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PerspectivesRegulatorsReimagineExplore influence, impact, andinnovation in today’s workers’compensation agencies.INSIDE:Metrics To Monitor State Workers’Compensation Systems PAGE 10IAIABC Innovation Awards PAGE 18Moonlighters Wanted PAGE 26Compversations withChristine Baker PAGE 32November 20161

Perspectives / November 2016About the IAIABCAdvancing the efficiency and effectiveness of workers’ compensation systems around the world.IAIABC is the largest trade association of workers’ compensation jurisdictional agencies in North America.Along with these government entities, various private organizations involved in the delivery of workers’compensation coverage and benefits participate in the IAIABC.Since it was founded in 1914, the International Association of Industrial Accident Boards and Commissions,or IAIABC, has been providing information and education on workers’ compensation policy, regulation, andadministration.Table of ContentsTable ofContentsEditor’s NoteLorra O’BanionPerspectivesThe goal of this new publication is to provide various perspectives on contemporary workers’ compensationtopics and to promote discussion and sharing of ideas. The IAIABC’s new Perspectives digital magazine will bepublished quarterly.On the Minds of RegulatorsJennifer Wolf HorejshMetrics To Monitor State Workers’ Compensation Systemsby Richard A. Victor and Ramona P. TanabeWashington’s Return to Work Partnerships ProgramInnovation and Automation of Alternative Dispute Resolution in VirginiaWorkers’ CompensationMoonlighters WantedTerry BogyoCompversations with Christine BakerDirector, California Department of Industrial Relations2 4 6 10 18 22 26 323

Editor’s NotePerspectives / November 2016Editor’sNoteLorra O’Banion is an AssistantAttorney General (AAG) with theNebraska Office of the AttorneyGeneral. As an AAG, she hasbeen assigned to exclusivelyrepresent the Nebraska Workers’Compensation Court for the past11 years. O’Banion is a memberof the IAIABC and currentlysits on the Board of Editors forPerspectives.“Heroes are made by the pathsthey choose, not the powers theyare graced with.”Brodi Ashton, EverneathIn my experience, the path to a career in workers’compensation for many of us in the industry is usuallyone we’ve stumbled upon, at least that is how I gotmy start. It is rarely a path specifically chosen. Giventhat many of us have stumbled onto this path, Iwonder, “How are heroes made in this industry?” AsI look around my own world of work, I need not lookfar to find many inspiring individuals in workers’compensation, such as Glenn Morton of the Nebraska4On a more personal note, Glenn Morton,former Administrator of the Nebraska Workers’Compensation Court, retired this September leavingbehind a legacy of 28 years of service with theCourt as well as serving many years as a committeemember and former President of the IAIABC. Glennhad been instrumental in keeping the tenets ofthe IAIABC together. Glenn has been a teacher, aworkers’ compensation resource and inspirationfor me and for many at the Nebraska Workers’Compensation Court as well as for many within theIAIABC organization. I wish him the best retirementhas to offer. With that said, I firmly believe we havenot heard the last from Glenn Morton in the workers’compensation world.Workers’ Compensation Court and on a national scale,I look to someone we are all familiar with; someonewhose life’s work made a significant impact in theindustry and who has forged efforts to improve,encourage and to educate a younger generationto get involved in workers’ compensation. I am, ofcourse, referring to innovator David DePaolo.David DePaolo was an industry leader, blogger, andfounder and CEO of WorkCompCentral. Sadly, DavidDePaolo died in a motorcycle accident on July 17,2016. To quote from Robert Wilson’s farewell article,paying tribute to David DePaolo, Wilson writes:“David felt strongly that the workers’ compensationindustry needs to highlight the good things weaccomplish, and fight the persistent negative imagecast upon us by external forces and bad players withinthe industry.” DePaolo also instituted the “CompLaudeTM Awards” launched on WorkCompCentral.To quote from the WorkCompCentral Comp LaudeTMAwards webpage, “The Comp LaudeTM event startedfive years ago with a very simple premise: Workers’compensation does a lot of good things for peopleexperiencing the misfortune of a workplace injury orillness.” David DePaolo will be remembered for all ofhis contributions and insights.2016 Nebraska Symposium of which the proceedswill be donated to Kids Chance of Nebraska. Justanother example of innovators working for a positiveoutcome in workers’ compensation.These are only a few examples of the good thingsthat happen when workers’ compensation worksin the way it was meant to work. Kudos to all thehardworking individuals and groups in the industrywho strive to make workers’ compensation Accidentally Podcast June 18, 2016 with Jennifer WolfHorejsh, Executive Director of the IAIABC interviews Glenn Morton.3The IAIABC has also instituted its own program torecognize outstanding individuals in the workers’compensation industry called the “Innovator’sAwards”. Such recognition is awarded to individualswho have tackled difficult issues in workers’compensation and have made significant changesto continue the work of workers’ compensation. Asyou will read, this issue of Perspectives speaks to thejurisdictional landscape of workers’ compensationtoday and honoring those innovators of our industry.Lastly, I want to give an honorable mention to Kids’Chance of Nebraska , a local chapter of Kids Chanceestablished by two workers’ compensation Nebraskaattorneys, Dallas Jones and Rod Rehm, who litigateworkers’ compensation claims on opposite sidesof the bar. Kids Chance of Nebraska was officiallyorganized in 2013 and whose purpose is to raisemoney and award post-secondary educationalscholarships to children with a parent who waseither killed or suffered a permanent disabilityin a work accident. Currently there are five (5)Nebraska recipients attending college with a goalto have 12 recipients per year by the year 2020.Major fundraisers of this organization include theKids Chance of Nebraska local chapter Chance was originally founded by Robert Clyatt (workers’compensation attorney in Valdosta, Georgia) in 1988. To find outmore about Kids Chance, please see Board of EditorsKen Eichler, Vice President,Regulatory and Outcome Initiatives,ODG/Work Loss Data InstituteNancy Grover, President, NMG ConsultingPaul Kauffman, Director of MedicalPrograms-Claims, Accident FundInsurance Company of AmericaIrina Nemirovsky, Research ProgramSpecialist, California Department ofIndustrial RelationsLorra O’Banion, Assistant AttorneyGeneral, Nebraska Office of the AttorneyGeneral5

On the Minds of RegulatorsPerspectives / November 2016On the Mindsof RegulatorsIn her role as the ExecutiveDirector of the IAIABC, JenniferWolf Horejsh works with theIAIABC community to advancethe efficiency and effectivenessof workers’ compensationsystems throughout the world.You can hear her perspective onthe industry during the IAIABC’smonthly podcast, “Accidentally.”Ever wonder what’s on the mind of regulators? TheIAIABC Commissioners and Associate Members’Forum on September 27 during the IAIABC 102ndConvention was an opportunity to find out. Heldeach year, the Forum brings together jurisdictionalrepresentatives from around the globe to giveupdates on policy issues impacting them now andin the near future. Thirty jurisdictions partook, givinginsight into the issues and challenges the industrywill address in the coming year.6Jurisdictional representatives participated in real-timepolling to identify the external and internal issueslikely to influence workers’ compensation. The firstquestion asked what external factors would mostimpact workers’ compensation in the next 12 monthsfifty percent of responses indicated the Economy, and25% indicated Healthcare; perhaps more surprisingwere the choices with no or very few responses –Federal Legislature/Policy, State Legislature/Policy,and Changing Employment Relationships.currently 0.6% of the USGDP is the result of crowdworking and that number isdoubling every six months.What EXTERNAL factors will most impact WC in the next 12 months?5050%40302025%10015%0%FederalStateEconomyIn most years, the US federal government would likelyhave no influence on state systems; however, muchcan change in a week. A week after the Commissionersand Associate Members’ Forum, the US Departmentof Labor issued the report, Does the Workers’Compensation System Fulfill Its Obligations to InjuredWorkers?, with the general conclusion that “workingpeople are at great risk of falling into poverty as a resultof workplace injuries and the failure of state workers’compensation systems to provide them with adequatebenefits. ” The report offers several suggestions onopportunities for the US federal government to addressperceived failings; whether this transpires will developin the coming months.Relatively few responses for State Legislature/Policycould mean significant reform efforts are unlikely, orregulators are unsure how this year’s elections mightinfluence the priorities of state legislatures in theupcoming session. It seems changing employmentrelationships, particularly the rise of sharing platformsand alternative work arrangements, have not had awidespread impact on state workers’ compensationsystems. A statistic shared during the discussionportion of the event that currently 0.6% of the USHealthcareChanging4%OtherGDP is the result of crowd-working and that numberis doubling every six months, may spur regulatorsto think about how to proactively respond to thisgrowing change in the economy.The second question asked what industry factorswould most impact workers’ compensation in thenext 12 months. Responses for this question weremore varied, with no response getting a majority.31%noted medical care. This was reinforcedas multiple jurisdictions noted updatesto their medical fee schedules, implementation oftreatment guidelines and a formulary, and effortsto address inappropriate use of opioids. For USjurisdictions, medical care and cost is influencedby many factors – notably the Affordable Care Act,Medicare payment methods and new outcome-basedfee models, consolidation of providers and hospitals,and greater emphasis on evidence-based medicine.7

On the Minds of RegulatorsPerspectives / November 2016What INDUSTRY factors will most impact WC in the next 12 months?313031%2520Uninsured Worker Funds: Several jurisdictionsnoted efforts to develop or properly fund anuninsured employer fund. Only 21 jurisdictions havean uninsured employer fund, which pays medicaland wage replacement benefits for employerswho have failed to secure workers’ compensationcoverage. They are funded through a variety ofmechanisms, most commonly employer assessmentsand ivesto WC24%of the responses noted Cost Factors,which could be concern for medical,wage replacement, or administrative cost. Perhapsthis is in anticipation of the publication of theOregon Premium Rate Ranking Survey in October?17%8MedicalCarestrategies, implementing tools, and deployingresources to identify employees (i.e. should becovered by a workers’ compensation policy) wasnoted by many jurisdictions.MisclassificationOthersome who believe the workers’ compensationpendulum has swung too far to the employer-side.Balancing the interests of labor and managementis a challenge that has shaped the system since itsbeginnings over a century ago.of the responses indicated ConstitutionalChallenges, a hot-button issue in severalstates this year. Florida, New Mexico, Oklahoma, andUtah faced significant Supreme Court rulings that willshape their systems in the years to come. In Florida,the Supreme Court issued rulings that declared the102 week limit for temporary total disability (TTD) andthe attorney fee schedule unconstitutional. Theserulings recently resulted in a 14.5% premium rateincrease effective December 1, 2016.The final question asked if in 10 years, workers’compensation would exist as we know it today. Markyour calendars for the 2026 Convention (Time andLocation TBD) to see who was correct!The Oklahoma Supreme Court found in Vasquezvs. Dillards the provision allowing an employerdesigned employee benefit plan unconstitutional,noting it “creates impermissible, unequal, disparatetreatment of a select group of injured workers.” Constitutional challenges have arisen fromMisclassification: There is a perception that aworker making a false workers’ compensationclaims is the most common form of fraud in workers’compensation. However, employer fraud, specificallymisclassification of employees as independentcontractors, is much more prevalent. DevelopingAfter polling, each jurisdiction gave a two andhalf minute update of legislative, regulatory, oradministrative issues. As anticipated, responses wereas diverse as the kinds of cars on the road. However,here are some highlights:Medical Care: As noted in the polling responses,medical management is an area of considerableregulatory focus. Jurisdictions noted fee schedules,evidence-based medicine, formularies, PDMPs, andmarijuana as areas of work in the coming year. This ishardly surprising, as medical treatment represents asmuch as 70% of the claim cost in some jurisdictions.2016 has brought surprises from unexpectedsources. It will be interesting to see how thesesurprises and new ones will influence the regulatoryenvironment in 2017. One thing will remainconstant, the IAIABC! The IAIABC looks forward tosharing news and information, hosting discussionssessions among peers, and developing resources tohelp its members thoughtfully respond.The announcement of the US Department of Labor event wasdistributed electronically on September 16, 2016. The report was notreleased until the day of the event.12US Department of Labor, Does the Workers’ CompensationSystem Fulfill Its Obligations to Injured Workers, October 5, 2016.Download the complete report at: WorkersCompensationSystemReport.pdf3Westphal vs. the City of St. Petersburg, Supreme Court of Florida, June9, 2016 sc131930.pdf and Castellanos vs. Next Door Company, Supreme Court ofFlorida, April 28, 2016 Supreme-Court-Castellanos-v-Next-DoorVasquez vs. Diliards, Supreme Court of the State of Oklahoma,September 13, 20164Will WC exist as we know it today in 10 years?70605059%403036%20100YesNoUnsure9

Editor’s NotePerspectives / November 2016Metrics To MonitorState Workers’Compensation SystemsIDr. Richard Victor is aSenior Fellow at theSedgwick Institute.Previously, he foundedand led the WorkersCompensation ResearchInstitute for threedecades. Dr. Victorhas authored manybooks and articles onworkers compensationissues, and advisedpublic officials anddiverse stakeholderson legislation andregulation.10Ms. Ramona P. Tanabeis Executive VicePresident and Counselof WCRI. She is currentlyleading the Institute’sflagship line of corebenchmarking studies,and her responsibilitieshave includedconducting studies onhealth policy, managingthe WCRI data collectionefforts, providing legalcounsel, advising publicofficials on medicalprivacy issues, andmanaging variousinternal and externalfunctions at WCRI.magine watching the driver of an 18-wheelertraveling down the interstate on a fine summer day.Usually exhilarating at 70 mph. Unfortunately, theinstrument panel has shorted out. No speedometer,and no oil pressure, coolant, tire pressure, or engineheat gauges. Still, there is a delivery schedule tokeep. Unbeknownst to the driver, the coolant levelis low. As the day progresses, the pressure on thehoses rises until eventually one ruptures with ahissing sound and a plume of steam. The driver pullsover, curses, and calls a tow truck. The rig is towedto the repair shop, the hose repaired, and radiatorrefilled. The next day, off goes the driver unhappywith the delay. As the day progresses, the driverhears the sound of metal grinding against metal.Low oil levels are damaging the engine. Again, hepulls over, curses loudly and calls the tow truck.The truck is a metaphor for a WC system. It performssmoothly, until it doesn’t. Policymakers can wait untilthe symptoms of distress are impossible to ignore;or they can make sure that the instrument panelthat describes the performance of the system isappropriate and functioning effectively.What metrics to put on the instrument panel? A verylarge number of metrics are possible. Winnowingthe list to a manageable number can be a challenge.This article lists the highest value metrics formonitoring system performance. The selection isbased on five decades of the authors’ experiencedoing research and assisting public officials andlobbyists for diverse interest groups to focus on themost impactful problems to solve.The metrics listed below are appropriate for internalbenchmarking. With appropriate adjustments, theymay also be relevant for external benchmarking.SCOPEThe scope of this article and the listed metrics isnecessarily limited. The metrics discussed hereinfocus on the benefit delivery system – what happensonce a worker reports a claim. It does not addressmetrics for monitoring the performance of insurancemarkets and prices or for injury prevention.EVOLUTION AND USES OF METRICSThe Primary Metrics measure a short list of keyoutcomes achieved by workers and their employers– the principal parties at interest in WC systems.We present a select list of Secondary Metrics whichmeasure the performance of system processes thatare central to achieving these worker and employeroutcomes.These metrics are commonly used in either internalor external benchmarking. Internal benchmarkinglooks at trends within a state system. In externalbenchmarking, an individual state system iscompared to other state systems. Meaningfulexternal benchmarking is more difficult and muchmore complex to do because of interstate differencesin nomenclature, claims and dispute processes,variable definitions, industrial mix, wage levels, etc.Twenty-five years ago, the truck story described the WCreform processes in many states: cycles of crisis-reformcrisis again. Metrics were scarce and reforms often“fixed” the problem, leading the advocates for reformto proclaim victory and go home to attend to pressingnon-WC issues. There was little systematic collectingand monitoring of metrics of system performance.Today, many states have abandoned that approach –relying less on anecdotes (the failed instrument panelin the truck) and more on credible data to understandcauses of a problem, to repair the causes, and toconduct periodic or ongoing monitoring whether thereform had the intended effects. Some states activelymonitor the performance of their system. They useperformance metrics to provide an early warning formid-course corrections (topping off the coolant). Afew use metrics to set improvement goals and monitorprogress toward their achievement.The truck is a metaphor fora workers’ compensationsystem. It performs smoothly,until it doesn’t.11

Metrics To Monitor State Workers’ Compensation SystemsPerspectives / November 2016There have been 3 stages in the evolution ofmetrics to monitor WC systems. Each state isevolving at its own pace.1. PRE-METRICS ERA: This period wascharacterized by cycles of “crisis, reform,and crisis again”– policymaking generallyrelied heavily on anecdotes and polit

Perspectives The goal of this new publication is to provide various perspectives on contemporary workers’ compensation topics and to promote discussion and sharing of ideas. The IAIABC’s new Perspectives digital magazine will be published quarterly. Table of Contents 4 6 10 18 22 26 32 Editor’s Note Lorra O’Banion On the Minds of Regulators

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