The West Virginia workers' compensation system has come a long way since its creation in 1913. Historically, employees relinquished some of their common-law rights to sue employers for injuries they sustained in a work-related accident, and instead received benefits by the employer-funded system. Soon after, West Virginia maintained monopoly control over workers' compensation. But now that is all about to change. We are rapidly approaching the final stage in the privatization process and West Virginia is on its way to becoming a competitive market.

The history of these changes can be traced to West Virginia Senate Bill 2013, which was passed July 1, 2003. This legislation radically changed the structure of the workers' compensation system in West Virginia to address the state's financial crisis, management of the workers' compensation system, and provisions that were implemented to control disability as well as the health-care issues. Under that system, the West Virginia Workers' Compensation Commission (WCC) was created and given responsibility for managing the state program.

The turning point occurred in 2005. In February of that year, West Virginia Governor Joe Manchin signed into law Senate Bill 1004, also known as the Workers' Compensation Bill, which called for the privatization of the state's workers' compensation system.

Under this legislation, three stages for privatization of the workers' compensation system were created. During the first phase, which took place in 2005, Brickstreet Mutual Insurance Company was established to manage the workers' compensation program until July 1, 2008. The second stage began in 2006, when Brickstreet replaced the WCC and became the only source of workers' compensation coverage in the state of West Virginia.

The third phase begins on July 1, 2008, when the West Virginia workers' compensation market will be opened to competition and Brickstreet will no longer be the sole source of workers' compensation coverage to private employers. However, Brickstreet will continue be the single provider of workers' compensation coverage for all state agencies, boards, commissions, and higher education through 2012. In 2013, the state agencies will be permitted to purchase coverage from any carrier.

With the recent changes, there are significant beneficial provisions in Senate Bill 1004. For example, the employer has subrogation rights to all workers' compensation benefits, and workers' compensation claims can be settled without approval from the Office of Judges. At this moment, many private insurance carriers are investigating their potential to write workers' compensation coverage in West Virginia. And on July 1, 2008, employers, except state and local governments, can purchase workers' compensation coverage from private insurance carriers.

On the way to a competitive market, there have also been significant legislative changes in West Virginia. For example, Senate Bill 571 provides a rebuttal presumption that cardiovascular injuries or diseases are compensable for professional firefighters. The qualifications are that the firefighter must have been a paid firefighter and active for the two previous years and must have worked a training session, drill, or fire-related call within the past six months where an actual fire occurred. In House Bill 4079, professional employer organizations (PEOs) are regulated and they are required to be licensed by the insurance commissioner by July 1, 2009.

Another bill, House Bill 4381, calls for a residual or assigned risk pool and the creation of a guaranty association. Also, the requirement that private carriers maintain an office in West Virginia has been eliminated. Effective Jan. 1, 2009, the insurance commissioner is allowed to designate an administrator of the assigned risk pool.

Under House Bill 4636, which some refer to as the "clean-up bill," the time frame for an injured worker to protest a decision is extended from 30 days to 60 days. Also, as of July 1, 2008, state-mandated surcharges on all workers' compensation policies are capped at nine percent for deficit reduction and 5.5 percent for the administrative operations of the insurance commissioner.

It is important to note for those carriers interested in competing in the West Virginia market that insurance adjusters must be licensed in the state of West Virginia. Although there is no requirement that adjusters reside in the state, the adjuster must pass the state adjusters' examination. However, there is no need for an adjuster to take the West Virginia adjuster licensing examination if the adjuster resides in a state other than West Virginia and that state requires the adjuster to pass an examination to obtain the adjuster's license. The adjuster must have a West Virginia non-resident adjuster license if TPAs use non-resident adjusters.

Maureen Kowalski is a shareholder in the Pittsburgh-based law firm of Dickie, McCamey & Chilcote, P.C. and concentrates her practice on workers' compensation law. She may be reached at mkowalski@dmclaw.com, www.dmclaw.com.

Special Reports /

Ending a 95-Year State Monopoly

Related Stories

Recommended For You