NATIONAL CONFERENCE OF INSURANCE LEGISLATORS
The National Conference of Insurance Legislators (NCOIL) Workers’ Compensation Insurance Committee met at the Radisson Hotel in Burlington, Vermont, on Friday, July 7, 2000, at 8:30 a.m.
Rep. Terry Parke of Illinois presided in the absence of Rep. Russell Gunn of Missouri, Chair of the Committee.
Members of the Committee present were:
Other legislators present were:
Mr. Bob Mackin, Mackin & Company
MINUTES
REPORT ON WORKERS’ COMPENSATION INSURANCE RATES AND TRENDS
Mr. Strauss said that since 1990, the frequency of workers’ compensation claims had dropped 24 percent, while the severity of those claims had risen 15 percent. He said the cost per claim was rising and might accelerate rapidly in the next few years.
Mr. Strauss said that specific economic, work environment and demographic variables influenced loss costs and the frequency of workers’ compensation claims. He said that higher wages, higher unemployment rates, fewer high-risk workers in the total labor force, managed care programs, and fraud prevention programs lower the frequency of claims. He said that increases in employment and higher benefit levels raise the frequency of claims.
Mr. Strauss said that the 1999 accident year combined ratio reached a record level of 135, despite stable loss costs. He said this meant that for every $1.00 in premium paid into the system, the insurer paid out $1.35 in claim expenses, not including investment income.
Mr. Strauss said the savings from reforms in the years past had been fully realized and that pressure for additional reform was mounting. He said the pressures for change included: benefit increase proposals, desires to roll-back reforms, attacks on managed care, privacy goals that could limit the ability to manage claims, rising loss costs, potentially broader definitions of injury and compensability, and federalization proposals such as ergonomics, black lung, medical privacy and nuclear exposure.
In response to a question by Rep. Bowler, Mr. Strauss said he had not seen too many state laws or proposed state laws that would allow social workers to serve as “gatekeepers” and act as practitioners to provide treatment under workers’ compensation claims. (Gatekeepers are those people who diagnose workers’ compensation injuries and validate claims.) Mr. Strauss offered to conduct a legislative search on the issue for Rep. Bowler. He said there was constant pressure to allow more and more people to diagnose workers’ compensation claims and provide workers’ compensation treatments.
Mr. Strauss agreed with Rep. Bowler that as the scope of “gatekeeper” broadened to include people such as social workers, the frequency of claims would also increase.
At the request of the Chair, Mr. Dennis Smith of the Missouri Employees Mutual Insurance Company offered additional information on workers’ compensation insurance trends. Mr. Smith said thus far in 2000, with no change in rates, the Missouri state fund had written $15 million in new premium, compared to $4 million in 1999. He said most of the industry was beginning to restrict underwriting in terms of acceptable classes of risk. As a result, he said the “market of last resort,” the state fund, was picking up the difference.
In response to a question by Sen. Fraser, Mr. Smith explained that insurers were beginning to restrict underwriting practices because combined ratios were rising significantly. He said the consistently rising medical costs were the driving factor and that if the frequency of claims were to rise, even more restrictive underwriting would occur.
In response to a second question by Sen. Fraser, Mr. Smith said that increased benefit levels certainly had an impact on the cost of claims, but that he had not seen major pressures to increase benefits or roll-back reforms in Missouri.
PROPOSED NCOIL RESOLUTION CONCERNING OSHA ERGONOMICS STANDARDS
Mr. Barry said that OSHA released its proposed program standard on ergonomics in November of 1999. He said the deadline for written comments ended on March 2, 2000. He said OSHA had held a series of public hearings that ended on July 6. He said that both houses of Congress had passed separate appropriations bills that would prohibit OSHA from promulgating or enforcing ergonomics regulations. He said the Clinton administration had threatened to veto that legislation.
Mr. Barry said that under the OSHA standard, an employer must remove a worker who experiences a musculoskeletal disorder (MSD) from the supposed source of the injury until the worker is able to return to work. In such a situation, Mr. Barry said that the employer must employ the employee in a modified work environment and continue paying 100 percent of the employee’s salary and benefits. If the employee is unable to work, or the employer is unable to find another job, Mr. Barry said OSHA would require employers to pay the injured employee 90 percent of salary and 100 percent of benefits.
Rep. Parke said that Rep. Keenan was the sponsor of a proposed NCOIL resolution calling upon OSHA to leave workers’ compensation issues to the purview of state authorities.
Rep. Young made a motion, seconded by Sen. Fraser, that the Committee adopt the resolution.
At the request of the Chair, Rep. Keenan said that the proposed resolution addressed the fact that the federal bureaucracy was now trying to take over the regulation of workers’ compensation, an area that has always been regulated by state legislatures.
At the request of the Chair, Mr. Dick Heydinger of Hallmark Cards, Inc., thanked NCOIL for taking up the issue. He said that for the first time, there was a federal administrative body proposing to introduce a national workers’ compensation benefit. He said the OSHA proposed standard would be very problematic for states to deal with because the medical and legal community had a difficult time diagnosing soft tissue injuries, let alone determining what was fair in terms of remuneration.
In response to a question by Rep. Parke, Mr. Heydinger said that the National Association of Manufacturers (NAM) estimated the cost for compliance at close to $780 per employee per year. Mr. Barry said that OSHA’s estimated cost for implementation and compliance was $4.2 billion. He said the Small Business Association (SBA) estimated the cost to exceed $14 billion.
Rep. Parke asked for an amendment to include language in the last resolved clause to forward the resolution to every member of Congress, not just congressional leadership. He said the additional cost to NCOIL was necessary in order for NCOIL to be effective.
Upon a motion duly made and seconded, the Committee voted unanimously to amend the resolution per Rep. Parke’s request.
The Committee voted unanimously in favor of the resolution as amended. Rep. Parke said the Executive Committee would vote on the resolution during its meeting.
NCOIL MODEL STRUCTURED SETTLEMENT TRANSFERS PROTECTION ACT
Sen. Seward said the main item for discussion in the Subcommittee concerned whether or not to require court approval in all cases or only for those cases above a certain threshold dollar amount. He said the Subcommittee decided to recommend to the full Committee to require court approval in all cases. He said the Subcommittee added a drafting note in Section 1 of the model to remind states to be mindful in providing for expedited court proceedings to avoid undue delays and expenses to the individuals involved.
At the request of the Chair, Mr. Underwood summarized the contents of the proposed model act.
In response to a question from Rep. Parke, Sen. Seward said that the Subcommittee decided not to establish a ceiling or floor in terms of deciding whether or not court approval should be necessary.
Sen. Geller said the Subcommittee also discussed the provision in Section 3 dealing with a discount/finance charge and whether or not to include such a fee cap.
Rep. Bowler moved, and Rep. Young duly seconded, a motion to delete the discount/finance charge language.
At the request of the Chair, Mr. Robin Shapiro of Singer Asset Finance Company said that no state with a structured settlement transfer protection law included the discount/finance charge cap language. He said that his organization supported the NCOIL model without the rate cap language.
After discussion among the legislators, the Committee voted 13 to 1 in favor of deleting the language.
At the request of the Chair, Mr. Doug Barnert of Barnert Associates asked the Committee to consider technical adjustments to the model. Mr. Barnert recommended that legislators modify the wording in Section 8 to make it resemble the language in the Minnesota law. The Committee voted 13 to 1 in favor of Mr. Barnert’s technical suggestions.
Rep. Richner asked the Chair to table the model until the New Orleans meeting so that legislators could consider additional changes.
Rep. Parke said he would really like to proceed with a vote at this meeting because NCOIL had been considering the issue for close to three years.
Rep. Richner said the model did not belong in the Workers’ Compensation Insurance Committee and that the Committee should refer it to the Property-Casualty Insurance Committee for further discussion.
Rep. Keiser said he opposed adoption of the model. He said the model would transfer the regulation of insurance to a court system -- beyond the purview of legislative action.
Rep. Counts said that at the Spring Meeting in San Francisco, the Executive Committee unanimously voted to ask the Workers’ Compensation Insurance Committee to finalize the model act and vote on it by this meeting. He said NCOIL had been working on the model for three years and should bring it to an end.
Rep. Richner said he was prepared to vote today and that he would vote no.
Sen. Larkin said that Rep. Richner had not submitted any comments on the issue in the three years NCOIL had worked on the model. He said, “a model is a model. If a state likes it, it is welcome to use it.” He said states could use the NCOIL model as guidance -- as a model -- and that a state could change it any way it deemed necessary. He said that NCOIL had an agenda for New Orleans and that the agenda should not be cluttered with items that could be resolved in Burlington.
The Chair asked for a roll call vote on the proposed model act. With a vote of 9 to 5, the Committee adopted the NCOIL Model Structured Settlement Transfers Protection Act. Rep. Parke said that the Executive Committee would consider the model at its meeting. He also said that he would consider additional discussion on the model in New Orleans if legislators desired. He asked legislators to contact NCOIL staff with any suggestions and concerns.
The legislators that voted in favor of the NCOIL model included: Rep. Parke, Rep. Davids, Sen. Oliver, Sen. Tallackson, Sen. Larkin, Sen. Seward, Rep. Counts, Rep. Keenan, and Rep. Milkey. The legislators that voted in opposition to the NCOIL model included: Rep. Riggs, Rep. Bowler, Rep. Richner, Sen. Fraser, and Rep. Young.
REPORT ON WORKERS COMPENSATION RESEARCH INSTITUTE’S MULTISTATE BENCHMARKING STUDY
UPDATE ON WORKERS’ COMPENSATION MEDICAL PRIVACY LEGISLATION
Ms. Holden said she would be willing to work with legislators in discussing both federal and state medical privacy legislation.
Rep. Parke asked for trade associations or any interested parties to submit position papers and other information on the topic to staff.
OTHER BUSINESS
At the request of the Chair, Mr. Sal Bianco of the Fremont Compensation Insurance Group asked the Committee to consider the American Legislative Exchange Council’s (ALEC) model act on rate filing deregulation as it concerns workers’ compensation insurance. He submitted a letter to that effect to the NCOIL Property-Casualty Insurance Committee.
ADJOURNMENT
For more information please sign our
guestbook.
WORKERS’ COMPENSATION INSURANCE COMMITTEE
BURLINGTON, VERMONT
JULY 7, 2000
DRAFT MINUTES
Rep. Steven Riggs, IL
Rep. Shirley Bowler, LA
Rep. Andrew Richner, MI
Sen. Edward Oliver, MN
Rep. Gregory Davids, MN
Sen. Leo Fraser, NH
Sen. William Larkin, NY
Sen. James Seward, NY
Sen. Harvey Tallackson, ND
Rep. David Counts, TX
Rep. Kathleen Keenan, VT
Rep. Virginia Milkey, VT
Rep. Mark Young, VT
Sen. Dave Donley, AK
Sen. Thomas Bozek, CT
Sen. Steven Geller, FL
Rep. Pat Patterson, FL
Rep. Leslie Waters, FL
Rep. Michael Smith, IN
Rep. Ronald Crimm, KY
Sen. Bob Dearing MS
Sen. Jon Bruning, NE
Sen. Katherine Wheeler, NH
Sen. Carroll Leavell, NM
Rep. George Keiser, ND
Sen. Jerry Klein, ND
Sen. Vincent Liebell, NY
Rep. Craig Eiland, TX
Rep. Lon Burnam, TX
Rep. James Colvin, VT
Rep. Maureen Dakin, VT
Rep. Frank Mazur, VT
Sen. Dale Schultz, WI
Sen. Frank Deem, WV
Del. Chuck Romine, WV
Also present were:
Ms. Susan Nolan, Mackin & Company
Mr. Chad Underwood, NCOIL Director of Legislative Affairs & Education
Ms. Jenn O’Connor, NCOIL Director of Legislative Affairs & Education
Ms. Alicia Bishop, NCOIL Legislative Assistant
The Committee voted unanimously to approve, as submitted, the minutes of its Friday, February 25, 2000, meeting in San Francisco, California.
At the request of the Chair, Mr. Peter Strauss of the National Council of Compensation Insurance (NCCI) updated the Committee regarding recent workers’ compensation insurance rates and trends. Mr. Strauss said he had provided a handout entitled, “The State of Workers Compensation: A Case of Accelerating Deterioration.”
At the request of the Chair, Mr. Dan Barry of the Risk and Insurance Management Society (RIMS) provided legislators with background information on the Occupational Safety and Health Administration’s (OSHA) proposed ergonomics standards. He said that OSHA had been reviewing ergonomics information for a number of years and that the National Academy of Sciences was due to complete a study on ergonomics by January of 2001.
At the request of the Chair, Sen. Seward provided the Committee with a report of the Structured Settlement Subcommittee proceedings. He reported that the Subcommittee met on Thursday, July 6, from 9:00 to 10:00 a.m. He said that legislators present at the Subcommittee meeting included: Rep. Allen Layson (AL), Rep. Richard Laird (AL), Sen. Steven Geller (FL), Rep. Brian Yamane (HI), Rep. Michael Ripley (IN), Rep. Shirley Bowler (LA), Sen. Edward Oliver (MN), Sen. Jim Seward (NY), Rep. David Counts (TX), Rep. Craig Eiland (TX), and Rep. Mark Young (VT).
Sen. Seward, Vice-Chair of the Subcommittee, said he presided over the Subcommittee meeting in the absence of Rep. Russell Gunn of Missouri, Chair of the Subcommittee, who was unable to attend the Burlington meeting. He said that one of the charges of the Workers’ Compensation Insurance Committee in 2000 was to develop an NCOIL model act to protect consumers involved in the transfer of structured settlements payment transfers. He said the major goal of the Subcommittee was to develop a model that would strike a balance between an individual’s rights to transfer structured settlement payment rights with the need for providing those consumers with protections.
Rep. Parke asked Mr. Rick Victor of the Workers Compensation Research Institute to come back to address the Committee in New Orleans to speak on his organization’s multistate benchmarking study on workers’ compensation insurance.
At the request of the Chair, Ms. Patricia Holden of the American Insurance Association (AIA) said she had prepared and distributed information for the legislators review concerning medical privacy issues as they pertain to workers’ compensation. She said that the summary included both enacted and pending medical legislation as of June 28, 2000.
Rep. Parke said that NCOIL President Dep. Spkr. Farragher had established an Executive Committee Task Force on Privacy. He said the members of the Task Force would include: Dep. Spkr. Farragher, Rep. Parke, Rep. Bowler, Sen. Oliver, Sen. Breslin, and Rep. Young.
There being no further business before the Committee, the Chair adjourned the meeting at 9:55 a.m.
