Speaker: Carol Isen

Council Comment: None.

Public Comment: None.

Action: Minutes approved for the meeting on June 7, 2021.

Speaker: Dr. Peggy Sugarman, Deputy Director, Workers' Compensation Division

Reported on Accomplishments, Initiatives and Challenges, Covid-19, Performance Quick Facts, Financials, and Claim Analytics.

Dr. Sugarman introduced the presentation topics and upcoming speakers for the Workers’ Compensation Division year-end report. Dr. Sugarman will first discuss accomplishments, initiatives, and challenges for the Workers’ Compensation Division. Next, Dr. Fiona Wilson will present information on COVID-19 and safety efforts. Stanley Ellicott, Finance and Systems Manager, will discuss performance quick facts and the financial state of the Workers’ Compensation Division. Julian Robinson, Claims Manager, will then share claim analytics. Lastly, Peggy Sugarman will return to comment on racial and gender equity in Workers’ Compensation.

Dr. Sugarman began the presentation by sharing accomplishments that improve outcomes for injured workers. The Workers’ Compensation Division completed its first-ever actuarial evaluation of our Alternative Dispute Resolution (ADR) programs for the SF Police Officers and SF Firefighter teams. The SF Firefighter program did not see savings due to many adverse claim developments. We did, however, see improvements as litigation is down significantly. For SF Police Officers, our actuarial reports projected substantial savings of $5.1 million. Improving outcomes for injured workers, reduction in litigation, and faster claim resolution continue to be the goals of these Alternative Dispute Resolution programs.

We continue to comply with state rules and regulations including reauthorization of our own Medical Provider Network (MPN), every four years. Thank you to Lupe Perez, Julian Robinson, and Kathy Hermanson who put together an 80-page document for the purpose of state reapproval. As a result, our MPN was recently reapproved by the State Workers’ Compensation Division until 2025.

Next, we presented workplace safety protection claim filings and benefit costs for Workers’ Compensation. Workers’ Compensation disability pay for public safety officers for the year 2021 increased by almost 10 million dollars. In conjunction with Workers’ Compensation, any employee who is assaulted at work is entitled to continuing salary compensation, considered “assault pay.” This year we paid 32,921 hours and $1,482,021 in assault pay. There were 58 claims for employee Catastrophic Illness Pay and 15 for family illnesses.

Our workplace safety protections have been presented to the Board of Supervisors. To continue protecting health and safety of city employees, our division has

• Implemented SB 1159 - COVID-19 Rebuttable Presumption for COVID-19 Positive Cases and developed new policies and procedures, staff training
• Implemented AB 685 – COVID-19 Safety Protection statute and corresponding Cal/OSHA Emergency Prevention Standard rules by helping to develop policy and guidance on contact tracing, facial coverings, return-to-work, PPE activity-based requirements
• Collaboratively built a COVID-19 Case Reporting and Close Contacts reporting system with Department of Technology to comply with CAL/OSHA requirements and enhance safety holding 1,624 employee positive case reports
• Overseen daily employee COVID-19 test results reporting for the CityTestSF Program (89,739 test results) which led to the positive identification of 946 positive employee cases
• Dr. Fiona Wilson coordinating targeted vaccination clinics for employees in collaboration with DPH Vaccination Team and our own Mawuli Tugbenyoh and Maggie McHale
• Nonie Devens, RN oversees the Nurse Injury Hotline responses providing immediate care advice, including COVID-19 information on testing and quarantine requirements
• Working with HSS to provide mental health “bridge care” for employees with mental stress/PTSD claims pending referral to WC psychologist
• Met weekly with citywide Health & Safety Professionals to roundtable safety issues, concerns, and safety policies.

We have made quite a few advancements regarding technology. Specifically, we

• Completed the largest and most complex upgrade to the Workers’ Compensation Claim System, enabling Official Disability Guidelines, enhanced dashboard reporting, and new claim management modules
• Implemented new financial configurations and claim system upgrades to comply with 1099-NEC information return reporting; issued 1,506 1099-MISC and 235 1099-NEC returns for 2020 tax year
• Deployed Enhanced Medicare Reporting Module for CCSF and SFMTA Programs with Franco Signor, an industry leader in Medicare Compliance Programs
• Completed an RFP for Managed Care Services, including Medical Bill, Utilization Review and Independent Physician Review Services
• Implement “Knowledge-base” (AKA “CompTiger”) system to organize internal policies, resources, and communications for between CCSF and Intercare for new and existing employees.

Our initiatives for FY21-22 include two critical contracting activities. Managed Care Services RFP resulted in a notice of intent to award a contract to Allied Managed Care. Contract development is proceeding with planned service implementation in November 2021 which will replace our existing service provider EK Health. Then, we are coming up on the end of our third-party claims administration RFP contract next year, so development is underway in partnership with the SFMTA.

Additional initiatives for FY21-22 consist of

• Return to work planning. This will yield new telecommute agreements for WCD staff/work groups and embrace hybrid work models. WCD is seeking to enhance connection and productivity for employees regardless of physical location with new tools.
• Promotional Exams for succession planning in process
• Continue to meet weekly with Health & Safety professionals across the City to discuss common challenges, review safety guidance, collaborate on safety recommendations for HR policy, and discuss Cal/OSHA requirements

Challenges for FY21-22 include inflationary pressures in fee schedules and benefits which continue to increase claim costs. For example,

• Temporary Disability (TD) incidence and duration increases are forecasted to continue into FY2021-2022
• TD Rate Increases – Expected announcement in November for 2022 injuries, may increase as high as 10.3% (from $1,356 to 1,496) due to statewide average weekly wage gains that were impacted by labor market fundamentals
• Post-Traumatic Stress Disorder presumption increasing mental stress claims
• Photocopy/document retrieval service fee increase proposal of 22% – expected implementation on 1/1/2021; annualized cost increase of $112,791
• Full impact of increases in the Medical/Legal Fee Schedule will be seen in this fiscal year; annualized cost increase estimate of $225k

We will be watching these increases very closely and will be trying to resolve Medical/Legal examinations quickly. Our Alternative Dispute Resolution programs serve as a tool intended to resolve claims rapidly with less cost.

Lastly, we are seeing some workload increases due to COVID-19. For example, there has been a substantial increase in the number of lost-time/indemnity claims, which use more resources. Also, we did not receive additional staffing to accompany test result distribution and data demands during the pandemic. Surveillance testing for those who are unvaccinated will continue to place pressure on WCD this fiscal year.

Next, Peggy Sugarman introduced Dr. Fiona Wilson to provide the COVID-19 report. Dr. Wilson began by presenting data which has been accumulated through the ServiceNow Reporting Tool. This tool allows us to study and reduce both exposures and close contacts in the workplace. There have been 48,152 cases reported in all of San Francisco, including employees and residents. We are coming off of a surge, we currently have 90 COVID-19 hospitalizations, and there have been 601 deaths as of September 9th, 2021.

Our ServiceNow Reporting Tool counted 2,163 positive employee reports, of which Workers’ Compensation received 728 claims for COVID-19. About 193 claims were denied due to negative test results, or because these employees contracted COVID-19 away from work, usually at home from a family member. Of the 2,163 employee positive reports, the most common employee job classifications with reported COVID-19 were those of transit operators, followed by registered nurses, firefighters, patient care assistants, and police officers.

Next, Dr. Wilson presented a graph showing when employees tested positive for COVID-19. This graph mirrors timeline reports from the media and health care organizations since the beginning of the pandemic. The first surge was last summer, the second surge during the end-of-year, and we are just now coming off our third surge.

Dr. Wilson shared the process in which we investigate close contacts once we learn an employee has tested positive for COVID-19. Only about 29% of our employees reported close contact exposure to others in the workplace during the 48 hours prior to first feeling symptoms of COVID-19. This number has remained significantly low, likely because many employees work remotely or are diligent in practicing safety guidelines. Less than ten of our employees who had to quarantine due to a close contact at work have turned into positive cases themselves.

Dr. Wilson continued with a breakdown of Workers’ Compensation COVID-19 claims as of September 9, 2021. Of the 728 COVID-19 Workers’ Compensation Claims filed:

• 8 claims - medical expense >$10,000
• 44 claims - medical expense >$2,000
• 18 claims – total expense >$50,000, of which 71.5% of expenditures attributed to 4850 salary continuation benefits
• Closed claims: Average per-claim expense was $4,787 for accepted claims as of case closure. Average per-claim medical expense $699. Figures include 4850 disability payment vouchers which are expenses incurred by departmental payroll, not DHR-WCD
• 1 death among active employees

Our hearts go out to the family of that individual.

Dr. Wilson discussed how we emphasize safety and the prevention of COVID-19 by vaccination. We are proud of our results that, since September 9th, 2021, city employees are almost 90% fully or partially vaccinated. We have had over nine vaccination events and have nine more coming up to encourage vaccinations.

Stanley Ellicott, our Finance and Systems Manager thanked Dr. Wilson for her COVID-19 presentation and greeted the Workers’ Compensation Council.

Stanley Ellicott then continued by sharing performance quick facts. He presented four key metrics which are tracked each quarter against the general benchmark performance within the program. The first factor is fiscal health, which measures how well we budgeted overall. Workers’ Compensation Division spent 95% of the annual budget in fiscal year 2020-2021. Our claim volume, which is the number of new claims in a period, has been on the rise, totaling 2022 indemnity claims and 687 medical claims. We see a mix of claims move towards indemnity and away from medical, so our claim mix has become more complex throughout the fiscal year, resulting in higher expenditures.

Regarding claim cost, we track the average cost of a claim that was closed in the period. For CCSF in fiscal year 21, we saw a slight decline within indemnity claim expenditures, attributable to some of the COVID-19 claims being less expensive, as Dr. Wilson noted earlier.

Our last metric is duration, the average days open of claims closed in the period. For Fiscal Year 2021, the average claim that was closed in that year was 192 days. This is a very important metric and one that we are very proud of because the longer a claim is open, the more complex and expensive it becomes, and the larger the impact on the employee. Keeping this number as low as possible is a key goal of the division.

Stanley Ellicott next presented financials, specifically, department expenditure trends. Slide 21 shows a breakdown of department expenditure movement. We are looking at the departments and the expense incurred within the department. Within Workers’ Compensation we generally track two types of expenditures. First we have all the expenses incurred on behalf of the claimant. Then we have overhead administrative expenses which reflect our cost of operation. The big news is the police department, which had been on an upward expenditure trend, saw a $2.9 million surplus for this fiscal year. They also saw a decline in year-over-year spending.

The fire department saw a surprising increase in severity of claims, including presumptions of cancer claims and other complex medical conditions. As a result, the fire department saw a large deficit of $1.4 million, and a year-over-year cost increase of roughly $2.7 million. Early results from FY22 forecast that the fire department’s growth in spending is cooling a bit, though we do expect financial pressure with their budget and resources. In terms of benefit expenditures overall, we are tracking a $3.7 million dollar or 4.9% increase in year-over-year spending.

The next slide shows where money is being spent by category. Included are Fiscal Year 2021 actuals, along with two prior years for comparison. Notably, there was a 26.2% increase in year-over-year temporary disability costs has been steadily growing. This increase is attributable to both increasing incidents of temporary disability and increased duration of the length of the open claim.

One of the tools we hope will have an impact on these figures and bring down our projected actuals is the deployment of the Official Disability Guidelines module in our Claims Enterprise system. This tool uses proprietary claim statistics and provides disability duration estimates for all injury types. We plan to use this information to identify outliers and allow work with our primary treating physicians to return injured employees to work in a timeframe that is medically feasible.

Related to the temporary disability increases, we see a similar but larger increase from 4850 salary continuation benefits. Analysis shows we had $2.8 million of these benefits attributed to COVID-19. Although COVID is a big part of the story, we are also seeing longer periods of 4850 benefits and temporary disability benefits paid.

Medical expenses, another cost driver, are down 8.9% this year. The pandemic disrupted access to medical care for many injured workers. As access improves, injured employees are seeking more care in 2021 than in the previous year.

We were able to control expenditures in administrative and general expenses for claim management. So, where we do have an opportunity to exercise fiscal restraint, we have been able to do so by 8.9%. Overall, there is a 16.7% expenditure increase this fiscal year.

Every year we report on our program overhead. Administration and general overhead expenses must be recovered for all the departments. This includes salary and benefits paid to the employees. We pay a very large state assessment for self-insurers, which notably declined in FY21 to $3.9 million. Inclusive of our claims administration, we pay for professional services, including financial services and third-party administration. We have a small allocation with DHR for shared resources, and we pay for materials and supplies. We ended fiscal year 2021, at $19.2 million. Our overhead rate was 31.9%. This is less than 2% year-over-year growth. We notate that we have accepted additional responsibilities without increasing our staff, and we have controlled expenditures where we were able to do so.

Next, Claims Manager Julian Robinson was introduced to discuss claim analytics in more detail. He presented claim filing frequency measured as a citywide rolling average, comparing the past four years against the current fiscal year. This year, total citywide indemnity claims are up by 29%. These include lost time claims and claims where we evaluate compensability. This indemnity claims increase was supplemented by a decrease in medical only claims by 35% overall due to employees working remotely. PTSD presumptions were not in place last fiscal year, so these numbers show the financial effects of PTSD presumption SB1159. Additionally, COVID-19 exposures are more prevalent with Fire, Sheriff, and Police who work near each other, such as in squad cars or stations, where they are unable to socially distance.

These numbers do not include the increase of report only claims, those that were set up from CityTestSF and ServiceNow results. Nor do they include the most recent surge of COVID-19 claims from July 2021.

The rate of all claims incurred citywide has held steady at our long-term goal of 10 per 100 full time employees (FTE) for any recent given fiscal year. Our non-telecommuting divisions, such as Fire, Sheriff, and Police, had claim surges which led to an increase of claims incurred per 100 full time employees. Lastly, other departments, show an increased rate of claims incurred per 100 FTEs due to fewer workers employed overall due to the pandemic.

Since November of 2020, our claim volume has increased by 40%. Our recent average is 242 claims per month. Most claims and either indemnity claims, or report only claims.

Next, Julian Robinson presented litigation statistics. Currently about 40% of open claims are represented by counsel, and 24% are litigated. This is a downward trend for both. Represented claims are those that are managed by an attorney but may, or may not, have filed an application with the Workers’ Compensation Appeals Board (WCAB) or mediation through our Alternative Dispute Resolution Program. Litigated claims have a filed application with the court, or mediation through our Alternative Dispute Resolution Program, and are proceeding towards hearing or trial. Our litigated percentage rolling benchmark is down from 34% to 24% from the previous rolling benchmark over the last four years. Congratulations to our claims staff and attorneys for managing claims while avoiding a court setting.

The next slide shows a litigated vs. non-litigated comparison. Overall, we have fewer litigated claims. However, these litigated claims are costing more. The average cost of a non-litigated claim is about 12% the cost of a claim that is litigated. One reason for increased cost on litigated claims involves the settlement of more claims in 2021 than there were in 2020 due to pandemic related delays, such as exam postponements. Additional reasons for increase cost on litigated claims include claims which tend to be open longer, may have multiple body parts included, utilize more discovery time, may contain hearings, and may consist of possible permanent disability with need for future treatments and/or medication.

Julian Robinson continued with Alternative Dispute Resolution (ADR) litigation statistics. The ADR programs strive to reduce the litigation rate and consequently, save on claim costs. Fiscal years 2017-2020 saw about 51% litigation within claims for the San Francisco Fire Fighters’ Association, and 50% litigation for the San Francisco Police Officers’ Association. Overall, Fire had 31% represented claims, but in the ADR program we had only 3% claims litigated. For police, the numbers dropped from 42% litigated outside the ADR program, to 9% litigated within the ADR program. The ADR program helps significantly reduce litigation.

Julian Robinson next reintroduced Peggy Sugarman, who thanked the claims teams, including Intercare, who continue to work through the increased pressures of the pandemic.

Next, Peggy Sugarman shared some team participation in statewide organizations. For example, Julian Robinson serves on the Board of Directors for the California Self-Insurers Association and participates in the Insurance Education Association. Christine Sacino, from the attorney’s office, is involved in California Workers’ Compensation Institute Legal Committee. Peggy Sugarman and Julian Robinson are involved in the California Workers’ Compensation Institute claims committee, which collaborates at a statewide level. These participations keep the Workers’ Compensation Division up to date regarding trends and help us to plan our operation throughout the year.

Next, Peggy Sugarman responded to a question posed by Todd Rydstrom last council meeting. Mr. Rydstrom asked what DHR was doing in terms of gender and racial equity in Workers’ Compensation.

Dr. Sugarman summarized that this is a challenging topic because the Workers’ Compensation system is not legally set up to be equitable for all employees. There is a law of liberal construct that protects all employees which requires judges to liberally construe any laws in favor of the employee. There are also disparities set up in the law in terms of eligibility and benefits. For example, there are legal presumptions for cancer, heart disease, Post Traumatic Stress Syndrome and COVID for public safety employees.

So, the system is not set up to treat everyone the same way, and there are limitations embedded into the system from decades ago. For example, claims for mental stress and psychiatric injuries, as well as someone who has been notified of termination, have higher thresholds to be eligible for Workers’ Compensation benefits than for other employees.

The RAND Corporation performed studies on behalf of the State Division of Workers’ Compensation to examine loss of earnings capacity post injury. They found inequitable outcomes that resulted in major changes to the permanent disability rating schedule. However, when this schedule was updated in 2005, it did not reflect the RAND recommendations in terms of increasing equity across percentages of disability. Further, the industry does not collect data on race, so there is difficulty making comparisons.

What we can do is work from the information that is received from decision makers, generally physicians. Physicians determine if the injury is industrial through the medical/legal process. The physicians decide whether they believe the patient when writing reports.

Several years ago, the Workers’ Compensation Division made changes to investigative policies to make sure our investigators are not reporting information to physicians that could be prejudicial in terms of race, gender, background, etc. So, we have already put into place policy to make sure our reports are freer from bias from investigators.

We have been talking about ways to discuss implicit bias with our medical provider network to make sure they avoid unfairness on their reporting from which we rely. We also have compliance officer, Joseph Carrillo, to thank for regular DHR and Intercare claims audits to ensure we are doing our work fairly.

Ultimately the state of Workers’ Compensation system through the administrative law judges make final decisions on an employee’s entitlement to benefits.

This summarizes the challenges regarding gender and racial equity as asked by Todd Rydstrom at our last council meeting.

Dr. Sugarman then returned the meeting back to Director Isen.

Council Comment: None.

Public Comment: None.

Andy Mathews, San Francisco Municipal Transportation Agency

Mr. Andy Mathews greeted the council. He acknowledged that Dan Roach, SFMTA Workers’ Compensation Manager, retired at the end of August 2021. We will miss his collaboration but are looking forward to working with Ify Omokaro. Mr. Omokaro greeted the council and advised he will be serving as acting manager until a permanent Workers’ Compensation Manager has been hired.

Andy Mathews then thanked Peggy Sugarman and the Workers’ Compensation team for their innovation, participation and collaboration, working in partnership with the SFMTA Workers’ Compensation program. Intercare manages claims for Public Works, Department of Public Health, City Attorney’s Office, DHR, and SFMTA. Much of the information Peggy shared today includes SFMTA. Mr. Mathews continued that many of the statistics and trends discussed apply to SFMTA as well.

Mr. Mathews began his slide presentation by reporting on claim volume based on rolling 12-month reports. He presented claim volumes by frequency. The categories are labeled indemnity, medical only, and other. Viewing the 12-month trend, we have captured the pandemic period.

We have many expensive indemnity claims, and very little medical only claims. One reason for the increase in length of claims is that towards the beginning of the pandemic, treaters were seeing less patients due to shelter-in-place. The transition to telemedicine efforts had a direct relation to temporary disability, leading to an increase of 5.8% over the previous twelve months. Surgical procedures were delayed last year, but now, employees are getting to the doctor more often and therefore medical-only claims increased by 1.66%.

Andy Mathews continued by reporting on financials. The expenditure numbers are driven up by temporary disability. To counter these increases, we have focused on early return to work opportunities, looking for ways to bring injured workers back within their temporary work restrictions. This includes faster return to service programs, as well as an increased ambassador presence within the city for SFMTA.

Another correlated effort to offset cost drivers is to resolve claims without medical legal evaluation. Peggy Sugarman spoke to the pending increases in the medical legal fee schedule which began April 1st, 2021. When combined with the challenge of getting a medical legal evaluation, the claim can be opened longer, driving up medical costs and indemnity costs. Settling the claim from the primary physician’s report is one way to mitigate the cost of the claim. SFMTA Workers’ Compensation has developed documentation focusing on getting permanent and stationary (P&S) reports from the treater to close the claim and avoid long delays. This is sure to have a positive effect on our claim costs.

As we continue to remain below claim cost and claim average, we will continue to use mitigation tools to support the efforts of the Workers’ Compensation program.

The Cause Analysis slide graphically demonstrates where our injuries are occurring in the agency. The top causes are repeated motion, assaults, and vehicle accidents. Assaults drive many of our indemnity claims. We can view many assaults via video, and we see how poorly our drivers are treated by riders. We continue to address these assaults, and the prevention of them, regularly. On our cause analysis slide, we added a column for the pandemic which describes the frequency of COVID-19 claims, of which most are report only. You can see that last quarter shows 39 claims down from a high of 43 in the second quarter of this fiscal year. Report only claims jumped in the third quarter of the fiscal year and dropped off dramatically, to nine, by the fourth quarter. We expect to see this rise again next quarter.

Next, Danielle Buri-Beaton was introduced to present the data of Agency Injury Rate per 100 Employees. Data shows a downward trend over the past year or so. We started the fiscal year at 9.96 and we have ended the fiscal year at 8.12. So, for every 100 employees, 8.12 have a workers’ compensation case filed. This is a reduction of almost two employees, 1.84 or 18%. This is a good trend for the organization. So far early in this fiscal year we are showing an increase in indemnity cases to be close to that of 2020. We will see how this continues to grow each quarter for the year. These are great results compared to the beginning of the fiscal year.

We have calculated that our litigated ratio, that is, the rate of injured workers who are represented by attorneys, compared to unrepresented injured workers, is flat at 39%. We do hope to see the number decrease over time.

Andy Mathews concluded his presentation and invited the council to ask any questions or provide comments.

Council Comment: None.

Public Comment: None.

Council Comment: Director Isen suggested she would like to see in the future a more in-depth discussion about preventative health and safety activities, as well as preventative medical activities the city is engaged in, as it becomes available.

Council Comment: None.