TN WORKERS’ COMPENSATION REFORM JEFF FRANCIS ASSISTANT ADMINISTRATOR DIVISION OF WORKERS’ COMPENSATION 1

WHY REFORM? WORKPLACE INJURIES ARE A SERIOUS MATTER  Cost to employees  May jeopardize their position  May leave them with impairments  May hurt them financially May not be able to support families  Cost to employers  Money, disruption of operations and loss of productivity. In FY : 60,541 Medical-Only Claims 40,360 Lost Time Claims 2

WHY REFORM?  Complaints about WC costs in TN Higher than surrounding states Discourages new jobs from coming to TN  Some TN firms expand to other states instead of in TN  Increased interest in “opting out”  Perception that process is too lengthy and complicated  Perceived incentives to stay off from work 3

WHY REFORM?  Concerns about court system Too litigious Only TN and AL use trial courts Inconsistency in court rulings  “Race to the courthouse” Timeliness; it can take years for a claim to move through the court

GOVERNOR LISTENED, APPOINTED “WORKING GROUP” AND ASKED, How Can the System Be Improved? 5

SIXTEEN MONTHS LATER PUBLIC CHAPTER 289 AN ACT TO REFORM TENNESSEE’S WORKERS’ COMPENSATION SYSTEM WAS SIGNED FOR DATES OF INJURY ON/AFTER JULY 1,

MAJOR CHANGES IN THE REFORM  Definition of Injury  Change in Construction of Law  Move from Chancery and Circuit Courts to Workers’ Compensation Court in DWC  Change in Medical Provider Panels  Change in Physician Communications

MAJOR CHANGES IN LEGISLATION  Enhanced Mediation  Introduction of Treatment Guidelines  Change in Temporary Total Disability Benefit  Change in determination of permanent partial disability benefits  New Penalties

MAJOR CHANGES IN THE REFORM  Change in Administrative Structure  DWC autonomous unit of DOL Court of Workers’ Compensation Claims Board of Workers’ Compensation Appeals Ombudsman Program/Enhanced Mediation Continuation of Existing Programs

EXPECTED IMPACT OF REFORM On Employees:  Process that is easier to understand  Emphasis on resolving disputes  Faster access to court  Quicker Medical Treatment  Quicker return to pre- injury employment On Employers:  Fairer, more predictable environment  Quicker, simpler resolution of claims  Less concern about venue  Lower administrative costs  More conducive to bringing jobs to TN

DEFINITION OF INJURY  Currently, there is a “could be” standard when it is supported by lay testimony  New Law: Injury is compensable if it arose “primarily in the course and scope of work” when all other possible causes are considered Primarily had applied to gradual injuries since 6/6/11.

MEANING OF “PRIMARILY” An injury arises primarily out of the employment if the employee can show that it “contributed more than fifty percent (50%) in causing the injury, considering all causes.”

MEDICAL PROOF Treating physician must state that work primarily caused the injury to a “reasonable degree of medical certainty.”  Reasonable degree of medical certainty means, “ in the opinion of the physician, it is more likely than not considering all causes, as opposed to speculation or possibility.” T.C.A (12)(D)  Treating physician’s opinion is presumed to be correct

NEW MEDICAL PROVIDER PANEL PROCESS  PC 289 simplifies the process by requiring only one panel.  Three or more independent physicians, specialists, chiropractors, or practice groups (or any combination thereof)  Initial Treating physician may refer injured worker to a specialist  Employer has 3 business days after notification of referral is received to offer a panel or referral stands.

PHYSICIAN COMMUNICATIONS  Now: Legislative requirement for a signed waiver form from injured worker before ER could speak to medical provider. (Response to Overstreet case)  New: Employer is allowed to communicate with treating physician (orally or in writing), only about the treatment for the workers’ compensation injury.

NEW PROVIDER PANEL PROCESS  Providers must be willing to treat the injured worker.  If not, ER must provide additional choices.  Maintains the “community” rule, but allows a 100-mile radius if not available in the community.  EE still gets travel reimbursement if outside 15- mile radius  NEW—Division can enforce a penalty for improper panels

NEW MEDICAL TREATMENT GUIDELINES-- TO BE ADOPTED BY 2016  Guidelines for the diagnosis and treatment commonly occurring workers’ compensation injuries  Intended to reduce disputes, improve quality and timeliness of medical treatment  In consultation with medical advisory committee

MEDICAL TREATMENT GUIDELINES  Medical Advisory Committee  Physicians with experience in WC with representatives of insurance, employers, and employees  Any treatment that follows guidelines presumed to be medically necessary  Rebuttable by clear and convincing evidence  Addresses an area of concern to employees and physicians

19 ALERT! EMPLOYER OPPORTUNITY Employers who do not provide injured workers appropriate, timely panels hurt themselves.  Lose control of claims when they do not act quickly to manage the claim.

ALERT! EMPLOYER OPPORTUNITY Employers who do use the panel process proactively can better manage claims:  Can negotiate discounts with the providers on panel.  Panel physician has a presumption of correctness regarding causation. Can be overcome by preponderance of evidence.  Employers can more easily monitor the medical progress of the claim.

DIFFERENT CONSTRUCTION OF LAW  Will replace current construction that the law must be liberally construed in favor of the employee.  New: Statute must be construed fairly, impartially and in accordance with basic principles of statutory construction.

THE OMBUDSMAN PROGRAM…  Will provide education and assistance to any party to a workers’ compensation claim that is not represented by an attorney.  Will be staffed by persons trained in Tennessee Workers’ Compensation law and rules of the various programs.  An ombudsman is not an attorney, and cannot provide legal advice, cannot sign documents on behalf of a party.

DUTIES OF THE OMBUDSMAN  The ombudsman will have the basic responsibilities of:  Advising parties of the basics of workers’ compensation laws and procedures  Answering the questions of parties  Assisting parties in the completion of forms  Acting as a liaison among the parties to ensure communication among parties and efficiency in the administration of claims

MEDIATION PROCESS  The new Mediation Program will function similarly to the current Benefit Review Process, but from the start of the claim.  Includes temporary and medical benefits  NEW—Additional requirements to act in good faith  Rules will be promulgated regarding “good faith”  Violation of those rules may lead to a penalty of up to $5,000

THE WORKERS’ COMPENSATION MEDIATION PROGRAM  All disputed claims must be mediated before a hearing in the workers’ compensation court will be scheduled.  NEW - certification of dispute process  If parties cannot agree, disputes must be certified before appearing before judge

WORKERS’ COMPENSATION COURT  Judicial function moved from courts to DWC for permanency issues – DOI 7/1/14  Judges appointed by Administrator  Licensed attorneys at least 30 years old  Must have at least 5 years appropriate experience  Will serve a 6 year term; maximum of 3 terms  There will be one Chief Judge  Selection process

WORKERS’ COMPENSATION COURT  Judges will be located across state and will receive training prior to serving.  Judges can be removed for non- performance or for cause  Tennessee Code of Judicial Conduct  Court hearings will be conducted in accordance with TN Rules of Civil Procedure and Rules of Evidence

DUTIES OF A WC JUDGE  Conduct hearings  Render orders, decisions and determinations in a timely manner  Approve settlements  Issue subpoenas  Compel obedience to judgments, orders and process through the assessment of civil penalties

NEW BOARD OF WC APPEALS  Will render and decisions on appeals of decisions by WC judge.  Wholly separate from the Court of Workers’ Compensation.  3 Appeal Judges  Appointed by Governor  6 year term, limit of 2 terms  Licensed attorneys with 7 years experience  Parties will still have right of appeal to the Supreme Court.

ALERT! EMPLOYER OPPORTUNITY  Employer/Insurance Company can have a better outcome if they:  Provide a representative with authority to settle the claim at all mediations  Provide the opposing party all documentation and information pertinent to the claim that is necessary to engage in fruitful negotiations  Arrive at ADR proceedings on time

TEMPORARY TOTAL DISABILITY (TTD) BENEFITS  Amount unchanged for those employees out 7 or more days  NEW—Ends when employee reaches MMI  “when the treating physician ends all active medical treatment and the only care provided is for the treatment of pain” with one exception—Mental/Mental claims  NEW— If TTD payments made post MMI, automatically offset against PPD

NEW IMPAIRMENT RATING PROCESS  Authorized treating physician’s (ATP) rating has presumption of correctness  Presumption can be overcome by a preponderance of the evidence  MIR Registry is still available when there is a dispute over the ratings  MIR rating trumps treating physician's  All impairment ratings will be BAW

CURRENT PERMANENT PARTIAL DISABILITY (PPD) BENEFITS  The current PPD benefits are capped at:  1.5 X the impairment rating for cases where the EE returns to work at the same ER earning at least 100% of pre-injury wage; and,  6 X the impairment rating for cases when the EE doesn’t.  The number of weeks of benefits are due varies. There is a list of 31 scheduled members that range from 10 weeks to 400 weeks.  For injuries to non-scheduled (BAW) members, the max number of weeks is 400.

NEW PERMANENT PARTIAL DISABILITY BENEFITS Date of Injury If worker does not return to work for any ER at 100% wage after initial disability period Date Injured Worker Reaches Maximum Medical Improvement

NEW PERMANENT PARTIAL DISABILITY (PPD) BENEFIT  Employee eligible for PPD benefit whether they return to work or not when they reach MMI  The initial PPD Benefit equals: impairment rating X 450 X 66 ⅔ % of the EE’s average weekly wage  This benefit is for the period determined by multiplying 450 by impairment rating  Impairment ratings “shall not consider complaints of pain”

PERMANENT PARTIAL DISABILITY (PPD): HOW TO CALCULATE INITIAL BENEFIT  Example: If the EE’s Average Weekly Wage is $750 and Impairment Rating is 7% :  Multiply.07 (rating) X 450 (weeks) X $500 (comp rate) = $15,750 during initial compensation pd..07 X 450 = 31.5 weeks (compensation period)  If the EE hasn’t returned to work 31.5 weeks after MMI, he/she is entitled to additional benefits

PPD BENEFIT AFTER INITIAL BENEFIT  If EE does not return to work or does, but makes less than the pre-injury wage, the EE is eligible for additional benefits.  The additional benefit is determined by multiplying the initial benefit by all that apply:  Factor of 1.35 because of loss of job or pay  Factor of 1.45 if no HS diploma or GED  Factor of 1.2 if employee > 40 years of age  Factor of 1.3 if unemployment in county where employed > 2 points above state average for year prior to initial period of compensation

PPD BENEFIT AFTER INITIAL BENEFIT  EE received $15,750 during the 31.5 weeks after the initial compensation period.  Lump sum or periodic payments  EE may be eligible for additional benefit(s):  Loss of job or lowered pay factor (1.35)  Education factor (1.45)  Age factor (1.2)  Unemployment factor (1.3)  The actual benefit will depend on which factors apply.

PPD EXAMPLE: 3 OF 4 FACTORS  Injured worker is 45, 8 th grade education, worked in Davidson County  Comp rate is $500  Impairment rating is 7%  0.07 X 450 X $500 X 1.35 X 1.2 X 1.45 = $36, in total benefits  Employee would have already received $15,750 in the initial benefit period  Additional benefit is $21,246.75

NEW PENALTIES  Failure to mediate in good faith  Failure to comply timely with order or judgment issued by a WC judge  Failure of employer to timely provide appropriate medical treatment  Failure of employer to provide panel  Wrongful failure of employer to pay TTD  Wrongful failure to satisfy terms of approved settlement

REFORMS ARE ONLY PART OF THE SOLUTION  What Employers Can Do To Make the System Better:  Know the law  Respond quickly and effectively to claims First Report of Injury even if you dispute the claim Contact Insurance Co. or TPA Medical Panel Wage Statement Meet deadlines in law If a claim is denied, file appropriate form

HOW DWC CAN HELP  Local DWC office can provide information and assistance  Education programs about Reforms and current law  Listen to your issues and look for solutions  Provide fair, impartial service to all parties

Revised: 07/13/2011 Revised: 07/13/2011 MemphisMemphis 170 N. Main Street, 11 th Fl170 N. Main Street, 11 th Fl Memphis, TN Memphis, TN Telephone: Telephone: Fax: Fax: Nashville--Metro CenterNashville--Metro Center 2222 Rosa L. Parks Blvd.2222 Rosa L. Parks Blvd. Nashville, TN 37228Nashville, TN Telephone: Telephone: Fax: Fax: CookevilleCookeville 444-A Neal Street444-A Neal Street Cookeville, TN Cookeville, TN Telephone: Telephone: Fax: Fax: KnoxvilleKnoxville 1525University Avenue1525University Avenue Knoxville, TN Knoxville, TN Telephone: Telephone: Fax: Fax: KingsportKingsport 1908 Bowater Drive1908 Bowater Drive Kingsport, TN Kingsport, TN Telephone: Telephone: Fax: Fax: ChattanoogaChattanooga 540 McCallie Ave, Ste W McCallie Ave, Ste W600 Chattanooga, TN 37402Chattanooga, TN Telephone: Telephone: Fax: Fax: MurfreesboroMurfreesboro 845 Esther Lane845 Esther Lane Murfreesboro, TN 37219Murfreesboro, TN Telephone: Telephone: Fax: Fax: JacksonJackson 225 Dr. MLK Drive, 1 st Fl225 Dr. MLK Drive, 1 st Fl Jackson, TN Jackson, TN Telephone: Telephone: Fax: Fax: Division of Workers’ Compensation Offices Website: MaconMacon

Questions? 44