The Way

GB's Weekly Governmental Briefing

Through our Governmental Affairs practice, GB is helping to shape the laws and regulations that will define the times ahead. Acting on behalf of the best interests of our clients and our industry.
Each week, we bring it all into focus.

A Different Path of Totality

Aug. 30, 2017
LEAD STORY

Hurricane Harvey made landfall on the gulf coast of Texas Friday night.  This category 4 storm was the most powerful hurricane to hit the mainland United States since 2005’s Hurricane Katrina. Even after weakening upon landfall, Harvey was reclassified into a tropical storm.  It delivered a torrential downpour onto coastal Texas, including more than 30 inches of rainfall in Houston, the nation’s 4th largest metropolitan area.

CATASTROPHIC FLOODING

Texas Gov. Greg Abbott activated 3,000 national and state guard members after Harvey caused historic and catastrophic flooding.  The National Weather Service characterized Harvey as a storm "beyond anything experienced before.”  Even today, thousands of homes continue to take on water and hundreds of people remain trapped and stranded in rising floodwaters across the Houston area.  Thousands of people have been rescued so far by civilian and municipal emergency responders.  The death toll from Harvey has risen to at least thirty.

THE PROMISE OF INSURANCE

Federal law requires that homes in flood-risk areas have flood insurance before a mortgage can be completed.  With few exceptions, the National Flood Insurance Program (NFIP) is the only flood insurance available to the vast majority of Americans. But, even before Harvey came aground, the NFIP was in financial straits.  The NFIP owes $24.6 billion to the Treasury, resulting from covered claims from Hurricane Katrina in 2005, Superstorm Sandy in 2012, and floods in 2016.  Harvey will likely make the situation worse.  The Pew Institute, in its review of National Oceanic and Atmospheric Administration (NOAA) data, estimates that some 435,000 NFIP policyholders reside in shoreline communities of Texas.

EXTENDING AND PROTECTING THE PROMISE

The NFIP has been extended 17 times between 2008 and 2012.  It has lapsed four times during that period.  A 2012 law extended the program through September 30, 2017.  Risk and insurance advocates have pushed Congress to once again reauthorize the NFIP.  Harvey’s arrival so close to the program's Sept. 30 expiration date could move lawmakers to action.  But, even as the storm and its damage estimates continue to surge,  teams of catastrophe claims adjusters are being staged throughout Texas to begin the process of examining the loss across all lines of coverage, once it is safe to do so.  We will continue to follow the path of Harvey as this story unfolds. 

California Workers' Compensation

MEDICAL DATA CALL

The California Workers' Compensation Insurance Rating Bureau (WCRIB) released its annual report of medical claim data for 2016 this week. WCRIB collected payment data exceeding $2.3 billion from more than 50 state insurer groups and their trading partners, representing more than 91% of the California workers' compensation market.

A DOWNWARD TREND

The WCRIB report found that medical payments per claim dropped 9% from 2014 to $3,474.  WCRIB concluded that the decline in medical payments per claim was driven by a drop in medical utilization, as reflected in a 10% reduction in paid medical transactions. The report also found that the average pharmacy paid per transaction declined by 17% during the three-year period, driven by decreases in all drug categories.

Making Our Way Around the Country

DEPARTMENT OF TRANSPORTATION

Democratic lawmakers this week took aim at the Trump administration for recalling a sleep apnea testing rule for railway and motor carrier operators.  Last fall, the Federal Railroad Administration (FRA) issued a safety advisory urging railroads to screen and treat workers for obstructive sleep apnea.  Safety advocates viewed the recommendation as a placeholder while the agency wrote new rules requiring railroads and other transportation companies to screen their operators for the sleep disorder.  But the FRA and the Federal Motor Carrier Safety Administration (FMCSA) announced earlier this month that they were cancelling that proposal.  The administration said it gathered significant information and held public listening sessions on the idea, but did not receive sufficient data to support future rulemaking at this time.

FEDERAL AVIATION ADMINISTRATION

In Denver this week, the U.S. 10th Circuit Court of Appeals ruled that the state of Wyoming cannot regulate the prices of air ambulance services provided to workers' compensation claimants.  To date, air ambulance providers have successfully argued in several federal trial courts that the Airline Deregulation Act (the Act) bars states from limiting the amounts they charge.  At least one state court ruling in Texas has curtailed the pricing.  However, as cited in the opinion, this is the first federal appellate decision supporting the federal preemption of air ambulance charges in the workers' compensation context.

HIGHER EDUCATION RISKS

It is rush week at fraternity and sorority houses on college campuses around the country.  One major state university, Penn State, is leading a charge to change its risk management structure to end self-governance of Greek letter houses, following the tragic alcohol-related death of a student during pledging activities.  The University has further leant its support to a new federal anti-hazing legislation, the Report and Educate About Campus Hazing Act (REACH Act), bi-partisan legislation designed to help institutions of higher education tackle the serious challenge of hazing. Congressman Patrick Meehan (R-PA) and Congresswoman Marcia Fudge (D-OH) introduced the REACH Act last month.  The measure would, for the first time, require colleges and universities to track and report hazing and provide students with educational programming about hazing.

LABOR DAY

Monday is Labor Day in the United States.  This week, U.S. Department of Labor Secretary Alexander Acosta announced that President Ronald Reagan will be enshrined in the Labor Department's Wall of Honor.  The only U.S. President to serve as a union president, Ronald Reagan led the Screen Actors Guild during its first three strikes and negotiated never-before-seen concessions for SAG members, which included residual payments and health and pension benefits.  Way to go, Gipper!

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