First look at the new self-insurance rules proposal
Sept. 6, 2018
Earlier this week, the Department of Labor & Industries published for public comment a series of proposed administrative rules that, taken together, form the first major attempt to modernize self-insurance regulations in decades.
As detailed in the proposal's notice sheet, the Department will be taking public testimony in a series of hearings around the state at the end of October, as well as written comments by e-mail through November 1. Taking into account what it hears from interested parties in the comment period, which could lead to some changes in the proposal, the Department plans to adopt the rules in early December and have them effective for claims starting July 1, 2019.
This blog post is meant as a first look at the proposed rules. Attendees at next Friday's Fall Conference will also get an opportunity to go over these new rules with L&I's self-insurance program manager Jim Nylander in a panel discussion with WSIA representatives.
The so-called Rules Modernization effort began in discussions between WSIA and the Department in mid-2016, when both parties shared their continued concerns with aspects of the existing rules -- concerns born in part out of the Department's difficulty staffing and timely completing the number of claims management orders it is requested to adjudicate, employers' concerns with delays, uncertainty, and the extent of Department re-adjudication of their decisions, as well as issues arising from the first round of audit reform.
Recognizing that some outcomes are dictated by statute and would require legislation to change, which is difficult in today's political environment, a decision was made to focus on the administrative rules -- "between the bookends" of the statutes that speak to claim initiation and claim closure.
The Department convened a working group, which also included labor and claimants' bar representatives, claims and compliance staff from self-insurance, the self-insurance Ombuds, and a member of the Department's executive management team. This group met for the better part of the last year and a half, attempting to reach consensus on a number of objectives and proposals meant to improve aspects of the status quo for self-insured employers and workers.
Taken as a whole, the proposed rules are meant to advance three objectives:
- Better communication to workers;
- Greater certainty for employers; and
- Recasting L&I as an insurance regulator and arbiter of disputes, rather than a re-adjudicator of claims decisions.
Although the rules amend, create, or repeal thirteen different sections of WAC chapter 296-15, they are organized around six distinct proposals:
1. A new comprehensive training and professional certification.
The amendments to WAC 296-15-360 for certified claims administrators would, with some exceptions, require completion of a "comprehensive goal-oriented curriculum approved by the department and resulting in a workers' compensation professional designation" or other "approved training program within the department" prior to becoming a certified claims administrator. The amendments also retool the certification's continuing education requirements, including shifting the responsibility of the curriculum review committee from making crediting decisions to advising on curriculum and credit approvals.
2. New purpose-driven forms that replace the SIF-5.
The amendments to WAC 296-15-420 do away with the SIF-5 for allowance, denial, or closure of a claim, substituting instead specific department-developed forms to be submitted either electronically or on paper. Although the "department-developed forms" have not been finally completed, *drafts* of the forms for requesting allowance, denial, an interlocutory order, or closure were reviewed by the working group.
3. New employer-worker communications that replace L&I orders (barring dispute).
New section WAC 296-15-425 would require the use of a department-developed template to communicate claims administration actions to the injured worker during the course of the claim (between allowance and closure), such as wage calculation or time loss payment, treatment authorization or denial, allowance or denial of a condition, and so on.
The communication must inform the worker that if he or she disputes the action being taken, the worker should within 60 days ask the department to intervene and adjudicate the dispute, at which point the Department will issue an appealable order. However, if no dispute is received, the department will not issue an order regarding the claim action.
The upshot of this is perhaps the most significant shift under the proposed rules. The Department will not be issuing any further orders, such as wage orders, unless there is a dispute. The self-insured employer retains the authority to simply process the claim without Department re-adjudication and free of waiting on an order.
At the same time, self-insured employers do not have the statutory authority to issue final and binding orders -- only the Department does. Accordingly, while the issuance of the communication will have legal significance (see item 6 below), it would not be considered final and binding until claim closure.
Nevertheless, this could be considered the biggest step in the direction of self-insured authority possible without the politically unlikely action of the Legislature -- speeding up outcomes and freeing up Department resources to more quickly complete audits, resolve disputes, and issuing allowance and closing orders.
4. New letter templates to use as tools for enhanced communication.
While not set forth in the rules proposal, the Department has circulated drafts of templates for notifying workers of actions calculating time loss, starting, stopping, or denying time loss, accepting or denying a contended condition, authorizing or denying medical treatment, or assessing an underpayment or overpayment of benefits.
5. New reasonableness standard for penalties.
The amendments to WAC 296-15-266 would include a new provision that if an underpayment arises from a wage calculation for time loss, the department will presume the benefits are not unreasonably delayed if the employer sent a copy of the wage calculation on the department-provided template under the new section 425, including a notice of the worker's right to dispute it to the Department, and the worker did not dispute it. The worker would have to show action "without foundation" or "unsupported by evidence" to overcome the presumption.
6. New certification requirement for all out-of-state claims managers.
The amendments to WAC 296-15-350 would require, beginning July 1, 2020, that all persons making claims management decisions, as defined, outside Washington be a certified claims administrator, and maintain business office hours in Pacific Standard Time. The rule would provide some flexibility for new hires or staffing issues in meeting the certification requirement.
The other amendatory sections in the proposed rules contain mostly clarifying language.
The amendment to WAC 296-15-450 is the most notable in this regard as it clarifies, and is intended to limit, the two-year Department look-back on employer-closed claims. A change to section 450(1)(a) makes the useful clarification that the kind of error justifying look-back is a clerical error and not a discrepancy, for example, due to an intervening change in law or interpretation.
All self-insured employers and representatives should carefully study the new rules proposal and consider how, if adopted, it would impact operations. WSIA encourages that any concerns be brought before the Department in the hearing or comment period for consideration.
Anticipating that some members may want to participate in a public hearing on the rules, WSIA will be producing a short, free webinar in mid-October addressing the nuts and bolts of testifying in a rulemaking hearing to attempt to demystify that process.