Yesterday, the Federal Reserve announced balances on consumer credit cards contracted by $7.4 billion in February, which translates to a 9.7% annual rate decline, the largest since 1976. American households, aided by reduced credit lines from banks, are tightening their belts.
However, the overall credit build-up of the past decade weighs heavy on consumers as delinquency rates and charge-off claims continue to rise.
Employers have been busy paring payrolls, but are also plagued by deteriorating workers’ compensation loss experience. While exposure levels decrease, premium rates remain relatively unchanged. The result is, as a percentage of payrolls, workers’ compensation costs are rising.
PROACTIVE STANCE REQUIRED
Much like the U.S. government, employers must intervene and stimulate the process of stabilizing the cost of existing claims and invest time and effort to prevent history from repeating itself as our economy recovers.
For existing claims:
- Demand a comprehensive service plan from your broker or agent. A detailed and complete analysis of your portfolio is required, including a financial target identifying the anticipated future cost of existing claims. Insist this be an ongoing project, not an exercise to be completed just prior to the renewal.
- Get behind the numbers:
a. Is loss data adjusted for subrogation recoveries?
b. Injury types-trends? Do injured employees seek medical treatment from the same physician?
- Medical Only claims – don’t be dismissive. Medical costs are outpacing the rate of inflation by a 4 to 1 margin.
- Utilization of medical bill re-pricing: Are you really saving costs or providing additional revenue to your claim administrator?
Planning for the current period:
- Implement safety measures. Some states provide a “credit” when an employer retains a safety consultant as part of its overall safety plan.
- Consider a “deductible” for medical only claims. (subject to various state laws)
- Verify that large losses have been properly limited. Death and second injury fund claims are two examples.
In concert with your service providers, employers can apply their own version of a “stress” test to understand the liabilities that have been accrued, identify appropriate adjustments to those liabilities, and continue to demand a focused attention not to allow those liabilities to grow.
Michael Ferreira is the President of Safegate Risk Consulting, LLC. He has been in the insurance industry for many years and has expertise in brokerage, underwriting and claims. While in the brokerage industry, he was the client account executive for Walmart. He can be reached at: 917-767-9123
WC Calculator www.ReduceYourWorkersComp.com/calculator.php
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Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel or other professionals before implementing any cost containment programs.
Loss Sensitive Programs – The basic loss sensitive programs are:
1-Incurred Loss Retro Plans
2-Deferred Premium Payment Plans
3-Paid Loss Retro Plans
4-Others – There are variations of loss sensitive plans including “loss divisor plans” and “compensating balance plans”.
The concept of a “loss sensitive“ insurance program is that the insurance company takes less of the risk than in a guaranteed cost program (see Guaranteed Cost Blog) by periodically charging for losses even after the policy year ends. These are typically called “retro adjustments.” In this type of arrangement, there is still a single insurance company providing the coverage and the claims handling; in other words, it is not “unbundled” in that the company providing insurance is the same one that handles the claims.
There is a “basic” premium which covers fixed expense such as administration, loss control, profit and taxes. There is also a portion of the premium that is loss sensitive. This is based on estimated losses but can be higher and lower, paid during the adjustments. In addition to the insured company is charged for claims handling and taxes on premium.
The benefit of this type of program is that the insured is rewarded for good loss experience (not many claims) during the policy year by having a portion of the standard premium returned. The drawback is that the insured has limited control over who handles the claims as in very few instances are the carriers willing to unbundle (have a company other than the insurance company adjust the claims). Normally, when their is a large deductible, the insurance company will unbundle, but not always. Another drawback is that the cash flow can be more beneficial under other types of plans.
In the deferred premium payment plan the premium is not collected during the policy year so the insured company has use of the money during that period so although the insured still has only limited control over the claims handling arrangement, they do have more cash flow benefit than under the standard incurred loss retro program. But for companies with high losses and a slow claim payment pattern there will still be negative cash flow.
Paid Loss Retro Plan -Control starts here. With this type of arrangement, the insured begins to gain more control and not experience a negative cash flow situation. What happens is that payments are made on “paid LOSSES”, not the total amount of the INCURRED (but not paid) losses which includes the amount reserved for those losses also. In this plan, when an employee returns to work more quickly and the reserve is lower, less money will be paid out for the claim. In the paid loss retro, most carriers are more amenable to unbundling the claims handling service allowing the insured to use a third-party administrator. An insured can request greater input such as authority for settlement, selection of counsel, waiver of subrogation liens and other strategies giving the company more input into how their claims are handled.
Although there are variations of loss senstive plans including “loss divisor plans” and “compensating balance plans” those are beyond the scope of this article. Contact your insurance broker about which type of plan is best for your company. Make sure to tell them you would like input into how your claims are handled.
Author: Robert Elliott, J.D.
For more information about what you CAN do, go to www.ReduceYourWorkersComp.com
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Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel or other professionals before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
Workers’ compensation medical and indemnity costs continue to rise and are now the two biggest workers’ comp challenges employers face.
To address these problem areas, some employers are utilizing an injury management service call “triage nursing” which leverages a nurse call center to facilitate timely, accurate reporting of injuries. Triage injuries to the most appropriate level of care, and improves return-to-work outcomes through immediate and detailed information delivery.
When risk management professionals think of a nurse’s involvement in the workers’ comp process, they normally think of “nurse case managers” in the traditional context. However, “triage” nurses get involved much sooner in the WC process – basically at the point of injury to assist employees in obtaining quality medical care. When an injury is reported, the nurse provides an objective medical assessment and channels the employee to the most appropriate, cost-effective level of care.
The first and primary benefit is improved medical care for employees. Triage nurses are highly compassionate medical professionals, who listen closely to the details of each injury and provide personalized attention to each employee, focusing on unique medical needs. As a result, employees have an overwhelming positive experience in the workers’ compensation process. Employers that provide this type of service send a clear message-that they care about their employees’ health, safety, and well-being. In addition, these organizations benefit from increased employee satisfaction, and consequently, decreased litigation.
The second benefit is a consistent, well-managed injury reporting process. Although it’s commonly understood that prompt reporting of injuries leads to improved claims costs and outcomes, there are still many delays and obstacles to compliance. An injured employee may wait to report an injury until it becomes worse and requires serious medical attention. Supervisors may be delayed in filing the proper claims form.
The third benefit is ensuring that every injury receives treatment appropriate to its level of medical severity. In the past, employers would often train supervisors to respond to worksite injuries, but these managers are not trained medical professionals. They would often err on the side of caution, sending employees-even those with minor injuries-to the emergency room.
Ultimately, workers’ compensation losses impact an organization’s bottom line, so containing these costs is important. By implementing a “Day of Injury” Nurse Triage, employers can reduce healthcare costs by as much as 20 percent, and by integrating a structured RTW program, injured employees recover and return to work sooner-reducing lost time by as much as 50 percent.
Paul Binsfeld is the CEO of Company Nurse, a firm specializing in workers’ compensation injury triage and management. For more information, email paulb@companynurse.com , or go to www.companynurse.com.
WC Calculator www.ReduceYourWorkersComp.com/calculator.php
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WC 101 www.ReduceYourWorkersComp.com/workers_comp.php
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel or other professionals before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
When offering modified duty to a workers in West Virginia, Attorneys Denise Klug and Aimee Stern, authorities on the subject from the highly regarded law firm of Dinsmore & Shohl, have counseled employers’ on workers’ compensation matters for many years. Attorneys Klug and Stern offer the following pointers on developing a modified duty job offer letter in West Virginia.
1-The employer should have a specific, written policy governing the modified duty program. At a minimum, this policy should explain whether the modified duty assignment is temporary, the duration of the assignment, the eligibility criteria for participation, and the duties and responsibilities of the claimant and the employer. The policy should also clearly state that it is not intended to deprive a claimant from seeking recourse under any applicable federal or state law.
2-It is recommended that employers keep up-to-date job descriptions, including physical demand guidelines, for all positions. This will help the employer, the claimant, and the claimant’s physician make prompt, informed decisions about modified duty possibilities.
3-Obviously, a claimant must be released to return to modified duty by his treating physician before modified duty can be offered.
4-The employer should obtain a clear description of the claimant’s physical capabilities. The description should identify what the claimant can do, as well as, what the claimant cannot do.
5-A detailed job description which includes the claimant’s physical restrictions should be developed.
6-It is a good practice to submit the modified duty offer to the claimant’s physician, prior to making the offer to the claimant, for the physician’s approval.
7-Modified duty can be part-time or full-time, and can be at reduced wages.
8-The employer will determine the value of the claimant’s modified duty tasks and pay him or her accordingly. The claimant may be eligible for temporary partial rehabilitation benefit, in an amount equal to 70% of the difference between the claimant’s pre-injury and modified duty wages.
9-Once a claimant is assigned to a light duty position, the employer should monitor the claimant’s progress regularly. It is important to make sure that the claimant, his or her supervisor, and his or her coworkers are all abiding by the physical restrictions placed on the claimant.
10-There is no mandatory time limit for modified duty.
Note: Employers should be aware that the 2008 amendments to the W. Va. Worker’s Compensation Act require the Insurance Commissioner to propose rules addressing a claimant’s trial return to work following a compensable injury. These rules have not yet been promulgated; however, when they are, employers will need to be aware of any changes the rules make to this area of the law.
About the authors
Denise D. Klug is a partner in the Litigation Department of Dinsmore & Shohl, LLP. Denise represents companies in the chemical, hospital, steel, trucking and numerous other industries in Ohio and W. Virginia. Denise counsels clients on violations of specific safety requirements, State Fund issues, premium discounts and establishing Drug Free Work Place Programs. She can be reached at denise.klug@dinslaw.com or 304-230-1700.
Aimee M. Stern is a member of the Litigation Department of Dinsmore & Shohl, LLP with an emphasis on toxic torts, medical malpractice and workers’ compensation. She can be reached at aimee.stern@dinslaw.com or 304-230-1603.
WC Calculator www.ReduceYourWorkersComp.com/calculator.php
TD Calculator www.ReduceYourWorkersComp.com/transitional-duty-cost-calculator.php
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel or other professionals before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
Recently, the National Council of Compensation Insurance (NCCI) reported that medical costs account for at least two-thirds of all workers compensation costs. A decade ago, indemnity costs accounted for sixty percent of total workers compensation loss costs. Clearly, through a continued focus on return-to-work programs, employers have engineered this dramatic shift.
However, due to the increasing cost of health care, the continual switching to increasingly expensive treatments and the increase in the utilization of services (including drug costs) medical costs exceed the general inflation rate by a healthy margin.
In order to meet this new challenge, employers, in partnership with their claim adjusters must renew efforts to forge stronger relationships with medical providers regarding medical treatment issues.
A return to basics is required and employers can implement some simple but effective tactics:
1-Identify injuries early – when an employee is injured, even if it is initially considered minor, capture data about the injury and the issues and environment that existed at the time the injury occurred.
2-Seek immediate treatment – especially when an employee reports a soft-tissue injury. Having employees receive immediate medical treatment, while disruptive to an operation will be less costly than an employee who fails to report to work at a later date only because they did not receive immediate care.
3- Eliminate lag time reporting claims – studies show that the faster accidents are reported to your claims administrator, the lower the ultimate cost of your workers compensation claims. Communication between the claim adjuster, the employee and the medical care provider is essential to helping the employee recover from an injury, making sure the correct medical treatment is being provided and that the costs incurred to provide both are reasonable and necessary.
While these three basic steps work effectively on each claim, it is equally important to understand the “big-picture” as well. Here are two reasons why accurate information about every accident is vital.
1-Accident data, once converted into useable information can identify trends that allow affirmative, remedial action. For example, one retailer identified a remedy to repetitive motion injuries to the hands and fingers of checkout cashiers. The checkout operation was re-designed to install a carousel for the plastic shopping bags, eliminating the cashiers having to lift the bags that were filled with purchased items. The lifting motion was “turned” over to the customer.
2-Adjuster services – know, understand and measure the performance of your claims adjuster on their effectiveness of reducing your workers compensation loss costs. We tend to focus on the “financial” performance but we need to expand the audits to include behavior. Examples include communication with an injured employee, medical care providers and the employer. Consideration should be given to the quality of the communication in addition to the frequency and consistency.
Michael Ferreira is the President of Safegate Risk Consulting, LLC. He has been in the insurance industry for many years and has expertise in brokerage, underwriting and claims. While in the brokerage industry, he was the client account executive for Walmart. He can be reached at: 917-767-9123
WC Calculator www.ReduceYourWorkersComp.com/calculator.php
TD Calculator www.ReduceYourWorkersComp.com/transitional-duty-cost-calculator.php
WC 101 www.ReduceYourWorkersComp.com/workers_comp.php
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel or other professionals before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
Michael Ferreira, President of Safegate Risk Consulting, a seasoned claims expert from New Jersey, discusses a case study of improving workers' comp loss experience with Video Event Recorders (VER). OVERVIEW A public passenger-transportation service company operates a fleet of fixed route buses, specialty vans for disabled and mentally-impaired citizens in a major metropolitan city. The fleet operates 20 hours a day, seven days a week. The drivers are unionized and they tend to be transient. The average employment duration is less than 5 years. Training and re-training is constant. THE ISSUE From a total cost and exposure perspective, passenger liability was the focus of attention. Workers compensation claims were delegated to a third party administrator and as long as frequency and severity rates remained in an acceptable range, not much attention was paid to them. To confront the automobile liability issues, the employer installed Video Event Recorders (VER) in the fleet. This system generates a video clip eight seconds before and eight seconds after the vehicle absorbs a certain G-force rating. The video captures footage inside the vehicle, outside-front and outside-rear. The concept is to modify the drivers behavior to operate the bus in a safe manner at all times. UNINTENDED CONSEQUENCE While the VERs had a positive impact on the number of accidents the fleet suffered, it also reduced the frequency of workers compensation claims. Many soft-tissue injuries were eliminated. Drivers had been claiming injuries from causes such as "hard-stops" (avoiding a collision) to being attacked by emotionally disturbed passengers. (The VER has a "panic" button for the driver to push). The employer received benefits beyond those originally assumed. They included: 1-Reduction of overtime – reduction in need to staff for drivers that missed work.| 2-Elimination of part-time drivers that were on call to fill in when driver was out work. 3-Reduction in cost paid to third-party administrator to adjust claims. Fewer claims equals less adjuster time. 4-Positive impact on workers compensation experience which led to reduction in workers compensation premium costs. CONCLUSION The use of technology to modify human behavior has intended and unintended consequences. The idea of having every move monitored may occasionally feel invasive, however, when it can be used to keep citizens safe, reduce costs and improve productivity, their use cannot be underestimated. Michael Ferreira is the President of Safegate Risk Consulting, LLC. He has been in the insurance industry for many years and has expertise in brokerage, underwriting and claims. While in the brokerage industry, he was the client account executive for Walmart. He can be reached at: 917-767-9123 WC Calculator www.ReduceYourWorkersComp.com/calculator.php TD Calculator www.ReduceYourWorkersComp.com/transitional-duty-cost-calculator.php WC 101 www.ReduceYourWorkersComp.com/workers_comp.php Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel or other professionals before implementing any cost containment programs. ©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
High deductible programs For larger employers, tne of the most popular insurance arrangements is very conducive to allowing companies to implement a workers' compensation cost containment program.
A high deductible program is almost like being self-insured in that it allows the company a lot of control, use of it's cash and also provides the benefit of using a licensed insurance company.
In a high deductible program the insurance company issues coverage over the deductible. Many companies have $500,000 deductible. This means on every claim they pay the first $500,000 of the loss with the insurance company paying only the amount in excess of the $500,000. The insurance company provides the claims handling and (workersxzcompxzkit) sometimes loss control for a fee. The insurance company may require a loss fund to be established or may require a letter of credit.
In a high deductible program the insured company can select counsel, decide whether a claim will be settled or not, and can normally make all other decisions with regard to how their claims are handled. Having claims settled without your authority is frustrating, but once you learn the ropes you will know to include these items in your account instructions, and negotiate for the levels of authority that suit your needs.
FREE tools to try:
WC Calculator: www.reduceyourworkerscomp.com/calculator.php
TD Calculator: www.ReduceYourWorkersComp.com/transitional-duty-cost-calculator.php
WC 101: www.ReduceYourWorkersComp.com/workers_comp.php
Do not use this information without independent verification. All state laws vary.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact IInfo@WorkersCompKit.com
Apportionment Allowed For Portion of California Claimant's Disability Associated with Illiteracy and Language Difficulties. Here's what happened A California worker sustained specific and cumulative injuries to his knees, shoulders, wrists, and right ankle while working as an auto washer for a rental car company. Due to the worker's injuries and his inability to read and write English, the workers' compensation judge found him to be non-feasible for vocational rehabilitation and, accordingly, awarded permanent total benefits. Most jurisdictions follow the "full responsibility rule" whereby an employer takes the employee as it finds him/her and is, therefore, responsible for the entire disability outlay. California, however, allows apportionment of a worker's claim under some, specific circumstances. Its statute generally provides that the employer is liable for only the percentage of permanent disability directly caused by the injury arising out of and occurring in the course of employment. The rental car company accordingly contended that the worker's limited language skills (he was virtually illiterate even in his native Spanish) and his overall lack of aptitude was a pre-existing, non-industrial factor that would support apportioning the worker's permanent disability benefits. Can/should such illiteracy be deemed a non-industrial "disability"? How how the court decided. In Hertz Corp. v. Workers' Comp. Appeals Bd. & Manuel Aguilar, 2008 Cal. App. LEXIS 2422 (December 16, 2008), review granted, depublished March 25, 2009, the Court of Appeal of California (6th Appellate District) determined that in as much as the Board's finding of 100 percent permanent disability was based, in part, on the finding of vocational non-feasibility, that is, a finding of the worker's permanent inability to compete in an open labor market, and since that finding was based, in part, on pre-existing, nonindustrial factors, it was error to direct the employer to provide 100 percent permanent disability benefits; the rental car company should not be liable for the portion of the workers' disability that had been caused by the pre-existing nonindustrial factors. The court of appeal, therefore, remanded the matter for a redetermination of Aguilar's permanent disability rating keyed to industrial factors. Note, however, that the Court of Appeal has apparently had second thoughts. On March 25, 2009, review was granted, and the decision was depublished. We will need to await an additional ruling by the court. See generally Larson's Workers' Compensation Law § 90.03, 90.04. Case: http://www.lexis.com/xlink?owcidslinks=on&ORIGINATION_CODE=00142&searchtype=get&search=2008%20Cal.%20App.%20LEXIS%202422%20&view=full Larson 90.03: http://www.lexis.com/research/xlink?app=00075&view=full&searchtype=get&search=5-90+Larson%27s+Workers%27+Compensation+Law+%A7+90.03&ORIGINATION_CODE=00248 Larson 90.04: http://www.lexis.com/research/xlink?app=00075&view=full&searchtype=get&search=5-90+Larson%27s+Workers%27+Compensation+Law+%A7+90.04&ORIGINATION_CODE=00248 _____________________________________________________________________________________ Tom Robinson, J.D. is the primary upkeep writer for Larson's Workers' Compensation Law (LexisNexis) and Larson's Workers' Compensation, Desk Edition (LexisNexis). He is a contributing writer for California Compensation Cases (LexisNexis) and Benefits Review Board – Longshore Reporter(LexisNexis), and is a contributing author to New York Workers' Compensation Handbook(LexisNexis). Attorney Robinson is an authority in the area of workers' compensation and we are happy to have him as a Guest Contributor to Workers' Comp Kit Blog. Tom can be reached at: compwriter@gmail.com. http://law.lexisnexis.com/practiceareas/Workers-Compensation _____________________________________________________________________________ WC Cost Calculator to show the REAL COST of workers www.ReduceYourWorkersComp.com/calculator.php Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs. ©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
With mounting financial problems, employers might find a compassionate and involved approach in their workers' comp programs helpful. There are many reasons a non-confrontational, more compassionate program works well. Here are a few of the benefits: 1. It's inexpensive. 2. It addresses a need. 3. It truly helps people in need. 4. It avoids the dehumanized handling of the workers comp boards. 5. It keeps the employer involved. 6. It reduces stress in the spouse. 7. It keeps the employer informed of all the stress-producing problems before they become irreversible. 8. It is a live-fire training exercise for the HR department and gives them a positive mission: defend and protect the worker. 9. It creates a fortress environment for the group. They are protecting each other. This is a few reasons why a less confrontational, more helpful approach is worth considering. Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers' compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. WC Cost Calculator www.ReduceYourWorkersComp.com/calculator.php REAL COST of work comp. WC 101 www.ReduceYourWorkersComp.com/workers_comp.php for the basics about workers comp. Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs. ©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
Companies with high workers’ compensation costs often do not have a tight post injury response procedure. It is important to have a procedure of what occurs immediately after an injury and for the first 24-48 hours because their must be communication between employee, doctor and employer. Nothing can be left to chance.
The employee should be kept in a contained process so that communication moves in a continuous loop. Without this continuity, the employee and the doctor may become fragmented, breaking off “into left field” from the employer, with the employee remaining out of work. A tightly controlled post-injury response procedure keeps control of the communication process among the three parties: employee, employer and physician. If communication between these parties is in place, it is much more likely the employee will return to work in a prudent but timely manner.
WC Calculator www.ReduceYourWorkersComp.com/calculator.php
TD Calculator www.ReduceYourWorkersComp.com/transitional-duty-cost-calculator.php
WC 101 www.ReduceYourWorkersComp.com/workers_comp.php
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel or other professionals before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
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