Oregon Officials Zero-in on Heat and Workplace Safety

With summertime just around the corner, authorities in Oregon do not want employers taking those employees who must work outdoors for granted.

 

Landscaping, construction, and agriculture are all labor-intensive activities that can raise the body temperature of workers in hot weather. This could lead to heat illness or even death, if precautions are not taken.

 

"Workers in Oregon aren't acclimated to working in this type of heat," said Penny Wolf-McCormick, health enforcement manager for Oregon OSHA. "Employers should provide drinking water, offer a shaded place for workers to take breaks, and watch for signs of trouble."

 

Oregon OSHA, a division of the Department of Consumer and Business Services, encourages employers and workers to learn the signs of heat illness and focus on prevention. Exposure to heat can lead to headaches, cramps, dizziness, fatigue, nausea or vomiting, and even seizures or death.

 

From 2010 through 2014, 28 people received benefits through Oregon's workers compensation system for heat-related illnesses (at least three days away from work).

 

Heat Illness is Deadly and Preventable

 

"Heat illness can be deadly, but it's preventable," Wolf-McCormick said.

 

To help those suffering from heat exhaustion:

 

  • Move them to a cool, shaded area. Do not leave them alone.
  • Loosen and remove heavy clothing.
  • Provide cool water to drink (a small cup every 15 minutes) if they are not feeling sick to their stomach.
  • Try to cool them by fanning them. Cool the skin with a spray mist of cold water or a wet cloth.
  • If they do not feel better in a few minutes, call 911 for emergency help.

 

Certain medications, wearing personal protective equipment while on the job, and a past case of heat stress create a higher risk for heat illness.

 

Heat stroke is a more severe condition than heat exhaustion and can result in death. Immediately call for emergency help if you think the person is suffering from heat stroke.

 

Here are some tips for preventing a heat-related illness:

 

  • Perform the heaviest, most labor-intensive work during the coolest part of the day.
  • Use the buddy system (work in pairs) to monitor the heat.
  • Drink plenty of cool water (one small cup every 15 to 20 minutes).
  • Wear light, loose-fitting, breathable clothing (such as cotton).
  • Take frequent short breaks in cool, shaded areas ?allow your body to cool down.
  • Avoid eating large meals before working in hot environments.
  • Avoid caffeine and alcoholic beverages (these make the body lose water and increase the risk of heat illnesses).

 

Employers can calculate the heat index for their worksite with the federal OSHA heat stress app for mobile phones. The tool is available at
www.osha.gov/SLTC/heatillness/heat_index/heat_app.html. A number of other tools are available atwww.osha.gov/SLTC/heatillness/.

 

 

 

Author Kori Shafer-Stack, Editor, Amaxx Risk Solutions, Inc. is an expert in post-injury response procedures and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. www.reduceyourworkerscomp.com.  Contact: kstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

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Ohio BWC Notes 11 Comp Fraud Cases

Authorities in the Buckeye State don’t take kindly to workers compensation fraud.

 

Ohio Bureau of Workers Compensation (BWC) Administrator/CEO SteveBuehrer announced recently that 11 individuals were convicted of, or pleaded guilty to, charges related to defrauding Ohio’s workers comp system in May 2015.

 

These court actions are the result of investigations conducted by BWC's Special Investigations Department (SID).

 

"Two cases this month highlight the value of the work of the intelligence unit within our Special Investigations Department, which exchanges data with other state agencies to root out fraudulent activity," Buehrer said. "They also uncover potential false claims, diversion of prescription drugs, medical billing fraud and unpaid workers' compensation premiums."

 

The following is a sampling of cases that resulted in guilty pleas or convictions during May:

 

Tim Wyse, Felicia Braggs-Wyse and Sarah Washtak doing business as Wyse Enterprise Inc. (Toledo, Lucas County), pleaded guilty recently in the Lucas County Court of Common Pleas in connection with lapsed workers compensation coverage, dishonored payments and altering a BWC coverage certificate. Co-owner Tim Wyse, of Toledo (Lucas County), pleaded guilty April 27 to two counts of workers compensation fraud, both fifth-degree felonies. Co-owner Braggs-Wyse, of Toledo (Lucas County), pleaded guilty the same day to passing bad checks, a first-degree misdemeanor. Business secretary Washtak, of Maumee (Lucas County), pleaded guilty May 11 to workers compensation fraud, a first-degree misdemeanor. Investigators received two allegations about the business. The collections department reported that a check written for a premium payment was returned for non-sufficient funds, which caused the employer's policy to lapse. Agents provided Wyse with instructions on how to reinstate the company's workers compensation policy, but Wyse failed to take steps toward becoming compliant. An allegation that the employer passed a false BWC certificate of coverage was also received. Braggs-Wyse said she generated the dishonored check, and Washtak admitted to falsifying and providing the workers compensation coverage certificate. Wyse was ordered to pay $13,277.59 in restitution and sentenced to three years of community control. Braggs-Wyse was ordered to pay $13,277.59 in restitution and was scheduled for sentencing on June 18. Washtak was not ordered to pay restitution and was scheduled for sentencing on June 25.

 

David Story doing business as Story Equipment & Repair (Wayne, Wood County) was convicted and sentenced May 8 in the Bowling Green Municipal Court on one count of failure to comply, a second-degree misdemeanor. BWC fraud investigators received a referral about Story’s business, Story Equipment & Repair in Wayne, in 2012 from the agency's employer compliance department. Story entered into a payment plan for premiums owed, and that investigation was closed. In 2014, SID used data to identify lapsed employers and discovered that Story defaulted on his payment plan, failed to report payroll for his business and did not pay related premiums to BWC. Investigators found that the payroll information he withheld resulted in an additional $6,969.62 in premiums due. Story was sentenced to five years of probation and was ordered to pay $125 in court costs. He was also ordered to pay a $750 fine and sentenced to 90 days of incarceration, which were both suspended as long as he continues making payments.

 

Douglas Vastine (Milford, Clermont County) pleaded guilty May 20 in the Franklin County Court of Common Pleas to one count of workers compensation fraud, a first-degree misdemeanor, and one count of forgery, a fifth-degree felony. BWC received an allegation that Vastine may be falsifying his job searches submitted to the BWC for disability benefits. Investigators found that he falsified job searches to qualify for living maintenance wage loss benefits between January and April 2013. Vastine received more than $6,000 in benefits he would otherwise been ineligible to receive. Investigators also found Vastine submitted false travel reimbursement forms to BWC, resulting in approximately $900 of improper payments. Vastine was scheduled to be sentenced July 10.

 

 

 

Author Kori Shafer-Stack, Editor, Amaxx Risk Solutions, Inc. is an expert in post-injury response procedures and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. www.reduceyourworkerscomp.com.  Contact: kstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

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Texas Mutual Recognizes Workplace Safety

Texas Mutual Insurance Company recently reported that its board of directors voted unanimously to approve a company-record $225 million dividend distribution in 2015. Qualifying policyholder owners across Texas will share the dividend, which will be distributed beginning in July.

 

Texas Mutual is owned by its policyholders, not stockholders, which means that the company shares its success by distributing dividends to policyholder owners who have made a commitment to preventing workplace accidents and helping injured workers get back on the job.

 

This is the 17th consecutive year the board has voted to distribute policyholder dividends, bringing the total to $1.8 billion. The company has paid the majority of that total – over $1 billion – since 2010.

 

"Texas Mutual's policyholder owners greatly contribute to the success of the organization by keeping their workers compensation losses low," said Bob Barnes, chairman of Texas Mutual's board. "We value that contribution and are proud to recognize it year after year with dividends that help Texas employers control their costs even further."

 

Texas Mutual President and CEO Rich Gergasko said the dividend distribution reflects a deep commitment that the company and its policyholder owners have made to Texas.

 

Keep Workers Safe and Costs Low

 

"Texas Mutual partners with our policyholder owners throughout the year to help them keep their workers safe and costs low," Gergasko said. "These dividends are a tangible representation of that year-round commitment. We appreciate the unique relationship that we have with our customers and know that this money goes back into our state's economy to help employers build their businesses for the future."

 

Gergasko noted that while Texas Mutual has awarded dividends each year since 1999, they are based on performance and therefore are not guaranteed.

 

Additionally, dividends must comply with Texas Department of Insurance regulations.

 

 

 

Author Kori Shafer-Stack, Editor, Amaxx Risk Solutions, Inc. is an expert in post-injury response procedures and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. www.reduceyourworkerscomp.com.  Contact: kstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

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Minnesota Legislature, Governor Back Comp Cut

There is some good news when it comes to the workers compensation system in Minnesota.

 

Legislation approved recently and signed by Governor Mark Dayton will cut workers comp inpatient hospital costs by 10 to 15 percent and slow future medical cost increases.

 

Minnesota's workers comp system will be required by the legislation to use the same payment system Medicare uses to reimburse hospitals beginning in January 2016. The system bases a hospital's reimbursement on a patient's diagnosis using Medicare Severity — Diagnosis-Related Groups (MS-DRGs). This replaces the current system in which reimbursement is based on charges billed for treating a patient.

 

The legislation enhances electronic billing, reduces information hospitals must submit with bills and reduces payment disputes. It also ensures injured workers are granted the right to have disability benefit payments electronically deposited in their own accounts.

 

Rules Set Up for 2017

 

The legislation authorizes the Department of Labor and Industry to adopt rules to take effect in 2017, setting up a similar system to pay outpatient hospital and ambulatory surgical center services provided to injured workers. The department will continue to work with all interested parties in developing the rules.

 

The bill is the result of eight months of complex negotiations involving hospitals, insurers, organized labor and employers.

 

"This is the most significant workers compensation cost control measure in two decades," said Ken Peterson, commissioner, Department of Labor and Industry. "Proper care will continue to be provided to injured workers, while costs will be driven down and the system made more efficient."

 

Before being submitted to the Legislature, all workers comp bills must be approved by the Workers Compensation Advisory Council; composed equally of labor and management representatives.

 

The council approved this measure in April 2015.

 

 

 

Author Kori Shafer-Stack, Editor, Amaxx Risk Solutions, Inc. is an expert in post-injury response procedures and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. www.reduceyourworkerscomp.com.  Contact: kstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

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Manitoba WBC Report Gets Thumbs Up

Workers compensation officials in the Canadian province of Manitoba have reason to smile.

 

The Workers Compensation Board of Manitoba (WCB) recently released its 2014 Annual Report .

 

The highlights include a surplus of $110 million and reshaping the organization to builda stronger workers comp system for the future. The WCB also released its 2015 – 2019 Five Year Plan.

 

"Building on our financial and system security, we began work on key strategic initiatives that will benefit Manitoba workers and employers while also transforming the workers compensation system to meet future demands and expectations," said Winston Maharaj, WCB president and CEO. "We are on the cusp of significant growth and opportunities and we are well-positioned to meet future demands based on a strong stable foundation."

 

In 2014, work began on the development of a compliance framework that protects the integrity of the workers comp system and a review of the assessment rate model. As well, the WCB introduced additional online services for employers and began work on customer journey mapping to better understand and enhance service to its customers.

 

The Annual Report also introduced a new measure of "days lost to workplace injury and illness" which is defined as the sum total of days the WCB has paid to workers in a given time frame.

 

For 2014, 1.8 days were lost to workplace injury and illness for each full time worker, down from 2.15 in 2010. This figure has been declining steadily over the past five years, resulting in less disruption to injured workers and their families and reduced costs to the provincial economy.

 

"This measure shows that workers are missing fewer days off work as a result of workplace injuries and illnesses which demonstrates the combined effect of prevention efforts and return to work initiatives," said Maharaj. "Our prevention efforts helped reduce injuries which had a significant effect on reducing the number of days lost for workers."

 

Workers Getting Back to Work Sooner

 

In addition, employers' and workers' focused efforts to help workers return to health and meaningful work, as soon as they can safely do so, is a key driver in the days lost measure. Effective return-to-work programs minimize the impact of an injury, promote recovery and benefit both workers and employers.

 

The WCB also made great strides in implementing Manitoba's Five-Year Plan for Workplace Injury and Illness Prevention by creating SAFE Work Manitoba, the entity that consolidates prevention services of the WCB and Workplace Safety and Health. The Annual Report includes SAFE Work Manitoba Financials that disclose the WCB's investment in prevention.

 

"Strong financial stewardship and successful prevention and return to work efforts by the WCB, its partners, and the workers and employers of Manitoba have made 2014 a success," remarkedMaharaj. "The surplus allowed us to announce a decrease of the average assessment rate for 2015 by approximately 13 per cent to $1.30 per $100 of assessable payroll."

 

The time loss injury rate also remained consistent at 3.2 per 100 full time workers in 2014.

 

 

 

Author Kori Shafer-Stack, Editor, Amaxx Risk Solutions, Inc. is an expert in post-injury response procedures and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. www.reduceyourworkerscomp.com.  Contact: kstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

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Calculate Your Workers Compensation Premium

All workers’ compensation insurance companies follow a very similar approach to calculating the cost of your next work comp premium. The formula used by the insurer includes the total payroll for your company, the number of claims your company has, the severity of the claims, the risk classification of your employees, the base rate for your business, the claim history of your company, and possibly a discount by the insurer for your efforts to prevent claims.

 

 

Payroll Figures

 

To establish your company’s workers’ compensation premium, the insurer will gather all the information needed, starting with the payroll figures for each job classification within the company.  [If you have a lost time claim, the employee’s indemnity is based on the employee’s earnings; therefore the insurer needs to know the payroll information].  The more employees you have, the higher the payroll.  Therefore the total amount of payroll is a key concern for the work comp insurer.

 

 

Loss History

 

The insurance company’s underwriter will review your loss history to determine how frequent your company experiences a workers’ compensation claim and the nature of those claims.  The higher the frequency of claims, the higher the insurance premium will be.  The underwriter will compare the frequency of claims your company experiences with the claim frequency of other companies who are of similar size within your industry.

 

In addition to analyzing the frequency of claims, the underwriter will review and study the nature and severity of the claims reported.  The underwriter gauges severity not by the medical reports on the injured employees, but by the amount of money spent on the claims for medical benefits and indemnity payments.  If the overall level of severity of your company’s claims is greater than other companies within your industry, the underwriter will adjust the insurance premium accordingly.

 

 

Risk Classification Exposure

 

The most difficult aspect of understanding how your insurance premium is calculated for most employers is what is called risk classification exposure.  The type of business you are in is assigned a risk classification by the underwriter.  All coal mining companies have the same risk classification which is unique to coal miners.  All law firms have the same risk classification which is unique to lawyers.  All fine Italian restaurants have the same risk classification which is unique for fine restaurants.  Each industry has its own risk classification to compare companies that have similar business operations.

 

By giving your company the same risk classification as your competitors, the underwriter is able to base your insurance premium on the history of claims for your industry.  To do this, a base rate is charged for the risk classification level.  The base rate is calculated by multiplying one percent per $100 of total payroll.   For example, the base rate for the coal miner might be $8 per $100 of payroll, while the base rate for the lawyer could be $0.50 per $100 of payroll.  The cost of work comp insurance for the coal miner making $1,000 per week would be $80 ($1,000 X $8 X .01) per week, while the cost of work comp insurance for the lawyer making $2,000 per week would be $10 ($2,000 X $0.50 X .01)

 

 

Experience Modification Rate

 

The base rate is then modified by the underwriter based on the frequency and severity of the injuries your employees have experienced in the past.  The lower the frequency of injuries, and the lower the severity of the injuries, the more the underwriter will lower your insurance premium. Conversely, the higher the frequency and severity of the injuries, the higher your insurance rate will be. This modification of the base rate is known as the experience modification rate

 

Every employer wants the underwriter to apply some discounts to the insurance premium.  In order to obtain discounts, the employer needs to be able to show the underwriter efforts the employer has made or is making to limit the number of work related injuries and to reduce the severity of the injuries if they do occur.  Employers can obtain discounts for having a strong safety drug, being a drug-free workplace, and by having a health and wellness program.

 

There is nothing an employer can do to legitimately change their risk classification exposure or their base rate.  There are numerous approaches an employer can take to reduce the frequency and severity of their claims and improve their experience modification rate.  

 

 

 

Author Michael B. Stack, Principal, COMPClub, Amaxx Work Comp Solutions. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  He is co-author of the #1 selling book on cost containment, Your Ultimate Guide To Mastering Workers Comp Costs www.reduceyourworkerscomp.com, and Founder of the interactive Workers’ Comp Training platform COMPClub. Contact: mstack@reduceyourworkerscomp.com

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Pair of Kansas Workers Injured, Company Charged

Two Kansas workers endured several weeks of skin graft surgery and physical therapy after suffering second-degree burns when gas vapors exploded in a railcar in December 2014 at GBW Railcar Services LLC.

 

The car was being prepared for cleaning when an electric heater ignited the flammable gas. Seven other workers were treated for injuries and released from the hospital.

 

After the incident in Cummings, U.S. Department of Labor Occupational Safety and Health Administration inspectors recently identified 11 serious safety violations and proposed penalties totaling $46,900.

 

"Two employees suffered painful injuries that put them out of work for three months because GBW Railcar Services ignored worker safety," said Judy Freeman, OSHA's area director in Wichita. "Failing to eliminate potential ignition sources from areas where flammable substances were likely to be present proved an explosive combination. Worker protection must always be job one."

 

A 30-year-old laborer, who was preparing the railcar for cleaning, suffered second-degree burns to the hands, face, neck and torso when the explosion occurred. He had been on-the-job for three months.

 

The fireball from the explosion ignited the paint booth where a 47-year-old worker also became engulfed in the flames, causing second-degree burns to his face, neck, hands and torso. The worker also sustained injuries from the paint booth door striking him during the explosion. The painter worked for the company for more than three years.

 

Workers Exposed to Fire and Explosion Hazards

 

OSHA's investigation found that GBW Railcar Services exposed workers to fire and explosion hazards by not eliminating potential ignition sources, such as electrical equipment and heating appliances, from areas where flammable vapors and materials could be present, and did not use electrical equipment rated for hazardous locations.

 

The company stored flammable materials improperly near paint booths; failed to maintain gauges to show air velocities; and did not protect above-ground fuel tanks from vehicle collisions.

 

GBW Railcar Services has more than 40 facilities nationwide and employs more than 2,100 people to perform repair, maintenance and recertification services for railcars.

 

The company was provided with 15 business days from receipt of its citations and penalties to comply, request an informal conference with OSHA's area director in Wichita, or contest the findings before the independent Occupational Safety and Health Review Commission.

 

 

 

Author Kori Shafer-Stack, Editor, Amaxx Risk Solutions, Inc. is an expert in post-injury response procedures and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. www.reduceyourworkerscomp.com.  Contact: kstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

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Read Adjuster’s File Notes To Understand Your Work Comp Claim

To know what is occurring on your company’s workers’ compensation claims, read the adjuster’s file.  Self-insured employers should include in their claims handling contract with the third party administrator the right to full on-line access to the adjusters’ files on a read-only basis.  Employers who have insurance with a standard workers’ compensation insurer can ask for read-only access to the adjuster’s files.  Some insurers will oblige while other insurers who are less confident about their adjuster’s work product will decline (they will give you a different reason for declining).  Both third party administrators and insurers will limit your claim file reading to the claims of your employees only.

 

 

Adjuster’s File Notes Contains Key to Understanding Claim

 

While the medical reports and lawyer reports can make for interesting reading, to maximize the value obtained from reading the adjuster’s file, focus your attention on the adjuster’s file notes.  Properly documented file notes will contain a synopsis of each phone call, each email and all correspondence received.  The standard method of entering this information is in the chronological order it was received.  The objective of the file notes is to give anyone who reads the file notes an understanding of the claim development and claim status.

 

The better claim management systems also require the adjuster to categorize any file note.  The most common categories will be employee contact, employer contact, medical provider contact, lawyer contact, reserves, medical reports and lawyer reports.  There are many other categories that will be used less frequently like subrogation, surveillance, state report filings and drug screen results.  The best claim management systems allow you to search the file notes by category, for instance: documentation of each employee contact.

 

When you read the adjuster’s file notes, you will find them to be a journal-style record of contacts, document reviews and future claim handling plans.  The adjuster file notes will also contain files notes entered by the adjuster’s supervisor and claims manager, claim support staff and nurse case managers (if the nurses are employees of the third party administrator or insurer).  The file notes entered by other employees benefit you as a reader of the file notes by giving you a more complete picture of what is going on, on the claim.

 

 

Adjuster Diary Documents Future Follow Up

 

In addition to file notes, the adjuster file should contain documentation of their diary system.  (“Diary” is simply placing an activity on their computer calendar for future follow up).   The diary should include a brief note with the date of follow-up.  The diary note will usually read something like:  “Call employee after doctor’s appointment” or “Confirm medical report received” or “Verify employee RTW (returned to work)”.  Normally diary length is set in 15 day, 30 day and 60 day increments, but precise date diary (for example: date of hearing) can be used.

 

The first group of file notes (remember they are in chronological order) will document the adjuster’s initial investigation of the claim.  This includes a discussion of the initial contact with the injured employee, the initial contact with the employer and the initial contact with the medical provider.  The adjuster should be documenting any issues relating to the claim including questions of compensability, subrogation, fraud, prior medical conditions and return to work capability.

 

 

Understand Compensability, Subrogation, Reserves, & Action Plan

 

The file note in regards to compensability should provide a reason the claim is compensable or a reason the claim is not compensable.  Examples:  “Claim compensable as the employee was performing standard work duties when the incident occurred”, or “drug screening showed employee was intoxicated at time of the injury and the injury occurred due to the employee’s intoxication”.

 

File notes for each note category should be precise and address the subject of the file note category.   Examples:  Subrogation – “No subrogation as no third party involvement in injury”;  Surveillance – “Assigned to PI Investigators to confirm employee’s physical capabilities”;  Return to Work:  “Employer unable to accommodate employee’s 5 pound lifting restriction, but will be able to provide light duty work when lifting restriction is raised to 20 pounds”.

 

The file notes for reserving are often limited to “See reserve worksheet”.  However, if the reasoning for a reserve change is simple, the reserve change should be explained in the file notes.

 

Action Plan file notes are often combined with the adjuster’s diary.  The action plan file note should include adjuster’s goals on the claim file and the steps the adjuster is going to take to advance the claim forward.  The action plan file note should explained the plan course of action and what the adjuster is going to do to accomplish the claim handling plan.  [This is an excellent place to look to see if the adjuster is really on top of the claim, or is just going through the motions.  When an adjuster is top of the claim, the adjuster’s action plan files notes will be specific as to what is needed.  The vaguer the action plan file notes, the less the adjuster understand the claim he/she is handling.]

 

 

Review Select Files On a Regular Basis

 

Reality is employers do not have the time to read every file note on every workers’ compensation claim.  We would recommend selective reading of the claims where the injuries are severe; where there are concerns about fraud; where there are return to work issues; and any other claims you have questions about.

 

 

Author Michael B. Stack, Principal, COMPClub, Amaxx Work Comp Solutions. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  He is co-author of the #1 selling book on cost containment, Your Ultimate Guide To Mastering Workers Comp Costs www.reduceyourworkerscomp.com, and Founder of the interactive Workers’ Comp Training platform COMPClub. Contact: mstack@reduceyourworkerscomp.com

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

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WORKERS’ COMP TRAINING: https://workerscompclub.com

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Massachusetts Man Seeing Other Side of Law

A former Suffolk County, Massachusetts correctional officer has pleaded guilty and been sentenced in connection with fraudulently collecting hundreds of thousands of dollars in workers compensation, disability, and retirement benefits while working, Attorney General Maura Healey announced recently.

 

Paul Mahan, 42, from Athol, pleaded guilty in Suffolk Superior Court to charges of Workers Compensation Fraud and Larceny by False Pretenses. After the plea was entered, Judge Linda Giles sentenced Mahan to five years of probation. Judge Giles also ordered that Mahan pay $305,618 in restitution.

 

“This defendant fraudulently collected state benefits, claiming he could not work, while at the same time working and earning money,” AG Healey said. “These benefits are intended to help individuals who are unable to work as the result of on-the-job injuries and we will pursue those who exploit these programs.”

 

On several dates between January 2006 and January 2013, Mahan and co-defendant Kelly Walsh, also of Athol, ran car dealerships in Winchendon and Orange and partnered with another venture while collecting tens of thousands of dollars in benefits derived from previous work-related injuries. During this time the defendants failed to disclose any earnings or their work status to the appropriate agencies.

 

Mahan began working as a correctional officer for the Suffolk County Sheriff’s Department (SCSD) in May 1997. In August 2000, Mahan sustained a knee injury while on the job that was immediately reported to the Department of Industrial Accidents (DIA). The SCSD, a formerly independently insured agency, began paying Mahan benefits retroactive to the date of the injury without contending the findings of the DIA.

 

In succeeding years, Mahan underwent Independent Medical Exams (IME) as required by DIA, with varying medical opinions of the severity of his condition and ability to work, in order to receive benefits. In May 2006, Mahan was ultimately determined by a judge to be permanently and totally disabled. A recipient of permanent total benefits may collect payments indefinitely.

 

As the result of these rulings, Mahan was ultimately able to collect three separate checks each month for the injury sustained during his three year tenure at the SCSD: workers compensation benefits, Assault Pay, and retirement benefits. The collection of these benefits amounted to payments totaling more than 100% of Mahan’s salary at the SCSD each month.

 

Periodic Surveillance Tipped Off Authorities

 

After paying Mahan benefits for six years, the SCSD initiated periodic surveillance of Mahan in June 2006.

 

On various occasions between 2006 and 2011, surveillance established that Mahan and Walsh were working regularly at Shamrock Motors of Winchendon, a business officially registered in the name of Mahan and Walsh’s wives, performing a variety of tasks on- and off-site. Walsh was also collecting disability through the federally administered Title II Disability Benefits, subsequent to a back injury sustained in May 2004.

 

Authorities discovered that Mahan and Walsh derived an income from Shamrock Motors. An investigation into the bank accounts associated with the business revealed numerous checks made payable to Mahan, Walsh and their wives totaling more than $385,000. 

 

Further investigation revealed that in June 2007 Mahan and Walsh were employed at another auto dealership in a contract partnership that paid the defendants $38,000 upon their separation.

 

As a result of Mahan’s failure to report his income, he received an overpayment of more than $203,000 in workers comp benefits from his employer’s insurance carrier, more than $125,000 in Assault Pay and more than $49,000 in retirement benefits. Walsh received an overpayment of more than $46,000 in social security disability benefits during the time of the fraud.

 

A Suffolk County Grand Jury returned indictments against Mahan and Walsh on Feb. 19, 2013. The defendants were arraigned in Suffolk Superior Court in March of 2013.

 

In May 2014, Kelly Walsh admitted to sufficient facts on the charge of Larceny by False Pretenses. 

 

 

 

Author Kori Shafer-Stack, Editor, Amaxx Risk Solutions, Inc. is an expert in post-injury response procedures and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. www.reduceyourworkerscomp.com.  Contact: kstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

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Stop The Bleeding! Control Hard & Soft Leakage

Self-insured employers and workers’ compensation insurers understand that mistakes cost money.  The overpayment of medical cost, indemnity benefits and claim expenses is a waste of money, and weakens the overall financial stability of the employer or the insurer.  What to do about claims leakage is a frequent topic of discussion.

 

When there is no doubt that a payment should not have been made (example:  a non-recovered duplicate payment), it is referred to as hard leakage.  When a payment is made that is questionable and is subjective (example: a higher than normal settlement), it is referred to as soft leakage. 

 

Employers and insurers frequently attempt to mitigate both hard leakage and soft leakage by providing additional training to the claims staff. Additional training definitely has benefits and will reduce leakage, but additional training normally addresses only the issues the work comp supervisor or claims manager has identified.  This approach will often continue to overlook different types of leakage that is not on the company’s radar.

 

 

Independent Claims Auditors Bring Perspective

 

To identify leakage that is being overlooked, companies have been turning to independent claims auditors who bring in an outside perspective when reviewing claim files.  Senior management often recognizes adjusters, supervisors and even claims managers have a built-in conflict of interest in identifying every source of leakage – the more leakage they identify, the lower their level of competency appears to be.

 

The independent claims auditor can be completely objective, as the independent claims auditor does not have to worry about the impression the results of a leakage audit will create. The outside auditor is looking for the financial mistakes (leakage) in an effort to assist the insurer or self-insured employer to lower its overall claims costs without the worry that senior management may be critical of the adjuster’s/ supervisor’s/claims manager’s performance.

 

 

Hard Leakage

 

The independent claims auditor will identify types of hard leakage including:         

 

  • Payment of non-compensable claims
  • Payment of claims occurring outside of the insurance policy period
  • Failure to utilize the medical bill fee schedule for all medical bills covered by the schedule
  • Payment of the same medical bill, including overlapping medical bills, more than once
  • Incorrect calculation of the employee’s average weekly wage
  • Incorrect calculation of the employee’s indemnity benefit
  • Incorrect calculation of the number of days or weeks of indemnity benefits owed
  • Incorrect handling of the waiting period and the retroactive period
  • Erroneous payment of indemnity benefits after the employee has return to work
  • Failure to properly calculate the impairment rating value
  • Failure to utilize the pharmacy benefit management program
  • Failure to apply offsets including unemployment benefits, social security benefits, over governmental programs
  • Failure to identify and pursue subrogation
  • Failure to obtain Second Injury Fund recoveries
  • Failure to obtain reinsurance company recoveries
  • Failure to arrange for modified duty work when approved by the medical provider
  • Payment of temporary total disability benefits when temporary partial disability benefits are owed
  • Overpayment of medical mileage
  • Over reserving of the long-term claim resulting in a higher than appropriate experience modification factor with Underwriting

 

 

Soft Leakage:

 

The independent claims auditor will identify possible soft leakage including:

 

  • Failure to thoroughly investigate the claim prior to acceptance of compensability
  • Failure to complete the Insurance Services Office inquiry
  • Failure to properly evaluate future medical benefits when settling a claim
  • Poor settlement negotiations
  • Failure to properly manage defense counsel
  • Failure to properly utilize medical case management, either over utilization or under utilization
  • Failure to utilize medical triage
  • Failure to settle dispute claims at the optimum cost point

 

 

Controlling Leakage Can Mean Large Savings

 

Controlling leakage is frequently the difference between an insurer or self-insured employer making or losing money.  While no claims operation will eliminate all leakage, a five percent (5%) leakage factor on a small self-insured program with $20 million in paid claims each year is an extra $1 million dollars spent, and 3% leakage on a $100 million a year paid out by an insurer is an extra $3 million dollars spent. 

 

The above lists of how leakage occurs in workers’ compensation are not complete.  There are various other ways leakage can occur.  For a leakage audit to provide the maximum benefit to the insurer or self-insured employer, an auditor with a high level of expertise in workers’ compensation is needed.  

 

 

Author Michael B. Stack, Principal, COMPClub, Amaxx Work Comp Solutions. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  He is co-author of the #1 selling book on cost containment, Your Ultimate Guide To Mastering Workers Comp Costs www.reduceyourworkerscomp.com, and Founder of the interactive Workers’ Comp Training platform COMPClub. Contact: mstack@reduceyourworkerscomp.com

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

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WORKERS’ COMP TRAINING: https://workerscompclub.com

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

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