Workers Comp Zone


A second bill to enact a presumption that COVID illness is industrial has been introduced in California’s legislature.

The bill, SB 1159 (authored by Senator Jerry Hill and co-authored by Assemblyman Tom Daly), would create a rebuttable presumption that for certain “critical workers”, COVID illness or death be deemed industrial. This would apply to critical workers who directly interact with the public during the pandemic.

SB 1159 is clearly a work in progress and will go through further revisions. At the moment it competes with AB 664 which would create a presumption that COVID is industrial for police, fire and certain healthcare workers. 

SB 1159 defines “critical worker” as “a public sector or private sector employee who is employed to combat the spread of COVID-19. It is the intent of the Legislature that this group of workers be explicitly identified in order to ensure that they receive all necessary health care through the workers’ compensation system.” This definition does not appear to cover “essential workers'” such as grocery employees, trucker, delivery people, and transit drivers, as they are not employed to combat the spread of the virus. Also, public safety or hospital/clinic workers who do not interact with the public would not be covered under SB 1159.

The current version of SB 1159 contains an undefined sunset provision and a requirement for an undefined amount of lost work time.

My last post, “To Presume or Not Presume, That is the Question”, discussed the recent WCIRB report on the projected costs of a COVID presumption:

In that post, I noted what appeared to me as a rather large discrepancy in cost projections between the WCIRB’s report and those of the State Compensation Insurance Fund. SCIF has announced that they are accepting diagnostically confirmed COVID claims of essential workers during the period of the stay at home order as industrial. SCIF’s press release noted projections of a total of $205 million in costs for this, significantly lower than the huge cost projections tallied by the the WCIRB.

Following my post, SCIF  President Vern Steiner reached out to me, offering a clarification on SCIF’s thinking on the matter.

Here is Steiner’s explanation:

I saw your most recent blog today and thought I would offer some insight into how State Fund arrived at our estimate of $115M for our decision to treat claims with a positive COVID-19 test from an essential worker as compensable.  I don’t expect you to do anything with it I just thought I’d offer you an explanation why our estimate seems to vary so much from the WCIRB’s estimate.

The WCIRB broke the essential workers into two different categories.  The category with far greater likelihood of contracting COVID-19 is the category with first responders and medical professionals.  Our insured book of business does not include much exposure in this area.  In fact we have received 21 claims on our insured book of business so far.  More than half of those claims has come from one bankrupt hospital system that came to us in January because of their bankruptcy.  The majority of those claims are showing a positive COVID-19 test result.  The majority of the other claims we have received are showing a negative test result.  Sometimes multiple negative results.

The WCIRB’s estimate was based on a year.  Our estimate was based on the period of the shelter-in-place or safer@home statewide order.  We estimated that would be lifted beginning in June.  If it is not lifted in June our estimate will go up.

The WCIRB’s estimate was for all system exposure including insured, self-insured and legally uninsured.  State Fund represents about 10.5% of the insured exposure.  We are not able to extend the same guarantee of compensability to state workers who fall under their legally uninsured program as we do not bear that financial responsibility.  If you look at the type of exposure we have in our insured book and understand that it is primarily the WCIRB’s second category of exposure with far lower infection rates and you attribute 7% of the overall exposure to State Fund (I believe the WCIRB estimated $5.2B for this category) our share of the $5.2B becomes $364M.  If you then make the assumption we did that the shelter-in-place orders will be lifted after 3 months our exposure decreases to $121M. 

We did our analysis before the WCIRB did their analysis and we relied on slightly different data.  The big variable is the ultimate infection rate.  We seem to have pretty good data on rates of hospitalization for those that test positive (in our under tested environment) and we have good data on ICU, ventilator and death.  Of course we have no data about permanent disability and future medical so we had to make some assumptions.  It turns out that the WCIRB’s analysis and our own are pretty darn close.

Reading your post I understood how you could raise the question you did.  When we announced that we would be accepting these claims we did not want to overstate the financial impact even knowing that any estimate at this point is quite uncertain.  We can easily see the exposure to State Fund exceeding $500M if this crisis continues as is for a year –  and we are in a position to provide that level of support.  

Steiner closed by noting that

“From my point of view as soon as the shelter-in-place orders started differentiating exposure for essential workers and the general population I believed that these claims would be compensable unless there was evidence that the exposure came from a non-work related source. I hope the rest of the insurance and self-insured community see this as well.”

Readers should stay tuned. I’ll be covering the effect of COVID on California workers’ comp, and watching to see how discussions of a COVID presumption develop.

Here is a link to SB 1159:

And here is a link to AB 664:

Julius Young