The bill includes a League-supported reinsurance clarification for post-traumatic stress disorder claims.
(Published May 5, 2014)
The bill includes a League-supported provision that will clarify the availability of workers’ compensation reinsurance to post-traumatic stress disorder (PTSD) claims.
The reinsurance provision was needed due to the 2013 changes enacted by the Legislature that amended the workers’ compensation statutes to extend coverage to PTSD arising in the course and scope of an employee’s duties. As the new law was being implemented, a significant unanticipated issue related to events with multiple PTSD injuries was identified that could drive up workers’ compensation insurance costs for self-insured entities as well as those entities that secure coverage through the League of Minnesota Cities Insurance Trust (LMCIT).
State law requires workers’ compensation insurers and self-insurers to purchase reinsurance from the Workers’ Compensation Reinsurance Association (WCRA). Insurers and self-insured entities can select from one of three retention limits, and the WCRA then provides reimbursement for statutory benefits once the selected limit has been reached as the result of an “occurrence.”
The costs of injuries to multiple employees arising from a single occurrence are typically aggregated for purposes of determining when retention limits have been reached, and the WCRA is obligated to provide reimbursement. At the time the 2013 law was enacted, however, PTSD was classified as an occupational disease. In the case of an occupational disease, each individual employee’s claim is treated as a separate occurrence, regardless of whether they arise from the same incident.
Due to the fact that the reinsurance retention amount for occupational diseases is calculated separately for each individual employee, instead of for all employees injured in the same incident, insurers and self-insured entities potentially face much higher costs for PTSD claims than for other types of workers’ compensation claims.
Chapter 192 modifies state statute to treat PTSD events involving multiple employees as one occurrence for retention purposes. The changes will not affect the amount of workers’ compensation benefits that individual employees receive, but will reflect how PTSD differs from the occupational diseases traditionally subject to individual limits, and allow PTSD to be treated the same as other personal injuries for purposes of WCRA reinsurance.
The reinsurance change is effective for employees with dates of injury on or after Oct. 1, 2013, which was the date that the 2013 PTSD law changes were effective under the 2013 law change.
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