Workers' comp in the post-pandemic world: COVID-19 risk management isn’t going away
Gary Pearce, chief risk architect with Aclaimant, shares his insights on the future of the workers' comp market.
A year of business closures and working from home had at least one upside: according to the National Council on Compensation Insurance, employers’ premiums declined by 10% last year, due to a combination of decreased payrolls and fewer claims.
However, like all areas of business operations, workers comp is expected to look different in the post-pandemic age, with more employers adopting a hybrid work model as well as greater safety precautions in the workplace.
Related: NCCI report: Workers’ comp system ‘stronger than ever’
Recently, BenefitsPRO reached out to Gary Pearce, chief risk architect with Aclaimant, for his insights on how workers’ comp has changed and evolved during the pandemic and what the future looks like.
How has the COVID-19 pandemic impacted workers’ compensation? What will be different moving forward now that we’ve been in this environment for over a year?
Arguably the greatest and most lasting change regarding workers’ compensation is its long-term impact on workplace safety. While the attention paid to COVID-19 will surely wane as infection numbers decrease, you can anticipate a permanent change in the mindset and expectations of the typical worker that they demand to be safe on the job.
COVID-19 caused a big dip in written workers’ compensation insurance premiums, reflecting downturns in payrolls as a consequence of suspended business activity. Losses went down even more than payrolls because the adverse impact of occupational COVID-19 infections was more than offset by a reduction in hazardous business activities and behaviors. Most COVID-19 infections were not compensable under workers’ compensation, and those that were tended to be relatively inexpensive, although a small percentage were very severe.
Additionally, COVID-19 arguably created a distraction that might have otherwise put pressure on the workers’ compensation system. Injured workers and COVID-19 victims both tend to disproportionately come from socio-economically disadvantaged groups, and there’s been a surge in public dialogue about improved working conditions and compensation for persons in those groups. Yet workers’ compensation was, at most, only on the fringe of that dialogue.
Moving forward, we’re going to have a remnant of laws and regulations at the national, state, and local levels that were prompted by the COVID-19 pandemic. Some of those laws and regulations will remain in place for years to come, whether due to inertia, concern about a next pandemic, a beneficial “spill-over” effect, or because such rules advance other political objectives. Consequently, the need for COVID-19-related risk management isn’t going away, and it will always be incumbent upon the employer to do what’s right and necessary even when action isn’t explicitly required under applicable laws or regulations.
What steps can businesses take to avoid workers’ comp litigation?
Everything starts with understanding the viewpoint and situation of the injured worker in order to avoid workers’ compensation litigation. Employees are hurt, perhaps scared, and unfamiliar with the system. Sometimes they are treated as an adversary or their honesty is called into question. Many can’t afford to miss a single paycheck. They’re getting dubious advice from friends and family. They see lots of attorney ads on TV, and their online searches lead them to sources that want to profit from their injury or illness. Businesses need to break this chain.
This starts by being in rapid and empathetic contact with the injured worker. You have to fill in the information gap. You have to earn the employee’s trust, a task that is not very practical if you are fighting your own history. You have to be the employee’s genuine advocate. Simply being nice can make a real difference.
Litigation management doesn’t commence when somebody gets hurt, rather it is an ongoing and cumulative effort. You have to develop a reputation among workers’ compensation attorneys and judges of being aggressive in fighting the specious case but highly supportive of the employee when their injury or illness is legitimate. You have to build a long-run philosophy within your network of providers such as nurse case managers, defense attorneys, and claim adjusters. These parties need to understand that maximizing billable hours on the current case must not be the top objective.
Quality documentation is essential. This includes good job descriptions, thorough accident investigations, and consistent and thorough record-keeping within the claim file.
It’s critical to get the injured worker back to full earnings as soon as possible. Having multiple return-to-work options is highly beneficial in this regard, as is a strong understanding of the jobs within one’s own organization that might be available to perform. It needs to be abundantly evident that one way or another, the worker is going to be put back to meaningful work as rapidly as possible.
How can businesses keep their employees safe as they return to the office, in some cases for the first time since 2020?
We’re all very familiar with the usual steps such as deep cleaning, physical barriers, telling sick people to stay home, and so forth. Employee expectations in this regard are so fundamental that it is difficult to imagine any office-based business that hasn’t undertaken a modicum of precautions. For those needing additional advice, a good place to start would be OSHA’s guidance released earlier this year, which outlines what employees need to know about COVID-19 protections in the workplace and the role of both employers and workers to ultimately limit exposure and spread of the disease.
Notwithstanding any third-party guidance or applicable laws or regulations, there’s no substitute for a close understanding on the part of management of the working environment for all employees, and for a robust and timely flow of information in both directions between workers and management. This needs to be coupled with a resolve to address issues promptly and to respond quickly and effectively as circumstances change.
While frontline workers made up most of the COVID-19 related workers’ comp claims last year, how do you expect these claims will play out for those who might catch the virus in a newly reopened office?
The usual outcome will be relatively benign for the employer. It will be difficult to establish a causal relationship between the office opening and the contracting of COVID-19, and even when this hurdle is cleared, the personal and financial consequences of COVID-19 are, in the majority of cases, relatively modest. While some state laws establish presumptions of compensability for certain classes of workers, those laws typically don’t apply to generic office work. Meanwhile, the volume of new COVID-19 cases continues to decrease.
To be sure, there will still be the occasional case of the tragically severe COVID-19 infection, and a fraction of them might be proven to arise from an office re-opening. Any employer found to have caused a severe exposure event due to a disregard of basic health and safety protocol is likely to suffer loss of customers, difficulty attracting and retaining talent, loss of market value, litigation and legal sanctions, and lasting brand damage.
Can the comp industry or businesses more generally “pandemic-proof” themselves? If so, how?
It is a rare business that can pandemic-proof itself or be totally insulated from the impact of world-changing events. The history of black swan events teaches us that we face the risk of planning for the last crisis rather than the next one and that we can’t necessarily foresee what form the next cataclysmic event will take nor when it might occur.
But this doesn’t mean nothing can be done. Instead of trying to foresee what’s next, or assuming that the next event will be like the last one, businesses should consider the consequences of whatever the next event might be. If you bundle together a couple dozen “black swan” scenarios and start tallying what impacts each such event might have, you’ll find that although the list of high-severity low-likelihood events is very long, the list of likely consequences is much shorter. For example, there are all sorts of things that can cause property damage, interrupt the supply chain, create liquidity problems, or impair the supply of talent, but the list of high-impact consequences is much shorter.
If you focus on how to mitigate consequences instead of trying to predict what’s next, you make your organization not just more pandemic-proof, but more resilient against an entire spectrum of adverse unforeseeable events.
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