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Dave North: Change is Coming – Change is Here

April 18, 2011 - WorkCompWire

By: David A. North, President & CEO, Sedgwick Claims Management Services, Inc.

Embrace change. It’s profound as both a personal and business philosophy. The reality is over half the states are currently debating workers’ compensation legislative reform and change is inevitable. Those organizations that recognize and prepare for change will thrive, and those who don’t will struggle to survive. Let’s look at what’s driving workers’ compensation legislative changes, the scope of some of the changes being discussed, and how to influence change in the future.

Elections have consequences, and clearly the election of 2010 is driving many of the workers’ compensation legislative changes that are being considered today. Last November, we witnessed a historic change in overall turnover and change in party control of legislative chambers. Candidates pledged during the election to grow their state’s economy and create jobs. Today, many states are considering workers’ compensation reform legislation as part of their efforts to keep those campaign promises.

A high level survey of several states and some of the more interesting senate and house bills that are being debated or that have recently passed include:

California: It will be interesting to track legislative changes in California during the coming months as pending legislation is sending mixed signals. In spite of the shift in power to Democratic control, even California is considering some legislation that would contain costs and in turn, favor business. For example, Assembly Bill 378 would require the adoption of a medical fee schedule for compounded drug products and limit reimbursement for these drugs until the medical fee schedule is adopted. Senate Bill 863 would call for a three year statute of limitations on outstanding liens for services rendered. Looking at the bigger picture, however, most of the major pending bills in California would likely increase costs for employers. For example, Assembly Bill 375 would create a presumption of compensability for neck and back impairment, bloodborne infectious diseases or methicillin-resistant Staphlococcus aureus (MRSA) that develops during the employment of public and private hospital employees. Assembly Bill 584 would require all physicians performing utilization review on workers’ compensation to be licensed by the State of California. Assembly Bill 947 would provide additional exception to the temporary disability cap. This is significant because claim costs in California today are above where they were pre-reform. The dynamic is different this year since California has a new Democratic governor who has not demonstrated how he will treat such bills. Most of these bills had been proposed previously but were vetoed by the previous Republican governor.

Illinois: Senate Bill 1349 would require treating physicians to submit to the utilization review process or risk not being paid for services. It also would allow the employer to make the initial choice of the treating physician for work injuries.

Kansas: House Bill 2134 would reduce benefits for pre-existing impairments. It would also stop benefit payments to employees who were terminated with cause or who voluntarily resigned following an injury, if the employer could have accommodated temporary restrictions. This bill passed the House and Senate and was presented to the Governor on April 8th.
Montana: On April 12th, Montana passed a bill that will allow settlement of medical benefits if the worker has attained maximum medical improvement and all parties mutually agree on the settlement.

North Carolina: House Bill 709 went before the state’s House of Representatives on April 6th. If passed the legislation would provide employers greater access to medical information of injured workers. It would also allow an employer to suspend compensation if an employee refused to attend or obstructed a medical examination provided by the employer. However, other provisions within the same bill would increase the period of temporary partial disability form 300 to 500 weeks and increase burial expenses from $3,500 to $10,000 when death arises from a compensable injury.

Oklahoma: House Bill 128 would make workers’ compensation insurance optional in Oklahoma. Further, Senate Bill 878 would reduce the maximum number of weeks that injured workers could receive temporary total disability benefits from 300 weeks to 156 weeks; prohibit the award of permanent partial disability to body parts for which no medical treatment was provided; and reduce the amount of time that a case can be reopened based on a change in conditions from three years to two years.

Tennessee: House Bill 1503 would characterize hearing loss, carpal tunnel syndrome and other repetitive motion injuries as ordinary diseases and not compensable under workers’ compensation, unless the disease arose primarily out of and in the course of employment.

Washington: In March, the State of Washington passed a bill that creates a network of health care providers who specialize in occupational health issues. They are trained and expected to follow best practices for getting workers back to work. It also mandates that injured workers seek treatment from a network provider for all but the first visit. In addition, the bill states that the department will work with self-insurers and the department utilization provider to implement utilization review for the self-insured community.

Clearly, employers have had a notable impact on the legislative debate, and they should continue to make their voices heard among policymakers. Those elected to state and federal government need to understand the issues and consequences associated with the legislation they enact. It is imperative that we make a commitment to further this understanding in order to sustain and strengthen this 100 year old social system. Ultimately, we must strike a balance that protects the interests of employees and employers alike.

Industry groups and associations offer excellent means for employers to take an active role on the political scene. Earlier this month, the Risk and Insurance Management Society (RIMS) announced the formation of a political action committee known as RISK PAC. The purpose of RISK PAC is to identify and support congressional candidates who will help advance risk management and the interests of the RIMS membership on public policy issues.

Many states also have coalitions and alliances designed to advance workers’ compensation issues. For example, the California Coalition on Workers’ Compensation (CCWC) is a statewide coalition of over 195 employers and numerous trade associations. Its mission is to achieve and maintain a California workers’ compensation system that is equitable and efficient for both injured workers and employers. According to CCWC leadership, the Coalition strives to be known as the premiere employer based organization dedicated exclusively to providing leadership and expertise to California’s workers’ compensation community. Other states have similar coalitions and offer opportunities for employer involvement.

On an individual employer basis, the impact of communications, letters, and meetings with policymakers cannot be overlooked. Every business has the opportunity to express an opinion and put forth suggested improvements for the system.

Today, the single most important factor driving an employer’s success is the ability to embrace change. Change is coming, and in some states, change is here. Become familiar with the legislative reforms being proposed in those states where you have operations, and be ready to implement those changes when they occur.

About Dave North
Dave North is President and CEO of Sedgwick Claims Management Services, Inc. (Sedgwick CMS).

Dave has nearly 30 years of experience in risk management services. He joined Sedgwick CMS in 1995 to provide overall corporate leadership in strategic development and growth.

Prior to joining Sedgwick CMS, Dave was the global practice leader for risk services at a major brokerage and risk management consulting firm. There, he led the development of a Total Cost of Risk strategy that included the property and casualty loss control services, claims management and consulting, risk management information services, structured settlements, law advisory and workers compensation consulting. These services were expanded around the world under his leadership.

Dave is a frequent speaker at many CPCU chapters and at national and local RIMS meetings. He developed and taught the American Management Association course on Advanced Risk Management Strategies: Managing the Total Cost of Risk. In 2002 he was recognized by Business Insurance as one of the 35 “Rising Stars” in insurance worldwide. In 2003, he co-authored the book “The Art of Self-Insurance”. He serves on the Board of the Workers’ Compensation Research Institute. He is Past Chairman of the Board of the Integrated Benefits Institute.

About Sedgwick Claims Management Services, Inc.Sedgwick CMS
Sedgwick Claims Management Services, Inc. is the leading North American provider of innovative claims and productivity management solutions. Sedgwick CMS and its affiliated companies deliver cost-effective claims administration, medical management, risk consulting and related services to clients through the expertise of approximately 8,500 colleagues in more than 150 offices in the U.S. and Canada. The company specializes in workers’ compensation; disability, FMLA and other employee absence; general, automobile and professional liability; alternative market; and warranty and credit card claims services as well as Medicare compliance solutions. Sedgwick CMS and its affiliates design and implement customized programs based on proven practices that meet client needs. To learn more, visit www.sedgwickcms.com.

Filed Under: Leaders Speak

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