1 WORKERS' COMPENSATION DIVISION 2 STATE OF OREGON 3 4 5 6 7 8 9 10 TRANSCRIPT OF MEETING 11 September 11, 2019 12 13 14 15 16 17 18 19 20 21 22 23 24 25 -1- 1 INDEX OF ATTENDEES 2 3 Attending 4 Fred Bruyns Workers' Compensation Division 5 Trent McGath City County Insurance Services 6 Bob Brandkamp AVISTA 7 Diana Burnette KPD Insurance 8 Jeff DeHaan Hays Companies of Oregon 9 Jaye Fraser SAIF Corporation 10 Sue Quinones City of Portland 11 Sean Staub SEIU 12 Rolanda Webb AVISTA 13 J.P. Agnesse Portland General Electric Company 14 Chris Hill S | D | A | O 15 Denny Carter Les Schwab Tire Centers 16 Daija Tucker KPD Insurance 17 Sarah Key Les Schwab Tire Centers 18 Aaron Fellman Workers' Compensation Division 19 Dave Dahl Division of Financial Regulation 20 Jason Cupp Workers' Compensation Division 21 Jody Howatt Workers' Compensation Division 22 Adam Breitenstein Workers' Compensation Division 23 Sally Coen Workers' Compensation Division 24 Daneka Karma Workers' Compensation Division 25 Barbara Belcher Workers' Compensation Division -2- 1 TRANSCRIPT OF MEETING 2 3 (00:09) So welcome to all of you. Thank you very 4 much for joining us this afternoon. We have more people in 5 attendance than I thought we would have. Is there anyone on the 6 telephone with us? I'm not sure they can hear me. Anyone on 7 the telephone with us. 8 (00:31) Yes. 9 (00:33) Yes. 10 (00:34) Okay, excellent. 11 (00:35) Les Schwab Tire enters has representatives on 12 the phone. 13 (00:35) Okay, wonderful. And just a moment ago when 14 I was talking, could you hear me okay? 15 (00:45) Yes, we can. 16 (00:46) Oh, good. Okay. So again, 17 thank you very much for coming. I think most of you have been 18 involved in advisory committees before but I just want to tell you that 19 it's more of an informal process than, say, a public hearing, which we 20 will also have on these rules later in the process. But this is an ideal 21 time to help us shape the rules that will eventually be proposed for 22 public testimony. 23 24 So, let us -- just give us your best 25 -3- 1 advice, and we will do our best to consider all that 2 advice and craft proposed rules that we will send out 3 to all of you later on in the process. 4 As we're going through the agenda, if there 5 are potential rule changes that will have fiscal 6 impacts to you or the people that you represent, 7 please let us know. We do rely on that information. 8 And we do have to file a fiscal impact estimate with 9 the Secretary of State when we file proposed rules, so 10 please give us the best information you have. I know 11 sometimes it will be difficult to put an actual dollar 12 amount on anything but if you can give us just some 13 idea of the extent of the impact, that will be very 14 helpful. Thank you for that as we go forward. 15 If you're on the telephone with us, there 16 isn't much to keep in mind, except if you have to 17 leave for any reason, please do not put us on hold, as 18 we may end up getting your background music. You may 19 dial into the meeting again if you'd like, if you do 20 need to leave. 21 My name is Fred Bruyns and I coordinate the 22 rulemaking process for the workers' compensation 23 division. And with that, I'd like to go around the -- 24 let's actually first start with our telephone folks so 25 we don't forget you. Please introduce yourself to the -4- 1 committee, and I want you to fully participate. 2 You're welcome just to listen, of course, but we want 3 you to have, you know, the kind of participation level 4 that you would have if you were here in person. So 5 could you introduce yourself to the committee. 6 (2:46) Sure, I'll go first. My name is 7 Denny Carter. I'm the (unintelligible) service 8 manager for Les Schwab Tire Centers. And we have two 9 other representatives joining us today and I'll let 10 them introduce themselves. 11 (02:59) Welcome, Denny. Anyone else? 12 (03:05) This is Diana Burnette from KPD 13 Insurance. 14 (00:39) Welcome, Diana. 15 (03:11) Thank you, and I'm 16 joined by Daija Tucker from our office as well. 17 (03:16) Okay. Welcome to you 18 both. Anyone else? Hearing no one, let's begin with 19 Bob. If we can go around the table and introduce 20 yourselves. 21 (03:30) Sure. 22 Bob Brandkamp, risk manager with AVISTA Corp out of 23 Spokane, Washington. 24 (03:36) Rolanda Webb with AVISTA Corp., 25 payroll and HRS manager. -5- 1 (03:40) J.P. Agnesse, risk manager, 2 Portland General Electric. 3 (03:45) Chris Hill, I'm an underwriter 4 with Special Districts Association from Oregon 5 (03:50) David Dahl, I'm an 6 actuary with the Division of Financial Regulation. 7 (03:55) I'm Sean Staub. Research with 8 SEIU local 503. 9 (04:00) Corina Spencer-Scheurich. I'm an 10 attorney with the Northwest Workers' Justice Project. 11 (04:04) Sue Quinones. Workers' Comp 12 manager for the City of Portland. 13 (04:08) Hi, I'm Jeff DeHaan. I'm with 14 Hays Companies of Oregon. We're an insurance 15 broker specializing in work comp. 16 (04:15) Trent McGath,City County Insurance 17 Services, risk information manager. 18 (04:20) Daneka Karma, policy manager with 19 the Workers' Compensation Division. 20 (04:25) Jody Howatt, Workers' Compensation 21 Division, self-insurance program. 22 (04:30) Jason Cupp, manager of 23 the self-insurance registration and reimbursements 24 25 -6- 1 units with Workers' Compensation Division. 2 (04:37) And I'm Aaron Fellman, I'm the 3 policy analyst with the Workers' Compensation 4 Division. 5 (04:40) And I will leave it up to you folks, 6 but you're welcome to have -- we would like you 7 introduce yourselves to the committee if you can. 8 (04:47) I'm Barb Belcher, I'm the employer 9 (unintelligible) manager for the Workers' Compensation 10 Division. 11 (04:53) Adam Breitenstein, 12 (unintelligible) section manager, Workers' 13 Compensation Division. 14 (04:57) Sally Cohen, deputy administrator, 15 Workers' Comp Division. 16 (05:01) Jaye Fraser, SAIF corporation. 17 (05:08) Again, welcome to everyone. And do 18 you have any questions about the process? Or before 19 we begin, I'm actually going to turn everything over 20 to Aaron to take us through the agenda. But any 21 questions about the process or where we're going from 22 here? Okay, then, Aaron, take it away. 23 24 (05:25) All right. Good afternoon everybody. 25 I'm Aaron Fellman. I'm the policy analyst -7- 1 who prepared these issue documents. Thank you all for 2 coming. 3 Just a rule of warning, we're going to be 4 jumping around a little bit in these, to try to 5 prioritize the issues which I think are going to 6 require the most discussion? So thank you in advance 7 for your patience there. We will be starting 8 straightforwardly enough with issue number one. This 9 is concerning Chapter 4-36, Division 85, Rules 32 and 10 -3. Premium assessment for self-insured employers and 11 employer groups. And the issue on the table is that 12 the method for determining accessible premium under 13 current rule, we believe may underestimate 14 self-insured employers would have paid had they been 15 insured employers. 16 Why is this relevant? Statue provides that 17 assessments for self-insured employers will be based 18 on what they would have paid had they been insured. 19 The method currently prescribed under rule for 20 determining the system premium, is that it will be 21 calculated based on the lowest rates filed by a single 22 insurer. I'm going to, really quickly, go over some 23 of the elements that go into an insurer's filed rates, 24 just for anybody who may not be as familiar. 25 Basically there's three that are relevant -8- 1 to us. The first is base rates, which are applied to 2 payroll and reflect the direct costs of losses. The 3 costs of the indemnity and medical benefits that the 4 law requires. Base premium is then modified by a lost 5 cost multiplier, or LCM, which provides for the 6 insurers' expenses. Things like salaries, office 7 space, as well as profit. 8 And then, finally, by a premium discount 9 rate, which offsets the expense components premium for 10 larger employers, recognizing that they tend to entail 11 proportionally lower expenses for insurers. 12 So getting back to the issue, the rule 13 requires us to use the lowest rates on file. Pretty 14 much all insurers to use the same NCCI base rates. So 15 the determiner factor is usually who has filed the 16 lowest lost cost multiplier. And in recent years this 17 has usually been 1.0, or in some cases lower, which 18 has a couple of implications.