News and Analysis
Ohio Supreme Court Narrows Reach of Coolidge Claims
In its notorious 2003 decision in Coolidge v. Riverdale Local School District, the Ohio Supreme Court held that an employee who was receiving temporary total disability benefits under the workers’ compensation system could not be terminated for absenteeism or inability to work. This week, the Ohio Supreme Court said something quite different. From OMA Connections Partner Bricker & Eckler LLP.
Managed Care Organizations Get New Contract
The state’s 25 workers’ compensation managed care organizations (MCOs) will operate under a new contract with the Ohio Bureau of Workers’ Compensation (BWC) as of January 1, 2008. “On its face, one of the best provisions of the contract is that compensation is based on performance and operational requirements,” said OMA president Eric Burkland. “Former contracts were based in large part upon a percentage of premiums paid by the employers served by the MCO, which created less incentive for MCOs to support premium-reducing initiatives.”
All state fund employers in Ohio select an MCO; in the event of a workplace illness or injury, the MCO is responsible for managing the injured worker’s medical treatment and paying provider invoices. MCOs are paid by the BWC using a portion of employer-paid premiums collected. Employers are able to select their MCO every two years in an open-enrollment period. There will be an open enrollment period in second quarter of 2008.
BWC Moving to Upgrade Reserving System
Under severe customer criticism, and legislative pressure, the BWC is moving to improve its reserving system. Its current system, the Micro Insurance Reserve Analysis System (MIRA), was purchased and installed at the agency in the past decade.
Since deployment, employers have criticized the system as a “black box” that drives inexplicable reserves of questionable predictive accuracy. The result for some employers has been terrible rate increases from one rating year to the next. For all employers, the system is impossible to understand or to manage against.
In order to address shortcomings, the BWC plans to upgrade to “MIRA II,” a next generation technology from its vendor, Fair Isaac.
The judgment of OMA Director of Workers’ Compensation Services Denny Davis? The upgrade will bring welcome improvement in reserving accuracy, but will not provide, without other enhancements, the kind of claims planning and management tools that employers want.
BWC Board Acts to Correct Group Rating Actuarial Flaw
The Ohio Bureau of Workers’ Compensation Board of Directors voted on November 21, 2007, to reduce the maximum group rating discount to 85% from its current level of 90%, effective July 1, 2008. Bureau officials said in a statement that this reduction will create “greater equity between premiums paid by group-sponsored employers and non-group employers, as well as reduce overall base rates.”
The Bureau’s action will also have the effect of compressing the savings achieved by all groups. For example, a 90% discount will drop to 85%, a 75% group will become a 71% group and a 50% credit will become a 47% credit.
Several actuarial studies (AON, Pinnacle, Mercer Oliver Wyman) have found that, because of a flawed “credibility table,” companies not in groups are subsidizing firms in groups by about $200 million a year. According to the BWC, the Board action is expected to reduce the subsidies by approximately $50 million.
In addition, the BWC anticipates that the change will allow a reduction in aggregate premium base rate by approximately 2.5%. Actuarial analysis suggests that Ohio base rates are more than 25% higher than they should be because of the group rating shortfall.
Company leaders want to lower taxes for 2007 and lower workers’ compensation premiums for 2008
Enrolling in a Drug-Free Workplace Program (DFWP) can possibly achieve both “wants.” But, companies must get started right away to maximize these opportunities because the BWC premium discount begins accruing January 1, 2008.
A DFWP will provide first-year BWC premium discounts of 10-15 percent, can be combined with other premium reducing programs and can increase productivity and protect your most valuable asset: your employees.
And there’s more: BWC Safety Grant dollars are available now to offset the costs of setting up a program. We’ll show you how. Call Working Partners®, your OMA-preferred provider of drug-free workplace services at (614) 337-8200 or (866) 354-3397 or visit www.workingpartners.com to learn more. From Working Partners LLP
BWC Reduces Group Rating Discounts
The Ohio Bureau of Workers’ Compensation Board of Directors voted on November 21, 2007 to reduce the maximum group rating discount to 85% from its current level of 90%, effective July 1, 2008. Bureau officials said in a statement that this reduction will create greater equity between premiums paid by group-sponsored employers and non-group employers, as well as reduce overall base rates.
The Bureau’s action will also have the effect of compressing the savings achieved by all groups, not just those at the highest tiers. For example, while 90% discount groups will see their credits drop to 85%, employers in a 75% group will become a 71% group and a 50% credit will become a 47% credit. The impact of this change is progressively lessened at lower group credits and will actually reduce the premiums paid by penalty-rated employers.
The OMA, which has members who qualify for group rating programs and those who do not, supports this move by the BWC Board.
OMA Practically Alone in View of Workers’ Comp Rates
Yesterday, the actuarial committee of the Bureau of Workers’ Compensation board held a public forum to hear from interested parties on the subject of the proposed reduction of the group rating maximum discount. BWC management has proposed a reduction of the maximum discount from 90%, because group-rated companies are being subsidized by non-group-rated companies by an estimated $200 million a year.
The OMA, which is made up of manufacturers that are eligible for group-rating and manufacturers that are not eligible for group rating, testified that workers’ comp rates in the state should be set fairly for all employers and that one group should not be subsidized by another. The Council of Smaller Enterprises, a Cleveland-based employer group, also testified in support of correcting the rate-making process to eliminate or reduce subsidization.
Following the hearing, Lisa Schaaf, OMA COO, stated: “A forced transfer of $200 million dollars every year from one set of employers to another is unconscionable. This actuarial situation calls into question the basic fairness of the system.”
Following public testimony the actuarial committee discussed the matter and is expected to recommend to the full board a maximum discount of 87% to begin with the July 1, 2008, plan year. The OMA promised its group rating members and prospects that it would mail 2008/09 proposals this week and will do so. When the full board takes action, the OMA will communicate the specific affect of the action to its members and prospects.
Safety Grants….a few things that have changed
The Ohio Bureau of Workers’ Compensation’s new requirements Safety Grant went into effect on July 1st 2007. Though most steps in applying for Safety Grant money have not changed, we feel it’s important to highlight the few things that have changed … in an effort to facilitate a smooth transition to the new protocol.
You can download a copy of the guide at www.ohiobwc.com.
Eligible employers can still apply for Safety Grant reimbursement for the following elements of a Drug-Free Workplace program – assuming you are in the BWC DISCOUNT program – this list, by the way, has not changed. It is important to note that contractors functioning as a comparable program to qualify for state construction projects but who do not have their entire workforce operating drug-free, are not eligible for Safety grant dollars. The program elements that can be reimbursed include:
• Development of written substance policy,
• Legal review of the policy,
• Employee education,
• Supervisor training, and
• Assessment services – provided the services are part of a BWC-approved consortium package — like what Working Partners® has to offer.
Private employers are still eligible for a 2-1 matching grant up to a maximum of $10,000. That means, for every three dollars you put on the table toward a reimbursable item, BWC will reimburse you TWO dollars. So … you pay one and the Bureau pays two dollars.
1. To be eligible to receive safety grant money you still must
a. Be a state-funded employer,
b. Maintain active BWC coverage for your employees,
c. Participate in the BWC’s DFWP or DF-EZ programs, or be running a comparable program.
Two main things that HAVE changed.
BWC now requires that the employer must be current on all monies owed to them.
If you have never applied for Safety Grant money in the past OR have never been paid directly by the state for doing work for them as a vendor, the Bureau is now requiring that you register with them as a vendor – since you will be receiving money from them – in the form of Safety Grant reimbursement.
To accomplish this, the NEW Safety Grant application includes a “New Vendor Information Form” or OBM-3456 to be completed by you.
This form is to be completed by your company in order for you to receive safety grant funds from BWC. Again … YOUR COMPANY is considered the vendor. (Contractors have been confused thinking this form is to be provided by the providers of drug-free services – this is not the case.)
The “New Vendor Information” form is very basic and it includes a 2 page document of instructions for how to complete the form. Article provided by Working Partners®.
Upcoming National Campaign
October 14th – 20th is the National Drug-Free Work Week 2007 and employers and workers across the nation are encouraged to participate. The purpose of Drug-Free Work Week is to highlight the fact that being drug-free is key to protecting workplace safety and health and to encourage workers with alcohol and drug problems to seek help.
Drug-Free Work Week is a national campaign sponsored by the U.S. Department of Labor (DOL). For the National Drug-Free Work Week, employers and employees are encouraged to do activities to educate, draw attention to and underscore their commitment to working drug-free. There are lots of ideas and even posters for download available on the DOL’s website at: www.dol.gov/asp/programs/drugs/workingpartners/wpdrug-free.asp
The themes of Drug-Free Work Week have widespread relevance, according to a recent survey conducted by the Hazelden Foundation, a national nonprofit organization that helps people reclaim their lives from the disease of addiction. The Hazelden research found that while most human resources practitioners recognize substance abuse and addiction as among the most serious problems faced in today’s workplace.
“Drug-Free Work Week is a perfect time to remind employers and employees alike that reducing workplace alcohol and drug abuse is a crucial part of keeping workers safe,” said Elena Carr, drug policy coordinator at the Labor Department. “Of course, in a safe and healthful workplace, every week should be Drug-Free Work Week.”
The campaign period is a great week to administer employee education or supervisor training if you are operating a drug-free workplace program (DFWP). Let the week motivate you to review your DFWP and healthcare policies; refresh your list of community service providers in case an employee asks for resources; have your Employee Assistance Provider (EAP) do an in-service; contact Working Partners for an article that you could disseminate to your workers about how drugs might impact their children; OR … if you are not operating a Drug-Free Workplace Program, THIS is a great week to plan and get started!
Remember, by operating a DFWP, you may qualify for a 10-15 percent discount on your workers’ comp. premium AND the Bureau has Safety Grants available to subsidize the costs of doing a program. Contact your DFWP preferred provider Working Partners® for assistance. Just call 614.337.8200!
Workers’ Compensation Budget Voted Out of House Committee
The bill was reported out of committee with a 19-3 vote. Three Democrats – Reps Luckie, Letson, and Harwood – voted against the final bill.
The committee heard testimony from a small general contractor from Fairborn, John Moon, whose employee was killed by an uninsured drunken driver on his way to a job site. He told the committee that the bureau had subrogated the claim to his insurance company and only asked for one-third of the money which had been paid to the family of the victim. The remaining amount was charged to Moon’s company and his group rating was dropped. He said since 2003 he has been denied inclusion in his group rating and has had to lease his employees because of the high cost of premiums.
This testimony led to the first amendment of the day by Rep. Widener. The amendment says that in the case of a death where neither the employer nor employee is at fault, the company’s experience rating should not be affected. The BWC administrator must also report annually to the Legislature what impact the amendment has on the bureau financially.
Democrats were not in support of this amendment, claiming that it jeopardizes the bureau’s long-standing nofault system. They contended that this issue should be considered by the committee which is looking at the bureau’s group rating process and that the surplus fund should not be used for this purpose. The amendment passed 12-10 along party lines.
The committee accepted another amendment which increases the powers of the administrator and one that creates a Bureau of Workers’ Compensation Oversight Council. The council will consist of three representatives appointed by the speaker and three senators appointed by the Senate president and three members each appointed by the speaker and president who represent employers, employees and claimants.
The council amendment was passed along party lines with the Democrats not in agreement with the makeup of the council or the creation of what they said was another layer of bureaucracy. A later Democratic amendment to this amendment failed which would have included an attorney representing employers, an attorney representing employees and a representative from an employee organization on the council.
Chairman Batchelder said the governor’s office believes that the creation of the council is the prerogative of the Legislature.
Rather than including the amendments in a substitute bill, Batchelder announced that he has decided to present the bill for a full vote by the House with all the amendments attached so members can readily see what changes have been made to the bill.
Other amendments which were passed today dealt with the following areas:
• Send invoices to both employers and third party administrators.
• Remove five-year time limit on the Drug-Free Workplace Program.
• Allow one application for sponsor organizations which contain different employer groups.
• Allow health care providers to pay medical only claims if less than $5,000.
• Expand the no-interest loans for purchase of lifting equipment to hospitals.
• Ban the revocation of coverage for employer who is fighting an assessment or fee charge.
• Pay board members for no more than one meeting on any given day.
• Drop the current group rating system once contract has expired.
• Correct a drafting error concerning an appropriation for the attorney general.
The preceding article is an excerpt from The Hannah Report, Ohio’s daily legislative newsletter providing independent, timely and comprehensive coverage of state government. For more information, please contact Hannah News Service at 614.228.3113. From Hannah News Service