Accident Fund reverses stance, gives workers comp benefits to Joplin, Mo., hero
October 24, 2011 - 1:54pm
JOPLIN, Mo.—Accident Fund Insurance Co. of America is reversing its denial of workers compensation benefits for a Joplin, Mo., man deemed a hero for saving three men with Down syndrome from the Joplin tornado.
According to a widely reported Associated Press story, Mark Lindquist suffered broken ribs, a shoulder injury, the loss of most of his teeth and spent about two months in a coma after 200 mph winds tossed him nearly a block.
A Missouri Senate resolution hailed him as a “true hero” for helping protect the three middle-aged men living in a group home that had no basement.
On May 22, Mr. Lindquist and a co-worker placed mattresses over the three men and then laid atop the mattresses to help
This is a very heartening development in a story of bravery and tragedy. A Missouri social worker almost died trying to protect three developmentally-disabled men during the horrific Joplin tornado last May. His employer's Workers' Compensation insurer initially determined that he was ineligible for benefits under state law. The carrier has now reversed that decision and will pay his millions of dollars in medical expenses.
Did the insurer change its mind because the Associated Press ran a story in newspapers across the country about the man's predicament? Perhaps. Whatever its motivations, the important thing is that the carrier is providing the necessary benefits. In America, we don't let heroes go bankrupt simply because they did the honorable thing. Three cheers to the carrier for seeing it that way.
In the long list of commercial insurance coverages, Employers' Liability doesn't get a whole lot of attention. Part One of the Workers' Compensation and Employers' Liability Insurance Policy gets the spotlight because most of the losses the policy covers are payments due under the relevant Workers' Compensation law. However, most employers have at least some exposure to employee injury and disease losses that Workers' Compensation doesn't address. This episode of Ask Tim takes a look at this neglected coverage and the New York-specific wrinkles that producers need to be aware of.
In case any of you thought that the alarm I sounded in episode #21 of the podcast (which described a potentially major coverage gap in the ISO Homeowners policy) was theoretical, take a look at a New York trial court's September 27 opinion in the case of Josma v. Interboro Insurance Co.:
Plaintiff alleges that she entered into a contract on or about June 9, 2010 with Nubia to perform work, labor, and services, and to furnish materials, in connection with the addition of a second story onto plaintiff's premises located in Uniondale, New York. Nubia allegedly began work shortly thereafter, which included removal of the house's roof and the placing of a tarp over the open portions of the roof at the end of each work day. On or about July 13, 2010, a wind and rainstorm allegedly caused portions of the tarp to be removed from plaintiffs roof and exposed the openings in the roof to the elements. Plaintiff alleges that because Nubia failed to properly secure the tarp over the open portions of the house's roof, rain from the storm entered the plaintiff's house and caused damage to the interior of the house, as well as to personal property.
Nubia was insured by a Commercial General Liability insurance policy through Kingstone at the time of this incident...
Nubia notified Kingstone that it was seeking coverage under the Kingstone policy for plaintiff's claim against Nubia for the damage to plaintiff's home and property and Kingstone disclaimed coverage based upon the exclusion in the Kingstone policy for "property damage or products/completed operations liability arising out of your work which involves the removal and/or replacement of roof materials," among other items. In addition, plaintiff sought coverage through her homeowner's policy with Interboro, but Interboro denied coverage because the premises were not plaintiff's primary residence and were not occupied by the homeowner, contrary to the information contained in plaintiffs insurance application to Interboro, which was allegedly prepared and submitted by defendant First Choice Coverages. [EMPHASIS ADDED]
This isn't just theory, folks. Carriers can and do deny coverage because an insured allegedly did not reside in the home.
On April 25, 2009, Jacob Hymes was operating his 2005 Harley Davidson motorcycle when he collided with a 2001 Chevrolet Malibu operated by Robert Meyer. Meyer was subsequently determined to be at fault for the accident. However, Meyer's liability insurance proved to be insufficient to fully compensate Jacob for the injuries he sustained in the accident.
Jacob had not elected to have underinsured motorist coverage from his primary insurer, GEICO, and therefore turned to his parents' policy with Allstate. Allstate denied Jacob's claim for underinsured motorist coverage, relying on the policy's "household exclusion." Allstate subsequently initiated this proceeding via complaint for declaratory judgment against the Apellants, seeking a determination that the policy did not cover Jacob's injuries in this case. The Appellants filed an answer and new matter, and thereafter filed a motion for judgment on the pleadings. The trial court granted Allstate's motion and dismissed Jacob's complaint. This timely appeal followed.
On appeal, the Appellants raise one issue for our review:
Did the lower court err in granting declaratory relief to Allstate and determining that a "Household Exclusion" barred recovery by Jacob Hymes of underinsured motorist benefits under his parents' insurance policy when Hymes suffered serious injuries while not "in, on, getting into or out of" his motorcycle and instead suffered those injuries after being thrown from the motorcycle and into the windshield and onto the ground some twenty feet away from the point of impact?
This is sad. A young man, through no fault of his own, suffers serious injuries in an auto accident. The at-fault driver doesn't have enough liability insurance to fully cover the injuries. The injured person had chosen not to buy Uninsured/Underinsured Motorist Coverage. Because he doesn't want to start out life with both a serious disability and medical bankruptcy, he desperately tries to find UM/UIM coverage under his parents' insurance. The Pennsylvania court rightly said no:
As explained by the trial court, our review should not result in an absurd construction of the policy. Words of "common usage" in an insurance policy are to be construed in their natural, plain, and ordinary sense, and a court may inform its understanding of these terms by considering their dictionary definitions...
Although we have, on occasions, admired good lawyering on behalf of a client and zealous advocacy, we cannot conclude that there is any plausible argument that the injures complained of here are not the direct result of Jacob's operation of his motorcycle while "on" it. Therefore, we conclude that recovery for UIM benefits is properly excluded under the pertinent policy provision.
This is why it is so important for consumers to at least consider buying the maximum Supplemental Uninsured/Underinsured Motorist limits available, as well as the maximum Personal Injury Protection limits. I understand why this man and his parents went to court on this; it sounds like his injuries may have been life-altering. Unfortunately, they had no control over the amount of insurance the other driver carried. They could control only the amount that they bought.
I encourage all you insurance producers out there to remember this story the next time a client only wants to talk about price. Easier said than done, I know, but it's an important discussion to have.
In addition to the requirement that individuals carry health insurance coverage, the federal Patient Protection and Affordable Care Act imposes on some employers obligations to offer coverage. The "employer mandate" is the subject of today's post. Essentially, it says to certain businesses that, if the government has to help their employees pay for health coverage, the businesses have to help the government offset the cost.
This part begins by adding two new sections to the federal Fair Labor Standards Act. An employer subject to the FLSA that has more than 200 full-time employees and that offers employees enrollment in one or more health plans must automatically enroll new full-time employees in one of the offered plans (subject to any legally-permitted waiting period) and continue enrollment of current employees in an offered plan. The employer must provide adequate notice to the employee and give him the opportunity to opt out of coverage. State requirements regarding payroll still apply, except that they cannot prohibit automatic enrollment.
Employers must also provide new hires (and, by March 1, 2013, current employees) written notice:
The rest of this part changes the tax law. It applies to employers who employed an average of 50 or more full-time employees during the preceding calendar year, other than those who exceeded 50 employees because they hired seasonal workers for 120 days or less during the year. If a business is new, the criteria is the average number of employees it is reasonably expected to employ in the current year. If an employer buys another employer, the law applies to it if it would have applied to the purchased employer.
The law states that if:
Then the employer is assessed a tax penalty equal to the number of full-time employees for that month multiplied by $750 divided by 12 ($62.50.) Therefore, a business with 100 full-time employees who does not offer coverage for one month will pay a penalty of $6,250. Starting in 2015, the $750 will be indexed to inflation. Also, employers that require a waiting period of more than 60 days before employees are eligible for coverage are assessed penalties equal to $600 per affected full-time employee.
Then the employer is assessed a penalty equal to the number of full-time employees for the month multiplied by $3,000 divided by 12 ($250), subject to a maximum of the number of full-time employees multiplied by $62.50. Again, this amount will be indexed for inflation starting in 2015.
The Treasury Department may provide for payment of the assessments on annual, monthly, or other periodic bases. The department will issue regulations providing for reimbursement to the employer of assessments that were incorrectly made because an employee was incorrectly determined to be eligible for tax credits or reduced cost-sharing. The Labor Department is required to study and report on whether these changes have resulted in reduced wages for workers.
Employers will have to annually report to the IRS:
Employers must by January 31 each year give each reported employee a written statement showing the information they reported to the IRS.
To the extent feasible, the Treasury Department must try to combine this report with the employer's other applicable tax returns. Employers who buy coverage from a health insurance carrier may arrange to have the carrier make the report for them.
Lastly, employees cannot pay for exchange-provided health plans with pre-tax dollars unless they work for an employer qualified to offer a group plan through the exchange.
That's a wrap on the mandates. The next post will start on some miscellaneous provisions; I hope to cover them all in one post, but I'll break into multiple posts if it gets too long. The good news is that these provisions are the last part of Title I, Quality, Affordable Health Care For All Americans. After scrolling through the law's table of contents, I can see some future sections that I will touch on only briefly and others that I'll discuss in detail. My hope is to have this primer complete by the end of this year. Stay tuned to see if I hit that goal.
That’s a page from Gruber’s forthcoming comic book, “Health Care Reform: What It Is, Why It’s Necessary, How It Works.” And what this speech-bubble resume doesn’t mention is Gruber’s extensive health reform work: The MIT economist was a key player on both the Massachusetts and national health overhauls. Inspired by his three children, Gruber has distilled all that experience into a 152-page comic book. The graphic novel won’t be out till early next year, but we here at Wonkblog have been flipping through an advance copy.
Gruber does a pretty fantastic job translating complex policies into comic-book form. A two-headed alligator represents the twin health menaces of “rising costs” and “the number of uninsured.” Health reform’s high-risk pools become swimming pools; the superhero version of Jonathan spends a decent amount of time warding off rumors of death panels and government health-care takeovers, in the form of zombies and vampires. The Congressional Budget Office makes multiple appearances. The graphic novel feels like John McDonough’s inside-the-room account of the Affordable Care Act, “Inside National Health Reform,” put to pictures.
Will the comic book win over the hearts and minds of any health reform opponents? Probably not. It’s no surprise that Gruber supports the health reform law and believes it will work; he helped write it. Those who disagree with the law won’t have their policy gripes dressed in graphic novel form.
But even when you use zombies, alligators and a health economist superhero, health policy is tough stuff. It takes Gruber 152 pages and 12 chapters to get through it. Although this book is a lot more digestible than tackling the health reform law in its entirety, it’s still more complex, and slower-moving, than your standard Superman adventure. But Gruber should get some slack: Superman never had to tackle cost curves and CBO scores.
This looks way cooler than my text-heavy Health Care Reform Primer. I never come up with the best ideas...
Breaking news: After much time, effort, video editing gyrations and a generous amount of profanity, I've configured the RSS feed for the podcast so that the last 10 episodes are now available in the iTunes Store. This means that you can subscribe to the podcast in iTunes (by, coincidentally, clicking the Subscribe in iTunes link on the left side of this screen) and get them automatically delivered to your computer or smartphone. You never have to miss the sight of me throwing something at J.B. McCampbell again.
Please note, if you will be watching them on an iPod Touch, you may need to do a wee bit of configuring in the iTunes software first. Simply select the video you want to watch from the list in the Podcasts section of the software, click the Advanced menu at the top of the screen, and select Create iPod or iPhone Version. That will format the video so you can watch it on those devices.
Probably no element of the federal Patient Protection and Affordable Care Act is more controversial than the so-called individual mandate. It is the subject of extensive litigation that has now reached the U.S. Supreme Court. Observers of the court expect it to issue a ruling during the heart of next year's presidential election season, effectively throwing gasoline on the inferno. I'm going to discuss this provision in detail below, but in its essence the provision gives taxpayers a choice: Purchase health insurance to cover yourself and your dependents, or pay a tax penalty. The question that the Obama Administration and opponents to the PPACA have asked the Supreme Court to answer is, does the U.S. Constitution give Congress the power to compel taxpayers to make this choice? Federal courts, both at the trial and appellate level, have arrived at opposing answers to this question.
The authors of Section 1501, titled Requirement to Maintain Minimum Essential Coverage, wrote their arguments for the law's constitutionality into the law. The first subsection, Findings, states (I have paraphrased to save space):
The provisions of the mandate are:
The following types of individuals are exempt from the mandate:
Calculating the amount of the monthly penalty is a three-step process:
To illustrate, assume a household with a single parent and two children under age 18 in the year 2016. Household modified taxable income is $50,000. The national average monthly premium for bronze-level coverage family coverage offered through exchanges is $1,300. Here's how we calculate the penalty:
This penalty appears paltry compared to the premium, but keep in mind that we have not factored in any premium tax credits and cost-sharing reductions for which the family may qualify. These might make coverage more attractive to the family.
The following individuals are exempt from the penalty:
Special rules included in the provision:
Health insurance providers must, by January 31 each year, report to the IRS on behalf of the insured individuals that the individuals had coverage for the previous calendar year. They must also send a summary of the reported information to the insured individuals. Officers of employees of governmental units will make the reports in cases where the coverage is through that governmental unit (i.e., Medicare.) Lastly, the Treasury Department must, by June 30 each year, send notices to all individual tax filers who are not enrolled in health plans informing them of the services available through the exchanges where they live.
And that is the whole story on the individual mandate. Everyone buys insurance or pays a tax penalty unless they're exempt, but no jail time, fines or tax liens for failing to pay the penalty. Will the nine justices of the Supreme Court uphold it, or will they say that Congress went too far? If they decide it's unconstitutional, what other methods should the country try to achieve the goals of universal health insurance and spreading the risk further? Smarter people than me are trying to figure that out.
The next post in this series will look at the employer mandates.
Question from an IIABNY member: What do you know about finance company cancellation notices? If the cancellation is on a Workers Compensation policy is the finance company required to send the notices to the insured Certified Mail/Return Receipt like the insurance companies do?
Answer: New York Banking Law Sect. 576 applies here. It states:
"1. When a premium finance agreement contains a power of attorney or other authority enabling the premium finance agency to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled unless such cancellation is effectuated in accordance with the following provisions:
(a) Not less than ten days written notice shall be mailed to the insured at his last known address as shown on the records of the premium finance agency, of the intent of the premium finance agency to cancel the insurance contract unless the default is cured within such ten day period and that at least three days for mailing such notice is added to the ten day notice. A copy of the notice of intent to cancel shall also be mailed to the insurance agent or broker.
(b) Service of the notice of intent to cancel or notice of cancellation by mail shall be effective provided that the notices are mailed to the insured's last known address as shown on the records of the premium finance agency. The records of the premium finance agency shall be presumptive evidence as to the correctness of such address.
(c) If the insurance contract or contracts provide motor vehicle liability insurance, every such notice of cancellation shall include in type or print, of which the face shall not be smaller than twelve point, a statement that proof of financial security is required to be maintained continuously throughout the registration period and a notice prescribed by the commissioner of motor vehicles indicating the punitive effects of failure to maintain continuous proof of financial security and actions which may be taken by the insured to avoid punitive effects.
(d) After the notice in paragraph (a) above has expired, the premium finance agency may thereafter, in the name of the insured, cancel such insurance contract by mailing to the insurer a notice of cancellation stating when thereafter the policy shall be cancelled, and the insurance contract shall be cancelled as if such notice of cancellation had been submitted by the insured himself, but without requiring the return of the insurance contract. A copy of the notice of cancellation shall also be mailed to the insured..."
Nothing in this language requires the finance company to send the notice by certified mail, return receipt. In addition, New York Workers' Compensation Law Sect. 54, which requires notice by certified mail, return receipt, appears to refer only to insurers ("No contract of insurance issued by an insurance carrier against liability arising under this chapter shall be cancelled within the time limited in such contract for its expiration unless notice is given as required by this section...Such notice shall be served on the employer by delivering it to him, her or it or by sending it by mail, by certified or registered letter, return receipt requested, addressed to the employer at his, her or its last known place of business..."). I think if the legislature had intended for premium finance companies to follow the same rules as insurers, it would have included the same language in Banking Law Sect. 576. (As a side note, Sect. 576 does contain some provisions that apply specifically to auto policies; the legislature could have done likewise for Workers' Comp.)
To summarize, in my opinion premium finance companies do not have to send cancellation notices for Workers' Comp policies by certified mail.