carolina kasting

The Newsletter of the American Association of State Compensation Insurance Funds
Fall 2002 • www.aascif.org
alberta
arizona
british columbia
california
colorado
hawaii
idaho
kentucky
louisiana
maine
manitoba
maryland
minnesota
missouri
montana
new brunswick
new mexico
new york
north dakota
northwest territories
and nunavut
nova scotia
ohio
oklahoma
ontario
oregon
pennsylvania
prince edward island
puerto rico
quebec
rhode island
saskatchewan
south carolina
texas
utah
washington
west virginia
wyoming
yukon
www.aascif.org
elcome to the fall issue of the AASCIF News. I
can’t believe that this issue is the last AASCIF Newsletter the
California Fund will be responsible for. Where did the two
years go? As some of you know, I informed State Fund’s Board of
Directors of my decision to retire at the end of this year. Acting as
President of AASCIF has really been icing on the cake of my 38-year
State Fund career. It has been a genuine pleasure to work closely with
the men and women of AASCIF and to further the goals of this wonderful organization. Acting on your behalf, I recently testified in
Washington D.C. in support of Federal legislation to put a terrorism
reinsurance mechanism in place. I am pleased to report that the outlook for enactment of such legislation now looks fairly positive.
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AASCIF is a unique organization. Our members all pursue the same
goal of strengthening our various workers’ compensation systems and
improving our services to employers and injured workers. I think we’re
doing a very good job, despite myriad obstacles and challenges. Our
sharing of experiences, both good and bad, has proven beneficial to
millions of people who depend on us to deliver the ‘goods.’ The synchronization of our activities fosters new ideas and solutions to both
old and new problems.
I would be remiss if I did not thank my fellow officers for all their help
during my tenure as AASCIF President. Vice Presidents Lane
Summerhays, David Stuewe, Russell Oliver and Carl Swanson,
Secretary/Treasurer Dianne Oki and Past President John Leonard
have been wonderful to work with and they have provided invaluable
contributions to the organization. No, I haven’t forgotten First Vice
President Patricia Johnson. The truth is, I want to single her out in
order to wish her much success during her term as President of this
fine organization. Pat is a wonderful woman, a savvy executive and an
outstanding leader. As a matter of fact, Pat has written a fine column
for this issue which appears on the facing page. After you read Pat’s
article I’m sure you will agree with me that AASCIF is in good hands.
my wife and I won’t have to fly back
immediately after the conference so I can
report to work. Janet, Casey, Ryan and I
can take time after the meeting to take in
the beauty of Vancouver and environs.
However, that’s in the future. Let’s move
on to the matter at hand which is the current edition of this Newsletter: In addition to Pat’s article, Curtis Larsen of
Montana, Michelle Landers of Kentucky
and Doug Hayden of New York explore
Kenneth C. Bollier
the often-overlooked issue of employer’s
AASCIF President 2000-2002
liability coverage. Their fine work begins
on page 4. Armin Holdorf of New York
discusses ways of measuring effective loss prevention strategies on page
16. Add to this our usual helpings of ‘Dim Sum,’ and ‘Around AASCIF,’
and you have an issue I think you’ll enjoy.
I would briefly like to put the spotlight on my coworkers at State Fund
who produced this publication during the last two years. I invite the
Communications staff who wrote, edited and designed the publication,
the Print Shop staff who made the Newsletter look so crisp and the Mail
Room crew who saw to it that you all received your copy, to take a
well-deserved bow.
When I announced my retirement plans to the employees of State Fund
I wrote, “I have developed an intense pride in the organization you
have nurtured and developed. I am confident you will continue to
enhance its success.” These words also apply to the members of the
American Association of State Compensation Insurance Funds. I wish
you all good health and much happiness in the coming years.
I also look forward to our first collaborative venture with the Canadian
association in Vancouver, BC during 2003. Incidentally, both my sons
asked me if my retirement from State Fund means they won’t be able to
go to Vancouver next year. I told them not to worry. I wouldn’t dream
of missing the annual conference. The difference next year will be that
aascif officers • 2002 – 2004
PRESIDENT
Patricia R. Johnson
President & CEO
Minnesota State Fund Mutual
3500 West 80th Street, Suite 700
Bloomington, MN 55431-4434
(952) 838-4200
VICE PRESIDENT
David Stuewe
Chief Executive Officer
Workers’ Compensation Board
P.O. Box 1150
Halifax, Nova Scotia B3J 2Y2
(902) 491-8000
VICE PRESIDENT
Carl W. Swanson
President & CEO
Montana State Fund
P.O. Box 4759
Helena, MT 59604-4759
(406) 444-6501
SECRETARY/TREASURER
Frances M. Kaitala
Vice President
Minnesota State Fund Mutual
3500 West 80th Street, Suite 700
Bloomington, MN 55431-4434
(952) 838-4200
FIRST VICE PRESIDENT
Lane A. Summerhays
President & CEO
Workers’ Compensation Fund of Utah
P.O. Box 57929
Salt Lake City, UT 84157-0929
(801) 288-8000
VICE PRESIDENT
Russell R. Oliver
President & CEO
Texas Mutual Insurance Company
221 W. 6th Street, Suite 300
Austin, TX 78701
(512) 404-7603
VICE PRESIDENT
Ken Ross
Executive Director & CEO
New York State Insurance Fund
199 Church Street
New York, NY
(212) 312-7665
PAST PRESIDENT
John T. Leonard
President & CEO
Maine Employers’ Mutual Insurance Company
P.O. Box 11409
Portland, ME 04104
(207) 791-3301
LOOKING AHEAD
TWO YEARS
Pat Johnson
AASCIF President 2002-2004
I consider it an honor to be elected President of AASCIF for the next two years. This
organization has been a great source of information and ideas for us as a member and for me
personally. Ken Bollier, now concluding his term, has certainly modeled the kind of leadership
I would aspire to continue. What an outstanding President he has been! With his impending
retirement from the California State Compensation Insurance Fund, I know I speak for the entire
AASCIF family in saying how much we will miss him at our table.
AASCIF’s success has depended on old-fashioned values in
pursuit of some highly contemporary goals. Our members
pursue continuous improvement, innovation and a more
effective voice for shared concerns. The traditional value of
generosity in sharing ideas, information and time to help
one another is our most powerful engine. Strong financial
support by members and business colleagues is another.
We come together because of a desire to learn ways to continually improve our organizations or our operational environments. Certainly, there’s a strong element of enlightened
self-interest in doing so. Those who may be contributing
ideas or information or advocacy today may be seeking them
tomorrow. But, the strength of character of AASCIF reflects a
disinterest by members in wasting time keeping score.
Learning and idea-sharing happens in one-on-one
exchange, and also in what we produce in publication and
presentation settings. Stoking the fires of learning takes
meaningful commitment. Our member organizations have
been generous in giving us talented people for committee
work and other active participation that adds knowledge for
the benefit of all.
It also takes commitment and perseverance to join forces on
issues we share and can more successfully advocate by
working together. AASCIF speaks as one voice on some issues.
Or, it helps put those with common issues in touch with one
another so they can.
We are a surprisingly diverse group for being in the same
general “business.” Occasionally, that means looking harder
to see commonality of issues and ideas adaptable for our own
organizations. But, diversity opens our minds to new possibilities. The heart of innovation is seeing the core of a good
idea in an unexpected place, taking it a step further and, by
development, making it our own.
How often I am struck by the equal opportunity for success
or failure, regardless of business form. That tells me it’s
worth looking in a lot of places for the next best ideas. Our
devotion to finding the way to successes for tomorrow, not
resting on those of today, is why we come together. That’s the
value of AASCIF membership and participation.
Ken Bollier’s leadership of AASCIF over the past two years is
the shining example of personal generosity of time and
talent. Despite times of challenge for his own organization,
he has always been ready to serve the increasing demands of
our diverse membership. He and his fine staff offered outstanding leadership and really took it to a whole new level.
We tip our hats. Ken and Dianne Oki, outgoing SecretaryTreasurer, have our deepest thanks.
Fran Kaitala, our new Secretary-Treasurer, and I look forward to working with the entire AASCIF leadership team,
including returning vice presidents Lane Summerhays,
David Stuewe, Russ Oliver, Carl Swanson, and newly
elected vice president Ken Ross. And we look forward to the
opportunity to serve you.
I was never shy. That’s an old-fashioned trait that somehow
never “took.” So, you can expect that I will ask you to be generous with your thoughts, your time and talents. It’s the tradition on which our organization’s success depends. We’ll
commit to doing our very best to put them to work in ways
that will serve us all.
I look forward to working with you.
By Curtis Larsen, Montana; Michelle Landers, Kentucky; Doug Hayden, New York
The untold story of employers’ liability insurance.
tate funds are in the business of providing
workers’ compensation insurance coverage for
employers in their respective states. Employers’
obligations to provide workers’ compensation benefits, and the scope of state funds’ coverage, are
dictated by state law. A workers’ compensation insurance policy is relatively simple and straightforward.
The policy provides for coverage of state-mandated
workers’ compensation benefits.
S
The workers’ compensation coverage of the typical
state fund policy is Part One of the policy. The infrequently used Part Two of the policy provides
employers’ liability insurance. This article tells the
untold story of the purpose and scope of employers’
liability insurance, or Part Two of a typical state fund
policy. Since most state funds use the NCCI policy
form, this article will focus on the terms and provisions of the NCCI form.
Most employers and employees in the United States
are covered by a state statutory workers’ compensation system. These statutory systems provide that
workers’ compensation benefits are the exclusive
remedy for a work-related injury. However, not all
employees are entitled to workers’ compensation
benefits. State laws usually contain exemptions for
certain classes of employees, such as household and
domestic workers, casual employees, family members, corporate officers and others. Some states also
have exceptions based on the number of employees
or size of the employer before workers’ compensation
coverage is required.
In some states, under certain circumstances, an
injured employee may be allowed to sue the
employer in tort outside the workers’ compensation
system, either as an alternative to, or in addition to
receiving workers’ compensation benefits.
Part One of the NCCI policy provides coverage for
workers’ compensation benefits mandated by law,
but does not cover lawsuits outside the workers’ compensation system. Further, general liability policies
4
usually do not provide coverage for a lawsuit by an
employee against his or her employer. Part Two of
the NCCI policy is intended to fill the gaps in coverage provided by workers’ compensation and general
liability insurance.
Unlike workers’ compensation coverage, state laws
do not mandate employers’ liability insurance. The
scope of coverage is spelled out in the contract or
policy. State laws and court decisions concerning the
enforcement and interpretation of contracts, particularly insurance contracts, will apply to Part Two
coverage. This is why the policy should be written as
clearly as possible, as any ambiguity in policy
language will be resolved against the insurer, and in
favor of the policyholder.
Part Two of the NCCI policy form has several sections
that address the conditions for coverage, what the
state fund will pay, defense of lawsuits, exclusions,
other insurance, limits of liability, subrogation rights
and other provisions. While a claims adjuster or
attorney may seldom need to read the policy when a
workers’ compensation claim is made, state fund
staff must carefully read all of the terms of Part Two
if an employers’ liability suit is tendered in order to
determine the state fund’s rights and obligations.
How the Insurance Applies
Part Two coverage applies to bodily injury by
accident or bodily injury by disease. The NCCI policy
form does not define bodily injury, so one must look
to the law of the applicable jurisdiction for
definition. The bodily injury requirement would
apparently mean that purely emotional distress
claims are not covered by the policy. In some states
workers’ compensation benefits are not provided for
emotional distress or mental-mental claims. Since
there is no workers’ compensation remedy, an
employee who has a mental-mental injury may be
able to sue the employer. Such a claim would not be
covered by Part Two of the NCCI policy, however.
Other conditions or criteria for coverage include: the
bodily injury must arise out of and in the course of
the injured employee’s employment; the employment must be necessary or incidental to the
insured’s work in the covered state, or while working
temporarily outside the covered state; bodily injury
by disease must be caused or aggravated by the
conditions of employment; and the suit must be
brought in the United States or Canada.
These conditions of coverage raise some interesting
points. First, coverage is provided only for injured
employees of a policyholder. Claims made by independent contractors or others who are not employees of the policyholder are not covered by the
employers’ liability policy.
The policy requires that the injury “must arise out of
and in the course of … employment.” This employment causation test is the same as found in most
workers’ compensation statutes. There is a substantial body of case law in each state that has interpreted and applied this test. Presumably, the courts
would apply these cases in a case involving an interpretation of the employers’ liability policy, but not
necessarily. Some courts have found the phrase
“arising out of” to be ambiguous as used in an
insurance policy.
The injury need not occur in the state fund’s jurisdiction to be covered by the policy. In fact, the injury
need not occur within the United States, nor must
suit be filed in the state fund’s jurisdiction. It is
unclear from the NCCI policy language whether it
covers an injury to a nonresident employee who
permanently works in another state for an employer
domiciled in the state fund’s state.
To be covered, the injury must occur during the
policy period. This makes the employers’ liability
coverage an “occurrence” policy, as distinguished
from a policy that covers “claims made” during the
policy period.
Payment Terms
The employers’ liability policy provides that the
insurer will pay all sums the insured legally must
pay as damages to an injured employee. Typically,
an employer must first be at fault in some way for
causing an injury. Further, if legally liable, the
employer may be obligated to pay damages based on
tort law, rather than workers’ compensation benefits.
These damages may include special damages, such
as medical expenses and lost wages, as well as general damages for pain and suffering, loss of enjoyment of life, and other general damages allowed by
the tort law of the state. After specifying in a general
way what the policy pays, the policy then lists four
specific types of covered claims. These include thirdparty-over lawsuits, loss of consortium claims, consequential bodily injury suits and dual capacity suits.
Third-party-over suits are claims made by a thirdparty against the employer for indemnity or contribution after an injured employee has sued the thirdparty. These third-party-over suits are barred in most
states, but where they are allowed, the employers’
liability policy provides coverage.
Loss of consortium claims may sometimes be
made by family members of an injured employee. In
most states, these types of claims cannot be made
independently of a claim by the injured employee.
For example, if an employee lawsuit is barred by the
exclusive remedy of workers’ compensation, then
family members have no viable claim for loss of
consortium. The employers’ liability policy provides
coverage in those states where such an independent
claim is allowed.
Similarly, the employers’ liability policy covers
consequential bodily injury suits by family members. Finally, the policy also provides coverage for
“dual capacity” suits by an injured employee
against the employer, such as when the employee is
injured by a product manufactured by the employer.
These types of claims are available in only a limited
number of jurisdictions.
5
The employers’ liability policy also provides that the
state fund has a duty to defend any claim, proceeding or suit against the insured for damages payable
by the policy. This duty to defend is a great benefit to
the policyholder, and may be worth more than the
limits of insurance in some cases. The duty to defend
is dictated by the allegations of the employer’s liability in the pleading made by the plaintiff. The carrier
must accept the defense, even if the carrier believes it
is unlikely that the employer is liable as alleged in
the pleading. Thus, the duty to defend is broader
than the duty to pay.
Exclusions
The employers’ liability policy contains several
exclusions, any of which may deny coverage of the
particular claim made.
Liability assumed under contract. While the coverage provisions of the policy expressly provide coverage for third-party-over lawsuits, this exclusion
excludes coverage when this claim is based on a
contract of indemnity.
Punitive damages. The NCCI policy excludes coverage of “punitive or exemplary damages because of
bodily injury to an employee employed in violation
of law.” An example of this type of situation is
employment of a minor in violation of child labor
laws. Note that the exclusion is not an exclusion of
coverage of all punitive damage claims. This creates
a potential conflict in at least some states, where the
insurability of punitive damage claims may be prohibited as against public policy. Thus, it is unclear
whether punitive damages may be covered by the
NCCI policy language in some circumstances.
(continued on page 11)
AASCIF Publications
Contest Winners
august 4-8, 2002 • new york
Congratulations to the 2002 AASCIF
Communications Awards Winners!
By Shelley Rowan, Nova Scotia
he Communications Awards are presented annually to those funds
and boards that have addressed communications issues with professional skill, creativity and resourcefulness. The awards recognize
publications and communications efforts that meet the highest standards
of performance in the workers’ compensation industry. The winners were
announced at the AASCIF Annual Conference in New York on August 7.
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The goal is to recognize the best, most creative and effective communications programs created by AASCIF workers’ compensation organizations
in the United States and Canada.
This year 29 U.S. funds and Canadian boards entered the awards contest
(up from 25 last year), with a total of 147 entries (up from 132 last year).
With more entrants and entries, the competition was fierce, demonstrating the high quality of work being produced by boards and funds across
Canada and the United States.
The winner of the Web site category was a featured speaker at the
Communications Workshop (Austin, September 25-27), sharing their
experiences in developing and delivering an award winning Web site.
John Monahan of the Workplace
Safety and Insurance Board of
Ontario accepts the Best of Show
Award for their Radio/TV
Advertising Campaigns entitled
“Safety Starts With You – 2002”
Pierre Benoit of Quebec accepts
the First Place Award in the
Open Category.
Special thanks to all who assisted in coordinating the 2002
Communications Awards, including Cindy Grinstead and John Womack
of the West Virginia Bureau of Employment Programs, Workers’
Compensation Division; John Mesagno and Bob Lawson of the New York
State Insurance Fund; George Layfield of the Injured Workers’ Insurance
Fund Marylan; and Mark Ladwig, Chair of the Communications
Committee.
6
AASCIF Publications Contest Winners
Ryan Rekstis of Ohio accepts the
First Place Award in the
Annual Reports category.
Steve Millikan of Missouri
accepts the Second Place Award
in the Annual Reports category.
Laurence Hubbard of Montana
accepts the Third Place Award
in the Annual Reports category.
Best of Show
Annual Reports
Workplace Safety and Insurance Board
of Ontario
“Safety Starts With You – 2002”
Advertising Campaigns – Radio/TV
First Place:
Ohio Bureau of Workers’ Compensation
“Annual Report”
Open Category
First Place:
CSST (Commission de la santé et de la sécurité
du travail du Québec)
“Collection of General Information
Documents on Understanding Quebec’s
Occupational Health and Safety Plan”
Second Place:
Missouri Employers Mutual Insurance
“2002 WorkSAFE Week Kit”
Third Place:
Workers Compensation Board of Manitoba
“If you’re hurt at work, we’re here to help”
(WCB Toolkit)
Terry Frakes of Texas accepts the
First Place Award in the
Website category.
Second Place:
Missouri Employers Mutual Insurance
“MEM 2001 Annual Report”
Third Place:
Montana State Fund
“Annual Report 2001”
Web site
First Place:
Texas Mutual Insurance Company
www.texasmutual.com
Second Place:
Maine Employers’ Mutual Insurance Company
www.memic.com
Third Place:
Louisiana Workers’ Compensation Corporation
www.LWCC.com
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John Leonard of Maine accepts the
Second Place Award in the
Website category.
AASCIF Publications Contest Winners
Robert Levy of Louisiana accepts
the First Place Award in the
Excellence in Writing category.
Thomas Cleary of Maryland
accepts the First Place Award in
the External Brochures category.
Tom Callanan of Utah accepts
the Second Place Award in the
External Newsletters category.
Excellence in Writing
Newsletters – External Audience
First Place:
Louisiana Workers’ Compensation Corporation
“Flight to Quality”
First Place:
Injured Workers’ Insurance Fund Maryland
“With IWIF – Policyholder Newsletter”
Second Place:
West Virginia Bureau of Employment
Programs Workers’ Compensation Division
“The History of Workers’ Compensation”
Second Place:
Workers Compensation Fund (Utah)
“Update”
Third Place:
State Compensation Fund of Arizona
“Fall/Winter 2001 AZ@Work”
Third Place:
Texas Mutual Insurance Company
“Make a Safer Worker to Make Your
Workplace Safer”
Newsletters – Internal Audience
First Place:
Workplace Safety and Insurance Board
(Ontario)
“Small Business Newsletter”
External Brochures
Janet Howard of West Virginia
accepts the Second Place Award
in the Excellence in Writing
category.
Don Smith of Arizona accepts
the Third Place Award in the
External Newsletters category.
First Place:
Injured Workers’ Insurance Fund Maryland
“Safer Sharps Credit Program”
Second Place:
Workers’ Compensation Board
of British Columbia
“Board Talk”
Second Place:
Texas Mutual Insurance Compamy
“Helping Build A Stronger Texas”
Third Place:
West Virginia Bureau of Employment
Programs Workers’ Compensation Division
“News & Views Online”
Third Place:
Workers Compensation Board of Manitoba
“2001 WCB Highlights”
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AASCIF Publications Contest Winners
Dennis Smith of Missouri accepts
the First Place Award in the
Print Advertising category.
Wally Fox-Decent of Manitoba
accepts the Second Place Award
in the Print Advertising category.
Janet Howard of West Virginia
accepts the Third Place Award
in the Print Advertising category.
Advertising Campaigns – Print
Advertising Campaigns – Radio/TV
First Place:
Missouri Employers Mutual Insurance
“WorkSAFE Campaign”
First Place:
Workplace Safety and Insurance Board
(Ontario)
“Safety Starts With You – 2002”
Second Place:
Workers Compensation Board of Manitoba
“If you’re hurt at work, we’re here to help”
Dennis Smith of Missouri accepts
the First Place Award in the
Internal or External
Communications
Campaign category.
Second Place:
CSST (Commission de la santé et de la
sécurité du travail du Québec)
“2001 SMBs Television Campaign”
Third Place:
West Virginia Bureau of Employment
Programs Workers’ Compensation Division
“Engineering Safety”
Third Place:
Hawaii Employer’s Mutual Insurance
Company, Inc.
“HEMIC TV Campaign”
Audiovisual Productions
First Place:
Maine Employers’ Mutual Insurance Company
“Back Injury Prevention Video”
Ralph McGinn of British
Columbia accepts the
Second Place Award in the
Internal Newsletters category.
Second Place:
Workplace Safety and Insurance Board
(Ontario)
“Things You’d Better Know”
Third Place:
CompSource Oklahoma
“Close Calls Video”
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AASCIF Among Top 200
Best’s Review recently listed the top 200 Property/Casualty Insurers
based on net premiums written in 2001.
AASCIF members in the list, in alphabetical order, include:
Arizona State Compensation Fund (#145)
Injured Workers Insurance Fund of Maryland (#171)
SAIF Corporation of Oregon (#143)
State Compensation Insurance Fund of California (#21)
Texas Mutual Insurance Company (#97)
Workers’ Compensation Fund Group of Utah (#174)
Ward’s Cites 2 From AASCIF
The Ward’s Group, a Cincinnati-based management consulting firm
specializing in the insurance industry, recently included the Louisiana
Workers’ Compensation Corporation and Maine Employers Mutual
Insurance in its 2002 Ward’s 50 Benchmark Group.
The list includes the top 50 among the companies analyzed;
they passed all safety and consistency screens and have achieved
superior performance for five years from 1997 through 2001.
Lawyer’s Mouth Washed Out
Illustrating that Justice eventually prevails in the courtroom,
a foul-mouthed workers’ comp attorney finally got his comeuppance
recently. A review board in Illinois recommended suspending him
for 30 days, according to the Chicago Tribune.
The recommendation was to be reviewed by the state Supreme Court.
The attorney would often refer to female opposing attorneys as “sweetie
pie,” “baby cakes” or “Mother Superior,” and would call male attorneys
and company officials “idiot” or “boy.” In one case, when a claims
adjuster had sent him a letter with which he disagreed, he tore the letter
up into tiny pieces and mailed them back with the suggestion that the
adjuster either eat them or “gently place them in that bodily orifice into
which no sun shines and try not to get any paper cuts.”
The same attorney was reprimanded in 1991 for abusive language.
Illinois attorneys’ rules of ethics are designed to discourage behavior
that is so obnoxious or intimidating that opponents will
throw in the towel rather than suffer more abuse,
said an official of the Attorney Registration and Disciplinary Commission.
“No one suggests that the ethics code is a substitute for Emily Post,
but there are limits,” the official said. “You don’t use means that have no
other purpose but to embarrass or burden a third person.”
Bad Vibes A Disability?
The Washington Post reported that some of the nation’s top psychiatrists
are suggesting that personality clashes could qualify as a new category of
mental illness, thus gaining insurance coverage for treatment.
The doctors recommend creating a new category called relational
disorders to be added to the next edition of the Diagnostic and Statistical
Manual, the profession’s guide for defining mental illnesses.
The paper described this movement as a “profound conceptual shift”
under which an individual might be healthy except when it comes to
certain relationships. Initially, the new category would apply only to family
relationships such as couples who constantly quarrel or children who
clash with their parents. Creating the new category would encourage
systematic study, drug trials and insurance coverage, according to the Post.
Booze Bad for Bus Drivers
The more alcohol that a transit worker drinks – even away from the job –
the more likely is the employee to suffer a workplace injury, according to a
study by researchers at the University of California at Berkeley.
In examining 1,836 employees of San Francisco’s municipal transit system
over a five-year period, the researchers found that workers who had 10 or
more drinks per week were more likely to file workers’ compensation
claims. The study said that consumption of alcohol contributed to 3
percent of workplace injuries, according to the Sacramento Bee.
Human resources professionals emphasize that wellness programs and
referrals for counseling can help curb substance abuse and thus might
help prevent workplace injuries. But others caution against too much
intrusion into employees’ personal affairs off the job.
Fire Pilots’ Kin Seek Benefits
The families of air tanker pilots and crewmembers killed in crashes while
fighting recent wildfires have asked the federal government to award them
the same benefits given for firefighters and police officers killed on duty,
according to the Denver Post.
Under the federal Public Safety Officers’ Benefits Program, established in
1976, victims’ survivors are eligible for an inflation-adjusted $259,000
one-time cash award, and may also receive tax credits and tuition benefits
for their children. Members of the Associated Airtanker Pilots are lobbying
Congress to have pilots and crews included in the program.
Exclusions (continued from page 5)
Workers’ compensation, occupational disease,
unemployment compensation, or disability
benefits. This exclusion makes it clear that these
types of benefits are not payable under the
employers’ liability policy. Workers’ compensation
benefits are payable only under Part One of the
policy. This exclusion does not mean, however,
that if workers’ compensation benefits are paid or
payable under Part One that there is no coverage
for employers’ liability under Part Two. Parts One
and Two of the NCCI policy form provide separate
coverage for different types of liability, and coverage under each stands alone.
Bodily injury intentionally caused or aggravated by the insured. This is an important exclusion
of the employers’ liability policy, and is similar to
exclusions in other liability policies. This exclusion raises some important points, the importance
of which may vary, depending on each state’s law.
First of all, most states have some kind of exception to the exclusive remedy defense when the
employer has intentionally caused an injury to an
employee. These exceptions typically require the
employer to have specifically intended an injury to
the employee. The intentional injury exclusion in
the employers’ liability policy will preclude insurance coverage for these types of injuries.
Secondly, the exclusion only applies to the
employer, and not to co-workers. In most states,
the employer is not liable for the intentional tort of
an employee.
Other exclusions. The policy also contains exclusions for certain employment practices, federal
employment-related benefit and liability systems,
and fines and penalties.
However, in Montana, the case of Sherner v.
Conoco, 2000 MT 50 undermined the assumptions
behind the intentional act exclusion of the
employers’ liability policy, and greatly expanded
employer’s liability outside of the exclusive remedy
of workers’ compensation benefits. In Sherner the
Montana Supreme Court ruled that the employer
was also liable for this liability of a co-worker. The
Court also held that the language of the statute
required only an “intentional act” and not “intentional harm”, thus bringing under the statute
almost all actions taken by a co-worker. Finally,
the Court equated the word malicious to mean the
same as the malice standard used in the punitive
damages statute. Generally, the standard is reckless
disregard of a high probability of injury.
There is usually no limit on liability for workers’
compensation insurance benefits, as the benefits
payable are set by statute. Since employers’ liability coverage is contractual in nature, the policy
has coverage limits. New York requires that
employers’ liability coverage be written with no
limits.
There are other policy provisions that space does
not permit us to address in this article. We have
focused on the basics of this little-used, but important coverage for state fund employers. This coverage provides a measure of risk management for
those situations where injuries may occur to
employees who are not covered by the exclusive
remedy provisions of state workers’ compensation
law.
Cases such as Sherner substantially broaden
employers’ liability, while at the same time leaving
in doubt whether the employers’ liability policy
provides coverage for these types of claims.
2 Cases Highlight Work Illnesses
T
October 30-31, 2002
Las Vegas – AASCIF CEO Conference at the Venetian.
Dinner on October 30 and CEO meeting on October 31.
wo recently decided cases in Canada and the U.S. have highlighted the
dangers of occupational illnesses.
An Ottawa waitress was awarded workers’ compensation benefits for lung
cancer that was caused by second-hand cigarette smoke. In an interview
on CBC-TV, Heather Crowe said she has never smoked a day in her life, but
has worked for 40 years in smoky bars and restaurants.
January 6-7, 2003
Las Vegas – AASCIF All-Committees Meeting.
For information call Fran Kaitala at (952) 838-4221.
A firefighter and paramedic in Akron, Ohio, recently won workers’
compensation benefits for AIDS. Stephen Derrig, 35, does not know when
or how he was exposed to the disease, but is adamant that it could only
have happened through his job, reported the Beacon Journal. According
to the Centers for Disease Control and Prevention, 23,473 health care
workers have developed AIDS, of whom 453 are paramedics.
August 17-21, 2003
Vancouver, British Columbia – AASCIF Annual Conference in
conjunction with the Association of Workers’ Compensation Boards of
Canada, at the Fairmont Waterfront Hotel.
Call Karen Mullins at (604) 231-8589 for information.
11
around aascif
California
around aascif is a regular feature of the AASCIF News. It briefly covers
items of interest submitted by AASCIF members or gleaned from their
websites, newsletters and other published news sources. To ensure that
your organization is included, send information to Mark Ladwig,
Minnesota State Fund Mutual Insurance Co., 3500 West 80th Street, Suite
700, Bloomington, MN 55431-4434. Phone: (952) 838-4270. E-mail:
markla@sfmic.com.
(continued)
Ms. Oki has also served as chief consultant to the Joint Legislative Study
Committee on Workers’ Compensation and on the boards of both the
California Insurance Guarantee Association and the Insurance Education
Association.
A contractor was arrested and jailed for involuntary manslaughter in the
death of a worker who fell from a roof two years ago, according to an
Associated Press report. The contractor was also charged with two felony
counts of failing to meet worker safety requirements, in addition to tax,
insurance and workers’ compensation fraud. Bail was set at $1 million.
Arizona
State Compensation Fund (SCF) of Arizona was ranked third in Arizona
Business Magazine’s list of the best insurance companies in the state in
2001. Only industry giants State Farm Insurance and Farmers Insurance
ranked higher in the property/casualty field.
Three owners of a pizzeria were arrested in San Francisco on charges of
workers’ compensation premium fraud and tax evasion, Insurance
Journal reported. The trio allegedly underreported their payroll to the
tune of $2.25 million from 1996 to 1999. That’s a lot of pepperoni.
After just two years at the helm of SCF of Arizona, President and CEO
Donald A. Smith Jr. was selected Executive of the Year by the American
Society of Safety Engineers in May. This award was established to
recognize the safety activities and support of a non-safety professional.
According to the editor of the Arizona chapter of the American Society of
Safety Engineers’ newsletter, “Mr. Smith has directed his organization
(Arizona’s largest carrier of workers’ compensation insurance) to revitalize
its efforts for prevention of work injuries and illnesses,
not only for its policyholders, but also as a safety and health resource
for the State of Arizona.”
Colorado
The National Council on Compensation Insurance filed an average
decrease of 10.2 percent in workers’ compensation insurance loss costs for
Colorado, effective December 1, 2002. As a result the Division of
Insurance is considering lowering premiums for some employers.
Pinnacol moved its office to 7501 East Lowry Boulevard, Denver, CO
80230. The general phone number is (303) 361-4000, and the fax is
(303) 361-5000.
California
State Fund President & CEO Kenneth C. Bollier, who is also the
President of AASCIF, announced that he will retire December 31, capping a
successful career with California’s largest workers’ compensation carrier.
He joined State Fund’s underwriting department in 1962, and rose to
management of underwriting/marketing, fiscal services and the Fund’s
investment portfolio. He also managed the San Francisco District Office
before his appointment to the Executive Committee in 1986. He was
promoted to executive vice president in 1989, and became president in
1995. He led State Fund through the introduction of open rating in
California’s workers’ compensation system.
Hawaii
Hawaii Employers’ Mutual Insurance Co. (HEMIC) is now the largest
writer of workers’ compensation in Hawaii, according to year-end 2001
statistics.
HEMIC announced that agents and employers now have access to online
quotations at HEMIC’s website. Policyholders may use the system to
review detailed account information including policy status, payment
history, claim status and more.
The Board of Directors appointed Dianne C. Oki as the
new President, effective January 1, 2003. A graduate of
Stanford University, she began her State Fund career in
1968, working in payroll auditing, sales, supervisor of
underwriting/marketing, claims manager, corporate
claims/rehab manager, vice president and executive vice
president. She served the past two years as AASCIF’s
secretary and treasurer.
HEMIC President and CEO Robert L. Dove has recently been appointed
to the AMCOMP board of directors and to the NAII Workers’
Compensation Committee.
12
around aascif
Maryland
Missouri
Authorities suspended the license of All American Towing for allowing its
workers’ compensation coverage to lapse. According to a report in the
Baltimore Sun, All American generated more consumer complaints than
any other towing company in the city, including charges that it inappropriately towed fans’ cars from the stadium parking lot during Baltimore
Ravens football games. A police investigation found no wrongdoing
regarding the towing during games. All American’s owner acknowledged
letting his workers’ comp lapse and said he will reapply for his license in
January.
For another year, Missouri Employers’ Mutual Insurance tops the list of
Missouri workers’ compensation providers when ranked by market share.
The Missouri Department of Insurance’s 2001 report indicates MEM has
19.7 percent of the available market, up from 16.9 percent a year earlier.
MEM’s market share is based on 2001 written premium of $136.7 million.
“From the beginning, MEM’s goal has been to be a long-term player in
Missouri’s workers’ compensation market,” said MEM President and CEO
Dennis Smith. “Our market share confirms our goal to be an available
market for Missouri’s employers.”
Injured Workers’ Insurance Fund announced a number of appointments.
Thomas Cleary was named Chief Operating Office. He joined IWIF as
Executive Vice President in 2001. Timothy Michels was promoted to
Vice President of Claims. He was previously a claims director for five years
and an IWIF staff attorney for five years. George Layfield was named
Director of Public Affairs. John M. Halladay was named Director of
Quality Assurance.
Governor Bob Holden proclaimed WorkSAFE Week for all Missourians
June 10-14. Modeled after the nation’s space program that says, “Mission
Success Begins with Safety,” WorkSafe Week 2002 featured astronaut and
Col. Mike Mullane, who logged more than 356 hours in space aboard
shuttles Discovery and Atlantis before retiring in 1990. Mullane reached
thousands of Missourians when he discussed the similarities between
safety in space and safety in the workplace. More than 900 MEM policyholders participated this year, and thousands more caught MEM’s
WorkSafe message through numerous radio, TV and print interviews.
WorkSafe Week raised more than $14,000 for Kids’ Chance of Missouri
Inc., a nonprofit organization that provides scholarships to children
whose parent has been killed or seriously injured in a workplace
accident. MEM also donated approximately 4,295 pounds of groceries to
food banks across Missouri.
The city of Baltimore hired a hospital and a management company to
examine injured city employees and handle their workers’ compensation
claims, reported the Baltimore Sun. Baltimore will close a city-run clinic
and cut 42 employees from the public payroll. Though initial costs for the
privatization plan will be higher than the city-run operation, officials
expect to save $18 million over five years.
A Montgomery County resident pleaded guilty to insurance fraud and was
ordered to pay $2,700 in restitution and court costs. While conducting
routine surveillance, IWIF discovered the man had returned to his job
while continuing to collect temporary total disability benefits.
Montana
Mark Cole has joined the board of director of the Montana State Fund
(MSF). An MSF policyholder himself, Cole co-owns a motor carrier
located in Shelby.
Minnesota
To help make up for a budget deficit, the Legislature voted in August to
take $4 million from the Old Fund, an account maintained to cover
liability for workers’ compensation claims for injuries that occurred
before July 1, 1990. Carl Swanson, MSF President and CEO, expressed
disappointment that lawmakers took funds that should have been used to
lower policyholders’ costs. “While we understand our state is facing
financial difficulty, we feel that it is inappropriate to use excess or surplus
from workers’ compensation programs to balance the budget,” he said.
The bill originally contained provisions to privatize the MSF, but that
proposal was shelved until next year.
State Fund Mutual (SFM) earned the No. 1 spot in the state among large
workers’ compensation carriers for prompt action on lost-time claims.
The Minnesota Department of Labor and Industry reported that SFM
paid or denied 90.3 percent of claims within the statutory 14-day period,
according to the Companion newsletter. SFM handled 2,582 lost-time
claims between July 1, 2000 and June 30, 2001. “Our consistently high
prompt first action shows how hard State Fund Mutual and its policyholders work to get claims off to a good start,” said Meg Kasting,
vice present of claims services.
13
around aascif
Montana
Ohio
(continued)
Beginning this fall, MSF safety experts will offer free seminars throughout
the state to help employers improve their workplace environment and
thus decrease injuries.
James Conrad, Administrator and CEO of the Bureau of Workers’
Compensation (BWC), presented the Governor’s Excellence in Workers’
Compensation 2002 Award to the Trenton brewery of the Miller Brewing
Company. The beer maker’s claim frequency was 0.14 in both 1999 and
2000, but declined to 0.09 in 2001 and 2002. The transitional work
program at the brewery has enabled 99 percent of its participants to
return to productive work within the plant.
Dr. Manuel Astte has joined MSF as its chief information officer. When
he was in the military, he served as personal aide and computer support
coordinator for the Office of General H. Norman Schwarzkopf and
received a Joint Service Commendation medal.
The BWC awarded a $200,000 grant to a labor-management cooperative
effort to curb drug use and improve workplace safety.
New York
Oklahoma
Due to understaffing, the Nassau County workers’ compensation office
has had difficulty investigating reports of fraud, according to Newsday.
The office received a tip that a county employee receiving payments
for a knee injury could often be seen on his roof doing repairs.
Another employee submitted a claim for $23,000 worth of medication
that included Viagra and diabetic drugs unrelated to his back injury.
A tipster reported that a police officer who alleged injury while making
an arrest actually received the injury while working on his deck at home.
But the staffing shortage hampers any attempt to follow up on such tips.
In fact, the paper reported, the county staff has difficulty making
payments timely. One medical provider said he had to wait as much as
three years for bills to be paid.
CompSource Oklahoma was recognized again with a commendation
from Governor Frank Keating on Quality Oklahoma Team Day.
The Policyholder Services Division won for its customer service program,
which utilizes policyholder service representatives to give one-on-one
service to policyholders. The project is entitled Workers’ Compensation
101, A Customer Service Program Designed to Inform, Educate and Assist
CompSource Policyholders.
Ontario
The Workplace Safety & Insurance Board has joined local safety
committees to promote safe practices in the workplace. The WSIB recently
participated in a seminar in Barrie for the Safe Communities Incentive
Program (SCIP).
North Dakota
The Bismarck Tribune and the Grand Forks Herald each recently
reported on North Dakota Workers’ Compensation’s Guardian
Scholarship Program, which awards scholarships to the spouses and
children of workers killed on the job. Since the program was created in
1997, it has awarded more than $407,000 to 191 people.
Oregon
A recent change in public contract law makes it easier for employers to
send workers out of state to perform temporary work on public contract
projects, the SAIF Corporation announced. The new law says out-of-state
employers working temporarily in Oregon on public contracts no longer
need to obtain Oregon workers’ compensation policies if their home-state
policies cover the workers they bring to Oregon and they do not hire
Oregon workers while in the state. Because Oregon changed its law, the
state of Washington reciprocated for Oregon employers.
Northwest Territories and Nunavut
The Workers’ Compensation Board won a national award for disability
management for its work with an Igloolik worker. Daniel Qanatsiaq
became a parapalegic at age 55 after he fell off scaffolding at a worksite
in 1996. The WCB worked with health care providers, rehabilitation
hospitals and the NWT Housing Corporation to maximize his
quality of life.
The aascif News is published quarterly by the American Association of State Compensation Insurance Funds for its members and others who are interested
in workers’ compensation systems. Send articles and inquiries to: Minnesota State Fund Mutual Insurance Co.; Attn: Mark Ladwig; 3500 West 80th Street;
Suite 700; Bloomington, MN 55431-4434. Phone: (952) 838-4270; e-mail: markla@sfmic.com.
Printed in the Print Shop of the California State Compensation Insurance Fund. Graphic artist: Jim Smoldt.
14
around aascif
Texas
Washington
Austin and San Antonio have substantially lower average costs for workers’ compensation than other regions of the state, according to a study by
the Workers’ Compensation Research Institute. Potential excess care and
higher utilization rates rather than higher prices may be to blame.
The study examined workers’ compensation medical costs in Austin and
found that costs for similar claims were higher in other regions:
Houston (58 percent higher), Fort Worth (51 percent higher), Dallas
(38 percent higher), East Texas (36 percent higher), El Paso (31 percent
higher), West Texas (27 percent higher), and South Texas (23 percent
higher). Costs in San Antonio were similar to those in Austin.
The study found that in the higher-cost areas, more injured workers
receive hospital-billed care.
The Department of Labor & Industries (L&I) recently received favorable
publicity for its safety program in the Puget Sound Business Journal.
Rather than using a heavy-handed approach to enforcement of workplace safety laws, L&I is partnering with businesses to pinpoint problems
and prevent accidents before they occur. For instance, L&I launched a
cooperative program with the Washington Restaurants Association to
reduce accidents among teenaged workers.
L&I launched a crackdown on unregistered residential wood framers in
September, making sure they are working safely and are paying their fair
share to the state workers’ compensation fund.
In what would be the agency’s first general rate increase in eight years,
L&I proposed increasing industrial insurance premiums by 40.5 percent
in 2003, Insurance Journal reported.
The Texas Oil and Gas Association (TxOGA) workers’ compensation
purchasing group received $14,485 in dividends from Texas Mutual
Insurance Company. This represents the third group dividend that TxOGA
has earned since it partnered with Texas Mutual in 1995. “We’re very
pleased with TxOGA’s safety efforts,” said Ken Lauber, Texas Mutual’s
Vice President of Field Operations. Founded in 1919, TxOGA is the oldest
and largest organization in the state representing petroleum interests.
Director Gary Moore announced plans to leave L&I at the end of
October to become the state’s chief labor negotiator. His replacement will
be appointed by the governor..
West Virginia
Utah
The Bureau of Employment Programs announced the
appointment of Dale E. Newell as the new Executive
Director of the Workers’ Compensation Division. Newell’s
insurance and risk management experience dates back to
1969 when he was an Underwriting Manager for Argonaut Insurance
Company in Honolulu, Hawaii and Los Angeles, California. Additional
experience includes Vice President of Underwriting for Western Employers
Insurance Company in Fullerton, California; Assistant Vice President with
Safeco Insurance Company in Seattle, Washington, and Vice President
with Parker, Smith & Feek, Inc., in Seattle where he retired in 1999. A
graduate of Glendale College in Glendale, California with a degree in
Business, Mr. Newell is married and is the father of two children. He is a
retired colonel with the Army National Guard, a former infantry officer,
U.S. Army, and served in Vietnam.
In August the Workers’ Compensation Fund (WCF) awarded $78,000 in
college scholarships to 52 children and spouses of workers who died in
industrial accidents. Each recipient received $1,500 to be used for tuition,
books and fees. Melvin Green, WCF’s chairman, noted that WCF had
awarded nearly 650 such scholarships since 1990.
The WCF received the Best of Show award at the Insurance Marketing
Communications Association (IMCA) Showcase Awards for its Update
newsletter. It also received an award of excellence in radio advertising for
its “We Made This Ad” spot featuring company employees.
WCF has put the OSHA 300 Log online to help employers comply with
OSHA’s new record-keeping rule. WCF provides the employers a list of
filed claims, and the employer then selects which claims are OSHA
recordable and generates the report. The log can be updated throughout
the year and the employer can print copies for its records at any time.
A.M. Best affirmed WCF’s rating of A- (Excellent), saying the rating
reflected the company’s financial strength, reserving practices and
dominant market position.
15
By Armin Holdorf, New York
he advent of workers’ compensation reform evolving across the nation
in the past 20 years has brought about increased scrutiny on the effectiveness of the methods used by insurance carriers to control injury
and illness of their insureds. Many states enacted regulatory reform to limit
workers’ compensation claims costs by regulating the insurance carrier accident prevention services. Many carriers responded by implementing specific
targeting strategies to effect a lowering of the incidence rate of their insureds.
While the methods differ, the intent is the same, to lower the incidence rate of
injury and illness of employers. The following case study highlights one State
Fund’s methodology for making a difference.
Tracking Safety Services
T
Working with the targeted policyholders, loss prevention consultants help to
structure and maintain effective safety programs. Included in the loss prevention services are workplace safety surveys, written action and service plans,
safety presentations, safety videos, and workplace environment testing for
noise and carbon monoxide exposure. These safety services are made available to NYSIF policyholders.
The loss prevention consultants and their supervisors are responsible for
tracking these accounts’ progress. The following are the loss prevention
representative’s key safety responsibilities:
NYSIF, the New York State Insurance Fund, takes a classic approach in
measuring the effectiveness of safety activities and programs. There are a
number of possible ways to evaluate program success or failure, and many
articles have been written about which approach is best. We have found that
tracking loss ratio and accident frequency over time gives us a fair picture of
an account’s trend. But we have added a twist: a second level of review from
the Home Office. This has two benefits. First, the review lets us make certain
that the loss prevention consultants and line supervisors select accounts that
can benefit from enhanced safety services. Second, management can review
progress centrally, prior to auditing the district offices.
• Review policyholder operations for hazardous exposures;
• Conduct surveys to identify unsafe behavior and conditions;
• Review loss analysis to identify unsafe acts and trends;
• Meet with clients to analyze findings and set action goals;
• Conduct safety training and presentations;
• Develop innovative ways to better serve NYSIF’s customers.
Action plans for targeted accounts are reviewed and updated as progress is
made in addressing unsafe acts and conditions, training is conducted, etc.
Semi-annually, the district offices prepare information for Home Office
management. A brief narrative report concerning every targeted account is
required from each loss prevention consultant. It contains a loss analysis,
describes the services provided in the last six months, and projects what will
be accomplished during the next six months. Loss ratios, claims valuations
and accident frequency are scrutinized for positive and negative changes. A
copy of the action plan is attached, along with the dates of service.
Selecting Accounts to Service
The key concept for safety work at NYSIF is targeting. This necessitates a
review at the district office level of the loss prevention consultants’ accounts,
to determine which ones are incurring losses that need to be addressed. The
selected accounts undergo a loss analysis that leads to the creation of action
plans for loss prevention. The representative, working with the policyholder,
devises these plans. Goals and dates for safety performance and improvement
are set and periodically evaluated and reviewed, and Home Office management reviews all targeted accounts – and their progress – semi-annually.
Management Review
Central management conducts periodic audits of district offices to review field
work. Prior to these visits, the semi-annual account reviews are examined.
This allows for an intimate examination of the targeted policies across the
state, as to whether they have met action plan goals. This review also can
indicate whether the loss prevention consultants have been servicing their
targeted accounts according to their needs.
Policies that are required to participate in New York State’s mandatory
Workplace Safety Program, also called Code Rule 59, are treated similarly to
targeted accounts. These policies have an experience modification greater
than 1.20, and also have an aggregate payroll higher than $800,000. Loss
prevention consultants evaluate the risk and make recommendations that
must be implemented within six months. The servicing representative, who
assists the policyholder in complying, reviews the recommendations. An
action plan is devised for this purpose. After six months the carrier conducts
a survey to see if compliance has been achieved. A 5 percent penalty is
assessed if the policyholder fails to implement all recommendations. This
program tracks affected policies with great scrutiny, and allows NYSIF to
review the effectiveness of its safety services.
NYSIF’s long-term goal in measuring the effectiveness of safety activities is to
ensure that loss prevention representatives are successful in reducing policyholders’ accident frequency. This leads to lower premiums for employers,
lower claims costs and increased policy profitability for NYSIF, and safer
workplaces for New York’s workers.
16