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FLASH ANALYSIS: California COVID-19 Executive Order

FLASH ANALYSIS:

California COVID-19 Executive Order

On May 6, 2020, California Governor Gavin Newsom issued an executive order in response to the big questions surrounding workers’ compensation benefits during the COVID-19 pandemic. In doing so, Governor Newsom has created a presumption for claims where an employee has been diagnosed with COVID-19. In other words, unless the employer through its claims administrator or insurance carrier can prove that the exposure didn’t happen at work, benefits must be paid. In our initial analysis of this order, it appears that workers’ compensation carriers are being targeted to help offset the massive burden being placed on state, federal & local governments by the pandemic.

Here are a few key things about the order that are important to remember.

  1. Any COVID-19 related illness of an employee shall be presumed compensable for the purpose of awarding workers’ compensation benefits, provided the following criteria are satisfied:
    1. Employee tests positive or was diagnosed with COVID-19 within 14 days after a day the employee performed labor or services at the employer’s place of business at the employer’s direction
    2. This day was on or after March 19, 2020
    3. The employer’s place of employment was not the employee’s home or residence
    4. The diagnosis is made by a physician holding a valid license issued by the California Medical Board and said diagnosis is confirmed by further testing within 30 days of the original diagnosis
  1. The presumption is rebuttable and only applies from March 19 to July 5, 2020
  1. All benefits apply to the approved claim.
    1. Medical benefits – cover all treatment needed to cure or relieve the injured worker from the effects of COVID-19

i.      This could just be testing & monitoring, or

ii.      In rare instances, go all the way up to an inpatient stay in an ICU unit with ventilator, anticoagulants, respiratory therapy, etc.

  1. Temporary disability – highly probable exposure to wage replacement benefits until the employee is cleared to resume work
  2. Permanent disability – improbable exposure occurring only in severe cases where residual respiratory deficits occur or permanent impairment arising from blood clots (e.g. DVT, pulmonary embolism, stroke, etc.)
  3. SJDB – highly improbable exposure, but would apply in cases where permanent disability is indicated and the employee cannot resume work
  4. Death benefits – highly improbable exposure, but COVID-19 does carry a risk of mortality

                                                               i.      Emergency order will extend death benefits only in instances where the deceased worker has a spouse or dependents

                                                             ii.      Emergency order specifically excludes the Death Without Beneficiaries Fund and no benefits are payable if the deceased has no surviving spouse or dependents

                                                           iii.      Burial benefits will be included irrespective of beneficiary status ($10,000)

  1. Paid sick leave benefits must be exhausted prior to workers’ compensation indemnity benefits coming due.
  1. The Executive Order establishes a truncated discovery period. All claims are presumed compensable if the claim is not denied within 30 days, as opposed to the 90 days we are used to.

Thankfully, the scope of this emergency order is fairly tight and only in effect from March 19 to July 5, 2020. Furthermore, the WCIRB has indicated COVID-19 claims will not be included on employers’ experience modifications. However, the bureau has not officially addressed any adjustments to its Uniform Statistical Rating Plan that would account for declines in payroll due to layoffs or furloughs and whether there will be an offset due to the lowered incidence of injuries or whether it will consider an adjustment for post-termination claims.

Looking forward, the California State Senate is working on a bill to codify Governor Newsom’s Executive Order, thus making certain provisions permanent. Presumptions are a slippery slope and while rebuttable, they put employers in a bad spot because the burden of proof is now on them to disprove an employee’s allegations. And let’s be real, insurance carriers are hard at work figuring out how they will recover costs from their policyholders – our best guess, an increased base premium rate.

The best defense for any workers’ compensation claim is good documentation. Keep attendance records and personnel files updated and pristine. The more information and corroborative evidence you have, the harder it will be for an adverse employee or their attorney to prove their own case. California’s workers’ comp system relies on a preponderance of evidence as its burden of proof. Proving that an employee was not at work on the date of an alleged exposure or evidence that no other employees tested positive for COVID-19 would go a long way. A negative test within 30 days (of diagnosis) at an industrial clinic would also assist in rebutting this presumption.

With all the uncertainty COVID-19 has brought to our doorsteps, this Executive Order serves primarily as a means of opening the insurance carriers’ coffers, driving up premium costs in 2021 and beyond, and giving employees added protections. The bright side is that employers will continue to enjoy protection from civil lawsuits that workers’ compensation coverage affords them. Rest assured that in these uncertain times, we continue to analyze and evaluate the best approaches for defending your business against workers’ compensation claims – COVID-19 cases are no exception.

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