1. 1 An Act To Improve The Workers’ Compensation System HB 194/SB 200

2. Why Reform?  Concerns about costs in TN Higher than states around TN Detriment to bringing new jobs to TN ○ Some current employers want to opt out  Concerns about court system Inconsistency ○ “Race to the courthouse” Claims in the court system take too long  Concerns that process is too complex and too lengthy 2

3. 3 WORKERS’ COMPENSATION COSTS BY STATE Premium Rates per $100 payroll* Workers’ Comp Costs/$100 Payroll by State 2012 Oregon Workers’ Compensation Premium Rate Ranking, Oregon Dept. of Consumer & Business Services

4. Why Reform? Length of Time in Court Date Injured Worker Reaches Maximum Medical Improvement Number of Days from Maximum Medical Improvement to Trial 8/18/20081487 10/23/20081147 3/18/2009793 3/31/2009667 4/28/2009643 8/10/2010530 9/30/2009471 8/9/2010232 1/3/2011382 2/25/2011634 4

5. Primary Areas of Reform  Administrative Structure Workers’ Compensation Division becomes an independent unit in Department of Labor & Workforce Development Administrator is appointed by the Governor for a term of 6 years with limit of 2 terms ○ Can be removed for cause or nonperformance Judicial function moved from courts to Division ○ Predominant model in United States 5

6. Administrative Commission Judicial W.C. Court (Commission) WORKERS’ COMPENSATION SYSTEM STRUCTURE BY STATE

7. Workers’ Compensation Court  Workers’ Compensation Judge Hears claims under rules of civil procedure and rules of evidence Must be 30 years old, be a licensed attorney, have 5 years experience in workers’ compensation law 6 year terms, with maximum of 3 terms Appointed by Administrator ○ May be removed for cause Decisions can be appealed 7

8. Workers’ Compensation Court  Chief Judge Performs duties of judge Administers day-to-day operations of court Licensed attorney with 7 years of workers’ compensation experience Term of 6 years ○ Maximum of 2 terms May be removed for cause 8

9. Workers’ Compensation Court  Workers’ Compensation Appeals Board Separate from Court of Workers’ Compensation Claims Governor appoints the 3 judges ○ Licensed attorneys with 7 years experience in workers’ compensation ○ Term of 6 years, limit of 2 terms Further appeal may be made to Supreme Court 9

10. Primary Reform Areas  Change the Definition of Causation ○ Injury is compensable if it arose “primarily in the course and scope of work” when all other possible causes are considered. ○ Definition of key phrases  Statute must be construed fairly and impartially Replaces language that statute must be liberally construed in favor of the employee 10

11. Approaches to Determine Causation 11 Must be major contributing cause to be compensable Must be significant cause to be compensable Substantial cause for certain illnesses to be compensable Does not require above to be compensable

12. Primary Reform Area - Disability Benefits  All impairment ratings to body as a whole  Impairment rating from treating physician is presumed to be accurate  Employee receives benefits if returns to work after MMI with any employer earning 100% of pre-injury wage Impairment rating times 450 (increase from 400) times 66 ⅔ % average weekly wage 12

13. Permanent Partial Disability Benefit  If employee does not return to work or makes < pre-injury wage, employee will receive additional benefits: Factor of 1.35 if doesn’t return to work Factor of 1.45 if no HS diploma or GED Factor or 1.2 if > 40 years of age Factor of 1.3 if unemployment in county where employed > 2 points above state average for year prior to initial period of compensation 13

14. Disability Benefits Timeline 14 Temp Total Disability Imp rating * 450 * 66 ⅔% AWW Additional benefits Maximum medical improvement If worker does not return to work for ER at 100% wage Date of Injury

15. Temporary Total Disability Benefit  Now Continues until employee reaches maximum medical improvement and impairment rating is assigned by physician. Can continue for 104 weeks if mental injury. Delayed if employee is in pain management treatment. Not always offset against permanent benefits.  Proposed Ends when employee reaches maximum medical improvement. No exceptions for mental injuries or pain management. If paid after maximum medical improvement, benefits are offset against permanent benefits. 15

16. Primary Reform Area - Mediation  Greater emphasis on already successful program Helps resolve temporary benefits and medical treatment disputes Helps parties resolve issues related to permanent benefits Additional requirements to act in good faith  New certification of dispute process If parties cannot agree, disputes must be certified before appearing before judge 16

17. Major Reform Area - Ombudsman  Robust education and assistance program to workers who do not have an attorney Ombudsman is neutral, no legal advice Provides education on rights and obligations of all parties and service providers Effective direction on preparation of forms Helps injured employees understand process and what they need to do to resolve disputes 17

18. Major Reform Area – Medical  Selection of Medical Panel Simplified One panel, not three for initial treating physician and additional panels for specialists Treating physician can make referral to specialist if one is needed ○ Employer has 3 days to give a panel of 3 or treating physician’s referral stands  Greater continuity of care, less friction, speedier treatment 18

19. Communications with Physician  Employer is allowed to communicate with treating physician In writing or orally  Removes requirement that employee sign a waiver before employer can review records  Only applies to medical records related to treatment for the workers’ compensation injury 19

20. Medical Treatment Guidelines  To be adopted by 2016  Will improve utilization review process Any treatment that follows guidelines presumed to be medically necessary ○ Addresses an area of concern to employees, physicians, and the division  Intended to reduce disputes, improve quality and timeliness of medical treatment  Fees for appeals to offset costs 20

21. Expected Results of Reform A workers’ compensation system that is fair, efficient, and provides better outcomes for employees and employers 21

22. Employees More assistance to understand the process Process that is easier to understand Emphasis on resolving disputes before “court” Faster access to “court” ○ Expedited hearings for catastrophic injuries Improved medical treatment ○ Fewer delays for utilization review Quicker return to pre-injury jobs Faster delivery of benefits 22

23. Employers  Fairer, more predictable environment Quicker, simpler resolution of claims ○ Improved relations with injured workers ○ Less concern about venue ○ Lower administrative costs Quicker return of employees to their jobs ○ Less disruption in operations  More conducive to expanding operations or coming to Tennessee 23

24. Expected Results of Reform Helps make Tennessee the #1 state in the Southeast for high quality jobs 24

25. Questions? 25