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2011

APRIL, 2011
In a decision issued on April 1, 2011 the Supreme Court held that W.Va C.S.R. 85-20-64.5 2004) was invalidated and cannot be applied to carpel tunnel syndrome impairment ratings under Table 16 of the AMA Guides (4th Ed.). The invalidation of this section of Rule 20 eliminates the 6% cap on each hand. Evaluators may select either Table 15 or Table 16 in rating CTS under the 4th edition of the Guides. If Table 16 is used, the ranges of impairment yield ratings of 0%, 6%, 12% and 24%. Thus, self-insurers’ direct exposure for higher PPD ratings will result. The case before the Court involved facts seen very often: the evaluator rated the claimant at 6% and then adjusted to 2%, on the basis that the impairment was mild. The Office of Judges held in this, and in other claims , that this type of reduction was improper, because it conflicts with the Guides( 4th ed.) . The Board of Review had consistently upheld the application of the Rule 20 ranges of PPD awards for CTS. This is a disappointing case result but the Court’s rationale is certainly not unreasonable. Regretfully, the section of Rule 20 that has been invalidated neither contained the express authority for the reductions (for mild, moderate, and severe impairment) to be applied in the manner the PPD evaluators were instructed to follow, (when applying the rule in CTS impairment ratings) nor did it contain an explanation by the former Health Care Advisory Panel whose work on Rule 20 resulted in the recommended provisions for PPD ratings that were adopted by the former agency’s Board of Managers. Hence, legal ambiguity in a rule results in a material increase for self-insurers in the actual value (and costs) for CTS PPD impairment ratings.

Since the 2010 annual conference, the WV Self-Insurance Board of Managers was fully engaged in the workers’ compensation rulemaking process before the Industrial Council. Created in 2005 the Industrial Council is a five member council appointed by the WV Governor for fixed terms, subject to WV Senate confirmation. The Council has statutory defined duties and is empowered to approve any workers’ compensation rule proposed by the Insurance Commissioner; among its many responsibilities. The concept of the Industrial Council began with WV Legislature’s decision to exempt all workers’ compensation rules from the Legislative Rulemaking Review process in 1993 when it also created the Compensation Programs Performance Council to develop policy for the former workers’ compensation agency. This was followed by the WCC Board of Managers in 2003 when the former monopoly was reestablished into a standalone agency (having been combined in 1991 with Unemployment Compensation and other employment programs into a large agency known as the Bureau of Employment Programs). Rulemaking in workers’ compensation became the subject of much political complaint by opponents of the reform legislation who like wise objected to the rules adopted to implement the changes in the workers’ compensation law, as directed by the legislature. Frankly opponents argue that the WV Legislature itself should assert itself into the rule making approval process by revoking the statutory exemption from that review (WV is in the minority of states which requires all rules adopted within the executive branch to be filed for legislative approval before the rules may become effective. This practice has always included a number of agency’s being exempted from such review, such as the WV Public Service Commission, which regulates utilities and common carriers. Hence, the status of exemption for the WV workers’ compensation rules has always been a priority for WVSIA to maintain. Frankly, workers’ compensation rules implementing the workers’ compensation laws simply are not a reflection of just another casualty and property insurance product line. Keeping the politics out of rulemaking is a constant challenge and is one area where WVSIA has always directed its attention.

During the late spring, three sets of rules were presented to the Industrial Council. One pertained to a trial return to work; another to the agency’s practices related to employers which request an exemption from coverage and the last related to a requirement that carriers and self-insurers obtain utilization review by a physician prior to denying certain medical treatment. When the Insurance Commissioner presented her initial draft rule for approval for filing for public a firestorm of stakeholder objections from carriers and self-insures erupted. Objectively, the basis for the proposed rule was not clear; the agency adamantly denied that the proposal would have a material financial impact on any party or group, and finally, the proposed rule appeared to have provisions which conflicted with parts of other rules already in place. The agency redrafted the rule, in response to the public comment and sought its approval. WVSIA and other business groups continued to voice concerns to the Industrial Council which ultimately rejected the rule by a 3-2 vote. The following month, the Commissioner withdrew the last of her three proposed rules, as one had failed procedurally and the most significant one failed by substantive vote. Since the August rule withdrawal, the Commissioner has not proposed any other rules or other business to the Industrial Council and in fact cancelled the Council’s meetings in January and February.

In September, the WVSIA Board met in Charleston and while we had hoped to have the Insurance Commissioner and her management team meet with us, we were unable to work that out. The Board did review the status of self-insurance audits, as several members reported on their experiences with the accounting firms retained by the Insurance commissioner and concerns about some audit practices were reviewed. We also received updates about the status of self-insurance funds managed by the Insurance Commissioner and the status of the OLD FUND,( having legacy claims with dates of injuries before July 1, 2005) and managed by the Insurance Commissioner and her selected third party administrators. That fund is financed, among other tax sources, by a self-insured directly assessed quarterly payments, insured employers premium assessments, personal income tax, lottery funds and a significant severance tax payment, primarily paid by the coal industry. In November, WVSIA’s Board met in Canonsburg, PA at Consol Energy. The meeting included a number of government relations representatives from member companies. The Board reviewed legislation anticipated to be filed during the 2011 legislature and confirmed WVSIA’s policy to defend against any roll backs to the reform legislation. Finally, WVSIA was actively involved in a number of business associations’ meetings when the 2011 legislature convened in January.

The WVSIA Board met in Charleston on February 8 and primarily focused on pending legislation, including the status of the Insurance Commissioner’s legislation that included her authority to allow political subdivisions to pool foe workers’ compensation self-insurance and required their participation in the Self-Insurance Guaranty Fund. A number of Board members agreed to participate in direct lobbying against the legislation as was presented. The WVSIA members made a very strong contribution to the positive resolution we received on that legislation.

The WVSIA Board next meets at 4:30 pm on April 20, 2011 at the Charleston Marriott Hotel. At that time all regular members will also vote for the WVSIA Board of Managers for the term beginning July 1, 2011 ( FY 2012). An annual meeting and conference reception will be held at 5:30 at the Marriott and all members are invited to attend that event and, of course, the annual educational conference program on April 21 at the Marriott.

Prior Updates

There were three workers’ compensation bills passed during the recent 2008 legislative session. HB 4381 and HB 4636 were bills initially drafted by the Insurance Commissioner. HB 4381 provides authority to appoint an entity to manage the residual market (adverse risk). The bill also provides that the Insurance Guaranty Association would cover carriers offering workers’ compensation insurance in West Virginia. These new provisions replaced two Funds created in the 2005 legislation.

HB 4636 amended the state contracts law, making clear defaulted employers may not carry on business with the state and makes clear that prohibition applies also to self-insured employers; changed the percent of insured employers' administrative and debt reduction surcharges; provides new time frames in which carriers must provide notices of contract cancellation or non-renewal; directs the Insurance Commissioner to develop rules to implement trial return to work and to regulate the licensing and registration of insurance adjustors and third party administrators; makes clear that employers may only protest an Old Fund decision, the Findings of the Occupational Pneumoconiosis Board, or a treating physician's impairment rating of 15% permanent partial disability or less (23-4-7); makes clear that a carrier may direct litigation; provides for conditional payment when compensability is denied, if the only basis for denial is that there was no new injury and that the claim involves an old claim; requires the party denying to begin conditional payment of the denied claim and give notice to the Office of Judges that it contends the claim is the responsibility of another carrier or self- insurer; provides that the Office of Judges may order another party to participate; Office of Judges may direct the party to take over payments; Office of Judges may treat a new claim application as a petition to reopen and petition to reopen as a new claim application. Finally, the bill increases salary for the Board of Review.

SB 571 creates a refutable presumption of compensability for cardiovascular injury or disease of professional fire fighters employed by municipal fire departments.

A detailed review of the 2008 legislation and West Virginia’s final transition to a fully competitive workers’ compensation insurance market will be presented at the April 24, 2008 Annual Conference at the Charleston Marriott.

Rules – Public hearing was held on May 20, 2008 on proposed changes to Rules 1, 2, 8 and 18. At that time, the deadline for filing written comments also expired. The Industrial Council will meet next on July 3, 2008 at 3:0 p.m. at the Offices of the Insurance Commissioner at which time final action on the rules is expected.

NCSI - At the recent annual meeting of the National Council of Self-Insurers, our WVSIA Board Secretary-Treasurer, Loyd Hudson, American Electric Power , gave a program presentation on AEP’s Integrated Disability Program which he directs. Loyd did an excellent job. Also, Max Koonce, WVSIA board member, WalMart Corporation, completed his two year term as president of the National Council. Max retains a position on the NCSI’s Executive Committee and serves on its Board of Managers along with Loyd Hudson and newly elected Gary Kennedy, Patriot Coal. WVSIA continues to enjoy the long voluntary service of these three members of the WVSIA Board. All three will continue to contribute to the success of the National Council of Self-Insurers.