washington is likely to continue and it's anyone's guess how it will affect the ACA and immigration. It's a fruitless exercise to get bogged down by the nervousness of uncertainty, which can create a malaise of inaction. Our advice: stay focused on long-term strategies, mitigate risks and stay tuned.