Are Workers’ Comp Insurers ready for what comes next in the COVID-19 crisis?

[Supplemental background for students of DMCCJ – Workers’ Compensation and Return to Work and DMCCL- Insurance and Other Benefits – Pacific Coast University for Workplace Health Sciences]

Workers’ compensation insurers and legislators are taking the first steps in dealing with the COVID-19 crises.  Are they ready for the operational, policy and financial challenges coming their way? With the challenges emerging, the public steps announced in some jurisdictions may provide insight into what lies ahead for those who work in and with workers’ compensation.

Operational challenges and risks 

Like other employers, workers’ compensation insurers and regulators face significant operational challenges during this crisis including: 

• Who is essential to keep us operating?
• Can we keep essential staff safe (at workplaces, with clients, or working from home)?
• Are we able to safely and securely leverage technology so staff can work remotely?
• Is there enough depth, knowledge and cross training to accommodate possible losses or incapacity of key personnel?
• How do we handle communications with clients virtually in a secure way?
• Will essential staff in our call centres have to spread out to comply with physical distancing?
• Is the staff isolation we are imposing contributing to mental stress and strain?

For workers’ compensation insurers, there are additional complications in their day-to-day operations.  In-person medical exams are often required to determine disability or treatment, site visits may be needed to determine causation or return-to-work accommodations, and personal home visits may be required to facilitate recovery and vocational rehabilitation or counselling.   

The medical and rehabilitation services often provided by workers’ compensation typically are very “hands on”. How are practitioners to deliver physiotherapy or massage therapy during periods of physical distancing?  The absence of such treatments may prolong recovery and lead to greater disability and suffering. If an injured worker contracts COVID-19 from a workers’ compensation official or provider in the course of treatment for a physical injury, that will complicate recovery and claim costs.   

Elective surgeries required as part of a clam may be delayed because of the pandemic.  The resulting increased duration will not only increase claim costs, the effectiveness of the surgical intervention may be degraded or recovery prolonged because of the pre-surgery delay.  There will be those who deteriorate or develop secondary conditions as a result of such delay; secondary mental injury is a real risk.

Sadly, some key personnel in workers’ compensation may not be able to return to work.  Experience and knowledge often come with age, but so does vulnerability to this particular disease.  Many organizations may face the loss of institutional memory and wisdom in the wake of this virus.  Many who survive the virus infection may feel lucky but others will feel guilt that they should survive while others did not. The degree to which this challenge may impact particular insurers remains to be seen but the risk is real.  The sidelining due to illness, subsequent disability or even death of key personnel is a real risk as this pandemic progress. The loss of colleagues, family and friends whether at work or not will compound the stresses of those already doing stressful work.  Are organizations capable of recognizing this and doing something about it?

COVID-19 is not going away anytime soon.  That means past workplace behaviours like shrugging off a minor cough or coming to work with the sniffles must stop.  Are HR policies and practices in place to ensure workers can stay home and not feel pressure to return to work before being fully recovered?  Do they have appropriate sick leave provisions so financial pressures don’t tip the scale towards a premature return to work?

Getting back to anything close to normal will be a long process.  Along the way, it may turn out that staff who have had COVID-19 and recovered may be able to return to work with immunity.  If so, should employers request or demand tests of their employees?  Should work be assigned on the basis of immunity? 

What’s going on inside workers’ compensation operations has implications for Disability Management (DM) professionals and others (Human Resource personnel [HR], Return-to-Work Coordinators [RTWC], for example)   who interact with them—all of whom may be dealing with similar issues in their own organizations.  Old contact methods, claim and billing requirements, and ways of doing things may change rapidly and often until a new equilibrium is established. Frustration with increased delays, changing personnel, and evolving procedures or rules may complicate your role and that of injured workers or their families.

Workers’ Comp Policy Challenges and Emerging COVID-19 Specific Provisions                   

In previous posts I raised the issue of compensability of COVID-19 infection and subsequent disability or death.   Existing legislation and policies may be sufficient but, clearly, some workers’ compensation authorities are making explicit statements on who may be covered for work-related COVID-19 exposure, quarantine, temporary disability, treatment and other workers’ compensation benefits.  We are at the beginning of the COVID-19 [first wave?].  As work-related COVID-19 cases rise, the challenge of consistent, fair and equitable application of workers’ compensation laws and policy will increase in importance.

To be clear, most workers who are infected with the COVID-19 virus will not suffer permanent disability or death.  Many may have mild disease or be asymptomatic; even those with what are described as the more common symptoms will be disabled for a time then fully recover.  Valid workers’ compensation claims may well  be established for these cases if certain conditions are met.

As with any other work injury or disease the compensability of a COVID-19 case hinges on its work-relatedness.  Exposure to a disease agent in the course of employment or arising out of employment duties does not always cause disease and subsequent disability.  The central question of causation, however, is the same for COVID-19 as it would be in any other claim.

Existing workers’ compensation policies are generally flexible enough to allow for consideration of COVID-19 claims.  The profile, severity and ubiquity of the risk, however, is different in the COVID-19 context.  Across much of the world, the employed work force has been divided into groups: essential workers and non-essential workers being the most obvious. Of those still working, there are those who are deemed “essential”—a designation that definitionally makes them unlike the rest of the workforce and acknowledges their greater risk.  Exactly how that designation impacts the workers’ compensation claim process is an ongoing challenge but the increased risk acknowledged in the essential designation may weigh heavily in the determination of compensability.  

If you work as a DM professional, you already know that occupational disease claims rank among the most contentious workers’ compensation cases.  They are notorious for lengthy inquiries before decisions.  Appeals or disputes around the acceptance of occupational disease claims are common and often protracted.  As the number of COVID-19 cases rise, the potential for delay in claim decision-making will rise.  Rapid, accurate and consistent decisions will depend on the degree of agility workers’ compensation systems can achieve on these potentially complex cases and constrained operating environments.  

A question of “ordered” testing and quarantine

Essential workers (and other workers) may be exposed to the COVID-19 through their work.  That exposure may come directly (from a customer, a patient, or another worker) or indirectly (from contaminated surfaces, waste or touchpoints).  First responders and medical staff come to mind immediately but cleaners, plumbers, transit drivers, grocery store clerks and many others fit the category of essential workers who are ate at an  elevated risk.

“Exposure” is not typically the basis for workers’ compensation claim.  That said, workers’ compensation statutes in many jurisdictions contain provisions that cover the cost of medically required testing (and potentially the time off while that testing is conducted).  The New York Workers’ Compensation Law provision (section 10 (3) (a)) is as follows:

3. (a) Notwithstanding any other provisions of this chapter, where a public safety worker, including but not limited to a firefighter, emergency medical technician, police officer, correction officer, civilian employee of the department of corrections and community supervision or other person employed by the state to work within a correctional facility maintained by the department of corrections and community supervision, driver and medical observer, in the course of performing his or her duties, is exposed to the blood or other bodily fluids of another individual or individuals, the executive officer of the appropriate ambulance, fire or police district may authorize such public safety worker to obtain the care and treatment, including diagnosis, recommended medicine and other medical care needed to ascertain whether such individual was exposed to or contracted any communicable disease and such care and treatment shall be the responsibility of the insurance carrier of the appropriate ambulance, fire or police district or, if a public safety worker was not so exposed in the course of performing his or her duties for such a district, then such person shall be covered for the treatment provided for in this subdivision by the carrier of his or her employer when such person is acting in the scope of his or her employment. For the purpose of this subdivision, the term "public safety worker" shall include persons who act for payment or who act as volunteers in an organized group such as a rescue squad, police department, correctional facility, ambulance corps, fire department, or fire company.

Care, treatment and even quarantine could be covered by this provision, at least for the occupations and workers provided for by the statute.  A formal quarantine order is made by a physician or public health official is, in part, a test to see if the exposed worker develops disease.  Quarantine segregates an otherwise well worker from others not in quarantine for the duration required for disease to develop to the point of symptoms or detection. 

Some states have moved to make coverage for quarantine an explicit provision in policy or law.  Governor Inslee of Washington State announced on March 5, 2020 the extension of workers’ compensation coverage to health care workers and first responders quarantined by a physician or public health officer.  The workers’ compensation coverage includes medical testing, treatment expenses if a worker becomes ill, and time-loss payments for those who cannot work if they are sick or quarantined.  Other jurisdictions may extend existing policies to cover similar exposure situations but have not published specific guidance on this question.

To presume or not to presume

Every workers’ compensation statute is different and the administration of the law varies by jurisdiction.  In some states, there are hundreds or even thousands of workers’ compensation insurers; there are also self-insured, self-administered firms operating in multiple jurisdictions and employer-union “carve out” agreements, each subject to workers’ compensation rules.  Achieving consistent application of workers’ compensation laws, policies and rules across all these arrangements is more complicated than for jurisdictions with a  single agency or exclusive state funds administering workers compensation (as in all Canadian provinces, several US states and for US federal employees).   . 

To provide greater consistency and to ensure the public-policy intent of workers’ compensation legislators is properly administered, some jurisdictions have announced specific laws, policies, or rules to cover the COVID-19 situation.  Existing laws would make the acceptance of claims by essential workers difficult without such provisions in many jurisdictions, particularly where the onus is of proof is primarily on the worker.  Even in jurisdictions where the law could be interpreted in favour of coverage, explicit “presumptions” can reduce inquiry time and speed claim decision-making.  Presumptions also provide a high profile means of communicating to workers, employers and insurers the intent of policy makers to protect and provide for essential workers during the COVID-19 crisis.

Kentucky is a recent example of a state addressing the specific workers’ compensation question during the COVID-19 outbreak in that state.  In Executive Order 2020-27  dated April 9, 2020, Governor Beshear noted that workers at risk of being exposed to or contracting COVID-19 should be covered by workers’ compensation.  The order directs as follows:

l.   An employee removed from work by a physician due to occupational exposure toCOVID-19 shall be entitled to temporary total disability payments pursuant to KRS 342.730(l)(a) during the period of removal even if the employer ultimately denies liability for the claim. In order for the exposure to be "occupational," there must be a causal connection between the conditions under which the work is performed and COVID-19, and which can be seen to have followed as a natural incident to the work as a result of the exposure occasioned by the nature of the employment;
2.       The limitations in KRS 342.040(1) are suspended and temporary total disability payments made pursuant to this Order shall be payable from the first day the employee is removed from work;
3.       For the purpose of this Order, it shall be presumed that removal of the following workers from work by a physician is due to occupational exposure to COVID-19: employees of a healthcare entity; first responders (law enforcement, emergency medical services, fire departments); corrections officers; military; activated National Guard; domestic violence shelter workers; child advocacy workers; rape crisis center staff; Department for Community Based Services workers; grocery workers; postal service workers; and child care workers permitted by the Cabinet for Health and Family Services to provide child care in a limited duration center during the State of Emergency.
4.       This Order shall apply to all insurance carriers writing policies providing workers' compensation insurance coverage in the Commonwealth of Kentucky, self-insured groups, and any employer carrying its own risk and authorized to self-insure in the Commonwealth of Kentucky; and
5.       Payment by the employer or its payment obligor pursuant to this Order does not waive the employer's right to contest its liability for the claim or other benefits to be provided.
This Order shall be in effect for the duration of the State of Emergency under
Executive Order 2020-215 or until this Order is rescinded by further order or operation of law.

Note the lack of any waiting period and the extensive list of occupations included in the presumption, which goes far beyond employees of a healthcare entity; and first responders (law enforcement, emergency medical services, fire departments).  The order includes what other jurisdictions specify as “essential” occupations including:

• corrections officers
• domestic violence shelter workers
• child advocacy workers
• rape crisis center staff
• Department for Community Based Services workers
• grocery workers
• postal service workers
• child care workers

Such lists can be important vehicles to communicate support to these specific workers.  Because workers’ compensation does not typically cover exposure or quarantine for many workers in these occupations, the profile of such presumptions can help ensure wide understanding and greater access to needed support.  On the other hand, specific listings exclude many with similar jobs that don’t fall neatly into the occupational titles defined in the rule, policy or legislation.

Illinois’ Workers’ Compensation Commission also amended its Rules of Evidence [Section 9030.70] (dated April 15, 2020)  as follows:

1) In any proceeding before the Commission where the petitioner is a COVID-19 First Responder or Front-Line Worker as defined in Section (a)(2), if the petitioner’s injury or period of incapacity resulted from exposure to the COVID-19 virus during a COVID-19-related state of emergency, the exposure will be rebuttably presumed to have arisen out of and in the course of the petitioner’s COVID-19 First Responder or Front-Line Worker employment and, further, will be rebuttably presumed to be causally connected to the hazards or exposures of the petitioner’s COVID-19 First Responder or Front-Line Worker employment.
2) The term “COVID-19 First Responder or Front-Line Worker” means any individuals employed as police, fire personnel, emergency medical technicians, or paramedics and all individuals employed and considered as first responders, health care providers engaged in patient care, correction officers, and the crucial personnel identified under the following headings in Section 1 Part 12 of Executive Order 2020-10 dated March 20, 2020: “Stores that sell groceries and medicine”; “Food, beverage, and cannabis production and agriculture”; “Organizations that provide charitable and social services”; “Gas stations and businesses needed for transportation”; “Financial institutions”; “Hardware and supplies stores”; “Critical trades”; “Mail, post, shipping, logistics, delivery, and pick-up services”; “Educational institutions”; “Laundry services”; “Restaurants for consumption off-premises”; “Supplies to work from home”; “Supplies for Essential Businesses and Operations”; “Transportation”; “Home-based care and services”; “Residential facilities and shelters”; “Professional services”; “Day care centers for employees exempted by [Executive Order 2020-10]”; “Manufacture, distribution, and supply chain for critical products and industries”; “Critical labor union functions”; “Hotels and motels”; and “Funeral services”.

Again, the list of essential or critical work and occupations is very broad but the provision is currently limited for 150 days.

Other jurisdictions are making adjustments through legislation (Alaska Senate Bill 241 , Minnesota HF 4537,  Missouri Emergency rule 8 CSR 50-5.005, Michigan Emergency Rule 684245 7) or executive order (Florida Executive order 20-52, for example). According to press reports, Bills to create presumptions for COVID-19 have also been been introduced in state legislatures in  New Jersey, Pennsylvania, Ohio and Utah (Jim Sams, “Regulators and Lawmakers Introducing Workers’ Comp to COVID-19” , Claims Journal, April 20, 2020)

And without a presumption?

Presumptions may change the profile of the workers’ compensation eligibility and shift the onus of proof (in more adversarial systems) or simplify the adjudication process (in more inquiry-based systems), but determining the “work-relatedness” or causation of a COVID-19 exposure and infection is not automatic. Even the presumptions noted above, factors present in the COVID-19 circumstances make it more likely that workers other than health care workers and first responders will establish valid workers’ compensation claims.   

First, in the early stages of this outbreak (and likely in the post-lockdown stage as well), contact tracing is and will be a key public health priority.  Because of contact tracing, the person-to-person path the virus took to infect a worker may be well documented in a way that is not common in most other infectious disease outbreaks.  If that documentation shows clear work-related transfer, the evidence may well support a valid claim for any resulting disability or death in a particular worker.  An order by public health or a physician for quarantine or hospitalization as a result of contact tracing is significant evidence. If the contact was in the course of and out of the duties of employment, the work-relatedness test for compensation is likely to be established with or without any legislative or policy presumption.

Second, the action of various authorities to name “essential services” creates a differential between workers in those services and those who are not.  The Manitoba Workers’ Compensation Board has the following note on its COVID-19 (Claims) page:

Is COVID-19 work-related?
Most instances of COVID-19 are not work-related. However, the nature and type of work your workers do may put them at greater risk of contracting the virus than the general public. Nurses, health care aides and other direct care providers in hospitals and long-term care facilities are some examples of workers who may be at greater risk. [Emphasis added] 

Clearly, workers deemed essential are at greater risk than those who stay home, work from home or are otherwise deemed non-essential.  That increased risk--with or without any presumption-- is significant evidence to be considered in the adjudication of any workers’ compensation case. 

Unlike many other occupational disease situations more commonly encountered in the workplace, the essential designation is a declaration that the increased risk faced by workers in these sectors is for the benefit of the broader society.  Grocery stores and pharmacies are clear examples.  The declaration of essential services means the check-out associate and the pharmacy aid are by definition at greater risk than others who are directed to work from home.  So are the day-care workers and teachers mandated to work and care for children of workers in essential services. And by extension, the transit worker, building service worker or custodian needed to support these essential workers will also be at greater risk than other members of the workforce or general public. 

A question of proximity

The essential designation may well go by the wayside as economic activity is gradually allowed to re-establish, albeit with new safeguards and limitations. Some occupations will be at elevated risk due to the proximity to others or to toxins essential to their work.   Hairdressers, massage therapists, and estheticians are always in close proximity to their patients or customers.  Plumbers, for example, may well experience elevated risk when working to maintain sanitation systems in residences or institutions where COVID-19 patients are present. Think about those who work in camps, employer-provided bunkhouses, or literally shoulder to shoulder on assembly or processing lines where physical distancing is extremely difficult.  Food production may be essential, so think about the farm labourers in transport vehicles or planting or harvesting machines… and what happens when one person in their workplace contracts COVID-19.   The proximity these workers have to an infected person, waste, or surfaces in the course of their employment puts them at greater risk.  The work-relatedness of disability or death arising from COVID-19 will have to be considered with these factors in mind.  

As an aside, there is at least one source of information that rates occupations against the proximity to others. The Occupational Information Network (O*NET) was developed under the sponsorship of the U.S. Department of Labor/Employment and Training Administration (USDOL/ETA).  This tool allows the user to select and rank occupations against many criteria including many “physical work conditions”. These conditions include exposure to contaminants, infections, radiation, sound, and many others.  For the purposes of this discussion, the important characteristic is “Physical Proximity - To what extent does this job require the worker to perform job tasks in close physical proximity to other people?”.

The O*NET tool allows the user to sort data on any characteristic, occupational code, or occupational title.  For a graphic representation of an analysis using both physical proximity and  exposure to diseases, see Lazaro Gamio,  “The Workers Who Face the Greatest Coronavirus Risk?”, The New York Times (on line), March 15, 2020 . 

For the DM professional, the key point is to not dismiss the possibility of a workers’ compensation claim.  The decision to accept or deny a claim rests with the workers’ compensation insurer or authority but they can only consider a claim if it is submitted to them.

A special concern:  Mental Injuries

Workers’ compensation systems routinely accept psychological impacts as a result of injury.  It is much harder when the mental or psychological issues arise without physical trauma confined to one fortuitous event.  Some mental injury conditions develop over time.  Post-Traumatic Stress Disorder  (PTSD) is one such condition.  Whether from a single incident or a series of events, there is a real risk of work-related psychological injury during this pandemic. 

To adjudicate this, however, most jurisdictions require a formal report from a psychiatrist or psychologist.  These are scarce resources and costly investigations often requiring a course of consultations and testing.  This bottleneck will impact any workers’ compensation claim related to COVID-19 mental injury and just as importantly any other case arising from any other traumatic injury or series of non-traumatic events.  It is important to realize that delay can make the problem worse and threaten the health and life of victims.  Some legislation is broad enough to allow for claims to be decided on the basis of other evidence but many workers’ compensation authorities and legislators will have to grapple with this issue.

The Financial Challenge

Workers’ compensation is a form of insurance.  The transfer of the financial risk of workers’ work-related injury or disease from employer to the insurer in exchange for a premium is essentially how workers’ compensation systems operate.  That premium is intended to reflect the whole cost of claims that will arise in the insured period, typically a year.  Those actual costs related to coverage year injuries will take years to fully develop.  In the meantime, the insurer can invest the value of the expected costs and gain a return on those investments.  That strategy is built into the premium calculation [for most fully capitalized workers’ compensation insurance schemes]. 

The cost of any given year’s injuries is intended to be borne by the employers whose employment gives rise to them.  Workers certainly bare many of the costs of injury and disease (physical impairment and disability, financial losses of wages not covered by compensation, social and mental costs) but employers are the nominal payers of premiums.  Insurers develop premiums based on expected costs including the expected cost of extremely rare events such as earthquakes, long-latency occupational diseases and other disasters. 

For years, the employer cost of workers’ compensation has been falling.  In many cases, the net cost of workers’ compensation to employers who pay premiums has been offset by dividends or discounts fueled by a buoyant investment market.  It has also allowed workers’ compensation insurers to build reserves for risks. 

Many workers’ compensation statutes creating state funds contain provision like this one from the Workers Compensation Act of British Columbia (Section 39(1)(d)):

39   (1)For the purpose of creating and maintaining an adequate accident fund, the Board must every year assess and levy on and collect from independent operators and employers in each class, by assessment rated on the payroll, or by assessment rated on a unit of production, or in a manner the Board considers proper, sufficient funds, according to an estimate to be made by the Board to…
(d)provide a reserve to be used to meet the loss arising from a disaster or other circumstance which the Board considers would unfairly burden the employers in a class;

Workers’ compensation insurers will receive claims for COVID-19 in the current coverage year.   The full costs associated with those claims will take years to develop.  The liability associated with the claims incurred this year may be covered in part by reserves and in part by increased premiums in future years. 

Concluding comments

The operational, policy and financial challenges resulting from the COVID-19 pandemic will be significant for workers’ compensation policy makers, insurers and regulators.  Employers who survive the downturn will likely have lower payrolls and likely face higher workers’ compensation premiums.  Investment markets may take a long time to recover and returns may fall below the required level for existing workers’ compensation claims liabilities. 

Injured workers from previous years will still need workers’ compensation services.  Vocational rehabilitation and return-to-work assistance are likely to be challenged by high unemployment with fewer job opportunities.  Competition for scarce medical and psychological resources may extend recoveries and add to claim costs.  Workers with accepted claims from the COVID-19 pandemic will also have extended recoveries. Some are likely to have permanent disabilities.  And the families of workers who die as a result of work-related COVID-19 infection will also need the financial and other supports that are part of what workers’ compensation was designed to provide.  Hopefully, workers’ compensation will be up to these challenges. 

The bottom line for those working in DM, HR or RTWC is this:   what’s happening in the workers’ compensation systems you deal with may have a big impact on how claims for COVID-19 and any other work-related issue are handled.  Policies and presumptions may alter timelines and processes  but workers’ compensation entitlements and responsibilities continue to apply for COVID-19 as they do with other work-related injury, disease and death cases. Workers who may have a case of work-related COVID-19 may have entitlement to workers’ compensation.  Making sure employers fulfill their duty to report and workers or their families may have access to entitled compensation and benefits remain part of the DM professional’s responsibilities.