Up North--November 2007

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November 2007

SFM Up North
A publication from the Duluth offices of SFM Companies
Editor: Kathleen S. Bray, Attorney

THIS MONTH'S TOPICS:

HEALTH INSURANCE CONTINUATION FOR DISABLED EMPLOYEES
WITNESS GUIDE--TIPS FOR TESTIFYING AT HEARING
WHAT IS MAXIMUM MEDICAL IMPROVEMENT?

HEALTH INSURANCE CONTINUATION FOR DISABLED EMPLOYEES

Minnesota employers are required to continue offering employees the opportunity to participate in a group insurance plan, even while the employee is totally disabled from employment. This obligation is required for employers with fully insured group insurance plans. It does not apply to self-insured non-governmental employers. Specifically, the statute governing continuation of health insurance benefits for disabled employees provides:

No employer or insurer of that employer shall terminate, suspend or otherwise restrict the participation in or the receipt of benefits otherwise payable under any program or policy of group insurance to any covered employee who becomes totally disabled while employed by the employer solely on account of absence caused by such total disability. This includes coverage of dependents of the employee. If the employee is required to pay all or any part of the premium for the extension of coverage, payment shall be made to the employer, by the employee.

Minnesota Statute § 62A.148
In many ways, Minnesota's state law is more generous than the federal law concerning health insurance continuation, which is known as "COBRA" (Consolidated Omnibus Budget Reconciliation Act). An information sheet from the U.S. Department of Labor outlines issues related to COBRA coverage (http://www.dol.gov/ebsa/faqs/faq_consumer_cobra.html). COBRA provides for extension of health insurance benefits when certain qualifying events occur, such as termination of employment, death of the employee, reduced hours of employment or entitlement to Medicare.

Minnesota’s state law is more generous than the federal COBRA law by allowing a disabled employee to stay under the group plan indefinitely so long as he or she maintains status as an employee. Once the employment relationship ends, the obligation to continue offering coverage under the Minnesota statute would end, as well. An information sheet concerning the interaction of these two insurance continuation statutes can be found on the Minnesota Department of Health's website (http://www.health.state.mn.us/divs/hpsc/mcs/cobra.htm).

The Minnesota statute does not require the employer to fully fund the group insurance plan for the totally disabled employee. Therefore, the employer may shift the full cost of the health insurance premium to the employee. If the employee defaults on his or her premium payment obligations, the group insurance coverage may be terminated without the grace period that COBRA provides for premiums. In this respect, the Minnesota statute lacks some of the protections provided by the COBRA statute.

If an employer has 50 or more employees, additional obligations relating to continuation of benefits may be required by the Family Medical Leave Act (FMLA). The FMLA generally provides job security and benefits continuation for covered employees for a 12-week period.

Note that this memo only address continuation obligations in the circumstance of an employee totally disabled from employment. Other insurance continuation events may trigger different obligations under Minnesota or federal insurance continuation laws.

Recommendations:

An employer should offer continued group insurance benefits at the same level as provided for active employees for a minimum period of 12 weeks before shifting additional premium costs to disabled employees. Even if the company is not covered by the FMLA, unless it causes financial hardship, this would minimize threat of discrimination claims and if a smaller company continued to grow and exceed the FMLA threshold, the employer would already have in practice a piece of the benefit protection required by the FMLA. A Minnesota employer with less than 50 employees could have a shorter time period before continuation coverage was activated and costs shifted, however.
Create or amend employment policy or benefits handbook to provide notice to employees of any benefit change, if costs are shifted after a certain time period of disablement, with the policy effective a certain date in the future (not retroactively).
To minimize threat of discrimination claims and related liability, have the cost-shifting policy apply to not only medically disabled employees (due to both workers' compensation and personal health conditions), but also apply to those employees on leaves for other disablements, and leaves due to non-medical conditions. However, certain types of leave may trigger other continuation events under federal or state law (e.g. military leave), and therefore review of any policy by your corporate attorney is strongly encouraged.

You should consult your corporate counsel, insurance agent and/or benefits administrator before implementing any new policies affecting insurance coverage of your employees.

WITNESS GUIDE--TIPS FOR TESTIFYING AT HEARING

The Office of Administrative Hearings (OAH), the agency that conducts workers' compensation hearings, has prepared a helpful tip sheet on "How to Be a Good Witness." The information sheet can be found on the OAH website at: http://www.oah.state.mn.us/forms/witness.guide.html. The witness tips are explained in more detail within the information sheet, but the following is a quick overview:

Tell the truth.
Answer the questions directly.
Speak clearly.
Stop if you hear "objection."
Stay calm.
If you don't know, say so.
Don't be afraid of the lawyers.
Stick to the facts.
Relax, but be serious.

The tips are helpful for deposition testimony, as well. If a manager or employee of your company has been subpoenaed to testify at a hearing or deposition, you should contact your attorney. It may be appropriate for the employee to have representation at the proceeding, depending on the status of the employee in the company, as well as the nature of the proceeding involved.

WHAT IS MAXIMUM MEDICAL IMPROVEMENT?

Maximum Medical Improvement ("MMI") is a significant concept in Minnesota workers' compensation, as it is an event that may lead to discontinuing an employee's total disability benefits. The workers' compensation statute defines MMI as "the date after which no further significant recovery from or significant lasting improvement to a personal injury can reasonably be anticipated, based upon reasonable medical probability, irrespective and regardless of subjective complaints of pain." Once an employee reaches MMI, even if their condition worsens later on, there are only limited circumstances (e.g. medically unable to continue working) where a new MMI period may be determined.

When an employee reaches MMI status, you will often see the insurer filing and serving the doctor's report that indicates the employee is at MMI. Ninety days after service and filing of MMI, the employee's entitlement to temporary total disability (TTD) benefits typically ends. MMI is typically also the point at which an employee's permanent partial disability (PPD) rating is assessed, and any permanent work restrictions assigned.

NOTICE: The distribution and receipt of the information provided in this newsletter does not create or continue any attorney-client relationship. The information provided is general in nature and should not be treated as legal advice concerning any particular set of facts or circumstances. Recipients should consult with their attorney before acting on any information discussed in each issue.