New Virginia Code Section 65.2-601.2 Goes Into Effect July 1, 2020

There have been several inquiries directed to the firm regarding the provisions of new addition to the Virginia Workers’ Compensation Act, Va. Code §65.2-601.2. This update provides our guidance on several frequently asked questions regarding this new section.

I. What does the new code section provide for?

The new section provides a required response to new claims for benefits from claimants. The Commission is directed to issue an order to employers, and employers are required to respond to that order within 30 days, accepting the claim, denying the claim, or stating that it lacks necessary information to complete its review (if information is lacking, the employer is required to state what information specifically it lacks). This response will not be a part of any hearing record however, so the employer is not bound irrevocably by any decision made in response to this new Order.

The Commission has suggested that there are two differences that are significant in the new statute:

  1. The statute requires that the claimant receive a copy of the response, and this is currently being interpreted as meaning that even a represented claimant should be copied on these responses; and
  2. Where the employer responds that a claim is still under investigation, the Commission will take seriously the requirement that employers specify what is being investigated and what information is needed to conclude that investigation in reviewing responses and encourages employers to respond with a reasonable amount of detail to that question.

Based on questions we have received from our clients, we would also emphasize that this statute should not cause a significant difference in how claims responses are made:

  1. These Orders will issue after a claim is filed, not upon notification of an injury. These orders will not issue after a notification of injury or a FROI is filed. The statute requires a claim filed by or on behalf of the employee.
  2. Acceptance of a claim in a 30 day order will not serve to bind the employer irrevocably. Indicating acceptance will not cause the Commission to automatically enter an award. Instead, expect the Commission to issue a letter directing the parties to execute agreement forms, consistent with what happens presently when you indicate acceptance of a claim in response to a 20-day order. Nothing has changed in the law about the right to withdraw from an agreement. Either party will still be allowed with withdraw their agreement to an award up to 30 days after an Award is entered.

The text of the statute can be viewed here:

§ 65.2-601.2. Notice to employee of employer’s intent.

    1. Whenever an employee makes a claim pursuant to § 65.2-601, the Commission shall order the employer to advise the employee, within 30 days following the date of such order, whether the employer (i) intends to accept the claim, (ii) intends to deny the claim, or (iii) is unable to determine whether it intends to accept or deny the claim because the employer lacks sufficient information from the employee or a third party to make such determination. If the employer responds that it intends to deny the claim, the response shall provide reasons therefor. If the employer responds that it is unable to determine whether it intends to accept or deny the claim because it lacks sufficient information from the employee or a third party to make such determination, the response shall identify the additional information that the employer needs from the employee or a third party in order to make such determination.
    2. The employer’s response to the order shall be considered a required report for the purposes of § 65.2-902.
    3. The employer’s response to the order shall not be considered part of the hearing record.
    4. An employer may, if the employee consents, send any response required by this section to the employee by email.

II. Does the Commission already do this?

To a degree, yes. Rule 1.5 of the Virginia Workers’ Compensation Commission provides the basis for what is commonly known as 20-day Orders. The applicable Rule provides as follows:

Rule 1.5 Acceptance or Rejection of Claim or Application.

    1. After receipt the Commission shall review the claim or application for compliance with the Workers’ Compensation Act and Rules of the Commission. B. The Commission may order the employer to advise whether the employee’s claim is accepted or to provide reasons for denial.
    2. Response to the order shall be considered a required report pursuant to §65.2-902 of the Code of Virginia.
    3. The employer’s response to this order shall not be considered part of the hearing record.

III. What is a “required report pursuant to §65.2-902” and why is that significant?

Certain reports have been designated as “required” reports by statute, and the simple answer is that if those required reports are not timely filed, the party that fails to file may be subject to fines. The relevant statute provides as follows:

§ 65.2-902. Failure to make required reports; civil penalty.

· Any employer, insurance carrier, self-insurer, group self-insurance association, or third-party administrator who fails to make any report required by the Commission pursuant to this title shall be assessed a civil penalty of not more than $500 for each failure. If the Commission determines that any such failure is willful, it shall assess a civil penalty of not less than $500 and not more than $5,000. The civil penalty herein provided may be assessed by the Commission in an open hearing with the right of review and appeal as in other cases…

IV. Will this change affect all claims or only new claims for benefits?

The new §65.2-601.2 specifically applies to initial claims for benefits arising under §65.2-601, and not to subsequent claims (e.g., change-in-condition claims, which are filed pursuant to §65.2-708, or to claims for medical benefits filed under §65.2-603 or §65.2-605.1) The Commission has indicated that the new 30-day Orders will replace 20-day Orders for new claims.

The Commission has confirmed that existing procedures will change for subsequent claims. Those claims are handled through the ADR department, which issues a different form, seeking a response within 14 days. That procedure will continue.

V. Why is this change happening?

The General Assembly has not provided any explanation for the change, but the Joint Legislative Audit and Review Commission (JLARC) produced a voluminous report on various issues within the Virginia Workers’ Compensation Act, including a study on whether claims are processed promptly and fairly. While JLARC found that claims were, for the most part, processed promptly and fairly, one impediment to prompt claims handling that was identified in the report was delay on the part of the employer in responding to initial claims for benefits.

VI. How will the Commission set fines? How will they determine if a failure to file a report was “willful?”

The Commission has had the ability to assess fines against employers for failure to make a required report for many years, applicable to the filing of Employer’s Accident Reports, and proof of insurance coverage. We have been unable to find any instance in which the Commission found a willful failure. Virtually every fine imposed for failure to make a required report was assessed at $250.00. While the Commission may take a more aggressive approach in enforcing the filing of these responses, the expectation is that employers will not be found willful in their failure to file unless the circumstances are particularly egregious.
The Commission indicated that the procedure for determining and issuing fines is still being developed but is expected to be consistent with its practices in enforcing the filings of other required reports.

VII. Is there any significance to the language of the statute that requires that the employer respond to the new 30-day Order, rather than the carrier or third-party administrator?

No. Rule 1.5 was written the same way, mentioning only employers. The Commission has accepted 20-day Order responses from the carrier or third-party administrator as a filing for the employer, and we expect that to continue to be the case for the new 30-day Orders.

VIII. Will the carrier/third-party administrator need to prepare a writing as a result of the new code section, §65.2-601.2?

No. The carrier/third-party administrator will simply need to respond to the Commission-generated form, accepting the claim, denying the claim, or indicating that further information is needed and specifying the information that is needed.

The Commission has indicated that the new form will be very similar to the existing form, with the primary differences being the new 30-day response threshold; a notice indicating that response to the order is considered a “required report;” and the inclusion of a field to allow employers to specify what information is needed for a response that the claim still under investigation.

Should you have any questions about the issues discussed here or other legal issues, please do not hesitate to contact the lawyers at Ford Richardson.

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