Safety & Workers' Compensation Committee

Table of Contents Safety & Workers’ Agenda 1 Guest Speaker Bio 2 Compensation OMA Public Policy Report 3 OMA News & Analysis 5 Committee OMA Bill Tracker 12 Workers' Compensation Policy Priorities DRAFT 14 Thursday, June 21, 2012 OMA Counsel Report 16 Roetzel & Andress Blog: Extra Precautions for 18 Ohio Industrial Commission Hearings When All Three of the Members are Not Present Overview of Medical Marijuana Ballot Initiatives and 19 Potential Concerns for Ohio Manufacturers Calfee Report: OSHA Issues Enforcement 22 Memorandum Draft letter to Richard E. Fairfax, OSHA Deputy 24 Assistant Secretary

Additional materials:  Base Rates 27  SI Assessment PowerPoint Presentation 29  Destination Excellence 44

2012 Safety & Workers’ OMA Safety & Workers’ Compensation Committee Compensation Committee Meeting Sponsor: Calendar

Thursday, June 21 BWC Administrator, Steve Buehrer - Confirmed Thursday, November 8

OMA Safety & Workers’ Compensation Committee June 21, 2012

AGENDA

Welcome & Self-Introductions Bob Truex, Lancaster Colony, Committee Chair

BWC Developments Dennis Davis, OMA Staff

Statehouse / Public Policy Ryan Augsburger, OMA Staff Report / Legislative Policy Priorities

OMA Counsel’s Report Tom Sant of Bricker & Eckler, LLP

Safety / OSHA Report Diane Grote Adams, Safex

New Business – OSHA William Ross, Calfee Halter & Griswold, LLP Enforcement Trends

Medical Marijuana Ballot Issues Cavett Kreps of Bricker & Eckler, LLP

Guest Speakers Steve Buehrer, BWC Administrator

Please RSVP to attend this meeting (indicate if you are attending in-person or by teleconference) by contacting Judy: [email protected] or (614) 224-5111 or toll free at (800) 662-4463.

Additional committee meetings or teleconferences, if needed, will be scheduled at the call of the Chair.

Page 1 of 51 OhioBWC - Common: Stephen Buehrer

Administrator/CEO Stephen Buehrer

Ohio Governor John Kasich appointed Steve Buehrer as Administrator/CEO of the Ohio Bureau of Workers’ Compensation in January 2011. He leads an agency of 2,000 employees that serves more than 225,000 employers and 1.3 million injured workers.

Known for his focus on fiscal responsibility, creating jobs, and emphasizing technology, Steve has helped engineer significant improvements within various levels of government over the past 20 years. He also has extensive experience with workers’ compensation, previously serving as BWC’s Chief of Human Resources. As a senator, Steve served as chairman of the Insurance, Commerce and Labor committee which oversaw all workers’ compensation

legislation.

Steve was a member of the Ohio Senate from 2007 until 2011. In addition to serving as the chairman of the Insurance, Commerce and Labor committee, he also was vice chairman of the Senate Highways & Transportation committee. In addition, Steve’s colleagues elected him majority whip, the fourth ranking leadership position in the Senate. He also received the Technology Advocate Legislator of the Year award for 2010 from Technology for Ohio’s Tomorrow. He won five Watchdog of the Treasury awards and was named National Legislator of the Year by the American Legislative Exchange Council in 2002. A nationally recognized leader, he serves as the chairman of the Midwest Council of State Government (CSG) and has served as national CSG vice chair.

Steve also served as a state representative for Ohio's 82nd House District (Defiance, Fulton and Williams counties). First elected in 1998, he was subsequently re-elected in November 2000, when his district became the 74th, and again in November 2002 and 2004. Steve’s peers in the House recognized his leadership by electing him assistant majority floor leader for both the 124th and 125th General Assembly. As chairman of the State Government committee, he had responsibility for all workers’ compensation legislation.

During his second and third terms as representative in the Ohio General Assembly, Steve authored and passed Ohio's two-year transportation budget, which provided funding for highway projects across the state. This legislation recreated the state’s transportation funding structure and provided additional transportation-related support for state and local governments.

Beyond his legislative experience and accomplishments, Steve also has extensive experience in state government. Aside from serving as the Chief of Human Resources at BWC, he also was the Director of Legislative Affairs at the Ohio Bureau of Employment Services. Following that assignment, Steve served six months at the Ohio Department of Human Services, at the request of Governor George Voinovich, assisting with multiple management-improvement initiatives. He later accepted a position as Deputy Director at the Ohio Department of Administrative Services where he oversaw the communications and legislative offices and later the State Human Resources Division.

Steve earned a bachelor’s in social studies education graduating summa cum laude from Bowling Green State University. He later earned his juris doctor from Capital University Law School graduating cum laude. He’s married to his wife Cathy and has three sons, Benjamin, Simon and Daniel.

Page 2 of 51

TO: OMA Safety & Workers’ Compensation Committee FROM: Ryan Augsburger DATE: June 6, 2012 SUBJ: Safety and Workers’ Comp Policy Update

Overview 2012 is a presidential campaign year. It appears the opportunity for meaningful policy reforms has passed. Following the defeat of state issue 2, a victory for labor groups, state leaders have backtracked from legislative reform efforts. Policymakers are wary of enacting reform legislation that could be overturned by opponents in a referendum.

Legislation In late January, Ohio Speaker of the House William Batchelder announced his priorities included “plans to reform the BWC, building upon existing reforms to go further in assisting injured workers while identifying other cost-saving possibilities.”

A package of workers comp bills (HB 516, HB 517, and HB 518) were introduced in mid- April amid a press conference and expedited schedule for hearings. Within days, the bills were pulled from the committee calendar in the Ohio House. No official reason was given.

The measures are opposed by trial lawyers and labor unions. The bills are supported by Bureau of Workers' Compensation Administrator Steve Buehrer. The OMA supports HB 517.

The bills, and particularly the main reform measure (HB 517), provide common sense improvements in the medical system that supports injured workers. The legislation would bring the Ohio system close to the 21st century in its use of modern tools for care management, tools that are used by all health insurance and disability insurance carriers in the U.S., including provider panels and provider outcome measurements.

It is a continuing shame to Ohio that the state’s workers’ compensation system remains mired in an outdated and costly medical care management program that so often fails both injured workers and employers.

In other business PEO legislation remains mired in the House. The Ohio Senate concluded work on SB 139 (Hughes, R-Columbus) to enact financial safeguards against PEOs, sending the measure to the Ohio House where the bill sits today.

SB 323 (Seitz, R-Cincinnati) would prohibit illegal and unauthorized aliens from receiving compensation and certain benefits under Ohio's Workers' Compensation Law. The bill has not advanced. The OMA Safety & Workers Comp Committee reviewed this bill at their February meeting.

Opportunities for administrative actions to change the rules and operating procedures of the BWC seem to be more likely than legislation.

Page 3 of 51 Bureau of Workers’ Compensation Among administrative reforms already enacted is the premium discount program, GrowOhio created earlier this year for new employers to the state. More recently, a rule package known as the Destination: Excellence Program will streamline existing premium discount programs such as discounts for instituting drug-free safety programs, utilizing vocational rehab services, and clarifying limitations on stacked discounts, and deductible programs.

The package is intended to simplify these and other existing programs while instituting new discount programs for making electronic payments and awarding new grant funds for employers and employees in returning injured workers to work.

A discount to promote wellness programs was also instituted earlier this year. See attached news and analysis. Also see article detailing BWC program to restrict pharmacy formularies.

Unemployment Compensation Like many states, Ohio’s fund to pay unemployment compensation claims was depleted in early 2010. The state has borrowed federal funds ($2.3 billion). Minimum repayments were required beginning September 2011 (nearly $300 in interest alone in the 2012/13 biennial budget). Eventually Ohio employers could see a premium increase to repay the federal loans and restore the state fund, probably coupled with cost cuts. That will require law change and is unlikely until after the election.

Some employers with high experience ratings will see FUTA tax increases as long as the state is in arrears.

Privatization / Competition: No action to report of a House drafted legislative proposal or on Senate study activity on the topic. The business community has been slow to embrace possible systemic changes, potentially because there is no good data available to model the effects.

Page 4 of 51 Safety and Workers' largest net gains in employer accounts were Frank Gates Managed Care Services (+4,655), Compensation Management CompManagement Health System, Inc. (+1,219), and 1-888-OHIOCOMP BWC Increases Funding to Safety Councils (+686). Meanwhile, the MCOs that had the largest net loss in employer accounts were Ohio Bureau of Workers' Compensation (BWC) CareWorks (-3,497), Sheakley UNICOMP (- Administrator/CEO Steve Buehrer announced a 1,392) and CorVel Ohio MCO, Inc. (-772). 10 percent increase in funding provided to support Ohio's 80 safety councils. The BWC If you have questions about your MCO services, indicates the role of the safety councils is to please contact OMA’s Georgia Booth, Jay increase safety awareness in the workplace and Kemo, or Barb Raduege. educate businesses on occupational safety and health issues. 06/08/2012

The statewide safety council funding for fiscal BWC Proposes Assessment Changes to Self- year 2013 will be effective July 1 and will total Insured Employers $911,650 with the increase. In its May meeting, Ohio Bureau of Workers’ 06/15/2012 Compensation directors heard a recommendation from Chief Actuary Christopher BWC Approves 2012 Policy Year Base Rates Carlson to amend certain categories of assessments paid by Ohio’s self-insured At its board of directors meeting this week, the employers as of July 1, 2012. Bureau of Workers’ Compensation (BWC) approved base rate changes for the 2012 policy Specifically, the Mandatory Surplus Fund, which year that begins July 1, 2012. As expected, the funds the costs of defaulted employers’ claims system-wide net effect of the rate changes is 0 with injury dates prior to 1987, is projected to be percent; however, each manual classification is in the red by $3 million by the end of 2013 if the established separately based upon the claims funding rate is not increased. The proposed experience of the employers in the class. change is from $0.030 to $0.069 (all assessments are computed per $1 of paid The BWC holds both decreases and increases compensation to injured workers reported for to base rates to a maximum of 25 percent. calendar year 2011).

Your company’s manual classification(s) can be Meanwhile, the assessment rate for the found on your BWC workers’ compensation mandatory Self Insured Employer Guaranty payroll report; new payroll reports should be out Fund, which funds the costs of defaulted in the next few weeks (but will still reflect 2011 employers’ claims with injury dates after 1986, is rates at this time of year). proposed to decrease from $0.0527 to $0.040.

The net effect of these mandatory assessment 06/15/2012 changes is an increase of $0.0263.

MCO Open Enrollment Winners and Losers There is also a recommended decrease in the assessment for employers that participate in the The 2012 workers’ compensation Managed optional Disallowed Claim Reimbursement Care Organization (MCO) open enrollment Fund, which reimburses self-insured employers period, orchestrated by the Bureau of Workers’ for claims costs ordered by the Industrial Compensation (BWC), concluded May 25, Commission but that are ultimately denied. The following almost of month during which assessment is proposed to be reduced from employers could switch to a different MCO in $0.0334 to $0.0300. pursuit of better service. 06/01/2012 A BWC report indicates the MCOs with the

Page 5 of 51 Average BWC Rate to Drop for State Fund Final Push for BWC Premium Saving Safety Manufacturers Program Enrollment

At its May meeting, the Bureau of Workers' The Bureau of Workers’ Compensation (BWC) is Compensation board of directors looked at making a final push for Industry Specific Safety proposed base rate changes for the 2012-2013 Program applications. The program rewards policy year by industry class. The average base participating employers with a three-percent rate (per $100 of reported payroll) premium discount. The application deadline for manufacturers will pay beginning July 1, 2012 this program, as well as the Transitional Work under the proposed scheme is $2.71, which is Bonus program, is May 25, 2012. 1.8 percent lower than the current average manufacturing base rate. The board is Not all employers are eligible for all programs; expected to take action on the proposed rates check OMA’s BWC program eligibility guide. at its June meeting. Questions can be directed to the BWC or to Of the ten classifications of employers in the OMA’s Georgia Booth, Jay Kemo, or Barb BWC system, manufacturers will pay the fifth Raduege. highest average base rate (per $100 of reported payroll), behind transportation ($6.57), 05/18/2012 construction ($3.95), extraction ($3.50), and agriculture ($3.10). The overall system-wide BWC Awards $350,000 in Safety Grants average base rate is expected to be $1.43. The Ohio Bureau of Workers' Compensation 06/01/2012 (BWC) has awarded safety intervention grants to 16 Ohio employers totaling more than BWC and IC Propose Administrative Fee $350,000. BWC designed the Safety Reductions to Employers Intervention Grant Program to help reduce illnesses and injuries and to research and Last week the Bureau of Workers’ establish best practices for accident and injury Compensation (BWC) board of directors prevention. reviewed a recommendation to reduce assessments for the Administrative Cost Fund, Ohio employers are eligible for the grants, which which funds the operating expenditures of include a 2-to-1 matching amount up to a BWC. BWC reported: Cost savings initiatives in maximum of $40,000 for a total of $60,000: recent years are allowing for the recommended $20,000 from the employer and $40,000 from 3% decrease in the assessment for private BWC. Quarterly data reports and follow-up case employers. The amount employers pay into the studies help BWC determine the effectiveness of Administrative Cost Fund is calculated as a employers' safety interventions and establish percentage of their premium. The board will best practices for other employers. vote on the Administrative Cost Fund proposal during its next meeting scheduled for June 15, 05/11/2012 2012. Hold July 17 for Haz Com 2012 and GHS In separate news, the Industrial Commission of Webinar Ohio has proposed lower administrative rates. Ohio employers pay assessments that are used to fund the administrative operations of OSHA has modified the Hazard Communication the Industrial Commission of Ohio. Periodically, Standard (HCS) to adopt the Globally the Commission examines rates and related Harmonized System (GHS) to improve safety operational costs. The current Administrative and health of workers through more effective Cost Fund Rate for calendar year 2012 for communications on chemical hazards. private employers is 2.10 percent; the proposed rate for calendar year 2013 is 2.03 percent. The GHS is an international approach to hazard communication, providing agreed criteria for classification of chemical hazards, and a 06/01/2012

Page 6 of 51 standardized approach to label elements and Not all employers are eligible for all safety data sheets. programs. To make it simpler for employers to understand their BWC program eligibility, OMA The regulation requirements will be phased in has created a useful web page. during the next three years, starting with training compliance in 2013. Here is a one-page For more information, contact Georgia Booth, summary from OMA Connections Partner, Jay Kemo, or Barb Raduege for details. Safex. 05/04/2012 OMA has scheduled a 90-minute webinar on – Tuesday, July 17 from 10:00 11:30 a.m. to MCO Open Enrollment Started This Week help members understand the new standard and compliance obligations. Pencil it in now; two years the Ohio Bureau of Workers’ registration will begin later this month. Every Compensation (BWC) holds a period of open enrollment during which every state fund 05/04/2012 employer can elect a new Managed Care Organization (MCO). The 2012 open enrollment Bill Would Deny Workers' Comp for Illegal period is April 30 to May 25. The role of the Aliens MCO is to provide medical management for employees who have an illness or injury that is If Senator Bill Seitz (R-Cincinnati) has his way, covered by BWC workers’ compensation illegal aliens would be denied workers’ insurance. compensation benefits and could be subject to prosecution for fraud by the Bureau of Workers’ The OMA’s endorsed MCO is Health Compensation. Under SB 323, workers would Management Solutions (HMS). OMA and HMS need to file a new employment disclosure form are independent entities and have no common to certify that they are authorized to work in the ownership; OMA selected HMS based entirely U.S. on its quality of service. The BWC provides an MCO report card to help employers distinguish Senator Seitz testified that the bill will deter MCOs’ quality of service; the most heavily illegal aliens from seeking work in Ohio, and weighted metric on report card results is an that, with Ohio’s 7.5% unemployment rate, jobs MCO’s rate of safe, effective return-to- should be reserved for U.S. citizens and legal work. BWC has also created an MCO selection immigrants. The senator noted that several guide for employers. states have legislated against illegal aliens' receipt of state workers' compensation benefits, OMA encourages manufacturers to take this including Wyoming, Idaho and Florida. opportunity to switch to HMS. One important activity HMS performs is aggressively seeking 05/04/2012 out potentially inappropriate prescription drug costs in employees’ claims and initiating Drug BWC Extends Deadline for Program Utilization Reviews from the BWC. Finding Enrollment expenses for drugs that are medically unnecessary for the treatment of the allowed conditions in a claim may result in credit Earlier this year, the Bureau of Workers’ adjustments to employers’ experience. Compensation (BWC) rolled out a package of new and existing programs called Destination When electing a new MCO, the employer Excellence that is intended to save employers records are automatically transferred from the money, improve safety and facilitate injured existing to the new MCO, with no disruption in worker return to work. Multiple components of service. MCOs are compensated by the BWC the program had an April 30 enrollment through a portion of employers’ premiums. deadline. The BWC has extended the enrollment deadline until May 25 for two of the programs: Industry-Specific Safety Program and 05/04/2012 Transition Work Bonus Program.

Page 7 of 51 BWC Actuary Says Net Zero Base Rate of Workers’ Compensation (BWC) was Change in 2012 requesting that the claimant be declared to have reached maximum medical improvement under OMA’s Jay Kemo, who attended the Bureau of the allowed conditions at that time. The Workers’ Compensation (BWC) actuarial claimant argued that termination of TTD committee of its board this week, reported that compensation would be premature in light of this there is expected to be no overall movement in authorization, and that he was entitled to base rates for 2012. continued TTD compensation during the course of this testing. The BWC’s actuarial firm, Deloitte Consulting LLP, prepared a rate analysis that BWC’s Chief The Tenth District Court of Appeals disagreed Actuarial Officer, Christopher Carlson, used to with the claimant’s rationale, citing State ex rel. develop his 2012 rate recommendations. In a Jackson Tube Serv., Inc. v. Indus. Comm., memo to BWC Administrator, Steve Buehrer, where the claimant was entitled to the continued Carlson wrote, “I recommend the BWC establish payment of TTD compensation only if the rates which result in no overall statewide rate claimant’s allowed conditions had not reached change for private employers for the policy year maximum medical improvement. starting July 1, 2012. I believe this approach will result in an actuarially sound rate level and will Per Roetzel, it has been the common practice meet the requirement to set the lowest possible before the Industrial Commission of Ohio that if rates of premium consistent with the any additional medical treatment is authorized maintenance of a solvent state insurance fund.” the termination of TTD is not indicated. This case, therefore, is a welcome development, While the 500-plus base rates will be calculated applicable to cases where the claimant has individually and while each rate may experience reached maximum medical improvement. a change, the overall effect is expected to be neutral. Carlson advises that: “Actual changes 04/27/2012 at the employer level could vary significantly based upon their actual experience, employee House Cancels Hearings on WC Reforms classification, expected loss amounts and participation or not in a group rating Introduced last week with a press conference plan.” Actual rates will be formally acted upon and scheduled for hearings this week, workers' by the BWC board in the coming months. compensation reform legislation was pulled from the committee calendar in the Ohio House. No 04/27/2012 official reason was given. The measures are opposed by trial lawyers and Further Approved Diagnostic Testing Does labor unions. The bills are supported by Bureau Not Justify Continued Temporary Total of Workers' Compensation Administrator Steve Benefits Buehrer, who provided excellent testimony last week. OMA Connections Partner, Roetzel & Andress LLP, issued an analysis on an Ohio court case The bills, and particularly the main reform that finds favorably for employers in a workers’ measure (HB 517), provide common sense compensation case in which the claimant has improvements in the medical system that reached maximum medical improvement: In supports injured workers. The legislation would State ex rel. Huffman v. Industrial bring the Ohio system close to the 21st century Commission, the claimant argued that he was in its use of modern tools for care management, entitled to the extension of temporary total tools that are used by all health insurance and disability (TTD) compensation based upon the disability insurance carriers in the U.S., including authorization by the Industrial Commission of provider panels and provider outcome Ohio of diagnostic testing recommended by the measurements. claimant’s physicians to further medically treat him for an injury in an allowed claim. It is a continuing shame to Ohio that the state’s workers’ compensation system remains mired in At the time of this authorization, the Ohio Bureau an outdated and costly medical care

Page 8 of 51 management program that so often fails both services provided to injured workers, improving injured workers and employers. care and cost.

Read a brief summary of the bills prepared by Sponsored by Rep. Barbara Sears (R-Monclova counsel to OMA, Cavett Kreps of Bricker & Twp.), HB 517 would require the Bureau of Eckler, LLC. Workers’ Compensation (BWC) to “issue a report grading quality outcomes of medical care 04/27/2012 organizations (MCOs) and providers within the BWC system—including return-to-work rates—to Open Wound to Hands & Fingers Continue to encourage proper competition between MCOs be Leading Injury and providers to ensure that injured workers receive the highest quality care possible. It also obligates the BWC contract with MCOs to create Among the OMA’s Workers' Compensation a network of providers that meet quality Services customers, open wounds to hands and benchmarks, as well as directions for injured fingers continue to be the most common injuries workers to choose a provider focused on return- that lead to workers’ compensation claims. to-work 45 days following an injury.”

In 2011, there were 400 such cases. In every HB 516, also sponsored by Rep. Sears, would year tested, this is the leading injury, by number “protect injured workers and strengthen the of incidences. BWC by giving the BWC the authority to decertify providers that present a danger to The second and third most prevalent injuries public health and safety, protect the integrity of leading to claims in 2011 were: contusion to BWC fraud investigations by keeping shoulder, arm, elbow or hand (185 claims) and investigation records confidential until the close sprain to lumbar region (97 claims). of an investigation, and require provider decertification appeals to be made in the The Bureau of Workers’ Compensation (BWC) Franklin County Court of Common Pleas.” Division of Safety & Hygiene offers no-charge safety training for all state fund employers, These reforms have been long sought by the including a few web courses, specifically OMA. They are opposed by organized labor Preventing Cuts & Lacerations and Avoiding and the trial bar. Back Trauma. View the press conference on the bills here. While these specific courses may be applicable, the best approach to safety is, of course, 04/20/2012 systematic. If you need help establishing or improving your overall safety management practices, do consider the safety consulting Employer Ordered to Shut Down for services of the BWC, also available at no- Egregious Premium Lapse Violations charge. OMA Connections Partner, Roetzel & Andress, Let us know if you need help accessing any reported that a judge in Cuyahoga County, Ohio BWC services. Contact Georgia Booth, Jay recently ordered Gray Container, a 55-gallon Kemo, or Barb Raduege. drum manufacturer, to discontinue its operations for repeatedly refusing to maintain workers' 04/27/2012 compensation coverage. The injunction against Gray Container, requested by the Ohio Bureau Long-Awaited Workers’ Comp Reforms of Workers' Compensation (BWC), was filed to Proposed protect the company's current employees. Gray Container has appealed the ruling to the Eighth District Court of Appeals. Ohio House Republicans this week introduced a package of three bills (HB 516, HB 517, HB 518) aiming to provide improve the Ohio workers’ 04/20/2012 compensation system. The legislation would produce much needed reforms of the medical

Page 9 of 51 Court Sides with Employer on OSHA Employers that will be participating in a group Recordkeeping Violation Statute of experience rating plan as of July 1, 2012, might Limitations consider: Drug Free Safety Plan, Industry Specific Safety program, and/or Transitional OMA Connections Partner, Roetzel and Andress Work program. LLP, reports that on April 6, 2012, the D.C. Circuit Court of Appeals reversed a longstanding OMA workers’ compensation account managers, precedent regarding the statute of limitations for Georgia Booth, Jay Kemo, or Barb Raduege can violating the Occupational Safety and Health help you further if you have questions. Administration’s (OSHA) recordkeeping requirements. In AKM LLC v. Secretary of 04/13/2012 Labor, the court ruled that the statute of limitations for such violations is six months OSHA Asks Enforcement Agents to rather than five years. Scrutinize Safety Incentive Programs

Per Roetzel: OSHA requires employers to The Occupational Health & Safety record information about employees’ work - Administration (OSHA) released a memorandum related injuries in three ways. Employers must to its field compliance officers and whistleblower (1) prepare an incident report and a separate investigative staff to provide guidance on several injury log within seven days of learning that an employer practices that “can discourage injury occurred; (2) prepare a year-end summary employee reports of injuries,” including safety report, certified by a company executive, of all incentive programs. recordable injuries during the calendar year; and (3) save all of these documents for five years. Retaliating against a worker for reporting an

injury or illness is illegal discrimination. OSHA The court decided that recording violations are indicates it has observed “… that the potential tied to the date of incident, not to the end of the for unlawful discrimination … may increase five year retention requirement. when management or supervisory bonuses are linked to lower reported injury rates.” Roetzel attorney Nathan Pangrace blogged, “This decision is a rare piece of good news for OSHA said that some employers establish the business community in a time where each programs that unintentionally or intentionally passing week brings news of increased OSHA provide employees incentive to not report enforcement. The court’s decision reverses a injuries. Therefore, OSHA’s guidance to its longstanding OSHA precedent and is a staff: such safety incentive programs are to be significant victory for employers.” scrutinized as being a potential violation of OSHA’s Section 11(c) in that some incentive 04/13/2012 programs could constitute unlawful discrimination/retaliatory action against workers April 30 Enrollment Deadline for BWC who do report injuries. In addition, the programs Money-Saving Programs also are viewed as potentially constituting an “employer’s failure to report injuries” and thus a There are some programs of the Bureau of violation of the recordkeeping standard as well. Workers’ Compensation (BWC) that might save your company money which have an upcoming OMA Connections Partner, Calfee, prepared this April 30 enrollment deadline. alert on the matter.

Employers that will not be participating in any 04/13/2012 BWC alternate rating plans as of July 1, 2012, (i.e. group experience rating or group Ohio High Court Clarifies Unemployment retrospective rating) might consider the Drug Benefits Not Used to Calculate Workers’ Free Safety Plan, Industry Specific Safety Comp Awards program, Transitional Work program, and/or Deductible programs. Regarding State ex rel. Warner v. Indus. Comm., OMA counsel, Cavett Kreps, of Bricker

Page 10 of 51 & Eckler LLP, explains: “The Ohio Supreme Court clarified average weekly wage (AWW) Employers will need to train employees on the calculations when an injured worker had a new label elements and safety data sheets by period of unemployment during the year December 1, 2013, with compliance milestones preceding a work injury. Typically, the AWW is in 2015 and full compliance by 2016. calculated by dividing the total wages for the year prior to the injury by 52 weeks. But an According to OSHA: “During the transition period exception to this rule excludes the weeks that to the effective completion dates noted in the correspond with "any period of unemployment standard, chemical manufacturers, importers, due to sickness, industrial depression, strike, distributors and employers may comply with lockout, or other cause beyond the employee's either 29 Code of Federal Regulations control." 1910.1200 (the final standard), the current standard or both.” Per Kreps: “The court explained that a period of seasonal unemployment may be subtracted The 850+ page rule can be found here. from the 52 week standard if the injured worker demonstrates that the weeks of unemployment 03/23/2012 were beyond the injured worker's control. Although receipt of unemployment benefits is contingent on demonstrating some efforts to seek employment, the court found that an injured worker must independently convince the Industrial Commission that the injured worker's unemployment was beyond the injured worker's control. The court also explained that the amount of unemployment benefits received is not included in the total wages calculation when calculating the AWW. “

Employers with seasonal employees will want to note this case.

04/06/2012

OSHA Modifies the Hazard Communication Standard to Adopt the GHS

The Occupational Health and Safety Administration (OSHA) has modified the Hazard Communication Standard (HCS) to adopt the Globally Harmonized System (GHS). This change is intended to improve worker safety and health through more effective chemical hazard communications.

According to, Dianne Grote Adams, president of OMA Connections Partner, Safex, “The Globally Harmonized System (GHS) is an international approach to hazard communication, providing agreed criteria for classification of chemical hazards, and a standardized approach to label elements and safety data sheets. The regulation requirements are planned to be phased in during the next three years.”

Page 11 of 51 Workers' Compensation Legislation Prepared by: The Ohio Manufacturers' Association Report created on June 18, 2012

HB123 WORKERS' COMPENSATION BUDGET (HOTTINGER J) To allow the administrator of Workers' Compensation to waive criteria certain public employers must satisfy to become self-insuring employers; to require bills for medical and vocational rehabilitation services in claims that are ultimately denied to be paid from the Surplus Fund Account under specified circumstances; to make appropriations for the Bureau of Workers' Compensation and for the Workers' Compensation Council for the biennium beginning July 1, 2011, and ending June 30, 2013; and to provide authorization and conditions for the operation of the Bureau's and the Council's programs. Current Status: 4/25/2011 - SIGNED BY GOVERNOR; Some provisions eff.

4/25/11; others 7/29/11

State Bill Page: http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_123

HB124 INDUSTRIAL COMMISSION BUDGET (HOTTINGER J) To set appropriations for the Industrial Commission for the biennium beginning July 1, 2011, and ending June 30, 2013, and to provide authorization and conditions for the operation of Commission programs. Current Status: 4/25/2011 - SIGNED BY GOVERNOR; Eff. 4/25/11

State Bill Page: http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_124

HB186 PROFESSIONAL EMPLOYER ORGANIZATION LAW (ADAMS R) To establish certain financial capacity requirements for professional employer organizations, clarify rights and liabilities of professional employer organizations and client employers, and to make other changes to the professional employer organization law. Current Status: 6/1/2011 - BILL AMENDED, House Commerce, Labor &

Technology, (Third Hearing)

State Bill Page: http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_186

HB252 IMMIGRATION STATUS-CONVICTED FELON (YOUNG R) To require a prosecuting attorney to ask the Immigration and Naturalization Service of the United States to verify or ascertain the immigration status of an offender who has been convicted of or pleaded guilty to a felony, to require a prosecuting attorney if the INS informs the prosecutor that the offender is an illegal alien to notify the alleged felon's employer, the Department of Job and Family Services, the Registrar of Motor Vehicles, and the Secretary of State, to make illegal aliens ineligible for certain state public benefits, and to prohibit the Registrar of Motor Vehicles from issuing a driver's license to an alleged felon with respect to whom a prosecuting attorney has given the Registrar the above notice and require the Registrar to cancel any driver's licenses issued to such an alleged felon. Current Status: 6/8/2011 - Referred to Committee House Transportation, Public

Safety and Homeland Security

State Bill Page: http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_252

HB516 WORKERS' COMPENSATION LAW (HENNE M, HOTTINGER J) To make changes to Ohio's Workers' Compensation Law. Current Status: 4/19/2012 - House Workers' Compensation Subcommittee, (First

Hearing)

State Bill Page: http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_516

Page 12 of 51 HB517 WORKERS' COMPENSATION LAW CHANGES (SEARS B, NEWBOLD C) To allow the Administrator of Workers' Compensation to pay for specified medical benefits during an earlier time frame, to require a workers' compensation claimant that refuses or unreasonably delays treatment without good cause to forfeit compensation and benefits during the time period of refusal or delay, to make changes to the health partnership program, and to make other changes to the Workers' Compensation Law. Current Status: 4/19/2012 - House Workers' Compensation Subcommittee, (First

Hearing)

State Bill Page: http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_517

HB518 WORKERS' COMPENSATION-HEALTH PARTNERSHIP PROGRAM (SEARS B, LANDIS A) To statutorily allow the Bureau of Workers' Compensation to summarily suspend a provider's certification to participate in the Health Partnership Program, to specify procedures for that suspension, and to exempt documents, reports, and evidence pertaining to a workers' compensation fraud investigation from the Public Records Law. Current Status: 4/19/2012 - House Workers' Compensation Subcommittee, (First

Hearing)

State Bill Page: http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_518

HB522 SERVICE PROVIDER-CERTAIN MOTOR TRANSPORTATION COMPANIES (MCGREGOR R) To establish a test to determine whether an individual providing services for or on behalf of certain motor transportation companies is considered an employee under Ohio's Overtime, Workers' Compensation, and Unemployment Compensation Laws. Current Status: 4/24/2012 - Referred to Committee House Commerce, Labor &

Technology

State Bill Page: http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_522

SB139 PROFESSIONAL EMPLOYER ORGANIZATION LAW (HUGHES J) To establish certain financial capacity requirements for professional employer organizations, clarify rights and liabilities of professional employer organizations and client employers, and make other changes to the professional employer organization law. Current Status: 5/16/2012 - House Commerce, Labor & Technology, (Third

Hearing)

State Bill Page: http://www.legislature.state.oh.us/bills.cfm?ID=129_SB_139

Page 13 of 51 POLICY GOAL: An Efficient, Effective Workers’ Compensation System

The Ohio Manufacturers’ Association works with its members companies, the Ohio Bureau of Workers’ Compensation, and the Ohio General Assembly to continually improve processes for injured workers and employers and to drive system costs down. An efficient and effective workers’ compensation system is built on the following principles:

 Injured workers will receive fair and timely benefits and the support they need for getting back to work quickly and safely.

 All businesses will pay fair workers’ compensation rates commensurate with the risk they bring to the system.

 Workers’ compensation rates will driven by actuarial data, and the state’s workers’ compensation insurance system will remain stable, solvent and actuarially sound.

 Workers’ compensation rates will not be structured in a way that punishes one class of manufacturers to benefit another (such as the historical subsidization of group-rated employers by non-group-rated employers).

 Ohio’s workers’ compensation system will be priced competitively to enhance the state’s ability to attract business investment and economic development.

These outcomes would be good for manufacturers and good for Ohio’s overall economy.

Workers’ compensation policy priorities include the following:

 Ensure BWC programs have a sound actuarial foundation. [Note: This seems more like a principle than a specific policy action to be implemented.]

 Consider requiring Managed Care Organizations to compete on price.

 Eliminate the “reasonable suspicion” standard from Ohio’s rebuttable presumption drug statute and incorporate the Louisiana Pacific standards of “voluntary abandonment” for benefits.

 Improve claims management processes, transparency and accountability associated with Ohio’s Self-Insured Employers’ Guaranty Fund.

 Require credentialing/certification of all claims management personnel based on accepted private insurance industry standards.

 Improve rate-making transparency by developing data and reporting on component costs within premium rates.

 Establish retirement benefit offsets and/or age or number-of-weeks caps for permanent total disability (PTD) awards.

Page 14 of 51  Require claimants to show new and/or changed circumstances when filing for permanent total disability (PTD) or permanent partial disability (PPD) benefits more than once.

 Require Industrial Commission hearings to be recorded to improve consistency in outcomes.

 Allow telephonic hearings for permanent partial disability (PPD) claims to lower transaction costs.

 Establish an impairment standard (no consideration of non-medical factors) for permanent partial disability (PPD) cases.

 Terminate the compensation paid for temporary total disability (TTD) effective the date determined by the medical evidence establishing maximum medical improvement.

 Specify that if a temporary total disability (TTD) claim is suspended due to a claimant’s refusal to provide a signed medical release or attend the employer’s medical examination, the claimant forfeits his or her right to benefits during the period of the suspension.

 Allow employers to pay compensation and medical bills without losing the right to contest a claim (payment without prejudice).

 Eliminate Ohio’s “employer of last resort” policy. [???]

 Terminate permanent total disability (PTD) payments at age 75.

 Require permanent partial disability (PPD) claims to be resolved by choosing either the claimant’s medical exam determination or the defendant’s medical exam determination – explicitly prohibiting a compromise between the two.

 Bar claimants in permanent partial disability (PPD) claims from seeking additional percentage awards for the same condition.

Page 15 of 51

OMA Safety & Workers' Compensation Committee Counsel's Report

Thomas R. Sant, Bricker & Eckler LLP Counsel to the OMA June 21, 2012

Since our last meeting of the committee, several cases of interest have arisen from the Supreme Court of Ohio.

1. State ex rel. McNea v. Indus. Comm., Slip Opinion No. 2012-Ohio-1296

On March 29, 2012, the Ohio Supreme Court ruled that a disabled Parma police officer who engaged in the illegal sale of prescription pain killers while he was receiving permanent total disability benefits was engaged in "sustained remunerative employment."

Police Officer Donald McNea was granted permanent total disability benefits in 2004 based on injuries he sustained in the course of his employment. At the time, he was under investigation for suspected illegal sale of prescription drugs. Subsequently, between October 1 and December 23, 2005, Mr. McNea was recorded selling Oxycontin to undercover police informants on four occasions for which he received a total of $6,200. He was arrested on December 23, 2005, and entered guilty pleas and was sentenced to three years in prison in 2007. The Industrial Commission declared that all compensation paid after his first confirmed drug sale in October 2005 constitute an overpayment.

Mr. McNea then filed a Complaint in Mandamus in the 10th District Court of Appeals seeking to have the Staff Hearing Officer's award overruled arguing that there should be no overpayment until he was imprisoned. The Court of Appeals found that there had been no abuse of discretion and Mr. McNea exercised his right to appeal to the Supreme Court. A unanimous Supreme Court affirmed the decision of the 10th District Court of Appeals rejecting his arguments that Mr. McNea's benefits should not have been terminated for any period prior to his interment. The Court determined that he was performing sustained remunerative work through late December and that there was no evidence that his medical condition changed afterwards to preclude his continuing endeavor.

The rule now stands that if you are receiving permanent total disability benefits, you best not be selling illegal drugs.

2. State ex rel. Corman v. Allied Holdings, Inc., et al., Slip Opinion No. 2012-Ohio-2579

5539447v1 Page 16 of 51

This case is another in a long line of voluntary abandonment cases that have been examined by the Ohio Supreme Court in recent years. Mr. Corman was injured in the course of his employment in 2002. The year after his sustaining that injury, he retired from Allied Holdings, Inc., and never went to work again. The Supreme Court pointed out that the record contained no evidence that he was medically incapable of working. The Commission denied his request for temporary total disability benefits, finding that his retirement was voluntary and unrelated to his injury. It also noted that Mr. Corman did not seek other work after he left Allied Holdings, Inc., showing that he intended to abandon the labor market. His mandamus action to the 10th District Court of Appeals resulted in his being denied a writ of mandamus. Even though Mr. Corman contended that he had retired from his employment because of the injury, the Court found that there was no evidence of a medical inability to work after his retirement in 2003.

5539447v1 2 Page 17 of 51 Labor & Employment Blog: Extra Precautions for Ohio Industrial Commis... http://ralawemployment.blogspot.com/2012/06/extra-precautions-for-ohio...

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6.14.2012 Extra Precautions for Ohio Industrial Commission Hearings When All Three of the Members are Not Present About Roetzel's Employment A recent Tenth District Court of Appeals for the State of Ohio case Services Group addressed a rarely seen issue involving third-level Ohio Industrial Commission hearings, specifically those set in front of the three commissioners. The case of State ex rel. Evert v. Indus. Comm., Employment Services 2012-Ohio-2404 was decided on May 31, 2012, and involved a death Roetzel's Employment Services' claim and the widow’s request on behalf of her late husband for the attorneys counsel and represent functional loss of use of all four of his extremities. In its own right, the public and private companies, issue appears to have been quite compelling, but the focus for the public sector entities and not-for- Court of Appeals was in fact a procedural issue. At stake procedurally profit organizations across the was the validity of a Commission decision when all of the members entire spectrum of labor, were not present and a reviewable record was not kept. employment and human resource issues. We work cooperatively As part of the appeal, the magistrate issued a decision highlighting the with in-house counsel, relevant facts. Of note, the Commission held a hearing with only two of executive-level managers, public its three members in attendance. In the subsequent commission order, officials, risk management there was a split decision between the two attending members, with professionals and human resource the non-attending member casting the deciding vote. The non-attending departments in handling all commissioner claimed she reviewed a summary of “the testimony and employment-related issues, arguments” presented by the parties. No actual transcript or audio including federal and state labor recording of the hearing existed. and employment law compliance, preparation and implementation In its decision, the court focused on the fact that it could not know of personnel policies and from the record before it what happened at the hearing attended only employment agreements, by two commissioners. In highlighting the importance of due process employee hiring, employee and impartiality by the commissioners, the court agreed with the discipline, leaves of absence and magistrate’s recommendation that the Commission be ordered to accommodation issues, affirmative conduct a new hearing with all members in attendance or at which a action, discrimination claims, reviewable record is kept. workers' compensation, benefit administration and health and safety regulations. View my complete profile Contact: Christopher R. Debski

Page 18 of 51

1 of 3 6/20/2012 12:08 PM

Memorandum

To: The Ohio Manufacturer’s Association

COLUMBUS l CLEVELAND Cc: Ryan Augsburger CINCINNATI-DAYTON

BRICKER & ECKLER LLP 9277 Centre Pointe Drive From: Bricker & Eckler LLP Suite 100 West Chester, Ohio 45069-4891 MAIN: 513.870.6700 Date: March 7, 2012 FAX: 513.870.6699 www.bricker.com Re: Overview of Medical Marijuana Ballot Initiatives and Potential [email protected] Concerns for Ohio Manufacturers

Elizabeth C. Stock 513.870.6698 [email protected] I. Overview of the Amendments

Maria J. Armstrong Two pending ballot issues propose amendments to the Ohio 614.227.8821 Constitution that would make it legal for certain individuals to grow, process, [email protected] distribute, purchase, sell and use marijuana and related paraphernalia in Ohio for certain medical reasons. Both the Ohio Alternative Treatment Amendment and the Ohio Medical Cannabis Amendment have been approved by the Ohio Attorney General and the Ballot Board, meaning that both petitions are now eligible to be circulated throughout Ohio for signatures.

Proponents of the issues now must gather signatures from registered voters across the state and submit those to the Ohio Secretary of State on or before July 4, 2012 in order to be eligible for the 2012 General Election. If, after review and verification of the signatures, it is determined that at least 385,253 valid signatures were submitted, one or both of the ballot issues will appear on the November ballot.

The issues are proposed by two different groups and do not appear to be a coordinated effort. The Ohio Alternative Treatment Amendment was approved by the Ballot Board in October of 2011. It is run by the founder of the Ohio Chapter of NORLM (National Association for the Reform of Marijuana Laws) and three other citizens, including Geoff Korff, a Salem Ohio attorney who describes himself as a “business executive in the manufacturing industry.” He is apparently the Vice President and General Counsel at Quaker City Castings. The Ohio Medical Cannabis Amendment was approved for circulation in January of this year, and is proposed by a bi- partisan group of individuals, including Dr. Bob Fitrakis. Bob Fitrakis is an attorney, journalist and Professor of Political Science at Columbus State Community. He is a perennial Green Party candidate and election reform advocate.

5225277v1 Page 19 of 51 Bricker & Eckler ATTORNEYS AT LAW Medical Marijuana Ballot Issues March 7, 2012

The two proposed amendments are similar in several significant respects discussed below. If passed by the voters, they would have an impact on Ohio manufacturers and all Ohio employers.

II. Impact on Ohio Manufacturers

Manufacturers (like many other Ohio employers) typically impose strict prohibitions against the distribution, possession, or use of illegal drugs (including marijuana) in the workplace, as well as against being under the influence of illegal drugs (including marijuana) in the workplace. In conjunction with such policies, manufacturers often require pre-employment, reasonable suspicion and/or random drug testing of applicants and employees.

As discussed further below, both Amendments would restrict, either expressly or indirectly, the ability of Ohio manufacturers to test and/or discipline their employees for using or being under the influence of marijuana in the workplace. Additionally, the Amendments would raise a variety of legal and practical uncertainties for Ohio manufacturers regarding testing and discipline for marijuana use. Although some of those questions may be answered through subsequent administrative regulations authorized under both Amendments, inevitably, there will be questions that will only be answered following expensive and time-consuming litigation.

A. Limitations on Drug Testing

Under both Amendments, the use of medical marijuana would be legal for certain individuals for medical purposes. Therefore, under both Amendments, asking about and/or testing for marijuana use would likely constitute a “disability-related inquiry” under the Americans With Disabilities Act (“ADA”).1 As a result, if either Amendment were to pass, the ADA would potentially prohibit Ohio employers from asking about and/or testing for marijuana use, except: (a) following a conditional offer of employment (provided all applicants in the same job category were subject to the same inquiry/test); and/or (b) if the employer could show that the inquiry/test was “job related and consistent with business necessity.”

As a practical matter, this limitation may not significantly impact pre-employment or reasonable suspicion testing; however, Ohio manufacturers may face challenges with their ability to conduct random drug testing for marijuana use if either Amendment were to pass.

B. Limitations on Ability to Discipline Employees or Refuse Employment

1. Positive Drug Test, Without More, Likely Insufficient for Termination, Discipline or Revocation of Job Offer

In the event an otherwise proper employee drug test produced a result that was positive for marijuana use, both Amendments would appear to prohibit Ohio employers from terminating

1 Inquiring about or testing for illegal drug use is not considered a medical inquiry or medical examination under the ADA and, therefore, is not subject to the ADA’s general prohibitions against medical inquiries and/or examinations.

2 5225277v1 Page 20 of 51 Bricker & Eckler ATTORNEYS AT LAW Medical Marijuana Ballot Issues March 7, 2012

or otherwise disciplining an employee (or denying employment to an applicant) based solely on that positive test result.

a. Alternative Treatment Amendment: This Amendment states that it does not require employers to permit employees to work while under the influence of marijuana or use marijuana in the workplace; however, it also states that “a patient must demonstrate impaired behavior as a result of cannabis use to be considered under the influence of cannabis.” Although not at all clear, this language suggests that denial of employment, termination or other discipline based on nothing more than a drug test that was positive for marijuana would be unlawful. Presumably, to justify an adverse employment action, the employer would also have to identify evidence of the employee’s impaired behavior and, somehow, establish that the impaired behavior was “a result of” the marijuana use.

b. Medical Cannabis Amendment: This Amendment provides, with no elaboration, that “[e]ligible residents shall have the right to be free of discrimination and interference from the State of Ohio with regard to their use of medical Cannabis.” The summary language to be included with the initiative petition is worded so as to indicate that the prohibition against discrimination applies generally, and not just to the State. Assuming that is the case, then, as with the Alternative Treatment Amendment, denial of employment, termination or other discipline based on nothing more than a drug test that was positive for marijuana would likely be unlawful under the Medical Cannabis Amendment.

2. Discipline for Lawful Possession or Distribution of Marijuana Prohibited

a. Alternative Treatment Amendment: This Amendment expressly prohibits Ohio employers from disciplining employees or otherwise denying someone a right or privilege of employment for acquiring, providing or possessing marijuana as authorized under the Amendment.

b. Medical Cannabis Amendment: If this Amendment’s non- discrimination provision (above) applies to private entities (as opposed to applying only to action by the State of Ohio), then it is likely that the Amendment, like the Alternative Treatment Amendment, would prohibit Ohio employers from terminating or otherwise disciplining an employee for lawful possession or distribution of medical marijuana.

III. Conclusion

Both Amendments, if passed, are likely to be of concern to Ohio manufacturers and other Ohio employers, as they would likely create significant limitations and legal and practical hurdles regarding the testing and disciplining of applicants and employees for marijuana use, possession and/or distribution in the workplace. If you have questions about the Amendments or this summary, please feel free to contact Liz Stock at 513.870.6698 or [email protected].

3 5225277v1 Page 21 of 51 not report injuries.” Henceforth, such safety incentive programs are to be scrutinized as Print | Close This Window being a potential violation of OSHA’s Section 11(c) in that some incentive programs could constitute unlawful OSHA Issues discrimination/retaliatory action against workers who do report injuries. In addition, Enforcement the programs also are viewed as potentially constituting an “employer’s failure to report Memorandum injuries” and thus a violation of the recordkeeping standard as well. Area Directed at Administrators are directed to institute both Section 11(c) and recordkeeping inspections Employer Safety under such circumstances.

Incentive Programs The memorandum does state that programs designed to encourage safe work practices, and Post-Accident such as incentives to promote worker participation in safety-related activities, such Discipline Measures as identifying hazards or participating in investigations of injuries, providing safety- Wednesday, April 11, 2012 logoed T-shirts, promoting safety committees and the like, would not be illegal OSHA has long “unofficially” disapproved under the new enforcement policy. The end of employer safety incentive programs such result perhaps is that it is acceptable to as “safety bingo,” “free pizza Fridays,” reward efforts but not the results achieved. facility bonuses and even the formerly ubiquitous “No Lost Time Incidents in The enforcement memorandum also _____Days” signage at plant entrances. For provides that disciplining an employee for their part, unions have long complained that being involved in an accident may be such programs discourage employees from problematical in three situations. First, and reporting injuries because of peer pressure perhaps understandably, an employer policy or other factors, and that such programs in of automatically disciplining employees who and of themselves have led to the steadily are involved in an injury regardless of fault declining reported injury and illness rates is now likely per se discriminatory under over the past decade. Accordingly, various Section 11(c). In addition, disciplining an OSHA Area Offices have been “suggesting” employee for making a “late” report, or to employers that they discontinue such otherwise violating proper reporting programs when a Compliance Officer is on procedure is now suspect. Such instances site for another reason, even though they are investigated on a case-by-case basis, as have no formal authority to do so. OSHA believes that employees may not be disciplined for a late report if they “do not Last month, OSHA issued an enforcement realize immediately that their injuries are memorandum to its Regional Administrators serious enough to report..." stating that “some employers establish programs that unintentionally or intentionally provide employees incentive to

Page 22 of 51 Finally, the memorandum also brings into This alert is provided by Calfee, Halter & question even disciplining an employee who Griswold LLP for education and is found to be “at fault” in an accident for information purposes only. This alert is not the violation of a safety rule. These, too, are intended to provide legal advice on specific to be investigated on a case-by-case subjects. The resolution of legal issues basis. Such investigation would focus on depends upon the specific facts of a the specificity of the safety rule and whether particular situation and the laws involved. the rule has been enforced in non-accident This alert may be considered advertising situations. This apparently leaves OSHA under applicable laws. telling employers on the one hand that they must have evidence of enforcement of their safety rules in order to raise the defense of “employee misconduct” to an OSHA citation, while on the other hand telling employers they should not enforce safety rules, at least in an actual injury situation.

It remains to be seen how local Area Offices will act upon the new enforcement memorandum.

>> Sign up to receive Calfee e-alerts

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For additional information and discussion on this topic, please get in touch with your regular Calfee contact or one of the Workers' Compensation & OSHA attorneys listed below:

William L. S. Ross 216.622.8221 [email protected]

Jeffrey J. Lauderdale 216.622.8545 [email protected]

William B. McKinley 216.622.8550 [email protected]

Page 23 of 51

Draft

To: Richard E. Fairfax, OSHA Deputy Assistant Secretary Subject: Employer Safety Incentive and Disincentive Policies and Practices

Dear Mr. Fairfax,

As you may know, the Ohio Manufacturers’ Association (OMA) is a member-supported and member-driven trade association of manufacturing sector employers in the State of Ohio. This is a State and an industry that have been hard hit by economic recession. We do take the time to write to you at this point on two matters.

First, congratulations on your recent AIHA William Steiger Memorial Award. It is no doubt well-deserved and must be a particular source of pride given your industrial hygienist background.

Second, we wish to express our extreme concern with the Enforcement Memorandum dated March 12, 2012, which addresses the subject line above. We have read the memorandum over several times and feel compelled to respond and provide a perspective from what could be considered the “real world”. Please initially understand that OSHA and the OMA share the same goal and desire for safe work places. The Enforcement Memorandum, however, seems based solely on a politically motivated anti-American business complaint that, somehow, the steadily decreasing occupational injury and illness rates are not “real,” but are instead a figment of safety incentive programs and disciplinary action. Such a view serves as a disservice not only to the continuing safety and health efforts of our members and others in the employer community (sometimes referred to as the “regulated community,” and at other times, depending on the political trade winds, as “stakeholders”), but also does a disservice to your own agency’s efforts over the

{01527433.DOCX;1 } Page 24 of 51

decades to improve work place safety and health.1 In addition, the Enforcement Memorandum gives little guidance to employers and leaves it to the individual perspectives of your Compliance Officers to determine whether or not a practice or policy is compliant.

It is important to establish that we are talking about and attempting to modify human behavior. We all agree that ensuring a safe physical work place is essential, but the most predominate factor to a safe work place is that of the individual. With decades of experience in dealing with worker safety, we have found that most injuries have occurred from behaviors. So, in order to change behavior, individuals must see a reason to change behavior and people must be given a positive incentive to change or a disincentive not to behave in a non- appropriate manner. It is basic human nature. Incentive programs can be a wonderful tool to positively impact people in a nurturing environment in order to obtain a desired outcome. Likewise, the agency has agreed that establishing work rules is clearly an integral part of any successful safety program. It is also clear that should individuals disregard the rules corrective action must be employed to prevent reoccurrence, especially if an injury has occurred. The behavior must be corrected. Typically that is in the form of discipline. It too is an integral tool in the safety program, just as the agency performs inspections of workplaces and, should it encounter non-compliances, it will issue citations and penalties. We have never found OSHA to issue t-shirts and provide pizza parties to manufactures for merely trying to comply. So why a different standard for the regulated community?

Everyone knows this is not a perfect world, but we do believe most of industry does not want to see their employees placed in harm’s way or injured. In order to facilitate that there must be mechanisms, real tools, which can be utilized to allow this to occur. We all also know that most individuals will comply with work rules and safety guidelines. But there are some that

1 We would also note the steadily declining occupational fatality rates. Since presumably no one is complaining that this is a product of a lack of reporting, it is instead indicative that the steadily declining related injury and illness rates are valid and not artificial .

{01527433.DOCX;1 } Page 25 of 51

will not. Therefore, rules must be employed and enforced.2 Otherwise there will be chaos. Industry must be able to deal with its employees in its own way. Additionally, with all the initiatives that require attention, we are surprised that the agency would want to micro- manage issues such as pizza parties and how employers communicate with their workforce through such methods as display boards, etc..

This Enforcement Memorandum will not provide value to the agency or the regulated community. It will create confusion due to the amount of subjectivity left to the Compliance Officers Indeed, the gist of the memorandum is to tell employers that it is preferable to reward the effort (safety committees, safety logoed tee-shirts, etc.), as opposed to rewarding the results (the purpose of most safety incentive programs). Returning, again, to normal OSHA processes, you issue citations for “results” (alleged violative conditions), as opposed to rewarding or penalizing effort or lack thereof. The simple point of changing behavior has been overlooked for the sake of chasing unfounded fears. Employers who are a member of our organization or otherwise are not trying to retaliate or discriminate. They are attempting to keep them safe and prevent injuries, not under-report. The bottom line here is the agency needs to promulgate objective, meaningful performance based standards and let employers get the job done. Keep the fear and unfounded suspicions out of regulatory affairs.

Thank you for your time and attention into this matter, and we ask that you withdraw the Enforcement Memorandum at this time.

Sincerely,

Ohio Manufacturers’ Association

cc:

2 Our lawyers advise us of something called the “employee misconduct” defense to an OSHA citation. Apparently, part of proving this defense is showing that the work rule allegedly violated had been enforced in the past. Thus, it would seem that OSHA is telling employers on the one hand that it needs proof of safety rule enforcement yet, on the other hand, suggesting to employers that it is somehow “discriminatory” to enforce safety rules (at least in injury situations).

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Money-Saving BWC Program Eligibility Homepage » Communities » Safety and Workers' Compensation Management » Money-Saving BWC Program Eligibility

Program descriptions Partners Group Programs

If you participate in one of You can also take But you cannot elect these these mutually exclusive advantage of these BWC BWC programs or take BWC rating programs: premium-reducing associated program programs: discounts:

Group-experience rating Deductible programs Join a group within your Safety programs Small Deductible Program industry to combine your Drug-Free Safety Program Large Deductible Program experience and claims with Safety council (2-percent Safety programs other group members to performance rebate only) Industry-Specific Safety Safety council (2-percent receive a premium discount. Program participation bonus)

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EM Cap Deductible programs This cap on an individual Safety programs Small Deductible Program employer's experience modifier Safety council Large Deductible Program (EM) minimizes the effects of a Industry-Specific Safety Safety programs significant premium increase. It Program Drug-Free Safety Program will equal 100 percent of the Claims management previous year's published EM programs whether it was an individual or $15K Medical-Only Program group EM. Transitional Work Bonus Program Vocational rehabilitation

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One Claim Program Safety programs Deductible programs Designed for employers Safety council Small Deductible Program Industry-Specific Safety Large Deductible Program recently removed from a group- Page 46 of 51 Program open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com experience-rating program, this Program Safety programs program can earn them up to a Claims management Drug-Free Safety Program 20-percent discount off the programs base rate during the initial year $15K Medical-Only Program of eligibility. Transitional Work Bonus Program Vocational rehabilitation

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Individual-paid-loss- Safety programs Deductible programs retrospective rating (not Safety council Small Deductible Program group-retrospective rating) Large Deductible Program Claims management Individual employers can programs Safety programs possibly earn a premium $15K Medical-Only Program Drug-Free Safety Program reduction by assuming a Vocational rehabilitation Industry-Specific Safety portion of the risk. . Program Policy management programs Policy management Early payment discount (aka programs FlexPay) Go-green discount Lapse-free discount

Claims management programs Transitional Work Bonus Page 47 of 51 open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Program

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* Can elect either early payment discount or go-green discount but not both.

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Drug-Free Safety Program (DFSP) – Implement BWC’s DFSP for a potential discount of 4-percent at the basic level or 7-percent at the advanced level (15-percent random testing required).

Safety council – Participating in local safety council meetings can result in a 2-percent rebate for participation and potentially a 2-percent bonus rebate for improved safety performance.

Industry Specific Safety Program – Offered through the BWC’s Division of Safety & Hygiene, this program allows employers to earn a potential discount of 3-percent by completing an online safety management self-assessment and completing one, two or three loss-prevention activities (depending on your payroll size). Activities include industry-specific training classes, attendance at BWC’s Ohio Safety Congress & Expo and/or on-site field consulting with a BWC safety expert. Page 49 of 51 open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com If your payroll is: Less than or equal to $100,000, complete one loss-prevention activity More than $100,000 up to $300,000 complete two loss-prevention activities More than $300,000, complete three loss-prevention activities

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$15K Medical-Only Program– Employers who choose to participate in this program pay up to $15,000 in medical and pharmacy bills. Once enrolled, the employer is responsible for the bills in all medical- only claims (claims with seven or fewer lost days from work).

Salary Continuation – The employer has the option at the onset of a lost-time claim (a lost-time claim is defined as a case involving 8 or more lost work days, not necessarily consecutive) to pay the worker’s salary in lieu of BWC temporary total disability compensation.

Transitional Work Bonus Program – Helps injured workers return to productivity by providing modified job duties that accommodate their medical restrictions. The worker receives a full paycheck with the goal of returning to his or her original job. Employers with an approved transitional work program may receive a “back-end” discount of up to 10-percent (approved transitional work program applicable to claims with dates of injury within that policy year).

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These programs help employers lower their premiums by offering an upfront premium discount in the form of a per-claim deductible. Deductible programs encourage employers to focus on workplace health and safety to reduce injuries and illness. Employers who effectively manage their workers’ compensation claims and related costs will see a financial benefit.

Small Deductible (levels from $500 - $10,000 per claim) – The deductible level selected may not exceed 25 percent of the employer’s annual premium.

Large Deductible (levels from $25,000 to $200,000 per claim) – The deductible level selected may not exceed 40 percent of an employer’s annual premium. Reviewed or audited financial statements (depending on deductible amount) prepared in accordance with generally accepted accounting principles for the three most recent fiscal years will be required. If you select a deductible level of $25,000 or more, you have the option of choosing an annual aggregate stop loss limit.

Go to ohiobwc.com for specific program details

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