Correctly Calculate the Average Weekly Wage

In any workers’ compensation claim, one of the most important issues that needs to be determined upon the onset of an investigation is the employee’s average weekly wage.  The average weekly wage serves as the basis for the determination of a number of workers’ compensation benefits entitled to an injured worker in most jurisdictions, which include Temporary Total Disability, Temporary Partial Disability, Permanent Partial Disability and Permanent Total Disability benefits.  If an average weekly wage is not accurately calculated from the onset, it can lead to a number of issues, which may delay or impede settlement, serve as a basis for underpayment of claims, or penalties should the claim become contentious.

 

 

Never Rely Upon the First Report of Injury

 

One of the first documents received by a claims handler at the inception of a claim is typically a First Report of Injury or similar document.  Often times, this is a pleading completed by either the employee or the employer and almost without exception contains inaccurate information about the employee’s average weekly wage.  In other instances, the average weekly wage is left blank, which causes further question about what the average weekly wage is, and can result in incorrect benefits being paid.

 

Obtaining accurate information to calculate the average weekly wage can often be received as follows:

 

o   Collect payroll records from the employer(s);

o   Use a recorded statement or deposition to receive information directly from the employee regarding the number of hours per week they are working, the number of weeks they have worked prior to the injury, their method of payment, information concerning vacation time and paid time off; and

o   Remember that construction workers or employees who work outside may be subject to different rules regarding the calculation of the average weekly wage.

 

 

Understand the Difference Between “Regular” or “Irregular” Employment

 

Every jurisdiction has different rules concerning the calculation of the average weekly wage and their definitions of “regular” and “irregular” employment.  If this is the case, an initial analysis must be made to determine the employee’s classification.

 

 

o   “Regular” employment typically occurs in instances where the injured worker has worked the same amount of time in the 26 (or 52) weeks prior to the work injury.  If employment is regular, the calculation to determine an average weekly wage is quite simple.

o   “Irregular” employees have a variance in earnings from week to week, as well as the hours that they work.  This typically arises in instances where an employee has worked varying hours depending upon their job duties, or has had periods of excessive absenteeism.

 

 

There are also a number of other issues that come into play when calculating an accurate average weekly wage.  These issues include, but are not limited to, the following:

 

  1. Bonuses: Courts have usually held that performance bonuses based upon attendance at work to be includable in the average weekly wage.
  2. Part-time/Additional jobs: Due to tough economic times, it is becoming more common to find injured workers who work more than one job.  As a result, even though an employee did not sustain an injury while working for one employer, it does not necessarily exclude the wages he or she earns in the final average weekly wage calculation.  Courts will usually examine if the employee was (1) regularly employed by two or more employers; and (2) that employment was taking place “at the time of the injury.”  In order for someone to be “regularly employed” the courts have scrutinized whether there was a continuing engagement to serve an employer in their business at that time.
  3. Winter lay-offs and construction seasons: Employment in construction, mining and seasonal work presents a whole host of problems for determining an accurate average weekly wage.  Most states have special rules when dealing with workers who have membership in specialized labor unions.  States have adapted their workers’ compensation laws that generally allow for these types of workers to have their average weekly wage computed under special terms and formulas.

 

 

Conclusions

 

Careful consideration must be taken during the initial investigation of the unique circumstances surrounding the injured worker’s employment in order to accurately calculate an average weekly wage.

 

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. 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.

 

Riverside (Calif.) Individuals Charged in Comp Scam

For five members of a California paving company, the road to success was paved with reported fraud.

 
The Riverside County District Attorney’s Office recently charged five owners, operators, and employees of a Corona-based paving company in a case involving wage theft, premium fraud, workers compensation fraud, and payroll fraud.

 
Charged and arrested with various fraud-related counts are:

 
Sabas Trujillo, DOB: 2-28-79, of Corona; Lucia Trujillo, DOB: 7-15-75, of Corona; Rick Trujillo, DOB: 5-20-77, of Corona; Laura Fitzpartick, DOB: 2-13-83, of Anaheim Hills; and Alex Trujillo, DOB: 9-11-87, of Pacoima.

 
Sabas and Lucia Trujillo are married and Rick Trujillo is Sabas Trujillo’s older brother. The three own and operate United Paving and Prestige Striping where Fitzpatrick and Alex Trujillo (no relation to the other Trujillos) are employed. The companies pave and re-pave streets and parking lots nationwide.

 
Some of the allegations in this case include: insurance premium fraud, workers being paid less than prevailing wages as agreed to in a contract, taking or receiving a portion of workers’ wages, preparing false documents for submission to a government agency, and denying an employee workers comp benefits.

 

Defendants Reportedly Obtained Some $4M

 
It is alleged that the actions of those charged allowed them to illegally obtain about $4 million. Civil documents have also been filed by the DA’s Office which freezes $6 million in assets of those charged.

 
About two years ago, dozens of then-current and former employees of the companies made complaints to the Inland

 
Empire Premium Task Force saying they believed they had been cheated.

 
An investigation was initiated which led to the service of search warrants at both companies. Computers, bank, payroll, and other documents were seized and examined requiring several wage audits to be conducted on several hundred projects which ultimately led to the filing of criminal charges.

 
“These types of crimes, or fraud, have a significant detrimental impact upon the economy of the state. They also impact not only the involved worker but also the competitive businesses that are properly following state law,” Riverside County District Attorney Paul Zellerbach said. “It is always important to ensure that all businesses can compete on an even playing field and that they all appropriately follow the same rules and 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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Be Wary of Compound Medications In Workers Compensation

Compound drugs have come under great scrutiny due to their increase in utilization, their safety issues, as well as the significantly higher cost associated with these drugs.  It is a relatively small subset of the pharmacy spend in workers compensation at 2.7%, but it is the fastest growing and most expensive segment. According to the 2013 Express Scripts Drug Trend Report, the per-user-per-year cost increased 126% from 2012 to 2013.  This is a growing problem that warrants your attention and understanding of the challenges and solutions.

 

 

What Are Compound Drugs?

 

Compound drugs are often seen as the answer when a patient fails to respond to standard marketed drugs and dosages.  One size drug does not always meet every patient’s need. Infants, small children, elderly persons, and people with allergies, are a few examples where compound drugs may play a role in treatment. Little relief from symptomology, need for dosage variation, and drug form (liquid vs pill) are several more reasons for compounding.

 

The U.S. Food and Drug Administration (FDA) does not know the total number of compounding pharmacies in the United States.  Compounds are made from combinations of regulated and/or over the counter drugs.  These may be prepared from standard drug recipes from multiple recipe reference sources that pharmacists use.  The pharmacist does review safety for patient usage.

 

Medical Providers will turn to compound prescribing when they do not obtain the treatment results from standard market drugs.

 

 

Compound Medication Issues:

 

  1. For payers, the greatest issue with compound drugs is their expense. Their cost can be as much as double the standard market drug cost.
  2. Most states do regulate compound drugs. They generally abide by standards set in the United States Pharmacopeia. Few if any, have their own regulatory departments or oversight units.
  3. The US Food & Drug Administration does little to no regulation of compound drugs.
  4. There is still concern as to the necessity and results of their use. Some studies have shown that there is little to no clinical evidence that they were more effective than standard drugs.
  5. Compounding medications can allow for collusion, excess cost, and possible fraud.
  6. Unexpected side effects can lead to risks and exposures up to the life of the employee. There may be addiction, or even risk of fatality.
  7. The medical provider and pharmacist might have some legal responsibility in the event of usage failures or unexpected side effects. They may have the defense of professional judgment. This legal protection is difficult to overcome in order to prove negligence and liability.
  8. Few claim technicians are fully equipped or experienced enough to allow, understand, monitor, and control the use of compound drugs.
  9. Few risk managers are schooled enough to institute and control a compound drug program for the self-insured employer.

 

 

 

Compound Medication Positives:

 

 

Compounds may be tailored to the individual to avoid allergic reactions, when a commercially-available strength is not available or if a different form is proven necessary.

 

  1. Dosage and length of use can be tailored to need rather than standards set by market place drugs.
  2. Compound medications may offer another possible solution if desired results are not achieved using commercially available alternatives.

 

 

Employer Solutions:

 

Compound drugs can be medically necessary and produce positive results, but the high cost and safety concerns associated with these drugs warrants the employer to look for solutions.

 

 

Intervention Flexibility

 

A best practice in a pharmacy benefits management relationship is the ability to intervene at both the point of sale, as well as retrospectively.  Employers should put controls in place to require prior authorization or review prior to the compound being dispensed.

 

Retrospectively there needs to be communication with the physicians prescribing these medications to justify the medical necessity.  Prescribers that are held accountable to these results are deterred from non-essential use.  Patients also need to be educated on compound medications when they are prescribed so that they can make informed decisions.

 

With the right information at the right time, the employer is in control.

 

 

 

Conclusion:

 

Compound drug usage in workers compensation claims could have positive results, but these results may be coming at unnecessary expense.  Thorough review and strong control is a must when considering or instituting a Compound Drug Program.

 

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. 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.

 

 

Aeroplane Employer Lands with Fines after Death

As one employer recently discovered, not properly protecting employees can land you in a heap of trouble.

 
Aeroplane manufacturer Airbus was recently fined following the death of an employee who was crushed between a tractor and a fertilizer spreader at the firm’s plant in Broughton, Great Britain.

 
The company was prosecuted by the Health and Safety Executive (HSE) after an investigation found Donny Williams and his co-workers had received no training on how to work on the equipment when the incident happened in November of 2011.

 
Mold Crown Court heard in July that the 62-year-old worked in the maintenance department, servicing the fleet of vehicles used by Airbus at the site. He was asked to fit a fertilizer spreader to the back of a tractor as part of a trial to spread granular de-icer onto the plant’s runway.

 
Williams asked a colleague to help him with this job by starting the tractor and pulling a lever in the tractor cab. As the other worker did this, he heard Williams shout and turned to see him trapped between the tractor’s rear tire and the spreader. Although his colleagues managed to release him, Williams died shortly after having been taken to hospital.

 
HSE’s investigation found that fitters in the department had received no training for driving, maintaining or attaching equipment to tractors and lacked understanding of tractor controls.

 
The company did not have a safe system for attaching equipment to tractors and no risk assessment for the job had been carried out by the company. In addition, none of the fitters knew of the existence of an operator’s manual for the tractor and none of them were familiar with the controls. Instead, they used a “trial and error” approach to find the right operations.

 

Incident was Preventable

 
The incident could have been avoided if the well-known “safe-stop” industry practice had been adopted by making sure the hand brake is fully applied, all controls and equipment are in neutral, the engine is stopped and the key is removed.

 
Airbus Operations Ltd of Aerospace Avenue, Filton, Bristol was fined nearly $342,000 and ordered to pay more than $100,000 in costs after pleading guilty to a breach of the Health and Safety at Work etc. Act 1974.

 

 

 

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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Are You in Control of the Workers Comp Claim Process?

For the smart business owner, properly managing your workers compensation claims is good business.

 

Think about how much time and money can be lost in cases where workers comp cases end up costing companies countless dollars. Not only is money lost, but premiums begin to rise. All told, it is a losing proposition for the business owner.

 

One of the keys to properly managing the claim process is being more than just a spectator, especially after your employee is sent for medical treatment. The key is to make sure a formulated post-injury process is in place.

 

Among the ways to go about this include:

 

  1. Proper reporting – Make sure the claim is reported to the insurance company, TPA (third party administrator) or self-insured claims office right away. Delaying this reporting can ultimately lead to higher premiums for your business;
  2. Do the paperwork – It is also important that the first report of an injury and any other required paperwork is done quickly and effectively. In the event the injury proves severe and the worker will be prevented from returning to his or her job within the waiting period, be sure to provide the claims people with the needed wage detailers in order to properly calculate the indemnity benefits;
  3. Know the history – Make sure you advise the claims office with the details surrounding the individual’s prior history of workers comp claims. Whether the claimant has a history of claims or this is their first goes a long way in how the adjuster approaches the matter;
  4. Review your transitional duty program – This is important in order to track down a job the employee can do within the treating physician’s parameters;
  5. Make available for discussion – Be sure the employee’s supervisor (and co-workers if needed) are available to discuss the accident and injury with the claims adjuster, along with helping the adjuster with the claims investigation as necessary;
  6. Treat the employee properly – Make sure you do not alienate the worker. Treating them fairly should lead to a smoother process;
  7. Keep dialogue flowing – It certainly does not hurt to check in on the employee as they are recovering at home;
  8. Are attorneys involved? – In the event you are reached by an attorney representing the claimant, let the claims adjuster know right away;
  9. Dispute questionable claims – If there is one or more questionable claims, dispute them so as not to give in to something that could cost you unfairly;
  10.  Know the past – Be wary of and fight attorneys and/or doctors that have a history of inflated claims, something that could go unchallenged if you don’t stand up to it;
  11.  Watch the claims trail – It is also important to monitor the adjuster’s state filings along with any related claim papers;
  12.  Keep an eye on workers comp board decisions – Another item to watch is reading the decisions made by the workers comp boards. If something seems amiss, fight it;
  13.  Be active – Given there are time limits on disputing decisions, don’t waste time, fight them actively and quickly. This also includes monitor the medical progress reports, making sure appropriate treatment is being dispensed;
  14.  Keep the adjuster in the loop – Finally, make sure you contact the adjuster immediately when your employee returns to work.

 

 

Having an employee go out due to an injury is never fun, but the process of getting them back to work and not seeing your premiums dramatically rise is something you do have a say in.

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. 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.

4 Things You Must Inspect On Your Forklift Before Every Shift

A forklift is a prodigious piece of equipment, a technological innovation that can help workers steer clear of heavy lifting and dangerous conditions. However, despite its resourcefulness and efficiency, a forklift can be a dangerous piece of equipment. It is important to take preliminary action and precautionary measures when operating a forklift. One of the routines that should never be overlooked is an inspection before using any forklift. There are many components that need to be inspected and gauges that need to be verified before use. Doing so will enhance use and provide optimal safety settings for operation. Here is a quick list of what to inspect before using a forklift:

 

 

1) Inspect Oil, Electricity and Fuel Gauges 

 

This is essential considering the proper amount of oil, battery power and fuel is needed to properly operate a forklift. If any gauges are reading low, installing a new battery or topping off oil and fuel may be needed. If this is done and there is no change, the forklift should be further inspected for any mechanical malfunctions. The worst thing that can happen is a gauge failing to read levels properly and the forklift subsequently malfunctions during use. This can be extremely dangerous.

 

 

2) Inspect Coolant Levels

 

Another important consideration to take is the amount of coolant in the reservoir and radiator. An overheating forklift can be exceptionally dangerous to any who use it. This is attested to a variety of reasons: first, the engine block can seize and as a result permanently damage the forklift. Second, the overheating manifold can smoke up and reduce visibility, causing drivers to not have adequate time to react to hazards. Finally, this can be a startling event leading to a crash which can cause injury or damage to the vehicle.

 

 

3) Inspect Lights and Horn

 

These are the primary warning devices for any forklift. A horn that malfunctions can lead to injury or accident by virtue of failing to alert anyone of a potential hazard. These hazards include a falling skid, a worker passing in the path of a forklift or another agent of calamity. Additionally, lights are another way to signal and gather the attention of anyone that needs to know of the forklift’s presence. A simple flicking on and off of the lights and test of the horn can be a huge difference maker.

 

 

 

4) Check The Steering System

 

This can be the most important thing to check. A failed steering system can lead to a catastrophic incident. It is essential to test the play of the wheel and ensure that the wheel turns at an appropriate angle and rate. This is can be exceptionally beneficial in narrow corridors where tight steering is required. It is also pertinent in scenarios that require heavy loading and lifting, where precision operation is required.

 

 

Following these basic tips can be the difference between life and death, injury and safety. Operating a forklift can be a wonderful experience, if the proper precautions are taken to ensure quality use. The most important measure that can be taken is proper inspection of essential utilities.

 

 

Tom Reddon is a Forklift Specialist and Blog Manager for National Forklift Exchange. He also sits on the MHEDA Executive Dialogue team. Connect with him via Twitter at @TomReddon.

Employer Fined as Mass. Workers Exposed to Hazards

One Massachusetts business is finding out that not properly protecting workers can be costly.

 
Workers performing abrasive blasting during the renovation of an Easthampton mill were overexposed to lead and silica and faced other health hazards due to their employer’s failure to supply basic, legally required safeguards.

 
As a result, the U.S. Department of Labor’s Occupational Safety and Health Administration cited Maher Industries, doing business as A Fast Blast, for 17 serious violations of workplace health standards.

 
“The hazards of lead and silica are well-known, and overexposure to them can seriously compromise the long-term health and well-being of workers,” said Mary Hoye, OSHA’s area director for central and western Massachusetts. “The safeguards to protect workers are well-known to employers who oversee this work. It is their responsibility to ensure that proper and effective protections are used at each job site.”

 
A serious violation occurs when there is substantial probability that death or serious physical harm could result from a hazard about which the employer knew or should have known. The Naugatuck, Connecticut-based abrasive blasting contractor faces $47,600 in proposed fines, following an inspection opened in April 2014 by OSHA’s Springfield Area Office conducted in response to a complaint.

 

Employees Faced Airborne Contaminants

 
OSHA found that employees were exposed to airborne concentrations of lead and silica generated by the abrasive blasting, which was in excess of permissible exposure limits.

 
Feasible engineering or administrative controls to reduce the exposure levels were not in place or in use. The lead exposure hazard was compounded by the lack of a shower facility and protective clothing and eye protection for exposed workers. The company failed to monitor lead exposure levels and allowed employees to consume beverages adjacent to abrasive blasting.

 
Lead exposure can cause long-term damage to the central nervous, urinary, blood and reproductive systems. Crystalline silica can cause lung cancer, silicosis, chronic obstructive pulmonary disease and kidney disease in workers.

 
Additional risks were posed by several deficiencies involving respirators. Employees were not medically evaluated to determine their fitness to wear respirators nor were they fit-tested to ensure a tight-fitting seal. Respirators were not cleaned and disinfected before and after each use, and the air compressor used to supply air to the respirators lacked a carbon monoxide alarm.

 
A Fast Blast was given 15 business days from receipt of its citations and proposed penalties to comply, meet informally with OSHA’s area director, 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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Ebola, The Common Cold And Workers Compensation

Concern about Ebola is at record proportions in the US – but if a worker contacts it, is the event compensable? Sorry, but the answer is a firm “that depends”.

 

Ebola, like the common cold, is a virus which is spread in similar ways from human to human and has initial symptoms which are very similar. The two largely differ in the severity of the consequences. In fact, if the severity of Ebola were the same as the common cold there would be little concern about it.

 

 

Ebola Is Transmitted Similar To Common Cold

 

Generally speaking, the common cold, even transmitted from worker to worker is not compensable, Even if it were, the condition usually resolves in a week and requires no medical treatment or prescription drugs; therefore, the consequences would result in no payments under the comp insurance.

 

But Ebola, with a mortality rate over 50%, and sometimes as high as 90%, is a different matter. Therefore, if worker to worker infection occurs, then work comp litigation is certain to follow. But a carrier, raising a defense that “this is no different than the common cold” will not receive a serious consideration.

 

 

Disease Generally Compensable If Considered Characteristic Feature of Employment

 

First, are diseases spread at work accidents, or occupational diseases? If the disease is spread by sneezes or cuts, it is generally considered an accident. If it is spread by presence in the environment, it is usually an occupational disease, IF the exposure is a characteristic feature of the employment. A health worker is necessarily exposed to many communicable diseases, general office workers have occasional exposure but it is not characteristic of the employment, and therefore not compensable.

 

Does that mean that Ebola is not compensable except for health workers? The rules may be modified where there is widespread fear. The incidents of 9/11 were, under the old rules of insurance and work comp not compensable, except for first responders since they were the acts of “the common enemy”, i.e., hostile forces, terrorists, bandits. A first responder necessarily deals with such forces as part of the job title, a general victim does not.

 

 

National Ebola Outbreak Likely Treated Similar to 9/11

 

But those rules were put aside during the night hours following 9/11, when the NY rating board was called to work non-stop to create a comp solution. A new solution was necessary because the actuary formulas had never computed the effects of mass terrorism. The computation is now there, hidden by euphemisms, because the chance of future loss is far from rare. (For the faint hearted, don’t try to find the numbers. They assume mass casualties of over 25,000 for future acts, which include small nuclear devices.)  The new solution was also necessary because it altered basic law without an act of court or legislature.

 

A national outbreak of Ebola would almost certainly receive the same treatment.

 

This would only duplicate the origins of the workers’ compensation laws. They were not created not by a new concern for the injured but the creation of much higher new risks involving high temperatures, pressures, concentrated acids, speeds and heights – all of which demanded new remedies.

 

Therefore, we can say that Ebola with not be treated as the common cold.

 

 

 

Author: 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. medsearch7@optonline.net

 

©2014 Amaxx Risk Solutions, Inc. 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.

California Posts Progress Report on SB 863

California officials recently updated the public on a workers compensation law that impacts many.

 
The Department of Industrial Relations and its Division of Workers Compensation posted a progress report on the department’s implementation of Senate Bill 863, the 2012 law which makes wide-ranging changes to California’s workers comp system.

 
The report, “SB 863: Assessment of Workers Compensation Reforms,” describes improvements made as well as the challenges remaining to fulfill the law’s intent to improve benefits to injured employees while containing costs.

 

SB 863 became law on Jan.1, 2013, but not all provisions were effective immediately, and some aspects are still going through the rulemaking process. The Division of Workers Compensation (DWC), a division of DIR, is implementing the reforms and working with stakeholders to navigate the changes in the law.

 

“Senate Bill 863 was the result of the Governor, employers and workers agreeing on reforms to address persistent problems that delayed care to workers and increased costs to business,” said Labor Secretary David Lanier. “While we still have work to do, I am pleased with the steps DIR is taking to implement the reforms.”

 
“DIR took a balanced approach to putting SB 863’s reforms into practice,” added DIR Director Christine Baker. “The priority was to increase the benefits in 2013, reduce frictional costs and implement the cost savings efficiencies through regulations, a process that started as soon as the law was signed. We have laid the groundwork for the next stage of improvements and expect more gains in the years ahead.”

 
Key findings of the report include:

 
• Although SB 863 successfully trimmed three percentage points off the rate increase, employers still had to endure an increase of more than 10% in their workers comp costs. Insurance prices had already begun to rise in 2012. After SB 863 was passed, the Department of Insurance adopted a minimum pure premium rate for Jan. 1, 2013, which was up 11.3% from the rate one year earlier. If SB 863 had not been enacted, indications are that the rates would have increased by 14.3%.Department of Industrial Relations Newsline No. 2014-60 Page 2

 

• Permanent disability benefits increases are now in effect. It is too soon to determine the net effects, primarily because it takes up to two years or more for permanent disability to be determined.

 
• SB 863 strengthened California’s self-insurance marketplace, thanks to the greater oversight authority provided to DIR’s Office of Self Insurance Plans over self-insured employers. The reforms lowered the rate of defaults thereby reducing costs to all remaining self-insurers. To date, no defaults have occurred in self-insured entities since SB 863 regulatory changes went into effect.

 
• SB 863 reduced ambulatory surgery center (ASC) facility fees from 120% to 80% of Medicare’s hospital outpatient fee schedule. The average amount paid per ASC episode in the first six months after the change in fee schedules was 26% lower than in the year before the change took effect.

 

Inpatient Fee Scheduled Amended

 
• SB 863 amended the inpatient fee schedule by repealing the separate reimbursement for spinal hardware. The average amount paid per episode of the spinal surgery involving implantable hardware declined by 56% after the separate reimbursement (duplicate payment) for spinal hardware was repealed.

 
• The lien filing fee halved the number of new liens being filed. In the first year the filing fee was in effect, 213,092 liens were filed, down from 469,190 in 2011, a greater than 50% reduction. This represents a cost savings of an estimated $270 million per year in litigation costs to California employers and insurers.

 
• Medical costs appear to be down: Preliminary data from WCIRB indicate that the estimated ultimate medical loss per lost-time claim is down 1.3% from calendar year 2012 to 2013. However, because the estimate is based on historical trends and adjusters’ predictions of what their cases will cost over the lifetime of the case, it is a weak performance indicator of the workers comp system after the extensive reforms brought about by SB 863.

 
• The Independent Medical Review (IMR) process is heavily used: approximately 185,000 IMR applications have been filed to date. The qualified medical evaluator (QME) process that IMR replaces costs on average $1,653 per QME request, at least three times higher than the administrative cost of an IMR. An IMR costs $420 to process, down from $560 initially, and the cost will go down further starting in 2015.

 
• Ten sets of cost-saving regulations have been enacted, and additional regulations are in process.

 
• More than 80 percent of IMR determinations uphold the utilization review (UR) finding that the treatment requested is not medically necessary. Pharmaceuticals are the most common IMR request, and narcotics are the most common type of pharmaceutical requested.

 
“One of the key improvements of the reforms was to improve the delivery of appropriate medical care to injured workers through an independent medical review process that is Department of Industrial Relations NewslineNo. 2014-60 Page 3transparent and consistent and uses evidence-based medicine,” said Dr. Rupali Das, DWC Medical Director.

 
It is still too early to gauge the overall effect of SB 863 reforms.

 
Revisions to the lien filing procedures, as well as the conflict of interest statute and the fee schedule changes, are expected to help reduce fraudulent behavior in the workers comp system.

 

 

 

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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Wellness Programs for Workers Compensation

There is growing evidence that an unhealthy workforce increases the chance for frequency and severity in workers compensation claims. Employees who, smoke, abuse alcohol, overdose on prescriptions, use recreational drugs, have weight issues, live sedentary life styles, are stressed, and have unregulated underlying pathologies like diabetes and heart conditions, are more likely to have injuries on the job.

 

Further, these unhealthy conditions delay recovery, add to medical treatment cost, and may subject the employer to exposures over and beyond the workers compensation injury.

 

Wellness programs are being recognized as a tool to reduce these workers compensation costs. An added benefit is that a healthy work force also reduces accident and health insurance cost and exposures.
Establishing a Wellness Program

 

When establishing a wellness program many factors need consideration. The size and needs of the employee population that will use the program is paramount. The need and use of fitness gyms and equipment is a major consideration.

 

 

Communicate Program with Articles & Posters

 

There will be need for communicative articles and posters stressing healthy life styles. Seminar meetings with employees discussing lifestyle changes, dieting, home exercises, and underlying pathology control should be conducted.

 

Training on the use of physical fitness gym equipment may require professional trainer intervention in order to prevent accidental injury by the employee’s misuse. Such an injury would probably be compensable due to the employer providing the service.
Pre-Program Physical

 

A pre-program physical examination to determine the employee’s fitness and capacity to participate in a physical fitness exercise program is recommended. The doctor and the employee should develop goals and objectives based on the examination results. If underlying pathologies are detected during this examination, the doctor and employee will need to set an effective control program. It is suggested the employer be involved for collaborative discussion and monitoring of the employee’s progress.

 

Time and place for participation by employees will be amongst the hardest issues to address. Cost and reimbursement will require resolution if there is need for off-site travel to a fitness center by the employee.

 

While the program needs to be accessible and easy for employee participation, there needs to be as little impact on production and job duty as possible. Off duty programs may require incentives for employee participation. Allowance for on duty participation will have to weigh the cost of lost production vs the benefit being derived.

Such a measurement may not be possible in a tangible manner other than to measure the number of workers compensation and employee benefits both before and after instituting the program. Studies have shown the return on wellness programs to be as high as 4 to 1.
Determine the Location of Program

 

Naturally the program will have to be free for the employee’s use. It can be advertised as any other employment benefit. Determining the need for a fitness gym to be on or off the employer premises depends on the organization’s size and accessibility to local gyms. If the organization is large enough, an onsite gym can be cost effective for equipment and trainer rather than paying membership and trainer fees.

 

Sometimes local school districts may be able to accommodate employees in using their gyms after school hours. Their fees might be more reasonable than a commercial gym. It may be necessary to pay the school gym teacher as a trainer. Be aware this may require separate insurance and hold harmless clause issues in a contract.
Measuring the Effectiveness

 

As already mentioned, the measurement of the program benefits can be seen most easily in medical costs from both workers compensation and employee benefits.

 

Some other areas that might lead to measurable difference are as follows: Has morale improved? Do employees seem more active and physically alert? Has there been any increase in ideas by the employees for doing their jobs? Are the employees thinking about new products or services to supply? Has absenteeism, dropped? Is there a greater team spirit? Are the employees more attentive to their job duties and responsibilities? Are the employees applying more attention to safety and job environmental conditions? Are employees making any suggestions to improve safety and environment? Has employee interaction improved? Are the employees more receptive to change, new ideas, new programs, new production changes and other job facets? Are employees more alert and attentive to their jobs?
Affordable Health Care Act Implications

 

The Affordable Health Care Act has set criteria for all wellness programs. If any of these criteria impact on workers compensation, such as the duty to provide a safe work place, they need to be incorporated in the program.
Summary:

 

Wellness programs are a proven way to have many positive effects on a workforce. Establishing a program will greatly reduce the cost of medical care and claim costs in both workers compensation and employee benefits. Healthier employees with underlying pathologies under control should also lead to higher production and service standards.

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

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

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

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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