Market Trends for West Virginia – June 1, 2012
By: Mary Jane Pickens
According to the National Council on Compensation Insurance, which manages the nation’s largest database of workers compensation insurance information and is the statistical agent for the workers’ compensation system in 33 states, the market “descriptor” for 2012 is “conflicted,” following “precarious” in 2010 and “deteriorating” in 2011. At its Annual Issues Symposium in May 2012, NCCI presented considerable information on trends in property and casualty lines generally, and workers’ compensation specifically. While claim frequency went up by 3% in 2010, that appears to be an anomaly. In 2011 claim frequency continued to drop. Net written premium increased in NCCI states by 7.5%. Of this amount, 3% represented an increase in employer wages. Wages are now at pre-2008 levels, but with fewer workers. And while fewer people are unemployed, the length of unemployment is longer.
NCCI filed for more loss cost increases in states than it did for decreases. The largest increase in loss cost filings was 10.5% in Virginia, and the largest decrease was in -9.3% in Alabama (West Virginia was the second largest decrease with -8.1%). Indemnity claim costs increased modestly in 2011 (2%), as did medical costs (4%). The combined loss ratio in 2011 for private carriers is about 115%; for residual market is about 121%; and for state funds it is running in the 130’s. In the residual market, the largest growth by policy size is seen in risks exceeding $100,000.00. The first quarter of 2012 shows an even more dramatic uptick in the residual market among these large risks.
On May 21, 2012, Commissioner Michael D. Riley addressed the Insurance Commissioner’s 3rd Annual West Virginia Workers’ Compensation Educational Conference. Commissioner Riley discussed several areas of focus at the OIC for 2012, particularly Failure to Timely Act (“FTA”) petitions. The OIC is analyzing the FTA data and will investigate carriers and administrators that have repeated failures to timely act as required by the statutes and regulations in West Virginia. Commissioner Riley stated that he wants to see FTA petitions eradicated. Commissioner Riley also discussed market conduct studies and self-insurer audits that the OIC is conducting. According to Commissioner Riley, one area of focus in these examinations and audits will be unreasonable denials under W. Va. Code § 23-2C-21(c) and W. Va. C.S.R. § 93-1-19.
It should be noted that at the OIC’s Educational Conference and in her latest report to the Industrial Council, Chief Administrative Law Judge Rebecca A. Roush presented statistics on claimants’ FTA petitions. In 2010, 87 such petitions were filed, and in 81% of these matters, the Office of Judges (“OOJ”) concluded that the carrier/TPA did not act timely. Medical treatment and compensability decisions were the most common source of the petitions in 2010. In 2011, 88 such petitions were filed. While only 67% have resulted in a finding that the carrier/TPA did not timely act, 25% were still pending resolution by the OOJ at the time of the report. Compensability decisions were the most common source of the petitions in 2011, followed by a comparable number of FTA petitions on medical treatment and failure to comply with decisions by the OOJ, the Board of Review, and the West Virginia Supreme Court of Appeals.
In addition, Judge Roush carefully reviewed all of the information that a claims adjuster must include in an order for it to be considered in compliance with legal requirements in West Virginia. This has been an ongoing area of concern for the OOJ and the Insurance Commissioner. Finally, Judge Roush covered the law surrounding a claimant’s right to attorney fees in the event of an unreasonable denial of compensability, medical treatment or TTD, however statistics were not offered.
West Virginia Supreme Court of Appeals – Case Law Update June 1, 2012
By: Dill Battle
The January 2012 Term of the West Virginia Supreme Court of Appeals ends June 30. The Court produced one reported workers’ compensation decision in the January term. However, the Court was very active and issued 105 Memorandum Decisions in the workers’ compensation practice area. In a presentation to the West Virginia Self Insurers Association on May 10, 2012, Justice Brent Benjamin noted that workers’ compensation appeals were 532 in 2011 (compared to the high-water mark of 2894 petitions in 2007).
On March 22, 2012, the Court issued a new reported decision on the addition of psychiatric diagnoses as a secondary condition to a compensable injury. In Hale v. WVOIC and Rockspring Development, Inc., 724 S.E.2d 752 (W.Va. 2012), the Court continues its recent trend of weakening the Rule 20 medical management guidelines. The Court addressed whether a claimant must get prior authorization from a claims administrator before seeking an initial psychiatric consultation. In a unanimous opinion, the Court held that W.Va. C.S.R. § 85-20-12.5(a) was invalid because it is in direct conflict with W.Va. C.S.R. § 85-20-9.10(g) and W.Va. Code § 23-4-1(a), and because it requires the claims administrator to make a psychiatric treatment decision without having the benefit of an expert psychiatric report, as required by W.Va. C.S.R. § 85-20-12.4. Hale, 724 S.E.2d at 757. The Court provided a roadmap for claims administrators when it held that W.Va. C.S.R. § 85-20-12.4 sets forth a three-step process that must be followed when a claimant is seeking to add a psychiatric disorder as a compensable injury in his/her workers' compensation claim: (1) the claimant's treating physician refers the claimant to a psychiatrist for an initial consultation; (2) following the initial psychiatric consultation, the psychiatrist is to make a detailed report consistent with the procedure described in W.Va. C.S.R. § 85-20-12.4; and (3) the claims administrator, aided by the psychiatrist's report, is to determine whether the psychiatric condition should be added as a compensable injury in the claim. Id.
The Hale decision is a pragmatic decision based on the facts of the case although it seems like a relatively light burden for a treating doctor who suspects a psychiatric consequence to seek authorization for a consultation. In that sense it is no different than asking for a neurosurgical or orthopedic referral. However, carriers, self-insured employers, and claims administrators are still allowed to make the ultimate decision about whether to add the psychiatric diagnosis aided by a detailed psychiatrist's report.
Federal Black Lung Update
By: Karin Weingart
On March 26, 27, and 28, 2012, the United States Supreme Court heard oral arguments on what is probably the most controversial piece of legislation in recent history, the Patient Protection and Affordable Care Act (PPACA).
Oral arguments covered four key legal issues stemming from the PPACA:
The third listed issue has particular relevance to anyone involved in federal black lung claims. Section 1556 of the PPACA reinstated the “15-year presumption” of Section 411(c)(4) of Title IV of the Federal Coal Mine Health and Safety Act of 1969, 30 U.S.C. §921(c)(4), for claims filed after January 1, 2005, that were pending on or after March 23, 2010. The presumption provides that if a claimant establishes at least fifteen years of qualifying coal mine employment, and that he has a totally disabling respiratory impairment, there is a rebuttable presumption that he is totally disabled due to pneumoconiosis. The PPACA also revived Section 422(l) of the Act, 30 U.S.C. §932(l), which provides that an eligible survivor of a miner who was receiving benefits at the time of his or her death is automatically entitled to survivor’s benefits without having to establish that the miner’s death was due to pneumoconiosis. 30 U.S.C. §932(l).
Although constitutional arguments specific to Section 1556 of the PPACA have failed, if the US Supreme Court rules that one or more of PPACA’s key provisions is unconstitutional or otherwise illegal and that the lack of a severability clause therefore defeats the entire bill, the black lung amendments will also fail. A final decision may be published in June.
[Note - the Supreme Court ruled on June 28, 2012, in the case of National Federation of Independent Business v. Sebelius, Secretary of Health and Human Services. The Court found constitutional most of the provisions of the PPACA.]
West Virginia Legislative and Regulatory Update – June 1, 2012
By: Dill Battle
At its March 22, 2012 meeting, the Workers’ Compensation Industrial Council approved a change to W.Va. C.S.R. § 85-11, “Employer Default, Enforcement, Collections and Related Matters.” After a comment period, several non-substantive changes were made by the OIC.
Also at the March 22 meeting Commissioner Riley reported to the Industrial Council regarding a comparison between the Voluntary Market and Self-Insured Market. He compared market share for the private market to the self-insurance market. Based on a report of policy accounts from NCCI’s Proof of Coverage System, Commissioner Riley reported that at the end of 2011 there were 34,000 workers’ compensation policies and 90 active self-insureds in West Virginia. Also, the estimated average employee accounts cover 590,000 employees by the private market and 80,000 employees for self-insureds in West Virginia. Finally, the private market provides about $21 billion in wages compared to $3.5 billion payroll for self-insureds.
On May 29, 2012, Insurance Commissioner Michael Riley issued Informational Letter #181 that summarizes 2012 insurance legislation from the 20012 Regular Session of the West Virginia Legislature. In an election year, the session was quiet with respect to workers’ compensation issues.
114 CSR 42 – Continuing Education for Individual Insurance Producers (Amended Rule – Effective April 20, 2012)
This rule, which sets forth the continuing education requirements for producers, previously established the 2-year reporting period as beginning on July 1 of every even-numbered year. This rule amendment allows the Commissioner to establish different 2-year reporting periods, which in turn permits the period to be set to coincide with licensing periods that are tied to each producer’s birth month. According to the Commissioner, this change brings West Virginia into compliance with uniformity and reciprocity standards adopted by the NAIC that provide that “the biennial CE compliance period shall coincide with the producer’s license continuation date.”
114 CSR 94 – Workers’ Compensation Insurance for State Agencies (New Rule effective April 20, 2012)
BrickStreet, as the successor to the state-run workers’ compensation system, was required to provide coverage to government agencies since 2006, but it was authorized to refuse to renew the policy of any such agency beginning in July 2011. See W.Va. Code §23-2C-15(b). In 2011, the Legislature made the Insurance Commissioner responsible for “managing the workers’ compensation risks” of all “executive agencies” (i.e. those under a cabinet secretary) and certain other state agencies. See W.Va. Code §33-2-21a(b). This new rule (initially promulgated as an emergency rule) includes conditions for participation by and removal of “discretionary participants” (non-executive state agencies), provides for an annual “open enrollment” period during which non-executive agencies may enroll, and permits the Commissioner to require the execution of a participation agreement.
West Virginia Supreme Court’s Access to Justice Commission
By: Dill Battle
The Workers’ Compensation Subcommittee of the West Virginia Supreme Court’s Access to Justice Commission continues its study of several areas related to access to the workers’ compensation system for indigent and pro se claimants. At its April 24, 2012 meeting the committee discussed proposed changes to W.Va. C.S.R. § 85-1 concerning access to file materials. The Committee is also studying recovery of attorney fees in medical treatment litigation which is currently not allowed in W.Va. Code § 23-5-16.
For further inquiries regarding West Virginia law contact Mr. Battle at (304) 340-3823 or at email@example.com.