Workers Comp | Spring 2019

DATA DIVE: More states pass laws allowing medical marijuana as public opinion evolves - PAGE 9 A PUBLICATION OF SPRING 2019 HIGHER FINES FOR FATALITIES, HIV EMPLOYMENT RULING PLUS MORE STATE NEWS PAGE 6 THE RIGHT BALANCE FOR COMP INDEMNITY PAYMENTS PAGE 18 HIGH-STAKES SAFETY RISK Uncertainty over regulatory change creates confusion for safety pros in energy, chemicals sector PAGE 14

PROMOTE. Why not? Let the custom reprint department help you promote your great press. November 2018 SPONSOREDSECTION Plaques MEDIUM EMPLOYER CATEGORY Celebrate your accomplishments with a plaque of your (250-999 U.S. Employees) company’s ranking/profile. Multiple finish options available. Great for display at home or in the o ce. Rank Company U.S. Employees 1 Assurance 494 2 A ens Administrators 299 3 FCCI Insurance Group 820 4 Brown & Riding 254 5 Hylant 698 6 Holmes Murphy 814 7 Propel Insurance 343 8 Discovery Benefits 795 99 TMMNNAASeSrevircveisc, eLsLC, LLC 44122 10 Amerisure 733 11 The Navigators Group, Inc. 564 12 Paychex Insurance Agency 921 13 PayneWest Insurance 742 14 Tokio Marine America 365 15 Risk Strategies 973 16 AMERISAFE 439 Reprinted with permission from Business Insurance. © 2018 Business Insurance Holdings. REPRODUCTIONS ARE NOT PERMITTED. 917.270.1989 • Visit www.BusinessInsurance.com/section/reprints. ® August 31, 2015 SPECIAL LARGEST PROPERTY/CASUALTY WHOLESALERS ® REPORT Ranked by 2014 wholesale premium volume from property/casualty placements* August 31, 2015 PERCENTAGE OF TOTAL BUSINESS SPECIALPhone/website Percent Lloyd's of surplus London coverholder LARGEST PROPERTY/CASUALTY WHOLESALERS2014 premium Percent lines volume change Rank Company/address 2014 gross Percent Underwriting Wholesale MGA Wholesale Principal officer revenues change manager broker employees REPORT1 Ranked by 2014 wholesale premium volume from property/casualty placements*AmWINS Group Inc. ® 4725 Piedmont Row Drive August 31, 2015704-749-2700 0 80.5% 14.6% 4.9% 3,382 M. Steven Hard copies Suite 600 www.amwins.com DeCarlo, CEO $8,945,801,573 10.4% $736,900,000 10.3% 66.0% Premium high quality reproductions on 80 lb. glossy paper designed to meet your specific marketing needs. Can be used Charlotte, NC 28210 PERCENTAGE OF TOTAL BUSINESS for client mailings, reception area and inclusion in press kits. Minimum order of 100. CRC Insurance Services Inc. SPECIAL LARGEST PROPERTY/CASUALTY WHOLESALERS$P5,h3o0n9e,0/w57e,0b0si0te 6.4% $712,2240214,v0o0plu0remmeiu8m.2%Pcehrac2ne9gn.e0t% 2r0e1v4eng3ur.0oe%sss Pcehracneg8net2.0Ps%uelirrncpeelsunst Un1md1ea.0rn%wagrietirng cDCLoEaLlvovOoeeyrndhOd'osoblndeonef rauer,eWmhpolloeyseaeles 2 1 Metroplex Drive Rank Com2wp0wa5wn-8y.c/7ra0cd-i7dn7rs9e.c0sosm W4bh.ro0ol%eksearle 2,M92G5A Principal officer Suite 400 Birmingham, AL 35209 REPORT Ranked by 2014 wholesale premium volume from property/casualty placements* Ryan Specialty Group L.L.C. AmWINS Group Inc. cPhaat4ri.ir9cm%kaGn./CREyaOn, 3,382 180 N Stetson Ave. 472531P2i-e7d8m4-o6n0t0R1ow Drive 3 46th Floor 1 Suitwew6w00.ryansg.com $47w,01w40w-07,.40a90m-02w,70i0n00s0.co1m0.8% $352,0$080,9,04050,8011,55.763% 108.41%.0%$736,900,000 10.3%82.06%6.0% 18.0%0 80.50% 148.63%1 M. Steven DeCarlo, CEO Chicago, IL 60601 Charlotte, NC 28210 PERCENTAGE OF TOTAL BUSINESS 4 All Risks Ltd. Fifth Floo2r CRC Insurance Services Inc. C$o1m2w,02wp55aw-0n8,.y0c7/r00ac0-id7n,d07s9r0.ec00sosm16.8% $114,0$05P0,3h,00o09n0,e0/5w71,e80b.08s0%ite 6.647%.0%$712,224502.10,04v%o0pl0uremmei8u.m2%5P5ce.h0ra2%cn9eg.n0et% 2r0e1v34e53ng..0u0ro%e%sss Pcehracne8gn52et..00%%Psuelirrncpeelsunst U1nm1d6.e0a7rn%2wagrietirng CNEWic4Ohbh.0oro%ollaekssearCleortezi, 2,9M25GA CDcELoaLvlvOoeoeyrnOdhd'obsolendonefaruer, Wholesale Principal officer 10150 York Road, HuS1nuMtitw8ee0twr40ow0-p03.la6elx6lr-iD5srk8isv1.0ecom Rank employees Valley, MD 21030 Birmingham, AL 35209 ARC Excess & Surplus L.L.C. Ryan Specialty Group L.L.C. AmWINS Group Inc. 1805N16S-7te4t7s-o4n10A0ve. S47u2iw3$t5e16w2P26-w2i70e,.800dry40ma-06on,00nst00g.01Rcoowm8D.2ri%ve CCah8vria0sl.tl5oa0%rpoh,eCrEJO. 148.361% 5 113 S. Service Road 3 46thwwFlwoo.arrcbrokers.com 1 Charlotte, NC 28210 $55,0$40w7,010,w0040w0-,70.4a09m0-,2w037i0.0n800s%.co1m0.285%.0%$352,0$080,904050,80115,5.67%3 101008%.14.%0%$736,900,00000 10.3%82.0%066.0% 181.08%8 0 Rcha8a5n2i.d0r.ma0%l%lanG/.CGEoOss, 116.702% Pchaatr4iir.cm9k%aGn./CREyaOn, 3,382 M. Steven NCEicO4h.o0l%as Cortezi, 2,925 DeCarlo, CEO Jericho, NY 11753 Chicago, IL 60601 Dave Obenauer, 6 U8SDu4.aSi0ltl.1eaRsN1i,s0.Tk0CX0Ien7ns5tu2rar2al5nEcxeprGersosuwpa4Iync.1VA0all1ll5Rw8e00iyws,0kYwM-so2.rDuL3kst22drR-i1.5so0k8a3.3dc00,oFmifth Floo2r CRC Insurance Services Inc. $712,32554..200,%0%00 8.2%557..00%%29.0% 3523.09.0%2% CEO Hu1SnutMiw8$tee06wt01r4wo0-03p,.00a6le0l6lx0r-i,5sD0k8r0s1i0v.0ceom6.1% $62,$7012w,020,w50500w-,080.c70r00c-1i,70n37.0s69.0c%0om169.80%.0%$114,0$050,300090,05178,0.80%058.06%6.47.%0% Birmingham, AL 35209 7 Worldwide Facilities L.L.C. A1J1eR3rCi2wcS1Ehw.3oxS-wc,e2e.Nr3wsv6Yswi-c1&fi4e15.7cRS05oou03marpdlus L.L.C. Ryan Specialty Group L.L.C. 15.6%10.00%%81.0% 19500 cDha8av2iirs.m00D%a.nM/CoEorOe, 1818.08% CCahvriasltloa0rpoh,eCrEJO. 831 Patrick G. Ryan, 725 S. Figueroa, Suite 19005 3 41860t$5wh51Nw61F9w-lSo7,0.t4oae07rt-0cs4ob,01nr00o0A0ke1vres..c7o.9m% $44,30$w3061,w2022-0w7,0.8r0y40a-6,n800s.060g0%.1com87.23%.0% $55,0$040,1,00000,000,30.80%0941.002%.85.%0%$352,050.00,%0000 chairman/CEO Los Angeles, CA 90017 Chicago, IL 60601 Nicholas Cortezi, Brown & Riding U.S. Risk Insurance Group Inc. AV10all1lw8l5R$e0w04iys0,8wkY-M1so2.,u3r3DLsk20tr-2d3iR5s1.,ok1804a.33cd400o, mF3if5th.2%Floor$H4u3n,3t5$w8460w,1100w5-,430.a60l60lr-,i085s0.k820s1%.0com67.10%.0% CEO S8u4i0t2w1e1wN310-w.40C.b50er2no-t7wr0an6la0Enxdprridesinswg.acyo4m 8 777 S. Figueroa St. 6 Dallas, TX 75225 $62,7$010,2,05000,00013,0.60%096.1069%.08.%0% $114,040.00,%0000 18.8%58.0%067.0% 355.10.70%5% Cchh5ar75ii.s0r.m0%B%aronwn, 352.902% Rchaan5idr.0ma%llanG/.CGEoOss, 672 Christopher J. Suite 2550 Cavallaro, CEO Los Angeles, CA 90017 9 P1SH0uao0rirttsenThoe2aur1msr4n,SaPpmAece1in9at0ltD4y4rGivreoup7L.L.CL7W2o.o5srw4lSAd8w.nw4Fgw-iied3g.lep2ues2esFg-,rao0iCcna4Ais,l0i.St9c0iueo0ism0te1L7.1L9.C0.05 J1A1eR$3r2wC4icS13wEh3.6-woxS,2c,1e.3weN0r6svw0Ys-i,cfi401&e5.10c70RS0o50oum13arpdl0u.s4L%.L.C$. 33,33$w5551,1w0690w-,700.4a07r0-c,40b110r.0o600k%1ers.c77.o93m%.0% $44,30$06,02020,0008,0.60%098.087%.32.%0% $55,010.00,%0000 3.8%914.0.0%%25.0% 51.040%0 DMac1n1D.i0oe0%nl%nP.ell, CEO 1950 DchaaviirsmD0a.nM/CoEorOe, 188 Program Brokerage Corp. Brown & Riding U.S. Risk Insurance Group Inc. 10 5 Bryant Park, Fourth Floo8r S77u7it8wSe6.w26Fw5-i5g6.p0u0re7o-rg8ora3a7mS0tb.rokerage.6comS8u4i02wt$1ew33N16-w0.49.0Cb5,60r2e7o-n57wt,04rna64al06nEdxrpir8de.i9sns%gw.caoym$33,10$8w040w,80w1-,27.3u30s2r3-i,5s11k8.45.34c%0om352.28%.4% $43,35$46,110504,0008,0.20%056.467%.01.%0% $62,4730.06,%0000 Mprae5rs8ci.d0C0e%onht/eCnE, O 351.705% 13.6%96.0%090.0% 41.0%00 Cchhari7isr.0mB%aronwn, 292 Randall G. Goss, New York, NY 10018 chairman/CEO Los Angeles, CA 90017 Dallas, TX 75225 Davis D. Moore, *Companies deriving more than 50% of1PSHt0uaoh0rirettsienTrhoep2aur1rmser4nm,SaPpimuAemce1in9avt0lotD4lyu4rmGivreeofuropmL7.wL.hCL7Wo.2olo5es4wrsl8SAawd.4lnwewF-gi3bie.dgp2rleuoes2eskg-F,r0eaionCr4caasAi0,lg.i0cSte9oiu.e0m1is0te21L70.1L19.3C0.p0remiu$m4w231vw36o-w,l1u2.03mw06we-,0fi4re05.cs00to10amted0..4% DMacnD1i.oe0nl%nP.ell, CEO 195 chairman/CEO Source: BI survey 9 $33,33$55,0109,0000,10.060%1 7.39.%0% $44,300,0000 8.6%98.0%73.0% 1.0%0 91.40.0%% 514.00% Chris Brown, 43.6%0 chairman Reprinted with permission from Business Insurance. © 2015 Crain Communications Inc. REPRODUCTIONS ARE 8.2%56.4%70.0% 96.00% 41.000% pMraerscidCe0onht/eCnE, O 175 NOT PERMITTED. 212.2101.0070N5P7reBo•wrgyrVYaaonmirstkiBP,tarNowrYkkw,e1rF0wao0gu.1eBr8tCuhosFrilpon.oer8ssInBLS77ousr7osuiw8twSe6Arw.n6na2wF-g5n&i6.e5gp0cl0urRe7oeei-sgdr8.,roic3aCnao7mgA0Smb9tr.0o/0kse17eracgtei.oconm/re2w$p13w3r6-w9i4n,.6b5t7r2so5-.7w,40#n466Ba0nId1r58id0.9i3n%7g.com$33,10$04,88117,3031,1.54%4 352.82.%4% $43,354,1054 *Companies deriving more than 50% of PthaertirnperresmSipuemcivaoltluymGerofruopmLw.Lh.Co.lesale brokerage. 1 2013 premium volume restated. 100 Tournament Drive 484-322-0400 Daniel P. Source: BI survey 9 Suite 214 www.psgins.com $436,100,0001 0.4% $33,335,000 1.6% 73.0% 0 98.0% 1.0% 1.0% 140 McDonnell, CEO 0 Horsham, PA 19044 Reprinted with permission from Business Insurance. © 2015 Crain Communications Inc. REPRODUCTIONS ARE 0 56.4% 43.6% 100 Marc Cohen, NOT PERMITTED. 212.210.1007075NPreB•owrgVyrYaaionmsrtiktBP, arNworYkkw,e1wrF0ao0.guB1er8tuChsoFirlnpo.oerssInsuw8r6wa6wn-6.pc0re7o-g.8cr3ao7mm0br/okseeracgteio.conm/rep$3r6i9n,6t7s5.,4#4B6I1580.39%7 $33,100,817 1.5% 28.4% president/CEO *Companies deriving more than 50% of their premium volume from wholesale brokerage. 1 2013 premium volume restated. Source: BI survey Reprinted with permission from Business Insurance. © 2015 Crain Communications Inc. REPRODUCTIONS ARE NOT PERMITTED. 212.210.0707 • Visit www.BusinessInsurance.com/section/reprints. #BI15037 December 2016 ® N ow in its 11th year, the Business 2016 senior management and family and Eprints Insurance Women to Watch awards a determination to maintain a work- program recognizes outstanding life balance that works for them as Maximize your exposure and drive tra c to your website women in the insurance and risk individuals. In addition, you’ll see with eprints. Receive a PDF of your feature that can be used that, again this year, many of our for web posting and/or electronic distribution. management sectors, highlighting honorees see the insurance industry as All eprints are sold as time-based licenses. an excellent, if somewhat unexpected, what they’ve achieved and examining sector for anybody to nd their niche and thrive. the personal traits that have helped e 25 honorees were nominated them attain professional success. In by readers and selected by a panel of Business Insurance editors. e selection addition, as the title of the program criteria include recent professional achievements, leadership qualities and professional expertise. e nominations also were required to include three suggests, we are looking to showcase references from co-workers, clients or other business associates. female leaders with the potential to take Gavin Souter, editor on even more signi cant leadership roles in the still male-dominated ranks of insurance industry executives. While all the women we feature have unique stories to tell, some common themes you’ll read about include hard work, creativity, a willingness to collaborate with others and encourage others to succeed, support from Marguerite Dixen President Third Coast Underwriters, a division of AF Group Chicago Age: 53 B uilding a company from the ground up Ms. Dixen selected the leadership team for science, but I started studying risk and insur - presents challenges, and that’s what Mar- ird Coast, which had a combined ratio of ance in college and really developed a passion guerite Dixen had to navigate at ird 89.6% in 2015, an accomplishment the rm for what insurance can do to move the econo- Coast Underwriters, a division of Lansing, attributes to its underwriting, claims and loss my and the world forward by diversifying risk,” Michigan-based AF Group that launched control approaches. Ms. Dixen said. in 2010. Michael A. Valiante, Chicago-based vice president of production and agency manage- “I’m kind of a risk management character that Chicago-based ird Coast specializes in ment at ird Coast Underwriters, calls her “a is spurred by curiosity and having the oppor - providing workers compensation insurance true inspiration to the entire team.” tunity to watch the economy grow,” she said. for industries that may have di culty being “From working directly with her personally, I insured under traditional workers comp pro- have learned the value of building a team which Joyce Famakinwa grams, such as the oil and gas sectors, construc- shares the vision to bene t those we work with tion and agricultural operations. on a day-to-day basis. It is critical to create an inclusive environment where diversity of e workers comp industry “was performing thought is paramount, which leads to better very poorly, and I was looking to write business outcomes for those we work with,” Mr. Val- in what was the toughest part of the market,” iante said. said Ms. Dixen, who has been president of Ms. Dixen credits her curiosity for getting her where she is in her career today. ird Coast since its launch in 2010. Before “My degree was in economics and political that, she was Midwest regional vice president and senior vice president for construction at SeaBright Insurance Co. CONTACT: Marie Grace LaFerrara Events and Reprints Manager [email protected] • 917.270.1989

CONTENTS SPRING 2019 | ISSUE 1 VOL. 5 12 18 14 22 26 COVER STORY PEOPLE IN COMP 14 Looking for a higher standard of safety 12 Kimberly George, Sedgwick Regulations being developed by OSHA and EPA were meant The senior vice president of corporate development, to address process safety risks in chemical facilities and oil mergers and acquisitions, and health care for and gas refineries. But those efforts have stalled under the Sedgwick CMS discusses workers comp trends. deregulation focus of the current White House. By Gloria Gonzalez FEATURES DEPARTMENTS 18 Benefits vs. business 4 EDITORIAL As the debate over how much to pay injured 6 STATE-BY-STATE workers continues, states walk a fine line between 9 DATA DIVE the needs of businesses and their employees. 10 STATE PROFILE By Louise Esola 30 THE FORUM 22 Making safety memorable A PUBLICATION OF Safety training used to mean watching films or PowerPoint presentations. Now virtual reality is trying to help workers learn by doing — safely. By Angela Childers 26 Weed in the workplace As more states legalize medical marijuana, employers must review their workplace drug use policies to make sure they are in compliance. By Brooke Nixon Workers Comp SPRING 2019 3

EDITORIAL Medical marijuana SPRING 2019 | ISSUE 1 VOL. 5 pushes the comp envelope CEO M edical marijuana remains an evolving issue that the workers compen- Adam Potter sation industry must adapt to. In March, the New Hampshire Supreme Court ruled that workers PUBLISHER comp insurers are subject to state laws that designate medical mari- Keith Kenner juana as a viable treatment and should reimburse injured workers for the cost [email protected] of the treatment. In addition, Hawaii is considering bills that would require EDITOR Gavin Souter workers comp payers to reimburse patients prescribed [email protected] medical marijuana. (Read about both developments in DEPUTY EDITOR Gloria Gonzalez our State-by-State section.) [email protected] Meanwhile, following the 2018 elections, medi- REPORTER Angela Childers cal marijuana is legal in 32 states and the District of [email protected] Columbia. (See our new Data Dive section for more REPORTER Louise Esola information.) [email protected] With the legalization trend appearing unstoppable, COPY CHIEF Katherine Downing Gavin Souter employers must adjust to the new reality wherever they [email protected] EDITOR are located. As Brooke Nixon of Constangy, Brooks, Smith & Prophete LLP explains on page 26, there is no COPY EDITOR Brian Gaynor longer a bright-line rule that employers can impose on issues such as employ- [email protected] ee discipline, accommodation of disabilities and comp reimbursements. ART DIRECTOR Jeremy Werling Uncertainty is also an issue for employers in the energy and chemical [email protected] industries who are grappling with regulatory conflicts surrounding safety HEAD OF ADVERTISING SALES & EVENTS Jeremy Campbell rules. As we report in our cover story, the chemical and energy sectors have [email protected] seen declines in employee fatalities over the past several years, but the poten- DIRECTOR OF MARKETING & EVENTS Katie Kett tially catastrophic consequences of an accident at the plants make safety [email protected] a priority. Efforts to impose additional safety regulations by the Obama SUBSCRIPTIONS & SINGLE COPY SALES [email protected] administration have stalled under the Trump administration, leading to some 954-449-0736 uncertainty over safety requirements, which can never be a good thing. Workers Comp is published four times a year and covers the trends and topics of interest to professionals Of course, the implementation of effective but practicable regulations is responsible for the cost-effective resolution of workers compensation claims — risk and litigation managers, only part of the answer to improved safety. Workers must also be trained on insurance and claims professionals, corporate counsel, outside counsel and services providers. safety issues, but that is far easier to mandate than to implement. As we report Copyright © 2019 by Business Insurance Holdings. on page 22, employers are using a variety of techniques to make training stick. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by When workers are injured, the workers comp system steps in to pay them any means, electronic, mechanical, photocopying, recording or otherwise, without prior written cash benefits to compensate for lost earnings. But that simple principle that permission of the Business Insurance Holdings. underlies the work-related compensation process must be supported by prac- A PUBLICATION OF tical application to be effective. The views expressed in contributed articles are solely those of the authors and do not necessarily reflect As we report on page 18, states must balance increasing indemnity pay- the views or opinions of Business Insurance Holdings or the companies in which the authors are employed. ments to respond to increases in inflation with the considerations of the economic ability of payers to make the payments. The wide spread between maximum benefits allowed by states shows that at least some of the states must have the answer wrong and that more work needs to be done to provide a fairer setup. 4 SPRING 2019 Workers Comp

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STATE-BY-STATE WILLFUL FATALITY COULD civil lawsuits alleging negligence filed by TRIGGER $100K FINE actors who contracted human immunode- ficiency virus during filming. A woman’s death from being crushed inside a redesigned The judges examined two exclusions in plastics molding machine is State Compensation Insurance Fund pol- behind a push to automatically icies for San Francisco-based Cybernet fine businesses $100,000 per death for Entertainment LLC that barred coverage workplace fatalities resulting from will- under the employer’s liability portion of ful workplace safety violations. the policy: one that excluded “any obliga- Rep. Martin Carbaugh, R-Fort Wayne, introduced H.B. 1341 on Jan. 14 to amend tion imposed by a workers’ compensation the Indiana code on workplace safety, which stipulates fines of $7,000 to $70,000 for ... law” and one that provides that cover- safety violations, to add the additional fine for a worker death caused by a company’s age does not extend to “damages or bodily failure to comply with safety standards and features. The fine would be automatic if injury intentionally caused or aggravated the employer is issued a willful violation and an employee dies, per the bill. by” the internet company, according to The bill passed the Indiana House of Representatives on a 96-0 vote Feb. 19, and documents in Cybernet Entertainment is under consideration in the state’s Senate. If passed, the bill would go into effect LLC v. State Compensation Insurance July 1, according to the bill digest. Fund, filed in San Francisco. Shacarra Hogue, 23, of Fort Wayne, was killed while working inside a plastic molding machine. Her employer, Fort Wayne Plastics, was found by the Indiana Facing three civil suits filed by actors, Occupational Safety and Health Administration to have intentionally removed parts Cybernet filed a third-party complaint of the protective features and instructed her to perform duties inside the machine, against State Fund seeking a declaration Rep. Carbaugh said. that the insurer had a duty to defend, which a district court subsequently ruled against. CALIFORNIA pensation and liability policies to employ- HAWAII ers of farmworkers without being properly BRAIN INJURY DRUGS licensed with the Department of Insurance. PAYERS WOULD BE REQUIRED PUT ON FORMULARY TO COVER MEDICAL CANNABIS The latest move against related compa- n The California Division of Workers’ nies American Labor Alliance and Com- n Both the Senate and House of Rep- Compensation updated its formulary pOne USA follows a cease and desist resentatives in Hawaii are considering for injured workers to include drugs to order issued by the department in 2016 identical bills that would require workers treat traumatic brain injury, regulators against the Agricultural Contracting Ser- compensation payers to reimburse patients announced in February. vices Association Inc. and its affiliates, the prescribed medical marijuana under state American Labor Alliance and CompOne law permitting them to use cannabis. Effective Feb. 15, the adopted changes USA, and its board chairman Marcus Asay. to the drug list, based on the American A follow-up decision and order was issued Nine of the 25 state senators are back- College of Occupational and Environ- in 2017 for the companies to refrain from ing S.B. 1523, introduced Jan. 24, the mental Medicine Practice Guidelines, selling insurance policies in California. same day Rep. Dee Morikawa, D-Lihue, include guidelines for treating traumatic unveiled H.B. 1524. brain injuries, according to a statement. The company, however, continued to sell insurance without a license, according to Both measures follow the state’s study There will also be a designation of addi- a statement issued by the commissioner’s on issues surrounding medical marijuana, tional drugs as “special fill” eligible, due to office. legalized in Hawaii in 2000, according treatment recommendations. to identical text accompanying both bills, The most recent decision and order which would add marijuana to the lan- COMPANIES FINED imposes a penalty that represents $5,000 guage in the state’s workers comp law per- $4.3 MILLION for each of the 869 days that the companies taining to prescriptions for injured workers. sold workers compensation insurance with- n California Insurance Commissioner out a license, according to the statement. Both bills would subject payers to a fee Dave Jones in December fined two compa- schedule and require an injured worker to nies $4.3 million for selling workers com- INSURER NOT OBLIGATED obtain a physician’s certification that he or TO DEFEND HIV CLAIMS she is eligible for enrollment in the state’s 6 SPRING 2019 Workers Comp program governing medical marijuana, n A three-judge panel of the 9th U.S. Circuit Court of Appeals in January ruled that the insurer for an entertainment company that produces pornographic films does not have to defend in court

WORKERS COMPENSATION NEWS FROM ACROSS THE US and that cannabis “may be reasonable and the grounds that there was no proof that damages related to his death because he necessary medical treatment only where an Mr. Atkinson was being paid for his travel was a “special employee” of the company authorized health care provider certifies that to work, as he was a salaried employee, running the plant, and therefore state law the potential benefits of the medical use… and that the accident did not occur with- dictates that the case is that of workers would likely outweigh the health risks.” in the scope of his employment, records compensation. state. The five-judge panel of the state Included in both bills are provisions high court unanimously affirmed the Citing exclusive remedy, the Court of against paying for drug “paraphernalia” commission’s ruling on compensability. Appeals of North Carolina classified Wil- and growing and cultivating of one’s own liam Belk as an employee of the Boise Cas- medical cannabis, which must come from MONTANA cade Wood Products LLC plant after he a licensed producer. was hired via the Arotek Inc. staffing agen- STATE’S COMP COSTS cy, which his family had claimed workers IDAHO TO DECREASE 17.2% compensation benefits from following the September 2015 accident, according to MAN HURT EN ROUTE n Montana’s Insurance Commissioner documents in The Estate of William Belk, by TO WORK DUE BENEFITS Matt Rosendale in February approved and through Taquitta Belk v. Boise Cascade the state’s largest reduction in workers Wood Products LLC, a member of Boise Cas- n The Supreme Court of Idaho in Janu- compensation loss costs since 2011. cade Co., John Doe 1 and John Doe 2, filed in ary ruled that a salesman who was injured Raleigh, North Carolina. while scraping ice off the windshield of The state’s overall workers comp loss a company truck on his way to work in costs will decrease 17.2% according to Mr. Belk’s family, after filing a comp 2017 is eligible for workers compensation the insurance commissioner’s office. The claim, filed a suit against the plywood benefits under exceptions to the state’s reduction is based on filings from the Boca company, among other defendants. Boise “coming and going” rule. Raton, Florida-based National Council Cascade filed for summary judgment and on Compensation Insurance and does not dismissal in trial court, which denied its According to documents in Matthew include any reduction in benefits for work- motions. The appeals court, in turn, cited Atkinson v. 2M Co. Inc. and Employers ers. The rate change will take effect July 1. “uncontradicted evidence” that Mr. Belk Assurance Co., filed in Supreme Court in was an employee of the wood company. Boise, Idaho, Mr. Atkinson was a sala- Workers compensation insurance in ried employee of 2M, a wholesaler of well Montana has continued to trend down NEW HAMPSHIRE drilling and irrigation supplies known for with lower average costs for businesses giving “legendary service” to customers by year after year, said the commissioner’s BOARD ERRED IN DENYING supplying technical assistance at the cus- office. The approved loss costs will be MEDICAL POT BENEFITS tomer’s place of business, running parts to used by both the Montana State Fund them, and assisting in the installation of and private insurers to establish premiums n An insurer may be required to cover the those parts. 2M provided Mr. Atkinson for Montana businesses. cost of medical marijuana, the Supreme with a pickup truck owned by the compa- Court of New Hampshire held when ny, with gas and maintenance paid by the NCCI attributed the decrease in Montana it overturned a workers compensation company, allowing him to call on poten- to more favorable loss experience over the appeals board decision denying an injured tial and existing customers. past few years,a decrease in lost-time claims worker’s reimbursement request for thera- frequency, a downward trend in indemnity peutic cannabis. In 2017, Mr. Atkinson filed a complaint average cost per case and a recent flattening with the Workers Compensation Com- in the medical average cost per case, accord- In Re Appeal of Panaggio, the state’s mission, which “found that Atkinson was ing to the commissioner’s office. high court in March determined in a entitled to benefits because he was injured unanimous decision that since workers in the course of his employment as he was NORTH CAROLINA traveling to work in employer-provided Workers Comp SPRING 2019 7 transportation when the accident occurred” FAMILY OF WORKER and ruled he was entitled to “reasonable KILLED CANNOT SUE medical benefits for injuries sustained” in the accident. n An appeals court in February ruled that the family of a mechanic crushed 2M and its insurer, Employer Assurance, to death while repairing a machine at a appealed to the state Supreme Court on plywood manufacturing plant in North Carolina cannot sue in civil court for

STATE-BY-STATE compensation insurers provide payments statewide change, will take effect July 1, fraud, the complaint documents a scheme for medical treatments, that they may be the bureau said in a statement. that charged Ohio money, partly in the subjected to the same state statutes that form of “sudden price increases,” that the cover medical cannabis as a viable medi- The rate cut follows a 12% reduction PBM later used to subsidize lower prices cal treatment. However, the decision did approved by the bureau last July for both for other clients. not address whether the insurer could be private and public employers, which took prosecuted under federal law for offering effect Jan. 1. Overall, the average rate Ohio terminated its contract with the treatment and remanded that ques- levels for the 242,000 Ohio employers OptumRx in October, according to the tion back to the board. in the bureau’s system are at their lowest attorney general’s office. in at least 40 years and will save private Andrew Panaggio suffered a work-re- employers in the state more than $200 A spokesman for OptumRx provided a lated injury in 1991 and received a lump- million next year, according to the bureau. statement on March 18 saying the allega- sum settlement in 1997 after his perma- tions were “without merit” and that PBM nent impairment award was approved. The bureau’s CEO/administrator, officials “are working with the State to He sought therapeutic cannabis for his Stephanie McCloud, said in the state- resolve the Bureau’s concerns in accor- ongoing pain, and the New Hampshire ment that safer workplaces have resulted dance with the terms of our contract.” Department of Health and Human Ser- in fewer and less costly workplace injury vices approved him as a patient and issued claims, and that lower inflation of medical PENNSYLVANIA him a medical marijuana ID. He pur- costs also contributed to the reduction. chased medicinal cannabis and submitted Claims in Ohio have fallen 18% since COMP INSURER FILES the receipt to Chicago-based CNA Finan- 2010 to 85,136 in 2018. CHARGE CORRECTION cial Corp., his workers comp insurer, which denied payment on the grounds that “med- The bureau noted that the actual total n The largest workers compensation ical marijuana is not reasonable/necessary premium paid by individual private insurer in Pennsylvania is the latest to file or causally related” to his injury. employers will depend on expected future a retroactive correction to its policyhold- claims costs in their industry, their com- ers’ workers comp charges. Mr. Panaggio appealed the denial. pany’s recent claims history, participation Although the New Hampshire Compen- in various bureau rebate programs as well The State Workers Insurance Fund of sation Appeals Board found Mr. Panaggio’s as assessments collected to fund the oper- Scranton, Pennsylvania, which writes use of cannabis as “reasonable and medi- ations of the system. Assessment rates for about $175 million in coverage, in January cally necessary”in a 2-1 decision, the board 2019 will be considered by the bureau’s filed a plan to correct charges to employ- upheld CNA’s refusal to reimburse him on board of directors in March. ers for comp policies written between the grounds that it’s “not legal under state April 1, 2018, and Dec. 31, 2018. or federal law.” OHIO ATTORNEY GENERAL SUES OPTUMRX At the end of October, the Pennsylva- Mr. Panaggio appealed, and the Supreme nia Compensation Ratings Bureau, which Court of New Hampshire reversed the n Ohio Attorney General Dave Yost on makes filings to the state’s insurance board’s decision. Although CNA argued March 15 filed a lawsuit against Optum- department on behalf of the nearly 325 that state statutes create “an explicit prohi- Rx Inc. claiming the pharmacy benefits companies that write workers comp insur- bition to require an insurer to pay a claim manager overcharged the Ohio Bureau of ance in the state, filed a proposed 5.24% for reimbursement” of medical marijuana, Workers’ Compensation millions of dol- reduction in overall loss costs. the court noted that the statute also states lars in prescriptions for injured workers that a qualified patient shall not be denied and asking for $30 million to cover both The Pennsylvania Insurance Department the right of the therapeutic use of cannabis. overcharges and punitive damages. approved in December the ratings bureau’s revised midyear loss cost filings, and the “(B)arring reimbursement of an employee The suit, filed in Franklin County insurance commissioner has been urging with a workplace injury for his reasonable Common Pleas Court, alleges that the insurers to act to reimburse business that and necessary medical care is to ignore this overcharges occurred because Irvine, Cal- were overcharged because of the earlier plain statutory language,” the court said. ifornia-based OptumRx failed to provide ratings bureau filing, said a spokesperson contractually agreed discounts on drugs with the department. OHIO for the state-run workers comp insurer. In addition to SWIF, four insurance STATE APPROVES 20% Alleging counts of breach of contract, groups, including 16 individual insurers, COMP RATE DECREASE fraudulent inducement and promissory have filed plans so far with the insur- ance department to retroactively correct n The Ohio Bureau of Workers’ Com- charges to their policyholders. pensation in late February approved a 20% reduction in the average premium rate it collects from private employers in the state, representing the bureau’s largest reduction in nearly 60 years. The reduction, which is an average 8 SPRING 2019 Workers Comp

DATA DIVE MEDICAL MARIJUANA POST-ELECTION 2018 MARIJUANA TESTING IN THE WORKPLACE Medical marijuana is legal in 32 states and the District of Columbia following Election Day 2018, when Missouri voters adopted a ballot measure to regulate medical cannabis use in the state and Utah voters Marijuana was the most commonly adopted Proposition 2, which regulates the licensed production and distribution of medical cannabis detected substance in workplace drug products to qualified patients who possess a physician’s recommendation. Recreational marijuana is screens, with the highest drug positivity also trending following Election Day, in which Michigan voters joined 10 other states and the District of rate of all drug classes across the majority Columbia in approving recreational marijuana. of industry sectors, according to a study released by Quest Diagnostics Inc. Adult and medical use regulated program Marijuana positivity was highest in Comprehensive medical marijuana program accommodation and food services, CBD/Low THC program at 3.5% positivity in 2017, more No public marijuana access program than 34% higher than the national positivity rate of 2.6% for the general Source: National Conference of State Legislatures U.S. workforce, according to the new report by the drug diagnostics firm A GROWING CONSENSUS headquartered in Secaucus, New Jersey. The data also found that eight sectors 85% of 2,000 85% FOUR OUT OF FIVE said that medical marijuana experienced year-over-year growth with Americans should be regulated like other medicines, with at least 20% INCREASES in marijuana surveyed in U.S. Food and Drug Administration oversight and positivity rates between 2015 and 2017: July 2018 prescriptions from a medical professional. believe that 33.3% marijuana should be Transportation legalized for and warehousing medical use. 33.3% Source: The Harris Poll, 2018 Other services, except OPIOID SCRIPTS DOWN IN MEDICAL MARIJUANA STATES public administration 10% 14% 11% 26.7% States that allow various States that permit medical marijuana Medicaid data showed an Construction forms of medical marijuana distribution via dispensaries — 11% REDUCTION in pain saw a 10% REDUCTION versus states that only permit the prescriptions between 2010 23.5%  in opioid prescriptions, private cultivation of marijuana for and 2015 in states that according to Medicare’s medicinal purposes — saw a permit medical marijuana. Wholesale trade prescription database 14% DECLINE in pain medications between 2010 and 2015. prescribed under Medicare Part D. 23.1% Source: Department of Public Administration and Policy at the University of Georgia, 2018 Manufacturing 20.7% Accommodation and food services 19.0% Administrative support, waste management and remediation services 18.5% Retail trade Source: Quest Diagnostics Inc.

STATE PROFILE Colorado CIVILIAN UPDATES LABOR FORCE Workplace fatalities declined slightly in Colorado in 2017, but transportation- WORKPLACE FATALITIES related deaths remained high, accounting for nearly 50% of all workplace 3.1 fatalities, while deaths caused by slips, trips and falls in the state nearly million Workplace fatalities decreased doubled. The state also approved a more than 16% reduction in loss cost (December 2018) slightly in Colorado from workers comp premiums in 2019, and the Occupational Safety and Health 2016 to 2017, according to Review Commission overturned citations alleging knowledge of violative POPULATION data released Jan. 10 by the conditions at a refinery site in the state. Colorado Department of Public 5.6 Health and Environment. INSURER PERFORMANCE million (July 2018 census estimate) In 2017, the state recorded 77 Written premium volume in Colorado’s workers compensation system has workplace deaths, a decrease continued to climb steadily each year since 2012. The combined ratio for COMPANIES from the 81 reported in 2016. the state’s insurers deteriorated slightly in 2017 but the ratio has improved The fatal injury rate also significantly since 2013. 165,264 decreased from 3.0 deaths per 100,000 full-time equivalent Insurer premiums Combined ratio (2016) workers in 2016 to 2.8 deaths per 100,000 in 2017. The state’s $956M $1.06B $1.07B $1.08B AREA fatality report is based on federal 92% 94% Bureau of Labor Statistics data. $710M $814M 104,094 113% Transportation-related deaths 106% square miles remained the most common cause of workplace fatality, 95% GROSS STATE accounting for nearly 50% of the PRODUCT CHANGE total workplace deaths in 2017. 2012 2013 2014 2015 2016 2017 2.7% Slips, trips and falls were Source: National Council on Compensation Insurance the second-most common (2017) cause of workplace deaths. ESTIMATED AVERAGE COST Medical cost* PER INDEMNITY CLAIM STATE RANK FOR COMP RATES HIGHEST COMP Indemnity cost PREMIUM RATES The Colorado Division of Insurance approved a $21,100 $22,400 $23,900 35th reduction of 16.7% for the average loss costs of workers $20,900 $20,700 $20,300 (2018) compensation premiums for 2019, marking the fifth $27,400 $29,100 $30,600 $31,600 $26,800 $27,700 consecutive year that Colorado has not reported an increase. 2011 2012 2013 2014 2015 2016 In 2017, the division * Excludes medical-only claims GOVERNMENT released a 2018 loss cost Source: National Council on Compensation Insurance 12% rate reduction of 12.7%. LARGEST INDUSTRIES EDUCATIONAL The 2019 reduction was SERVICES, based on a recommendation ALL from the National Council on OTHERS HEALTH CARE Compensation Insurance. & SOCIAL 39% The state also reported ASSISTANCE a reduction in the number PROFESSIONAL 7% of claims filed, which has & BUSINESS decreased from 26.3 claims SERVICES FINANCE, filed per million in 2002 to 18.4 15% INSURANCE, claims per million in 2016. REAL ESTATE, WHOLESALE OSHA CITATIONS TRADE RENTAL & 6% LEASING The Occupational Safety and Health Review Commission Source: U.S. Bureau of Economic Analysis 20% vacated a citation leveled against a refinery, holding that 10 SPRING 2019 Workers Comp an administrative law judge erred in finding that the company had knowledge of a violative condition as a controlling employer at its worksite. The U.S. Occupational Safety and Health Administration inspected the Commerce City, Colorado, refinery owned by Suncor Energy Inc. of Calgary, Alberta, in response to a complaint that an employee had fallen and sustained a serious injury, according to the ruling in Secretary of Labor v. Suncor Energy Inc. As a result of the inspection, OSHA had issued two serious violations and one other- than-serious violation, with a proposed penalty of $12,000.

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PEOPLE IN COMP Kimberly George SEDGWICK Well-known in workers QTell us about your early QWhy nursing? compensation circles, Kimberly career in health care. George is senior vice president of AThe small town I’m from has a really corporate development, mergers AWell, I wanted to be a nurse since I fabulous hospital. Being so rural, and acquisitions, and health care was 5 years old. On my fifth birthday I to get to a big hospital you’re three to for Sedgwick Claims Management wore a nurse’s outfit to my birthday party, four hours away, and so the hub of the Services Inc. A registered nurse and so health care was just something community (is the) hospital, and what for more than 20 years, she began that I had an interest in from the time I that brings to a small rural community her career in neurotrauma before was very little. I actually quit high school is really important. Through my family, she transitioned to insurance and before my senior year and began nursing I knew the director of nursing, as well benefits in 1990 but continued to school early. I was fortunate enough to as other nurses who were a part of that work as a nurse. In 2011, she was have wonderful parents who supported my hospital. There’s also a nursing home. We named by Business Insurance vision. And they were maybe a little sad, would visit the older people who lived in as a Woman to Watch. She’s a but they supported my leaving the little the nursing home, and it was really part mother to two daughters — one town in Oregon I’m from and moving to of our community. If you think about jobs studying to become a nurse — and the city and starting nursing school. I put in a small town that women would have, recently married Mark Walls, the myself through nursing school working they were retail, they were teachers, and vice president of communication in a nursing home as a certified nursing they were in health care. I also helped and strategic analysis for Safety assistant. And then when I became an my family with our (farm) animals. I National and her co-creator for RN, I started working in neurotrauma at would help with the medications. the workers comp webinar series a large hospital in Portland, Oregon. “Out Front Ideas.” She recently spoke with Business Insurance Reporter Louise Esola on her beginnings, where the industry is heading and her passion for travel. Edited excerpts follow. 12 SPRING 2019 Workers Comp

QDo you feel that this background A little secret that some people know is handle pain, how we engage with the led you to this place, helping that during our first Christmas together claims process, whether we are trusting coordinate care for injured workers? with my parents and my daughters in of our environment, whether we can even Oregon, my dad had a cardiac arrest. It have the literacy to follow through … To AIf you think about my early career, was very sudden, we didn’t know he had have a good experience we need to think it was about getting the best health a heart issue and all, and Mark did CPR more about the design of our products and care for people in the right setting and and saved my dad’s life. He learned CPR engagements rather than just a process at the right time, as well as quality care. at Safety National. It’s pretty special, because of a regulatory expectation. (For) And I’ve always been able to thread that not just for our relationship, but he payers it’s still tough because we have a through into my career at Sedgwick over means a lot to my whole family as well. system that says you pay for a physical the last 18 years. And I’ve done that injury but we need to stop inhibiting our by creating quality care programs, I’ve QI was on your last “Out Front claims examiners and our nurses in workers done that by creating case management Ideas” webinar. How do you and compensation from doing what’s right for programs, health network programs Mark develop those webinars? the patient … I do believe that will help us that allow our injured workers and our longer-term get better health outcomes employees to get the best medical care. AThe topics that (we talk about) we’re and cost outcomes for the claims. each passionate about. We do have QI know you like to travel. What some debates, and we have our work QWhat are the hurdles to interesting things have you done time where we make that happen. We achieving that? and where are you going next? do have a good time with it; it is a lot of work, but it seems, from the engagement AThe fear that there will be a AWell, next will be Europe for work that we have, there’s definitely interest. psychological or mental health until I plan a trip to Greece this next diagnosis added to the claim, and so summer with my daughters. But last year QIn a recent survey, insurance usually we call that an additive diagnosis I was probably in six or seven different executives were saying that it’s that will increase the ultimate payout countries and I took my youngest daughter important to get the worker healthy of the claim. That’s the number one and one of her friends to Cuba, which and not just focus on the injury. challenge. The second is, it’s a new is probably one of the more interesting What are your thoughts on that? way of thinking and it takes teams countries I’ve been to. I’ve been to and systems quite a bit of time to Asia and Africa, and traveled the world, APeople are holistic beings, and this change, but there are certain employer but experiencing Cuba with the Cuban whole being will influence how we programs that are beginning to evolve. people and spending time with them and really understanding what our sanctions PMS We help employers and insurers have done to this beautiful country and settle workers’ compensation its people. We spent a lot of time with ® claims quickly, regardless of people in their 20s and early 30s, and complexity. what their vision is for the country going forward was a really fabulous experience. Offices Nationwide QYou married Mark Walls last TEAMARCADIA.COM summer. How did you meet? 800-354-4098 AMark is somebody that the industry knows. Dave North, Sedgwick’s CEO, Workers Comp SPRING 2019 13 and Kim Krause, who’s head of marketing, had suggested Mark and I do some collaboration. It really wasn’t until we had worked together more closely, then it was like, “Are you married? Nope. Are you married? Nope,” and our relationship sort of went from there. It’s nice to have somebody who understands what I do every day who respects not only me, of course, as his wife, but the career that is really important to me. And it is very busy, and the fact that he supports that is pretty fantastic.

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SAFETYSEEKING HIGHER STANDARDS Safety management of highly hazardous chemicals languishes as concerns rise BY GLORIA GONZALEZ duction of nail polish remover, glues and paint thinner, and naphtha and xylene, both D [email protected] components in gasoline, had caught fire as eadly incidents at chemical facilities and oil and gas refineries have of press time. “All personnel are accounted generated significant media attention and triggered a targeted regula- for and there have been no injuries reported tory effort to improve safety for the workers employed at the facilities, as a result of this incident,” the company the first responders dealing with such events and the surrounding said in a statement on March 18. communities. The U.S. Occupational Safety and Health Administration and the In the chemical manufacturing subsector U.S. Environmental Protection Agency were both pursuing and plan- of U.S. Bureau of Labor Statistics data, 13 deaths were reported in 2017 compared ning to implement regulations aimed at addressing process safety risks under with 15 in 2016 and 28 in 2015. None of the 2017 fatalities were attributed to fires the Obama administration, but those efforts have stalled under — and some say or explosions, but five such deaths were reported in each of the previous three years. have been undermined by — the Trump administration. “I feel more comfortable walking Employee fatalities at the facilities are incident in quite a few years, but it’s really through a chemical plant than driving my relatively rare, but some experts believe only a matter of time until there’s some kind car through the streets of Houston,” said improvements in the safety culture — and of an explosion or release at a chemical plant Don Abrahamson, principal process safe- perhaps more regulatory action and over- or a refinery. The fact that you’re moving ty engineer with Abrahamson Consulting sight — are needed to prevent what can be backwards on these regulations makes it LLC in Katy, Texas. “The problem that catastrophic events. more likely that something will happen.” we have is when these incidents happen, the number of fatalities that occur get a lot “We’ve been lucky,” said Jordan Barab, In the latest incident, a March 17 fire at a of visibility.” former deputy assistant secretary of OSHA chemical facility in La Porte,Texas, owned under the Obama administration and by Intercontinental Terminals Co. forced Workers Comp SPRING 2019 15 senior labor policy adviser to the U.S.House the facility to shut down and local residents of Representatives’ Education and Labor to shelter in place. Eight tanks holding Committee. “There hasn’t been a major chemicals such as toluene, used in the pro-

The BP lessons and BP Products North America Inc., a monitoring inspection, according to the unit of London-based BP PLC, to abate agency. BP officials could not be reached The number of fatalities in the oil and hazards and protect refinery workers. for comment. gas extraction sector has fluctuated, hit- In September 2005, BP agreed to pay a ting a 10-year high of 144 in 2014 before then-record $21 million in penalties and The Texas City incident provided or reit- trending back downward, with 81 deaths submit to evaluation of its process safety erated valuable safety lessons, said Lau- reported in 2017 — 10 of which were management program by an independent rence Pearlman, Chicago-based senior attributed to fires or explosions, according auditor. In October 2009, BP agreed to vice president for Marsh Risk Consulting’s to BLS data. pay a $50.6 million penalty — down from workforce strategies practice. For example, OSHA’s proposed $87.4 million for 709 BP’s placement of occupied trailers close One of the most infamous safety inci- alleged failures to comply with the 2005 to an operating unit was a key factor lead- dents was the March 30, 2005, oil refin- settlement agreement and for safety and ing to the fatalities, according to the U.S. ery explosion in Texas City, Texas, known health violations identified during the Chemical Safety and Hazard Investigation in government and safety circles as the agency’s inspection of the Texas City refin- Board’s March 2007 report. BP America refinery explosion, in which ery — and to implement third-party over- a series of untracked near misses helped sight of its processes for relief and safety “Those are some things you can look contribute to the accident that killed 15 instrumented system evaluation. In July for,” he said. “The harder things are … workers and injured 180 others. 2012, BP agreed to pay a $13 million pen- the four fundamental elements of process alty for citations stemming from the 2009 safety. Are you designing it safely? Are you OSHA conducted 17 inspections and operating it safely? Are you maintaining it issued hundreds of citations that led to a safely? And are you leading it properly?” series of agreements between the agency WOULD PLANNED EMERGENCY STANDARD OVERREACH? T he U.S. Occupational Safety and OSHA tasked the National Advisory responder safety?” said Nicole Smith, Health Administration’s plans to Committee for Occupational Safety and a Washington-based shareholder and develop a potential emergency Health’s subcommittee for emergency expert in occupational safety and health response standard gained new momentum response and preparedness with exploring law with Vedder Price. “I feel like with the announcement that a review a potential regulation in September they are always trying to expand their of its impact on small businesses was 2015. In December 2016, NACOSH jurisdiction. I don’t know where their imminent, but some experts question if recommended that OSHA pursue an jurisdiction ends if they can do this.” the agency is overstepping boundaries emergency responder preparedness But Stephanie Thomas, Houston-area by pursuing such a regulation. program standard and submitted a draft researcher and community organizer with OSHA announced on Feb. 7 that it plans rule for OSHA consideration that would public interest group Public Citizen, said to initiate a Small Business Advocacy Re- require emergency service organizations OSHA and U.S. Environmental Protection view panel on emergency response under to write and implement a comprehensive Agency rules requiring companies to the Small Business Regulatory Enforce- risk management plan. The rule-making coordinate with and provide information ment Fairness Act within 60 days, accord- effort stalled under the Trump admin- to first responders are critical, as ing to the Small Business Administration. istration but was unexpectedly added seen in 2017 when Hurricane Harvey Such a standard would outline procedures back to the agency’s agenda under the triggered severe flooding at chemicals to respond to natural catastrophes such prerule stage, meaning the agency is manufacturer Arkema Inc.’s Crosby, as hurricanes and incidents such as considering taking action, in May 2018. Texas, facility (see story, page 29). explosions at chemical plant facilities. “That is definitely moving forward,” “A number of (first responders) ended up OSHA’s efforts to regulate emergency re- said Micah Smith, of counsel with going to the hospital after that incident sponse had been percolating for years, but Conn Maciel Carey LLP in Washington. because they were exposed to chemicals,” gained momentum after an April 2013 ex- But “when we’re talking about these she said. “They hadn’t been fully informed plosion at the West Fertilizer Co. in West, major industrial workplaces, they’ve about what they were walking into. First Texas, killed 12 emergency responders already eliminated much of their risk to responders really want to see some of and led to then-President Barack Obama’s employees or to emergency responders.” these disclosure policies in place so they executive order directing agencies such as Some experts question whether OSHA can go into a situation and know what OSHA to strengthen their preparation and should be implementing such a standard. kind of protective gear they need.” response to chemical safety incidents. “Why is OSHA involved in first Gloria Gonzalez 16 SPRING 2019 Workers Comp

OSHA’s main vehicle for regulating these HIGHLY VOLATILE facilities is its process safety management standard, although potential violations Current citations of 1910.119 (Process Safety Management of Highly Hazardous Chemicals) may also fall under its control of hazardous substances rule, better known as lockout/ 1,184 1910.119 VIOLATIONS (2009-2018) tagout, or its confined space regulation, which “sets up a fairly confusing and fairly $16.7M Total citations Total penalties difficult scenario” for regulators, workers, 805 contractors and owners and operators, said 1,014 Jim Stanley, president of safety consulting 704 firm FDRsafety LLC in Franklin,Tennes- 814 see, and a former deputy assistant secretary 711 616 663 of labor for OSHA. 443 The ability of OSHA inspectors “to understand the processes aren’t anywhere $2.8M $3.0M $2.2M $3.3M $2.5M $2.3M $2.5M $2.5M 368 near as good as the people that are working $1.9M there,”he said.“There’s a lot more to safety 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 in that workplace than just violations.” Note: Counts are for the number of times that a violation of a standard under 1910.119 has been cited. The West, Texas, lessons Violations may be grouped when a source of an identified hazard involves interrelated violations of different standards. Source: U.S. Department of Labor Enforcement Data, OSHA Data Catalog A new regulatory effort to tackle chemi- cal safety hazards emanated from an April In May 2018, the EPA proposed a rule explosive material … people would have 2013 explosion at the West Fertilizer Co. to rescind the planned changes, common- evacuated, and potentially there would in West, Texas, that killed 12 emergency ly referred to as the reconsideration rule. have been fewer fatalities.” responders and three civilians and injured A final rule had not been issued as of press more than 260 others, according to the time, meaning the Obama administra- “ We don’t have confidence in the CSB’s January 2016 report. The explosion tion’s rule is in effect for now. rule-makings that we’re going to get out of triggered an estimated $230 million in this administration, and we will continue insurance-related losses, but the company “The biggest thing that comes to mind to litigate on basically every front because was insured for just $1 million, according for me is just how confusing this must of that,” he added. to the report. all be,” said Brittany Barrientos, a Kansas City, Missouri-based partner with Stinson If the reconsideration rule is challenged, a The West, Texas, disaster led to Leonard Street LLP. “Most businesses are court could issue an injunction preventing then-President Barack Obama’s April not trying to be unsafe … so I think the it from taking effect, which would shock 2013 executive order directing agencies uncertainty of the regulations is probably those in the regulated community expect- such as the EPA to strengthen their prepa- frustrating.” ing the RMP amendments to be lifted, ration and response to chemical safety said Micah Smith, of counsel with Conn incidents, which culminated in multiple Texas-based staffers of Public Citizen, Maciel Carey LLP in Washington. The actions, including proposed amendments one of the public interest groups that has D.C. Circuit’s opinion on the delay rule to the EPA’s Risk Management Program. sued the Trump administration over several showed that the court looked “very closely” regulations, have seen first-hand the fallout at the EPA’s congressional authorization to But the Trump administration delayed of major chemical incidents and pledged to act under the Clean Air Act amendments enforcement as it considered reconsider- fight any attempts to weaken or rescind the that authorized the Risk Management ation petitions, which led a group of 11 RMP amendments, particularly in the area Program and required the agency to devel- state attorneys general to sue the EPA in of emergency response, as regulated enti- op regulations to protect the environment July 2017. The U.S. Court of Appeals for ties would be required to coordinate with from chemical releases. the District of Columbia Circuit ruled and inform local first responders of the in their favor in August and vacated the types of chemicals present in their facilities. “They’re not authorized to make pro- delay rule after finding it to be arbitrary tections against releases weaker,” he said. and capricious and determining it did not “The West, Texas, incident is anoth- “The chances the Obama-era RMP rule have the purpose or effect of assuring com- er example where some of the fatalities continues in effect for a short or long pliance, but was rather calculated to enable were definitely caused by some of the period of time are much, much higher noncompliance. people staying closer to the facility then than people tend to think.” they should have after the fire started,” said Adrian Shelley, Austin, Texas-based A proposal to modernize OSHA’s pro- director of Public Citizen’s Texas office. cess safety management and related stan- “If people had known the volume of See MANAGEMENT page 29 Workers Comp SPRING 2019 17

18 SPRING 2019 Workers Comp

DEBATE PAYMENTSOVER INJURY CONTINUES Workers comp benefit levels vary from state to state as each tries to strike a balance between the needs of employers and injured workers BY LOUISE ESOLA [email protected] W hether workers are paid enough cash benefits following an inju- School of Business at Arizona State Univer- ry that leaves them incapable of sity and 2018 chair of the National Academy earning a paycheck is a common of Social Insurance Study Panel on Workers’ question in workers compensa- Compensation Data. The panel analyzed data from all states for its tion circles that’s not likely to go 2018 study that put issues such as medical pay- away, experts say. ments and indemnity under the microscope. A Yet as of early 2019, few states are in dis- line graph in the report shows the percentage cussions about raising indemnity payments, of cash benefits sloping downward since 1980. although watchdogs and stakeholders are antic- “The claimants bar would always like to see ipating another push in one form or another. benefits higher,” but there are no talks in Florida “There’s always a lot of controversy about what to raise indemnity so far in 2019, said W. Rogers workers are receiving,” said Marjorie Baldwin, Turner Jr., a Winter Park, Florida, attorney with a Phoenix-based professor at the W.P. Carey Hurley, Rogner, Miller, Cox & Waranch PA, Workers Comp SPRING 2019 19

which represents employers. CASH BENEFITS FOR in an email to Business Insurance explaining New York addressed the issue with INJURED WORKERS the math: As of 2019, the maximum week- ly compensation rate is $845.74 in South reforms in 2007, which gradually increased The maximum weekly temporary total Carolina. Annually, that’s $43,978.48. “A the maximum weekly indemnity benefit disability benefit ranged from a high worker who made $70,000 or more likely from $400 — where it stood since 1992 of $1,688 in Iowa to a low of $478 is going to have much less money available — to the latest benefit of $904.74, which in Mississippi as of January 2017. for them than their family has been accus- went into effect July 1, 2018, and takes tomed to,” he wrote. inflation into account. The minimum weekly benefit in 2017 ranged from a high of $583 “The bills are coming in and they are Now the state is known as having the in North Dakota to a low of $20 in not having money to pay those bills … highest comp costs in the nation because Arkansas, Florida and Wisconsin. it affects credit scores and can take down of it, according to data released in the fall families,” Mr. Sink said in an interview. by the Oregon Department of Consumer Over five years between 2012 and 2016, and Business Services and experts weigh- the states with the largest decreases And the more serious the injury, the ing in on the current state of the New York in cash benefits included: Oklahoma, more serious the concerns with cash ben- workers comp system. But the New York down 36.4%; Michigan, down 36.2%; efits, experts say. Workers Compensation Rating Board and Tennessee, down 32.6%. disputed the report. “In general, the thinking is if you have Source: National Academy of Social Insurance, 2018 a really serious injury and are out of work That’s not the case in other states, for a long, long time, you are going to be many of which have cut benefits by either permanently disabled by certain percent- undercompensated when compared to reducing the maximum dollar amount per ages, providing more cash. For example, people with shorter-term injuries,” said week or reducing the amount of time a an arm injury may leave a worker 20% Ms. Baldwin. “In general, economists will person can be deemed disabled under the disabled, per medical guidelines that are say that the people with the most serious comp system. And experts warn it’s not often debated, too. injuries are undercompensated.” an apples-to-apples issue, as many states craft their benefits with caps and time lim- The benefits are usually posted on the Spurring the discussion of greater ben- its that can change with the situation and state websites and often include charts and efits for injured workers is that workers can depend on type of disability. annual notices. A common theme is that compensation has been dubbed as the only the benefits are usually set way below what profitable property/casualty market, with In most states, the benefits are calculated a worker needs to pay bills, according to the National Council on Compensation at about two-thirds of the injured worker’s George Sink Jr., who represents injured Insurance late last year showing state rate average weekly wage — with variations if workers in Charleston, South Carolina. decreases falling between 3.5% and 19.1% the worker had more than one job or is for 2019, experts say. “For people with higher income, they may see a sudden reduction in income after a work injury or disability,” Mr. Sink wrote JURY IS OUT ON HIRING ATTORNEYS FOR CLAIMS DISPUTES I njured workers who hire attorneys to according to San Diego-based workers attorneys fees were set at 20% of the first represent them in claim disputes can comp attorney Robert A. McLaughlin of $5,000 of benefits, 15% for the next $5,000, see up to 20% of their cash benefits the Law Office of Robert A. McLaughlin and 5% to 10% of the remainder. go toward legal representation, according and president of the California Applicants’ Meanwhile, whether attorneys in workers to the National Academy of Social Attorney Association, which advocates for comp are necessary has been up for Insurance’s study on benefits. attorneys that represent injured workers. debate. In discussing how some workers “States do differ, but 20% of the Attorneys fees are a subject of debate, comp claims can be complicated by recovery is a common attorney fee,” said as was the case in Florida, where the state medical treatment reviews, Mr. McLaughlin Les Boden, an economist and environment Supreme Court ruled in 2016 that Florida’s said most workers can go without an health professor with Boston University’s attorney fee schedule, which set fees as low attorney but that it’s not likely to happen. School of Public Health, who now chairs as $1.53 per hour, violated state and federal “I am always thinking about the poor the data panel for the Washington-based laws as it hindered an injured worker’s injured worker who does not have an organization. ability to obtain legal representation, he attorney,” he said. “I feel for those States such as California require that said. The Florida Legislature has not set people who have a hard time navigating attorneys fees connected to workers limits to attorney fees in the wake of the the process.” compensation cases be set by a judge, ruling. Prior to the defunct fee schedule, Louise Esola 20 SPRING 2019 Workers Comp

Yet increasing benefits — which usu- ers, as 2013 reforms reduced benefits by as some,” said Mr. Burke. ally means higher costs for employers much as 60% in some instances, according Another mechanism for raising comp — is a balancing act for states that still to Bob Burke, an attorney who represents want to keep workers comp rates down to injured workers and a former Oklahoma benefits came into play in Florida in 2016 attract businesses, according to Mary Beth secretary of commerce in Oklahoma City when the state Supreme Court ruled that Hughes, a partner in the Milwaukee office who advocates for changes to benefits. cutting off temporary disability benefits of Husch Blackwell LLP, which represents after 104 weeks to a worker who is total- employers. “There is certainly, on behalf of injured ly disabled and incapable of working but workers, a desire to have a reasonable who has not yet reached maximum medi- “Wisconsin is a state that prides itself increase in benefits,” said Mr. Burke. “The cal improvement is unconstitutional. The on making workers compensation reforms 2013 legislation has given Oklahoma the case, Bradley Westphal v. City of St. Peters- that will not sway with the political winds lowest workers comp benefits in the coun- burg, eventually pushed the limit to 260 … therefore we keep rates steady,”she said, try, and there is certainly a hope that there weeks, he said. adding that reforms are unlikely with the would at least be a reasonable increase … state automatically increasing payments not nearly to the level where they were.” As for raising weekly pay, Mr. Turner year after year. is in line with others in stating that 66% In 2013, before reforms took effect in — the standard two-thirds — of aver- In Oklahoma, however, where benefits Oklahoma, the maximum temporary total age weekly pay should be enough for an have declined year after year, that’s not disability benefit was $771, according to injured worker on temporary disability. “I likely to be the case. data on the state’s website. It was set at don’t see anyone saying we need to make it $590.63 per week in 2018. 80% from 66%,” he said, emphasizing that In early February, Oklahoma was teeing a significant increase is not likely. up to increase cash benefits to injured work- “For high-income earners, that is trouble- MISSING SOMETHING? WHERE ARE THE “EXPERIENCED ADJUSTERS” ON MEDICAL ONLY CLAIMS? Don’t let unmonitored The majority of Workers’Compensation claims are considered “Medical Only”, and typically assigned to inexperienced Medical Only Adjusters, or more commonly seen as “payment clerks” claims become your with no real adjudication expertise. What’s the Risk? Cost drivers associated with “Medical Only” claims can change, and in the standard TPA model, no one is watching! worst nightmare! CBCS’s ADVANTAGE OF AN EXPERIENCED CLAIM ADJUSTER Center of Excellence Model eliminates the • Cost avoidance due to medical bill’s causal relationship to the injury Medical Only Adjuster • Immediate investigation & contacts completed throughout life of all claims role and only places • Monitoring of Over Utilization experienced adjusters • Claim information is always under review as it may impact the claim outcome or direction • Adverse development monitoring on your programs. • Early identification of fraud indicators • Avoidance of “unmonitored medical treatment plans” • Adjuster remains consistent on claim – From open to close FOR MORE INFORMATION CONTACT CHRIS WECKHERLIN: 563.451.0747 OR JILL GLAD: 314.402.2202 Workers Comp SPRING 2019 21

22 SPRING 2019 Workers Comp

SAFETYMAKING TRAINING STICK Employers are turning to technology to make safety training more interactive in an effort to help workers remember it BY ANGELA CHILDERS [email protected] E mployers routinely conduct safety as the customized video- and classroom-based training in an effort to reduce the like- training that has proven effective for veteran lihood of injuries, but capturing and workers and a more interactive approach for the maintaining the attention of employees younger generation of employees. in an age where they are saturated with “Many times you go into training, and the interactive media, email and communi- moment you walk out of that classroom you cations is a challenge. start to forget what you learned,” said Kim Making safety training stick can also require Shambrook, senior director of safety education employers to adopt a variety of approaches tar- and training at the National Safety Council geted at different employee populations, such based in Itasca, Illinois. Workers Comp SPRING 2019 23

Many companies still conduct their “You still see a lot of death by Power- in a dark room to learn by watching an annual refresher training with slide decks Point,” said Mr. Brown. “With online old safety video is ineffectual, said David or online self-study, said Coleman Brown, self-study or webinars, people put it on Barry, national director of casualty risk vice president of risk control for CBIZ play, then they do all of their other work, control, risk control and claims advocacy Insurance Services Inc. based in the com- then at the end they take a test,” he said. practice at Willis Towers Watson PLC in pany’s Columbia, Maryland, office. Overland Park, Kansas. But video train- The old technique of putting employees ing can still be a great training technique, particularly if a company takes the time VR HELPS REDUCE TRAINING RISKS to take a personalized approach, he said. V irtual reality is one of the latest Over the past two years, the brokerage and fastest-growing safety training Ms. Shambrook, who has personally has created individualized safety videos, techniques, experts say. experienced virtual reality training often at a company’s worksite with their simulations, said the “very real” feeling branding and employees. Workers are more engaged and likely to retain infor- In 2017, more than $435 million was associated with the simulation makes the mation if the safety hazards they view in a video are the actual hazards they will face invested in corporate-facing technology consequences of that risk much more at the workplace, and they are more likely to take ownership for maintaining a safe companies to advance mixed-reality memorable. workplace if they are participating in the video or watching a coworker or supervi- learning, which includes both virtual and “There’s certain training that goes into sor demonstrating how to avoid a hazard or conduct a particular task safely, he said. augmented reality, according to Monroe, whether you’re wearing the right harness, Companies can also email or post snip- Washington-based Metaari Advanced tagging off, etc., that you can teach in pets of the videos to employees to con- stantly reinforce the training messages and Learning Technology Research, a com- the classroom, but you never experience themes. By regularly emailing short clips focusing on a particular safety issue via this petitive intelligence research company. what it’s like to fall,” she said. “VR allows “microtraining” or “constant drip model,” the safety messages remain fresh and at the Though virtual reality can be cost-pro- you to create that environment. It allows forefront of the employees’ minds, he said. hibitive for smaller employers, many larg- people to experience that emotional tug Learning through doing can also help improve retention, according to Mr. er companies whose workforces which really resonates. Brown. For example, when teaching fall protection, he asks employees to come face potentially lethal risks Suddenly [the risk] has to training with their harnesses. As a group, they will go through the check- have embraced it, experts relevance to them.” list to inspect their harnesses, be taught the proper way to put them on, have an say. For example, Common- Tjeerd Hendel-Blackford, opportunity to put on the equipment, then demonstrate to the instructor that their wealth Edison Co., an electric head of thought leadership at harness is in good working order and that they can properly put on the equipment. utility company based in Chicago, Enhesa NV, a global environmental, “The demonstration shows you that they recently began using virtual reality to cre- health and safety consultancy in Brussels, have the knowledge, skills and ability — also known as the KSAs,” Mr. Brown said. ate an underground manhole environment said a United Kingdom-based utility “With our labor shortage, a person who has KSAs is more valuable than anybody.” that gives employees the experience of company recently implemented virtual While seasoned employees may still be working in a manhole and allows them reality training to increase awareness and more receptive to traditional video- and classroom-based safety training, young- to use trial and error to identify potential management of mental health issues at er generations tend to learn differently, said Ms. Shambrook. Some companies issues, make choices and learn from the the workplace because of its high suicide consequences of their actions in a safe rate. Through the use of virtual reality environment, according to a company glasses, employees were shown the point spokesman. The utility expects 100 em- of view of a colleague who was unhappy, ployees to use this technology per year. stressed, and then standing at the top of Virtual reality is revolutionizing training, a building ready to commit suicide. said Kim Shambrook, the senior director “The impact of this training was appar- of safety education and training for ently almost instantaneous, with employ- National Safety Council based in Itasca, ees coming forward with their worries, Illinois. For instance, companies can sim- concerns and personal experiences with ulate an employee’s heightened risk for mental health issues,” Mr. Hendel-Black- falling using virtual reality to address a ford, who is based in Paris, said in an key workplace safety risk. Fall protection email. “The shock impact … meant that remains the most frequently cited viola- it had an immediate impact on breaking tion by the U.S. Occupational Safety and down what is often a taboo subject in a Health Administration, and falls account macho environment.” for nearly 40% of all construction deaths. Angela Childers 24 SPRING 2019 Workers Comp

have had success using interactive learn- COSTS AVOIDED workplace injuries for its flight attendants. ing maps — a strategy where risks are Linda Tapp, president of SafetyFUN- presented to employees gathered in small The U.S. Occupational Safety and groups who work together to show the Health Administration estimates that damentals in Madison, New Jersey, steps to avoid an injury in particular sce- the value of an avoided workplace which creates corporate training games narios, said Laurence Pearlman, the senior injury is $77,000 per case. and activities, also champions the use of vice president of workforce strategies for collaboration and grouping employees in Marsh Risk Consulting. Typical workers compensation injuries small teams to come up with the solution cost insurers about $30,526 each, on to a safety problem. Using this approach, Last year, Delta Airlines changed its average, based on total workers comp and making it as visual as possible, can approach for providing safety training for costs and the total number of reportable also help illustrate the safety solutions for new flight attendants. Rather than creat- injuries in the private sector. the 14% of the workforce that can’t read, ing a traditional classroom environment, and the 30% that can only read at a basic the 1,200 new flight attendants were Indirect costs of an injury, which level, according to the National Center for placed in groups of between four and seven include the cost of hiring and training Education Statistics. trainees and presented with potential risks replacement workers, administrative and asked to work together to determine costs and lost productivity are estimated “It ’s an embarrassing problem for the safest way for dealing with the scenar- to be equal to 110% of the direct adults,” she said. “One-third (of the work- io. The change was made in part to better costs of a compensable injury. force) can’t read above a fifth-grade level. engage the largely millennial-aged new A lot of the training activities I do are hires, said Amal Yusef, the airline’s man- Safety and health programs can help image-based.” ager of safety promotion based in Atlanta. reduce injuries by 14% to 35% for employers who newly implement Using images to illustrate a problem “Sitting in a room wasn’t working,” she a safety and health program. and its solutions not only resonates more said. “With interactive learning maps, with workers, it also helps when train- they were faced with different scenarios Source: Benefits of the OSHA On-Site Consultation Program: ing non-native English speakers, and can on a plane or a layover, and talk amongst An Economic Analysis Working Paper, August 2018 allow the facilitator to see that both the themselves about what to do if faced with individual and the group understand how the situation.” Delta doesn’t have data on the effec- to prevent an injury from a graphic per- tiveness of the program yet because the spective, she said. Not only did it help facilitate conver- first learning maps training was rolled out sation and thought on the best way to in March 2018, but Ms. Scott expects to Workers Comp SPRING 2019 25 handle potential risks, Ms. Yusef said it have data over the next few years about also stimulated debate on decisions that whether the training program is reducing fell into a gray area, such as what to do if a more senior flight attendant says to keep serving passengers when the captain has notified that turbulence is coming. To create the learning maps, Delta had flight attendants with varying years of service identify the pain points in their roles so trainees could experience scenar- ios they would likely encounter once on the job. Then they developed a range of solutions from which the trainee groups would choose. “The beauty of the learning map is peo- ple come to the ‘ah ha!’ moments them- selves rather than you telling them that this is the right answer,” said Susanne Scott, Delta’s director of corporate safety, also based in Atlanta. The approach also helps empower new and younger flight atten- dants and equip them with the confidence to handle an in-flight situation, she said.

PERSPECTIVES 26 SPRING 2019 Workers Comp

CANNABISMAKING SENSE OF LAWS Marijuana in the workplace: Legal, illegal and somewhere in between E conomist Klaus Schwab said, BY BROOKE NIXON employers to take adverse action against “Change can be frightening, Constangy, Brooks, Smith & Prophete LLP an employee for marijuana use. The rele- and the temptation is often to vant section states: resist it.” medical marijuana. These and other sim- With groups like the Coa- ilar laws may affect how business owners “This act does not require an employer lition to Regulate Marijuana can legally hire, fire, discipline and man- to permit or accommodate conduct oth- like Alcohol in Michigan, the age their workforces. In some states, how- erwise allowed by this act in any work- Campaign to Legalize and Regulate ever, these laws do not affect the work- place or on the employer’s property. This Marijuana in Arizona, and The Con- place at all. Business owners and human act does not prohibit an employer from necticut Coalition to Regulate Marijuana resources professionals have an endless list disciplining an employee for violation of forming across the country, rapid change of questions about how these laws affect a workplace drug policy or for working is occurring in marijuana legalization, and their businesses. While the particulars of while under the influence of marijuana. more change is certain to come. each state law vary, drastically in some This act does not prevent an employer areas, there are a few overarching guide- from refusing to hire, discharging, dis- The simple times where employers could lines that employers can follow. ciplining, or otherwise taking an adverse have a bright line rule against applicants employment action against a person with and employees using marijuana may be Can you fire an employee for respect to hire, tenure, terms, conditions, over. At the end of 2018, 10 states and the marijuana use in a state where it or privileges of employment because of District of Columbia had passed expan- is legal? that person’s violation of a workplace sive laws legalizing marijuana for adult drug policy or because that person was recreational use. Thirty-three states and In some states, the answer is a clear and working while under the influence of the District of Columbia have legalized unequivocal yes. For example, in 2018, marijuana.” Michigan voters passed a measure to legalize, regulate and tax marijuana in Workers Comp SPRING 2019 27 the state, but the terms specifically allow

PERSPECTIVES In Connecticut, on the other hand, the cant because of her “status” as a qualifying How might medical marijuana answer is no for medical marijuana users. medical marijuana user, but because she affect workers compensation The Connecticut statute provides that an would be actively using marijuana while claims? employer may not refuse to hire a per- she was employed. son, or discharge, penalize or threaten an Many workers compensation insurers employee solely on the basis of his or her The court said to distinguish between refuse to pay the cost of medical marijuana, status as a qualifying patient for medical these two would render the law mean- even if a doctor prescribes it to an insured’s marijuana use. ingless. Further, the court did not buy injured employee. However, in some states, the employer’s argument that federal law insurers are required by law to cover the However, the law further provides, should pre-empt the state’s law legalizing cost of medical marijuana treatment. Since “Nothing in this subdivision shall restrict marijuana use or the company’s argu- marijuana use is still illegal under feder- an employer’s ability to prohibit the use ment that it could not hire the appli- al law, insurers may have an argument to of intoxicating substances during work cant because it would violate the federal refuse payment of the claim despite the hours or restrict an employer’s ability to Drug Free Workplace Act. In the end, state law. An alternative issue involves an discipline an employee for being under the court granted the plaintiff applicant employee who has been injured at work the influence of intoxicating substances summary judgment, meaning that she but who tests positive for marijuana at the during work hours.” Accordingly, even won her case without ever having to go post-injury drug test. If the employee was in states where the law prohibits adverse to trial or face a jury. This ruling should a legal medical marijuana user, can insur- action against a medical marijuana user, concern employers because the law’s ers deny workers compensation benefits? most states retain an employer’s ability explicit language allowing employers to Some have done just that. Unfortunate- to prohibit marijuana use while on duty prohibit intoxicating substances during ly, we are not certain which side will win and even allow employers to discipline work hours and discipline employees these arguments.These conflicts are simply employees who are under the influence of for being under the influence did not too new and have not had enough time to medical marijuana while at work. prevent the court from ruling in the make their way through the court system. applicant’s favor. Should I be concerned about What should I do now? ADA claims brought by medical Are there any concerns I should marijuana users? have about potential marijuana While the details of the specific laws use by my workforce? vary from state to state, it is important Because marijuana is still an illegal that every employer review their work- drug under federal law, employers are not Multiple studies have linked marijua- place drug use policies on an annual basis. required to accommodate an employee’s na use to increased accidents and inju- Special attention should be paid to defi- marijuana use under the Americans with ries, especially for employees who drive nitions and provisions that differentiate Disabilities Act, a federal law prohibiting an automobile or machinery as part of between illegal and legal drugs, since what discrimination on the basis of an employ- their job duties. According to a 2014 may have been an illegal drug when the ee’s disability. However, employees who New England Journal of Medicine arti- policy was drafted could now be a legal are authorized to use medical marijua- cle, short-term effects of the drug include drug under state law. na in states where such use is legal may impaired short-term memory, making it have state law claims against an employer difficult to learn and to retain information; If a marijuana use law is passed in your who takes an adverse action against them impaired motor coordination, interfering state or if one was passed in recent years, because of marijuana use. with driving skills and increasing the risk your HR department and employment of injuries; altered judgment; and, in high counsel should work together to ensure For example, in a recent Connecti- doses, paranoia and psychosis. that the company’s policies are in compli- cut lawsuit, a federal judge held that an ance and that all managers and other deci- employer violated the state law referenced The detrimental effect of marijuana sion-makers are aware of the actions that above when it withdrew a job offer to an use by employees will differ from work- can and cannot be taken against employee applicant who tested positive for THC, place to workplace and from employee to marijuana users. the active ingredient in marijuana. The employee. Consequently, it is important applicant disclosed during the application for every business owner to review their Brooke Nixon is a process that she was qualified under the job descriptions with particular emphasis partner at Constangy, Connecticut Palliative User of Marijuana on any positions that are considered to be Brooks, Smith & Act to use medical marijuana to treat her “safety sensitive” positions. Courts may be Prophete LLP. She post-traumatic stress disorder. The court more willing to allow employers to take can be reached at rejected the employer’s various arguments adverse action against legal marijuana 205-226-5466 and that it did not refuse to hire the appli- users in these positions. [email protected]. 28 SPRING 2019 Workers Comp

MANAGEMENT They have a sense of what I would call ing and verifying that those four elements chronic unease, which means they want to of process safety are consistently there.” Continued from page 17 be confident that their assets are operating properly, but they always want to be check- “The process safety culture needs to advance,” Mr. Abrahamson said. dards to prevent major chemical accidents, WAKE-UP CALL FOR CHEMICAL MAKERS which had considerable overlap with EPA’s F looding instigated by Hurricane RMP rule-making, was moved off the Harvey at chemicals manufacturer like Harvey. There were no recommenda- active rule-making list to the long-term Arkema Inc.’s Crosby, Texas, plant in tions that would have been different than list, meaning the agency did not expect what (Arkema) did. And they were prepared to have a regulatory action within the 12 months after publication of the agenda, in August 2017 symbolizes the safety chal- for the only thing they had ever experienced July 2017.The OSHA rule-making “as far as we can tell is stalled,” Mr. Smith said. lenges these types of facilities will increas- before: a 100-year and 500-year flood.” “It’s not going away, but it’s also not really going anywhere.” ingly contend with in the face of wors- But the Gulf Coast is “particularly Culture shock ening natural catastrophes, experts say. vulnerable to weather events,” said Jordan The CSB’s March 2007 report into the Arkema’s Crosby facility is located Barab, former deputy assistant secretary Texas City disaster determined it was caused by organizational and safety defi- within the 100-year and 500-year flood of the U.S. Occupational Safety and Health ciencies at all levels at BP, with warning signs present for several years but compa- plain, and extensive flooding caused by Administration under the Obama admin- ny officials failing to intervene effectively. Serious safety culture deficiencies were heavy rainfall from Harvey exceeded its istration and senior labor policy adviser further revealed when the refinery experi- enced two additional serious incidents just equipment design elevations and caused to the U.S. House of Representatives a few months after the fatal incident. the plant to lose power, backup power and Education and Labor Committee. “We saw “When the Chemical Safety Board looked into the BP incident, they found critical refrigeration systems, according to at Arkema the basic policy for chemical fa- workers that were overworked, weren’t well trained in the emergency procedures, a May 2018 report by the U.S. Chemical cilities that are vulnerable to these events maintenance had fallen behind,”Mr. Barab said. “The companies were just not invest- Safety and Hazard Investigation Board. is basically to shut it down and hope for ing enough into safety, which puts the workers at risk and puts the surrounding Since September 2017, several civil the best or hope it just blows up without communities at great risk.” lawsuits have been filed against Arkema, hurting anybody. That’s hardly a good plan Safety culture issues were also deter- mined to be at play in the BP Deepwa- although those are essentially on hold for the future as severe weather events ter Horizon incident that resulted in the deaths of 11 workers and caused a massive, pending the resolution of criminal charges increase in both frequency and intensity.” ongoing spill in the Gulf of Mexico, with the CSB reporting that safety culture was filed against the company and two of Arkema “had a good plan in place,” said “negatively impacted by an insufficient focus on process safety.” its executives for an emissions release Don Abrahamson, principal process safety “There are some companies with phe- that allegedly endangered the public, engineer with Abrahamson Consulting nomenal process safety cultures, and they’re characterized mostly by ‘our assets are safe according to Rusty Hardin, an attorney LLC in Katy, Texas. “But the water kept and I can show it,’” Mr. Pearlman said. “They really have a handle on what could representing Arkema with Rusty Hardin rising. They lost their power. They lost go wrong and cause black swan incidents. & Associates LLP in Houston. Arkema their backup power. At that point, there’s estimated Harvey-related expenses at €24 nothing they could do. How do you plan million ($27.3 million), including €18 million for 51 inches (of rain) in three days?” for the insurance deductible retained, Arkema had been cited for 10 serious according to its 2017 financial statements. violations by OSHA in February 2017 and Arkema had a written hurricane agreed to pay $91,724 in fines. But the preparedness plan and an emergency OSHA violations were unrelated to flooding response plan to address contingencies and had been corrected, and Arkema im- such as a loss of power, Mr. Hardin said. mediately reported the Harvey flooding in- “These things are all too easy for every- cident to agency officials, Mr. Hardin said. body to Monday morning quarterback,” he “In Arkema’s case, nobody was harmed said. “The lesson from it is that we may be in the workplace and they were walking starting to encounter more extreme, more through chest-high water moving product unprecedented weather events than ever from the warehouse to one of these before. If you go back to the Chemical refrigerated trailers,” he said. “If the Safety Board report, they basically found water hadn’t been so unprecedented, that there were no standards for the indus- nothing like this would have happened.” try that would have applied to something Gloria Gonzalez Workers Comp SPRING 2019 29

Subrogation MODERATOR How do you identify potential Once you decide that there subrogation in a workers is subrogation potential, Richard Lenkov, compensation claim? how do you decide whether to capital member, actually pursue recovery? Bryce Downey & KRIS McCONNELL: Most subrogation Lenkov LLC can be identified in an initial or McCONNELL: First, meet with your Mr. Lenkov’s practice subsequent investigation. Look for client to see if there is a hold- areas include insurance the obvious by asking who is at harmless agreement or something litigation and workers compensation, among fault: third party, faulty equipment that would preclude you from pursuit. others. With nearly 20 years of experience, maintained by a third party, a Second, decide whether the pursuit he serves as co-chair of the Claims and physician who made a mistake? will bring recovery dollars that Litigation Management Alliance’s Workers cover the time and effort needed. Compensation Committee. CASEY WOODRUFF: When significant injuries occur, investigate to determine WOODRUFF: We consider the likely 30 SPRING 2019 Workers Comp if a potential culpable defendant exists size of the workers compensation other than the employer. At construction lien, cost in pursuing litigation sites with multiple contractors or against the third party (which is where mechanism of injury involves traditionally much higher than the alleged defective or malfunctioning expenses associated with a workers equipment, we frequently investigate compensation case), existence of third-party actions. This may also insurance and our likelihood in showing include any outside company that fault on behalf of the tortfeasor. was on the employer’s premises to service the machine. SAYRE: Counsel and carrier should discuss strength of the case against JONATHON SAYRE: The most critical the third party, including the ability aspect is the identity of a true third- to prosecute the case, size of the party defendant. The investigation lien and the cost to recover. Other process should seek to identify any considerations include whether the party that does not qualify as an injured employee’s counsel will file employer or special employer under their own civil action against the third the Labor Code. If there is a third party. If so, counsel and carrier can party, your attorney should prepare an discuss whether it makes more sense analysis of that party’s involvement to file a Notice of Lien or intervene to the incident and whether there into the employee’s civil action. is any articulable cause of action. Counsel and carrier should discuss strength of the case against the third party, including the ability to prosecute the case, size of the lien and the cost to recover. Jonathon Sayre, Manning & Kass, Ellrod, Ramirez, Trester LLP

SUZY BRADEN: It is a business, BRADEN: We operate in many states, can use the lien as leverage to get then a financial, decision. We do not but Florida is one of the few that issues resolved or to accomplish a subrogate if the injury resulted from specifically address subrogation specific outcome. One example is an an incident with a patient or family in workers compensation. The overall settlement of the claim for member of the patient. We do not carrier has the right to file a zero dollars by effecting a waiver of pursue it if the amount is under $1,000. Notice of Payment pursuant to the lien in its entirety. Also, this is one statute, but they are not allowed to time that you want to work with the Tell us something unique in your intervene in third-party claims. claimant’s attorney who is pursuing state about subrogation. the subrogation. Working together can Explain the challenges of handling better bring about a lucrative outcome. McCONNELL: We handle multiple both the workers compensation jurisdictions, but specifically in Florida claim and the third-party case. WOODRUFF: It’s better to resolve we use the Manfredo formula (see the workers compensation case Manfredo v. Employer’s Casualty WOODRUFF: Compensability of the before resolving the personal Insurance Co.): third-party settlement accident may be accepted in a workers injury case; otherwise, you reduce amount, less attorney fees and costs, compensation case, but the practitioner your opportunity to negotiate. divided by the full case value. That must still obtain and preserve evidence gives you the percent value of the lien. that will be probative of fault in a third- SAYRE: Focus on being pragmatic party trial. A workers compensation when negotiating resolution. Counsel WOODRUFF: In Illinois, the claimant is frequently entitled to only and carrier should have a clear Kotecki case establishes that a two-thirds of their lost wages and understanding as to the expected workers compensation carrier payment of their medical bills reduced recovery on the lien, how to obtain is entitled to reimbursement of by the fee schedule. In a third-party that recovery and to be flexible 75% of what they have paid in case, the goal is to make the plaintiff based on the underlying litigation. workers compensation benefits. “whole” by paying the full amount of their lost wages and medical expenses. BRADEN: Don’t spend more money SAYRE: If a Notice of Lien is filed, the Treating medical records and bills are chasing subrogation dollars than lien will be reduced by the Common usually most quickly and economically what you will actually collect. Time Fund Doctrine. This principle is based obtained by subpoena issued in really is money! Like any other out of fairness, as it was the employee’s the workers compensation case. negotiation, shoot for the stars, but counsel that obtained the recovery recognize that some money beats and, therefore, it is fair to reduce Any practical advice for our readers? no money, especially in states where the lien by counsel’s attorney’s fees you have little to no subrogation and a pro-rated amount of costs. McCONNELL: There are times you laws to support your recovery. MEET THE PANEL Kris McConnell Casey Jonathon Suzy Braden is state director Woodruff is Sayre is a is workers at CCMSI, the founding partner at compensation managing the attorney and Manning & claims manager Florida office. lead personal Kass, Ellrod, for Encompass She has worked injury attorney Ramirez, Health Corp. in insurance at Woodruff Trester LLP’s in Birmingham. claims with a Johnson & Orange County Encompass primary focus Evans Law office, where Health is one on workers compensation for Offices in Chicago. He has been he is the practice area leader of the nation’s largest providers over 31 years. Kris was a Board recognized by Leading Lawyers for the firm’s subrogation of post-acute health care of Directors member for the and has presented to organizations team. He has worked at both services. She has served on the Central Florida chapter of Risk and such as the Illinois Education pharmaceutical and medical device Alabama Workers’ Compensation Insurance Management Society Association, Illinois Institute of companies, working on internal Organization board for 10 years. from 2009 to 2016 and has been a Continuing Legal Education, and legal matters and coordinating member of Workers’ Compensation the United Food and Commercial efforts with the companies’ Institute’s Conference Planning Workers International Union. regulatory departments. Committee for over 20 years. Workers Comp SPRING 2019 31

YOUR ULTIMATE WORKERS COMP RESOURCE Workers Comp magazine + WCAuthority.com are the workers comp industry’s premier news resources to over 18,000* industry professionals. Opioid cures, State profile: Marijuana New rules cover expansion Kentucky still causes on toxic *Workers Comp magazine internal subscriber figures, September 2018. plus more news passes concerns substances from the states reforms for payers need attention PAGE 6 PAGE 10 PAGE 18 PAGE 22 WORKERS COMPENSATION SUMMER 2018 | ISSUE 2 VOL. 4 WORKERS COMP MAGAZINE Anti-fraud Employers Hispanic Raising efforts, first face complex workers the bar UPCOMING ISSUES: responders drug-testing see higher on safety and more rules injury rates standards SUMMER 2019 PAGE 6 PAGE 14 PAGE 20 PAGE 24 Space close – 5/31 Material close – 6/7 WORKERS COMPENSATION WINTER 2018 | ISSUE 4 VOL. 4 FALL 2019 Space close – 8/2 Bribery charges Physician Opioid TPA selection Material close – 8/9 for safety official, outreach reduction requires pot rulings improves strategies attention WINTER 2019 plus more news outcomes need buy-in to detail Space close – 11/1 PAGE 6 PAGE 12 PAGE 18 PAGE 22 Material close – 11/8 WORKERS COMPENSATION SOLVING THE PUZZLE FALL 2018 | ISSUE 3 VOL. 4 OF SETTLEMENTS HEALTH Comp claims can create CASROECIAL thorny problems for employers that require careful negotiation VIOLENMCE DIA FRAUDThose trained to care for PAGE 14 others face heightened A PUBLICATION OF CLUESattacks themselves PAGE 10 A PUBLICATION OF Malingering workers often leave evidence trail through online posts PAGE 14 A PUBLICATION OF WCAUTHORITY.COM GAIN ACCESS TO: • Breaking news and analysis • Workers Comp digital magazine • Industry blog listing • Events & education calendar • Industry forms and tools • Job search engine powered by Great Insurance Jobs ADVERTISE | Jeremy Campbell | [email protected] SUBSCRIBE | [email protected] CONTRIBUTE | [email protected]