Speaker: Kate Howard

Council Comment: None.

Public Comment: None.

Todd Rydstrom motioned to approve the minutes for the meeting on December 6, 2021.

Lorenzo Donati seconded the motion to approve the meeting minutes from December 6, 2021.

Action: Minutes were approved for the meeting on December 6, 2021, by a vote of four to zero.

Dr. Peggy Sugarman, Deputy Director, Workers’ Compensation Division

Reported on Accomplishments, Initiatives and Challenges

Dr. Peggy Sugarman thanked Director Kate Howard and greeted the council. She introduced the presentation topics and upcoming speakers for the Workers’ Compensation Division Second Quarter report. Dr. Sugarman first presented challenges, accomplishments, and initiatives for the Workers’ Compensation Division. She advised that Dr. Fiona Wilson would present theCOVID-19 report, Stan Ellicott, the IT and Finance Manager, would discuss performance and financial reports, and Julian Robinson, Claims Manager, would explain and share claim analytics.

Dr. Sugarman began the presentation talking about the challenges and changes we have seen since the last council meeting. Since our last meeting on December 6th, 2021, the Omicron variant fueled an enormous number of new COVID claims. Approximately 1,000 new claims were filed within a month of returning to the office after December holiday break. Considering our annual volume is a little less than 3,000 claims per year, this was a huge increase in claims, resulting in challenges which include:

• Backlog of reported claims awaiting set-up, mostly Police & Fire COVID, clerical staff working overtime and weekends;
• Triaging to identify cases that required more immediate set-up (orthopedic, PTSD);
• Continuing to manage ongoing challenges with Temporary Disability (TD) incidence and duration which are forecasted to remain high throughout FY2021-2022;
• Financial pressures from increased temporary disability rates, increased fee schedules for Medical Legal and Copy and Document Retrieval Services;
• Changes in SFERS due to litigation will increase Permanent Disability Benefit payouts in IDR cases to cover only the percentage of the City’s contribution to the employee’s retirement and not as to the entire value of the body part that is subject to the IDR; and
• Budget deficits which continue to develop in many departments.

Continuing with the explanation of our temporary disability expense history, financial pressures have been weighing on our budget since the beginning of the pandemic in March 2020. This is not necessarily due to the impact of the COVID-19 claims since most are required to use City-paid COVID leave before they are entitled to temporary disability benefits or disability pay. What we are seeing is more delayed return to work, and increased Workers’ Compensation Temporary Disability rates from the State.

State Workers’ Compensation Temporary Disability rates increase annually. As of 1/1/2022, the TD rates went up 13.5%.

Dr. Sugarman next presented Claims Incurred Per 100 FTE. The Fire Department is our biggest customer, with over 40 claims per 100 full-time employees. Overall, citywide injury rates have increased only minimally.

Dr. Sugarman next discussed the following initiatives:

• The Third-Party Claims Administration RFP development is underway in partnership with SFMTA. The current contract with Intercare will expire November 1, 2022.
• We are working with Mayor’s Budget Office (MBO) to increase department budgets based on current year deficits and forecasted cost growth.
• Department dashboard pilot project is slated for an April launch, enabling access for real-time claim look-ups and data retrieval from a secure portal.
• Pre-planning is underway for supplier technology system upgrades, including our medical provider check printer, Change Healthcare, and US Bank’s Supplier Prefer Pay Portal that is presently used for issuing ACH transactions, but must be decommissioned by end of 2022.

We have had some accomplishments as well, which include working with G2 Insurance Services, who completed a workload assessment report on 2/22/2022. This workload assessment report reviewed our structure and recommended an increase in staffing to adjust the mix of Managers/Supervisors, Supervisors to Claims Examiners, and Claims Assistants to Claims Examiners. These recommendations focus on both the immediate short term “band-aid,” and to address longer-term staffing ratios. Other recommendations of increased staffing are intended to free up supervisors to concentrate on key areas such as return to work after injury. Concentrating on return to work has a benefit of reducing claim costs, which is a key objective for our division.

We accomplished the launch of a new, online knowledgebase platform named CompTiger, which draws together policies and procedures, workflows, trainings, job aids, staff resources, news, and more. Our goal with CompTiger is to organize and centralize critical shared business resources to increase efficiency, keep resources updated, and improve hybrid work. Further, CompTiger offers additional co-working and project planning capabilities, and limitless expansion opportunities.

We implemented a partnership with Allied Managed Care (AMC) for medical bill review and utilization review on 2/28/2022 for CCSF and SFMTA programs. The AMC program replaces services previously provided by EK Health from 2017-2022. AMC will be responsible for mission-critical services, including review and evaluation of 120,000 annual medical bills, and 8,000 treatment requests from physicians treating WC patients. This new contract reduces bill review costs by 5% and holds utilization review costs steady, with pricing locked for the first three years of the agreement. Our transition has been smooth, but there are significant time and resource investments necessary to build nine inbound/outbound data interfaces to support the programs, train staff, work with providers, and change management.

Our staffing accomplishments included hiring two new employees: Amy Lao and Vince Lacsamana. Additionally, a conditional offer was accepted for new Safety Officer to work on injury prevention.

Next, Peggy Sugarman introduced Dr. Fiona Wilson to provide the COVID-19 report. Dr. Wilson began by sharing that since the last meeting in December, the Omicron surge has now declined. She then presented some key CCSF policy updates, which include:

• The Health Officer’s Booster Mandate for employees in High-Risk Sectors
• Broader access and use of Rapid Antigen tests to accelerate earlier return to work after COVID and for testing after close contact exposures.
• Employees now self-report vaccination/booster dates and COVID testing results (lab & rapid results) to People & Pay

There have been over 60,000 more COVID-19 cases in San Francisco since December 2021, and more than 100 deaths in the same period. When we met last time we were having 57 new cases per day. However, last week the increase was 141 per day. This does not capture the surge in January where we saw 2400 new cases per day. We currently collect about 5300 PCR COVID tests per day, though our January peak saw 16,000 tests collected per day. Hospital numbers peaked as well and are coming back down to 89 current hospitalizations.

The ServiceNow Reporting Tool shows over 5,000 positive employee reports, of which Workers’ Compensation received 2,888 claims for COVID-19. Last quarter, there were just over 800 claims. Of these 5,000+ COVID claims, about 2,619 claims were accepted and 269 claims were denied. Denied claims were due to negative test results, or because these employees contracted COVID-19 away from work, usually at home from a family member.

The most common employee job classifications affected are in public health and public safety. The Fire Department reported 300 more cases than in December 2021. These employees are more vulnerable due to the nature of their public facing roles and their congregate setting inside the fire house. MTA, HSA and Sheriff were big contributors as well to employee job classifications which were affected by COVID-19.

Of the 2800 + received claims, medical expenditures are low, with only $1 million for total paid COVID-19 claims citywide. There are:

• 17 claims - medical expense >$10,000
• 76 claims - medical expense >$2,000
• 35 claims - total expense >$50,000, of which 72.3% of expenditures attributed to 4850 salary continuation benefits
• Closed claims: Average per-claim expense was $4,081 for accepted claims with expense as of case closure. 1,871 COVID-19 claims have been set-up with no actual expenditures as of this report.
• 6 known deaths among active employees, which is the same number as last quarter.

One main reason that for low medical costs is because we have had an incredibly successful vaccine mandate. Vaccinations and the vaccination booster keep people from getting severe COVID symptoms. Booster vaccines are not required for all city employees but required in the high-risk sectors (primarily healthcare). About half of our employees are boosted which leads to a lower chance of hospitalization due to COVID.

Next, Stan Ellicott continued with a discussion of our fiscal health performance quick facts for the second quarter. Slide 22 presents a snapshot of performance metrics based on a benchmark of the last four years compared to the second quarter of this year. Usually, the WC Division spends about 95% of its overall workers’ compensation budget. As of this report, we are projecting our costs at 127% of this year’s budget.

Our claim volume, which is the number of new claims in each period, was 511 indemnity claims versus our benchmark of 418 claims per quarter. This number does not include the backlogged claims waiting for set-up which will be reflected in quarter three. Average costs of claims which were closed in the second quarter are continuing to decrease. Duration of open claims is also decreasing due to the relatively quick closure of COVID claims. Many of the Omicron surge claims which were recently set up, had zero expenditures so far.

Next, Stan presented the projected costs for the fiscal year based on eight months of actual expenditures. Temporary disability expenditures are up by over 20%, permanent disability benefit are up 19% and medical expenses have increased by 21%. Overall, we are looking at a 17% increase compared to fiscal year 2021.

Many departments have continued see increased benefit expenditures, with deficits in the Department of Public Health, SF Fire Department, the Sheriff’s Department, Department of Public Works, Recreation & Parks, the Airport, PUC Wastewater, and the Human Services Agency. We have modified our projection methodology with a goal of trying to produce a more stable projection through year end. We will need to seek a supplemental appropriation to solve this deficit either in whole or in part, to meet these expenses.

Sheriff Spotlight: You can see a stable expenditure trend prior to the pandemic. Unfortunately, the pandemic has caused cost escalation for the Sheriff’s Office within this past fiscal year with increases in 4850,indemnity, and more recently, in medical expenditures.

Fire Department Spotlight: There is a huge spike from December 2021 when we settled a large claim which represented approximately $1.6 million dollars in expenditures. Over the last year and a half, the Fire Department has seen a steady, ongoing increase in medical expenditures and more treatment of firefighters. The firefighters benefit from a robust set of legal presumptions that require us to pay for more complicated and expensive medical services for such conditions or illnesses as cancer, heart trouble, and Post Traumatic Stress Syndrome.

Department of Public Health Spotlight: Cost increases in indemnity and medical expenditures have been increasing compared to prior years for medical and indemnity.

Stan Ellicott thanked the Mayor’s Budget Office and the Controller’s Office for partnering with us and addressing these deficits. It is challenging for this division both operationally and financially. As we grow out of this crisis and look back at our lessons learned, we have ideas we will recommend to the council and other parties which could build more flexibility into the program so we can weather these storms more easily in the future.

Next, Claims Manager Julian Robinson was introduced to discuss claim analytics in more detail. He presented our claim filing frequency which has been in an upward trajectory over the last several quarters. You will see a comparison of the past three years against the current quarter. This does not include most of the claims pending set up due to the increase in COVID-19 claims.

Citywide, overall claim filing frequency has increased by 9% with a 22% in indemnity/lost time claims and a 16% decrease in medical-only claims. The biggest increases have been with Fire, Police, and Sheriff. We are also seeing more claims where the injured worker is off work whether it is for COVID, orthopedic, or psychological reasons.

Julian Robinson next presented a graph showing the claim filing history of Workers’ Compensation, Intercare, and SFMTA. There is an overall upward trajectory for CCSF claims. This started to dip when COVID first hit but then we saw a surge with the Delta variant. We saw a second surge at the end of 2020 and beginning of 2021. The third surge was followed by a fourth surge the last two weeks of the year. Within a thirty-day period we received about 1,000 claims, which is not displayed on this graph and will be represented next quarter.

Not only are we seeing an increase in COVID claims, we also are seeing an increase in PTSD and stress claims.

Over the last year and a half, our inventory of open claims remained steady at about 3,600 claims. Since summer of 2021 there has been a steady increase in volume, passing the 4,000 mark in October of 2021. Future medical claims are on a downward trajectory as these claims are being administratively closed or settled. We have seen a substantial increase in indemnity claims.

Julian Robinson then presented the litigation statistics. Currently, about 36% of open claims are represented by counsel with 19% of open claims litigated compared to the prior quarter, which was 24%. With Fire and Police, 32% and 44% respectively were represented but only 11% and 15% litigated. We are seeing that the Alternative Dispute Resolution program has a profound effect on the reduction in litigation.

Julian Robinson explained the break-down cost of a litigated claim vs. a non-litigated claim. The cost of a non-litigated claim is only about 14% of a litigated claim. In 2022, we are seeing an increase in settlements and retroactive payments, which means claims which were denied but later found compensable for payment. Overall, a litigated claim this last fiscal year averaged $70,000 whereas the average of a non-litigated claim is less than $10,000.

Julian Robinson then reported the litigation statistics for the Alternative Dispute Resolution (ADR) Program. The ADR program strives to reduce litigation and consequently save on claim costs while expediting the delivery of benefits to employees and reducing unnecessary friction. In Q2 of the 2022 fiscal year we are seeing quite a low representation rate of 12% for Fire and 27% for Police. The litigation rate is only 4% for Fire and 2% for Police, respectively compared to the last three fiscal years when 38% of firefighters and 52% of police officers were represented. Many of these claims were older claims which opted into the ADR Program as requested by the applicants’ attorneys. This does slightly affect our litigation and representation numbers. Our litigation and representation rates would be even lower without opt-in claims. Our Carve Out manages litigation well and keeps claims out of a court setting. The ADR program helps significantly reduce litigation.

Dr. Sugarman thanked Julian Robinson, Stan Ellicott, and Dr. Fiona Wilson for their presentations.

Director Howard thanked the presenters for their thorough presentation. Director Howard then requested questions or discussion from the council.

Council Comment:

Todd Rydstrom, representing Controller’s Office, commented positively on the extensive and helpful presentation. He asked if there are any next steps or assistance needed from city departments and/or Controller’s Office on the integration and cross-impacts of 4850 pay as it relates to overtime and required minimum staffing, and asked if there is anything the Controller’s Department can do to understand projected costs regarding return to work and hybrid work schedules?

Public Comment: None.

Speaker: Ify Omokaro, San Francisco Municipal Transportation Agency Leaves Services Manager

Mr. Ify Omokaro greeted the council. Introduced himself as the SFMTA Leaves Services and Accommodations Manager who will be presenting on behalf of the not yet hired Workers’ Compensation Manager. Andy Mathews and Danielle Buri will be additional presenters.

Today’s agenda will describe Accomplishments, Initiatives, and Challenges, a COVID-19 Report, and Performance Quick Facts, followed by Claim Analytics, and Financials.

This quarter, the SFMTA Workers’ Compensation team, led by Ify Omokaro

• Virtually met with the Intercare SFMTA team for introductions and a get to know the program.
• Worked with Intercare to re-establish Service Instruction Guidelines to meet the current needs of the SFMTA program.
• repared and filed complex new annual public self-insurer reports to the Office of Self Insurance Plans on 9/30/21.
• Positive COVID tests for SFMTA Employees were updated in the Claims Enterprise System and completed by 11/15/21.

Mr. Omokaro shared the challenges faced by the SFMTA this quarter, including:

• State Medical Legal Fee Schedule changes expected to be adopted in 2021 that are likely to have a significant effect on the cost of medical/legal evaluations.
• Vaccination Requirements may have an impact on claim filing to pursue workers’ compensation benefits. Currently working on procedures for unvaccinated employees who are eligible for modified duty.
• Rise in Temporary Disability Benefit Maximum is effective 1/1/22 and expected to impact the overall indemnity costs for CY 2022.
• Ongoing Review of Assault Claims
• Re-Directing Injured Workers to MPN Clinics instead of emergency rooms (via ambulance)
• Current RTW Process updates for injured employees
• Update on WC Manager position for SFMTA

Danielle Buri spoke up and shared the presented slides were from the previous quarter. While the information is similar, she asked to make an adjustment to the arrangement to present data from quarter two instead of quarter one. Danielle Buri then shared her screen, and the presentation continued with the SFMTA accomplishments and initiatives for Q2.

• Reduction of new indemnity claim frequency in Q2 by 28%.
• The team achieved a 104% closing ratio in Q2.
• Re-instated the quarterly claim reviews with SFMTA and the team.
• Achieved process improvement for wage statement protocols.
• Accomplished consistent TWP program updates.
• Working with CCSF and the new managed care vendor for implementation.
• Collaborating with CCSF to enhances the Medical Provider Network (MPN).
• Preparing the required Request for Proposal for Third Party Claims Administration.

Next, Mr. Omokaro described the SFMTA’s workers’ compensation challenges:

• Rise in Temporary Disability Benefit Maximum is effective 1/1/22 and expected to impact the overall indemnity costs for CY 2022.
• Ongoing Review of Assault Claims.
• Re-Directing Injured Workers to MPN Clinics instead of emergency rooms (via ambulance).
• Returning injured to modified duty.
• Update on WC Manager position for SFMTA.

Mr. Omokaro continued with the COVID-19 report:

• 254 COVID-19 Workers’ Compensation Claims filed as of 12/31/21.
• 211 Reported claims only.
• 41 Indemnity claims reported, of which two claims are litigated.
• 19 Accepted claims.
• 22 Denied claims: Negative test or not occupational in nature.
• Average paid per indemnity claim = $5,044.
• Average Incurred per indemnity claim = $14,792.
• As of 12/31/21, only 9 claims remained open.

Continuing with Performance Quick Facts, Mr. Omokaro communicated that fiscal health at 23% was below the benchmark of 25%. There were 109 indemnity claims and seven medical claims below a benchmark of 138 and 16 respectively, determined over the last five years. We are proud our claim costs are down this quarter for both indemnity and medical. The average amount of days a claim was opened this quarter, 529 days, is a small increase from the benchmark of 443 days.

Next, our claim filing frequency is a more in-depth breakdown of claim filings. We show a significant decrease in claim filing frequency this quarter compared to the last year. We are moving in the right direction and hope to continue this momentum. The Omicron variant in quarter three may likely be an exception.

Claims frequency is trending at 9-10 claims per 100 full time employees. A big change is the number of employees, which has been reduced from 6000 to below 5400.

For all of 2021, our claim cause distribution is mostly caused by repetitive motion, accidents, and physical assault. Most of these claims derive from our transit division, who are our front-line employees deal with public daily.

In looking at our claims that are over $100,000, two-thirds of claims are from operators and parking control workers. Not many claims are over $300.000, few are a million, and few are over one-million-dollar claims.

The next slide shows litigated vs. non-litigated claims of the last five fiscal years as compared to the first two quarters of this fiscal year. The rate of litigated claims has been going down, which typically equates to a reduction in claim costs. Non litigated claims can be closed faster and cost less.

Last year we were a bit over budget, yet we are still consistent with our costs. We assumed not having as many employees on site reduced claims. However, our public facing transit employees do not have the luxury of working from home. So, while our budget changed, our claim costs did not. Based on our current spending for quarter two, we are a little under projected budget at about $30 million.

Looking at costs per category, most of our costs are for disability payments. We are on pace to be below our projected budget, which hopefully will continue.

Council Comment: None.

Todd Rydstrom, representing Controller’s Office, thanked Mr. Omokaro for an thorough and detailed report. As you receive information regarding return to work, light duty or otherwise, please continue to present return to work findings, including the citywide option mentioned by Dr. Sugarman, to the council. Thank you in advance.

Public Comment: None.

The council raised no items to be addressed in future meetings.

Council Comment: None.