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Senate Bill 7 benefits you

Law will help BWC increase efficiencies

Friday, June 30, 2006

Senate Bill 7 (SB 7) contains many provisions that help BWC cut costs, increase revenue and improve service. The act, which goes into effect June 30, will save the bureau approximately $100 million per year.

Among many provisions, SB 7 safeguards BWC against fraud, allows for direct deposit of benefits and enforces stricter compliance to workers’ compensation laws to ensure all employers are paying their fair share.

Despite a referendum challenge to SB 7, BWC will continue its efforts to better serve its customers. The organizers of the referendum did submit signatures at the end of June, and the Ohio Secretary of State's office has two weeks to review and validate the signatures. If there are sufficient, valid signatures, the Ohio voters would decide the contested portions of SB 7 this fall.(See referendum section below.)

Then, a majority of voters would have to approve the referendum during the Nov. 7 general election to rescind specified portions of the law.

For more information about a specific provision, click on the appropriate link below.

Benefits
SB 7 contains several provisions in the area of determination and payment of workers’ compensation benefits. For example, it reduces the 40-week waiting period for injured workers to file an application for permanent partial disability (PPD) to 26 weeks. It also redefines a person’s eligibility for permanent total disability compensation (PTD).

In addition, the act allows for payment of benefits to victims of rape or sexual assault in the workplace, even if they incur no physical injury. This is unprecedented in Ohio. Previously, a physical injury was necessary for a victim to qualify for counseling and other services.

The act also changes the amount of time an employee may receive payments for wage loss suffered: (1) if the worker returns to employment other than his or her former position; or (2) if the worker is unable to find employment consistent with his or her physical capabilities.

In the area of determination and payment of workers’ compensation benefits, the act also:

  • Increases the maximum limit for BWC’s $1,000 Medical-Only Program to $5,000;
  • Requires the bureau’s administrator to establish a program that mitigates the impact one significant claim can have on a group-rated employer’s experience, and also establish eligibility criteria and requirements an employer must satisfy to participate in this program;
  • Allows any party to void a settlement agreement if an employee dies during the 30-day period after approval of a final settlement agreement;
  • Revises conditions under which a final settlement agreement may be filed without an employer’s signature and establishes related notification requirements;
  • Specifies that an employee receiving compensation for PTD due to a traumatic brain injury is entitled to receive that compensation regardless of his or her subsequent employment in a sheltered workshop, so long as the employee does not receive more than $2,000 in compensation from the job per calendar quarter;
  • Revises finger numbering for PPD (the way the workers’ compensation system catagorizes/numbers fingers for medical billing purposes;
  • Increases the award for facial disfigurement from $5,000 to $10,000;
  • Requires objective evidence of substantial aggravation and limits medical treatment to the pre-injury level of impairment;
  • Adds that persons, while confined to a county jail in lieu of incarceration in a state or federal correctional institution, as well as those persons confined in any state or federal correctional institution as under continuing law, may not receive compensation or benefits during the period of confinement.

Anti-fraud provisions
In fact, behind bars is where BWC wants people who commit workers’ compensation fraud. Fraud is a hidden cost of workers’ compensation insurance, with an impact on both employers and injured workers. Industry estimates indicate that between $80 million and $320 million are lost to workers’ compensation fraud each year in Ohio.

To ensure BWC only pays legitimate claims, BWC aggressively attacks fraud through its special investigations department. The department seeks to identify and recover funds obtained illegally in cases such as: improper billing for medical services, false information supplied to BWC for financial or other gain, and individuals who collect workers’ compensation benefits while working.

SB 7 expands the definition of workers’ compensation fraud to include altering, forging or creating BWC certificates to falsely show correct coverage, providing false information when such data is needed to determine an employer’s actual premium or assessment, and failing to secure or maintain workers’ compensation coverage with the intent to defraud the bureau. It also:

  • Prohibits persons, health-care providers and managed care organizations (MCOs) from obtaining or attempting to obtain by deception payments to which they are not entitled;
  • Authorizes monetary penalties and debarment for persons, health-care providers and MCOs for obtaining or attempting to obtain by deception payments to which they are not entitled, and specifies procedures for enforcing these provisions;
  • Designates BWC’s special investigation department a criminal justice agency, and allows the department to apply to access the computerized criminal databases including those administered by the National Crime Information Center or the Law Enforcement Automated Data System in Ohio and other criminal databases.

Compliance with the workers’ compensation law
Ohio law also requires employers to base their premium payments on the total actual payroll paid to employees. SB 7 allows the bureau to compare the total payroll employers report to BWC with what they report to the tax commissioner. It allows BWC to furnish a quarterly list containing the name and Social Security or employer identification number of any employer to the tax commissioner requesting the total amount of payroll the employer reported on his or her annual tax return. The tax commissioner must disclose the total amount of payroll an employer reported after receiving BWC’s list.

Fines and penalties
SB 7 also makes it more costly for employers who do not pay their premiums timely. The previous system allowed for tiered penalties based on overdue periods, ranging from 2 to 12 percent of the premium due. SB 7 allows for a permissive penalty of not more than $30 plus a tiered penalty beginning at the prime interest rate multiplied by the premium due if the employer is 61 to 90 days delinquent. The penalty increases every 30 days thereafter, capped at the prime interest rate plus 8 percent, times the premium due. This penalty can never exceed 15 percent of the premium due.

The act also requires BWC to adopt rules to penalize self-insuring employers who fail to pay assessments, which increase incrementally the longer they remain unpaid.

Direct deposit of payments under the workers’ compensation law
In addition to increasing penalties for employers who pay their premiums late, SB 7 helps BWC cut costs by reducing mailings and postage. The act permits BWC to electronically deposit all disbursements the agency pays out and requires the bureau to adopt rules regarding use of direct deposit. The law also:

  • Requires the administrator to notify injured workers about the usage of direct deposit and to furnish debit cards and instructions for use of those cards to injured workers;
  • Allows the administrator to enter into contracts with an agent to supply debit cards to injured workers to access payments, and to enter into contracts with an agent and agreements with financial institutions to credit debit cards with the amounts specified by the administrator;
  • Permits the administrator to require any payee to provide written authorization designating a financial institution and account number to which BWC may credit a payment via direct deposit.
Use of direct deposit makes the bureau more efficient — making payments less costly, faster and safer.

Coverage under the workers’ compensation law, and disputes and appeals
SB 7 also touches on functions of the Industrial Commission of Ohio (IC). It imposes a five-year limit on the continuing jurisdiction of BWC and the IC to make a modification, change, finding or award if there has been no payment of medical benefits within six years of an injury and no compensation paid within 10 years.

It also specifies a injured worker may not dismiss a complaint filed with a court of common pleas concerning appeal of an IC decision without the employer’s consent, if the employer filed the initial appeal. It also disallows parties from using medical dispute resolution procedures to resolve any issues approved through standard treatment guidelines, pathways or presumptive authorization.

Other SB 7 provisions
The act covers various miscellaneous items. For example, it changes the manner by which BWC calculates the wage payable to certain tipped employees, now tying it to standards used for the federal Fair Labor Standards Act.

SB 7 also states information concerning claims filed with BWC or the IC, including information identifying a injured worker's address and telephone number, is not a public record under the Public Records Law (sec. 149.43) and is not open to the public.

In addition, SB 7 also:

  • Increases a cap on specified attorney’s fees for successful court appeals from $2,500 to $4,200;
  • Requires the administrator or self-insuring employer, as appropriate, to deduct attorney’s fees and necessary expenses from a lump-sum payment and pay that amount directly and solely to the attorney, if child support orders are involved.

What the referendum asks voters to repeal from Senate Bill 7

  • Require objective evidence of substantial aggravation and limit medical treatment to the pre-injury level of impairment.
  • Reduce the statute of limitations for both lost-time and medical-only claims to five years.
  • Set a stricter definition for permanent total disability and list four factors BWC would not consider.
  • Reduce non-working wage loss benefits to 52 total weeks, but the first 26 weeks would not count against the overall wage loss 200-week limit.
  • Eliminate injured worker's automatic right to dismiss an employer’s appeal.
  • Increase the attorney fee for a successful injured worker appeal from a maximum of $2,500 to $4,200.
  • Exempt injured worker home address and phone number from public record.
  • Make rape or sexual assault at the workplace a compensable injury.
  • Allow settlements outside the experience period without employer sign-off.
  • Allow employment for those with traumatic brain injury on permanent total disability.
  • Prohibit county prisoners from receiving benefits.
  • Designate BWC’s special investigations unit as a criminal justice agency.
  • Prohibit the Workers’ Compensation Oversight Commission from adopting campaign contribution policies that exceed state law.
  • Provide for self-insuring employers to choose to pay compensation and benefits directly under certain circumstances.
  • Calculate average weekly wage for permanent total disability based on average weekly wage during date of injury or on the date of disability due to occupational disease.
  • Allow any party to void a settlement agreement if an employee dies during the prescribed 30-day waiting period.
  • Administrator shall not recalculate a injured worker's average weekly wage for permanent total disability awards solely for the reason that the injured worker continued working and wages increased.