SB 0777 - Fiscal Note

Fiscal Note - SB 0777 - Modifies provisions of workers' compensation law

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 2870-04

BILL NO. SB 777

SUBJECT: Workers' Compensation

TYPE: Original

DATE: February 2, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Workers' Compensation Fund	($1,897,072)	($1,932,376)	($1,986,064)
Total Estimated Net Effect on All State Funds	($1,897,072)	($1,932,376)	($1,986,064)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 7 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Insurance (INS) assume this proposal would not have a significant additional fiscal impact on the department. It is anticipated that current appropriations and staff would be able to absorb the additional responsibilities for this single proposal. However, if additional proposals are approved during the legislative session, the department may need to request an increase in appropriations due to the combined effect of multiple proposals.

The Office of State Courts Administrator assume this proposal will not cause costs to appreciate substantially. Oversight assumes that the fiscal impact of this proposal could be absorbed by current FTE's and appropriations.

The Attorney General's Office assume this proposal would not cause costs to appreciate substantially and that any resulting expense could be absorbed in current appropriations and existing resources.

Officials from the Department of Transportation assume this proposal will have no fiscal impact on their agency.

Based on a response from similar legislation in the 1997 regular session, the Department of Corrections assumes no fiscal impact.

Officials from the Department of Labor and Industrial Relations assume that 35 additional FTE will be needed to satisfy the requirements of this proposal (4 Registered Nurse III's, 10 Administrative Law Judges, 4 Court Reporters, 2 Investigator I's, and 15 Clerk Typists). The Registered Nurse III's will be required to perform quality of care and utilization reviews of approximately 4,200 cases each year. The Division of Workers' Compensation assumes that each utilization case will take two hours to review for a total of 8,400 hours. At 40 hours per week this utilization procedure will require 4 nurses. In addition, continuing education costs per year for each nurse is estimated at $1,000 each.

The Division of Workers' Compensation is estimating that a Physicians Consultant service will be needed to design and set the standards for the quality of care and utilization reviews in order to comply with federal workers compensation practices. This consultant service is estimated at $62,500 in FY99, $77,250 in FY00 and $79,567 in FY01.

ASSUMPTION (continued)

The Division of Workers' Compensation estimates there are 16,491 contested cases annually where the employee retains the services of an attorney. The review of each contract and the determination of fees pursuant for such services takes approximately one hour per case. It is estimated that 10 additional Administrative Law Judges will be needed to handle the increased

duties of determining attorney fees and holding hearings pertaining to disputes over attorney's fees. It is assumed that 4 additional court reporters will be needed to provide court reporting services for the anticipated increased hearings. The additional clerk typists are needed to provide the notice of cancellation to policy holders; the docketing of the additional hearings; to enter spousal support liens and to operate the scanning units.

The proposed legislation expands the Fraud and Noncompliance Unit duties to investigate medical billing practices. This will generate new complaints to the unit for medical billing. The Division estimates that 2 Investigator I's will be necessary to investigate medical bill fraud. The Workers' Compensation Fund would also incur the costs for the representation provided by the Attorney General's Office in the prosecution of these cases.

The proposed legislation requires the Division to store depositions and medical records. There will be an increase of approximately 102,000 pages of information that will need to be retained (1,019 hearings x 100 pages of deposition per case) plus medical records from approximately 42,000 lost time cases per year. The Division would require the purchase of two high speed scanners in order to properly store these documents.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
WORKERS' COMPENSATION FUND
Cost - Department of Labor &
Industrial Relations (DOL)
Personal Service (35 FTE)	($1,104,508)	($1,332,068)	($1,365,371)
Fringe Benefits	($309,594)	($373,379)	($382,713)
Expense and Equipment	($482,970)	($226,929)	($237,980)
Total Costs - DOL	($1,897,072)	($1,932,376)	($1,986,064)
ESTIMATED NET EFFECT ON
WORKERS' COMPENSATION FUND	($1,897,072)	($1,932,376)	($1,986,064)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business

Small businesses that currently provide workers' compensation insurance to their employees could see a reduction in the cost of premiums for this coverage.

DESCRIPTION

This proposal would modify the provisions of the Workers' Compensation Law.

This act modifies the definition of "accident" with regard to the proof of work-relatedness requiring evidence that work was a substantial factor in the causal relationship as

stated in Smith v. Climate Engineering.

This act adds sole proprietors and limited liability partners, and partners or copartners comprising a partnership to the definition of "employer". Currently, any reference to the employer also includes his insurer. Under this act, it would also include a group self-insurer.

Currently, a person who has work done on his premises under a contract is deemed an employer and is liable to the contractor and employees if such persons are injured or killed on the premises. This act specifies that liability applies to "qualified employees", which shall not include the contractor owners or executive officers.

Currently, any city or county is required to receive a certificate of workers' compensation insurance from any applicant before issuing an occupational or business license. This act would limit the requirement to contractors only, and would require contractors who are exempt from workers' compensation insurance to sign an affidavit attesting to their exemption. This portion of the act is similar to SB 733 (1996).

The injured worker, the last employer and any prior employers of the injured worker may join any other prior employer to determine if there was repetitive motion exposure and to determine where the liability lies. If the injured worker does not cooperate in testifying to the facts surrounding a repetitive motion injury, the administrative law judge shall suspend all rights to workers' compensation benefits for that injured worker.

DESCRIPTION (Continued)

Currently, exempted employers may subject themselves or any class of exempted employees to Workers' Compensation Law by filing with the Division a notice of election to accept the

provisions. This act also requires a list to be filed which includes the exempted employments.

Fraudulent workers' compensation insurance acts are punishable as a Class A misdemeanor, as well as a fine.

Hospitals and others providing medical care to the employee currently are required to allow records of the employee to be provided to the Division, the employer, the employee and any other party to the proceeding. This act states that such provision applies to all records from every hospital and others providing medical aid at any time, before and after the employee's injury, which pertain to any relevant parts of the body alleged to have been injured.

This act allows the employer to settle liability concerning prosthetic devices.

This act prohibits the payment of workers' compensation benefits for temporary total, temporary partial or permanent total disability at the same time the employee is receiving unemployment benefits.

This act allows vocational examinations, and allows examinations at the request of the State Treasurer as custodian of the Second Injury Fund. This act also allows testimony by vocational experts.

When calculating the total average weekly wage of any employee who has multiple employments, this act specifies that such employments apply to the employee's entitlement to temporary total or partial disability benefits only. The amount of non-workers' compensation benefits shall be subtracted from the amount found to be due. The compensation rate is the one the employee would have been entitled to receive had the employee been working only for that employer at the time of the injury.

Section 287.337 is repealed, which requires rates and rating systems for construction employees to be based on the intrastate modification rate if the employer has a credible Missouri Intrastate Modification Rate; Employers without such a rate are subjected to a higher rate. This provision is identical to part of SCS/SB 270 (1997).

Currently, there are different reporting requirements for injuries involving less than $500 in medical costs. This act would remove the distinction in reporting injuries, making all injuries reported in the same way, as was done prior to 1993. This provision is identical to SB 730 DESCRIPTION (Continued)

(1996) and part of SCS/SB 270 (1997).

No administrative law judge, legal advisor or other Workers' Compensation Division employee shall refer or direct any injured party to a specific attorney, physician or other provider of services. Violation of this provision shall be grounds for termination of employment or discipline. The Division shall approve any reasonable compromise settlement. This provision is

similar to SB 266 (1997).

A written award shall be issued no later than 30 days after hearing the last of the evidence, which shall occur no later than 60 days after commencement of the hearing, except in extraordinary circumstances.

This act allows filings by electronic fax on applications for review.

Administrative Law Judges shall not reopen any prior award except to correct a clerical error within 20 days of the original award. The Labor and Industrial Relations Commission may correct a clerical error within 30 days of the final award.

This act provides that records shall be available for at least ten years.

Under certain circumstances, a judge may dismiss any claim for compensation if the employee files for dismissal, and no notice of hearing shall be required.

This act allows for a uniform experience rating plan for groups of employers qualified to insure under Chapters 287 or 537, RSMo.

Documents filed by an applicant pursuant to Chapters 287 or 537, RSMo., to comply with agency regulations shall be closed records. This act is similar to a number of provisions in SB 829 (1996).

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Insurance

Department of Transportation

Office of State Courts Administrator

Attorney General's Office

Department of Labor and Industrial Relations

NOT RESPONDING: Department of Corrections

Jeanne Jarrett, CPA

Director

February 2, 1998