1. Workers’ Compensation Issues to Watch Stephen Peacock Regional Claims Manager, Safety National stephen.peacock@safetynational.com

2. 2 Election Cycles Impact

3. 3 Viability of Workers’ Compensation Is it doing what it was set out to do?

4. 4 Contributing Factors to Increased Workers’ Compensation Costs  Economic Return on investments are still coming back from historic lows Insurance premiums and SIRs continue to increase  Societal Medical cost inflation Advancements in medical technology Obesity, diabetes, aging, and other co-morbidities Dependence on Opioids Prevalence of violence in the workplace  Government Federal Regulations: OSHA, EEOC, ADA Affordable Care Act Medicare Set Asides Employer Liability & Exclusive Remedy

5. 5

6. 6 Impact of Affordable Care Act (ACA) What is in store with health reform?

7. 7 Blurring Lines Between OCC & Non-OCC

8. 8 Evolving Claims Model

9. 9 On-Demand Economy Workforce and business considerations  Who is an employee?

10. 10 Florida Supreme Court Watch

11. 11 Potential for Regulatory Change

12. 12

13. 13 OSHA Reporting ALL: Fatalities (8 hours) In-patient hospitalizations (24 hours) Amputations (24 hours)

14. 14 Amputations are … (per OSHA) “… the traumatic loss of a limb or other external body part. Amputations include a part, such as a limb or appendage, that has been severed, cut off, amputated (either completely or partially); fingertip amputations with or without bone loss; medical amputations resulting from irreparable damage; amputations of body parts that have since been reattached. Amputations do not include avulsions, enucleations, deglovings, scalpings, severed ears, or broken or chipped teeth.”

15. 15 OSHA Annual Budget 2008 = $486M 2009 = $513M (03/09 increase of $17M after President change) 2010 - 2011 = $558M 2012 = $564M 2013 = $535M (after $17M cut due to auto. sequestration) 2014 - 2016 = $552M 2017 = $595M (requested)

16. 16 OSHA Provide Value in WC? 1972 Work Injuries: 10.9 per 100 workers 2014 Work Injuries: 3.2 per 100 workers

17. 17 OSHA Provide Value in WC? 1970 Work Place Fatalities = 13,800 1970 Work Force = 77,800,000 1970 Ratio = 18 per 100,000 workers 2014 Work Place Fatalities = 4,821 2014 Work Force = 118,720,000 2014 Ratio = 4 per 100,000 workers

18. 18 Top 10 Most Frequently Cited OSHA Violations (2015) 1) Fall protection (construction) 2) Hazard communication standard 3) Scaffolding (construction) 4) Respiratory protection 5) Control of hazardous energy (lockout/tag-out) 6) Powered industrial trucks 7) Ladders (construction) 8) Electrical, wiring methods, components & equipment 9) Machinery and Machine Guarding 10) Electrical systems design

19. 19 Creeping Catastrophic Claims

20. 20 Co-Morbidities Psycho-Social Factors Obesity Diabetes Aging Substance Abuse

21. 21 Rising Claims with Co-Morbidities

22. 22 Average Age with Co-Morbidities

23. 23 Co-Morbidities & Work

24. 24 Co-Morbidities & Cost

25. 25 Co-Morbidity, Age & Cost

26. 26 Obesity Morriss v. BNSF Railway Co., No. 14- 3858, 04/05/2016, published. NE US 8 th Circuit Court of Appeals In 2011, BNSF extended a job offer to Morriss as a Machinist, but later withdrew the offer, citing its concern with the "significant health and safety risks" posed by his weight

27. 27 Opioids by the #s (2014) 576,000 139,000; $100,000 (3x than 2013) $52,000,000,000 $1,583 6 – 10 78 / 500,000 75% 105 vs 30 322% & 264%

28. 28 Cancer Presumption National League of Cities April 2009 Report Assessing State Firefighter Cancer Presumption Laws and Current Firefighter Cancer Research – April 2009 http://tkolb.net/FireReports/PresumptionReport2009.pdf

29. 29 Cancer Presumption  Overall, 44 states have some sort of presumption law for public safety personnel  Currently, 27 states include cancer in their presumption law  Many of these laws were enacted in the last 5-10 years so full impact is not yet known  Major Concerns  1 in 2 people will develop cancer in their lifetime  Total cost to municipality also includes ancillary disability pensions, healthcare continuations, extended leaves, etc.

30. 30 Predictive Analytics

31. 31 What Can You Do In Your WC Program? Predictive Modeling  Era of “Big Data”?  Work with NLC, your broker, TPA, carrier to develop a plan so problem claims get identified early  Consider Triage Control of Medical and Rx costs  Overall medical cost containment strategy  Use of Pharmacy Benefit Management Return to the Basics – Risk assessment  Pre & Post Loss programs and controls

32. 32 What Else Can You Do? Stay Committed to Your Risk Management Mission  Savings, not cost, should not be main issue  Review Depts. and procedures to find highest risks  Become familiar with OSHA’s requirements Continue Safety & Loss Prevention Activities  Enforce them  Incorporate wellness into your programs, if possible Take Advantage of NLC, carrier, broker, & TPA Services  Are they partners in your risk management efforts? Get/Stay Involved in Industry and Legislative Initiatives  State efforts for WC/ACA reforms & Rx controls

33. 33 Interesting Facts to Consider 1)60% of all costs in WC claims are attributable to medical 2)90% of all narcotics are consumed in the United States 3)In 1996, no state had more than 20% of the population considered obese 4)In 2010, no state had less than 20% of the population considered obese 5)Over the last 2 decades well over 750 Police Officers died in crashes, only 45% wore seatbelts, however 84% of all American drivers now use their seatbelts 6)Number of workers aged 65+ doubled between 1998 and 2012 7)63% of employers offering health benefits also offer at least one wellness program

34. 34 Safety National Public Sector Claims Local Government & Schools Large Losses (greater than $1,000,000 above SIR) - 49% of Safety National incurred $ Large Loss Occupation - Police Officers 16% - Firefighters 6% Top 3 Large Loss Causes - Motor vehicle accidents - 25% of incurred $  Police officers are involved in 60% of these claims - Slips, trips and falls - 22% of incurred $ - “Struck by” - 16% Since 1977, 57% of Safety National’s MVA related claims for First Responders are still open claims

35. Questions? Stephen Peacock Regional Claims Manager, Safety National stephen.peacock@safetynational.com