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Update: Sorting Through the Fallout from Gov. Newsom's Executive Order

When last we spoke, Governor Newsom had just signed an executive order for a COVID-19 presumption for employees, wherein any COVID-19 related illness was presumed to have arisen in the course of the employment for purposes of workers’ compensation benefits. The rebuttable presumption is confined to within 14 days of working at the employee’s place of business from March 19, 2020 to July 5, 2020.

We previously discussed the possible legal challenges and unintended consequence that may arise out of this executive order. The Workers’ Compensation Insurance Rating Bureau (“WCIRB”) has provided an updated midrange cost projection of the presumption to $1.2 billion, which compromises 7% of the estimated $18.3 billion annual cost of workers’ compensation claims.

A new published report from the California Workers’ Compensation Institute (CWCI) calls into the question about the necessity of a statutory presumption, such as the one proposed in Senate Bill 1159, By Senator Jerry Hill, D-San Mateo, suggesting that the system is already working as intended, even before the executive order or SB 1159, and approving COVID-19 claims when there is a causal relationship between the disease and employment.

The CWCI conducted a survey of 16 carriers and 12 self-insured organizations and gathered information on 1,077 claims for COVID-19 that were filed as of April 30, 2020. Of those claims, health care providers comprised of most of the claims at 40.9%, followed by first responders at 32.2%, critical infrastructure workers at 11.4% and the remaining 15.5%% were employed in other sectors. Of these claims, 27.7% were accepted, 36.9% were still under investigation and the remaining 35.5% were denied. Approximately 69.5% of the denied cases were denied because the worker tested negative for COVID-19, 14.5% were denied due to lack of exposure to the virus at work, and 16% were denied on “other” reasons, which included working from home, lack of diagnosis and symptoms and refusal to take the COVID-19 test.

Although not conclusive, the CWCI study provides important data to the debate on the scope of the presumption, whether necessary or not. If the two bills, AB 664 and AB 196, which call for a “conclusive” presumption were passed, it would not allow any consideration for cases where there was no evidence that a worker was infected with the virus that accounted for nearly three-quarters of the denials in the claims CWCI studied. Fortunately for the industry, neither “conclusive” presumption bills have gained much traction and are currently not scheduled for hearings.

As of now, it appears that a negative test would be sufficient to rebut the Governor’s executive order presumption, but it is unclear whether it would in the proposed SB 1159 because the California Legislature has yet to finalize the bill.

As of now, it appears that a negative test would be sufficient to rebut the Governor’s executive order presumption, but it is unclear whether it would in the proposed SB 1159 because the California Legislature has yet to finalize the bill. The Senate Committee on Labor, Public Employment and Retirement passed SB 1159 on May 18, 2020 by a vote of 3-1. The bill has been referred to the Senate Appropriations Committee, wherein a hearing has not yet been set.

If and when you began addressing claims for COVID-19 based on the presumption or not, treatment will continue to be dictated by the Medical Treatment Utilization Schedule (“MTUS”). On May 27, 2020, the California Division of Workers’ Compensation announced their plans to adopt and incorporate the American College of Occupational and Environmental Medicine (ACOEM) and MDGuidelines COVID-19 Clinical Practice Guideline into the MTUS. However, it is important to note that the evidence-based recommendations are continuing to evolve, which will naturally change the guidelines.

As we continue to navigate through this unprecedented time together, it is important to note that California is not the only state moving towards presumptions for employees that contract COVID-19. At least five other states, New Jersey, New York, Vermont, North Carolina, Louisiana, have introduced similar bills to provide COVID-19 presumptions to front-line and essential workers.

As more and more States move towards granting COVID-19 presumptions and bills are progressing through their respective legislatures, it is important that they take a nuanced approach and consider all factors and reputable data to ensure that all shareholders are reasonably considered and not made to unevenly bear the costs of this horrific pandemic. We will continue to follow the developments of SB 1159 and any other presumptive bills and will, of course, keep you apprised.