Kentucky Department of Workers’ Claimse-archives.ky.gov/pubs/Labor/annrpt01.pdfKentucky Department...

Kentucky Department of Workers’ Claims

2

Commonwealth of KentuckyDepartment of Workers’ Claims

WORKERS’ COMPENSATION BOARDDwight Lovan, Chairman

(270) 687-7339

Jonathan StanleyJohn Gardner

(859) 246-2773

ADMINISTRATIVE LAW JUDGESSheila C. Lowther

Chief Administrative Law Judge (502) 564-5550

In addition to the Frankfort office, DWC specialists and ombudsmen may be contacted at thefollowing offices for information and assistance regarding workers’ compensation issues:

Toll free 800-554-8601

410 West Chestnut Street, Suite 700Louisville, KY 40202Telephone 502-595-4146Fax 502-595-4146Toll free 866-874-0006

145 East Center StreetMadisonville, KY 42431Telephone 270-824-7023Fax 270-824-7603Toll free 866-874-0005

220-B North Eighth StreetPaducah, KY 42001Telephone 270-575-7048 Fax 270-575-7025Toll free 800-554-8603

131 Summit Drive, Suite 103Pikeville, KY 41501Telephone 606-433-7661Fax 606-433-7798Toll free 800-554-8602

Perimeter Park West1270 Louisville RoadFrankfort, KY 40601

COMMISSIONER Charles Edward Jennings

Telephone 502-564-5550

Fax 502-564-8250

Website dwc.state.ky.us

Annual Report 2000-2001

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Kentucky Department of Workers’ ClaimsMission Statement

Resourceful administration of Kentucky’s workers’ compensation programand equitable and expedient processing of claims.

PERFORMANCE OBJECTIVES

No individual in the United States shall, on the grounds of race, color, religion,sex, national origin, age, disability, political affiliation or belief, be excludedfrom participation in, or denied benefits of, or be subjected to discrimination under any program or activity under the jurisdiction of the Kentucky Labor Cabinet.

This agency does not discriminate on the basis of race, color, national origin, religion, age or disability in employment or provision of services.

o assure prompt delivery of statutory benefits, including medical services and indemnity payments

o provide timely and competent services to stakeholders

o foster stakeholder knowledge of rights and responsibilities under the Workers’ Compensation Act

o encourage stakeholder involvement in the development ofpolicy and delivery mechanisms

o provide the public and policy makers with accurate and currentindicators of program performance

o anticipate changes in the program environment and respond appropriately

PRINTED WITH STATE FUNDS

TTTTTT


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Table of Contents

Kentucky’s Workers’Compensation Program................. 8Workers’ Compensation Insurance Coverage ................ 9

Resolution Of Disputes ................................................. 10Attorney Fees Awarded During FY 2001 ....................... 11

Program Statistics ......................................................... 13First Reports Of Injury ...................................................... 14Distribution Of Lost Time Injuries By Type......................... 15Workers’ Compensation Claims........................................ 17Claims Filed By Fiscal Year .............................................. 17Reopenings ..................................................................... 19Work-Related Fatalities .................................................... 23

Program Performance ................................................... 25

Organizational Chart ..................................................... 26

Fiscal Performance .......................................................... 28

Workers’ Compensation Board ......................................... 30Administrative Law Judges ............................................... 32


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Claims Processing......................................................... 33Claims Branch ................................................................. 34Appeals Branch ............................................................... 34Open Records ................................................................. 34

Information and Research ............................................. 34Technical Services Branch ............................................... 37Electronic Data Interchange ............................................. 37Benchmarking Section ..................................................... 38

Security&Compliance .................................................... 38Self-Insurance Branch ..................................................... 40Coverage......................................................................... 42Enforcement .................................................................... 43

Constituent Services ..................................................... 45Ombudsmen and Specialist Activity .................................. 46Managed Care ................................................................. 47Medical Evaluations ......................................................... 48Vocational Rehabilitation .................................................. 49

Workers’ Compensation Court Decisions..................... 51

Kentucky Workers’ Adjudication Timeline .................... 54

Table of Contents


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The Honorable Paul A. PattonGovernor of the Commonwealth of KentuckyCapitol BuildingFrankfort, Kentucky 40601

Dear Governor Patton:

In accordance with KRS 342.230(2) and KRS 342.435, I have the privilege to submit to youthe Annual Report of the Department of Workers’ Claims for fiscal year 2000-2001.

The provisions of House Bill 992 became effective during this period. The elimination ofthe arbitrators and the re-instatement of the Workers’ Compensation Board significantlyimpacted claims processing and the delivery of benefits. In addition, adjustments made tothe laws governing claim re-openings resulted in a record-breaking number of motions filedat the end of the calendar year.

2000-2001 was also significant with respect to the number of injuries reported to the department.Even as Kentucky prospered with a rising number of workers, the number of reported work-related injuries was the lowest in a decade.

The department continues to work closely with business and labor, the legal arena, and theinsurance and health care industries on ways in which to enhance the workers’ compensationsystem .

We welcome your suggestions for continuous improvement as we move into a new era. Witha focus on service and striving to provide a user friendly Department of Workers’ Claims,we’re excited about the ways in which we’re building momentum to meet Kentucky’s needs.

Sincerely,

Ched Jennings,Commissioner


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Charles Edward ‘Ched’ JenningsCommissioner

Commissioner Jennings received hisBachelor of Arts in Political Science from theUniversity of Kentucky in 1972 and his JurisDoctor in 1975 from the University ofLouisville Brandeis School of Law.

From 1976-79 Mr. Jennings served as legalcounsel to the Workers’ CompensationBoard.

In 1986, Jennings was appointed byGovernor Martha Layne Collins to theWorkers’ Compensation Task ForceCommission. The Commission wasresponsible for designing the administrativeprovisions of House Bill 1 which wasprimarily responsible for the design of thepresent Administrative Law Judge/Boardsystem.

In 1988, the Commissioner foundedCompEd Inc., a Kentucky non-profitcorporation that conducts annual seminarson workers’ compensation issues andpublishes an annotated version of thestatutes and administrative regulations.

In May of 2001, Mr. Jennings was appointedto serve as Commissioner of theDepartment of Workers’ Claims.

Thomas ‘Tick’ LewisDeputy Commissioner

Deputy Commissioner Lewis has 25 years ofexperience in workers’ compensation, safetyand human resources.

He joined the Department of Workers’ Claimsstaff from Cook and Sons Mining, where hewas Manager of Human Resources andSafety.

Mr. Lewis received his M.A. in Education fromMorehead State University in 1973.

Mr. Lewis then began a 20- year career inmining, serving as owner, safety inspector,examiner and as a manager of workers’compensation.

Beginning in 1994, the Deputy Commissionerserved as a Kentucky Coal AssociationRepresentative to the Health Policy Board,where he worked on preparing the standardbenefits plan for the Health Reform Act.

From 1997-2000 Mr. Lewis worked as anarbitrator with the Department of Workers’Claims.

Mr. Lewis is a member of several professionaland labor organizations including the UnitedMine Workers of America and the KentuckyCoal Association.


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Kentucky’s Workers’Compensation Program

The General Assembly establishes rightsand duties regarding workers’ compensationthrough statutes found in Kentucky RevisedStatutes, Chapter 342—the Workers’Compensation Act.

Kentucky’s Workers’ Compensation Actprovides benefits to employees injured injob-related accidents and to those whocontract or develop diseases due toworkplace exposure. In exchange for theprotection that workers’ compensationgrants, employees surrender the right to sueemployers in civil court for damages arisingfrom workplace injuries.

Benefits include money payments for lostincome, the expense of medical treatmentand vocational rehabilitation training for newjob skills. If an employee’s death occurs as

a result of the injury, a lump-sumpayment of $50,000 (for injuriesoccurring after July 13, 2000) ismade to the employee’s estate.Income benefits are alsoextended to the surviving spouseand dependents.

The Department of Workers’Claims (DWC) within the LaborCabinet administers Kentucky’sworkers’ compensation program.The Commissioner is appointedby the Governor and isempowered to adopt regulationsthat implement the law, such asthose that guide the adjudicationof claims and the delivery ofmedical and rehabilitationbenefits.

Among DWC functions are the following:

< Provide information concerning benefits

< Maintain injury records and program costs

< Process and adjudicate claims

< Enforce laws requiring employer coverage

< Regulate self-insured employers

< Implement strategies to improve carrier performance

< Render program assessment to policy makers


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Workers’ Compensation Insurance Coverage

Most Kentucky employers are subject to theWorkers’ Compensation Act and must carryworkers’ compensation insurance eitherthrough purchase of a policy from aninsurance carrier, by becoming self-insuredor by joining a self-insurance group. Thelaw imposes penalties on employers whofail to obtain coverage and non-complyingbusinesses may be closed by court action.

Some employees are exempt frommandatory workers’compensation coverage. Farmworkers and workers who areemployed as domestic servantsor employed by homeownersfor residential maintenance andrepair, members of certainreligious sects and employeesprotected by federal laws aresome of those exemptions.Those who voluntarily executea waiver of workers’compensation protection areexempt from coverage;business partners who areowners of the business are notrequired to obtain coverage onthemselves.

Whether a worker is an employee or anindependent contractor is a frequentlydisputed issue in workers’ compensationclaims. The general test to determine thisdistinction usually is found in the followingquestion: Does the worker have the right tocontrol the details of the work?

Employee leasing corporations mustregister with the Department of Workers’Claims and demonstrate that workers’compensation coverage has been securedfor job sites where leased employees work.

Temporary help service companies aredeemed the employers of temporaryemployees and must secure workers’compensation insurance coverage.

Employees may reject coverage under theWorkers’ Compensation Act by signing andfiling with the employer an Employee’sNotice of Rejection of Workers’Compensation Act, commonly known as aForm 4 Waiver. By rejecting the Act,

employees surrender benefits that may bedue under the Workers’ Compensation Act,but retain the right to sue employers forwork-related injury or disease in civil court.

The law prohibits employers from requiringemployees to sign a Form 4 Waiver as acondition of employment. Only waiverssigned freely by the employee will beupheld.


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Resolution Of Disputes

When an employee is injured on the job,the employee notifies his/her employer ofthe injury as soon as possible. Theemployer, in turn, notifies its insurancecarrier if the employer is not self-insured.This notification process alerts the employerand/or insurance carrier of its potentialliability and the need to begin payments tothe employee. Medical benefits are thenfrequently started as well as incomebenefits. So long as these benefits continueto be voluntarily paid, there may be nodispute or need for an employee to file a

workers’ compensation claim. In manyinstances, the injured worker and theemployer reach an agreement which isformalized and approved by one of theadministrative law judges at the department.

In other instances, there may be adisagreement by either party on the amountof or entitlement to benefits. The employermay contest payments of these benefits,challenging whether the employee’s

condition is due to a work injury, challengingthe extent of disability, or whether medicalexpenses are reasonable or necessary. Theemployee may also feel entitled to a largeraward than the employer thinks is justified.Where there is a disagreement, either partymay contact the Department of Workers’Claims ombudsmen or workers’compensation specialists for intervention.

The primary mission of the DWC is toexpeditiously resolve disputes as toentitlement to workers’ compensation

benefits. A toll free number (1-800-554-8601) is available to allparties for information andassistance in resolving thesematters. Staff members contactthe parties involved, help with theexchange of information or medicaldocuments and also engage allparties in discussions aimed atresolving the disagreement.

If the differences cannot beresolved either with the assistanceof DWC staff or by the parties,litigation may ensue. In filing aclaim, many workers retain anattorney, familiar with workers’compensation law, to handle the

complexities of the adjudication process.

An employee is not required to have anattorney to file a claim. However,employees choosing to representthemselves will be held to the samestandards as members of the bar. For thoseworkers who obtain an attorney, fees forrepresentation are on a contingency basisand recovery of benefits is required beforefees are payable.


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A t t o r n e y F e e s A w a r d e d D u r i n g FY 2 0 0 1

Number of Fees Total Fees Average FeeApproved Awarded

Plaintiff 4,510 $15,813,386 $3,506

Defense 3,931 $ 9,702,902 $2,468

The Department of Workers’ Claimsprocesses a variety of injury andoccupational disease claims. To simplify theadministrative procedure, several types ofclaim application forms are used; Form 101for injuries, Form 102 for occupationaldiseases and Form 103 for hearing lossclaims. These claim application formscontain basic information identifying theworker, employer and the nature of theincident producing the injury/disease andmust be thoroughly completed, typed,notarized, and filed with supporting medicaldocumentation with the Department.Additional forms must also be completedand filed with the claim application: Form104, Plaintiff’s Employment History; Form105, Plaintiff’s Chronological MedicalHistory; and Form 106, Medical Waiver andConsent. In occupational disease claims,the Form 115, Social Security Release Formis also required. All of these forms areavailable by telephoning the Department ofWorkers’ Claims or can be downloaded fromthe agency’s website:dwc.state.ky.us.

Once a claim is filed, it is assigned to anAdministrative Law Judge. These judgeshave responsibility for overseeing allaspects of the claim including the

introduction of evidence and ruling on allpleadings. If the claim is not settled, thejudges will render a decision on alluncontested issues.

To assist in understanding how theadministrative judicial process works, theAdjudication Timeline contained within thisreport (pages 54-55) outlines the stepsinvolved.


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Program Statistics

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S T A T I S T I C S

P R O G R A M


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First Reports Of Injury

Kentucky Revised Statute 342.038mandates that employers keep a record ofall workplace injuries received byemployees. Employers must file a FirstReport of Injury with the Department ofWorkers’ Claims when more than one day oflost work occurs. This report must be filedwithin one week after learning of the injury.Kentucky employers who fail to comply withthis requirement are subject to the penaltyprovisions of KRS 342.990.

In fiscal year 2000-2001, there were 39,589lost time First Reports of Injury filed with theDepartment (meaning that these injuredworkers missed more than one day of work).While the number of lost time injuries have

declined in recent years, this is the lowestnumber of injuries reported to DWC in thepast decade.

The most common work-related injury inFY 2000-01 was caused by strain; therewere 15,373 workers injured in this mannerand most of the strains reported were aresult of lifting. Falls/slips/trips followed asthe second most common cause with 8,220reported; almost 1,500 of the falls/slips/tripswere same level incidents.

Injuries caused by being struck or injuredby an object totaled 4,477; almost 2,000 ofthese were a result of being struck/injured.by a falling/flying object. Motor vehicle

15,373

8,220

4,477

2,722

1,710

1,642

1,605

1,595

1,334

911

strain/injury by

fall/slip/trip

struck/injured by

other causes

motor vehicles

caught in/under/between

cut/puncture/scrape

repetitive motion

strike against/step on

burn/scald

DISTRIBUTION OF LOST TIME INJURIES BY CAUSE OF INJURY

Program Statistics

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There were 1,642 injuries caused byworkers getting caught in, under or between,with 561 of these injuries involvingmachinery. Cuts, punctures and scrapeswere reported by 1,605 workers. Almost halfof these injuries (a total of 772) were cuts,punctures and scrapes involving tools/utensils. Repetitive motion was the cause of injuriesreported by 1,595 workers. There were1,334 reports of injuries caused by strikingagainst/stepping on and there were 911reports of injuries caused by burns and/orscalds.

Miscellaneous causes of injuries totaled2,722 and included such things as foreignobjects in the eye (495 reports), absorption/ingestion/inhalation (527 reports) andanimal or insect bites (280 reports).

Criminal assault was also included in themiscellaneous causes of injury category;there were 106 incidents reported.

Review of the nature of injuries revealedthat sprains (there were 16,500 reported)and strains (3,038 reported) accounted fornearly half of all injuries. Contusions/bruises were reported in 4,744 injuries;there were 2,744 fractures and 2,484lacerations reported.

Distribution Of Lost Time Injuries By Type

Hearing Loss 134 Coal Workers’ Pneumoconiosis 123 Occupational Disease 1,358 Injury 37,974


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The distribution of lost time injuries bystandard industrial classification (sic) codeswas similar to those reported last fiscalyear.

Manufacturing reported 9,977 injuries; therewere 1,883 injuries incurred in themanufacture of transportation equipment.The services sector reported 9,766 injuries;one third (3,763) of which were from thehealth services division. Retail tradereported 5,559 injuries; one third of theseinjuries (1,896) were from eating anddrinking establishments.

There were 3,728 injuries reportedby the construction industry; thearea of plumbing, heating and airconditioning incurred the highestnumber of injuries (544).

In the transportation/communication/public utilitiessector, there were 3,406 injuries;almost half of these (1,539)occurred within motor freight andwarehousing.

The mining industry reported 2,295injuries, the majority of which werecoal mining -- both surface andunderground (2,148).

The public administration sectorreported 2,071 injuries; 1,404 ofwhich were within the executive,legislative and general governmentdivision. Wholesale trade reported1,434 injuries, half of which werefrom non-durable goods (741).

Agriculture, forestry and fishingreported a total of 485 injuries; 181of which were incurred within thelandscape/horticultural servicesdivision.

There were 454 injuries reported by thefinance/insurance/real estate sector; 216 ofwhich occurred within the division of realestate.

There were a total of 414 injuries reportedas unclassified.

Program Statistics

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0

2000

4000

6000

8000

10000

12000

Hearing Loss 351 332 530 439 163 119 99 179

OD 1871 1711 1343 1040 453 404 364 496

CWP 4359 1655 1662 1265 363 162 122 363

Injury 5485 5486 5347 6058 4236 4034 3675 5081

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01

Claims Filed By Fiscal Year

CWP includes Black Lung and Dust Disease Not Otherwise ClassifiedOD includes carpal tunnel syndrome

Fiscal year is July 1 through June 30

A workers’ compensation claim in Kentuckyoriginates when: 1) A settlement documentis filed to voluntarily resolve workers’compensation issues between parties; or 2)a claim application is filed because theparties are not in agreement and the mattermust be resolved by an Administrative LawJudge.

Workers’ compensation claims are typicallydivided into two types, indemnity andmedical-only, a distinction that is used in thisreport. Indemnity claims are those for whichincome benefits are paid to compensate forlost wages, functional impairment or death.Medical service costs are paid in addition toincome payments.

Most of the data in this report pertains toindemnity claims. Presently, there is nostatutory requirement that employers or theirinsurance carriers report medical-onlyinjuries to DWC.

For an injury to be compensable, it must becaused by the employee’s work. To beconsidered for temporary total incomebenefits, an injured worker must miss morethan seven days of work. Medical-onlyclaims are those where medical services aredelivered but the employee does not qualifyfor income payments.

In FY 2001 there were 6,119 requests forresolution of claims filed with theDepartment of Workers’ Claims. Thisrepresents an increase from FY 2000, duein part to the December 2000 deadline forreopenings.

Workers’ Compensation Claims


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Multiple Body Parts Including 1033

Systems and PartsSpinal Cord 329Wrist 255Shoulder 254Multiple Upper Extremities 158Soft Tisse 116Multiple Trunk 107Lungs 86Upper Arm 86Upper Back 76Multiple Lower Extremities 62Soft Tissue 45Thumb 29Multiple Head Injury 26Pelvis 19Upper Leg 18Skull 16Sacrum 10Vertebrae 9Toes 8Wrist and Hand 8No Physical Injury 7Nose 7Multiple Neck Injury 6Mouth 3Teeth 1

Distribution of Claims by Body Part

In reviewing the litigated injury claims,DWC found that strain was the mostcommon cause of injury, a total of 2,440.Fall or slip (1,175) was the second mostcommon cause of injury. Injuries causedby being struck by an object totaled 552and 380 claims involved motor vehicleaccidents.

The average age of claimants was 41years. 32% (1,908) of claims were filed bywomen and 68% (4,211) were filed bymen.

Men filed the majority of claims in allstandard industrial classification

categories except retail trade, finance/insurance/real estate and services.

Workers employed in the mining industryfiled the greatest number of claims(1,435), followed by manufacturing(1,386) and services (1,055).

The distribution of claims by occupationcode mirrored the last fiscal year. Miningmachine operators filed the largestnumber of claims (548), followed bylaborers (510) and truck drivers (396).

Program Statistics

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ReopeningsA final settlement or award in a workers’ compensation claim is generally subject to a“motion to reopen”.

Pursuant to House Bill 1, December 12, 2000, marked the last opportunity for claims withdecisions rendered prior to December 12, 1996, to be submitted for re-opening.KRS342.125 (8) reads in part “claims decided prior to December 12, 1996 may be re-opened within four years of the award or order or within four years of December 12, 1996,whichever is later…”

Prior to the implementation of HB1, claimants were allowed an unlimited time to re-open.

The chart below illustrates the drastic increase in the number of motions to re-open receivedby DWC as a result of the December 12th deadline. The volume received in Decemberclosely rivals the number received during the entire previous calendar year.

124 134 120196

978

58 58 57 55 56114 600

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5 0 0

6 0 0

7 0 0

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Duplicate motions belonging to the same case file have been omitted from the above count

Distribution of Reopenings by Month


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County Total LaborForce

FROIs %of FROIs toLabor Force

Claims % of Claimsto FROIs

AdairAllenAndersonBallardBarrenBathBellBooneBourbonBoydBoyleBrackenBreathittBreckinridgeBullittButlerCaldwellCallowayCampbellCarlisleCarrollCarterCaseyChristianClarkClayClintonCrittendenCumberlandDaviessEdmonsonElliottEstillFayetteFlemingFloydFranklinFultonGallatinGarrardGrantGravesGraysonGreenGreenupHancock

7,582 8,62010,110 4,33118,715 6,00210,46346,97310,21522,35115,283 3,820 4,270 7,87334,994 5,944 6,52817,76146,405 2,786 5,27111,701 6,73228 99416 941 7,344 6,179 4,060 3,04750,364 5,114 2,664 5,679

6,42513,51225,132 3,282 3,820 7,91510,44217,55312,658 4,12416,578 4,150

135 117 179 83 411 115 323 568 233 489 283 82 153 121 587 113 108 268 457 30 131 204 142 457 387 248 80 92 66 804 83 29 135

132 596 410 46 67 182 252 282 257 85 223 87

1.78%1.36%1.77%1.92%2.20%1.92%3.09%1.21%2.28%2.19%1.85%2.15%3.58%1.54%1.68%1.90%1.65%1.51%0.98%1.08%2.49%1.74%2.11%1.58%2.28%3.38%1.29%2.27%2.17%1.60%1.62%1.09%2.38%1.32%2.05%4.41%1.63%1.40%1.75%2.30%2.41%1.61%2.03%2.06%1.35%2.10%

11 9 21 10 27 19 89 45 23 94 28 7 44 17 70 14 18 16 52 2 9 38 19 37 43105 5 13 4 77 13 7 19249 10264 51 4 7 19 32 32 24 10 36 10

8.15% 7.69%11.73%12.05% 6.57%16.52%27.55% 7.92% 9.87%19.22% 9.89% 8.54%28.76%14.05%11.93%12.39%16.67% 5.97%11.38% 6.67% 6.87%18.63%13.38% 8.10% 11.11%42.34% 6.25%14.13% 6.06% 9.58%15.66%24.14%14.07%12.89% 7.58%44.30%12.44% 8.70%10.45%10.44%12.70%11.35% 9.34%11.76%16.14%11.49%

146,703 1,931

A Comparison by CountyLabor Force, Lost Time First Reports of Injury (FROI) and Litigated Claims

Program Statistics

21

10.81%54.50%11.24% 8.15% 8.94%12.63%13.64%11.82%20.49%13.56% 9.85%36.23%13.71%55.63%21.74%12.17%20.05%38.60%33.33%62.07%35.76%10.00%10.21%17.24%12.27%19.30%19.48%13.04% 9.80%11.60%39.55%13.04%13.25%67.03% 5.47% 7.55%15.87%12.16% 7.00% 8.20%12.50%17.17%11.66%16.79% 8.49%

81224 20 15 38 24 3 69 25930 39 96123 84 55 14 88 44 18126113 10 29 15 20 11 83 15 10 69 53 24 33124 7 12 10 27 7 10 34 17 38 68 9

2.00%4.46%2.41%2.34%1.75%2.64%0.89%2.99%1.61%1.78%1.85%2.89%1.10%2.59%2.23%1.80%1.88%2.04%2.11%4.67%3.89%2.30%2.46%1.73%1.23%1.68%1.25%1.82%2.31%1.60%2.62%1.65%1.68%5.90%1.54%1.43%2.12%1.98%2.08%2.39%2.10%2.03%2.60%2.08%3.85%

749 411 178 184 425 190 22 584 1226859 396 265 897 151 253 115 439 114 54 203 316 100 284 87 163 57 426 115 102 595 134 184 249 185 128 159 63 222 100 122 272 99 326 405 106

County

HardinHarlanHarrisonHartHendersonHenryHickmanHopkinsJacksonJeffersonJessamineJohnsonKentonKnottKnoxLarueLarurelLawrenceLeeLeslieLetcherLewisLincolnLivingstonLoganLyonMcCrackenMcCrearyMcLeanMadisonMagoffinMarionMarshallMartinMasonMeadeMenifeeMercerMetcalfeMonroeMontgomeryMorganMuhlenbergNelsonNicholas

Total LaborForce



386,243


37,383 9,211 7,384 7,871 24,229 7,190 2,462 19,513 7,569

21,451 9,168 81,298 5,829 11,360 6,397 23,296 5,581 2,565 4,349 8,119 4,339 11,564 5,036 13,220 3,388 34,168 6,330 4,411 37,204 5,113 11,150 14,832 3,135 8,310 11,111 2,976 11,226 4,815 5,109 12,959 4,884 12,555 19,432 2,750


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OhioOldhamOwenOwsleyPendletonPerryPikePowellPulaskiRobertsonRockcastleRowanRussellScottShelbySimpsonSpencerTaylorToddTriggTrimbleUnionWarrenWashingtonWayneWebsterWhitleyWolfeWoodfordOut of State

Total

WomenMen

Total LaborForce



County

9,71125,951 4,394 1,735 6,794 11,37726,725 6,31826,673 1,018 6,211 9,836 5,81218,52018,504 8,702 5,762 9,243 5,374 5,962 3,201 6,03650,695 6,140 8,449 5,41414,358 3,30013,758

1,981,868

857,0001,124,868

241 294 78 40 116 4081148 158 732 10 154 188 120 382 290 224 134 197 76 91 60 167 880 89 178 192 406 80 1932390

39,589

14,18125,188

2.48%1.13%1.78%2.31%1.71%3.59%4.30%2.50%2.74%0.98%2.48%1.91%2.06%2.06%1.57%2.57%2.33%2.13%1.41%1.53%1.87%2.77%1.74%1.45%2.11%3.55%2.83%2.42%1.40%

2.00%

1.65%2.24%

27 38 9 5 16181591 22 82 1 21 13 19 33 26 7 21 31 7 3 10 29 62 11 13 17 47 14 17 29

6,119

1,9054,206

11.20%12.93%11.54%12.50%13.79%44.36%51.48%13.92%11.20%10.00%13.64% 6.91%15.83% 8.64% 8.97% 3.13%15.67%15.74% 9.21% 3.30%16.67%17.37% 7.05%12.36% 7.30% 8.85% 11.58% 17.50% 8.81% 1.21%

15.46%

13.43%16.70%


Program Statistics

23

Work-Related Fatalities

Initially, there were 94 on the job fatalitiesreported to the Department of Workers’Claims in fiscal year 2000-2001. Afterinvestigation, 45 of these deaths weredetermined to be work-related; theremainder have either been ruled not work-related, not a Kentucky claim, or there areissues which are still in a pending status.

The total of on thejob fatalities for 2000-2001 represents adecrease from the 62fatalities that occurredduring last fiscal year.Based on a recent USLabor Departmentreport, the number ofworkers nationwidekilled on the job lastyear dropped about2%.

In Kentucky last year,the youngest workerwho died on the jobwas a 15-year old boywho was driving a golfcart that went out ofcontrol. The oldestworker who died onthe job was an 89-year old man who was driving a funeralhome limousine when the vehicle struck atree.

Four of the fatalities involved workers whowere 19 years old; two were killed whilefighting a fire, one was shot to death at thedrive through window of his place ofemployment and one was suffocated whenhe fell through a bin loaded with sand.

The average age of these workers killed onthe job was 38. Forty-four of the fatalitieswere men; the sole woman who was killedon the job was a temporary worker who wasshot more than ten times by a co-worker.

The most common causes of injuriesincurred were the result of motor vehicleaccidents (16) and falls (9). Six workerswere killed when they were caught either by

a machine or by falling debris (rock, dirt,sand). Five fatalities occurred when theworker was struck by or struck againstmoving parts or objects. Three fatalitieswere the result of gun shot wounds inflictedduring the course of a crime.

Photo Courtesy of News Enterprise, Elizabethtown KY


24

According to the US Labor Department’srecent report, motor vehicle accidents werethe leading cause of deaths of workersacross the country. Deaths from falls andhomicides increased nationally as well as inKentucky; compared to last fiscal year, therewas an increase in the number of falls (3)and homicides (2) in Kentucky during thisreporting period.

Occupations of these workers ranged fromattorney to welder, farm worker to engineer,bus driver to painter. Ten of the workerskilled on the job were machine operators;seven were construction workers and fivewere motor vehicle drivers.

Nationwide, among industries, constructionagain had the highest number of fatal workinjuries. This was mirrored in Kentucky,

where the construction industry claimednine lives. Manufacturing and the servicessectors each claimed seven lives; themining industry reported five fatalities, asdid the public administration sector.

Unlike last fiscal year, when all but one ofthe injured workers died on the day of theaccident, one-fifth of 2000-2001 accidentvictims were not killed instantly. Threeworkers lived one day past the date of theiraccidents; two workers lived three days aftera heat stroke and a fall from a ladder; andtwo other workers lived four and five daysafter falls. A sawyer struck in the chest by aboard from the saw he was operatingsurvived 14 days and a heavy equipmentoperator who fell from a bulldozer lived 17days past the date of his accident.

1 1 1

3 3 3 3

5

9

16

0

2

4

6

8

10

12

14

16

18

Fire/Fla

me

Gun Sh

ot Wou

nd (n

ot crim

inal)

Tempe

rature E

xtreme

Caugh

t/Colla

pse

Electro

cuted

Caugh

t in a M

achine

Gun Sh

ot Wou

nd (cr

iminal)

Struck

Again

st or B

y Fall

Motor V

ehicle

Accid

ent

Distribution of Fatalities by Cause of Injury


25

ProgramPerformance

The Department of Workers’ Claims strives to deliver expedient and efficientservices to the constituency.

Through technological advances and an attitude of working smarter, theDepartment of Workers’ Claims is dedicated to meeting the uniquechallenges of Kentucky’s workers’ compensation program environment.

Approximately 50% of DWC’s personnel are involved solely in the processingof benefit claims. Roughly 25% of the staff are involved in constituentservices, vocational rehabilitation services, insurance compliance, legalservices and administration. The remaining staff is assigned to data entryand other computer related services.


26

The Department of Workers’ Claims receives 100% of its funding from a special fundassessment imposed upon the amount of workers’ compensation premiums received byevery insurance carrier writing workers’ compensation insurance in the Commonwealth, byevery group of self-insurers and against the simulated premium of every employer carryingits own risk.

Initially established in 1987, this assessment was divided into two parts; one rate for allemployers and an additional assessment rate for those employers engaged in theseverance and processing of coal.

The “all employer” assessment rate was set at 23.3% in 1987 and has experiencedperiodic declines over the past 13 years. It is currently holding at 9%. The additional “coalemployer only” assessment rate, initially set at 40%, was abolished on December 12, 1996with the passage of House Bill 1.

Current funding is derived solely from the remaining “all employer” assessment of 9%effective for premiums written through December 31, 2001. Any changes to theassessment rate must be recommended to the General Assembly not later than October 31of the year prior to each regular legislative session.

FiscalPerformance

Fiscal Performance

27

DW

C F

ISC

AL

HIS

TO

RY

FISC

AL

YE

AR

PER

SON

NE

LPE

RSO

NN

EL

BU

DG

ET

AC

TU

AL

DIF

FER

EN

CE

PE

RC

EN

T o

fC

AP

AC

TU

AL

AL

LO

TM

EN

TE

XP

EN

DIT

UR

ES

BU

DG

ET

($)

($)

($)

EX

PE

ND

ED

2000

-200

124

220

814

,942

,300

12,7

16,9

27(2

,225

8,37

3)85

.1%

1999

-200

026

820

715

,637

,000

12,3

87,2

88(3

,249

,712

)79

.2%

1998

-199

926

820

814

,994

,000

12,6

06,1

88(2

,387

,812

)84

.1%

1997

-199

827

222

715

,182

,500

12,5

88,5

27(2

,593

,973

)82

.9%

1996

-199

727

222

912

,137

,900

11,0

57,3

91(1

,080

,509

)91

.0%

1995

-199

620

713

8

9,82

2,20

0

9,47

9,97

0

(342

,230

)96

.5%

1994

-199

521

012

0

9,75

7,20

0

8,58

6,71

6(1

,170

,484

)88

.0%

1993

-199

416

715

9

7,86

0,00

0

7,33

7,68

8

(522

,312

)93

.4%

1992

-199

316

716

0

7,50

5,10

0

7,00

4,56

1

(500

,539

)93

.0%

1991

-199

215

315

0

6,90

1,60

0

6,49

7,81

5

(403

,785

)94

.0%

1990

-199

115

514

9

6,73

7,30

0

6,48

7,54

0

(249

,760

)96

.0%

1989

-199

013

913

6

5,69

5,10

0

5,29

5,83

5

(399

,265

)93

.0%

1988

-198

913

212

3

6,03

1,20

0

4,95

1,30

9(1

,079

,891

)82

.0%


28

Workers’Compensation

Board

Board chairman Dwight T. Lovan receivedhis Bachelor’s degree from BaylorUniversity and J.D. from the University ofKentucky College of Law. Admitted to theKentucky Bar in 1977, Judge Lovanworked as a staff attorney for the KentuckyCourt of Appeals with responsibility forworkers’ compensation appeals for 15months. From 1979 to 1990 he practicedlaw in Owensboro, concentrating in theareas of workers’ compensation and civillitigation. Dwight T. Lovan, Chairman


29

John Anthony Gardner

Board Member John A. Gardner graduatedfrom Western Kentucky University in 1971and received his J.D. from the University ofKentucky in 1974.

Judge Gardner served on the district courtbench for the 24th Judicial District from1979-1991 and again from January 2000 toJune 2000. He was elected to theKentucky Court of Appeals in 1991 andserved an eight-year term. In July of2000, Judge Gardner was appointed to theWorkers’ Compensation Board.

Jonathan Stanley

Board member Jonathan Stanley receivedhis Bachelor of Arts degree from MoreheadState University in 1978 and a MastersDegree in international economics andpolitical science from the University ofKentucky in 1979. He received his J.D.from the University of Kentucky College ofLaw in 1982.

While in law school, Judge Stanley workedas a law clerk for the Special Fund. From1983 - 1997, he was a partner in the firm ofWilson and Stanley in Lexington. JudgeStanley was appointed to the KentuckyWorkers’ Compensation Board in 1999.


30

Distribution of Claims Filed by Hearing Location

Ashland 274 Louisville 1385Bowling Green 210 Madisonville 189Covington 311 Owensboro 191Hazard 558 Paducah 222Lexington 836 Pikeville 1129London 498 Pineville 316

Administrative Law Judges

Sheila C. LowtherChief Administrative Law Judge

During the 2000-2001 fiscal year, there were a total of seventeen administrative law judges(ALJs). These judges have offices in Covington, Danville, Frankfort, Fulton, Henderson,Lexington, Louisville, Mt. Sterling, Pikeville, Pineville, and Richmond. In addition, there arehearing sites in Ashland, Bowling Green, Hazard, London , Madisonville, Owensboro andPaducah.

The ALJs held 5,696 informal conferences. During these informal conferences, theypresided over settlement negotiations, ruled on evidentiary disputes, and identifiedcontested issues. During this period, the ALJs also held 2,731 formal hearings. 2,669opinions were issued in these claims. They also issued 149 decisions in claims on remandfrom the Workers’ Compensation Board, the Court of Appeals and the Kentucky SupremeCourt.

Sheila C. Lowther graduated cumlaude from Transylvania University in 1977.She received an English Speaking UnionFellowship and attended the Universityof London. She received her J.D. fromthe University of Kentucky in 1980.

Judge Lowther was in privatepractice, focusing on workers’compensation in Madisonville, Kentuckyfrom 1980 through 1995. She wasappointed an Administrative Law Judge forthe Kentucky Department of Workers’Claims in 1995 and since January 1999,has served as Chief ALJ.

The table below indicates thevolume of claims hearing activity,based on the 6,119 claimsassigned and received duringfiscal year 2000-2001.

Claims Processing

31

Claims Processing

Within the Division of Claims Processing, under the supervision of Division Director OraBurge, the Claims Processing Branch receives and processes applications for resolution ofclaims and assigns claims to administrative law judges.

The Appeals Branch, headed by Dianna Rose, is responsible for the processing of appealsto the Workers’ Compensation Board. The Branch also prepares the record for appeals tothe Kentucky Court of Appeals and the Kentucky Supreme Court.


32

.

Claims Branch

The Claims Branch is comprised of severalsections: Claims Assignment, Docket, CaseFiles and Open Records sections. Thebranch is charged with the responsibilities ofreceiving and processing all Applications forResolution of Claims, scheduling BenefitReview Conferences, the assignment ofclaims to the Administrative Law Judges(ALJs), and scheduling court reporters forALJs. The branch prepares the Frankfortmotion docket, attends the docket meetingsto record the rulings, processes the docket’sorders, routes claim files and documents,and disseminates claim information.

Due to the deadline for reopenings ofDecember 12, 2000, a record number ofmotions to reopen were filed. The staff ofCase Files, Claims Assignment and DocketSections were successful in the timelyprocessing of all motions, assigning same tothe motion dockets, processing the docketorders, and assignment of the reopenedcases to the ALJs.

Appeals Branch

The Appeals Branch is responsible forprocessing records on claims appealed fromALJ decisions to the Workers’Compensation Board (WCB), the KentuckyCourt of Appeals and the KentuckySupreme Court.

Personnel assigned to the Appeals Branchwork closely with the WCB members and itsstaff to ensure appeals are processed in atimely manner. All motions on appeals aretracked and presented to the WCB weeklyfor appropriate action, a database ismaintained of all appellate filings and

inquiries regarding the status of activeappeals are directed to the Appeals Branch.

During FY 2001, 641 ALJ decisions wereappealed to the Workers’ CompensationBoard; 161 WCB decisions were appealedto the Court of Appeals; and 87 workers’compensation claims were appealed to theKentucky Supreme Court.

Open Records

The Open Records Section responds towritten requests for workers’ compensationinformation under the Kentucky OpenRecords Act, KRS 61.870-884. Many ofthese requests are from employersinquiring about an employee’s history ofwork related claims; 13,727 such requestswere received in FY 2001.

Hundreds of additional inquiries arereceived from the Social SecurityAdministration (284) and Kentucky’sDepartment of Fish and Wildlife (186).Additionally, during FY 2001, 80 inquiries forinformation were presented in person.

The staff responds to thousands of requestsfor copies of DWC records. Charges forphotocopied and microfilmed pages aremodest, yet, during FY 2001, more than$70,000 was collected in copying charges.

Pursuant to KRS 342.229, which sets outwhat constitutes unwarranted invasion ofprivacy, the DWC treats injury reports intheir entirety as exempt from disclosure.Only if personal and/or private information isredacted from the records or if the injuredworker has signed a release, does DWCprovide information on First Reports ofInjury.

Information and Research

33


Led by Director Deborah S. Wingate, the primary duties of this division are collection,storage and retrieval of data and dissemination of information. The Records Branch isresponsible for data entry, coding and ensuring the validity and integrity of the data. TheTechnical Services Branch renders both hardware and software services and is responsiblefor the development and maintenance of DWC’s data systems, including the wide areanetwork.

Through the Benchmarking Section, the division performs critical research and publicationfunctions. These include injury and claims data analysis and annual and quarterly reports.Through Benchmarking’s report card process, insurance carrier performance is monitored,including the timely filing of first reports of injury and fatalities. This section also respondsto requests for program information from legislators, government agencies and the public.


34

Technical Services Branch

The Technical Services Branch has accomplished the goal of networking all field offices.All Administrative Law Judges and field staff now have on line access to the department’snetwork and to the Internet.

Technical Services staff participated in an analysis of Windows 2000 operating systemscompatibility with state and in-house applications.

In preparing for the AS400 data conversion to a server based environment, TechnicalServices has studied the hardware and application needs, adding programming staff in theDesign and Development section to provide support for all applications and data conver-sion needs.

In addition to the AS400data conversion project, theTechnical Services Branchremains committed todevelopments that willenhance the agency’s abilityto process and retrieveworkers’ claims data. Phasetwo of the overallenhancement project willinclude implementing activeserver pages on thedepartment’s web site. Thiswill provide for on line filingof workers’ compensationclaims. DWC is also in theprocess of converting thecurrent Image system fromthe AS400 onto a platformwhich will allow additionaloptions and greatercapabilities.

The DWC network hasmoved behind the LaborCabinet’s firewall, ensuringreliability and security to thedepartment’s network.


35

Electronic Data

Interchange

Insurance carriers and self-insuredemployers report workers’compensation activity to DWCthrough Electronic Data Interchange(EDI).

Introduced in 1996, EDI was initiallyused to transmit First Reports ofInjury. Over the past several years,Subsequent Reports of Injury, Proof ofCoverage and Medical Bill Reportinghave been added to the list ofelectronic reporting.

In many cases, carriers will outsourcethis reporting method to tradingpartners, who must be approved bythe Department of Workers’ Claims.

In the past year, DWC has added 65Proof of Coverage trading partners and 40 First and Subsequent reports of injury tradingpartners. In addition, DWC has approved 17 new Medical Billing trading partners, with 38potential partners still in the testing phase.

The Department of Workers’ Claims has embarked on an EDI Initiative Project to refineand improve the collection capability of EDI records. DWC will be undergoing a completere-design of the current EDI applications. The strategy of this initiative is to ensure thecollection of credible, accurate data in a timely manner.

The EDI Initiative Project will include the following:

♦ Redesign of system hardware and EDI applications

♦ Additional edit checks to reduce error rates and to improve data quality

♦ Automation of report cards to monitor carrier performance

♦ Training seminars for trading partners, carriers and employers


36

BENCHMARKING SECTION

The Benchmarking staff conductsmultifaceted, specialized industry and injuryresearch, collecting, reviewing andcomparing data relevant to workers’compensation issues and Kentucky’sDepartment of Workers’ Claims.

Data collected from First Reports of Injury,Subsequent Reports of Injury and variousother DWC databases provides the statisticalreports and analyses compiled by theBenchmarking staff. Quarterly activityreports and DWC’s annual report to theGovernor are examples of the research,analysis and compilation duties of theBenchmarking staff.

Value added research efforts extend tomonitoring and evaluating program performance.Based on data elements transmittedelectronically to DWC by employers and carriers,detailed reports are generated by Benchmarkingstaff. Designed to ensure compliance with

Kentucky’s reporting requirements andreveal patterns of violations, the publicationof performance report cards representsDWC’s proactive role in improvingperformance.

Kentucky statute holds the carrierresponsible for compliance with reportingrequirements. Performance report cardsregarding timely filing of fatalities havebeen issued since 1997. Report cards areaccompanied by a letter from DWC’sCommissioner, stating that those inviolation must provide in writing the reasonfor non-compliance.

In April 2001, the Department issuedperformance report cards to insurancecarriers, a result of monitoring carriers’compliance with timely filing laws regardingon the job fatalities.

There were 70 work-related fatalitiesincluded in this report card for calendaryear 2000. Less than half of the fatalitieswere reported to DWC according to law; 42of the 70 were in violation. Of those 42,

there were 36 who qualified for assessment ofpenalties. There were eight fatalities that werenever reported to the Department and there werefive instances in which there was no workers’compensation insurance coverage.

Research conducted by Benchmarking staff isalso generated by requests from other divisionsand agencies. Research results range fromcompiling industry and/or injury specific statisticsto collecting information on the workers’ claimsprocess, including outcomes and timelines.


37

The Division of Security and Compliance, headed by Director Gary Davis, C.P.A., is responsiblefor ensuring that non-exempt Kentucky employers maintain workers’ compensation insurancecoverage. The Self-Insurance Branch audits group and individual self-insured employersand processes applications for self-insurance. The Coverage Branch maintains recordsdocumenting workers’ compensation insurance coverage for Kentucky employers. TheEnforcement Branch monitors Kentucky businesses to verify compliance with the Workers’Compensation Act.

Security&Compliance


38

Division of Security and Compliance

The Division of Security and Compliancefocuses its resources on ensuring that non-exempt Kentucky employers maintainworkers’ compensation insurance coverage.

Self-Insurance Branch Branch auditors utilize independentresources, including regional and nationalnewspapers, business periodicals, Internetbusiness sites and Dun & Bradstreetservices to monitor the financial condition ofself-insurers.

During FY 2001, the Department finalizedthe examinations on the following self-insured groups: Forest Industry Self-Insurance Fund, Associated GeneralContractors Self-Insurance Fund, andCooperative Self-Insurance Fund.Examinations of the Kentucky RetailFederation and AIK-Comp were performedwith the examination of Kentucky RetailFederation becoming final during FY 2001.

Conversion of self-insured group funds tofully insured products via a “loss portfoliotransfer,” reached its zenith in the late 1990swith the remaining group funds moving tosolidify their premium base in FY 2000 and2001. The lone exception was WorkersGuardian Self-Insurance Fund. WorkersGuardian, a homogenous fund focused on

the metal manufacturers of theCommonwealth, closed the fund in March2001 and is currently in a run-off mode,exploring the benefits of a loss portfoliotransfer. Fortunately, even though theindustry was experiencing significantchange with the group funds struggling towithstand the competition of the traditionalcarriers, there were no insolvencies of groupself-insurance funds.

While the vast majority of Kentucky self-insured employers are financially strong,self-insured employers experiencingfinancial stress are placed on a “Watch-List”and monitored on a quarterly basis.“Watch-List” membership remainedrelatively low during FY 2001.

HB 1 (Extraordinary Session, Dec. 1996)established three guarantee associations,the Kentucky Individual Self-InsuredGuaranty Fund (hereinafter Individual G.F.),the Kentucky Group Self-Insured GuarantyFund (hereinafter the Group Fund) and theKentucky Coal Employers Self-InsuranceGuaranty Fund (hereinafter the Coal G.F.)for the purpose of protecting workers andtheir dependents in the event of insolvencyof a self-insured. Prior to FY 2000, noinsolvencies of self-insureds had impactedany of the guaranty funds.

Companies on Watch-list 13 9 5 6

Individual Self-Insurers 224 214 201 193

Self-Insured Groups 10 10 10 9

Fiscal Year 1998 1999 2000 2001

Since fiscal year 1998, self-insurance has experienced a net reduction of 31 employers,bringing the FY 2001 total to 193 as noted below:


39

Corporate bankruptcies in recent years haveclaimed the full attention of the division, asletters of credit have been called andaccounting, administrative and investmentprocedures put into place in order to ensurefuture claim payments.

During FY 2001, the Guaranty Fund initiatedthe process of actuarially determining thevalue of one such bankrupt entity, Fruit ofthe Loom. It appears that the claims liabilitywill be close to that estimated by DWC.

After Quaker Coal Company defaulted inpayments due under the Kentucky Workers’Compensation Act, DWC entered into anagreement with the bond underwriter,Frontier Insurance and the Coal GuarantyFund. Specifically, an imprest revolvingclaims account of $1 million would beestablished at the Coal Guaranty Fund andreimbursed on amonthly basis. TheFund took control ofthe Quaker claims,contracted forservices with a thirdparty administratorand began makingclaim payments.Approximately $1.5million was paid toQuaker claimants inFY 2001.

Frontier Insurancesuffered a ratingsdrop to ‘marginal’, prompting DWC to focuson obtaining substitutes for coveragepreviously provided by Frontier. At the closeofFY 2001, DWC’s efforts had met with mixedsuccess. Lodestar Energy, self-insured atthe beginning of FY 2001 provided asubstitute Letter Of Credit for its FrontierBond and obtained coverage in the

voluntary market (KEMI) on September 20,2000. However, two coal companies,Manalapan Mining and AEI Resources,continued operating and making benefitpayments while utilizing the Frontier suretytotaling in excess of $30 million.

DWC is hopeful that the recent increase incoal prices will provide the necessaryresources permitting these companies toobtain other suitable surety in the nearfuture.

Near the end of FY 2001, Lodestar Energyfiled Chapter 11 bankruptcy proceedingsand informed DWC that claims paymentswould be continued but that they wouldadhere to the provisions of the automatic

stay afforded by section 362 (a) of theBankruptcy Code.

A brief interruption relative to the continuedadministration of claims occurred prior toLodestar’s filing of relief from the stay at theinsistence of DWC.

In accordance with provisions of the orderlifting the automatic stay, DWC resumed fulladjudication and administration of the claimsshortly after the close of the fiscal year.


40

Coupled with the department’s purchase of a license to use an Internet-based optiondeveloped by Workers’ COMPLINK that allows carriers to bypass vendors and report proofof coverage information directly to Kentucky, DWC now operates the nation’s premierEDI-POC system. In almost all instances, the transfer of information and acknowledgmentof proof of coverage is accomplished in three (3) working days or less.

SERF (South East Coal Restoration Fund)

Established to distribute workers’ compensation benefits to the injured employees ofbankrupt South East Coal, the South East Restoration Fund was divided into long-termand short-term investments intended to extend the period of payments to claimants.

During FY2001, the injured employees of South East Coal Company continued to receivetheir indemnity benefits under the South East Coal Restoration Fund (SERF). Due to asound investment strategy employed by the Kentucky Workers’ Compensation FundingCommission, the Department of Workers’ Claims is hopeful that all claimants will be fullyindemnified.

Projection of Income Benefits To Be Paid To South East Coal Claimants

$-

$50,000

$100,000

$150,000

$200,000

$250,000

FY20

01

FY20

04

FY20

07

FY20

10

FY20

13

FY20

16

FY20

19

FY20

22

FY20

25

FY20

28

short-term

long-term

Coverage

Currently, two data collection agents are approved to transmit to DWC, Claimport andWorkers’ COMPLINK.

KEMI, the state competitive workers’ compensation fund, established a direct link to DWCand files Proof of Coverage reports without the assistance of a vendor.


41

Proof of Coverage Notices Filed Via Electronic Data Interchange

53%

30%

2%

11%

4%

Accepted AutomaticallyAccepted ManuallyRejected AutomaticallyRejected ManuallyMass Rejections

During FY 2001, DWC continued to enjoy the benefits of the EDI-POC system enabling itto reduce staff without sacrificing quality. The Coverage Branch operates with six (6) full-time staff including the Branch Manager compared to a staff of thirteen (13) in 1998.

Furthermore, the success of direct reporting by KEMI provides encouragement thateventually all carriers of significant volume will be able to report directly to DWC, thusincreasing the accuracy and ease of reporting.

Enforcement

The purchase and implementation of HP palmtop computers has enabled the complianceofficers to move from a paper driven reporting mechanism to an all electronic format. Dataelements are entered via touch sensitive screens and final reports are submittedelectronically. The capability of recorded narratives provides additional investigativeinformation. DWC continues to explore wireless technology opportunities within the POCprogram.

During FY 2001, DWC compliance officers inspected 10,248 Kentucky businesses inorder to verify workers’ compensation coverage.

The Commissioner issued 476 citations, assessed penalties of $670,700 and collectedfines totalling $294,565 .

The number of employees filing notice with the Department to reject coverage under theKentucky Workers’ Compensation Act has reached its lowest point since 1987, with 6,732on file for the fiscal year.


42


43

Constituent Services

The Division of Ombudsmen and Workers’ Compensation Specialist Services maintainstoll free telephone lines to assist citizens in workers’ compensation matters by answeringquestions, providing information and attempting to resolve conflicts. Mediation services areavailable in an attempt to speed resolution of claims and expedite the delivery of benefits toinjured workers.

The Division is headed by the Honorable Cathy Costelle, Division Director, and theHonorable Andrew Manno, Chief Specialist.


44

During FY 2000-2001, the Division of Ombudsmen and Workers’ CompensationSpecialist Services continued its proactive efforts to provide assistance and information,responding to 16,939 requests. Most of these were completed within one week of the initialcontact.

DIVISION OF OMBUDSMEN AND WORKERS' COMPENSATION SPECIALISTSDISTRIBUTION OF REQUESTS FOR ASSISTANCE BY SOURCE

Claimant56%

Carrier7%

Medical Review1%

Medical Provider8%

Other8%

Attorney11%

Government2%

Employer7%

The chart above represents the breakdown on the sources of requests. The listing belowoutlines the subject matter. The category ‘Other’ includes inquiries such as the attorney ofrecord, the carrier/insurance agent, current mileage rate and miscellaneous questions of ageneral nature.

TOPICS NUMBER OF CALLS

Rights and Procedures 10,171Claims Status Request 2,179Form Request 1,794Other 1,623Coverage 1,334First Report of Injury 761Medical Fee Schedule 573Claim Filing Assistance 395Medical Fee Dispute 212Referrals to Outside Agencies 161Utilization Review 143Managed Care 141Fraud 81Unfair Claims Settlement Practice Investigation 68Vocational Rehabilitation 46


45

Constituent Services

While specialists cannot representclaimants or appear with them at hearings,specialists assist injured workers who arenot represented by an attorney in filing claimapplications, and completing other forms.

In addition to providing information,ombudsmen and specialists intervened invarious disputes between two or moreparties within the workers’ compensationsystem. In these interventions, DWC staffmembersassist theparties inreaching aresolution tothe dispute byfacilitatingcommunicationsbetween theparties.Ombudsmenand specialistsintervened in2,400 disputesthis year,successfullyresolving amajority ofthem.

In May 2001, the division held anintensive two-day training session gearedtoward improving the overall workers’compensation knowledge of staff members.Other program areas of focus includedcustomer service, team building,unfairclaims investigations and mediation.

Managed Care

Managed care is governed by 803 KAR25:110 and is intended to regulate costs byutilizing gate-keeper physicians, pre-certification of services, aggressive casemanagement, and coordination of medicaltreatment and return-to-work policies.

There were 42 plans utilizing physiciansfrom 16 networks in operation during FY2001. The majority of these plansoperated statewide.

There wereapproximately5,428 employersenrolled in amanaged careplan. Theemployees oftheseparticipatingemployerscompriseapproximately22% of theworkforce.

Each plan isreviewed on aquarterly basis toensure

convenient geographic accessibility toquality medical care.


46

In FY 2001, the medical scheduling section of DWC received university medical reports for152 injury claims, 90 hearing loss claims and 126 pulmonary claims.

Pulmonary claims include but are not limited to coal workers’ pneumoconiosis, silicosis,asbestosis, asthma, contagious diseases, lead poisoning/liver disease and exposure tonoxious fumes/chemicals.

Evaluation of the pulmonary claims revealed that 79 were coal workers’ pneumoconiosis(CWP); 58 of which were determined to have negative findings. Six of the CWP claimswere found to be occupationally related ; three were Class 1 CWP and three were Class 2.

Results of the evaluations on hearing loss claims revealed 51 workers with a functionalimpairment rating of greater than or equal to 8 percent.

As mandated by KRS 342.315, the Department of Workers’ Claims has contracted with theUniversity of Kentucky and the University of Louisville medical schools to performevaluations of employees with workers’ compensation claims.

Occupational disease and hearing loss claims are referred for evaluations upon the filing ofa claim for benefits. In injury claims, the Administrative Law Judge may order evaluationsor they may be requested by the plaintiff or defendant and then referred by theAdministrative Law Judge.

Examinations scheduled from July 1, 2000 - June 30, 2001:

University of Kentucky University of Louisville TOTAL

Injury Claims 62 71 133

Hearing Loss Claims 56 38 94

Pulmonary Claims 88 68 156

Total 206 177 383

Medical Evaluations


47

Vocational Rehabilitation

KRS 342.710 provides retraining benefits forthose who are unable to perform work forwhich they have previous training orexperience, because of the effects of workrelated injuries. In addition to payment ofdirect school costs such as tuition andtextbooks for a period of 52 weeks, carriersmay also provide financial assistance withthe costs of transportation, lodging, andmeals. On a caseby case basis,additional periodsof training may beawarded.

Individuals havetraditionally beenreferred to theVocationalRehabilitationsection when anaward is made andthe AdministrativeLaw Judgedetermines avocationalevaluation ismerited.Evaluationsconsisting ofassessment of theinjured employee’sacademicachievement levels,occupationalaptitudes andinterests are obtained at voc-ed facilitiesapproved by DWC throughout the state.The Rehabilitation Supervisor then reviewsthe evaluation results with the injuredemployee and assists in determining/selecting retraining options for a job

compatible with permanent medicalrestrictions.

During this fiscal year, the VocationalRehabilitation section received 116 casesfrom Administrative Law Judges. 39 casescame from additional sources such ascarriers and attorneys as well as self-referrals from injured employees. The total

caseload of 155 wassubstantially below the253 referrals receivedlast year.

Approximately 1/3, or38, of the injuredemployees referred thisyear by ALJs had beenawarded benefits forpermanent totaldisability. Their agesranged from 28 to 60with the average age43. This group wascomprised of 29 malesand 9 females and theaverage completedyears of education was12.

The remaining 78referrals from ALJswere awarded benefitsfor permanent partialdisability ranging from1.5% to 142.50%. The

average award was for 29.23% ppd. Theirages ranged from 23 to 60 and the averageage was 38.55. Comprised of 54 males and24 females, the average completed years ofschool was 11.7.


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722

89

21 17

returned to work -same employer

returned to work -differentemployer

mutual agreementto close

rehabilitation notordered on

appeal

lump sumsettlement

Status of 157 Vocational Rehabilitation Cases Closed in FY 2001

Believing that vocational rehabilitation services should not have to be delayed until claimsare litigated, the Commissioner wants an intense rehabilitation effort focused on seriouslyinjured employees soon after it is recognized that, without retraining to gain new work skills,they may be unable to return to suitable employment.

Return to WorkSame Employer

Return to WorkDifferentEmployer

MutualAgreement

To Close

Rehabilitationnot

Ordered onAppeal

Lump SumSettlement

Status of 157 Vocational RehabilitationCases Closed in FY 2001

Constantly reviewingopportunities for improvement,DWC has developed a newdatabase for the vocationalrehabilitation section. Thisautomated system will provideprogress reports and whenfully implemented, will enablestaff to monitor activity andtrends.


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WORKERS’COMPENSATION

COURT DECISIONS


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City of Louisville v. Larry Slack,Ky., 39 SW3d 809 (2001)The provision allowing theassessment of an attorney feeagainst the employer when theemployer does not prevail onappeal was found to violate theemployer’s procedural dueprocess rights. The provisionviolates Section 2 of theKentucky Constitution.

McNutt Const. V. Clifford Scott,Ky., 40 SW3d 854 (2001)The Court stated that inconstruing the definition of“injury”, the critical question isone of causation. AlthoughKRS 342.0011(1) clearlyindicates that the effects of thenatural aging process are notconsidered to be an “injury,” italso clearly indicates that work-related trauma which is theproximate cause producing aharmful change in the humanorganism is an “injury.” TheCourt concluded that wherework-related trauma causes a

dormant degenerative condition to become disabling and to result in a functionalimpairment, the trauma is the proximate cause of the harmful change; hence, theharmful change comes within the definition of injury. Abolishing the Special Fund didnot make the portion due to arousal noncompensable.

Kelly Gibbs v. Premier Scale, Ky., 50 SW3d 754 (2001)


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The Court concluded that while theclaimant’s complaints or symptomsmight be sufficient for the physician tomake a diagnosis, the law requiresmore. A diagnosis by itself is not an“objective medical finding.” KRS342.0011(1) makes it clear that not allwork-related harmful changes arecompensable. That section requiresthat the harmful change must beevidenced by objective medicalfindings as the term is defined in KRS342.0011(33). “Objective medicalfindings” is defined as informationgained through direct observation andtesting of the patient applyingobjective or standardized methods.The existence of the harmful changemay be established indirectly throughinformation gained by directobservation and by objective orstandardized methods of testing thatdemonstrate the existence ofsymptoms of such change. Wherethe symptoms are directly observed orconfirmed by standardized methods,the requirements of KRS 342.0011(1)may be satisfied.


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ClaimFiling

SchedulingOrderBeginningProofTime

Claim filed/issuance ofnotice thatapplicationfor resolutionof claim hasbeen filed/assignment toAdministrativeLaw Judgeand schedulingof the BenefitReviewConference

45 Days 95 Days 105 Days 119 Days

Employer must file notice ofclaimdenial oracceptance Form 111

Partiesexchangewitness lists10 days priorto BRC

End ofprooftaking anddiscoveryperiod

ALJ holdsbenefitreviewconference

HearingbeforeALJ

All parties have60 days topresent proof,then thedefendant has 30days, then theplantiff has 15days rebuttal (105days total)

EmployerAcceptance/Denial

Witnesslists due

EndProofTime

BenefitReviewConference

ALJHearing

Kentucky Workers’Adjudication


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179 Days 193 Days 203 Days 213 Days 243 Days

ALJ rendersdecision within60 days ofhearing

Parties have 14days to filepetition forreconsideration

Responseto Petitiondue 10days afterresponseis due

ALJ ruleson petition10 daysafterresponse isdue

Appeal toBoard within30 days ofthe Opinionoor award orruling onpetition forreconsideration

ALJDecision

Petition forReconsiderationFiled

Response toPetition ofReconsiderationFiled

Ruling onPetition forReconsideration Appeal to

Board

TimelineCompensation


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Key Personnel** at time of publication

Charles Edward Jennings, Commissioner (502) 564-5550, Ext. 421Thomas Lewis, Deputy Commissioner (502) 564-5550, Ext. 412

Dwight Lovan, Chairman, Workers’ Compensation Board (270) 687-7339Sheila Lowther, Chief Administrative Law Judge (502) 564-5550, Ext. 422

Rex Hunt, General Counsel (502) 564-5550, Ext. 498

Gary Davis, Director (502) 564-0905, Ext. 403Division of Security & ComplianceBeverly Goodwin, Coverage Branch Manager (502) 564-0905, Ext. 404Steve Taluskie, Self-Insurance Branch Manager (502) 564-0905, Ext. 411Barbara Rash, Enforcement Branch Manager (502) 564-0905, Ext. 424

OR (800) 731-5241

Deborah Wingate, Director (502) 564-5550, Ext. 423Division of Information & ResearchDiane Roush, Records Branch Manager (502) 564-5550, Ext. 415

Research Specialists:Dawn Sullivan (502) 564-5550, Ext. 483Scarlett Consalvi (502) 564-5550, Ext. 489

EDI AdministratorStephen Mason (502) 564-5550, Ext. 540

Webmaster:Greg Rice (502) 564-5550, Ext. 426

Cathy Costelle, Director (502) 564-5550, Ext. 559Division of Ombudsmen andWorkers’ Compensation Specialist ServicesAndrew Manno - Chief Specialist (502) 564-5550, Ext. 558Ingrid Bowling - Managed Care (502) 564-5550, Ext. 449Oscar Morgan - Vocational Rehabilitation (502) 564-5550, Ext. 544

Ora Burge, Director (502) 564-5550, Ext. 490Division of Claims ProcessingDianna Rose, Appeals Branch Manager (502) 564-5550, Ext. 467Carol Stevens, Open Records Requests (502) 564-5550, Ext. 429

Commissioner’s Office (502) 564-5934Administrative Services (502) 564-8250Ombuds & WC Specialist (502) 564-9533Open Records (502) 564-5732Medical Schedulers (502) 564-9533

DWC Fax Numbers:

Claims (502) 564-3792EDI/Research (502) 564-5732Security & Compliance (502) 564-0916WC Board Offices (859) 246-2779Vocational Rehabilitation (502) 564-9533

PRINTED WITH STATE FUNDS

This agency does not discriminate on the basis of race, color, national origin, religion, age or disabil-ity in employment or provision of services.

No individual in the United States shall, on the grounds of race, color, religion, sex, national origin,age, disability, political affiliation or belief, be excluded from participation in, or denied benefits of, orbe subjected to discrimination under any program or activity under the jurisdiction of the KentuckyLabor Cabinet.

Kentucky Department of Workers’ Claimse-archives.ky.gov/pubs/Labor/annrpt01.pdfKentucky Department...

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Transcript of Kentucky Department of Workers’ Claimse-archives.ky.gov/pubs/Labor/annrpt01.pdfKentucky Department...