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November 2004

State: Florida

Area of Interest: In response to hundreds of calls from homeowners and construction contractors, both in and out-of-state, concerned about Florida requirements for workers' compensation insurance coverage, the Florida Department of Financial Services is reiterating the responsibilities of contractors under state law.

Under Florida law, construction employers with one or more employees must provide workers' compensation coverage for their employees. Construction employers who are corporate officers or members of a limited liability company can exempt themselves from coverage if they obtain an exemption from the Department of Financial Services' Division of Workers' Compensation. In addition, out-of-state contractors must obtain a Florida policy or a policy endorsed by their current carrier using Florida rates.

The department remains concerned that homeowners who employ an uninsured contractor may be held financially responsible if an injury occurs during repairs.

For contractors unable to secure coverage in the private market, the Florida Workers' Compensation Joint Underwriting Association, Inc. (FWCJUA), the state's insurer of last resort for workers' compensation insurance coverage, is offering a streamlined process for obtaining coverage. Employers who enter into a payroll service and premium deduction program with the FWCJUA, and pay a processing fee, will be eligible to receive a policy within one business day and will save up to 76 percent in up-front premium costs, depending on their payroll amounts.

Source: State of Florida

State: New York

Area of Interest: New York State Insurance Department Issues Citations to Marsh and McLennan Cos., Inc. and Marsh, Inc. As Part of Joint Investigation with New York State Attorney General's Office

Superintendent of Insurance Gregory V. Serio today announced that the New York State Insurance Department has issued citations to Marsh & McLennan Companies, Inc. (MMC), Marsh, Inc., and Marsh Global Broking, wholly owned subsidiaries of MMC, and more than 10 other Marsh-related entities, as part of the ongoing joint investigation between the Insurance Department and New York State Attorney General Eliot Spitzer into wrongdoing associated with contingency fee arrangements.

"Our joint investigation with the Attorney General's office has raised serious questions about the way they have conducted business in New York State. This action today is part of the regulatory response to these concerns," Superintendent Serio stated.

Representatives from MMC and their New York-licensed subsidiary brokerage firms have been directed to appear at the Insurance Department on Nov. 23, 2004 to respond to charges that they used fraudulent, coercive, and dishonest practices and demonstrated untrustworthiness under New York State Insurance Law.

The New York State Insurance Department has the authority to suspend or revoke licenses, seek restitution on behalf of aggrieved parties, and levy monetary penalties against its licensees.

The investigation is ongoing.

Source: State of New York

State: California

Area of Interest: Insurance Commissioner John Garamendi Announces 12 Department-Sponsored Bills Signed Into Law by Governor- Commissioner Garamendi applauds Governor Schwarzenegger for taking action to provide more effective protections for insurance consumers

Insurance Commissioner John Garamendi announced Thursday that Governor Arnold Schwarzenegger has signed all 12 Department of Insurance-sponsored bills to reach his desk in 2004. The bills provide a wide range of protections for all insurance consumers, including homeowners, seniors and disaster victims.

The bills include the Commissioner's Homeowners Bill of Rights, which helped bring relief to wildfire disaster survivors; financial protection measures to protect seniors and other consumers from scams in the life insurance and annuities industry; and assorted bills covering auto insurance, health care, and the investigation of potential insurance fraud.

Following is a list and brief description of each of the measures:

• Senate Bill 1273 (Scott): Increases jail time to one year and monetary penalties to $50,000 for “twisting” or “churning” of annuities. “Twisting” or “churning” is the practice of inducing a person to take out a policy of insurance, then encouraging them to lapse, forfeit, switch policies or surrender a policy, resulting in large commissions to the agent.
• Assembly Bill 2316 (Chan): Establishes the “Senior Protection Fund” by assessing up to $1 per each new individual annuity or life insurance product sold in California. This fund will be used for investigative and educational efforts related to life insurance/annuity fraud.
• Assembly Bill 2384 (Nakano): Allows the department to penalize insurance companies who don't pay credit life and disability policy death benefits within 30 days of the date of a death.
• Assembly Bill 2557 (Koretz): Increases the misdemeanor penalty for individuals who transact insurance without a license to imprisonment for up to one year in county jail, and provides for a fine up to $50,000.
• Assembly Bill 2199 (Kehoe): Extends the time for rebuilding destroyed homes. This bill establishes a minimum 12-month period (24 months in a declared State of Emergency) for homeowners to repair, rebuild, or replace their home after a loss, commencing with payment of actual cash value.
• Assembly Bill 2962 (Pavley): Guaranteed Renewability/Premium Adjustments. Insurers are prohibited from canceling coverage during the course of rebuilding the destroyed structure and must renew a policy at least once if a total loss was caused by a disaster. Also establishes a uniform measurement of “actual cash value.”
• Senate Bill 64 (Speier): Mediation Program for Fire Survivors. Authorizes the Department of Insurance to sponsor a mediation program to expedite the resolution of conflicts between victims of the Southern California wildfires and their insurance carriers relating to issues such as coverage, scope of loss, and claims settlement and payment practices.
• Senate Bill 1855 (Alpert): Underinsurance Disclosures. Consumers are provided various disclosures when they purchase a homeowners policy. One disclosure, known as the “Petris Disclosure”, is given to consumers every two years and defines each of the categories of coverage available in the marketplace. The coverage currently known as ‘Extended' Replacement Cost will now be called ‘Limited' Replacement Cost. The “Declarations” page for the policy will include a new consumer disclosure about limitations on reconstruction costs for their home. In addition, a new ‘California Residential Property Insurance Bill of Rights' will be provided to consumers every two years.
• Assembly Bill 2677 (Ridley-Thomas): Requires automobile insurers and insurer groups to provide consumers a cost estimate for its lowest price personal automobile insurance policy at the limits the consumer has requested and for which the consumer is eligible.
• AB 2208 (Kehoe): Conforms health insurance law to other statutes requiring domestic partners to be treated the same as spouses for health insurance purposes.
• AB 1227 (McCarthy): The bill creates more effective penalties than currently exist to apply when insurers' Special Investigations Units are found to be inadequate.
• AB 1728 (Vargas): Makes several substantive changes to the law regarding investments by insurers in subsidiaries, reporting requirements disability fraud funding, and a technical change to eliminate an obsolete provision prohibiting a rollback of surety rates.

Source: State of California

State: New York

Area of Interest: OSHA Fines Massena, N.Y., Automobile Parts Manufacturer $160,000 for Failing to Record Workplace Injuries and Illnesses

A Massena, N.Y., automobile parts manufacturer's widespread failure to record work-related hearing losses and other occupational injuries, as well as a variety of safety hazards, has resulted in $160,000 in fines from the U.S. Labor Department's Occupational Safety and Health Administration (OSHA).

General Motors Powertrain Corp. has been cited for alleged willful, serious and other violations of health and safety standards at its Route 37 East plant. OSHA began its inspection on April 13 in response to an employee complaint.

OSHA's inspection identified 98 instances where the company did not record on the OSHA 300 Log work-related noise-induced hearing losses and other injuries and illnesses suffered by employees at the plant. Accurate recordkeeping is essential for protecting workers since it provides the opportunity for timely identification and correction of conditions that can harm workers.

The Massena plant's failure to record work-related injuries led to the issuance of two willful citations, carrying $140,000 in fines. OSHA defines a willful violation as one committed with an intentional disregard of, or plain indifference to, the requirements of the Occupational Safety and Health Act and regulations.

Six serious citations, with $12,000 in proposed fines, were issued for a variety of safety hazards including an obstructed exit route, inadequate guarding of moving machine parts, no load rating for an elevated work platform, failure to assess the need for personal protective equipment for workers, lack of warning signs and a non-exit door not marked as such. A serious citation is issued when death or serious physical harm are likely to result from a hazard about which the employer knew or should have known.

Source: Occupational Safety and Health Administration

State: Illinois

Area of Interest: Company Penalized $361,500 for Willful and Serious Workplace Safety Violations OSHA Inspection Followed Deadly April Explosion

The U.S. Labor Department's Occupational Safety and Health Administration (OSHA) has issued citations and proposed penalties to Formosa Plastics Corp. of Illiopolis, Ill., following its investigation into an April 23 explosion that took the lives of five workers, seriously injured three others and destroyed much of the facility.

OSHA issued citations for 45 alleged serious violations and three alleged willful violations of federal workplace safety and health regulations. Serious violations included allegations of a wide range of hazards associated with control of flammable liquid and ignition sources, insufficient worker training, electrical and lockout/tagout hazards, insufficient training on emergency response, organization, and equipping of fire brigade personnel, among others. The alleged willful violations charged the company with failing to maintain fire protection equipment, failing to replace or repair defective equipment used in highly hazardous chemical processes, and inadequate inspections and tests of equipment used in processes involving highly hazardous chemicals.

Formosa Plastic employed some 136 workers in Illiopolis prior to the blast and approximately 4,000 workers company-wide. Formosa purchased the Illiopolis facility in 2002 and had no previous OSHA inspections.

Source: Occupational Safety and Health Administration

State: Florida

Area of Interest: Office of Insurance Regulation Disapproves Workers' Comp Rates

Florida Commissioner of Insurance Regulation Kevin McCarty, today, disapproved the latest workers' compensation rate filing because the decrease in rates was not enough. McCarty ordered the National Council on Compensation Insurance (NCCI) to re-file rates that reflect a larger rate decrease.

McCarty said that while NCCI does fine work, “I disagree with how they assessed parts of this filing. The reforms passed by the Legislature have reduced the high rates Florida's businesses pay to protect their employees. I have to make sure all savings and costs are properly reflected in this filing, and I just do not believe they have been, ” McCarty said.

NCCI had proposed an overall statewide average decrease in premiums of 0.9% in a September 15, 2004 amendment to the filing. This was down from a 2.2% decrease that NCCI had initially filed for rates on new and renewal business beginning January 1, 2005. A public hearing was held October 5th to allow interested parties to testify on the filing.

In his order, McCarty said he would approve a revised filing with an overall statewide premium reduction of 5.1% and with an overall statewide premium drop of 11.8% for contractors. Among the reasons the filing was disapproved were disagreements with the supporting documents; with the loss trend calculations and with the filing's reinsurance provisions. McCarty ordered the amendments to the filing be made as soon as is practicable.

Senate Bill 50A was passed by the 2002 Legislature. The bill ordered substantial reforms to Florida's workers' compensation system. At the time Gov. Jeb Bush signed the bill into law, Florida's employers were paying amongst the highest premiums in the nation while the state's workers received amongst the lowest benefits. McCarty's order for the 5% reduction would be in addition to a 14% reduction that became effective on October 1, 2003.

Source: State of Florida

Area of Interest: OSHA Signs Strategic Partnership with the Army

OSHA today entered into a partnership with the U.S. Department of the Army that is designed to improve safety and health for the Army's civilian workforce at 21 military installations across the country.

"We are committed to help Federal Agencies improve workplace safety and health," said OSHA administrator John Henshaw. "This partnership with the Army is an excellent opportunity to share the knowledge and best practices in both agencies to further improve safety and health among civilian personnel at Army installations."

The partnership agreement supports the goals of the President's Safety, Health, and Return-to-Employment (SHARE) Initiative. The Army and OSHA will work in partnership to accomplish six key goals:

1. Reduce civilian workforce fatalities, injuries, and illnesses at each participating Army installation by at least 3% per year.
2. Expand awareness of the value of effective safety and health management systems.
3. Reduce total case rates and severity rates related to musculoskeletal disorders (MSDs).
4. Share best practices and successes with other Army installations and similar worksites in other industries.
5. Expand the Army's participation in VPP.
6. Convey civilian workforce safety and health best practices and injury/illness reduction lessons learned to Army military personnel.

The partners will work together to identify the most common factors that cause injuries, illnesses and fatalities at each participating installation and develop procedures to address these factors and eliminate the hazards.

The agreement also calls for the identification of key tasks and processes that cause MSDs, and the development of guidance to address and correct the MSD hazards at all participating installations with similar jobs or procedures.

Source: Occupational Safety and Health Administration

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