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A Healthier Workforce: The Hot Debate Over Employer Responsibility and Employee Incentives

August 13, 2015 (19 min read)

By Jennifer C. Jordan, Esq., General Counsel, MEDVAL LLC

A Medicare set-aside (MSA) is sometimes like an exercise in accident reconstruction. And when the MSA gets ugly, as they frequently do, it is typically because of some factor other than the industrial accident itself. Things like, had the employee not been over 300 pounds or had undiagnosed health problems such as heart disease or diabetes at the time of the accident, the claims would likely have been minor and the employee back to work in no time. By the time the claim gets to the MSA stages, there is absolutely nothing that can be done about it but to ponder what if. However, it was interesting to find that—while likely unintentional—the 2015 RIMS Annual Conference in New Orleans provided the workers’ compensation industry some good insights as to the solution to many of these issues—a healthier workforce.

An MSA is based solely upon everything that has taken place up to that point in time, good, bad or ugly. And the uglier the MSA, typically the more non-related medical conditions involved. Although an employer is not responsible for an employee’s general health problems, the second those preexisting conditions interfere with the treatment of an industrial injury or disease, it becomes responsible. Workers’ compensation laws will require that the non-industrial condition be treated so that the industrial condition can be treated. But more significant is the fact that had the employee been stronger or generally healthier, then perhaps the industrial accident could have been avoided altogether.

At the 2015 RIMS Annual Conference, a common theme arose from many of its workers’ compensation sessions and that was a healthier workforce. While in years past the focus on workers’ compensation has left attendees wanting more, this year provided an ample offering so much so that decisions had to be made as to which session to attend (even more surprising was that such a common thread could develop). Whether it be the Affordable Care Act’s impact on workers’ compensation or the aging workforce, the one thing that was clear was that a healthier workforce is less likely to get injured on the job and when they do, the severity will likely be less. Even discussion of the American Medical Association’s reclassification of obesity as a disease eventually turned to the speaker’s perceived impact on MSAs and MMSEA mandatory reporting. The following will attempt to summarize these insightful presentations and their impact on workers’ compensation.

THE AGING WORKFORCE, presented by Dr. Thomas B. Gilliam, President of IPCS, and Michelle Despres, Executive Director of Align Networks

The United States is experiencing an aging workforce. People are simply working later in life, many well into their seventies. Sometimes it is because they enjoy what they do but more often than not it is because they cannot afford to retire because they failed to sufficiently save for retirement or their 401Ks underperformed. And this segment of our workforce is part of the baby boomer generation so there are simply a lot more people currently remaining in the workforce longer. Although it is great to have such vast experience remain available, it comes with new risk management issues. While our older workers get injured less often, when they do, it takes a lot longer to heal. And because of that, their claims are a lot more expensive.

There are three major medical factors that must be considered when employing an aging workforce: Sarcopenia (loss of muscle mass); Dynapenia (loss of muscle strength); and Sarcobesity (conversion of muscle mass to fat). A simple fact of aging is that the rate at which we lose muscle mass and strength increases, particularly if we become less active. On average, 30% of muscle mass is lost between ages 30 and 65. Shoulder and knee strength decreases about 23% from ages 30 to 60. The problem is that many are unaware that such transformations are occurring because muscle mass converts to fat mass and therefore there is no noticeable change in weight. This will have no impact on body mass index (BMI) which is the measure physicians gauge obesity by, so typically this is not a condition that will be diagnosed as needing treatment. It is commonly chalked up as a fact of life. People simply get weaker as we age.

However, when remaining in the workforce later in life, these conditions may impact an employee’s ability to actually perform the job function and threaten their safety. Loss of muscle strength may manifest itself in difficulty climbing stairs, getting in and out of chairs, bending, lifting, ability to grip, etc. These employees will have a higher fall risk, demonstrate fatigue or poor activity tolerance faster, demonstrate painful, slower movement resulting in lower productivity, or demonstrate poor postures placing even desk employees at risk. And with decreased strength and mobility, the chances of getting injured on the job increase and does the rehabilitation time. And because low strength is a risk factor for metabolic syndrome, Type II Diabetes, cardiovascular disease and mortality, the chances of increased treatment costs due to comorbidities increases. Therefore, this has become a significant risk management issue.

The good news is that Sarcopenia can be reversed with physical activity and strength training. Strength training improves balance, reduces fall risk and builds bone mass reducing osteoporosis. Eccentric training and high velocity concentric training are more effective than traditional exercise regimens. Besides requiring less energy and being more tolerant to an aging population, this type of exercise forces muscle to absorb the energy in a loaded position, slowing contraction to control it, which has a greater impact of these age related conditions.

The bad news is that there is little that can be done to avoid employing our aging workforce since any effort to do so would be discrimination. While there are ways to legally implement Physical Capability Testing Physical Capability Evaluations (PCE™) to measure an individual’s ability to perform a particular job function, even that will not solve the problem. New ergonomic considerations will need to be considered to avoid certain awkward positions or unnecessary strains. Shortening the duration of certain tasks may avoid fatigue. Certain gloves may assist with grip issues.

But what can be done is mitigation, such as promoting a healthier work force. But simply providing health benefits does not cause employees to seek routine health evaluations; therefore, it could be up to an employer to mandate certain physical capability screenings as a condition of employment. Or there are situations in which a new employee can agree to baseline testing and periodic exams as a term of employment. And the Affordable Care Act provides for certain wellness programs which shall be discussed further below. In the end, it is up to the employer to mitigate the way in which the general health of its employees results in lost time and lost productivity of its workforce.

New AMA Classification of Obesity, presented by Michael Davis, Sr., VP of Risk Control Services at Lockton and MaryRose Reaston, Ph.D., CSO and Founder of Emerge Diagnostics.

Although referenced in the discussion above, obesity was reserved as a standalone topic herein because it is in no way unique to the aging workforce. Obesity is an epidemic in the United States that affects all ages. The incidence of obesity has doubled over the past 15 years in the United States. The situation is so bad that in 2013, the American Medical Association voted to declare obesity a disease, a reclassification that will affect 78 million people. The Department of Health and Human Services (DHHS) says that obesity costs U.S. businesses $13 billion dollars a year. But as an official disease, obesity is not only a risk indicator but a potential liability. Because it is a disease, physicians can’t ignore it anymore and must provide treatment. Once treatment has been had for six months or more, the Americans with Disabilities Act (ADA) says that obese employees cannot be discriminated against and reasonable accommodations may become necessary. That could include ergonomic equipment but could just as easily include time off from work to go to the gym. The true impact of this reclassification has yet to be seen, therefore it must be treated as yet another emerging risk management issue for employers.

And as with the aging workforce, employers cannot discriminate again hiring the obese just as they cannot force an obese employee to lose weight. And with obesity comes the possibility of many comorbidities such as Type II diabetes, metabolic syndrome, hypertension, hyperlipidemia, cardiovascular disease, osteoarthritis, chronic back pain, asthma, gall bladder disease and even cancer. And as obesity typically comes with decreased activity, it becomes harder to lose weight, metabolisms slow and muscle mass and strength is lost, all of which could impact job performance. Therefore, employers need to understand this classification of obesity and find ways to mitigate its effects in the workplace.

The first thing we must understand better about obesity is that the AMA version of it may not necessarily be what you may think of when you envision obesity. The AMA has tied the definition of obesity to a body mass index (BMI) of 30 or more. BMI is calculated by taking your weight in kilograms divided by the square of your height in meters, or KG/M2. This provides a fairly accurate measure of body fat for both men and women but does have some limitations. For example, muscle is much denser than fat, therefore an athlete will have a much higher BMI, likely one that indicates obesity by the AMA standard. However, that athlete is probably far from unhealthy.

Another problem with BMI is sarcopenia. As we age, we naturally start to lose muscle mass starting around age 30. But people who are inactive can lose as much as 3 to 5% of their muscle mass per decade after age 30. Consequentially, loss of muscle mass means loss of strength and mobility. Sarcopenia tends to accelerate between ages 65 and 80, increasing incidences of fragility and falls. The limitations in individuals over 65 dues to loss of muscle strength, called dynapenia, is staggering. 16 to 18% of women and 8 to 10% of men over 65 cannot lift 10 lbs. or stoop/kneel down. This affects extensor muscles so grip and mobility can be compromised, affecting work performance and increasing potential for injury.

But, one of the problems with the AMA definition of BMI is that some individuals suffering from sarcopenia may maintain the same BMI as they age and never recognize that they have become obese. Muscle weighs more than fat so as it breaks down and is substituted for fat weight; it is entirely possible to maintain the same body weight. However, your body composition has become unhealthy. If BMI is the only indicator used to identify the disease and initiate treatment, then some of our aging workforce will likely go undiagnosed. While there are other methods for measuring body fat such as skinfold thickness measurements, underwater weighing, bioelectrical impedance, dual-energy x-ray absorptiometry (DXA) or computerized tomography, because BMI is an inexpensive and easy to use screening, given it only requires measurements of height and weight, it is not likely we will see any other testing standard adopted.

And by using this definition, it has been determined that 30% of our population is obese. Those with BMI between 25 and 30 are classified as overweight and said to make up 50% of the population. Only 20% of our population is considered healthy. The presenters also noted that for the morbidly obese, BMI of 40 or more, there were 11.65 claims per 100 workers. They reported that there is a 15% increase in the cost of claims for the overweight and their injuries happen in half the time. Obesity has simply become an indicator of on the job injury.

When the AMA adopted its policy on June 18, 2013, it declared that it “recognizes obesity as a disease requiring a range of medical interventions to advance obesity treatment and prevention.” As such, doctors can no longer glibly recommend diet and exercise as the only solution. As a disease, physicians have an obligation to treat obesity or run the risk of medical malpractice claims should resulting comorbidities eventually kill a patient. And once you have treated obesity for six months or more, the ADA could subject an employer to making reasonable workplace accommodations.

An accommodation is considered any modification or adjustment to a job or work environment that enables a qualified person with a disability to apply for or perform a job. The term also encompasses alterations to ensure a qualified individual with a disability has rights and privileges in employment equal to those of employees without disabilities. Typical accommodations for obese individuals include ergonomic chairs and seat belt extenders but could also include elevators, stair lifts, automatic door openers, wheelchair lifts, specially designed ladders, harnesses and other equipment, scooters or wheelchairs. But what about a Segway if they can’t sit in a wheelchair for prolonged periods. And how about time off from work to walk around the block throughout the day or go to the gym? Or getting rid of vending machines? The possibilities are endless when you start to think about the potential abuses this could spur.

Furthermore, there may be animosity created among employees for giving special attention to what most consider a lifestyle choice, implying that the disabled person has no control over the condition. At what point do the accommodations start to discriminate against the healthy employees? What if the disease becomes the excuse and the obese worsen because the perception that disease is unavoidable justifies the condition and makes treatment seem pointless? And then what about the possibility of these accommodations being demanded by a totally healthy person with a BMI over 30 who is only technically obese? Medicalizing obesity will ultimately lead to costly drugs and surgeries because that is how we treat all disease in this country. So while the AMA’s heart may have been in the right place, it may have no idea of the potential consequences of their actions.

Accordingly, the first ADA lawsuit following the AMA reclassification was filed on July 13, 2013, not even 30 days following the reclassification. Whittaker v. America’s Car-Mart, Inc. is a case in which an employee’s obesity made it difficult for him to walk around the car lot where he was employed as the general manager of a car dealership, considered to be an essential function of his job. Whittaker claimed he was wrongfully terminated without being provided reasonable accommodations. In April 2014, a federal district court ruled that obesity itself may be a disability and the case would be allowed to proceed. The speakers expressed concerns that once obesity is accepted as a valid disability, injured workers could more easily argue that their obesity is a permanent condition that impedes their ability to return to work, as opposed to a temporary life choice that can be reversed.

Another consideration is that the EEOC had excluded being “overweight” as a definition of impairment, recognizing obesity as a body weight more than 100% over the norm, whereas the AMA qualifies it as an impairment without proof of an underlying physiological disorder. The Federal District Court supports the EEOC’s position that an employee does not have to prove an underlying condition, particularly where there is evidence that the “employer perceived the employee’s obesity as a disability or otherwise expressed prejudice against the employee for being obese.” So it appears that this issue is ripe for litigation for some time to come.

Lastly, the speakers of this session inferred that due to MMSEA Mandatory Insurer Reporting requirements, employers would need to report obesity for any Medicare eligible employees. The issue was hotly debated among attendees as the speaker did not distinguish an employer’s obligation to report obesity only if caused by the work injury or potentially if treated in order to address the work injury. As presented, it sounded as if obesity would need to be reported for any Medicare eligible employee regardless of being related to the work injury and that is simply not the case. Medicare’s secondary payer exclusion is triggered by a primary payers’ obligation to make payments for medical treatment; therefore, it must be compensable under the relevant workers’ compensation law in order for reporting to be required.

To sum up, obesity already had a tremendous impact on the average workplace in the form of obese individuals missing more work due to comorbid conditions, limitations on performance of physical activities, the increased likelihood of incurring a work injury and the higher costs associated with treatment. However, obesity as a disease poses new potential liabilities, such as costly accommodations and heightened scrutiny for discriminatory hiring and firing practices. Accordingly obesity has become its own risk management area that needs to be taken seriously.

THE TOP TEN RISKS PRESENTED BY THE AFFORDABLE CARE ACT presented by James P. Anelli, ACA Team Leader for LeClairRyan and Randy Jouben, Director of Risk Management for Five Guys Enterprises LLC

So the general consensus among the many interrelated RIMS 2015 presentations was that healthier individuals as a general proposition would eliminate many of the workplace risks associated with employing the elderly or obese. And one of the primary ways our government feels health related problems can be addresses is through greater access to health care, in particular, through various provisions of the Affordable Care Act (ACA). Section 4980H of the Internal Revenue Code, titled “Employer Shared Responsibility Provisions,” provides that “employers must offer affordable and ‘minimum value’ health care coverage for full time employees if they have more than 50 full time employees or their equivalent (FTE’s).” The idea is that employers will benefit from a healthier workforce in less lost time due to medical conditions, less work injuries and shorter recovery times.

But the fallacy of that idea is that just because people have access to health care does not mean that they will seek it. There are plenty of insured people in our society today that make up a significant portion of the obesity statistics discussed above. Most people do not seek medical treatment until they are not feeling well and it can be difficult at times to prove that an undiagnosed comorbidity was not brought on by a work related incident because of that. But an idea put forth during the obesity presentation was that just having health insurance will make people more at ease and in turn healthier. A Washington University study was quoted that demonstrated an improvement in health in people who invested in their 401Ks over noncontributors. Essentially people that take care of themselves financially or medically have less stress and less health issues as a general proposition. So employee wellness will lead to happier more productive employees, reduce your risk of workplace injuries, cut your claim time and medical costs, prevent the need to accommodate obesity as a disease, avoid wrongful termination lawsuits when obese employees can no longer perform their job functions, help our aging workforce to actually perform their job functions longer with strength training, and so on and so on. It is not rocket science to figure out that as a country we all would be so much better off if we were healthier. But if it were that easy, wouldn’t we all be healthier already?

For that reason, the ACA also provided incentives for employers to create wellness programs. The ACA reorganizes, amends, and adds to the HIPAA nondiscrimination and wellness provisions of part A of title XXVII of the Public Health Service Act (PHS) relating to group health plans by adding section 715(a)(1) to the Employee Retirement Income Security Act (ERISA) and section 9815(a)(1) to the Internal Revenue Code (IRC) to incorporate the PHS Act into ERISA and the IRC, making them applicable to group health plans. As passed in 1996, amendments were made to the PHS, IRC and ERISA generally prohibiting group health plans and group health insurance issuers from discriminating against individual participants and beneficiaries in eligibility, benefits, or premiums based on a health factor. Regulations for wellness programs were finally made in 2006, dividing them into two general categories. Participatory wellness programs are available without regard to an individual's health status, such as programs that reimburse for the cost of membership in a fitness center or provide a reward to employees for attending a monthly, no-cost health education seminar. The second category are "health-contingent wellness programs," which generally require individuals to meet a specific standard related to their health to obtain a reward, such as for not using, or decreasing their use of, tobacco, achieving a specified cholesterol level or weight.

Unfortunately no good deed goes unpunished. The EEOC, the enforcement agency for the ACA, filed several lawsuits against employers alleging that their programs were not voluntary. In one example, failure to participate meant the employee had to pay 100% of her health plan. On March 24, 2015, the House Workforce Protections Subcommittee convened to discuss the matter. The representative for the U.S. Chamber of Commerce commented that the EEOC’s actions have a chilling effect on employers’ willingness to implement such programs. A recent GOP-sponsored bill, Preserving Employee Wellness Programs Act (H.R. 1189), would clarify that if an employer-sponsored wellness program’s financial incentives comply with ACA, then those incentives would likewise be in compliance with ADA and GINA.

But within days of the RIMS presentation, the EEOC finally proposed regulations that would provide needed guidance as to how the ADA applies to employer wellness programs that are part of a group health plan. The proposed regs define when a program is considered voluntary, outlines what kind of health information an employer may obtain, places a maximum cap of 30% of the total cost of the employee only coverage as an incentive for participation, and other much needed clarification. Basically an employer may not require participation, deny health insurance to nonparticipants and not take retaliatory action against anyone who does not participate or fails to achieve the desired outcome. Hopefully with this new clarity, employers may be more willing to initiate wellness programs, improve the health of their workforce and lower their risk and costs overall.


RIMS 2015 provided many exciting topics that demonstrated new risk issues for workers’ compensation. However, the message was clear that our society addressing its general health problems will have a direct correlation to reducing the costs associated with work injuries, whether that comes in the form of fewer injuries because our workers are stronger or more agile or because once they do get hurt they will heal much faster without the numerous undiagnosed comorbidities that commonly plague our society. And under the ACA, employers can institute programs that incentivize employees to participate. If the studies prove to be true, healthier employees are more productive and employers can ultimately benefit in ways beyond workers’ compensation issues. Thanks to RIMS for putting on another insightful conference and we look forward to more exciting content in San Diego in 2016.

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