carolina kasting
Transcription
carolina kasting
The Newsletter of the American Association of State Compensation Insurance Funds Fall 2002 • www.aascif.org alberta arizona british columbia california colorado hawaii idaho kentucky louisiana maine manitoba maryland minnesota missouri montana new brunswick new mexico new york north dakota northwest territories and nunavut nova scotia ohio oklahoma ontario oregon pennsylvania prince edward island puerto rico quebec rhode island saskatchewan south carolina texas utah washington west virginia wyoming yukon www.aascif.org elcome to the fall issue of the AASCIF News. I can’t believe that this issue is the last AASCIF Newsletter the California Fund will be responsible for. Where did the two years go? As some of you know, I informed State Fund’s Board of Directors of my decision to retire at the end of this year. Acting as President of AASCIF has really been icing on the cake of my 38-year State Fund career. It has been a genuine pleasure to work closely with the men and women of AASCIF and to further the goals of this wonderful organization. Acting on your behalf, I recently testified in Washington D.C. in support of Federal legislation to put a terrorism reinsurance mechanism in place. I am pleased to report that the outlook for enactment of such legislation now looks fairly positive. W AASCIF is a unique organization. Our members all pursue the same goal of strengthening our various workers’ compensation systems and improving our services to employers and injured workers. I think we’re doing a very good job, despite myriad obstacles and challenges. Our sharing of experiences, both good and bad, has proven beneficial to millions of people who depend on us to deliver the ‘goods.’ The synchronization of our activities fosters new ideas and solutions to both old and new problems. I would be remiss if I did not thank my fellow officers for all their help during my tenure as AASCIF President. Vice Presidents Lane Summerhays, David Stuewe, Russell Oliver and Carl Swanson, Secretary/Treasurer Dianne Oki and Past President John Leonard have been wonderful to work with and they have provided invaluable contributions to the organization. No, I haven’t forgotten First Vice President Patricia Johnson. The truth is, I want to single her out in order to wish her much success during her term as President of this fine organization. Pat is a wonderful woman, a savvy executive and an outstanding leader. As a matter of fact, Pat has written a fine column for this issue which appears on the facing page. After you read Pat’s article I’m sure you will agree with me that AASCIF is in good hands. my wife and I won’t have to fly back immediately after the conference so I can report to work. Janet, Casey, Ryan and I can take time after the meeting to take in the beauty of Vancouver and environs. However, that’s in the future. Let’s move on to the matter at hand which is the current edition of this Newsletter: In addition to Pat’s article, Curtis Larsen of Montana, Michelle Landers of Kentucky and Doug Hayden of New York explore Kenneth C. Bollier the often-overlooked issue of employer’s AASCIF President 2000-2002 liability coverage. Their fine work begins on page 4. Armin Holdorf of New York discusses ways of measuring effective loss prevention strategies on page 16. Add to this our usual helpings of ‘Dim Sum,’ and ‘Around AASCIF,’ and you have an issue I think you’ll enjoy. I would briefly like to put the spotlight on my coworkers at State Fund who produced this publication during the last two years. I invite the Communications staff who wrote, edited and designed the publication, the Print Shop staff who made the Newsletter look so crisp and the Mail Room crew who saw to it that you all received your copy, to take a well-deserved bow. When I announced my retirement plans to the employees of State Fund I wrote, “I have developed an intense pride in the organization you have nurtured and developed. I am confident you will continue to enhance its success.” These words also apply to the members of the American Association of State Compensation Insurance Funds. I wish you all good health and much happiness in the coming years. I also look forward to our first collaborative venture with the Canadian association in Vancouver, BC during 2003. Incidentally, both my sons asked me if my retirement from State Fund means they won’t be able to go to Vancouver next year. I told them not to worry. I wouldn’t dream of missing the annual conference. The difference next year will be that aascif officers • 2002 – 2004 PRESIDENT Patricia R. Johnson President & CEO Minnesota State Fund Mutual 3500 West 80th Street, Suite 700 Bloomington, MN 55431-4434 (952) 838-4200 VICE PRESIDENT David Stuewe Chief Executive Officer Workers’ Compensation Board P.O. Box 1150 Halifax, Nova Scotia B3J 2Y2 (902) 491-8000 VICE PRESIDENT Carl W. Swanson President & CEO Montana State Fund P.O. Box 4759 Helena, MT 59604-4759 (406) 444-6501 SECRETARY/TREASURER Frances M. Kaitala Vice President Minnesota State Fund Mutual 3500 West 80th Street, Suite 700 Bloomington, MN 55431-4434 (952) 838-4200 FIRST VICE PRESIDENT Lane A. Summerhays President & CEO Workers’ Compensation Fund of Utah P.O. Box 57929 Salt Lake City, UT 84157-0929 (801) 288-8000 VICE PRESIDENT Russell R. Oliver President & CEO Texas Mutual Insurance Company 221 W. 6th Street, Suite 300 Austin, TX 78701 (512) 404-7603 VICE PRESIDENT Ken Ross Executive Director & CEO New York State Insurance Fund 199 Church Street New York, NY (212) 312-7665 PAST PRESIDENT John T. Leonard President & CEO Maine Employers’ Mutual Insurance Company P.O. Box 11409 Portland, ME 04104 (207) 791-3301 LOOKING AHEAD TWO YEARS Pat Johnson AASCIF President 2002-2004 I consider it an honor to be elected President of AASCIF for the next two years. This organization has been a great source of information and ideas for us as a member and for me personally. Ken Bollier, now concluding his term, has certainly modeled the kind of leadership I would aspire to continue. What an outstanding President he has been! With his impending retirement from the California State Compensation Insurance Fund, I know I speak for the entire AASCIF family in saying how much we will miss him at our table. AASCIF’s success has depended on old-fashioned values in pursuit of some highly contemporary goals. Our members pursue continuous improvement, innovation and a more effective voice for shared concerns. The traditional value of generosity in sharing ideas, information and time to help one another is our most powerful engine. Strong financial support by members and business colleagues is another. We come together because of a desire to learn ways to continually improve our organizations or our operational environments. Certainly, there’s a strong element of enlightened self-interest in doing so. Those who may be contributing ideas or information or advocacy today may be seeking them tomorrow. But, the strength of character of AASCIF reflects a disinterest by members in wasting time keeping score. Learning and idea-sharing happens in one-on-one exchange, and also in what we produce in publication and presentation settings. Stoking the fires of learning takes meaningful commitment. Our member organizations have been generous in giving us talented people for committee work and other active participation that adds knowledge for the benefit of all. It also takes commitment and perseverance to join forces on issues we share and can more successfully advocate by working together. AASCIF speaks as one voice on some issues. Or, it helps put those with common issues in touch with one another so they can. We are a surprisingly diverse group for being in the same general “business.” Occasionally, that means looking harder to see commonality of issues and ideas adaptable for our own organizations. But, diversity opens our minds to new possibilities. The heart of innovation is seeing the core of a good idea in an unexpected place, taking it a step further and, by development, making it our own. How often I am struck by the equal opportunity for success or failure, regardless of business form. That tells me it’s worth looking in a lot of places for the next best ideas. Our devotion to finding the way to successes for tomorrow, not resting on those of today, is why we come together. That’s the value of AASCIF membership and participation. Ken Bollier’s leadership of AASCIF over the past two years is the shining example of personal generosity of time and talent. Despite times of challenge for his own organization, he has always been ready to serve the increasing demands of our diverse membership. He and his fine staff offered outstanding leadership and really took it to a whole new level. We tip our hats. Ken and Dianne Oki, outgoing SecretaryTreasurer, have our deepest thanks. Fran Kaitala, our new Secretary-Treasurer, and I look forward to working with the entire AASCIF leadership team, including returning vice presidents Lane Summerhays, David Stuewe, Russ Oliver, Carl Swanson, and newly elected vice president Ken Ross. And we look forward to the opportunity to serve you. I was never shy. That’s an old-fashioned trait that somehow never “took.” So, you can expect that I will ask you to be generous with your thoughts, your time and talents. It’s the tradition on which our organization’s success depends. We’ll commit to doing our very best to put them to work in ways that will serve us all. I look forward to working with you. By Curtis Larsen, Montana; Michelle Landers, Kentucky; Doug Hayden, New York The untold story of employers’ liability insurance. tate funds are in the business of providing workers’ compensation insurance coverage for employers in their respective states. Employers’ obligations to provide workers’ compensation benefits, and the scope of state funds’ coverage, are dictated by state law. A workers’ compensation insurance policy is relatively simple and straightforward. The policy provides for coverage of state-mandated workers’ compensation benefits. S The workers’ compensation coverage of the typical state fund policy is Part One of the policy. The infrequently used Part Two of the policy provides employers’ liability insurance. This article tells the untold story of the purpose and scope of employers’ liability insurance, or Part Two of a typical state fund policy. Since most state funds use the NCCI policy form, this article will focus on the terms and provisions of the NCCI form. Most employers and employees in the United States are covered by a state statutory workers’ compensation system. These statutory systems provide that workers’ compensation benefits are the exclusive remedy for a work-related injury. However, not all employees are entitled to workers’ compensation benefits. State laws usually contain exemptions for certain classes of employees, such as household and domestic workers, casual employees, family members, corporate officers and others. Some states also have exceptions based on the number of employees or size of the employer before workers’ compensation coverage is required. In some states, under certain circumstances, an injured employee may be allowed to sue the employer in tort outside the workers’ compensation system, either as an alternative to, or in addition to receiving workers’ compensation benefits. Part One of the NCCI policy provides coverage for workers’ compensation benefits mandated by law, but does not cover lawsuits outside the workers’ compensation system. Further, general liability policies 4 usually do not provide coverage for a lawsuit by an employee against his or her employer. Part Two of the NCCI policy is intended to fill the gaps in coverage provided by workers’ compensation and general liability insurance. Unlike workers’ compensation coverage, state laws do not mandate employers’ liability insurance. The scope of coverage is spelled out in the contract or policy. State laws and court decisions concerning the enforcement and interpretation of contracts, particularly insurance contracts, will apply to Part Two coverage. This is why the policy should be written as clearly as possible, as any ambiguity in policy language will be resolved against the insurer, and in favor of the policyholder. Part Two of the NCCI policy form has several sections that address the conditions for coverage, what the state fund will pay, defense of lawsuits, exclusions, other insurance, limits of liability, subrogation rights and other provisions. While a claims adjuster or attorney may seldom need to read the policy when a workers’ compensation claim is made, state fund staff must carefully read all of the terms of Part Two if an employers’ liability suit is tendered in order to determine the state fund’s rights and obligations. How the Insurance Applies Part Two coverage applies to bodily injury by accident or bodily injury by disease. The NCCI policy form does not define bodily injury, so one must look to the law of the applicable jurisdiction for definition. The bodily injury requirement would apparently mean that purely emotional distress claims are not covered by the policy. In some states workers’ compensation benefits are not provided for emotional distress or mental-mental claims. Since there is no workers’ compensation remedy, an employee who has a mental-mental injury may be able to sue the employer. Such a claim would not be covered by Part Two of the NCCI policy, however. Other conditions or criteria for coverage include: the bodily injury must arise out of and in the course of the injured employee’s employment; the employment must be necessary or incidental to the insured’s work in the covered state, or while working temporarily outside the covered state; bodily injury by disease must be caused or aggravated by the conditions of employment; and the suit must be brought in the United States or Canada. These conditions of coverage raise some interesting points. First, coverage is provided only for injured employees of a policyholder. Claims made by independent contractors or others who are not employees of the policyholder are not covered by the employers’ liability policy. The policy requires that the injury “must arise out of and in the course of … employment.” This employment causation test is the same as found in most workers’ compensation statutes. There is a substantial body of case law in each state that has interpreted and applied this test. Presumably, the courts would apply these cases in a case involving an interpretation of the employers’ liability policy, but not necessarily. Some courts have found the phrase “arising out of” to be ambiguous as used in an insurance policy. The injury need not occur in the state fund’s jurisdiction to be covered by the policy. In fact, the injury need not occur within the United States, nor must suit be filed in the state fund’s jurisdiction. It is unclear from the NCCI policy language whether it covers an injury to a nonresident employee who permanently works in another state for an employer domiciled in the state fund’s state. To be covered, the injury must occur during the policy period. This makes the employers’ liability coverage an “occurrence” policy, as distinguished from a policy that covers “claims made” during the policy period. Payment Terms The employers’ liability policy provides that the insurer will pay all sums the insured legally must pay as damages to an injured employee. Typically, an employer must first be at fault in some way for causing an injury. Further, if legally liable, the employer may be obligated to pay damages based on tort law, rather than workers’ compensation benefits. These damages may include special damages, such as medical expenses and lost wages, as well as general damages for pain and suffering, loss of enjoyment of life, and other general damages allowed by the tort law of the state. After specifying in a general way what the policy pays, the policy then lists four specific types of covered claims. These include thirdparty-over lawsuits, loss of consortium claims, consequential bodily injury suits and dual capacity suits. Third-party-over suits are claims made by a thirdparty against the employer for indemnity or contribution after an injured employee has sued the thirdparty. These third-party-over suits are barred in most states, but where they are allowed, the employers’ liability policy provides coverage. Loss of consortium claims may sometimes be made by family members of an injured employee. In most states, these types of claims cannot be made independently of a claim by the injured employee. For example, if an employee lawsuit is barred by the exclusive remedy of workers’ compensation, then family members have no viable claim for loss of consortium. The employers’ liability policy provides coverage in those states where such an independent claim is allowed. Similarly, the employers’ liability policy covers consequential bodily injury suits by family members. Finally, the policy also provides coverage for “dual capacity” suits by an injured employee against the employer, such as when the employee is injured by a product manufactured by the employer. These types of claims are available in only a limited number of jurisdictions. 5 The employers’ liability policy also provides that the state fund has a duty to defend any claim, proceeding or suit against the insured for damages payable by the policy. This duty to defend is a great benefit to the policyholder, and may be worth more than the limits of insurance in some cases. The duty to defend is dictated by the allegations of the employer’s liability in the pleading made by the plaintiff. The carrier must accept the defense, even if the carrier believes it is unlikely that the employer is liable as alleged in the pleading. Thus, the duty to defend is broader than the duty to pay. Exclusions The employers’ liability policy contains several exclusions, any of which may deny coverage of the particular claim made. Liability assumed under contract. While the coverage provisions of the policy expressly provide coverage for third-party-over lawsuits, this exclusion excludes coverage when this claim is based on a contract of indemnity. Punitive damages. The NCCI policy excludes coverage of “punitive or exemplary damages because of bodily injury to an employee employed in violation of law.” An example of this type of situation is employment of a minor in violation of child labor laws. Note that the exclusion is not an exclusion of coverage of all punitive damage claims. This creates a potential conflict in at least some states, where the insurability of punitive damage claims may be prohibited as against public policy. Thus, it is unclear whether punitive damages may be covered by the NCCI policy language in some circumstances. (continued on page 11) AASCIF Publications Contest Winners august 4-8, 2002 • new york Congratulations to the 2002 AASCIF Communications Awards Winners! By Shelley Rowan, Nova Scotia he Communications Awards are presented annually to those funds and boards that have addressed communications issues with professional skill, creativity and resourcefulness. The awards recognize publications and communications efforts that meet the highest standards of performance in the workers’ compensation industry. The winners were announced at the AASCIF Annual Conference in New York on August 7. T The goal is to recognize the best, most creative and effective communications programs created by AASCIF workers’ compensation organizations in the United States and Canada. This year 29 U.S. funds and Canadian boards entered the awards contest (up from 25 last year), with a total of 147 entries (up from 132 last year). With more entrants and entries, the competition was fierce, demonstrating the high quality of work being produced by boards and funds across Canada and the United States. The winner of the Web site category was a featured speaker at the Communications Workshop (Austin, September 25-27), sharing their experiences in developing and delivering an award winning Web site. John Monahan of the Workplace Safety and Insurance Board of Ontario accepts the Best of Show Award for their Radio/TV Advertising Campaigns entitled “Safety Starts With You – 2002” Pierre Benoit of Quebec accepts the First Place Award in the Open Category. Special thanks to all who assisted in coordinating the 2002 Communications Awards, including Cindy Grinstead and John Womack of the West Virginia Bureau of Employment Programs, Workers’ Compensation Division; John Mesagno and Bob Lawson of the New York State Insurance Fund; George Layfield of the Injured Workers’ Insurance Fund Marylan; and Mark Ladwig, Chair of the Communications Committee. 6 AASCIF Publications Contest Winners Ryan Rekstis of Ohio accepts the First Place Award in the Annual Reports category. Steve Millikan of Missouri accepts the Second Place Award in the Annual Reports category. Laurence Hubbard of Montana accepts the Third Place Award in the Annual Reports category. Best of Show Annual Reports Workplace Safety and Insurance Board of Ontario “Safety Starts With You – 2002” Advertising Campaigns – Radio/TV First Place: Ohio Bureau of Workers’ Compensation “Annual Report” Open Category First Place: CSST (Commission de la santé et de la sécurité du travail du Québec) “Collection of General Information Documents on Understanding Quebec’s Occupational Health and Safety Plan” Second Place: Missouri Employers Mutual Insurance “2002 WorkSAFE Week Kit” Third Place: Workers Compensation Board of Manitoba “If you’re hurt at work, we’re here to help” (WCB Toolkit) Terry Frakes of Texas accepts the First Place Award in the Website category. Second Place: Missouri Employers Mutual Insurance “MEM 2001 Annual Report” Third Place: Montana State Fund “Annual Report 2001” Web site First Place: Texas Mutual Insurance Company www.texasmutual.com Second Place: Maine Employers’ Mutual Insurance Company www.memic.com Third Place: Louisiana Workers’ Compensation Corporation www.LWCC.com 7 John Leonard of Maine accepts the Second Place Award in the Website category. AASCIF Publications Contest Winners Robert Levy of Louisiana accepts the First Place Award in the Excellence in Writing category. Thomas Cleary of Maryland accepts the First Place Award in the External Brochures category. Tom Callanan of Utah accepts the Second Place Award in the External Newsletters category. Excellence in Writing Newsletters – External Audience First Place: Louisiana Workers’ Compensation Corporation “Flight to Quality” First Place: Injured Workers’ Insurance Fund Maryland “With IWIF – Policyholder Newsletter” Second Place: West Virginia Bureau of Employment Programs Workers’ Compensation Division “The History of Workers’ Compensation” Second Place: Workers Compensation Fund (Utah) “Update” Third Place: State Compensation Fund of Arizona “Fall/Winter 2001 AZ@Work” Third Place: Texas Mutual Insurance Company “Make a Safer Worker to Make Your Workplace Safer” Newsletters – Internal Audience First Place: Workplace Safety and Insurance Board (Ontario) “Small Business Newsletter” External Brochures Janet Howard of West Virginia accepts the Second Place Award in the Excellence in Writing category. Don Smith of Arizona accepts the Third Place Award in the External Newsletters category. First Place: Injured Workers’ Insurance Fund Maryland “Safer Sharps Credit Program” Second Place: Workers’ Compensation Board of British Columbia “Board Talk” Second Place: Texas Mutual Insurance Compamy “Helping Build A Stronger Texas” Third Place: West Virginia Bureau of Employment Programs Workers’ Compensation Division “News & Views Online” Third Place: Workers Compensation Board of Manitoba “2001 WCB Highlights” 8 AASCIF Publications Contest Winners Dennis Smith of Missouri accepts the First Place Award in the Print Advertising category. Wally Fox-Decent of Manitoba accepts the Second Place Award in the Print Advertising category. Janet Howard of West Virginia accepts the Third Place Award in the Print Advertising category. Advertising Campaigns – Print Advertising Campaigns – Radio/TV First Place: Missouri Employers Mutual Insurance “WorkSAFE Campaign” First Place: Workplace Safety and Insurance Board (Ontario) “Safety Starts With You – 2002” Second Place: Workers Compensation Board of Manitoba “If you’re hurt at work, we’re here to help” Dennis Smith of Missouri accepts the First Place Award in the Internal or External Communications Campaign category. Second Place: CSST (Commission de la santé et de la sécurité du travail du Québec) “2001 SMBs Television Campaign” Third Place: West Virginia Bureau of Employment Programs Workers’ Compensation Division “Engineering Safety” Third Place: Hawaii Employer’s Mutual Insurance Company, Inc. “HEMIC TV Campaign” Audiovisual Productions First Place: Maine Employers’ Mutual Insurance Company “Back Injury Prevention Video” Ralph McGinn of British Columbia accepts the Second Place Award in the Internal Newsletters category. Second Place: Workplace Safety and Insurance Board (Ontario) “Things You’d Better Know” Third Place: CompSource Oklahoma “Close Calls Video” 9 AASCIF Among Top 200 Best’s Review recently listed the top 200 Property/Casualty Insurers based on net premiums written in 2001. AASCIF members in the list, in alphabetical order, include: Arizona State Compensation Fund (#145) Injured Workers Insurance Fund of Maryland (#171) SAIF Corporation of Oregon (#143) State Compensation Insurance Fund of California (#21) Texas Mutual Insurance Company (#97) Workers’ Compensation Fund Group of Utah (#174) Ward’s Cites 2 From AASCIF The Ward’s Group, a Cincinnati-based management consulting firm specializing in the insurance industry, recently included the Louisiana Workers’ Compensation Corporation and Maine Employers Mutual Insurance in its 2002 Ward’s 50 Benchmark Group. The list includes the top 50 among the companies analyzed; they passed all safety and consistency screens and have achieved superior performance for five years from 1997 through 2001. Lawyer’s Mouth Washed Out Illustrating that Justice eventually prevails in the courtroom, a foul-mouthed workers’ comp attorney finally got his comeuppance recently. A review board in Illinois recommended suspending him for 30 days, according to the Chicago Tribune. The recommendation was to be reviewed by the state Supreme Court. The attorney would often refer to female opposing attorneys as “sweetie pie,” “baby cakes” or “Mother Superior,” and would call male attorneys and company officials “idiot” or “boy.” In one case, when a claims adjuster had sent him a letter with which he disagreed, he tore the letter up into tiny pieces and mailed them back with the suggestion that the adjuster either eat them or “gently place them in that bodily orifice into which no sun shines and try not to get any paper cuts.” The same attorney was reprimanded in 1991 for abusive language. Illinois attorneys’ rules of ethics are designed to discourage behavior that is so obnoxious or intimidating that opponents will throw in the towel rather than suffer more abuse, said an official of the Attorney Registration and Disciplinary Commission. “No one suggests that the ethics code is a substitute for Emily Post, but there are limits,” the official said. “You don’t use means that have no other purpose but to embarrass or burden a third person.” Bad Vibes A Disability? The Washington Post reported that some of the nation’s top psychiatrists are suggesting that personality clashes could qualify as a new category of mental illness, thus gaining insurance coverage for treatment. The doctors recommend creating a new category called relational disorders to be added to the next edition of the Diagnostic and Statistical Manual, the profession’s guide for defining mental illnesses. The paper described this movement as a “profound conceptual shift” under which an individual might be healthy except when it comes to certain relationships. Initially, the new category would apply only to family relationships such as couples who constantly quarrel or children who clash with their parents. Creating the new category would encourage systematic study, drug trials and insurance coverage, according to the Post. Booze Bad for Bus Drivers The more alcohol that a transit worker drinks – even away from the job – the more likely is the employee to suffer a workplace injury, according to a study by researchers at the University of California at Berkeley. In examining 1,836 employees of San Francisco’s municipal transit system over a five-year period, the researchers found that workers who had 10 or more drinks per week were more likely to file workers’ compensation claims. The study said that consumption of alcohol contributed to 3 percent of workplace injuries, according to the Sacramento Bee. Human resources professionals emphasize that wellness programs and referrals for counseling can help curb substance abuse and thus might help prevent workplace injuries. But others caution against too much intrusion into employees’ personal affairs off the job. Fire Pilots’ Kin Seek Benefits The families of air tanker pilots and crewmembers killed in crashes while fighting recent wildfires have asked the federal government to award them the same benefits given for firefighters and police officers killed on duty, according to the Denver Post. Under the federal Public Safety Officers’ Benefits Program, established in 1976, victims’ survivors are eligible for an inflation-adjusted $259,000 one-time cash award, and may also receive tax credits and tuition benefits for their children. Members of the Associated Airtanker Pilots are lobbying Congress to have pilots and crews included in the program. Exclusions (continued from page 5) Workers’ compensation, occupational disease, unemployment compensation, or disability benefits. This exclusion makes it clear that these types of benefits are not payable under the employers’ liability policy. Workers’ compensation benefits are payable only under Part One of the policy. This exclusion does not mean, however, that if workers’ compensation benefits are paid or payable under Part One that there is no coverage for employers’ liability under Part Two. Parts One and Two of the NCCI policy form provide separate coverage for different types of liability, and coverage under each stands alone. Bodily injury intentionally caused or aggravated by the insured. This is an important exclusion of the employers’ liability policy, and is similar to exclusions in other liability policies. This exclusion raises some important points, the importance of which may vary, depending on each state’s law. First of all, most states have some kind of exception to the exclusive remedy defense when the employer has intentionally caused an injury to an employee. These exceptions typically require the employer to have specifically intended an injury to the employee. The intentional injury exclusion in the employers’ liability policy will preclude insurance coverage for these types of injuries. Secondly, the exclusion only applies to the employer, and not to co-workers. In most states, the employer is not liable for the intentional tort of an employee. Other exclusions. The policy also contains exclusions for certain employment practices, federal employment-related benefit and liability systems, and fines and penalties. However, in Montana, the case of Sherner v. Conoco, 2000 MT 50 undermined the assumptions behind the intentional act exclusion of the employers’ liability policy, and greatly expanded employer’s liability outside of the exclusive remedy of workers’ compensation benefits. In Sherner the Montana Supreme Court ruled that the employer was also liable for this liability of a co-worker. The Court also held that the language of the statute required only an “intentional act” and not “intentional harm”, thus bringing under the statute almost all actions taken by a co-worker. Finally, the Court equated the word malicious to mean the same as the malice standard used in the punitive damages statute. Generally, the standard is reckless disregard of a high probability of injury. There is usually no limit on liability for workers’ compensation insurance benefits, as the benefits payable are set by statute. Since employers’ liability coverage is contractual in nature, the policy has coverage limits. New York requires that employers’ liability coverage be written with no limits. There are other policy provisions that space does not permit us to address in this article. We have focused on the basics of this little-used, but important coverage for state fund employers. This coverage provides a measure of risk management for those situations where injuries may occur to employees who are not covered by the exclusive remedy provisions of state workers’ compensation law. Cases such as Sherner substantially broaden employers’ liability, while at the same time leaving in doubt whether the employers’ liability policy provides coverage for these types of claims. 2 Cases Highlight Work Illnesses T October 30-31, 2002 Las Vegas – AASCIF CEO Conference at the Venetian. Dinner on October 30 and CEO meeting on October 31. wo recently decided cases in Canada and the U.S. have highlighted the dangers of occupational illnesses. An Ottawa waitress was awarded workers’ compensation benefits for lung cancer that was caused by second-hand cigarette smoke. In an interview on CBC-TV, Heather Crowe said she has never smoked a day in her life, but has worked for 40 years in smoky bars and restaurants. January 6-7, 2003 Las Vegas – AASCIF All-Committees Meeting. For information call Fran Kaitala at (952) 838-4221. A firefighter and paramedic in Akron, Ohio, recently won workers’ compensation benefits for AIDS. Stephen Derrig, 35, does not know when or how he was exposed to the disease, but is adamant that it could only have happened through his job, reported the Beacon Journal. According to the Centers for Disease Control and Prevention, 23,473 health care workers have developed AIDS, of whom 453 are paramedics. August 17-21, 2003 Vancouver, British Columbia – AASCIF Annual Conference in conjunction with the Association of Workers’ Compensation Boards of Canada, at the Fairmont Waterfront Hotel. Call Karen Mullins at (604) 231-8589 for information. 11 around aascif California around aascif is a regular feature of the AASCIF News. It briefly covers items of interest submitted by AASCIF members or gleaned from their websites, newsletters and other published news sources. To ensure that your organization is included, send information to Mark Ladwig, Minnesota State Fund Mutual Insurance Co., 3500 West 80th Street, Suite 700, Bloomington, MN 55431-4434. Phone: (952) 838-4270. E-mail: [email protected]. (continued) Ms. Oki has also served as chief consultant to the Joint Legislative Study Committee on Workers’ Compensation and on the boards of both the California Insurance Guarantee Association and the Insurance Education Association. A contractor was arrested and jailed for involuntary manslaughter in the death of a worker who fell from a roof two years ago, according to an Associated Press report. The contractor was also charged with two felony counts of failing to meet worker safety requirements, in addition to tax, insurance and workers’ compensation fraud. Bail was set at $1 million. Arizona State Compensation Fund (SCF) of Arizona was ranked third in Arizona Business Magazine’s list of the best insurance companies in the state in 2001. Only industry giants State Farm Insurance and Farmers Insurance ranked higher in the property/casualty field. Three owners of a pizzeria were arrested in San Francisco on charges of workers’ compensation premium fraud and tax evasion, Insurance Journal reported. The trio allegedly underreported their payroll to the tune of $2.25 million from 1996 to 1999. That’s a lot of pepperoni. After just two years at the helm of SCF of Arizona, President and CEO Donald A. Smith Jr. was selected Executive of the Year by the American Society of Safety Engineers in May. This award was established to recognize the safety activities and support of a non-safety professional. According to the editor of the Arizona chapter of the American Society of Safety Engineers’ newsletter, “Mr. Smith has directed his organization (Arizona’s largest carrier of workers’ compensation insurance) to revitalize its efforts for prevention of work injuries and illnesses, not only for its policyholders, but also as a safety and health resource for the State of Arizona.” Colorado The National Council on Compensation Insurance filed an average decrease of 10.2 percent in workers’ compensation insurance loss costs for Colorado, effective December 1, 2002. As a result the Division of Insurance is considering lowering premiums for some employers. Pinnacol moved its office to 7501 East Lowry Boulevard, Denver, CO 80230. The general phone number is (303) 361-4000, and the fax is (303) 361-5000. California State Fund President & CEO Kenneth C. Bollier, who is also the President of AASCIF, announced that he will retire December 31, capping a successful career with California’s largest workers’ compensation carrier. He joined State Fund’s underwriting department in 1962, and rose to management of underwriting/marketing, fiscal services and the Fund’s investment portfolio. He also managed the San Francisco District Office before his appointment to the Executive Committee in 1986. He was promoted to executive vice president in 1989, and became president in 1995. He led State Fund through the introduction of open rating in California’s workers’ compensation system. Hawaii Hawaii Employers’ Mutual Insurance Co. (HEMIC) is now the largest writer of workers’ compensation in Hawaii, according to year-end 2001 statistics. HEMIC announced that agents and employers now have access to online quotations at HEMIC’s website. Policyholders may use the system to review detailed account information including policy status, payment history, claim status and more. The Board of Directors appointed Dianne C. Oki as the new President, effective January 1, 2003. A graduate of Stanford University, she began her State Fund career in 1968, working in payroll auditing, sales, supervisor of underwriting/marketing, claims manager, corporate claims/rehab manager, vice president and executive vice president. She served the past two years as AASCIF’s secretary and treasurer. HEMIC President and CEO Robert L. Dove has recently been appointed to the AMCOMP board of directors and to the NAII Workers’ Compensation Committee. 12 around aascif Maryland Missouri Authorities suspended the license of All American Towing for allowing its workers’ compensation coverage to lapse. According to a report in the Baltimore Sun, All American generated more consumer complaints than any other towing company in the city, including charges that it inappropriately towed fans’ cars from the stadium parking lot during Baltimore Ravens football games. A police investigation found no wrongdoing regarding the towing during games. All American’s owner acknowledged letting his workers’ comp lapse and said he will reapply for his license in January. For another year, Missouri Employers’ Mutual Insurance tops the list of Missouri workers’ compensation providers when ranked by market share. The Missouri Department of Insurance’s 2001 report indicates MEM has 19.7 percent of the available market, up from 16.9 percent a year earlier. MEM’s market share is based on 2001 written premium of $136.7 million. “From the beginning, MEM’s goal has been to be a long-term player in Missouri’s workers’ compensation market,” said MEM President and CEO Dennis Smith. “Our market share confirms our goal to be an available market for Missouri’s employers.” Injured Workers’ Insurance Fund announced a number of appointments. Thomas Cleary was named Chief Operating Office. He joined IWIF as Executive Vice President in 2001. Timothy Michels was promoted to Vice President of Claims. He was previously a claims director for five years and an IWIF staff attorney for five years. George Layfield was named Director of Public Affairs. John M. Halladay was named Director of Quality Assurance. Governor Bob Holden proclaimed WorkSAFE Week for all Missourians June 10-14. Modeled after the nation’s space program that says, “Mission Success Begins with Safety,” WorkSafe Week 2002 featured astronaut and Col. Mike Mullane, who logged more than 356 hours in space aboard shuttles Discovery and Atlantis before retiring in 1990. Mullane reached thousands of Missourians when he discussed the similarities between safety in space and safety in the workplace. More than 900 MEM policyholders participated this year, and thousands more caught MEM’s WorkSafe message through numerous radio, TV and print interviews. WorkSafe Week raised more than $14,000 for Kids’ Chance of Missouri Inc., a nonprofit organization that provides scholarships to children whose parent has been killed or seriously injured in a workplace accident. MEM also donated approximately 4,295 pounds of groceries to food banks across Missouri. The city of Baltimore hired a hospital and a management company to examine injured city employees and handle their workers’ compensation claims, reported the Baltimore Sun. Baltimore will close a city-run clinic and cut 42 employees from the public payroll. Though initial costs for the privatization plan will be higher than the city-run operation, officials expect to save $18 million over five years. A Montgomery County resident pleaded guilty to insurance fraud and was ordered to pay $2,700 in restitution and court costs. While conducting routine surveillance, IWIF discovered the man had returned to his job while continuing to collect temporary total disability benefits. Montana Mark Cole has joined the board of director of the Montana State Fund (MSF). An MSF policyholder himself, Cole co-owns a motor carrier located in Shelby. Minnesota To help make up for a budget deficit, the Legislature voted in August to take $4 million from the Old Fund, an account maintained to cover liability for workers’ compensation claims for injuries that occurred before July 1, 1990. Carl Swanson, MSF President and CEO, expressed disappointment that lawmakers took funds that should have been used to lower policyholders’ costs. “While we understand our state is facing financial difficulty, we feel that it is inappropriate to use excess or surplus from workers’ compensation programs to balance the budget,” he said. The bill originally contained provisions to privatize the MSF, but that proposal was shelved until next year. State Fund Mutual (SFM) earned the No. 1 spot in the state among large workers’ compensation carriers for prompt action on lost-time claims. The Minnesota Department of Labor and Industry reported that SFM paid or denied 90.3 percent of claims within the statutory 14-day period, according to the Companion newsletter. SFM handled 2,582 lost-time claims between July 1, 2000 and June 30, 2001. “Our consistently high prompt first action shows how hard State Fund Mutual and its policyholders work to get claims off to a good start,” said Meg Kasting, vice present of claims services. 13 around aascif Montana Ohio (continued) Beginning this fall, MSF safety experts will offer free seminars throughout the state to help employers improve their workplace environment and thus decrease injuries. James Conrad, Administrator and CEO of the Bureau of Workers’ Compensation (BWC), presented the Governor’s Excellence in Workers’ Compensation 2002 Award to the Trenton brewery of the Miller Brewing Company. The beer maker’s claim frequency was 0.14 in both 1999 and 2000, but declined to 0.09 in 2001 and 2002. The transitional work program at the brewery has enabled 99 percent of its participants to return to productive work within the plant. Dr. Manuel Astte has joined MSF as its chief information officer. When he was in the military, he served as personal aide and computer support coordinator for the Office of General H. Norman Schwarzkopf and received a Joint Service Commendation medal. The BWC awarded a $200,000 grant to a labor-management cooperative effort to curb drug use and improve workplace safety. New York Oklahoma Due to understaffing, the Nassau County workers’ compensation office has had difficulty investigating reports of fraud, according to Newsday. The office received a tip that a county employee receiving payments for a knee injury could often be seen on his roof doing repairs. Another employee submitted a claim for $23,000 worth of medication that included Viagra and diabetic drugs unrelated to his back injury. A tipster reported that a police officer who alleged injury while making an arrest actually received the injury while working on his deck at home. But the staffing shortage hampers any attempt to follow up on such tips. In fact, the paper reported, the county staff has difficulty making payments timely. One medical provider said he had to wait as much as three years for bills to be paid. CompSource Oklahoma was recognized again with a commendation from Governor Frank Keating on Quality Oklahoma Team Day. The Policyholder Services Division won for its customer service program, which utilizes policyholder service representatives to give one-on-one service to policyholders. The project is entitled Workers’ Compensation 101, A Customer Service Program Designed to Inform, Educate and Assist CompSource Policyholders. Ontario The Workplace Safety & Insurance Board has joined local safety committees to promote safe practices in the workplace. The WSIB recently participated in a seminar in Barrie for the Safe Communities Incentive Program (SCIP). North Dakota The Bismarck Tribune and the Grand Forks Herald each recently reported on North Dakota Workers’ Compensation’s Guardian Scholarship Program, which awards scholarships to the spouses and children of workers killed on the job. Since the program was created in 1997, it has awarded more than $407,000 to 191 people. Oregon A recent change in public contract law makes it easier for employers to send workers out of state to perform temporary work on public contract projects, the SAIF Corporation announced. The new law says out-of-state employers working temporarily in Oregon on public contracts no longer need to obtain Oregon workers’ compensation policies if their home-state policies cover the workers they bring to Oregon and they do not hire Oregon workers while in the state. Because Oregon changed its law, the state of Washington reciprocated for Oregon employers. Northwest Territories and Nunavut The Workers’ Compensation Board won a national award for disability management for its work with an Igloolik worker. Daniel Qanatsiaq became a parapalegic at age 55 after he fell off scaffolding at a worksite in 1996. The WCB worked with health care providers, rehabilitation hospitals and the NWT Housing Corporation to maximize his quality of life. The aascif News is published quarterly by the American Association of State Compensation Insurance Funds for its members and others who are interested in workers’ compensation systems. Send articles and inquiries to: Minnesota State Fund Mutual Insurance Co.; Attn: Mark Ladwig; 3500 West 80th Street; Suite 700; Bloomington, MN 55431-4434. Phone: (952) 838-4270; e-mail: [email protected]. Printed in the Print Shop of the California State Compensation Insurance Fund. Graphic artist: Jim Smoldt. 14 around aascif Texas Washington Austin and San Antonio have substantially lower average costs for workers’ compensation than other regions of the state, according to a study by the Workers’ Compensation Research Institute. Potential excess care and higher utilization rates rather than higher prices may be to blame. The study examined workers’ compensation medical costs in Austin and found that costs for similar claims were higher in other regions: Houston (58 percent higher), Fort Worth (51 percent higher), Dallas (38 percent higher), East Texas (36 percent higher), El Paso (31 percent higher), West Texas (27 percent higher), and South Texas (23 percent higher). Costs in San Antonio were similar to those in Austin. The study found that in the higher-cost areas, more injured workers receive hospital-billed care. The Department of Labor & Industries (L&I) recently received favorable publicity for its safety program in the Puget Sound Business Journal. Rather than using a heavy-handed approach to enforcement of workplace safety laws, L&I is partnering with businesses to pinpoint problems and prevent accidents before they occur. For instance, L&I launched a cooperative program with the Washington Restaurants Association to reduce accidents among teenaged workers. L&I launched a crackdown on unregistered residential wood framers in September, making sure they are working safely and are paying their fair share to the state workers’ compensation fund. In what would be the agency’s first general rate increase in eight years, L&I proposed increasing industrial insurance premiums by 40.5 percent in 2003, Insurance Journal reported. The Texas Oil and Gas Association (TxOGA) workers’ compensation purchasing group received $14,485 in dividends from Texas Mutual Insurance Company. This represents the third group dividend that TxOGA has earned since it partnered with Texas Mutual in 1995. “We’re very pleased with TxOGA’s safety efforts,” said Ken Lauber, Texas Mutual’s Vice President of Field Operations. Founded in 1919, TxOGA is the oldest and largest organization in the state representing petroleum interests. Director Gary Moore announced plans to leave L&I at the end of October to become the state’s chief labor negotiator. His replacement will be appointed by the governor.. West Virginia Utah The Bureau of Employment Programs announced the appointment of Dale E. Newell as the new Executive Director of the Workers’ Compensation Division. Newell’s insurance and risk management experience dates back to 1969 when he was an Underwriting Manager for Argonaut Insurance Company in Honolulu, Hawaii and Los Angeles, California. Additional experience includes Vice President of Underwriting for Western Employers Insurance Company in Fullerton, California; Assistant Vice President with Safeco Insurance Company in Seattle, Washington, and Vice President with Parker, Smith & Feek, Inc., in Seattle where he retired in 1999. A graduate of Glendale College in Glendale, California with a degree in Business, Mr. Newell is married and is the father of two children. He is a retired colonel with the Army National Guard, a former infantry officer, U.S. Army, and served in Vietnam. In August the Workers’ Compensation Fund (WCF) awarded $78,000 in college scholarships to 52 children and spouses of workers who died in industrial accidents. Each recipient received $1,500 to be used for tuition, books and fees. Melvin Green, WCF’s chairman, noted that WCF had awarded nearly 650 such scholarships since 1990. The WCF received the Best of Show award at the Insurance Marketing Communications Association (IMCA) Showcase Awards for its Update newsletter. It also received an award of excellence in radio advertising for its “We Made This Ad” spot featuring company employees. WCF has put the OSHA 300 Log online to help employers comply with OSHA’s new record-keeping rule. WCF provides the employers a list of filed claims, and the employer then selects which claims are OSHA recordable and generates the report. The log can be updated throughout the year and the employer can print copies for its records at any time. A.M. Best affirmed WCF’s rating of A- (Excellent), saying the rating reflected the company’s financial strength, reserving practices and dominant market position. 15 By Armin Holdorf, New York he advent of workers’ compensation reform evolving across the nation in the past 20 years has brought about increased scrutiny on the effectiveness of the methods used by insurance carriers to control injury and illness of their insureds. Many states enacted regulatory reform to limit workers’ compensation claims costs by regulating the insurance carrier accident prevention services. Many carriers responded by implementing specific targeting strategies to effect a lowering of the incidence rate of their insureds. While the methods differ, the intent is the same, to lower the incidence rate of injury and illness of employers. The following case study highlights one State Fund’s methodology for making a difference. Tracking Safety Services T Working with the targeted policyholders, loss prevention consultants help to structure and maintain effective safety programs. Included in the loss prevention services are workplace safety surveys, written action and service plans, safety presentations, safety videos, and workplace environment testing for noise and carbon monoxide exposure. These safety services are made available to NYSIF policyholders. The loss prevention consultants and their supervisors are responsible for tracking these accounts’ progress. The following are the loss prevention representative’s key safety responsibilities: NYSIF, the New York State Insurance Fund, takes a classic approach in measuring the effectiveness of safety activities and programs. There are a number of possible ways to evaluate program success or failure, and many articles have been written about which approach is best. We have found that tracking loss ratio and accident frequency over time gives us a fair picture of an account’s trend. But we have added a twist: a second level of review from the Home Office. This has two benefits. First, the review lets us make certain that the loss prevention consultants and line supervisors select accounts that can benefit from enhanced safety services. Second, management can review progress centrally, prior to auditing the district offices. • Review policyholder operations for hazardous exposures; • Conduct surveys to identify unsafe behavior and conditions; • Review loss analysis to identify unsafe acts and trends; • Meet with clients to analyze findings and set action goals; • Conduct safety training and presentations; • Develop innovative ways to better serve NYSIF’s customers. Action plans for targeted accounts are reviewed and updated as progress is made in addressing unsafe acts and conditions, training is conducted, etc. Semi-annually, the district offices prepare information for Home Office management. A brief narrative report concerning every targeted account is required from each loss prevention consultant. It contains a loss analysis, describes the services provided in the last six months, and projects what will be accomplished during the next six months. Loss ratios, claims valuations and accident frequency are scrutinized for positive and negative changes. A copy of the action plan is attached, along with the dates of service. Selecting Accounts to Service The key concept for safety work at NYSIF is targeting. This necessitates a review at the district office level of the loss prevention consultants’ accounts, to determine which ones are incurring losses that need to be addressed. The selected accounts undergo a loss analysis that leads to the creation of action plans for loss prevention. The representative, working with the policyholder, devises these plans. Goals and dates for safety performance and improvement are set and periodically evaluated and reviewed, and Home Office management reviews all targeted accounts – and their progress – semi-annually. Management Review Central management conducts periodic audits of district offices to review field work. Prior to these visits, the semi-annual account reviews are examined. This allows for an intimate examination of the targeted policies across the state, as to whether they have met action plan goals. This review also can indicate whether the loss prevention consultants have been servicing their targeted accounts according to their needs. Policies that are required to participate in New York State’s mandatory Workplace Safety Program, also called Code Rule 59, are treated similarly to targeted accounts. These policies have an experience modification greater than 1.20, and also have an aggregate payroll higher than $800,000. Loss prevention consultants evaluate the risk and make recommendations that must be implemented within six months. The servicing representative, who assists the policyholder in complying, reviews the recommendations. An action plan is devised for this purpose. After six months the carrier conducts a survey to see if compliance has been achieved. A 5 percent penalty is assessed if the policyholder fails to implement all recommendations. This program tracks affected policies with great scrutiny, and allows NYSIF to review the effectiveness of its safety services. NYSIF’s long-term goal in measuring the effectiveness of safety activities is to ensure that loss prevention representatives are successful in reducing policyholders’ accident frequency. This leads to lower premiums for employers, lower claims costs and increased policy profitability for NYSIF, and safer workplaces for New York’s workers. 16