2014 Tennessee Workers’ Compensation Legislative Report Josh Baker

1. 2014 Legislative UpdateJosh Baker, WC Judge & Division Legislative LiaisonRobert Marioni, Moderator

2. 2014 Tennessee Workers’ Compensation Legislative Report Josh Baker Administrative Attorney and Legislative Liaison

3. Uninsured Employers Fund Benefit Provision Act • T.C.A. § 50-6-405 requires workers’ compensation coverage • Any entity who fails to provide coverage will be penalized • The Uninsured Employers Fund is depository for all penalties paid by employers who failed to provide insurance • Fund collects approximately $1,000,000 each year in civil penalties Text 210738 and your Questions to 22333

4. Uninsured Employers Fund Benefit Provision Act • 23 states have an Uninsured Employers Fund (UEF) - only Tennessee pays no benefits So…. • The Governor signed Public Chapter 765, AKA the Uninsured Employers Fund Benefit Provision Act, on April 24, 2014 Text 210738 and your Questions to 22333

5. Uninsured Employers Fund Benefit Provision Act • Bill allows Administrator to pay limited benefit from the UEF to employees injured while working for an uninsured employer • Payment is discretionary • Benefit is up to $40,000 ($20,000 for medical and $20,000 for temporary disability) • Administrator may also secure additional funding from Employee Misclassification Education and Enforcement Fund (EMEEF) under certain circumstances Text 210738 and your Questions to 22333

6. Uninsured Employers Fund Benefit Provision Act • To qualify for benefits the employee must: • Be a Tennessee resident • Work for an employer who failed to carry WC insurance • Have been injured on or after 7/1/2015 • Report the employer to the Division within 60 days after the date of injury • Prosecute a WC claim against the employer

7. Uninsured Employers Fund Benefit Provision Act • Division becomes a creditor of employer if benefits are paid from the UEF • Division may file a lien on employer’s assets to recover payment • If the employee does not complete prosecution of the claim the Division may recover from the employee Text 210738 and your Questions to 22333

8. Clean Up Legislation • Public Chapter 903 - Workers’ Compensation Update Bill • Legislation is mainly clean up: • Defines “specialty practice group” • Clarifies treatment of LLCs • Clarifies use of civil penalty proceeds • Ensures availability of surgical/diagnosis 2nd opinion • Clarifies MMI standard for mental injuries with a physical component Text 210738 and your Questions to 22333

9. PC 903 Substantive Sections • Bill has two important substantive components: • Section 8 amends the procedure for assessing UEF penalties • Section 13 provides a “safety-valve” provision for claims Text 210738 and your Questions to 22333

10. PC 903 Safety Valve Provision • Current T.C.A. § 50-6-242(a) allows a workers’ compensation judge to “bust the caps” if certain facts are found: • 55 years of age • No high school diploma or grade 8th reading and writing skills • No transferrable job skills • No viable job options Text 210738 and your Questions to 22333

11. PC 903 Safety Valve Provision • Current § 242 (a) did not integrate well into reform act: • Age is already a factor considered in PPD • Education also considered in PPD • Did not provide for equitable recovery in extraordinary cases • Did not address the “donut hole” Text 210738 and your Questions to 22333

12. PC 903 Safety Valve Provision • New safety valve provision allows a WC judge to award up to 275 weeks if Judge finds that an inequity exists and then determines that: • Employee has impairment rating > 10% • ATP certifies that employee cannot return to pre-injury occupation • Employee earning < 70% of pre-injury wage Text 210738 and your Questions to 22333

13. PC 903 UEF Penalties Procedure • Prior law – penalties assessed under a pre-assessment due process procedure: • Contested case hearing set within 30 days of letter notifying defendant that penalty may be assessed • Penalty assessed following hearing if warranted or if defendant does not appear • Defendant can appeal hearing decision to Chancery Court under UAPA statute.

14. PC 903 UEF Penalties Procedure • Division was setting hearings, hiring court reporters, and prepping for many “no show” hearings…So • Change in law – provides for a post-assessment due process procedure: • Division assesses penalty upon receiving notice of coverage violation • Defendant can either pay or request UAPA contested case hearing • Hearing set within 45 days of request • If a contested case is held, defendant can appeal hearing decision to Chancery Court under UAPA statute.

15. PC 903 UEF Penalties Procedure • Practical effect of change in assessment procedure: • Contested case available upon request rather than automatically set • Penalties assessed before hearing • Time between request for hearing and date of hearing is increased from 30 days after the request is made to 45 days after the request is made Text 210738 and your Questions to 22333

16. Leased Owner/Operators of Semi Trucks • T.C.A. § 50-6-106(1)(A) excludes the application of Tennessee Workers’ Compensation Law to common carriers. • However, under subdivision (1)(B), the common carrier may provide insurance to a leased owner/operator upon a written agreement. Text 210738 and your Questions to 22333

17. Leased Owner/Operators of Semi Trucks • Public Chapter 633 altered the terms of T.C.A. § 50-6-106(1)(B) by: • Requiring the leased owner/operator to “establish the validity of and satisfy the terms and conditions of all contractual agreements between the parties prior to the payment of any claim for workers’ compensation” Text 210738 and your Questions to 22333

18. Leased Owner/Operators of Semi Trucks • PC 633 also made changes to T.C.A. § 50-6-106(1) by adding two additional subdivisions: • (1)(C) establishes the venue for the contract dispute as either: • the county where the contract was signed, or • the county of the carrier’s principle place of business Text 210738 and your Questions to 22333

19. Leased Owner/Operators of Semi Trucks • Changes to (1)(D) protects the statute of limitations: • Gives employee 90 days to file WC claim after contract dispute is resolved • If WC claim was filed before contract dispute suit – claim held in abeyance Text 210738 and your Questions to 22333

20. Practical Effect of PC 633 • What is the practical effect: • Leased owner/operators will have to prove compliance with contractual terms in a separate suit before filing WC claim • Effect will not be broad because: • Only a small number of carriers offer WC insurance through contract • Case law required resolution of contract issue already Text 210738 and your Questions to 22333

21. Ombudsman and Appeals Board • Public Chapter 289 (2013) established the Ombudsman Program • Ombudsmen provide information and assistance to unrepresented WC claims participants • PC 289 also established the WC Appeals Board • Appeals Board will hear appeals of CWCC decisions • Board will be staffed by three justices • Neither the Ombudsman Program nor WC Appeals Board has begun providing services

22. Ombudsman and Appeals Board • Public Chapter 837 (2014) made slight changes to Ombudsman Program: • Provided clarity on scope of Ombudsmen’s responsibilities • Barred Ombudsmen from being compelled to testify; and • Clarified that unrepresented persons have a right to access Program services Text 210738 and your Questions to 22333

23. Ombudsman and Appeals Board • PC 837 also made slight changes to the process for appointing WC Appeals Board Justices: • Law requires Governor to make appointments “in consultation” with the Speakers of the House and the Senate Text 210738 and your Questions to 22333

24. Practical Effect of PC 837 • Provide a guidepost for the operation of the Ombudsman Program • Effect on initial appointments to WC Appeals Board uncertain: • Law not effective until 7/1/14 • Effect on future appointments also uncertain: • “Consultation” is ambiguous

25. QUESTIONS?