During this presentation, I am going to introduce you to the Five Most Common Mistakes that drive-up your workers’ comp

1. Overview of Tennessee Workers’ Compensation—2014Avoid some of the most common mistakes, cut your workers’ comp costs and prepare for the upcoming Reforms.Jeff Francis, Assistant Administratorb.jeff.francis@tn.gov

2. During this presentation, I am going to introduce you to the Five Most Common Mistakes that drive-up your workers’ comp costs and the Pending Reforms.

3. Common Mistakes Mistake #1: Employers do not handle reported injuries correctly.

4. Important—when to file a 1st Report Form C-20 (Tennessee Employer’s First Report of Injury or Illness) should be filed in all cases where the injury or illness results in: • receipt of medical treatment outside of the employer’s premises, • absence from work, • death.

5. Worker’s Compensation ClaimsT.C.A. 50-6-201 • Claims have two classifications: • Medical Only • 1 to 7 days off work with physician statement • Lost Time & Medical • If 8 days or more off work with physician statement indemnity benefits are due to the claimant • July 1, 2012 through June 30, 2013 • 59,713 Medical-Only Claims • 39,809Lost Time Claims

6. Common Mistakes Mistake #2: Employers are not providing injured employees with a panel of physicians. 6

7. Provide a Panel C-42—Choice of Physician Form Employers lose control of claims when they don’t take reported injuries seriously. Several types of panels. 7

8. 2009 Legislation SB1574/HB1472provides specific procedures for obtaining medical information from authorized treating medical providers—medicalwaiver. (Deals with Overstreet case) there is no covenant of confidentiality or prohibition against communications with authorized treating medical providers if guidelines/procedures (waiver) are followed. 8

9. Common Mistakes Mistake #3: Employers are not taking full advantage of recent reforms passed by the legislature.

10. Drug Free Workplace ProgramT.C.A 50-9-101 et. Seq. Created as part of the Workers’ Compensation Reform Act of 1996, the DFWP has three basic objectives: • To promote drug-free workplaces in Tennessee, • To discourage the abuse of alcohol and drugs in the workplace, and • To penalize employees who choose to engage in alcohol and drug abuse.

11. Drug Free Workplace ProgramT.C.A 50-9-101 et. Seq. While participation is voluntary, this program offers the employer several significant benefits, among them: • A shift in the burden of proof in workers’ compensation claims involving a positive alcohol or drug test, • Discounted workers’ compensation insurance premiums (by 5%), and • Denial of unemployment benefits to an employee terminated because of a positive alcohol or drug test.

12. The Benefit Review ProgramT.C.A. 50-6-236-239 The goals of the Benefit Review Program are: • To resolve disputes which occur in the context of a workers’ compensation claim, • To minimize adversarial relationships between parties, and to • To decrease litigation and reduce the overall costs of workers’ compensation claims for all parties.

13. The Benefit Review Program The Benefit Review Program offers service in four main areas: • Toll-freenumber: 1-800-332-2667 • Requests for Assistance: for temporary disability and medical benefits • Benefit Review Conferences: for settlement mediation • Settlement Approvals: finalization of settlements

14. Division of Workers’ Compensation Offices 1-800-332-2667 Website: www.state.tn.us/labor-wfd/wcomp Pickett Sullivan Clay Johnson Montgomery Robertson Hancock Claiborne Sumner Stewart Scott Fentress Hawkins Trousdale Campbell Lake Obion Jackson Overton Henry Washington Cheatham Weakley Grainger Macon Carter Houston Union Smith Davidson Wilson Hamblen Greene Morgan Dickson Putnam Anderson Gibson Carroll Dyer Unicoi Benton Knox Jefferson Humphreys De Kalb Cumberland White Cocke Williamson Roane Rutherford Crockett Hickman Cannon Lauderdale Sevier Loudon Blount Van Buren Warren Henderson Perry Decatur Madison Rhea Haywood Maury Bledsoe Meigs Lewis Bedford Coffee Tipton Monroe McMinn Chester Sequatchie Marshall Shelby Grundy Moore Wayne Hardeman Giles Hardin Fayette McNairy Lincoln Fayetteville Bradley Franklin Lawrence Hamilton Marion Polk Nashville--Metro Center 2222 Rosa L. Parks Blvd. Nashville, TN 37228 Telephone: 615-741-1383 Fax: 615-253-2480 Cookeville 444-A Neal Street Cookeville, TN 38501-4027 Telephone: 931-520-4290 Fax: 931-520-4316 Knoxville 1525University Avenue Knoxville, TN 37921-6741 Telephone: 865-594-5177 Fax: 865-594-5172 Memphis 170 N. Main Street, 11thFl Memphis, TN 38103-1820 Telephone: 901-543-6077 Fax: 901-543-6039 Murfreesboro 845 Esther Lane Murfreesboro, TN 37219 Telephone: 615-848-6743 Fax: 615-217-9378 Chattanooga 540 McCallie Ave, Ste W600 Chattanooga, TN 37402 Telephone: 423-634-6422 Fax: 423-634-3115 Kingsport 1908 Bowater Drive Kingsport, TN 37660-4136 Telephone: 423-224-2057 Fax: 423-224-2056 Jackson 225 Dr. MLK Drive, 1st Fl Jackson, TN 38301-6985 Telephone: 731-423-5646 Fax: 731-265-7022 Revised:07/13/2011

15. Common Mistakes Mistake #4: Employers do not have the proper workers’ compensation coverage as required by law.

16. Uninsured Employers Fund The UEF strives to have covered employers comply with the Workers' Compensation Act. The Program has offices in Jackson, Nashville, Memphis, Knoxville & Kingsport, Tennessee. Important Points: In most industries, employers with five or more employees, including part-time employees, must carry workers’ compensation insurance. Family members are included in the count if they meet the definition of employee.

17. Compliance Program Uninsured Employers Fund Stats In fiscal year ending June 30, 2013the program collected $995,592in monetary penalties. We also conducted 1,308 onsite inspections. Also, 324 employers were penalized for non-compliance.

18. 2010/11 Legislation Employee Misclassification Education and Enforcement Fund (EMEEF) was created. Effective March 1, 2011, new legislation requires everyone in the construction industry must: be covered by workers’ comp, or be specifically exempted.

19. 2011 Legislation Who may request an exemption? Up to 5 officers of a corporation Members of LLCs that own at least 20% of the business (maximum of 5) Partners that own at least 20% (maximum of 5) Up to 5 owners of certain family owned businesses Sole proprietors

20. Exemption Registry My disclaimer: Other restrictions apply (licenses, etc.) Requests for exemptions are sent to the Secretary of State’s office, not the Dept. of Labor, and cost $200.00 for two years For more info about the exemption registry: http://tnbear.tn.gov/wc/

21. Common Mistakes Mistake #5: Employers or their insurance carriers are not handling a claim timely.

22. Penalty Program The Penalty Program enforces several penalties, including: • a 25% penalty for failure to pay or untimely payment of temporary disability benefits; A 25% penalty assessed by the department is made payable to the injured employee; 2) a $10,000+ penalty for failure to comply with a Specialist’s order; 3) a penalty for failure to timely file Claims forms.

23. Public Chapter 289An Act To Improve The Workers’ Compensation System

24. Why Reform? • Concerns about costs in TN • Higher than border states • Detriment to bringing new jobs to TN • Some current employers want to opt out • Concerns about court system • Inconsistency—“Race to the courthouse” • Claims in the court system take too long • Concerns that process is too complex and too lengthy

25. 1. Concerns About Costs Under $1.50 $1.50 - $1.99 $2.00 - $2.49 $2.50 - $2.99 $3.00 - $3.49

26. 2. Concerns about courts: Tennessee’ s system is different from other states: • One of only two states that is a court-based system • The only state with a hybrid system that includes mandatory mediation

27. 3. Concerns About the Complicated and Lengthy Process

28. Implementation Reforms are effective for injuries or diseases that occur on or after July 1, 2014 Rules will be formulated for various sections of the reform bill

29. Major changes in the reform Definition of Injury Change in Construction of Law Move from Chancery/Circuit Courts to Workers’ Compensation Court in DWC Change in Medical Provider Panels Change in Physician Communications Change in PPD benefit calculations

30. Definition of Injury Currently, there is a “could be” standard when it is supported by lay testimony New Law: Injury is compensable if it arose “primarily in the course and scope of work” when all other possible causes are considered • Primarily had applied to gradual injuries since 6/6/11.

31. Meaning of “primarily” An injury arises primarily out of the employment if the employee can show that it “contributed more than fifty percent (50%)in causing the injury, considering all causes.”

32. Medical Proof Treating physician must state that work primarily caused the injury to a “reasonable degree of medical certainty.” • Reasonable degree of medical certainty means, “ in the opinion of the physician, it is more likely than not considering all causes, as opposed to speculation or possibility.” T.C.A. 50-6-102(12)(D) • Treating physician’s opinion is presumed to be correct

33. Different construction of law Will replace current construction that the law must be liberally construed in favor of the employee. New: Statute must be construed fairly, impartially and in accordance with basic principles of statutory construction.

34. WORKERS’ COMPENSATION COURT • Judicial function moved from courts to the Division of Workers’ Compensation • Judges appointed by Administrator • Licensed attorneys at least 30 years old • Must have at least 5 years appropriate experience • Will serve a 6 year term; maximum of 3 terms • There will be one Chief Judge • Selection process

35. New Board of WC Appeals Will render and decisions on appeals of decisions by WC judge. • Wholly separate from the Court of Workers’ Compensation. 3 Appeal Judges • Appointed by Governor • 6 year term, limit of 2 terms • Licensed attorneys with 7 years experience Parties will still have right of appeal to the Supreme Court.

36. New Medical Provider panel process PC 289 simplifies the process by requiring only one panel. • Three or more independent physicians, specialists, chiropractors, or practice groups (or any combination thereof) Initial Treating physician may refer injured worker to a specialist • Employer has 3 business days after notification of referral is received to offer a panel or referral stands.

37. New Provider panel process Providers must be willing to treat the injured worker. Maintains the “community” rule, but allows a 100-mile radius if not available in the community. • EE still gets travel reimbursement if outside 15-mile radius NEW—Division can enforce a penalty for improper panels

38. Physician communications New: Employer is allowed to communicate with treating physician (orally or in writing), only about the treatment for the workers’ compensation injury.

39. New Medical Treatment Guidelines—To be adopted by 2016 Guidelines for the diagnosis and treatment commonly occurring workers’ compensation injuries Intended to reduce disputes, improve quality and timeliness of medical treatment In consultation with medical advisory committee

40. New Permanent Partial Disability benefits If worker does not return to work for any ER at 100% wage after initial disability period Date of Injury Date Injured Worker Reaches Maximum Medical Improvement

41. PPD benefit after initial benefit If EE does not return to work or does, but makes less than the pre-injury wage, the EE is eligible for additional benefits. The additional benefit is determined by multiplying the initial benefit by all that apply: • Factor of 1.35 because of loss of job or pay • Factor of 1.45 if no HS diploma or GED • Factor of 1.2 if employee > 40 years of age • Factor of 1.3 if unemployment in county where employed > 2 points above state average for year prior to initial period of compensation

42. Expected Results of Reform A workers’ compensation system that is: • fair, • efficient, and • provides better outcomes for employees and employers.

43. Employees • More assistance to understand the process • Emphasis on resolving disputes in mediation • Faster access to “court” • Improved medical treatment • Fewer delays • Quicker return to pre-injury jobs • Faster delivery of benefits

44. Employers • Fairer, more predictable environment • Quicker, simpler resolution of claims • Improved relations with injured workers • Lower administrative costs • Quicker return of employees to their jobs • Less disruption in operations • More conducive to expanding operations or coming to Tennessee

45. When an Employee is injured, the Employeeshould: • Immediately notify his/her employer and complete a “First Report of Injury”. • If medical care is required, choose a physician from a panel of physicians that is provided by the employer. Sign the form to acknowledge. • Sign a medical waiver. • Follow the advice of the physician. • Stay in contact with the employer and insurance adjuster.

46. When an Employee is injured, the Employershould: • Have the employee complete a “First Report of Injury” and file it with their insurance carrier • Provide the injured employee an appropriate panel of physicians • Have the injured employee sign a medical waiver • Give the injured employee the name & phone number of the insurance carrier/adjuster • Provide a wage statement to the adjuster

47. When an Employee is injured, the InsuranceAdjustershould: • Contact the employer and the injured employee within 2 business days. • Investigate the claim. • Accept or deny the claim within 15 days of its knowledge of the claim. • For accepted claims, issue compensation if appropriate, and file all appropriate forms with the Workers’ Compensation Division. • For denied claims, file all appropriate forms with the Workers’ Compensation Division.

48. Questions?