STAFF REPORT BRIEFING ITEM

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1 Report No: Meeting Date: January 8, 2014 Alameda-Contra Costa Transit District TO: FROM: SUBJECT: Operations Committee AC Transit Board of Directors David J. Armijo, General Manager Workers' Compensation Process STAFF REPORT BRIEFING ITEM RECOMMENDED ACTION(S): Consider receiving report regarding the District's Workers' Compensation Process. EXECUTIVE SUMMARY: District staff works closely with the Third Part Administrator (TPA), Defense Counsel, Physicians and others to ensure proper claims management and treatment of workplace injuries so employees can return to work. This report provides an overview of how claims are processed, monitored and settled. No formal documentation for Workers' Compensation settlement authority has been found although the current practices appear to have been in place for several decades. Authorization of formal settlement authority for District staff will be proposed in the near future. This report also outlines measures taken by the District to prevent injuries and promote safety among the workforce. BUDGETARY/FISCAL IMPACT: There is no budgetary or fiscal impact associated with this report. BACKGROUND/RATIONALE: The California Labor Code requires employers to provide indemnity payments, reasonable and necessary medical treatment and rehabilitation assistance to employees unable to compete in the open labor market as a result of an industrial injury or illness. The District's workers' compensation program is administered by a TPA, Sedgwick Claims Management. The TPA is responsible for timely payment and medical treatment of injured workers. District staff monitors and coordinates efforts with the TPA as well as with defense attorneys. Initial Claims Processing: When an employee is injured, the employee is required to provide notice to the District within 24-hours. Immediately upon filing an industrial injury claim, the employee is offered medical treatment and is sent to the medical clinic assigned to his or her work division. Notice of a 141

2 Report No Page 2 of 4 claim is electronically transmitted to the TPA to commence an investigation. The employee's supervisor is also responsible for investigating the injury. The TPA provides notice to the employee within 90 days whether the claim has been accepted as compensable. The number of open claims and most common workplace injuries are presented in Attachment A. Monitoring of Claims: The TPA claims examiners track the treatment and progress of injured employees. In addition, District staff has ongoing communication with the TPA and has established several monthly review meetings to ensure treatment and return to work schedules are appropriate. These meetings are described in Attachment B. The TPA and District staff utilizes Nurse Case Managers to provide expert advice on an employee's treatment and status. In addition, the District has developed a Medical Provider Network (MPN) to treat injured employees. Return to Work: The District and TPA receive electronic notification of an employee's medical status immediately following each medical appointment and the Leave Management Department coordinates return to work with the employee's department. Employees with temporary restrictions who are unable to return to their usual positions may be offered modified work before being able to perform their regular duties. Disabilitv Ratings: Once an employee's mjunes become permanent and stationary, a disability rating can be determined by utilizing a rating schedule. This rating can be converted into a number of weeks of compensation by utilizing a table of values from the Labor Code. Attorneys and others can determine these ratings and use them when settling cases. A more complete description of the determination and use of disability ratings can be found in Attachment C. Settlements: Employees with disability ratings reach settlements that compensate the employees for their permanent injuries. Many claims allow for little or no discretion. Attorneys and Claims Examiners, who have in-depth knowledge of their assigned claims, make.settlement recommendations using guidelines stipulated in the Labor Code. Information about settlement types can be found in Attachment D. District staff does not negotiate settlements directly with the employee or the employee's attorney, but works closely with Defense Counsel and the Claims Examiner to ensure settlements are reasonable and in the best interest of the District. 142

3 Report No Page 3 of 4 If either party disputes a rating, a mandatory settlement conference is held where the State requires that all parties shall have a person available with settlement authority either in person or over the phone. Judges approve all agreed upon settlements and will make the final award decision if a settlement cannot be reached. Settlement Authority: The 10% settlement authority of the TPA examiner is provided through their contract with the District. The Human Resources Manager provides settlement authority for Stipulated Awards and up to $30,000 for compromise and release. Compromise and Release settlements above $30,000 require District Board Approval. No formal documentation of the current District staff settlement authority has been found although the current practices appear to have been in place for several decades. Formal documentation for Workers' Compensation settlement authority will be proposed in the near future. Other large Northern California transit districts provide fairly significant settlement authority to their staff (see Attachment E). Also, the workers' compensation program managers at BART, VTA and SFMTA were unable to provide documentation of authorization by their respective Boards for their settlement authority. Measures for Injury Prevention: There are many programs and activities utilized by the District to prevent injuries. These programs are delineated on Attachment F. ADVANTAGES/DISADVANTAGES: This report is being provided to inform the Board of the of The District's administration of it workers' compensation program as required by the California Labor Code and the programs in place to minimize or reduce overall costs. ALTERNATIVES ANALYSIS: There are no alternative actions recommended in this report. PRIOR RELEVANT BOARD ACTIONS/POLICIES: There is no Board Actions/Policies recommended in this report. ATTACHMENTS: A. Open Claims, Program Cost and Most Common Workplace Injuries B. Monthly Workers' Compensation Monitoring Meetings C. Workers' Compensation Disability Ratings D. Workers' Compensation Settlements E. Comparison: Workers' Compensation Settlement Authority F. Measures to Prevent Workplace Injuries 143

4 Report No Page 4 of 4 Department Head Approval: Reviewed by: Prepared by: Kurt De Stigter, Chief Human Resources Officer David A. Wolf, General Counsel Janet Jackson, Human Resources Manager Wahid Amiri, Manager, Safety and Environmental Engineering (Safety Operational Measures for Injury Prevention only) 144

5 Staff Report Attachment A Annual Number of Open Claims and Cost FYl0/11 FYll/12 FY12/13 Total Claims Count Total Program Costs $8,276,357 $9,102, $8,793,730 Most Common Workplace Injuries Workers Compensation - New Claims Count by Top Frequency Body Part Group and Year Multiple Body Parts Upper Extremities Trunk lower Extremities Head Neck Note: Report represents new claims reported per fiscal year 145

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7 Staff Report Attachment B Monthly Workers' Compensation Monitoring Meetings External Field Case Management: District staff and the TPA Claims Supervisor conduct review meetings at each assigned medical clinic to ensure employees receive proper medical treatment, discuss employee work status and ensure physicians are not unnecessarily extending time off work. Internal Field Case Management: District staff meets with division management to discuss the status of their employees on leave for any reason. Information about the employee's condition is exchanged and strategies for return to work are discussed. Claims Review: District staff meets monthly with the TPA and Defense Counsel to discuss and strategize the following: Early Claims Resolution Employees receiving TID payments Future Medical Claims- resolution Litigated Claims Settlement of claims postured for settlement 147

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9 Staff Report Attachment C WORKER'S COMPENSATION DISABILITY RATINGS Permanent and Stationary Injury: Ratings can be determined after the Agreed Medical Examiner or Panel Qualified Medical Examiner deems an injured worker "permanent and stationary" and outlines permanent restrictions and/or limitations. Rating Components: Under the California workers' compensation system, the amount of payment received because of a permanent disability is determined by a rating that is a percentage of total permanent disability. In rating permanent disability, consideration is given to: The nature of the physical injury or disfigurement (as determined by the medical examiners); The employee's occupation, and The employee's age at the time of injury. Rating Determination: Once the permanent restrictions are determined, the employee's attorney, defense attorney, the Disability Evaluation Unit (DEU) of the State or an independent rater can determine a rating. The percentages of disability are determined by applying the components outlined above to a rating schedule adopted by the Workers' Compensation Administrative Director. A permanent disability rating may be converted into a number of weeks of compensation utilizing a table of values set forth in the Labor Code. Rating for Injured Workers without Legal Counsel: Employees with permanent disabilities who are not represented by an attorney are rated by the state's Disability Evaluation Unit (DEU). If the examiner agrees with the rating and it is within their settlement authority {10% or $6,957.50; depending upon the date of injury could be lower), it is paid. Conversely, if it is not within settlement authority, the recommendation is forwarded to the Human Resources Manager for approval. Either party may dispute the rating, in which case a mandatory settlement conference will be held where a judge reviews the dispute. The judge will either accept the original rating or ask that the claim be resubmitted to the DEU to adjust the rating. Rating for Injured Workers with Legal Counsel: Employees with permanent disabilities who are represented are rated by their attorney and defense attorney. If a dispute arises, the claim is sent to an independent rater for rating. If the dispute continues, through a mandatory settlement conference, a judge will urge both parties to agree to a rating (in most cases, the attorneys will agree to split the difference in the rating). If the attorneys do not reach agreement, the judge will decide the rating. 149

10 Note: There are several factors that may cause a dispute in ratings - Examples: apportionment, existing claims, non-industrial medical, etc. Below is a depiction of a permanent disability rating. Date of Injury: 8/9/10 A 50 year old bus driver who was diagnosed with bilateral (both hands) Carpal Tunnel Syndrome for which she underwent surgery. Based on the Agreed Medical Examiner's findings (restrictions), she is permanent and stationary and unable to return to her usual and customary duties (bus driver) and has lost a percentage of her ability to compete in the open labor market. The claim has been rated as follows: L CTS Q2-(4)6-250F-6-7 R CTS (4)5-250F CG -7 13% = $11,

11 Staff Report Attachment D WORKERS' COMPENSATION SETTLEMENTS Compromise and Release: Compensation is the measure of the responsibility which the employer has assumed for injuries or deaths which occur to employees. No release of liability or compromise agreement is valid unless it is approved by the appeals board or referee. If the claim is settled by compromise and release, the settlement would factor in the cost of future medical treatment as outlined by the Agreed Medical Examiner or the Panel Qualified Medical Examiner to arrive at final settlement. Currently, a compromise and release settlement is considered when an employee separates employment. A compromise and release relieves the employer from future liability. Stipulated Awards: The parties involved in a workers' compensation claim may stipulate (agree to) facts relating to the claim in writing and file the written stipulation with the WCAB along with a request for the issuance of an award. The stipulation must be signed by the applicant, applicant's attorney and the attorney or authorized representative for the defendant. For claims settled by stipulated awards, a designated portion of the award is paid each week until it is paid in full. Throughout the industry, stipulated awards are the preferable mode of settlement; however, future medical costs are not included in a stipulation settlement. Findings and Award: If settlement is not obtained through a compromise and release or stipulation, each attorney submits a written statement summarizing their client's position and petitions the judge for a decision. A findings and awards will be served on all parties within 30-days of submission of the case for a decision. Finding and Award will bear interest and penalties if applicable. 151

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13 Staff Report Attachment E Comparison: Worker's Compensation Settlement Authority AC Transit: The Third Party Administrator (TPA) has settlement authority for up to 10% of permanent disability which equates to $6, (or less, depending upon the date of injury). The Human Resources Manager provides settlement authority for Stipulated Awards and up to $30,000 for Compromise and Release. Compromise and Release Settlements above $30,000 require Board Approval. BART: The TPA has authority for workers' compensation settlements via Stipulations and Compromise and Release up to $25,000. The Senior Personnel Analyst has authority to settle between $25,001 and $100,000 and the Human Resources Manager has authority in excess of $100,000. Sacramento Regional Transit: The TPA has settlement authority up to$50,000. Settlements over $50,000 in "new money" go to the Board for approval. The SRT Board formally approved worker's camp settlement authority for the General Manager up to $50,000. This authority was delegated to the Chief Administrative Officer who also delegated settlement authority of $25,000 to the Risk Administrator and $5,000 or $10,000 to the Claims Analysts. SFMTA: The TPA has authority to settle claims up to $20,000. The Claims Manager/Supervisor can settle workers' compensation claims via Stipulations and Compromise and Release between $20,001 and $100,000. Anything above $100,000 requires approval from the Director of Transportation and the Board of Directors. VTA: The TPA has authority to settle claims up to $5,000. The Claims Manager/Supervisor has authority between $5,001 and $25,000 via Stipulations and Compromise and Release and the General Manager has authority to settle workers' compensation claims between $25,001 and $50,000. Workers' compensation settlements in excess of $50,000 require Board approval. These settlement amounts have been in place since a 1995 Board Resolution. 153

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15 Measures to Prevent Workplace Injuries Staff Report Attachment F Programs implemented by Human Resources (Leave Management) Department: Ergonomic Assessments: Ergonomics program is to prevent the occurrence of work-related musculoskeletal disorders and to prevent repetitive motion injuries (RMis) by controlling or eliminating the risk factors which cause them. Through on-site work evaluations, the program ensures that all affected employees are aware of job-related risk factors and provides information and solutions to elevate them. On-site ergonomic assessments are conducted by a licensed physical therapist and have reduced injuries such as, but not limited to, carpal tunnel syndrome, neck strain and back strain. Through this program, employees are provided with key board trays, headsets, chairs, lumbar supports, etc. Proper Bodv Mechanics Assessments: When injuries occur in clusters, in an attempt to m1mm1ze risk exposure, employees are assessed and trained by a Physical Therapist on proper body mechanics. Recently, we experienced an increase in injuries among Service Employees Classification for shoulder, neck and back injuries. Services Employees throughout the District underwent an extensive assessment and training on how to incorporate proper body mechanic (lifting, bending, pulling, pushing, stretching etc.) in their day-to-day work life. As a result of this training, there has been a reduction in injuries among service employees throughout the District. Programs implemented or monitored by the Safety and Environmental Department: Transportation Employees: New Employee Orientation Training (Safety and Environmental Engineering) Operator training (TEC) DMV annual Training (TEC) Operator User Guide (TEC) Defect Card Program Injury Investigations (Assistant Superintendents) Identify unsafe acts or unsafe conditions Road Supervisor Investigations including bus videos. Root Cause Assessment (Assistant Superintendents), reviewed by Safety and Environmental Engineering. Recommendations are to be made to correct Identify unsafe acts or unsafe conditions. Major Program Revision based on Root Cause Assessment; Seat Belt Policy. Result: less back injuries. The Safety and Environmental Engineering Department conducts annual Emergency Response Drills at all Facilities. Critiques are conducted and "After Action Reports" are generated as necessary for improvement. 155

16 Report No Page 2 of 2 Maintenance Employees: New Employee (3 to 5 day} Training (Safety and Environmental Engineering} Operator training (TEC) DMV annual Training (TEC) Monthly Tailgate Refresher Training (two Topics Monthly) (Safety and Environmental Engineering) Operator User Guide (TEC) Drug/Alcohol Random, Post Accident, Reasonable Suspicion and Follow-up Testing {HR) Injury Investigations {Immediate Supervisors) Identify unsafe acts or unsafe conditions. Major Program Revision based on Root Cause Assessment; Safety Eye Wear Policy. Result: less eye injuries and prevention of three potentially serious eye injuries. Road Supervisor Investigations (if on the road) All Employees: The Safety and Environmental Engineering Department conduct monthly inspections of every Facility to identify and correct unsafe conditions. The Safety and Environmental Engineering Department conducts quarterly inspections of AC Transit's four Transit Centers to identify and correct unsafe conditions. The Safety and Environmental Engineering Department Facilitates monthly Joint Labor/Management Safety Committee Meetings at every Facility to identify and correct unsafe conditions brought to the Committee by its members. The Safety and Environmental Engineering Department reviews reports of "Unsafe/Unhealthy Working Conditions" submitted by employees. These reports are reviewed during the Joint Labor/Management Safety Committee Meetings and tracked until a remedy is put in place. The Safety and Environmental Engineering Department submits safety and health articles for the Bus Lines News Letter. The Safety and Environmental Engineering Department has established and accountable to our Smart Goals. The Safety and Environmental Engineering Department manages and maintains our Injury/Illness Prevention Program as required by Cal OSHA. The Safety and Environmental Engineering Department is in the process of coordinating the Development of a District Wide "System Safety Prevention Program {SSPP)", Safety Management System {SMS), and Moving Ahead for Progress in the Century (MAP 21) Programs per the Federal Transportation Association requirements. 156

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