FISCAL NOTE

Date Requested: February 18, 2020
Time Requested: 01:46 PM
Agency: Insurance Commission
CBD Number: Version: Bill Number: Resolution Number:
3307 Comm. Sub. HB2321
CBD Subject:


FUND(S):

7152, 7173, 7162

Sources of Revenue:

Special Fund

Legislation creates:

Creates New Expense, Increases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


House Bill 2321, if enacted, would amend W.Va. Code § 23-4-1f (which prohibits “mental-mental” workers’ compensation claims) to allow worker’s compensation benefits for first responders diagnosed with post-traumatic stress disorder (PTSD) resulting from an event or events that occurred during the course of employment without an accompanying physical injury. First responder is defined as a law-enforcement officer, firefighter, emergency medical technician or paramedic. The bill provides criteria for diagnosis and treatment, and further states that “wage indemnity benefits” are contingent on active participation in treatment. It also provides that the Joint Committee on Volunteer Fire Departments and Emergency Medical Services study the implementation of HB 2321 and to report back to the Legislature with modifications or additions to W.Va. Code § 23-4-1f by December 31, 2020. The West Virginia Offices of the Insurance Commissioner (“OIC”) believes that HB 2321, if enacted, will result in a substantial increase of PTSD claims being filed by first responders due to the prevalence of PTSD among first responders. The National Center for Biotechnical Information concluded that the prevalence of PTSD among emergency medical technicians (EMTs) is greater than 20%. Various sources have reported the prevalence of PTSD among firefighters to be in the 7%–37% range. Because of the expected increase in claims, the anticipated cost impact on employers of first responders and on the individual first responder occupational class codes established and maintained by the National Council on Compensation Insurance (NCCI) will likely be significant. The OIC has consulted with its rating and statistical agent and believes the increase in insurance premiums to employers of first responders, which would include volunteer fire departments, to be at least 5% or more. There are more than 400 volunteer fire department organizations that purchase workers’ compensation insurance in West Virginia for their members. However, the overall impact on other, non-first responder employers across West Virginia is expected to be small since first responders make up only a small percentage of the overall workforce in West Virginia. It should be noted, therefore, that much of the cost impact will be borne by governmental entities which are the typical employers of first responders as well as volunteer fire departments. The OIC would also note that workers’ compensation benefits for first responders with PTSD “mental-mental” claims are a relatively new phenomenon in the United States. Many states that have enacted PTSD legislation in recent years have not yet experienced the full impact of the change in costs because the full cost of the medical care or indemnity benefits for these claims is as yet unknown since benefits provision under these new laws is ongoing. Additionally, a majority of first responders are employed by governmental entities or public employers (states, counties and municipalities). A significant number of counites and municipalities in West Virginia self-insure for workers’ compensation, as opposed to purchasing private insurance to cover their risks, and therefore do not report claims data to NCCI. For that reason, insurance claims data is not comprehensive for the first responder PTSD claims experience. In West Virginia, the West Virginia Counties Risk Pool has 48 counties as members, as well as one municipality and seven ambulance or emergency services providers. It is believed that all of these entities employ first responders and they self-insure as a group. Additionally, five larger municipalities in West Virginia self-insure their workers’ compensation benefits individually. Those entities are monitored by the OIC to ensure adequate security for their claims obligations. The potential exists for these municipalities to be required to post additional security with the OIC in order to be adequately collateralized for their increased workers’ compensation liabilities resulting from PTSD claims. As stated, due to the fact that benefits for PTSD are relatively new in terms of workers’ compensation benefits, and due to the fact that a significant number of first responders are employed by public employers that self-insure and do not report workers’ compensation claims data to NCCI, comprehensive and credible data regarding the anticipated increase in the number of claims, as well as the costs of those claims, if HB 2321 is enacted is not readily available. Additionally, workers’ compensation benefits are very state specific and vary widely due to differing laws regarding indemnity payments and definitions of employees covered as first responders. In 2015, a PTSD bill was introduced in Ohio (Ohio is a monopolistic state for workers’ compensation) and the Ohio Bureau for Workers’ Compensation estimated that the additional coverage would cost $182 Million per year. Also, in 2015, Ohio estimated that 18% of first responders in that state would file workers’ compensation claims. In 2019, another PTSD bill was introduced in Ohio and the Ohio Bureau of Workers’ Compensation indicated that it would raise claims costs by $44 Million in the initial year. The OIC also received and reviewed an actuarial report prepared by the actuarial firm of Oliver Wyman Actuarial Consulting, Inc. for the Commonwealth of Virginia regarding the impact of adding PTSD as a compensable condition for first responders. This report estimated the increased premium cost to be in the range of $123 to $984 per employee, per year. However, as noted, there are significant variances in legislation among the states, as well as significant differences in population and classification code participants, and these variances and differences make a direct correlation between West Virginia and our neighbors problematic. The actual cost effects of this bill will depend on the actual number of first responders diagnosed with PTSD in West Virginia and the total workers’ compensation benefits paid. Additionally, with PTSD claims, there is the risk of multiple claims occurring from a single catastrophic event, such as a mass casualty event, large fire or other significant emergency situation.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2020
Increase/Decrease
(use"-")
2021
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.



Memorandum


House Bill 2321 contains no effective date, so proposed changes could have retroactive cost impacts. Such a retroactive application of the law could result in an unfunded liability to the extent that these additional claims costs were not contemplated in the premiums already charged for policies written prior to the effective date of the bill or were not accounted for as potential claims expenses by self-insured public employers. The OIC already administers State funds that could be impacted by retroactive application of HB 2321, and these include the Old Fund and the State Entities Worker's Compensation Fund. House Bill 2321 does not clearly define what constitutes a traumatic “event” or “events” for the purposes of exposure. Additionally, there is no statute of limitations addressing the time limits for filing PTSD claims. Currently, there are three statutes of limitations in W.Va. Code § 23-4-15: injury/death, occupational pneumoconiosis, and occupational disease. It does not appear that PTSD falls squarely within any of the three enumerated statutes of limitation. If it is not clear which statute of limitation applies, it could result in increased litigation due to confusion or unclarity on the part of claimants as well as employers. If PTSD is to be considered an occupational disease claim, it is unclear whether a claim would have to meet the six-part test of W. Va. Code § 23-4-1(f). If there is a lack of clarity as to whether the PTSD arose out of an event or events that occurred within the course and scope of the first responder’s employment, or whether the injury was within the applicable statute of limitations, it will likely result in increased claims litigation. Any costs associated with increased claims litigation would be expected to exert upward pressure on overall costs. The proposed language in W.Va. Code § 23-4-1f(b)(1) defines first responder as a law-enforcement officer, firefighter, emergency medical technician or paramedic. However, the language in W.Va. Code § 23-4-1f(d), which refers to first responders, also includes dispatchers, corrections officers and other similarly classed persons in the reporting requirement. The proposed language in HB 2321 for W.Va. Code §23-4-1f(c)(2) states that the continued receipt of “wage indemnity benefits” is contingent upon the claimant actively participating in treatment ordered by the appropriate treating health care provider. This requirement would be unique in regard to PTSD claims. Also, there is no benefit specifically termed a “wage indemnity benefit” in West Virginia worker’s compensation law. This likely is synonymous with an indemnity benefit for temporary total disability benefits. However, it should be noted that temporary total disability benefits do not provide for full wage indemnification and are limited to a maximum of 104 weeks under W. Va. Code § 23-4-6(c). Also, if a treating physician determines that a claimant has reached his or her maximum degree of medical improvement, temporary total disability benefits end. See W. Va. Code § 23-4-7a(c) or § 23-4-7a(e). The report by the Joint Committee on Volunteer Fire Departments and Emergency Medical Services is due to the Legislature on December 31, 2020 by HB 2321. This reporting date is likely too soon to enable accurate reporting on the effectiveness of the provisions and implementation, since there would be far less than one (1) year of experience at that time.



    Person submitting Fiscal Note: Melinda Kiss
    Email Address: Melinda.A.Kiss@wv.gov