Workers' Compensation

The Senate Bill 1004 was enacted February 16, 2005 to move state controlled Workers’ Compensation to a private owned company. The unfunded liability of $3 billion will be paid partially by the new Mutual Company co-pay and general taxes.

By January 1, 2006, a mutual company owned by all employers in West Virginia will be created and the State will be out of the business. The Directors and Officers of this new company will be elected by the employers. It will be mandatory to have coverage and until 2008 the mutual company will be the only source for employee coverage.

On July 1, 2008, any insurance company can file to be qualified to provide coverage.

On January 1, 2006, the State will transfer $600 million dollars to the new mutual company to fund its start up. On January 1, 2006, an average of 15% reduction will be given on virtually all accounts, thereafter rates will be set based on the employers’ experience.

Of the 850 employees currently working for Workers’ Compensation, 350 will be transferred to the Insurance Commission, who will oversee the mutual company, and later all the carriers on the same basis as any other insurance company. The other 500 current employees will be retained by the employer owned mutual company, and will lose their status as government employees and become "at will" employees.

What will happen to the mutual company after July 1, 2008 will depend on its ability to compete with other private insurance companies. I am sure companies like Acordia will be trying to get your Workers’Compensation business after July 1, 2008. West Virginia will be out of the employees’ insurance on the same basis as 46 other states.

Mechanically, the employees will continue to file claims with the new private insurance carrier. The employer will still be required to respond to the claims on forms provided by the insurance carriers. If a claim is rejected by the insurance carrier, the employee will have a right to appeal to the newly created Office of Judges, then to the Board of Review, and appeal from there to the State Supreme Court. Thus politics are not totally removed from the process.

An Office of Inspector General is set up to investigate and prosecute fraud by either the employer or the employee. Employees engaging in physical activity which is considered inconsistent with their injury constitutes fraud.

The impact of this entire process is already being felt. In 2003, the Legislature, with court approval, eliminated the liberality rule where for example, an employee with a heart complaint examined by the top heart doctor at John Hopkins and found completely sound, but examined by a chiropractor in Mingo County and found totally disabled, would be awarded total permanent disability for life. In 2002 and before an average of 1200 employees got a life time permanent disability award. (In 2004 that was down to 75.) Awards are now being made based on a more realistic evaluation of the employee. Under the old rule, disability depended on if an employee could find his job locally. Now, the employee must find any job he/she can do within 75 miles from home.

Mendalistis coverage (intentional injury) will be offered by the new insurance company at an additional cost.

Premiums will be paid in advance like any insurance coverage. If the premiums are not paid when due, your coverage will be cancelled, and you will not be allowed to do business in West Virginia.

The General Contractor’s liability for its subcontractors’ employees will be abolished January 1, 2006.

Employers will no longer be required to furnish lawyers to protest claims. The insurance company will do this like any other insurance claim. If the employer objects to the insurance company’s ruling, it will have to do so through its own lawyer. Employees may still use lawyers to process their claims.

State law continues to place obligations and restrictions regarding the employment of and discrimination against a Workers’ Compensation claimant. In addition, both state and federal laws relating to individuals with disabilities may also come into the picture regarding a particular claimant. Therefore, you should continue to seek legal advice on matters relating to workers’ compensation and employment.

It is reported that eight to 9000 small companies pay a minimum premium of $100 per year to cover one or two employees. This premium will increase significantly to probably $1,000.00 per year minimum. There are 42,000 employers now covered by the State Workers Compensation Commission.

Self insured companies will be controlled by the Insurance Commissioner on rules yet to be published, but are expected to be much the same as currently exist.

We will try to keep you advised of any changes from the above report.

If you have questions or concerns regarding workers' compensation changes,  contact us at the law firm of Holroyd & Yost today for a free initial consultation.

Holroyd & Yost
209 W. Washington Street
Charleston, West Virginia 25302-2345
Phone: (304) 343-7501 Fax: (304) 343-7505
E-mail
Website: www.holroydyost.com