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November Issue of Risk Management Now Online

It’s that time again — a new issue of Risk Management magazine is now online. The cover story in our November issue celebrates the 100th anniversary of the modern U.S. workers compensation system and highlights the fact that even though workers comp is only 100 years old, its principles date back a millennium.

Additional features in the newest issue are a first-hand account by Michael Cawley of 25 lessons learned during his 25 years as a risk manager, the pros and cons of cloud computing and seven steps to building a successful workers comp program.

Our columns explore topics such as the rise in workplace suicides, the largest data breach in history, regulatory uncertainty within the insurance industry, the Red Flags Rule, and human clinical trial insurance in South Korea. Also included are monthly staples such as our articles highlighting recent industry reports (Findings) and our book reviews (Shelf Life).

If you enjoy what you seen online, you can subscribe to the print edition to enjoy even more content.

Please let us know what you think in the comments below. And stay tuned to the blog for even more coverage in the future. Lastly, you can follow the magazine on Twitter“like” us on Facebook and join our LinkedIn group.

Workers Comp Turns 100

100th birthday

2010 marks the 100th anniversary of workers compensation. That’s right — that little program that ensures that a worker will be paid if he or she is injured on the job now officially dates back a century.

These days, everyone is familiar with workers comp and we may even take it for granted sometimes.

Nancy Hamlet, senior vice president of Healthcare Solutions, wrote a feature for the November issue of Risk Management magazine (available online November 1st) that explores the long history and evolving future of workers comp. She notes that the first statewide workers comp law was adopted in Wisconsin in 1911, but “scholars have found evidence that the concept of formalizing payments to injured workers existed as early 2050 BCE.” Hamlet added:

The early Greeks, Romans, Arabs and Chinese all had compensation schedules for certain losses as well. For example, an Arab who lost a finger received more than someone who lost a thumb; the value of a lost ear was calculated based on its surface area.

Workers comp has (thankfully) evolved into a system that delivers value to both employers and employees by striving for fair compensation for workplace injuries. Workers comp systems vary from state to state, however. The Insurance Information Institute (III) has penned a lengthy article on the current state of workers comp in America (available online). The article examines some recent state activities, including:

Oklahoma: In an effort to make the state more attractive to new business, Oklahoma legislators passed a number of workers compensation bills in May, including HB 2652, which would modify the workers compensation court, effective November 2010. Oklahoma is one of a handful of states where the courts administer the workers compensation system.

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Among other things, it will reduce the number of judges on the court, require them to have at least five years of workers compensation experience prior to appointment and require Senate confirmation for new judges appointed by the Governor to fill vacancies.

In addition, it would extend their terms from six to eight years.

Texas: A pilot return-to-work program, adopted as part of comprehensive workers compensation reforms that took place in 2005, has now been made permanent. The program, which was designed to promote early and sustained return to the workplace after a work-related injury, reimburses an employer with less than 50 employees for expenses incurred in making workplace modifications so that the injured employee can return to the work. Maximum reimbursements, which under the pilot program were $2,500, have been raised to $5,000. Insurers are required to inform policyholders of the existence of the program.

New York: In accordance with the provisions of the 2007 workers compensation reform bill, employers who establish a safety incentive program, a return-to-work program and a drug and alcohol prevention program will be eligible to receive premium credits. Employers setting up safety programs that conform to the regulations issued by the Commissioner of Labor or a return-to-work program will receive a 4% credit in the first full year and a 2% credit each consecutive year. Drug and alcohol prevention programs are eligible for 2% premium credits.

Florida: In May 2009 lawmakers passed HB 903 in response to a state Supreme Court decision that reinstated hourly attorneys’ fees. Hourly fees had been the largest cost driver in the state’s workers compensation system. Under the new law, attorney fees in workers compensation cases will now return to the sliding scale set out in reform legislation passed in 2003. As a result, the 6.4% workers compensation rate increase imposed in April after the ruling was rescinded, and the 18.6% rate decrease that would have taken effect before the ruling was reinstated in July 2009. Rates declined again effective July 2010, the eighth consecutive drop, bringing the overall rate decrease since the reforms were passed to 64.7%, according to the insurance commissioner.

California: The Workers Compensation Insurance Rating Bureau is calling for a 29.6% rate increase to take effect in January 2011. A hearing will be held at the end of September. The insurance commissioner rejected the last request for an increase.
The bureau’s recommendations are advisory only. The bureau noted that even with the proposed increase, rates would still be 53% lower than those in effect on July  1, 2003, the year reforms were adopted that have stabilized the system.

Hamlet notices a few more trends, which she includes in her article on the topic. Those are the upward pressure on medical care costs* due to the increasing obesity of Americans and an aging workforce; the growing digitization of medical care records, which will speed the review process and help the injured worker return to worker faster; and the impact of personalized prescription drugs.

*The III notes that spending on medical care for workers comp claims climbed a cumulative 200% between 1993 and 2007.

Do You Have Employee Benefits Liability Coverage?

Ryan Hanley has provided a tale of caution regarding employee benefits liability:

Let’s say you just hired a new employee and it’s their first day.  First you walk them around the office introducing them to each employee and point out the “strategic” bathrooms.  Then you sit them down and talk about how happy you are they’re joining the team and what your expectations are for their first few months of work.  After the pep-talk your “Boss” obligations are over so you take the new employee to see the HR Manager who’s job it is to go through the nuts and bolts of working for your company.

What you don’t realize walking away from the HR Manager’s office is that he had been up till 300am the night before with a sick child and wanted nothing more than to zip through the New Hire presentation and get back to vegetating in front of his computer screen for the remainder of the day.  So the HR Manager begins to skip through sections telling himself that he’ll explain Benefits to the new employee tomorrow.  All that was necessary to explain was the building key-card and computer passwords.  The HR Manager is a good employee, but today he just wanted the new employee out of his office.  As fate would have it the next day was very busy with payroll issues and the HR Manager forgot to go talk to the new employee. And the new employee was so excited about her new job that she completely forgot that she did not sign up for the Benefit program.

Two months later the new employee is involved in a very severe car accident on the way to work.  What do you think her reaction was when she woke up to hear she did not have Health Coverage?

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!

Can you say LAWSUIT!

As Ryan later notes, most companies have some employee benefits coverage within their general liability policies. But fewer know exactly what they would do if the situation described above came true.

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The lesson, as always, is to understand your coverage.

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The Quagmire of Medical Marijuana in the Workplace

medical marijuana

At the time of this writing, there are 14 states that have legalized the use of marijuana for medicinal purposes. This, of course, poses quite a few problems regarding the employment of individuals who are prescribed pot. Probably the most pressing is the issue of workers compensation for employees who use medical marijuana and are injured on the job.

Since the Obama administration announced last year that it would end raids on distributors of medical marijuana if such dispensaries were following their state’s laws on the matter, the number of dispensaries exploded in those 14 states (California alone has more than 2,000 of these pot depots). Below is a list of states that have enacted laws that legalize medical marijuana use (courtesy of ProCon.org)

I was curious as to some of the issues regarding employment and medical marijuana so I contacted Brett Halloran, attorney with New Jersey-based Fox Rothschild LLP.

Emily Holbrook: How far does an employer have to go to accommodate medical marijuana users? Are they required to tolerate it in the states that allow such use?

Brett Halloran: Under New Jersey’s law, an employer does not have to accommodate the use of medical marijuana at all, although it may do so if it wishes. I am not aware of any state medical marijuana law that would require an employer to accommodate the use of medical marijuana in the workplace.

Holbrook: Do employers follow state or federal law when it comes to dealing with an employee who is prescribed medical marijuana?

Halloran: Employers need to be cognizant of both federal and state law. While state law may permit the use of medical marijuana, federal law still treats the use of marijuana as a crime, regardless how or why the individual obtained the drug. Therefore, at least under federal, use of medical marijuana is still a crime in all 50 states. In part because of that reason, courts have generally held that employers in states that permit the use of medical marijuana are not required to accommodate its use in the workplace.

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Holbrook: How do some employers’ “zero-tolerance” programs need to adjust for the legalization of medical marijuana in some states?

Halloran: For the time being, employers may continue to have “zero tolerance” for workplace drug use, including the use of marijuana, in states that permit medical marijuana. That said, however, employers should review any such policies, including drug-testing policies, to make clear that any prohibition on the use of illegal drugs extends to marijuana prescribed and taken under state medical marijuana laws. By taking an explicit position on the use of medical marijuana by employees, employers can help insulate themselves from a claim, in the context of a later disability discrimination suit, that the employer’s stated reason for a resulting adverse job action was mere pretext.

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That brings us to a recent case in Michigan involving a Walmart employee who was fired for testing positive for marijuana during a employer-issued drug test. The 30-year-old employee, who was prescribed marijuana to treat symptoms of an inoperable brain tumor and sinus cancer, was issued the drug test after an on-the-job injury, which is Walmart’s policy. Is this fair? The American Civil Liberties Union doesn’t think so — they immediately filed a lawsuit.

“No patient should be forced to choose between adequate pain relief and gainful employment,” Scott Michelman, a staff attorney with the ACLU Drug Law Reform Project told CNN. “And no employer should be allowed to intrude upon private medical choices made by employees in consultation with their doctors.”

As you have probably guessed, the Walmart employee of five years has also filed a lawsuit. In Walmart’s defense, however, they claimed that “like other companies, we have to consider the overall safety of our customers and our associates, including Mr. Casias, when making a difficult decision like this.”

The issue of medical marijuana in the workplace will only become more important and widespread as more states are set to legalize its medicinal use.