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NAMIC 2005 Survey of New State Insurance Laws Summary and Analysis

WORKERS' COMPENSATION

The second most common issue trend to surface among the new state insurance laws identified in the 2005 survey is workers' compensation. A total of approximately 120 new laws, nearly 15% of all the new laws identified in this report relate to the regulation of some aspect of workers' compensation insurance. NAMIC's analysis of these provisions identified several subcategories of workers' compensation issue trends. Notably, new laws pertaining to benefits, claims and authorized treatments; disputes and settlements; workers compensation funds; omnibus state law changes; contractor requirements; fees / taxes/services; state oversight; and a group of miscellaneous workers' compensation measures.

Benefits, Claims and Authorized Treatments

Twenty-two laws were enacted in 15 different states: Arkansas, Colorado, Delaware, Florida, Indiana, Kansas, Nevada, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee and Virginia. Arkansas enacted HB 1011 amending the definition of a compensable injury to include injuries to the neck and spine (HB 1011). Colorado HB 1113 increases the limits limitations on permanent partial disability payments. Colorado HB 1139 increased the enforcement of workers' compensation laws by offsetting for benefits obtained by fraud. Also, all notices of contest will be filed electronically. Delaware SB 17 requires all workers' compensation benefits for permanent impairment and disfigurement to be paid as a lump sum. Florida HB 423 amends the criteria an owner-operator of a motor vehicle must meet in order to be excluded from workers' compensation coverage. vIndiana SB 508 amends provisions pertaining to mandatory coverage, scheduled injuries, permanent partial impairment, average weekly wages, maximum compensation, and burial expenses. Kansas HB 2141 establishes guidelines for determining whether the burden of proof has been met in establishing that an employee used, had possession of, or was impaired by alcohol or drugs while working. Nevada AB 364 requires a workers' compensation insurer that is paying compensation to an injured employee for a permanent total disability to provide the employee with an annual accounting of payments. North Carolina House Bill 99 creates a study committee on workers' compensation benefits.

Indiana SB 508 amends provisions pertaining to mandatory coverage, scheduled injuries, permanent partial impairment, average weekly wages, maximum compensation, and burial expenses. Kansas HB 2141 establishes guidelines for determining whether the burden of proof has been met in establishing that an employee used, had possession of, or was impaired by alcohol or drugs while working. Nevada AB 364 requires a workers' compensation insurer that is paying compensation to an injured employee for a permanent total disability to provide the employee with an annual accounting of payments. North Carolina House Bill 99 creates a study committee on workers' compensation benefits.

North Dakota HB 1171 amends provisions pertaining to total disability and rehabilitation services. Oregon HB 2408 amends provisions regarding workers' compensation impairment and permanent partial disability, while SB 386 requires that medical examinations used to support termination of benefits include at least one report in which the author personally observed the worker. Oregon HB 2405 requires aggravation claims for workers' compensation injuries to be established by submission of a form signed by the worker or representative, and the attending physician. Oregon SB 311 requires a worker, when requested, the insurer or self-insured employer to attend an independent medical examination, to use a physician selected from a list of qualified physicians established by the Director of Consumer and Business Services.

Rhode Island HB 5858 provides that any state employee receiving workers' compensation health benefits for total disability would also be entitled to receive the health insurance benefits he or she was receiving at the time of injury. South Carolina SB 557 authorizes a municipality to provide workers' compensation benefits to prisoners working for the municipality. SB 75 pertains to law enforcement office disability determination.

South Dakota SB 16 specifies that requests for compensation or additional compensation must be in the form of a written petition for a hearing. South Dakota HB 1019 makes firefighters from nonprofit rural fire departments eligible for state workers' compensation coverage. Tennessee HB 762 removes the 2005 sunset provision for chiropractic inclusion on the workers' compensation panels if the injury is a back injury. Virginia HB 1567 relates to coverage for local emergency response teams.

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Disputes and Settlements

As with 2004, three states approved new laws in 2005 that specifically address dispute resolution or settlement protocol of workers' compensation cases. Idaho SB 1092 clarifies that the right to workers' compensation benefits is not affected except in the case of a denied claim, for which the statute of limitations for requesting a hearing and award is one year from the date of making the claim. Oregon HB 2294 provides that if an insurer or self-insured employer denies a claim for a new medical or omitted medical condition, the claimant may request a hearing on the denial. Tennessee HB 440 removes an established expiration date for the special workers' compensation appeals panel.

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Workers' Compensation Funds

Three states (Connecticut, Georgia, and Wyoming) approved legislation addressing their respective state workers' compensation funds. Connecticut SB 1336 changes the laws governing the Second Injury Fund. Georgia HB 200 provides for the dissolution of the Subsequent Injury Trust Fund. Wyoming SF 79 changes provisions of the state's workers' compensation fund by detailing expense and reserve requirements.

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Omnibus State Law Changes

Seven states (Alaska, Illinois, Minnesota, Missouri, North Dakota, Oklahoma, and West Virginia) enacted legislation in 2005 making comprehensive changes to their state laws. Because of the breadth of these changes, unique to each state, NAMIC recommends a thorough review of the complete text of each of these new laws.

Alaska (SB 130) enacted omnibus workers' compensation changes that include the establishment of a workers' compensation appeals commission and task force. Illinois HB 2137 makes numerous changes to the state's Workers' Compensation Act, including the failure of an employer to provide coverage, payments for burial expenses, payments and transfers to the Rate Adjustment Fund, creates a Medical Fee Advisory Board, penalties for false or fraudulent claims and amends procedures in contested cases.

Minnesota SF 1716/HF 1859 provides that insurers are no longer required to file annual statements of defense fees and costs. The definition of "standard workers' compensation premium" is revised. Insurers are required to pay the full amount of the assessment s for the special compensation fund. An employer may designate a pharmacy or network of pharmacies that employees must use to obtain outpatient prescription and nonprescription medications. The 30 day pre-filing requirement to the Commissioner of intent to cancel, terminate or non-renew a policy is eliminated. Instead, a notice must be placed on or sent with the premium invoice or other document to notify the insured of the intended cancellation or termination.

Missouri SB 1 includes reforms changing the standard from "substantial factor" to "prevailing factor" in the definition of compensable injury; gives preference to objective medical findings over subjective complaints; raises criminal penalties; and allows for voluntary claim settlements. North Dakota HB 1123 addresses premium payment, coverage requirements for foreign employers, and independent contractor certification. North Dakota HB 1125 amends laws governing premiums and payment of certain medical benefit claims.

Oklahoma SB 1X increases benefits for workers, increasing death and burial benefits, disfigurement benefits and "take home" benefits. An ombudsman process was established and mediation is encouraged. The new law provides employer choice of physician, and encouraging enrollment in certified workplace medical plans. Rate approval is now a use-and-file system, and the State Health Department is permitted to visit sites to review certified workplace medical plans. Tennessee SB 2311 adds requirements for Division of Health related boards to obtain patient's medical records without a signed waiver when investigating a complaint.

West Virginia's legislature met in several extraordinary sessions to address workers' compensation issues. SB 1004 is the state's Workers' Compensation Debt Reduction Act, privatizing and creating an employer-owned, private mutual insurance company regulated by the State Insurance Commission. HB 412, passed in the Fourth Extraordinary Session, relates to debt restructuring and the new insurance company. HB 501 is further legislation related to transition of the West Virginia Workers' Compensation Commission to the private mutual company

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Contractor Requirements

Arkansas and Tennessee approved new workers' compensation provisions in 2005 that specifically address compliance requirements of contractors working in those states. Arkansas SB 941 clarifies the liability of prime contractors and subcontractors under the state's workers' compensation law. Tennessee SB 751 requires contractors to show proof of workers' compensation coverage relative to applying for or renewing a contractor's license.

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Fees / Taxes / Services

The legislatures in Arkansas, Florida, Idaho, North Dakota, and Tennessee passed laws in 2005 that address specific workers' compensation legislation regarding fees, taxes, or services. Arkansas SB 368 revises the workers' compensation administrative tax procedures and requires casualty insurers to maintain accident prevention services in order to write workers' compensation insurance. Florida SB 1693 enacts federally mandated changes to state unemployment compensation tax law. Idaho HB 331 adopts a medical fee schedule for physician services. North Dakota HB 1182 allows certain political subdivisions to use all or part of the property tax levy and the insurance reserve fund for payment of Workforce Safety and Insurance contributions, premiums, judgments, and claims of political subdivisions. North Dakota HB 1122 establishes a lien in favor of the Workforce Safety and Insurance Organization when an injury or death for which compensation is payable under provisions of the workers' compensation law was sustained under circumstances creating a legal liability in a third party. North Dakota HB 720 extends the Medical Fee Schedule Rule deadline. Tennessee SB 1578 requires that the penalty provisions of rules on a comprehensive medical fee schedule are not effective until January 1, 2006.

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State Oversight

In an increase from 2004, 10 legislatures passed laws in 2005 regarding state regulatory oversight of their respective workers' compensation markets. Hawaii SB 1808 revokes the workers' compensation rule-making authority of the director of the Department of Labor and Industrial Relations and amends provisions regarding vocational rehabilitation and claims filing. The Hawaii Legislature overrode the Governor's veto of this legislation. Maine HP 245 extends the time within which a hearing officer may request a review of a decision by the full workers' compensation board to 25 days.

Nevada AB 254 increases the maximum administrative fines and benefit penalties the state industrial relations division may impose on an insurer, managed care organization, health care provider, third party administrator or employer, and expands the violations for which a benefit penalty can be imposed. Ohio HB 226 revised the law regarding the Workers' Compensation Oversight Commission reporting requirements concerning investments. Oregon SB 670 requires the Director of Consumer and Business Services to review and approve certain treatment standards for care provided to injured workers by a managed care organization. Oregon 2091 provides that the review process of workers compensation claims decision made by the Department of Consumer and Business Services is governed by the provisions of the Administrative Procedures Act.

Rhode Island HB 5177 provides that the workers' compensation administrator would be appointed to serve a term of five years by the chief judge of the Workers' Compensation Court. South Carolina SB 127 relates to the Code of Judicial Conduct for workers' compensation commissioners. Tennessee HB 477 adds a chiropractor to the membership of the Medical Care and Cost Containment Committee.

Texas HB 7 abolishes the Texas Workers' Compensation Commission and replaces it with the State Department of Workers' Compensation, headed by a single commissioner. Other changes were made, including the establishment and greater reliance on a designated doctor process by which independent doctors consider disputed issues related to indemnity benefits. The Department is also required to adopt evidence-based medical treatment guidelines and allow for adoption of more specific treatment protocols.

Virginia HB 1862 authorizes the Workers' Compensation Commission to require a business entity with a controlling interest in or sharing common ownership with any professional employer organization to guarantee the performance of all obligations under the Workers' Compensation Act by the non-controlling business entity, including payment of benefits.

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Miscellaneous New Workers' Compensation Provisions

Eleven states (Arkansas, Connecticut, Georgia, Kentucky, Louisiana, Minnesota, North Carolina, Oregon, South Carolina, Utah and Virginia) approved other types of workers' compensation measure in 2005 that address a variety of additional specific aspects of workers' compensation laws. Arkansas HB 2917 establishes the method for proving physical or anatomical impairment in workers' compensation cases involving occupational hearing loss. Connecticut HB 6940 requires workers' compensation insurers and liability insurers to provide the state with notice of claim payments. Georgia HB 327 includes the providing of a premium discount for an insured with a drug-free workplace program, while Georgia SB 225 eliminates the reserve requirements for employers' liability and workers' compensation insurance policies. Kentucky SB 86 establishes minimum financial standards for workers' compensation self-insured groups to ensure that self-insured groups are providing adequate coverage for member employers' risks and liabilities for injured employees of the member employers.

Louisiana House Bill 680 allows a legal dependent of a deceased employee to sue the direct employer for all legal damages when the direct employer fails to secure workers' compensation insurance or proper certification of self-insured status. Senate Bill 292 authorizes a Horsemen's Workers' Compensation Insurance Program. Last, Louisiana Senate Resolution 122 requests the Senate Committee on Insurance to study providing farms with the ability to provide workers' compensation coverage through existing policies of insurance without obtaining a separate workers' compensation insurance policy.

Minnesota SF 1998/HF 2023 is named the "prompt billing law", requiring providers to bill health plan companies no later than six months after the date of service or when they acquire the correct name/address of the health plan company responsible for payment of the bill, whichever is later.

North Carolina Senate Bill 319 establishes the North Carolina self insurance security system and clarifies the procedures by which subsidiary and affiliate companies may be licensed as self insurers for workers' compensation and to make other conforming and technical changes to the workers' compensation laws respecting individual self insurers.

Oregon HB 2404 provides that a penalty will not be assessed against an insurer or self-insured employer if, on reconsideration of the closure of a workers' compensation claim, the increase in compensation results from information that the insurer or self-insured employer could not reasonably have known at the time of claim closure. Oregon SB 172 changes the date for commencement of the reconsideration period for a workers' compensation claim when reconsideration is requested by an insurer or self-insured employer to the earlier, rather than later, of the date of the request for reconsideration by the workers, the date of receipt of a waiver from the worker of the right to request reconsideration, or the date of expiration of the right of the worker to request reconsideration.

Rhode Island SB 549 defines a "high protected risk" as a fire resistive building that meets the highest standards of fire safety according to insurance company underwriting requirements. SB 549 also allows insurance companies in Rhode Island to offer workers' compensation and employers' liability coverage to groups of employer beneficiaries. South Carolina SB 135 pertains to constable premium payments while SB 491 ties the maximum salary paid to the administrator director to the salary paid to commissioners, rather than circuit judges.

Utah SB 159 provides an offset against the premium assessment on workers' compensation insurance for qualified donations to an occupational health and safety center. Two Virginia bills, HB 1728 and SB 1215, pertain to non-work driving activities as noncompensable. Virginia HB 1863 provides for imposition of civil and criminal penalties against employers that fail to insure payment of workers' compensation to their workers. HR 2462 provides that recipients of Temporary Assistance for Needy Families benefits are, under certain circumstances, considered to be Commonwealth employees for the purposes of the Workers' Compensation Act. HB 2775 allows an employee suffering from a disease directly attributable to 9/11 rescue and relief efforts two years after the employee first learns of the disease diagnosis within which to file claim. Virginia HB 2700 provides coverage within the scope of employment for purposes of the Workers' Compensation Act, if injuries to first responders occurred while traveling from home or another location outside a work location to that work location.

Wyoming SF 82 changes provisions regarding rate manipulation, premiums, preauthorization of non-emergency care, and clarifies certain definitions.

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Also Inside This Summary

The following provides a brief summary and analysis of each of the notable key issue trends that emerge from NAMIC's 2005 listing of new laws.

Search for an Issue Overview

Motor Vehicle Insurance

Tort Reform

Identify Theft

Catastrophe Related Legislation

Military Personnel Insurance Related Legislation

Additional Emerging New Law Issue Trends