By John Hollick, JD, SFM Chief Defense Counsel

Nationally, many states have been enacting laws regarding medical marijuana, recreational marijuana and hemp-derived substances. Given the prevalence of THC-infused products, employers are asking about the impact of these potentially intoxicating substances on the workers’ compensation system.

For example, in Minnesota consumers can now purchase THC-infused food and beverages. The THC must be hemp-derived, and there are no restrictions on who can sell these products or where they can be sold. Hemp, which is legal on the federal side, has less THC (the substance in marijuana that produces the “high”) than the typical marijuana plant. The THC edibles in Minnesota could be consumed as gummies, milk chocolate, snacks or beverages.

This has left employers wondering whether they need to be more concerned about the potential for THC-intoxicated employees to become injured on the job, and if these intoxicated employees would then get workers’ compensation benefits.

Look to state laws

Many states, including Minnesota, have several exceptions to the typical workers’ compensation no-fault system. One exception is the so-called “intoxication defense.” Minnesota’s law, which was first enacted in 1953, states that if the intoxication of the employee is the proximate cause of the injury, then the employer is not liable for workers’ compensation benefits. The burden of proof, however, is on the employer.

Iowa law states that if an injured employee fails the post-injury alcohol and drug tests, they will then carry the burden of proof to show that they were either not intoxicated, or that the intoxication was not the substantial factor in causing the injury.

In Wisconsin, the law states that if the employee is in violation of an employer’s policy regarding alcohol or drug use and that violation causes a work injury, the employee would lose all their rights to workers’ compensation benefits, except medical.

Colorado, which has had medical and recreational marijuana legalization in effect for several years, has one of the tougher laws. It states that if a drug test indicates the presence of a controlled substance, including marijuana, in the employee’s system during working hours, then it is presumed that the employee was intoxicated, and the injury was caused by the intoxication. The employee would then have to rebut this presumption by presenting clear and convincing evidence. Indemnity benefits would be reduced by 50% if the employer prevailed on this defense, but medical benefits would not be affected.

What can employers do?

The best way employers can control work comp costs is to prevent injuries and have solid safety programs. A clear and communicated handbook policy on intoxication is important.

It is also important to report workers’ compensation injuries in a timely manner to your work comp insurer or administrator, and if intoxication could be an issue in causing the work injury, early investigation and identification of witnesses is important. An employer should also consult an attorney if they are considering a drug testing program as some states, including Minnesota, have complex drug testing laws.

This is not intended to serve as legal advice for individual fact-specific legal cases or as a legal basis for your employment practices.

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SFM’s territory expansion continues as the team makes more progress in Kansas and Indiana and sets its sights on Tennessee.

SFM has selected the Volunteer State as our 2023 expansion state, continuing our plans for growth. Our team is already meeting with key industry contacts in the state to develop relationships with regulators, agencies, and agency associations. SFM expects to be appointing new agency partners in Tennessee in the coming months, and to begin writing business in the first half of 2023.

“We are extremely optimistic about our future outlook in Tennessee,” said SFM Business Development Specialist Cody Allen. “We chose Tennessee based on several key factors: a consistent history of profitability in the work comp line, ease of doing business from a regulatory standpoint, and a potential strategic partnership to help with our initial agency distribution.”

A year in Indiana

SFM entered Indiana in fall of last year and started writing business in January. So far, we have surpassed our initial goals for 2022 for written premium and appointed agencies.

“Our team is developing a few key relationships in Indiana that we expect to increase our growth in the state in the coming year,” said SFM Small Business Marketing Representative Mark Lewis. “It’s encouraging to know that agents in this competitive work comp market want to work with a carrier that has a deep desire to support both them and their policyholders, and that is also competitive on pricing and commission.”

This first year, we have had the chance to meet many new agencies thanks to our team members’ activities participating in both the Big I Indiana and the Professional Insurance Agents (PIA) of Indiana. SFM will be exhibiting at the annual Big I Indiana convention in November, and we encourage you to stop by our booth to meet our team.

Recap of Kansas, our first expansion state

We’re continuing to grow in Kansas.

“The reception by Kansas agencies and our results to date have far exceeded our expectations and this state remains a marker of what our company can achieve with hard work and through terrific agency partnerships,” Allen said.

Currently, we have over 450 policies and $1.6 million of in-force premium in the state, and we have signed up over 115 agencies.

SFM is now writing business in 34 states. You can view a complete state coverage list on the coverage and services page of the SFM website.

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The Independent Insurance Agents of Nebraska recognized SFM for outstanding effort and service with two annual awards for 2022.

Senior Marketing Underwriter Jeff Magee was named the IIAN’s Company Representative of the Year and SFM was named Five Star Company of the Year for 2022.

Company Representative of the Year: Jeff Magee

The Company Representative of the Year award considers an individual’s support of the “Big I,” company-agent relations, new business production and agents’ ability to give their clients superior service. Magee’s nomination cited both his service to agencies and leadership within the organization.

“Jeff goes out of his way to make sure he is providing our agency with the highest level of service and truly values the relationship we have with SFM,” the nominator said. “Jeff has been an active leader on the IIAN Foundation Board, and promoter of our Nextgen group. Jeff is a great leader in our industry.”

Magee, who is based in Omaha, Nebraska, has been an underwriter with SFM for six years. He’s spent time working in a variety of roles for both carriers and agencies throughout his 25-year career in the insurance industry. He currently serves as president of Kids’ Chance of Nebraska , a nonprofit organization that provides scholarships to the children of Nebraska workers who have been severely or fatally injured on the job.

Five Star Company of the Year: SFM

The Five Star Company of the Year award is based on agents’ ratings of carriers in the following areas: technology, personnel, policy issuance, products/markets, claims, agency support, extraordinary factors (such as charity work or lobbying efforts) and overall relationship.

“We’re so grateful to our agency partners in the Nebraska ‘Big I’ for this meaningful recognition,” said VP of Regional Business Shawn Miner. “This award leaves us humbled and even more inspired to continue working hard for our Nebraska agents.”

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Users of SFM Agency Manager (SAM) now have the ability to change effective dates on quoted applications, including approved quotes. We added this feature earlier this year in response to feedback from agents.

You can update application effective dates right from the SAM quote screen. To change the effective date on an existing application, simply type the new effective date in the provided boxes and click “Save Dates.” You can reset effective dates forward up to 60 days past the original application effective date. To move a date backward, please reach out to your underwriter for review.

This change comes as a response to suggestions made by agents who use the SAM system frequently. This enhancement represents the latest in a series of refinements to the digital user experience for SFM’s agency partners.

“We’re already hearing from agents who appreciate the additional flexibility this upgrade gives them,” said Steve Sandilla, SVP & Chief Business Officer. “We’re grateful to our agency partners for providing direct feedback on how our SAM system can make their lives easier, and we work hard to turn their suggestions into meaningful improvements.”

For more information about optimizing your agency’s application workflow in SAM, contact your SFM underwriter.

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Starting in 2023, the Minnesota Workers’ Compensation Insurers Association will be including trend, tail development, and loss adjustment expense data in pure premium base rates.

This change will bring Minnesota more in line with the practices of states that use the NCCI for rating, which include Iowa, Nebraska and South Dakota.

The pure premium rate statewide is increasing 5.7%, with the loss experience component decreasing 9.5% and definitional changes offsetting with a 16.8% increase. Insurers will be required to adjust their expense load, known as a Loss Cost Multiplier, to take out trend, tail development, and loss adjustment expense when adopting the 2023 rate sets. Many SFM policyholders could see a decrease in premium next year, although in some cases this may be offset by changes in payroll and individual loss experience.

Here’s a little more information from the Minnesota Workers’ Compensation Insurers Association newsletter on the data that will now be included in the Minnesota rates:

• Trend data: This accounts for the difference in cost between the experience period, which was in the past, and the future period for which the rates apply.
• Tail data: This accounts for the ultimate costs of claims, which can go on for years or even decades.
• Loss adjustment expenses: This accounts for costs associated with recording, managing and settling claims such as attorney fees, court expenses and claim adjuster salaries.

See additional information about the change in MWCIA Circular Letter No. 22-1809 .

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Back by popular demand, the SFM Foundation’s live fall fundraising event is scheduled for this November.

SFM Foundation event proceeds provide most of the funding for scholarships. Due to the pandemic, the annual fall fundraiser was changed to a virtual event over the past two years. By bringing the in-person event back in 2022, the Foundation hopes to provide even more funding for a growing number of scholarships to students and families in need.

Join us from 6-9 p.m. on Thursday, November 10, at the Westin Edina Galleria in Edina, Minnesota, near SFM’s Bloomington headquarters. The event will feature wine and craft beer tasting, a silent auction, raffles, shopping, appetizers and more. Tickets are $40 in advance or $50 at the door.

In addition to the in-person event, a virtual silent auction will begin on Monday, November 7 and close during the live event at 8 p.m. on Thursday, November 10. The link to participate in the virtual auction will be available on the SFM Foundation website as the event nears.

If you’re interested in sponsoring the event, donating items for the silent auction, or purchasing tickets, visit sfmfoundation.com/events .

About the SFM Foundation

The SFM Foundation provides scholarships for students whose parents were seriously injured or killed while working for Minnesota or Iowa employers. SFM Foundation is an affiliate of Kids’ Chance of America  in Iowa and Minnesota and is also known as Kids’ Chance of Iowa. To learn more about the cause, visit sfmfoundation.com .

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The Workers’ Compensation Reinsurance Association is distributing $35 million to policyholders who had Minnesota workers’ compensation policies in 2020.

Recipients whose share of the distribution exceeds $15 will receive a check from the association, according to the association’s FAQ page . Checks are being sent out over the course of this year.

The amount each policyholder receives is based on the amount of earned premium for the 2020 calendar year.

Insurers and self-insured employers are also receiving a distribution.

For more details on the distribution, see the Workers’ Compensation Reinsurance Association’s Policyholder FAQ page .

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