FYI:

Loss Fund Distribution

- Michael Hammond

Loss Year 8 (1996) and Loss Year 10 (1998) were declared "closed" at the March 17, 2003 Quarterly Board Meeting. This action increases the total number of closed Loss Years to 10. Now in our 15th year of operation, MVRMA has closed all but 5 loss years. What is the significance of these closures, and how do they benefit our members?

Every year, as part of the annual budget, a loss fund amount is established specifically to pay claims within our self-insured retention for that particular year. The amount of the loss fund is based upon actuarial loss simulation and risk retention studies conducted by our independent actuary. The funding amount usually provides for a confidence level in the range of 60-80%. For example, the amount contributed for LY 15 (2003) was $1,762,232 and provides a confidence level of 60%. This amount represents a little more than half of the overall member contributions for 2003.

The integrity of each loss year is maintained throughout its existence. As claims are paid, they are deducted from the appropriate fund balance. Correspondingly, interest is allocated to each loss fund account monthly, and subrogation and deductible reimbursements are credited when received.

When all known claims and lawsuits for a particular loss year have been settled and/or paid, the Board may declare the year closed. This action is taken only if the loss year has been in existence four (4) years in order to insure the statute of limitations has expired on potential claims. The average life span for most loss years is between 5 and 9 years.

Unlike a commercial insurance company or other insurance pooling arrangements, MVRMA refunds surplus loss reserves to contributing members when the loss year is closed. The surplus reserves are distributed in the same proportion as they were originally contributed. The method for this distribution is defined in the "Surplus Loss Reserves Distribution Policy" as follows: "Within 30 days of declaring the loss year closed, MVRMA will deposit each member’s surplus to the General Reserve Fund… unless notified in writing…of the municipality’s decision to: 1. Apply all or a portion of its surplus to the upcoming year’s invoice for loss fund and operating contributions. 2. Apply all or a portion of its surplus to any other outstanding MVRMA invoice. 3. Receive all or portion of its surplus in the form of a refund."

With the closure of LY 8 and LY 10, MVRMA will have refunded more than $2.9 million from its 10 closed loss years. This amount represents 45% of the loss fund contributions for those years – not a bad return!

The potential for surplus loss reserves should provide a real incentive for our members to be more cognizant of good loss control measures. By focusing on safety training, effective management techniques and policy development, we can all benefit from reduced loss expenses. MVRMA’s Loss Control Program is dedicated to assisting with these efforts. Making risk management a priority is essential to the success of the MVRMA program.

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Counselors' Comments

 - Dinsmore & Shohl

Ohio Legislature Enacts New Subrogation Statute

Effective April 9, 2003, the State of Ohio once again has a workers' compensation subrogation statute on the books. Ohio's previous workers' compensation subrogation legislation was struck down by the Ohio Supreme Court in June, 2001 when Justice Alice Robie Resnick, writing for a block which included Justices Douglas, Sweeney and Pfeifer, struck down O.R.C. Section 4123.931 in the case of Holeton v. Crouse Cartage Co. (2001), 92 Ohio St. 3d 115. With a change in the composition of the Ohio Supreme Court, and with modifications contained in the new subrogation statute, the question now becomes whether the new statute (SB 227) will survive the constitutional challenge which is sure to come.

The general purpose behind a subrogation statute is to prevent "double dipping" by an injured worker. Specifically, where an injured worker recovers lost wages and medical expenses through workers' compensation, then recovers damages representing the very same elements in a third-party case, subrogation requires repayment of money recovered from the tortfeasor to reimburse the employer for workers' compensation payments made to or on behalf of the injured employee. Under Senate Bill 227, the "subrogation interest" of the Bureau or self-insured employer will include past, present and estimated future payments of compensation, medical benefits and other costs. Likewise, the new bill retains many of the elements of the prior statute which were favorable to employers. For example, the proposed bill places upon the claimant the burden of notifying the statutory subrogee (the self-insured employer or the attorney general on behalf of the Bureau) of the identity of all third parties against whom the claimant has or may have a right of recovery in the third-party action. In the absence of such notice, plus "a reasonable opportunity to assert its subrogation rights," no settlement or judgment which a claimant obtains in a third-party action can be final. Furthermore, without appropriate notice, both the third party and the claimant will be jointly and severally liable for the full amount of the subrogation interest. Once again, the right of subrogation is automatic, and does not depend upon the filing of a court case against the third party by the claimant who has recovered workers' compensation benefits.

Operationally, the new statute creates a right of recovery based upon the payment of workers' compensation benefits by either the Bureau or a self-insured employer. The right of subrogation is applied against the "net amount recovered" in the third-party action, meaning basically either the judgment or settlement obtained, less the claimant's attorneys' fees and costs. The new statute also squarely addresses the Holeton majority's problem with the different treatment according to those claimants who settle their third-party claims, as opposed to those who proceed to trial. Under Senate Bill 227, in the event of a settlement, the net amount recovered is divided and paid between the claimant and the statutory subrogee on a basis proportional to the claimant's uncompensated damages and the subrogation interest.

Given that the Ohio Academy of Trial Lawyers was involved in the drafting of the new legislation, the conventional wisdom seems to be that Senate Bill 227 has a high likelihood of surviving a constitutional challenge. If so, Ohio will rejoin the remainder of the United States in providing subrogation reimbursement for workers' compensation benefits which are duplicated in third-party actions.

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The Claims File

- Craig Blair

The winter of 2003 is finally over! Our members are busy cleaning out the empty salt storage buildings, putting away snow blades and filling potholes so roads are passable until summer road projects begin. With the change of seasons, we may not have to worry so much about road conditions, but the spring and summer months can bring different types of risks to our members.

Most of our members will be hiring "seasonal" employees. Their duties can range from working at the pool or recreation centers to cutting grass and repairing roads. These temporary positions satisfy a very real need for the municipality as well as providing summer employment for students and others in the community. But, we must all recognize the hiring of seasonal employees does not eliminate the need for proper training.

When any new employee is hired, a safety training session (MVRMA has numerous tapes available) should be required before he performs any duties for the city. This is never more true than when a city hires a younger, inexperienced, temporary employee. The seasonal employee knows he is hired for a 2-3 month period and may be assigned to what is perceived as menial work. He may not recognize or appreciate the importance of safety in his day to day activities. It is important to have him work with a more experienced employee until he understands what is expected. If a member allows these employees to drive a city vehicle, a drivers license check should be done, and at a minimum, a training session with one of MVRMA's defensive driving tapes should be required. Where applicable, training on personal protective equipment and the operation of mowers and weed trimmers should be included.

Like full-time employees, seasonal employees need to be trained on sexual harassment, discrimination and workplace violence and understand the city's policies on these topics. Younger, inexperienced employees especially need reassurance the city is concerned about their welfare, and care should be taken in providing an "open" policy for reporting problems in these areas.

Remember, the spring and summer months may bring new risks, but safety training and policy review with employees is never "out of season."

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Loss Control Lowdown

-Starr Markworth

Time for Spring Cleaning

It has long been recognized that good housekeeping plays an important role in setting the tone for workplace safety. A worksite with good housekeeping presents a safer work environment. Worksites with poor housekeeping generally have many other, more serious, safety problems.

Good housekeeping creates efficiency on the job and helps prevent accidental injuries. Poor housekeeping can frequently contribute to accidents by hiding hazards that cause injuries. If the sight of paper, debris, clutter and spills is accepted as normal, then other more serious health and safety hazards may be taken for granted.

Housekeeping is not just cleanliness but a basic component of accident and fire prevention. It includes keeping work areas neat and orderly; maintaining halls and floors free of slip and trip hazards; and removing waste materials (e.g., paper, cardboard) and other fire hazards from work areas. It also requires paying attention to important details such as the layout of the entire workplace, aisle marking, the adequacy of storage facilities and maintenance.

Effective housekeeping is an ongoing operation: it is not a hit-or-miss cleanup done occasionally. Periodic "panic" cleanups are costly and ineffective in reducing accidents. Workplace housekeeping should be part of your day-to-day operations.

Housekeeping can also be translated into vehicle and equipment care. Once the employees begin to take pride in their workplace cleanliness, the behavior will trickle over into their care for their equipment and vehicles. For example, it’s easier to leave the excess salt in the back of the dump truck once the snow storm has passed, but the exposure of the salt in the bed over time will cause rust, thus reducing the life of the vehicle. Why not take the time to clean out the bed of the truck and preserve its paint and overall appearance?

There’s no time like springtime to begin a good housekeeping program. If you would like more information, please contact me at 937/438-8878 or by email smarkworth@mvrma.com.

Remember…..each employee is responsible for maintaining good housekeeping, so do your part to keep your workplace clean, safe and efficient.

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Brokers' Beat

Pedestrian Safety

In today's litigious environment, public entities continue to be vexed by the increasing conflict between automobiles and pedestrians on public streets. An article in the February issue of Public Works described an experiment in traffic control conducted by the Civil and Environmental Engineering Department at Michigan State University’s East Lansing campus. They monitored selected crosswalks throughout the campus to observe driver behaviors when a pedestrian entered the crosswalk. During a specified observation period, an average of only 12 vehicles yielded to pedestrians at crosswalks (as required by law) without any type of signage. This was a very disturbing finding with respect to driver behavior.

They then placed a plastic "Yield to Pedestrian" sign on the center line of the roadway at the crosswalk. You have probably seen these signs. They look like paddles, about 36 inches high, and are yellow with a pedestrian symbol and a very small inverted red triangle at the top. When placed in the crosswalk, an average of 221 vehicles yielded the right of way to pedestrians during the same observation period. The placement of the signs dramatically improved driver behavior. That result is impressive or cause for concern, depending on how you choose to view it.

But, what is most interesting about the test is the lack of what the report calls the "Halo Effect." The test was conducted with moveable signs. As soon as the safety signs were removed, traffic reverted to its prior poor behavior. They conducted the test using different variants such as time of day, day of the week, class schedule etc., and found no lasting impact on driver behavior. Drivers continued to disregard the law and failed to yield to pedestrians in the crosswalks without the signs in place, an interesting yet alarming discovery. The implication for public entities as they attempt to upgrade the safety of crosswalks is there will be no spill over or "Halo Effect" at other crosswalks. Drivers don't seem to take a cue from just one well-marked crosswalk in the area. In order to effectively address driver behavior, all streets with crosswalks need signs. To defray the dollar impact of such an implementation, installation of signs could be accomplished during a two to three year timeframe. Be assured, however, the cost of the signs will be far outweighed by the cost of potential claims or lawsuits.

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Coming Events

8 - 10:00 am - Bloodborne Pathogens

10:15am - 12:15 pm - Lockout Tagout of Energy Sources

1:15 - 3:15 pm - Changing Chlorine Takes Safety

(Contact Hours being Offered)

Location: MVCC

1195 E. Alex-Bell Rd.

Centerville, OH

MVRMA Strategic Planning Retreat

9:00 am - 3:00 pm

Springdale Community Center

AGRIP Annual Conference

Reno, NV

MVRMA Quarterly Board Meeting

9:00 am

MVRMA Offices

Confined Space and Heat Over Exposure

AM or PM Session

MVCC

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From the Board Room...

At the March 17, 2003 Quarterly Board Meeting, the following actions were taken:

- Approved the 2003 liability placement authorized by the Finance Committee

- Approved closure of LY 8 (1996) and LY 10 (1998)

- Approved Founding Membership in GEM and authorized the Executive Director to execute the agreement

- Approved amending the 2003 budget and changing the annual payment to include the GEM deposit premium

- Approved the deduction of the GEM deposit premium from the closure of LY 8 and LY 10, where possible

- Authorized the Executive Director to sign an unsecured term note with Fifth Third Bank to pay the GEM deposit premium for the City of Piqua

- Approved the MVRMA 2003 Liability Coverage Document

- Authorized the Executive Director to execute the contract with Management Partners Inc. to facilitate this year's Strategic Planning Retreat

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