The Supreme Court recently increased the reach of the federal laws to combat job discrimination, ruling that employees are protected from illegal bias not just from a top decision maker, but from other supervisors too.
According to a report from The Los Angeles Times, the justices commented the crucial issue is whether illegal bias was a "motivating factor" in the choice to terminate an employee. Companies and public agencies are not shielded from liability, they concluded, simply due to the fact the supervisor who made the decision to fire a worker did so for valid reasons. If other supervisors are biased and influence the decision, the employer can be held at fault, they argued. (WCxKit)
For at least a decade, lower courts have had differing views as to whether the workplace civil rights laws should center narrowly on the single supervisor who makes hiring and firing decisions, or more broadly on the many supervisors who influence the outcome. By a unanimous vote, the high court chose the broad approach.
The decision restores a $57,640 jury verdict in favor of Vincent Staub, an Army reservist who was terminated from his employment as a medical technician at the Proctor Hospital in Peoria, Illinois. He contended a pair of his supervisors were biased against him because he was absent on weekends due to his military duties.
They claimed he put a "strain on the department," and others had "to bend over backwards to cover" for him.
The complaints go to the hospital's vice president for human resources. She looked into remarks that Staub was "abrupt" with others and was at times absent from his work location. She decided to terminate him.
Staub sued, relying on the Uniformed Services Employment and Reemployment Act of 1994, which forbids discrimination against employees due to their military duties. Justice Scalia said this law is "very similar" to the other federal civil rights laws that forbid discrimination based on race, religion, sex or national origin. The pair of statutes is in play if the illegal bias was a "motivating factor" in the employers decision.
Though a jury ruled for Staub, the U.S. 7th Circuit Court of Appeals in Chicago tossed out the verdict. Its decision discounted the comments of his direct supervisors and said the vice president for human resources acted by herself.
Then-U.S. Solicitor General Elena Kagan encouraged the court to listen to the case of Staub v. Proctor Hospital and to adopt the broader interpretation of the federal workplace discrimination laws. (WCxKit)
They did so in an 8-0 vote, with Kagan not voting.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact:RShafer@ReduceYourWorkersComp.com or 860-553-6604.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com.
To pay the cost of workers compensation claims, the insurer or the self-insured employer sets aside the amount of money the company anticipates as necessary to cover the cost of the claim. The process of placing money in a reserve – reserving – sounds simple, but it’s not. While most financial obligations of a company have a set price, workers comp claims do not come with a predetermined cost. The amount of money needed to pay the claim is an estimate based on the experience of the adjuster with previous similar injury claims. Even though the reserve is an estimate, it is a legal obligation and appears on the insurer's balance sheet.
If the workers comp adjuster for the insurer under estimates the amount of money necessary to pay the claim, the claim is under reserved. If the adjuster over estimates the amount of money needed for the claim, the claim is over reserved. Both under reserving and over reserving creates issues for the insurer. In a previous article we discussed under reserving of files and the complication under reserving bring. In this article, we will look at the complications from over reserving. (WCxKit)
When a claim file is over reserved, the extra money placed in the insurance reserve to pay the claim is not available to the insurer for any other purpose. The growth of the business is reduced because the insurer has less money available for its financial operations – investing, supplies, salaries, and other usage. While the impact of one claim being over reserved may not be felt, the impact of many claims being over reserved significantly curtails the growth of the insurance company and can even strangle the potential of the insurance company by reducing the funds it has available for its business.
Over reserving also causes a serious side affect for the workers comp insurer because of the way the premiums are calculated. The two components of workers comp claims affecting insurance premiums are frequency and severity. Workers comp claims are often referred to as “long-tail” claims because they often remain open for years. Therefore, when the underwriter at the insurance company computes the insurance premium, both the closed claims – where the reserves reflect what was actually paid – and the open claims, are used to calculate the future premium.
When the claim files are over reserved, the severity of the claims is overstated in the calculation of the insurance premiums. This has a detrimental impact on the cost of workers comp insurance. The extra money in the over reserved open claims results in the premium calculation being higher than it should be. The employer is penalized for over reserves by having to pay higher insurance premiums than should be charged. If the employer can obtain the same workers compensation insurance at another company, at a lower price, the insurer loses the employer's business. If the over reserving is severe enough, it can cause the financial collapse of the workers comp insurer because the insurer is unable to sell any new business as the insurance premiums it charges employers are too high.
The workers comp adjuster may over reserve the claim out of an abundance of caution, or more often, because it is easier to put a high reserve on the file than it is to spend the necessary time evaluating the medical information, the extent of the impairment/disability, and the applicable workers comp statutes to determine the correct reserve amount. As claims management understands the impact of over reserving, when they see a pattern of over reserving, the usual conclusion is the adjuster is either inexperienced or incompetent. The insurer or self-insured employer needs to work with the adjuster who is over reserving to improve the adjuster's reserving skills. When over reserving is corrected, the excess money being held in reserves is released and goes straight to the bottom line of the insurer's financial report. (WcxKitz)
The financial security and well-being of the insurer or the self-insured employer is dependent upon the adequacy of the workers comp claim reserved. If the reserved is overstated, it will diminish the monetary funds the company has available for its other financial obligations and opportunities. It will also cause the necessary premiums to be overstated, resulting in a loss of business for the insurer.
If you are a self-insured employer and believe your workers comp claim reserves are set too high, please contact us and we will be glad to set you up with an independent claims auditor to verify the accuracy of your claim file reserves.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact:RShafer@ReduceYourWorkersComp.com or 860-553-6604.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
© 2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com. Reformatting or rewriting our articles without prior permission is a violation of copyright law and we WILL take action against you if you do this without permission.
Workplace deaths in Washington state climbed in 2010, with 86 men and women killed due to job-related trauma, according to a report unveiled on work-related fatalities by the Department of Labor & Industries (L&I). The deaths are the most reported since 2006 and a steep climb from 65 fatalities reported in 2009.
“Last year was a difficult one for worker safety, and this report demonstrates that,” L&I director Judy Schurke said. “Behind these numbers are grieving families and traumatized co-workers. It is only with the continuing cooperation of labor, business and safety and health professionals that we can hope to prevent future deaths like these from happening.” (WCxKit)
The Washington FACE 2010 Work-Related Fatalities Report is based on preliminary data regarding workplace deaths in 2010. It was compiled by the Fatality Assessment and Control Evaluation (FACE) program, managed by L&I’s Safety and Health Assessment and Research for Prevention (SHARP) program. FACE is part of a national program designed to identify and study fatal occupational injuries.
“These tragic statistics demonstrate that workplace deaths occur with alarming frequency,” said SHARP Research Director Barbara Silverstein. “Our hope is that this report will encourage a broad discussion of safety and health in every work site in our state.”
Among the report’s findings, deaths involving farm workers, loggers and workers in the fishing industry accounted for 20 of the fatalities in 2010. Seven farm workers died in tractor roll-over accidents, which prompted L&I to issue a hazard alert to the agriculture industry last month.
With seven men and women killed in a single incident at the Tesoro refinery explosion in Anacortes, Skagit County ranked just behind King County last year for having the most workplace deaths. (WCxKit)
Despite the overall increase in workplace deaths, fatalities in the construction industry remained low with seven deaths reported in 2010.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: Info@ReduceYourWorkersComp.com or 860-553-6604.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com.
A small percentage of doctors are responsible for prescribing close to 80% of Schedule II opioids for workers compensation injuries, according to unveiled research from the California Workers Compensation Institute (CWCI).
BusinessInsurance.com reports that Schedule II opioids include “major narcotics LIKE oxycodone, fentanyl, morphine and methadone, which have limited FDA-approved medical uses and carry a high potential for addiction and abuse,” according to the CWCI. (WCxKit)
The study reports that 10% of doctors prescribing Schedule II opioids for injured California workers accounted for approximately 80% of all workers comp prescriptions for the drugs and 88% of the associated payments.
The CWCI reviewed 233,276 prescriptions dispensed to 16,890 California workers from the period of January 2005 to December 2009. It discovered that nearly half of all Schedule II opioid prescriptions went towards minor back injuries.
Yet the American College of Occupational and Environmental Medicine claims the use of these drugs is “typically not useful in the sub acute and chronic phases,” according to the. (WCxKit)
Previous CWCI research discovered the use of the drugs in California workers comp cases had ballooned, with their costs accounting for 3.8% of workers comp prescription drug costs in 2005 but growing to 23.6% four years later.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact:Info@ReduceYourWorkersComp.com or 860-553-6604.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 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 you go on-line and read your adjuster's file notes about your claims, do you know what to look for to be sure the adjuster is performing a quality claim's investigation on your claim files? If not, read on and learn what the adjuster should be doing to be sure you are being protected from unnecessary workers compensation cost.
ONE:
The first thing the adjuster should do in the claim investigation is to verify coverage. Before the adjuster accepts the claim, the adjuster should check to be sure there is coverage. The verification of coverage should be the first adjuster's note in the claim file notes. (WCxKit)
This would include:
1. The policy number.
2. The policy dates to verify the policy is in enforce for the date of the accident.
3. The state(s) covered under the given policy number and policy period.
4. Any endorsements to the policy that would change the coverage.
5. Any exclusions to the policy that would change the coverage (for example – a particular location of the employer is excluded from the coverage).
TWO:
Once the adjuster has confirmed there is coverage, the next step in the investigation is to begin the contacts. With workers compensation, the first contact attempt should not be the employee, it should be the employer. The reason for this is the employee will only provide information the employee considers beneficial to himself. The employer will often provide information that will assist adjuster on the direction of the claim. The employer might advise that no one saw the accident and the claim is highly questionable, or the employer might advise that there were seven fellow employees who saw the injury occur.
THREE:
The initial contact with the employer should be the same day the accident is reported, or at least within 24 hours of the report of the claim. The adjuster's file notes should reflect more than “called the employer.” The contact details that should be included in the file notes include:
1. The facts of the accident.
2. The identification of any witnesses.
3. A discussion of any subrogation issues.
4. Any knowledge the employer has of a prior claim.
5. Verification of the information on the Employer's First Report of Injury.
6. The disability status of the employee.
7. A description of the employee's job duties.
8. The length of time the employee has worked for the employer.
9. Confirmation of lost time if the injury was reported after the initial waiting period for indemnity benefits.
10.The availability of modified duty for the employee.
11.If applicable, a request by the adjuster to the employer to provide the necessary documentation of the employee's wage history.
FOUR:
The initial contact with the employee should immediately follow the initial contact with the employer. The employee contact should also be the same day the accident is reported, or at least within 24 hours of the report of the claim. The file notes should reflect the initial contact with the employee covered:
1. The facts of the accident.
2. The identification of any witnesses.
3. A discussion of any subrogation issues.
4. Any prior injury claims of the employee (both workers comp and any other injury claims).
5. Verification of the information on the Employer's First Report of Injury.
6. Any additional information not on the Employer's First Report of Injury that would be needed to file the ISO index on the employee.
7. The disability status of the employee including information on the nature of the injury, the treatment and the prognosis.
8. The employee's attitude toward the employer and returning to work.
9. A summary of the explanation of benefits and the future course of action the adjuster will take.
FIVE:
The investigation should also include the contact of any witnesses. The initial contact with the witness(es) should be the same day the accident is reported, or at least within 24 hours of the report of the claim. The file notes on the contact with the witnesses should reflect the facts of the accident as told by the witness(es). All witnesses should be asked to identify any other witnesses they know about.
SIX:
The first contacts part of the investigation should also include contact with the office of the medical provider. This allows the adjuster to verify the nature and scope of the injury, the diagnosis and the prognosis, plus the adjuster can make arrangements for all medical bill and medical reports to be sent to the adjuster. This information on this part of the adjuster's investigation should also be reflected in the file notes.
SEVEN:
If the adjuster has any reason to question the compensability of the claim, or if there is the potential for subrogation, or if the employee's injuries are severe, the adjuster as a part of the, should obtain a recorded statement from the employee during the initial contact. The file notes should reflect a summary of this part of the investigation.
EIGHT:
The claim investigation encompasses much more than just the initial contacts with the employer, employee, medical provider and any witnesses. The work comp claim investigation should also include:
1. A medical authorization in those states that require one for workers comp.
2. Obtaining the current medical records.
3. Obtaining past medical records if the employee has a history of prior injury claims.
4. A wage statement for the calculation of indemnity benefits.
5. The filing of the ISO index.
6. A police report, OSHA report of any other governmental record related to the injury.
7. A recorded statement from the employee's supervisor if there is a compensability question.
8. Engineering report or other documentation to support subrogation when applicable.
9. Information on any responsible third parties when subrogation is possible.
10. Any other information that will have an impact on the outcome of the claim.
NINE:
If the only file notes on the investigation read something like “called employer, no questions about the claim,” the adjuster is not doing a proper investigation. Even if the injury was witnessed by a dozen co-workers, the adjuster who is doing a proper investigation will still cover all the key points noted above. Even in the most valid of claims, the adjuster should still learn the employee's diagnosis and prognosis, and when the employee will be back on the job. If the adjuster is not asking when the employee can return to work full duty or on modified duty, the claim investigation is incomplete. (WCxKit)
TEN:
All the information obtained during the claim investigation should be summarized in the file notes for your review. If the adjuster is not doing so, ask that the file notes be documented. After all, with workers compensation, you will eventually pay the cost of the employee's claim through your insurance premiums. You should know if you are getting the proper claim investigation that you are paying for.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com or 860-553-6604.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com.
A Cardiff-based truck and van company has been fined $32,022 after a mechanic fell from a makeshift platform attached to a forklift truck.
The 21-year-old HGV mechanic fractured his hip when he fell 15 feet at Fairwood Truck Centre in Rogerstone, Newport. (WCxKit)
Watts Truck & Van (Cardiff) Ltd was prosecuted by the Health and Safety Executive (HSE) after an investigation into the incident in August of 2009.
Newport Magistrates Court heard how the worker, who does not wish to be named, was standing on the platform while repairing a light at the top of a high-sided vehicle. The makeshift platform had been put together by a colleague from a wire surround, which had been screwed to a wooden pallet and placed on a fork lift truck.
The platform had not been securely fixed to the fork lift, so when the worker leant to catch a light bulb thrown up to him by a colleague, it fell, taking him with it.
The father-of-one needed an operation on his hip, was off work for a month, and has had to undergo numerous physiotherapy sessions since. He still suffers continuous pain in his hip and is no longer able to go running or boxing.
The HSE investigation found Watts Truck & Van (Cardiff) Ltd failed to ensure that work at height by its employees was properly planned and supervised and carried out safely.
The company which is based in Lydney, Gloucestershire, pleaded guilty to breaching Regulation 4(1) of the Work at Height Regulations 2005. It was fined $32,022 and ordered to pay $4,915.58 costs.
HSE inspector Paul Cartwright noted, “Its extremely fortunate that the injuries in this case were not more serious.
"Falls from height can easily be fatal. Where possible, employers should avoid the need for employees to work at height. Where it cant be avoided, they must assess the risks, ensure suitable access equipment is used, and make sure there is effective planning, training and supervision in place."
Falls from height remain the most common cause of workplace fatality. (WCxKit)
In 2008/09 there were 35 deaths, 4654 major injuries and a further 7,065 injuries that caused the injured person to be off work for over three days or more, due to a fall from height.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: Info@ReduceYourWorkersComp.com or 860-553-6604.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com.
A British construction company has been fined after a man fell six meters down a lift shaft at a construction site in Brighton.
David Homewood, 53, from Eastbourne, was delivering a kitchen unit to a new block of luxury flats in Ocean Heights, Roedean Road, Brighton, when the incident happened on Nov. 3, 2009. (WCxKit)
Homewood was walking backwards upstairs while carrying one end of the unit while a colleague supported the other end, but as they reached the second floor landing; he stepped over a roll pack of insulation and fell down the unguarded lift shaft.
The Health and Safety Executive (HSE) prosecuted principle contractor Brighton Construction Ltd for failing to manage the construction site properly.
Lewes Crown Court was told Homewood fell about six meters and suffered a fractured spine, bruised lungs and a fractured pelvis. He was in intensive care for six days and was in the hospital for four weeks. His walking is now impaired and he has been unable to return to work since the incident.
The court also heard that advice had been given to Brighton Construction Ltd after a HSE inspection five months before the incident. The inspector wrote to the company requiring that any openings in the floors were protected with guardrails. (WCxKit)
Brighton Construction Ltd, of Maria House, Millers Road, Brighton, pleaded guilty to breaching Regulation 22(1) of the Construction (Design and Management) Regulations 2007 at court today (March 3). It was fined a total of $40,405 and ordered to pay costs of $24,238.50.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact:Info@ReduceYourWorkersComp.com or 860-553-6604.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com.
A New Zealand woman, Vanessa Kennedy was convicted and ordered to repay more than $65,000 for ACC fraud after pleading guilty to obtaining weekly compensation payments by deception under the Crimes Act in district court.
In 2009, Mrs. Kennedy acting on behalf of her husband, Grant Kennedy, advised ACC he was unable to work due to a back injury sustained doing landscaping. She indicated Mr. Kennedy’s annual income was around $75,000 and requested weekly compensation. (WCxKit)
However, ACC’s investigation unit discovered Mr. Kennedy was not earning anything and Mrs. Kennedy had provided false documents to support her claim.
Mrs. Kennedy was ordered to repay ACC $65,931.80, given 150 hours community service, and put on a six month community detention curfew between 8 p.m. and 6 a.m. (WCxKit)
ACC General Manager Claims Management Denise Cosgrove welcomed the successful prosecution saying, "This case is a reminder that ACC takes fraud seriously. People who defraud ACC are stealing money from all New Zealanders and diverting funds that would otherwise be used to help injured people who really need ACC’s support .
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: Info@ReduceYourWorkersComp.com or 860-553-6604.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com.
Massachusetts Gov. Deval Patrick recently signed an executive order to ban discrimination against transgender employees in state government.
The measure is written to add protections for "gender identity and expression" to existing rules against discrimination. It would cover all state agencies in the executive branch of government along with companies or organizations that contract with the state. (WCxKit)
Gunner Scott, executive director of the Massachusetts Transgender Political Coalition, stated workers should not have to fear that they could lose their jobs due to who they are.
Arline Isaacson of the Massachusetts Gay and Lesbian Political Caucus praised Patrick for signing the executive order but also sought legislation that would prohibit discrimination on the basis of gender identity in the private sector too.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact:Info@ReduceYourWorkersComp.com or 860-553-6604.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com.
You have finally gotten the state-of-the-art claims management system. Now, that you have the ability to self measure your performance, are you doing so? The following benchmarks suggestions are some of the ways you can compare where you are now with where you were in the past. These benchmarks will also provide you with the information you need to objectively set goals for the New Year.
Many risk managers and claim managers want to measure their performance by the amount of dollars spent on claims. Financial results can be excellent benchmarks. We will discuss financial benchmarks, but also will look at ways to benchmark the quality of the claim handling process. Here are some benchmarks suggestions. (WCxKit)
Claim Financial Benchmarks
1. Changes in average claim cost – This is the most common benchmark – a comparison of the average cost of medical benefits, indemnity benefits and claim expenses. The data is easily obtainable and allows you to compare your claim cost with last month, last quarter, last year and any other time frame you chose.
2. Average claim cost compared to your industry – It is often not enough to know that your claim cost has declined since last year. You will also want to know if your claim cost is higher, lower or about the same as your business competitors. (A great way to gain a competitive edge in your industry is to do a better job of managing your workers' compensation program). Information on your industry can often be difficult to obtain. Some of the large TPAs and large workers' compensation insurers have partial data with which comparisons can be made. The National Council on Compensation Insurance (NCCI) collects payment data in the 35+/- states in which they operate, but they charge some hefty fees for their data on your industry. WorkersCompKit has a good benchmarking system to quickly calculate these numbers.
3. Initial reserve to ultimate value ratio – This is a ratio of the aggregate payments in a coverage line (for example: medical benefits) to the initial reserve value. This will give you an idea as to the knowledge and accuracy of the adjuster is estimating claim value.
4. Ratio of reserves + payments (90 days prior to closing) to final claim cost – By comparing what the adjuster has in reserves plus claim payments made 90 days prior to the claim closing date, with the final amount paid on the claim, you can gauge the accuracy of your large claim reserving. [Exclude the claims closed in less than 6 months]. The ratio of reserves plus dollars previously paid on the claim, to the final claim cost should be approximately 1.0. If the ratio is under 1.0, the overall claims are under reserved. If the ratio is over 1.0, there is on average extra money setting in reserves.
Claim Handling Process Benchmarks
While there are many ways to gauge your claim handling, these are some suggestions for measuring claim-handling performance:
1. Average bill process time – This is simply a comparison of days between the date the medical bill, legal services bill or other expense was received in the claims office, and the date the payment was processed. This allows you to measure the timeliness of your bill payment process and gauge the progress of your staff.
2. Closing ratios – This is the ratio of files open during the month, quarter or year compared to the files closed during the same time frame. Ideally 1.0 or better.
3. Percentage of closed files with payments over $1,000 – This indicator will keep the claim office honest on the closing ratios. It is too easy to manipulate closing ratios, so this will tell you the claim office close files prematurely when the number of closed claims with payments increase.
4. Average time to input initial reserve – While different claim offices have different standards as to how soon (48 hours, 7 days, 15 days, 30 days) the initial reserve should be in the computer system, by comparing the current average length to time to a prior month, quarter or year, you can gauge how quickly the adjusters are inputting initial reserves.
5. Average days between reserve changes – By having your computer compute the average number of days between reserve changes, you can quickly determine if the reserving is adequate. If you see on average a reserve change every 6 months, the claim office reserving procedure is probably okay. If you see the average days between reserve changes is 30 days, the claim office definitely has a problem with stair-stepping the reserves.
6. Files on diary – This is a measurement of the files that are being actively worked on the diary. The claim office should have every file on diary to prevent the files from stagnating.
7. Files with missed diary – This benchmark can be either a list of the files where the diary has not been updated the diary due date has passed, or it can be a percentage of the files with a claim handling due date that has passed. Either way, it provides you with insight into how current the claims office is in the handling of the claims.
8. Claim file notes usage – As most computer systems automatically input a note when a check is paid, diary is due, etc., a benchmark measuring non-computer generated file notes will tell you how often on average each file is being actively reviewed/worked on by the adjuster.
9. Initial index filings – If you require all your workers' compensation indemnity claims to be indexed, this ratio will tell you whether your goal is being met. Your computer system should also be able to tell you the file numbers of the claims that have not been indexed so they can be corrected. (WCxKit)
10.Subsequent index filings – Many work comp insurers require long term claims to be re-indexed every 6 months or every year. This benchmark would compare the number of long term claims with the number of subsequent index filings.
Now while we can make these recommendation for benchmarks, don't ask us to program your computer system. That's a job for your IT department. However, by using these benchmarks, you can measure both the fluctuation in your claim financial and the success of your workers' compensation claims handling program.
Grading you adjusters is another aspect of measuring adjuster performance. Ask the carrier or TPA whether they SCORE their adjusters – as in giving them a numeric grade. Broadspire scores and ranks their adjusters in a unique and extremely interesting scoring sytem which is backed up with additional training if needed. Adjusters with superior scores receive monetary incentives each month. This is the only such system I know about although there may be others.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com
©2011 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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