How Workers’ Compensation Legislation for COVID-19 Claims Impacts Your Cash Flow

Posted July 15, 2020 by Zach Schultz

The first half of 2020 has been an extremely rare situation for most Americans, especially in the workers’ compensation community. With most of the country under some kind of “stay at home” order, businesses deemed non-essential were asked to close their doors and send their workforce home to control the outbreak. But what about the essential workers? And the bigger question was, what happens if an essential worker gets infected with COVID-19?

Most states have occupational disease rules in their workers’ compensation regulations. These rules are in place to cover any disease contracted as a result of their occupation. A common example is a coal worker’s pneumoconiosis. A doctor can connect the casual relationship between the worker inhaling coal dust and their lung disease. With COVID-19, the infection can come from anywhere, making it difficult to prove that relationship.

Many states began proposing legislation or issuing emergency orders, stating if certain workers test positive for COVID-19, it is presumed that the infection was contracted while performing duties related to the employees job. This rebuttable presumption removes the burden of proving the casual relationship needed for most occupational disease claims, allowing these employees to claim workers’ compensation benefits. As of June, 14 states have issued Emergency Orders or passed legislation regarding presumption for COVID-19, while another 11 states have similar legislation under review (1).

Here is the NCCI map of all state legislation changes as of June 2020:

Some orders, like the directive issued in Florida, limit presumption to first responders and healthcare workers, while the Emergency Order in California covers a wider range of essential employees (2). Under this order, California only saw 21% of its COVID-19 work comp claims denied as of the start of July, compared to almost 45% in Florida over the same time period. This shows how impactful these orders and bills can be.  

Federal legislation was also put in place in May, when the House passed the HEROES Act. This bill creates presumption for federal employees, including postal workers, the TSA, and the Department of Veterans Administration. Congress is also looking to expand workers covered under TSA presumption to include security officers, air marshals, canine handlers, or any other employee requiring substantial contact with the public through HB 6656, currently in-House committee. The HEROES Act also created presumption under the Longshore and Harbor Workers’ Compensation Act for anyone working maritime jobs from January 2020 through January 2022.

In early April, CMS recommended delaying non-emergent, elective medical services to conserve critical healthcare resources needed to combat COVID-19. During this time telehealth became a more popular form of treatment for work comp patients. Most states relaxed policy restrictions allowing treatment to continue without risking COVID-19 exposure. Florida, for example, went from 264 total telehealth claims in January, to 12,156 by May, according to a report issued by the Florida Workers’ Compensation Commission (3).

Even with all these new laws to cover workers, we still saw a drastic decline in workers’ compensation inventory from our clients due to COVID-19. Most of the workforce was sidelined by “stay at home orders” and providers were dedicating all their energy to treating COVID-19 patients. Calmatters.org reported the state of California total workers’ compensation claims dropped from over 50,000 in January, to just under 1,100 in May. That’s almost a 98% claims decrease in five months (4).

However, they did see a dramatic increase in COVID-19 claims during that same time period. Based on an article published by Calmatters.org, California had almost 5,100 COVID-19 related workers’ compensation claims by the end of May, with 95% of those coming in only two months – March and April (5). A report by WCIRB estimates an average cost of $17,400 in total benefits per claim there (6). If that estimate ends up being remotely accurate, these claims have strong revenue potential at a time the healthcare industry needs cash more than ever.

Given the level of nuance and complexity involved in these claims, it is vital for hospitals and providers to stay up to date on any COVID-19 related developments. This pandemic has shone a spotlight on occupational disease laws and could set the precedent for other illnesses being covered in the future. Knowing what rules and regulations we have at our disposal has never been more important. If you want to learn more about your state’s legislation and how it may impact your workers’ comp claims, email us at contact@enablecomp.com.

Resources:

  1. NCSL: COVID-19: Workers’ Compensation
  2. California Workers Compensation Institute Report to the Industry “Integrating COVID-19 presumption into the California workers compensation System”
  3. Florida Division of Workers Compensation 2020 COVID-19 Report issued on May 31, 2020
  4. California Department of Industry relations
  5. CalMatters.org COVID-19 claims: Over 5,000 Californians file for workers comp by Barbara Fede Ostrov June 4th, 2020
  6. WCIRB California “Cost Evaluation of potential conclusive COVID-19 presumption in CA Workers’ Compensation”