The Seventh Annual Louisiana Workers’ Compensation Educational Conference, held February 2nd and 3rd at the Renaissance hotel in Baton Rouge featured topical sessions on state regulation, opioids, return-to-work, and a range of other issues. One standout included a point/counterpoint style debate between Office of Workers’ Compensation (OWC) Deputy Director Pauline Williams and LCTA Executive Vice-President Troy Prevot about Louisiana’s Second Injury Fund.
The breakout session, titled “Is the Second Injury Fund (SIF) Fulfilling Its Obligation?” enjoined a crowd of about 50 conference attendees to asses the Fund’s usefulness in the modern age, and several spoke out.
Williams, who previously led and administered the Second Injury Fund, argued for the program and explained that the sometimes-sluggish processing of claims has improved since the OWC managed to secure a $10 million appropriations increase through the state Legislature in 2015. Williams also emphasized that, prior to the Second Injury Fund (founded here in Louisiana in 1974), workers and employers were left in the lurch – either the worker received benefits only for the second injury and/or employers and insurers were required to foot the bill for the combined effects of both injuries.
“We paid off the tail on some of those old claims [since the appropriations increase] that have maybe been around for awhile,” Williams said. “Payment approvals have also seen a substantial uptick. We had to go to the Legislature and explain that the cost of claims does increase so that we could access funds for the Second Injury Board. We had money sitting in the treasury that we could not touch.”
The stated purpose of the Second Injury Fund is located in La. R.S. 23:1371:
(1) Encourage the employment, re-employment, or retention of employees who have a permanent, partial disability.
(2) Protect employers, group self-insurance funds, and property and casualty insurers from excess liability for workers’ compensation for disability when a subsequent injury to such an employee merges with his preexisting permanent physical disability to cause a greater disability than would have resulted from the subsequent injury alone
Williams asserted that by the statute as written, the SIF is in line with its purpose. When pushed by Prevot to address the “obligation” angle of the debate, Williams doubled down: “Obligation to me is that it is properly administered and that it is making sure that it is financially responsible.”
Jill Leonard, AVP of Claims Operations at the Louisiana Workers’ Compensation Corporation (LWCC) weighed in on this point, “I certainly think that the Board now is making decisions in a much more timely fashion,” she said. “That directly impacts employers’ e-mods. Whereas years ago, decisions might have been three or four years out at which point that year’s losses have already dropped off the e-mod calculation so they never saw a benefit. We [LWCC] have gotten claims approved as quickly as within a year of the accident date.”
Following Leonard, Mark Tullis, Administrator of LCI Workers’ Comp, then turned the discussion to assessments, which have been point of contention within the local workers’ comp industry in the past – especially when claims took years to be processed and paid. “My question is: what is the logic of basing it on what an insurer pays out, versus the premium that’s collected? Why was that switch made and what is the reasoning?”
Williams said that she didn’t know why the change was made but that “there was difficulty in determining what was a fair assessment for a self-insured employer who does not have a premium base.”
Tullis countered that fully self-insured employers are likely a small percentage of the base, and explained that, from his program’s perspective as a self-insured group, “there’s a built-in punishment for having a settlement philosophy” because “when you settle a lot of claims early then you’re going to pay a lot more. The percentage stays about six percent, but you pay out more for that prior year.” Williams suggested that the “indirect punishment” Tullis described could be offset because the claims have a shorter tail.
Troy Prevot then transitioned into his counterpoint to Williams, arguing that the Second Injury Fund does not fulfill its obligation.
Prevot cited reports from other states phasing out Second Injury Funds (see full PowerPoint presentation below) that said that they were not useful and did not actually encourage employers to hire people with previous injuries. He explained that in the past 30 years, almost 20 states have discontinued SIFs (14 in the 1990s and 5 since 2000) for reasons including:
- the Fund’s coverage extending beyond its initial intended scope,
- funding’s failure to keep up with actual expenses, and
- that SIFs are no longer necessary since the inception of the ADA.
“I will say, if I had to have a Fund, I couldn’t ask for a better administered one than ours in Louisiana,” Prevot noted. “However, I don’t see the utility with the ADA and the EEOC around – you can’t discriminate, you just can’t.”
On the administration angle, Mark Tullis weighed in again, saying that he wonders where the expenditures are going if administrative costs are at two percent (as Williams presented) and if the appropriation increase from the Legislature was helping to offset increasing severity in the state. “Is there any way to look at what an entity paid in over a five year period in terms of assessment and what that same entity recovered?” he asked, “Because if your administrative costs are under two percent, that must mean that most everything that’s being collected is being paid out. But I bet if you got a group together to make that comparison, some entities are collecting a lot more than what they are contributing. That can be significant.”
In response, Prevot and Williams again disagreed on obligation. Williams, plus Leonard, who spoke from the audience about LWCC’s experience, see the Fund as similar to an insurance product where the money is pooled.
However, Prevot argued against that perception saying that, “Most self-insured groups and carriers will tell you that somebody’s losing – it’s a zero sum game.”
The conference is an annual two day event presented with assistance from the International Workers’ Compensation Foundation and included about fifteen exhibitors and 300+ attendees this year. Coverage from previous years is available on Comp Blog here and here.
Download the presentation: OWCA Education Conference 2017_SIF
Editor’s Note: LCI Workers’ Comp presents Louisiana Comp Blog.