NEASHRM Workers’ Compensation

1. NEASHRMWorkers’ Compensation • August 9, 2011

2. Table of Contents • Basic Workers’ Compensation Rules • The Cost of Accidents • Benefits to Employees • Definitions and Provisions • Types of Injuries Covered and Excluded Claims • Choice of Physician • Adjudication of Claims • Available Defense and Case Studies • Fraud • Exclusive Remedy • Third Party Actions

3. Basic Arkansas Workers’ Compensation Rules • Act 796 of 1993 became the law for Arkansas Workers’ Compensation Laws effective July 1, 1993 • All employers with three or more employees must carry workers’ compensation insurance or be self-insured • Insurance is purchased by the employer and cannot be charged to the employee • Coverage is provided through a workers’ compensation insurance policy or state approved self-insured plan • AWCC Form P must be on display at all worksites

4. Posting and Notification Requirements • With the posting of AWCC Form P, employers have the right to expect injured employees to provide written notice of any injuries using AWCC Form N • AWCC Form N advises employees of their rights and responsibilities regarding their injury • Employers must submit the First Report of Injury – AWCC Form 1 to their insurance carrier for each injury • Insurance carriers report to the state for employers

5. The Cost of Accidents • Direct • Medical • Indemnity • Insurance premium • Indirect • Attorney fees / court costs • Turnover • Lost productivity of tenured employee • Training/retraining • Lost productivity due to modified duty • Investigation time/paperwork • Machine/equipment/tool damage • Damage to facility • Personnel leaving work areas to assist injured employee(s) • Shutting down entire facility in worst cases • Citations • Negative publicity from media and in community • Gossip

6. Benefits to Employees • Medical • Temporary Total Disability • Not to exceed two-thirds of the employee’s average weekly wage up to a statutory maximum • First installment due on 15th day after notice to the employer • Compensation is not allowed for first seven days excluding the day of injury • If a disability extends beyond the first seven days, compensation commences with the 9th day of disability • If disability extends for a period of two weeks, compensation is allowed beginning the first day of disability excluding the day of injury • Serious and Permanent Facial or Head Disfigurement • Up to $3,500.00 • Permanent Partial Disability • Scheduled Injuries • Provisions for Vocational Rehabilitation • Death Benefits • Funeral Expenses • Dependency Claims

7. Definition of Employee • “Employee” means a person, including a minor, where lawfully or unlawfully employed under any contract of hire, written or oral, express or implied, but excluding agricultural farm laborers, State employees, or whose employment is casual and not in the course of trade, business, profession, or occupation of the employer • Sole proprietors and partners are employees unless they file written notice with the AWCC opting out • Excludes persons who work while incarcerated

8. “Statutory Employer” Provision • When a subcontractor fails to secure WC insurance, the prime contractor is liable for compensation to subcontractor’s employees • Primary contractor who becomes liable for payment of compensation to an employee of a subcontractor may recover from the subcontractor for liability so incurred • There is no coverage for sole proprietors or partners when there is an election for non-coverage

9. Types of Injuries Covered • Traumatic or Single Occurrence Claims • Any injury arising out of the scope and course of employment is covered • The standard of proof is preponderance of the evidence • An injury is only accidental if it is caused by a specific incident and is identifiable by time and place of occurrence with the following exceptions • Repetitive Motion • Carpal Tunnel Syndrome • Gradually Occurring Back Injuries • Hearing Loss • Other Exceptions include Separate Statutes for Certain Types of Compensable Injuries to include: Mental Injury/Illness, Cardiovascular, Coronary, Pulmonary, Respiratory, or Cerebrovascular Injury/Illness/Death

10. Occupational Disease • Defined as any disease that results in disability or death and arises out of an in the course of employment, or naturally follows or unavoidably results from a compensable injury • To be compensable, the disease must be due to the nature of employment in which the hazards of the disease exist, are characteristic thereof, peculiar to the employment, and actually incurred in the employment

11. Excluded Injuries or Claims • Stress-induced mental injuries with no accompanying physical injury (unless accompanied by a crime of violence) • Certain Assaults • Horseplay (except “innocent victims”) • Certain Recreational and Social Injuries • Injuries that occur at a time when “actual employment services are not being performed” • Injuries Substantially Occasioned by the use of Illegal Alcohol, Illegal Drugs, or Prescription Drugs Used in Contravention of a Physician’s Orders

12. Statute of Limitations • Compensation for disability for an injury, other than occupational disease or infection, is barred unless a claim is filed with the AWCC within two years from the date of injury • A claim for an occupational disease or infection is barred unless filed within two years from the date of the last injurious exposure • A claim for silicosis or asbestosis must be filed within one year after disablement and the disablement must occur within three years from the last injurious exposure • A claim for compensation on account of death is barred unless filed within two years of the death

13. Choice of Physician • Employer Has the Right to Choose Initial Treating Physician • Claimant Has an Absolute Right to Obtain a Change in Treating Physician • The Commission has found that the “one time” change of treating physicians has not occurred until the Commission enters an order changing the physician • Where the claimant simply requests a new physician and the employer agrees, the Commission does not recognize that as the one-time change • Medical Treatment Must be Reasonable, Necessary, and Authorized • There is a Medical Fee Guide/Schedule Provision for Cost Containment • Managed Care is Voluntary • Medical Records are Obtained Pursuant to a Signed Release

14. Claim Contesting and Adjudication • Each Employer Desiring to Controvert the Right to Compensation Must File, On or Before the 15th Day Following Notice of the Alleged Injury or Death, a Statement on Form AR-2 Asserting that the Right to Compensation is Controverted • Method of Claim Adjudication • Administrative Law Judge presides over a hearing • A party can appeal the judge’s decision to the AWCC • An appeal from the Commission’s opinion is heard by the Arkansas Court of Appeals • The Commission is Not Permitted to Approve Settlements with Open Medicals • A Workers’ Compensation Claim Cannot be Settled in Arkansas Without Approval by an Administrative Law Judge

15. Available Defenses Based on Employee Conduct • Self-Inflicted Injury • Willful Misconduct or Horseplay • Injuries Involving Drugs or Alcohol

16. Alcohol and Drug Defense • Intoxication Must be Carefully Documented • Blood or alcohol test • Evidence must be properly presented in court • Chain of custody of tested material must be accounted for • Affidavit of person taking sample • Nurse or person storing sample for pickup • Courier • Laboratory person receiving sample • Laboratory technician testing the sample • Testimony of a Toxicologist is important • With serious injuries, hospitals often do not like to test • Employer should send a representative to the hospital • A Positive Test Shifts the Burden of Proof to the Employee that the Alcohol or Drugs Did Not Substantially Cause the Injury

17. Case Study #1 • Transport, Inc. versus Hill, 2009 • Respondent denied case based on intoxication defense • Claimant did not fail drug screen, simply refused to undergo hair follicle test four days after accident • An Administrative Law Judge held that the claimant’s refusal to take test was not sufficient to raise the presumption of intoxication • Judge found that claimant otherwise established a compensable injury and awarded benefits • The Commission affirmed the Administrative Law Judge’s decision • Court of Appeals also affirmed • Court noted that the plain language of the statute did not specify the refusal of a drug test was sufficient to create the presumption • Court stated only the presence of alcohol or drugs in creating presumption

18. Case Study #2 • Hanks versus ACF Industries, Inc., 2003 • Claimant was injured “while simply standing in an unfortunate location when a structurally deficient rack failed, striking and injuring the claimant” • Drug test revealed the presence of marijuana in the system metabolites and respondents denied the claim • An expert testified that: • Marijuana metabolites can remain for days or even weeks • “Failing to get out of the way in time to avoid injury when the rack came apart is consistent with impairment caused by marijuana” • “The urine sample results are also consistent with the claimant not being impaired when the rack broke” • The presence of marijuana metabolites is not necessarily indicative of intoxication or impairment • The Commission found, “the events unfolded so rapidly when the rack broke that the claimant’s injuries appear inevitable, regardless of whether or not his normal reaction time might have been impaired”

19. Fraud • Class D Felony for the following: • False statement or representation of the purpose of obtaining benefits or payment, or for the purpose of defeating or wrongfully increasing or decreasing any claim or payment or obtaining or avoiding workers’ compensation coverage • Willful discrimination with regard to hiring or terms or tenure, or any term or condition of work on account of pursuing a compensation claim • Obstructing or impeding the filing of a claim for benefits • Act 796 provided for the establishment within the Arkansas Insurance Department of a workers’ compensation fraud investigation unit • The unit can investigate and refer for prosecution

20. Exclusive Remedy • Workers’ Compensation Remedies are Exclusive • Exceptions • Prime contractors who are not statutory employers • Employers who are not insured (employee can elect to claim workers’ compensation benefits or sue in tort) • Acts of employer which result in injury to the employee that are deemed willful and intentional • No Additional Penalties for Unsafe Working Conditions, however Act 796 mandated the establishment of the AWCC Workers’ Safety and Health Division • Designations of extra-hazardous employers • Remedial plans • Inspections

21. Third Party Actions • Third Parties Can be Sued by an Injured Employee • Co-Employees Can be Sued for Work-Related Injuries • Subrogation is Available • It is often difficult for employers to recover losses

22. Independent Contractors and Professional Employment Organizations / Temporary Staffing Services • Independent Contractors are not Employees and therefore Not Covered under the Arkansas Workers’ Compensation Law • Not entitled to benefits • A Licensed Professional Employer Organization Shall be Deemed an Employer of the Covered Employee • Exclusive remedy applies • Temporary Employees are Covered Under the Temporary Staffing Service’s Insurance Plan

23. QuestionsSpecial Thanks toWRIGHT, LINDSEY, & JENNINGS LLPLittle Rock, AR The information contained herein is confidential information to and is the exclusive property of Staffmark, its parent company, CBS Personnel Holdings, Inc., (and its subsidiaries: Staffmark Investment LLC, CBS Personnel Services, LLC, CBS Personnel Services, LLC dba “Venturi Staffing,” and Kilgore Group, Inc.) and is only to be used by Recipient in evaluating the services of such entities. Neither the documents nor the contents of the documents are to be used, reproduced or disclosed, in whole or in part, by Recipient without the expressed written permission of Staffmark or CBS Personnel Holdings, Inc. The information should be destroyed or returned to Discloser when no longer needed.