Articles | Cases

Coronavirus and Workers' Compensation: important updates

Regulatory and legislative activity

In response to COVID-19, there have been a host of changes to state laws, either through legislative or executive action, relating to presumptive coverage, telehealth, utilization review, premium payment and cancellation relief, screening and testing, hearings, and more. This is a fluid situation and, to some degree unexpected expansion of coverage and compensability. The NCCI has an excellent resource that provides weekly updates by state.

One area to watch closely is the extension of presumption of coverage for COVID-19 to include first responders and health care workers and, in some cases, other essential workers such as grocery employees. When state policy is amended so that COVID-19 infections in certain workers are presumed to be work-related and covered under workers' compensation, the presumption places the burden on the employer and insurer to prove that the infection was not work-related, thus making it easier for those workers to file successful claims.

Minnesota, Wisconsin, and Alaska enacted legislation covering first responders and in some cases, health care workers. Executive actions to implement presumption policies for first responders and health care workers in response to COVID-19 were issued in Arkansas, Florida, Illinois, Kentucky, Michigan, Missouri, North Dakota, and Washington state.

In Illinois coverage was initially even broader; however, a County Circuit Court Judge issued a temporary restraining order against the emergency changes made by the Workers' Compensation Commission. The Commission then voted unanimously to repeal the rule, citing the "uncertainty and expense of litigation." The changes would have created a presumption that work is the cause of COVID-19 if contracted by any "frontline worker" identified in Gov. J.B. Pritzker's March 20 stay-at-home order, including workers at grocery stores, laundries, banks and hardware stores, among other businesses. The lawsuit argued that the commission exceeded its authority and that the legislature would be the proper body to implement such changes. Some speculate that the repeal may lead to an executive order.

Kentucky created a COVID-19 presumption for workers in grocery stores, child-care centers, domestic violence shelters, and rape crisis centers, in addition to first responders and healthcare workers. However, it requires the same evaluation as other claims as to whether the disease acquisition occurred in the course of and scope of employment.

Action is also under consideration in Louisiana, Massachusetts, New Jersey, New York, Pennsylvania, Puerto Rico, Ohio, Vermont, and Utah. For more information.

Employers and insurers are concerned that these presumption policies will increase insurance costs for employers at a time when businesses are already facing significant financial challenges. A recent study by the National Council on Compensation Insurance (NCCI) estimated that 49 million to 62 million workers could potentially qualify as essential workers who could be eligible for workers compensation relating to COVID acquisition. Costs could range from $1 billion to $80 billion in the 38 states it serves.

The California Workers' Compensation Insurance Rating Bureau (WCIRB) was asked to provide the cost impact of a conclusive presumption for health care workers, firefighters, EMS and rescue employees, front line law enforcement officers, and other essential critical infrastructure (ECI) employees. The results were staggering. As reported in their Research Brief, the annual cost estimates of COVID-19 claims range from $2.2 billion to $33.6 billion with an approximate mid-range estimate of $11.2 billion, or 61% of the annual estimated cost of the total workers' compensation system before the impact of the pandemic.

Similarly, the New York Compensation Insurance Rating Board conducted a legislative analysis of the potential cost impacts of COVID-19 virus exposure as an occupational disease. It estimated in late March that presumptive COVID-19 coverage could cost the system more than $31 billion - more than triple the state comp system's current annual losses in both the insured and self-insured markets.

Reporting payroll of furloughed workers, class code changes, repurposing operations


On April 23, 2020, NCCI published Item B-1441 - Revisions to NCCI Manual Rules Related to the COVID-19 (Coronavirus) Pandemic. This was filed to all NCCI states and submitted to the independent bureau states for their consideration. The states that have adopted these rules as of April 30 include Alabama, Arkansas, Colorado, Connecticut, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Mississippi, Montana, Nevada, New Hampshire, New Mexico, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, and West Virginia. Wisconsin, which is an independent bureau state, was the first state to approve new rules. Michigan has indicated they are adopting the rule for their residual market and carriers operating in Michigan can adopt the rule.

The key points are:

Another consideration is class code changes now that so many employees are working from home. Kevin Ring, the Lead Analyst for the Institute of WorkComp Professionals, notes whether a class code assignment can change depends on the circumstances. If the employee was already classified in 8810 (Clerical Office), the classification would change to 8871 (Clerical Telecommuter).

For other employees to qualify for a change in classification, the job must change. For example: You operate a manufacturing facility and have an employee who programs CNC machines for your manufacturing process. The job consisted of not only writing programs but inspecting parts to ensure the program is working correctly. As a result of the crisis, this employee is now working from home writing programs. This employee could have their payroll re-classified into 8871 because they are currently doing a purely clerical job, with no exposure to the manufacturing shop.

Some classifications include clerical employees in their definition. In these cases, reclassifying employees who are now working from home would not be allowed.

Stay current on NCCI updates here.

WCIRB - California

The Workers' Compensation Insurance Rating Bureau of California (WCIRB) has made a special regulatory filing to the California Insurance Commissioner. Major provisions include:

Stay current on California updates here.

New Jersey has adopted similar changes.

Also, manufacturers that shift gears and repurpose their operations to meet changing customer demand, or to produce gowns, masks, and ventilators amid the COVID-19 pandemic, need to be sure that their insurance coverage is appropriate. Creating a new or different product can change the company's risk profile and exposure base. While some companies may have government immunity under the Defense Production Act, it's important to seek counsel to better understand the liabilities involved.

There are a lot of moving parts right now, including premium reductions, class codes, industry classifications,payroll changes, and the impact on the Mod. It's critical to discuss your situation with your Certified WorkComp Advisor to find the best moves for your business.

Claims/premium impact

In a national survey of 15 workers' compensation insurance carriers by Health Strategy Associates, respondents said on a scale of 1-5 (with 5 being extremely significant), COVID-19 will have an impact of 4.4 on the industry. The largest impacts are projected to come from an increase in death claims and delayed return to work. The rapidly changing legislative environment combined with the uncertainty of the future makes it difficult to know what the long-range impact of COVID-19 will be on workers' compensation. However, this is what we do know: