State presumption rules throw wrench into workers' compensation

State presumption rules throw wrench into workers' compensation | Insurance Business

State presumption rules throw wrench into workers

The saying, “We’re all in the same boat,” hasn’t necessarily been true of the COVID-19 pandemic and its impact on workers’ compensation in the US. The differences in how the coronavirus has reverberated through workers’ comp claims varies between states, and is dependent on a number of factors, according to one expert.

“This is a state-by-state phenomenon, and you can have states that share borders that are having massively different impacts from COVID on the workers’ compensation system,” said Matt Zender, SVP of workers’ compensation strategy at AmTrust Financial Services. “How the states are opening up the presumption of compensability rules, how the states have handled their shutdown orders – all of those factors have had a very large impact on workers’ compensation.”

At the beginning of the coronavirus pandemic in the country, AmTrust saw the number of overall workers’ comp claims drop due to the fact that not as many people were working. Then, as the states started to codify their responses to how they would view a coronavirus claim, AmTrust began to see spikes in claims, though again, the trends in claims are unique to each state.

Read more: Workers’ comp professionals expect 20% drop in new injury claims – study

In the case of Florida, for instance, there are two components leading to a spike in claims. One was the increase in workers’ comp claims broadly because the state did not shutdown to the same extent as other states, so more people were working and were thus exposed, putting more claims into the system, explained Zender. The second reason for the claims increase was related to the presumption rules that came into place, which is a trend that has been evident in other states as well.

“If you look at the claims in California by month of injury, it’s reasonable to assume that the reason that they spiked in June and July had to do with the governor’s executive order, and the fact that these types of claims have never been a part of the workers’ comp system,” said the AmTrust expert, highlighting that, “In California … July [had] more than triple [the claims] that we had in May.”

Read more: Workers’ comp COVID-19 claims get refused

Besides differences at the state level, particular industries have likewise been more exposed to the risk of their employees contracting coronavirus while on the job. The California Workers’ Compensation Institute has been tracking COVID-19 workers’ comp claims, and revealed that the top five industries impacted are healthcare (making up 38.3% of total COVID-19 workers’ comp claims), the public sector (15.6%), retail (7.6%), manufacturing (7.5%), and transportation (5%).

In addition to workers potentially contracting coronavirus on the job, there are other risks that could likewise result in workers’ comp claims. For example, an operation that previously had 25 employees and has now cut the number of workers to 17 due to social distancing measures might require workers to do tasks they haven’t been responsible for before, and for which they have not received adequate safety training.

“You’re also going to find some claims that result from businesses that are employing new COVID-friendly rules, in terms of how they’re interacting with customers and how they’re keeping employees safe,” said Zender. “You have claims [that result] from putting up the plexiglass. A lot of those people who are building the very vehicle to keep their employees safe from COVID may find themselves ironically getting a totally different type of claim.”

As coronavirus-related workers’ comp claims continue to come in, Zender has some predictions for how the marketplace might develop in the coming months. His main takeaway is that the new rules that states are introducing around workers’ comp could have significant implications down the road.

Read more: CA orders workers’ comp insurers to reduce premiums

“This is an expansion, where they’re now allowing for benefits where they would have previously been excluded, and historically when expansions occur, they tend to grow, not shrink,” he said. “As the plaintiffs’ bar starts to become more versed in how to make sure they’re looking out for their clients, it’s reasonable to expect that that’s going to become more codified and part of the process, and those claims will not be just a temporary disability claim.”

The change in workers’ comp is something that AmTrust experts are keeping a close eye on and asking key questions about as presumption rules are introduced.

“What is the start and stop period, is there a requirement for a COVID test, what types of employees are subject to the new presumption rules – all of those factors are important,” said Zender, pointing to New Jersey, which recently passed presumption rules that he says have “some pretty limited guardrails on them” since there is no start and stop period and there are no tests required, making it difficult to determine whether insurers will have an ability to “ring fence who gets eligibility and who does not.”