Marketplace responds to workers' comp changes

The important thing to grasp is that with this change, employers, employees, insurance companies, attorneys and doctors will need to change their approaches to the workers’ compensation system.

Changes start with the new definition of accident: “An unexpected, traumatic event or unusual strain identifiable by time and place of occurrence and producing at the time objective symptoms of an injury caused by a specific event during the work shift.”

Formerly, for an injury to be compensable, the employment had to be a “substantial” factor. Now the employment has to be the “prevailing” factor. This new language will make it more difficult for a nonwork-related injury to be covered by workers’ compensation. It also will prompt more accident investigations to determine the cause.

Several new provisions employers need to be aware of include:

• The failure to obey any rule or policy relating to a drug-free workplace or the use of alcohol or nonprescribed drugs that results in an accident shall result in compensation being reduced by 50 percent. Employers need a written policy that all employees have read, understood and signed.

• An employee’s failure to use prescribed safety devices (safety glasses, hard hat, gloves, machine guards, etc.) shall reduce benefits by at least 25 percent but not more than 50 percent. Again, the employer needs to have a written safety policy with a section regarding safety equipment and devices. Training in the use of safety devices is important as well.

• The amount an employer can pay out-of-pocket for an injury without it affecting their experience modification – a credit or debit factor added to a workers’ compensation policy – has been raised from $500 to $1,000. Employers must still report the injury (for informational purposes only) and lost time must not be more than three days.

• Compromise settlements between employer and employee shall now be approved as long as it is not the result of undue influence or fraud, and the employee fully understands his rights.

When the law was drafted, modified, approved and signed, an error in the final bill was overlooked. This resulted in language that excluded accidents that arise out of and in the course of employment. The error also potentially leaves employers open to civil liability as a result of accidents. This error totally defeated the original purpose of workers’ compensation – a no-fault system that helped injured workers without the employee suing their employer.

The governor called a special session to correct this error immediately through an emergency clause. Although the corrected language passed by majority vote, it did not receive the two-thirds majority needed to make it effective immediately. This correction will become effective in December, 90 days after the corrected version was signed by the governor.

So does this mean there is no workers’ comp coverage for accidents until December and employees can or have to sue employers for accidents? Technically, yes.

However, the marketplace is responding as if it were corrected. The risk is still there, however, if an employee and an attorney want to test this error with an accident that occurs between Aug. 28 and December and sue an employer.

In addition, an employer could deny coverage for an accident during this time period to test this error. Let’s hope this error doesn’t result in additional legal action.

As everyone gets used to the new statute, it’s important for employers to make the necessary adjustments to comply. This includes increased accident investigation to determine the cause and to prevent the situation from occurring in the future. Written drug and alcohol policies, safety programs and protective device policies are a must. And don’t forget to take advantage of paying small claims up to $1,000 to keep them off your experience modification.

If you decide to do nothing, you’ll be left behind. Contact your insurance agent and make the necessary changes to comply with the law.

Richard Ollis is president and CEO of the employee-owned, independent insurance agency, Ollis and Co.