Speaker: Carol Isen

Council Comment: None.

Public Comment: None.

Caryn Bortnick motioned to approve the minutes for the meeting on March 7, 2022.

Lorenzo Donati seconded the motion to approve the meeting minutes from March 7, 2022.

Action: Minutes were approved for the meeting on March 7, 2022, without objection.

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

Reported on Accomplishments, Challenges, and Initiatives

Dr. Peggy Sugarman thanked Director Carol Isen and greeted the council, members of departments, and members of the public attending the meeting. She introduced the presentation topics and upcoming speakers for the Workers’ Compensation Division report. Dr. Sugarman will first present challenges, accomplishments, and initiatives for the Workers’ Compensation Division. She advised that Dr. Fiona Wilson will then present the COVID-19 report. Dr. Sugarman will return to present performance and financial reports on behalf of Finance and IT Manager Stanley Ellicott. Lastly, Julian Robinson, Claims Manager, will share and explain claim analytics.

Dr. Sugarman began the presentation by addressing supplemental appropriation, which was needed to address the deficits that many of the departments faced. The Workers’ Compensation Division successfully worked with the Mayor’s Office to increase department budgets by $13.1M for Sheriff, Fire, DPH, and DEM.

Dr. Sugarman continued with additional Workers’ Compensation Division accomplishments:

• Negotiated FY23-23/FY23-24 budget with the Mayor’s Office and preparing for Board Phase and BLA question and answer
• Hired new Temporary Exempt Staff and actively recruiting PCS backfills
• Conditional offer accepted for new Safety Officer to work on injury prevention
• Launched CompTiger knowledge sharing system with Intercare Teams
• Conducted continued staff trainings
• Cleared backlog of the surge of COVID cases
• Collaborated with SFMTA to release RFP for Third Party Administrator services
• Terminated five medical providers from the MPN due to multiple concerns, including ongoing billing issues, self-referrals, and charges for unauthorized services
• Preparing implementation of recommendations from G2 Insurance Services assessment of program operations and organizational structure, including:
  • Reserve and payment authorization approval limit increases
  • Case settlement authority increases

Next, Dr. Sugarman presented current challenges in Workers’ Compensation, which are:

• High volume of WC cases straining the workforce
• Costs for WC Benefits continue to stay at high levels despite some leveling
• COVID-19 illness and outbreaks continue to negatively affect staff, departments, and productivity

Dr. Peggy Sugarman then explained recently proposed state legislation. AB 1751 is expected to extend COVID-19 Presumption legislation (Public Safety, Healthcare, Outbreak infections occurring within 14 days of working on site) through 1/1/2025. SB 1127 would reduce the time to accept “presumption” claims to 60 days and levy up to $100,000 against employers for unreasonable denial. This bill would also extend temporary disability benefits to first responders with cancer claims to 240 weeks. Currently these benefits are capped at 104 weeks within a 5-year period.

To address these challenges on an ongoing basis, Workers’ Compensation Division developed the following initiatives:

• Temporary Transitional Work Assignments Policy Development
• Workplace safety and injury prevention program development
• Pre-planning for staffing enhancements and space planning activities necessary to grow in place
• New platforms launching from US Bank to retire the Supplier Prefer Pay Portal in 2022 (technology used for ACH payment instructions); and Change Healthcare for medical provider check printing
• Enhanced reporting and department dashboards for FY2023
• Enhanced investigation into COVID-19 illness, costs, and projections
• Implementing procedures to allow electronic service of medical/legal reports
• Leadership transition planning

Peggy Sugarman introduced Dr. Fiona Wilson to provide the COVID-19 report. Dr. Wilson began by sharing that, since the last meeting in March, the Omicron surge has come and gone. Currently the highly transmissible variants are B.2 and B2.1.21. However, because our employees are highly vaccinated and boosted, we are seeing little serious illness and rare hospitalization. Also, there is a rapid resolution of symptoms for many city employees. Employees can test after day five and return to work. Additionally, oral therapy is now widely available and appropriate for some employees.

Dr. Wilson then presented some key CCSF policy updates, which include:

• Broadened access and use of Rapid Antigen tests. This accelerates earlier return to work after COVID illness, and for required testing after close contact exposures
• Employee submits by Self Report, vaccination, and booster dates, as well as results from Lab and Rapid Antigen COVID testing
• Outbreak management:
  • Re-masking required by CalOSHA
  • More than three outbreaks in a single building with multiple floors and departments: DHR recommends mask up for all in building, especially in transit/common spaces

Throughout the City of San Francisco, we are seeing

• SF new cases have climbed: low 82/day in mid-March, 141/day at last WCC meeting, 489/day,
• Test positivity rate: from 3/100, to 5/100 now 11/100
• May be leveling off, await results after Memorial Day holiday
• ServiceNow: no longer can make new records ~5000
• People & Pay totals: 1040
• Suspect number is higher than has been entered into People & Pay

San Francisco has had 20,000 more cases of COVID than at our last meeting in early March, and 98 more deaths. We have about tripled the number of cases per day from early March. A unique challenge is capturing results of at-home tests. A little over 6,000 city workers have had COVID, and about half have been accepted as a Workers’ Compensation claim.

To determine the costs of COVID in WCD, we look at what has been paid on COVID-19 claims citywide. As of May 25th, 2022, the total paid on 3,484 COVID-19 claims was $9,108,216. The bulk of the money, $6,220,215 was paid toward 4850 salary continuation claims. The out-care cost of COVID is $1,460,663.

In greater detail:

• 27 claims - medical expense >$10,000 – an increase of 10 claims from Q2
• 87 claims - medical expense >$2,000
• 42 claims - total expense >$50,000, of which 66% of expenditures attributed to 4850 salary continuation benefits
• 2,772 COVID-19 claims have been set-up with no actual expenditures as of this report
• Closed claims: Average per-claim expense was $3,173 for accepted claims with expense as of case closure
• No additional deaths reported

The departments which are most susceptible to COVID-19 claims are Fire, Sheriff, and Police, followed by Health Care and SFMTA/Muni.

Dr. Wilson would like to further study and share

• How much of the COVID costs are pre and post vaccine mandate?
• What about long COVID?
  • Percent of possible long COVID (out > 3 months)
  • Costs of long COVID: medical vs. lost work
• Return to work analysis:
  • Percent returning sooner than 10 days quarantine, through use of home Rapid antigen testing
  • Use of COVID sick time

Next, Peggy Sugarman returned to discuss fiscal health performance quick facts for the quarter. She shared a snapshot of performance metrics based on a benchmark of the last four years compared to the third quarter of this year. Last time we projected to go well over budget and requested supplemental appropriation adjustments. Our benchmark is usually to spend about 95% of the overall workers’ compensation budget. As of this report, we are projecting our costs at 98.5% of this year’s supplementally appropriated budget.

Our volume of 1,163 indemnity claims is a significant surge at almost three times our average benchmark of 413 claims per quarter. We saw a reduction of medical-only claims from 234 average to 170 with an average benchmark of 234 medical claims per quarter. This number reflects the new cases received after the December 2021 holidays. In terms of duration, cases were opened and closed quickly, and closure average continues to drop.

Next, Dr. Sugarman presented costs by expenditure category. The data as of May 25th, 2022, shows a striking year over year change with a 22.6% increase in temporary disability. We refer to a need for the temporary transitional work program to bring employees back sooner. Our clinical staff Nonie Devens and Fiona Wilson are working with claim staff and medical partners to address treaters who do not more readily release injured staff to return to work.

Permanent disability has gone up about twenty percent. We have been resolving older, high value claims to keep costs down. By closing and settling cases by a compromise and release, we decrease future liability. Looking ahead at the full fiscal year, we will review future liability estimates. Salary continuation for public safety, or 4850 pay, has been a cost driver at 13.8%. Medical costs have risen dramatically by 18.8%. Temporary disability rates rose 13.5% at the beginning of this year which affects all payments including live pension payments.

Looking at temporary disability expense history, for many years our average was $650,000 per month. As of March 2020, temporary disability expenses began an increasing trend, reaching $1.5 million in December 2021. The amount dropped to $1.38 million in the month of May 2022. This is due to a lack of availability to bring workers back sooner.

The top ten departments expenditure trends include supplemental appropriation adjustments. A few deficits remain in departments such as AIR and REC, who felt they did not need supplemental appropriation. WCD continues to work with these departments internally. We ended the year on a slight positive due to supplemental appropriation.

Next, Claims Manager Julian Robinson was introduced to discuss claim analytics in more detail. Last quarter he discussed a backlog of claims that were pending setup. Current analytics now reflect those claims now that the backlog has been cleared.

Claims incurred per every 100 full time equivalent rose due to several COVID-19 surges. These surges affected Fire, Sheriff, Police, and the citywide average. The citywide average is about 15 per 100 full time equivalent. Removing COVID-only claims reduces the citywide average to approximately nine per 100 full time equivalent. Likewise, the Fire Department shows 60 per 100 FTE, but only 23 when removing COVID data. Removing COVID claims results in the Police and Sheriff numbers decreasing from 30 to 20 claims incurred per 100 FTE. These numbers show the substantial impact of filings and number of claims, as well as time off work.

The Department of Public Health rates remain the same due to staffing. During the pandemic, DPH staffed up substantially. Their claim filings were still on par with the number of staff which increased over time. Whereas Fire, Sheriff, and Police had same or less staffing, but more claim filings, which impacted their filing frequencies.

Overall citywide we are up 106% in claim filing frequency. Indemnity is up about 181% citywide. We are down 25% in medical-only claims, because COVID claims are lost time claims, not medical claims. The most heavily impacted departments are Fire, Sheriff, and Police due to their service to the city, 24/7. COVID claims are 8.1% of our volume and they are mostly indemnity claims.

Julian Robinson then presented litigation statistics. Currently, about 34% of open claims are represented by counsel with 17% of open claims litigated, compared to the prior quarter. This is a marked improvement from three years ago when representation was close to 50%. Litigation was also close to 50% and now is 17%. Part of this decrease is a result of our Alternative Dispute Resolution (ADR) program, which the industry continues to embrace. A majority of the COVID claims are non-represented, non-litigated and require little if any treatment. This may result in slight artificially lowered litigation rates.

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 11% of a litigated claim. Overall, a litigated claim this last fiscal year averaged $71,000, whereas the average of a non-litigated claim is just over than $8,000 which is slightly down from last quarter. Due to supplemental appropriation, we are settling more claims. We do expect some high-cost claims which may impact these numbers. Our goal is to resolve claims without the need for litigation and for the employee to feel comfortable to pursue the claim without counsel.

Julian Robinson then reported the litigation statistics for the 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. COVID claims have affected these statistics, however absent COVID, these litigation rates were trending down. In Q3 of the 2022 fiscal year we have seen quite a low representation rate of 11% for Fire and 23% for Police. The litigation rate is only 3% for Fire and 2% for Police, respectively, compared to the last three fiscal years when 39% of firefighters and 53% of police officers were represented. Our litigation and representation rates would be even lower without opt-in claims, which come into the program already represented. Even applicant attorneys have commented they like the speed, ease of resolution, and efficiency of the Alternative Dispute Resolution program.

Dr. Sugarman thanked Julian Robinson and Dr. Fiona Wilson for their presentations, and thanked Nonie Devens and Stan Ellicott as part of the team which makes this work possible. Peggy Sugarman also thanked Helene Paz for managing the Safety Reporting Hotline and responding to safety concerns which have become more frequent. Thank you to the entire team.

Council Comment:

Anna Dunning, representing Mayor’s Budget Director asked if the 4850-salary continuation pay is used after sick time has first been utilized? She asked what is the average number of days workers are receiving this temporary disability pay?

Public Comment: None.

Director Isen commented on the upcoming retirement of Peggy Sugarman. Director Isen remarked the presentation has shown that Peggy Sugarman has built a very strong legacy and team. She expects the transition to be seamless and looks forward to honoring Peggy in the next few months before her retirement.

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 from Intercare will be additional presenters.

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

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

• Reduced new indemnity claim frequency in Q3 by 8%
• Achieved an 82% closing ratio in Q3 and 90% fiscal year to date
• Reinstated quarterly claim reviews with SFMTA and the team
• Completed the transition and rollout of the new managed care vendor for implementation
• Collaborated with CCSF to enhance the Medical Provider Network (MPN)
• The board approved funding for the contract to coordinate a joint Request for Proposal for Third Party Claims Administration (TPA). This was distributed in the industry and proposals are due electronically by June 1st, 2022.
• In process of video access to the claim professional staff to improve speed of decision making
• Working on electronic workflow for all claim reporting

Mr. Omokaro shared the challenges faced by the SFMTA this quarter, including a rise in temporary disability benefit maximum. Effective 1/1/22, this change is expected to impact the overall indemnity costs for CY 2022. To address many assault claims, we continue to review verbal and physical assault claims which remains a department wide challenge.

We still have many employees working from home due to surges and outbreaks. This prevents us from having modified duty opportunities. Many managers for modified duty aren’t in the office. So, it’s less likely to have positions available for injured workers who are seeking modified duty. Mr. Omokaro said there is new advertising to share the opportunities for this program.

Interviews were held last week for the position of SFMTA Worker’s Compensation manager. An offer will be sent to the candidate this week. Therefore, the challenge of filling the role of manager will be soon alleviated.

Mr. Omokaro continued with the COVID-19 report:

• 306 COVID-19 Workers’ Compensation Claims filed as of 3/31/22
• 253 Reported claims only
• 49 Indemnity claims reported, of which three claims are litigated
• 26 Accepted claims
• 23 Denied claims: Negative test or not occupational in nature
• Average paid per indemnity claim = $5,489
• Average Incurred per indemnity claim = $13,919
• As of 3/31/22, only ten claims remained open

Continuing with Performance Quick Facts, Mr. Omokaro communicated that fiscal health at 24% was right below the benchmark of 25%. There were 133 indemnity claims and eight medical claims below a benchmark of 138 and 16 respectively, determined over the last four years. Claim costs are a bit above our benchmark last quarter for both indemnity and medical. The average amount of days a claim was opened this quarter, 534 days, is an increase from the benchmark of 443 days.

Next, our claim filing frequency is a more in-depth breakdown of claim filings. We show a slight increase in claim filing frequency this quarter compared to the last quarter. We are moving mildly towards the average benchmark, as expected from last quarter.

Claims frequency is trending at 9-10 claims per 100 full time employees, which is the same as the last quarter. We anticipate ten claims per 100 full time employees for next quarter.

Most claim cause distribution is caused by physical assault. Most of these claims derive from our transit division, such as parking control operators and who are our front-line employees deal with public daily. Additional causes include repetitive motion and accidents.

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 four fiscal years as compared to the past three 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 three, we are on pace to meet the budget at about $30 million.

Looking at costs per category, most of our costs are for disability payments followed by medical costs. We are on pace to be below our projected budget, which hopefully will continue. We are addressing why the recovery costs are so low and believe at this time to be a processing error, which will be reviewed.

Council Comment: None.

Public Comment: None.

Director Isen discussed an opportunity to occasionally invite the unions to hear the presentations and have an opportunity to comment directly to the council.

Council Comment: None.