The owner of a Lowell, Massachusetts staffing company has pleaded guilty to charges he underreported the size and scope of his business operations in order to avoid paying approximately $110,000 in workers compensation premiums, Attorney General Martha Coakley’s Office announced.
Dara Duong, 53, of Lowell, pleaded guilty to charges of Workers Compensation Fraud (3 counts), and Larceny over $250 (2 counts). After the plea was entered, Superior Court Judge Kathe Tuttman sentenced Duong to two-and-a-half years in the House of Correction, suspended for three years and three years of probation. Duong was further ordered to pay full restitution and perform 400 hours of community service at the Muscular Dystrophy Association in Beverly.
The AG’s Office began an investigation after the Massachusetts Insurance Fraud Bureau (IFB) finished its own investigation and referred the matter for prosecution. Duong was the owner of three companies based in Lowell: Middlesex Temporary Agency (Middlesex), Ankgor Staffing, Inc. (Ankgor), and General Labor Services (General Labor). All three companies provided unskilled labor, such as factory workers, to several client companies.
Over a three-year period Duong intentionally underreported his companies’ payrolls, the total number of employees, and the number of clients his employees worked for. Duong also misrepresented job classifications as part of a scheme to avoid paying higher workers comp premiums to two insurance companies. Investigators discovered that based on Duong’s false representations on his insurance policies, he avoided paying approximately $110,000 in workers comp premiums for a total of three policy periods. (WCxKit)
A Middlesex Grand Jury returned indictments against Duong and he was arraigned on in Middlesex Superior Court where he originally pleaded not guilty.
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.
©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.
Workers’ Compensation Costs Can Be Reduced by Implementing Operational Best Practices: Learn How With This New Guidebook.
A company that wants to implement a new workers compensation program or revamp an existing system will find this book helpful. Maybe your company has recently expanded and you realize the need to train a workers compensation manager or regional coordinators how to hold down compensation costs. Whatever your need, here is the answer:
Workers Compensation Management Program: Reduce Workers’ Comp Costs 20%-50%.
Used by more than 150 firms across the country, this is THE book to help every employer develop a more effective workers compensation program to reduce workers compensation costs. It is based on field research and decades of experience in workers compensation from all aspects of the business. Best practices are described in detail for each person in the injury process.
This easy-to-read manual has been updated for 2012. It now includes:
An index for quick topic look-up so you can view a term or a procedure and see all relevant references.
NEW – Workers Compensation Basics
Purpose of Workers Compensation
Who Pays for Workers Compensation?
Parties Involved in Workers Compensation
Benefits for the Employer
Independent Contractors
Benefits for the Employee
Injuries Covered
Types of Workers Compensation
How Losses are Categorized
How Losses are Reported
Calculating Your Premium
How Mod Effects Your Premium
Good/Bad Mod Example
Five Ways to Reduce Your Mod
NEW – Fundamentals of Cost Containment
Reasons Workers Compensation Costs are High
Who is in Charge?
Work Ability Form Properties
Who is Responsible for Managing Workers Compensation Claims?
Who is Responsible for Managing Workers Compensation Process?
Hidden (Indirect) Costs of Workers Compensation
Additional Costs
Calculating WC Costs
External Obstacles to Cost Control
Internal Obstacles to Cost Control
NEW – Working with Your Adjusters or TPA
Account Handling Instructions
MD Participation
NEW- Reporting a Claim
Critical Issues
Essential Intake Considerations
Nurse Triage
NEW- Directing Medical Care
Occupational Health Clinics
Remote Health Services
Directing Medical Care in California
NEW- Return to Work
What to Include in a Transitional Duty Policy
Non-Profit, Volunteer or Charitable Positions
Employees Who Never Return to Work
Coordinating WC with Federal and State Leave Statutes
NEW – Other Indemnity Cost Containment Services
Telephonic Disability Intervention
NEW – Medical Cost Containment
URAC Certification
Mental Health RNs
Chronic Pain Programs
An Aging Workforce
At Home Recovery Services
Medical Fee Schedules
Fee Schedule Coding
ICD-9 and CPT Codes
NEW- Physical Therapy and Physical Rehabilitation
Differences between Physical Rehabilitation Programs
Pharmacy Benefits Management Program
Authorized Drug Formulary
Toxicology Screening
NEW – Fighting Fraud and Abuse
Medical Terminology Used to Identify Malingering
Reviewing Investigation Reports and Videos
Avoid good Day/Bad Day Syndrome
NEW – Claims Resolution and Settlements
Conditional Payment and Final Demand
Pharmacy Component of MSA
California Settlement Process
A 183-page guide covering how to assess your workers compensation program, design program materials, roll out a program to the organization, and monitor and manage the program once implemented.
Written by a national expert on workers compensation cost containment with over 25 years experience helping companies reduce their losses 20% to 50%.
T. Ronca, a workers’ compensation defense attorney from Long Island, NY, said the
book is an invaluable desk reference. “It is one of the tools that should never be out of reach for a risk manager. Direct employer involvement with claims in the first weeks is the difference between success and failure. This manual will guide the conscientious employer through the pitfalls,” Ronca said.
What’s more, the book can be delivered with your company logo on the cover and a full-color ad for your company on the back cover.
Take it out to the field. Text tabs are available to put on each chapter and it is ready to go as your company training manual. All you will have to do is customize the Training Agenda that is in Part I of the book.
Included in the manual are topics such as: Return to work and transitional duty, claim reporting, employee communications, controlling fraud and abuse, directing medical care, medical cost containment solutions, post injury response procedures, reporting procedures, working with your carrier and third party administrator. There is information about physical therapy, pharmacy benefits management programs, training supervisors and gaining management commitment. It also contains concepts of claim settlement and resolution as well as safety and loss control. New areas are identified above.
There are 5 sample worksheets in the manual to help organize an efficient workers’ compensation program. These include: timetable for implementation, the injury coordinator job description, and several sample roll-out letters. We recently received a terrific phone call from a third-party administration firm saying how the manual provided an organized way to train clients at loss prevention and has helped their clients put "layers of better WC management" in place. Everyone benefited.
One large distribution firm wrote to us to say the chapter on safety and loss control led to a company-wide safety change that only cost a few hundred dollars but prevented a specific type of injury that had been draining its budget, says Rebecca Shafer, Esq., President of Amaxx Risk Solution, Inc. who authors the book. Shafer is a national expert on workers’ compensation cost containment with more than 25 years of industry experience helping many companies reduce their losses 20-50%.
When you order your copy of Manage your Workers’ Compensation Program from Advisen at
http://corner.advisen.com/wcbooks, the 183-page guidebook shows how to assess your program, design program materials, roll-out a program to the organization, and monitor and manage the program once implemented.
The workbook is also available with a customized front and back cover for bulk purchases. Discounted rates apply to bulk orders.
One company said, "After reading the manual, we took a look at past workers comp practices and saw that every department did things differently. Manage Your Workers’' Compensation Program 2012 gave us the guidance we needed to standardize our workers’ compensation programs across the country. It was like a pre-prepared lesson plan," according to the risk manager.
A regional hospital in North Dakota wrote that, "Our small company expanded rapidly and we actually didn’t have any official workers’ compensation program in place. This manual gave us step-by-step procedures from the first meetings with management to monitoring the final program. Buying and reading the book was almost like hiring another employee – one who was an expert in workers’ compensation."
Who Uses the Workers’ Compensation Book?
Risk Managers and Workers’ Comp Managers find it useful learning about the cost containment niche and use it for themselves and to bringing new team members up to speed very quickly. The book becomes a “lesson plan” tool.
Safety Directors use the book to train supervisors in workers’ compensation claims management. They learn more about their area of responsibility — post loss cost containment — adding to their overall knowledge. They also learn what to do after an injury and what steps are supposed to take place during the first 24 hours.
Brokers use it for prospects, as well as, to learn about specific aspects of cost containment, passing their knowledge on to their clients. For example, when discussing how to develop a return-to-work program and a client asks about, “off-site return-to-work programs,” the broker quickly finds the relevant section in the book, reviews it and passes the answer on to the client, along with a copy of the cost containment book with the broker’s logo.
Adjusters use the book to gain a better understanding of the employer’s perspective. Adjusters also want to learn more about cost containment to add to their overall workers’ compensation knowledge in order to grow their careers and stay abreast of new services.
Account Producers give the book to prospects during formal presentations to illustrate their company is on top of the workers’ compensation industry. The book makes an excellent client gift.
Vendors such as doctors, physical therapy networks, occupational clinics and medical management firms learn how their service might fit into the workers’ compensation marketplace, what is important to employers, and what they look for in medical services to enable the vendors to enter the workers’ compensation marketplace.
The manual is a cost-cutting tool to learn more about systematic and operational techniques for reducing workers compensation costs.
Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and 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. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.
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.
©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.
Posted in
Claim Audits & File Review,
Communication with Employees,
Coordinating Medical Care,
Federal Workers Compensation,
Fraud and Abuse,
Insurance Issues, Rates, Premiums,
Lowering Premiums & Experience Mod,
Management Commitment,
Medical Cost Containment & Managed Care,
Medicare Set Asides (MSAs),
Professional Development Issues,
Return to Work and Transitional Duty,
Risk Management,
Safety and Loss Control,
Settling WC Claims,
TPA and Claims Administration,
WC 101,
WC in Other Countries (International) |
The authors of this letter are journalists, columnists, bloggers and content publishers for the workers' compensation industry across the United States. We are a politically and professionally diverse group. We do not agree on everything, yet find ourselves of one opinion on a highly critical matter. We are competitors who are now colleagues for a common cause; to bring light to a serious injustice being committed within your state.
The prosecution of Charles (Sandy) Blunt was, in our view, an outrageous and almost farcical event. It is, in the final analysis, a travesty that has damaged the national view of your state, hampered the operation of a State agency, and ruined the life of a good man wholly undeserving of such results. (WCxKit)
Sandy Blunt was Director of North Dakota's Workforce Safety & Insurance from May of 2004 until December of 2007. He was, as you are likely aware, prosecuted by state authorities for “misspending government funds”. Specifically, he was charged and convicted on two counts
1. During his almost 4 year tenure his agency spent approximately $11,000 on employee incentive items, including flowers, trinkets, balloons, decorations and beverages for Workforce Safety and Insurance employee meetings, and on gift certificates and cards in small denominations for restaurants, stores and movie theaters. Blunt personally approved some of these expenditures. Others were made by managers as part of daily operations under his watch. Not a dime went into an employee’s pocket, nor did Blunt personally benefit from any expenditure.
2. His agency paid $8,000 to an employee, David Spencer, for sick pay when he was not apparently sick, and it also failed to collect $7,000 from Spencer when he left prior to the end of his employment agreement. The $7000 was for moving expenses incurred that prosecutors felt Spencer owed the state. Blunt’s position was that the agency was not entitled to collect these funds, since Spencer’s departure was not voluntary.
All told, the state prosecuted Sandy Blunt, and he is now a convicted felon for “misspending” $26,000 of government money.
No one has ever alleged that Blunt personally benefited from any of these expenditures. Blunt was acting like other capable, ethical North Dakota executives ‐ in the best interest of customers and of the mission of his employer. In our industry it is considered a best practice to provide employees and supervisors with incentives. It is not frivolous, it's necessary, and what every employer should do.
The first of these two charges would be, to many people, laughable if it were not for the damaging consequences associated with them. The notion that buying inexpensive incentive items for your employees could result in a felony conviction is simply stunning. This would not be elevated to a criminal status in most states in the nation. The fact that it is in North Dakota should have a chilling effect on businesses looking to move there.
The second and more serious charge, involving the sick pay and moving expenses of employee Spencer, has been fatally undermined by the revelation that the prosecutor in the matter, Cynthia Feland, withheld critical evidence from the defense – evidence that largely clears Blunt in this area. A disciplinary panel for the North Dakota Supreme Court has found on November 7, 2011 that
“Cynthia M. Feland did not disclose to Michael Hoffman, defense attorney for Charles Blunt, the Wahl memo, and other documents which were evidence or information known to the prosecutor that tended to negate the guilt of the accused or mitigate the offense.”
Withholding of evidence by prosecutors is one of the most serious acts of prosecutorial misconduct in North Dakota and all other states. In recognition of this, the panel recommended Ms Feland’s license to practice law be suspended. We urge that you read the entire report of the panel, including the penalties the board recommended be imposed on Ms. Feland. For the report, go here.
Had the prosecutor not withheld evidence, in all likelihood the case would never have come to trial, and the reputation of Blunt and the WSI would be free of taint. The evidence in question shows that WSI’s auditor’s own findings backed Blunt’s position on payments related with Spencer. However, those findings were not made available to the defense, and the prosecutor was found to have allowed testimony to be given at the trial that directly conflicted with information she had. As we indicated, Feland, now a judge in your state, has been recommended for suspension and a fine over these findings.
Yet Sandy Blunt remains a convicted felon. His crime? Buying balloons, trinkets and $5 gift cards – for his employees, not for himself. For that, Blunt, who is married with two children, has had to spend half a decade, and untold thousands of dollars trying to clear his name.
Some of us have known Sandy for quite a while. Some have come to know him while learning of his situation. Others of us have never met Sandy, but recognize the tenuous nature of his treatment. Collectively we speak to thousands within our industry every day. Our opinions have been clear; this situation needs the light of truth shone brightly upon it. The time and resources expended prosecuting a man on such questionable grounds should be more closely examined, by the business community, workers compensation professionals and the media in North Dakota. (WCxKit)
Sandy Blunt is a good and decent man. He deserves better. So, it would seem, do the people of North Dakota.
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If you are going to sell business insurance to the business community, you need a strong basic understanding of workers compensation insurance. While companies will be concerned about having insurance for their buildings, inventory, and vehicles, and will understand the need for various types of property insurance, the same companies will look at work comp insurance as a governmental mandated cost of doing business.
As their agent, you need to be able to explain to your client business the importance of workers compensation and how it works.
While your clients, the companies, will think about their property insurance exposures, they will have a far higher frequency of workers compensation claims then property claims. Therefore, selling and servicing workers compensation insurance can be challenging for any agent, even experienced ones. The successful insurance agent will be the agent who can explain the advantages of all types of business insurance including workers compensation.(WCxKit)
A major part of the challenge of workers compensation insurance is the way it is different from the other various business lines. With property insurance, the cost of the claim can normally be ascertained fairly quickly and easily. The longer life of some work comp claims, along with the variables of medical treatment, income replacement, and a third party (the employee) who has a different perspective and different motivation, makes the evaluation of the cost of the work comp claim much more complex.
The complexity of work comp is what often keeps insurance agents from being as educated in workers comp as they are in the other insurance products they sell and service. However, learning the parameters of work comp is not nearly as difficult as you might think. To assist you in becoming more proficient in work comp, we have put together a guide that has become quite popular both with agents/brokers and with risk managers/corporate financial control management.
Our guide will assist agents in better understanding the entire work comp process which will assist you, the agent, in providing a higher level of service to your clients when they have a claim or even when they just want a better understanding of workers compensation. The chapters of the guide that will be of special interest to insurance agents include:
1. How an employer should assess their work comp program.
2. How the employer should structure their work comp team.
3. The forms and documents the employer will need to process/submit their work comp claims.
4. The training the employer will need in their work comp program.
5. The management and monitoring of the employer’s work comp program.
Additionally, as the agent, you will want to understand what is going on with the client’s work comp claims. Learning more about the claim progress will allow you to answer the questions your clients have about their claims. Knowing the differences between the way property and work comp claims are handled will allow you to better service your clients. Some of the topics that benefit insurance agents and allow for a better understanding of workers compensation include:
1. The role of the third party administrator in the work comp claim.
2. The differences between bundled and unbundled services.
3. The importance of proper account handling instructions.
4. The role of medical management in the claim.
5. The best practices of work comp claim handling.
6. The ability of the employer to control the selection of the medical providers.
7. The importance of a return to work program at the client.
8. The importance of a solid safety program.
9. How to fight fraudulent claims. WCxKit
It is important that the agent can answer all of their client’s insurance questions including the questions on workers compensation. We encourage you to learn work comp to the point that you can answers all your client’s questions. If you want to know more about cost containment, learn more about our book Workers Compensation Management Program: Reduce Costs 20% to 50%.
Author Rebecca Shafer
, JD, President of Amaxx Risk 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. She is the author of the #1 selling book on cost containment, Manage Your Workers Compensation: Reduce Costs 20-50% www.WCManual.com.
Contact: RShafer@ReduceYourWorkersComp.com.
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@ReduceYourWorkersComp.com.
As any employer with locations in more than one state knows, the workers compensation policy is written specifically for the states where the employer has physical facilities. On the Information Page that comes with each new policy or policy renewal, is Item 3.A (for most insurance carriers) which designates the states where the workers compensation policy is applicable. Workers compensation coverage does not apply to claims filed in other states.
While the insurance carriers attempt to limit the exposure to claims occurring where they may not have claims offices, or knowledge of the workers compensation statutes, the states take a much broader approach. The workers comp statutes of most states specify when and how the workers comp act applies out of state. Normally, the state statute will indicate that if the contract to hire was negotiated within the state, the workers comp laws apply regardless where the injury occurs. (WCxKit)
Most state workers comp statutes will have extraterritorial provisions that state if the principal place of employment is within the jurisdictional boundaries, a workers comp injury occurring outside of the state boundaries is still covered by the state law. The workers comp statutes also normally specify that any work related injury occurring within the borders is subject to the workers compensation statutes, even for employers and employees whose place of business is not within the state line boundaries.
When the employee is injured in another state where the employer does not normally do business, the extraterritorial provisions of the state workers comp act work great, as long as the employee elects to utilize the benefits of the home state workers compensation act. The problems occur when the employee elects to file the claim in a state where the employer does not have a physical location and the employer does not have workers compensation coverage.
The usual reason an employee files for benefits in a state other than the home state is the amount of temporary total disability (TTD) benefits that will be paid. Consider the highly successful salesman from Georgia earning $1,500 per week. If he is injured in Iowa with its high maximum weekly TTD rate, he will receive $1,000 per week while he is unable to work, if he elects Iowa for workers comp benefits. If he elects Georgia benefits, the TTD rate is capped at $500 per week.
This creates a coverage issue for the employer. When the workers comp policy is purchased, the employer should have the insurance agent or broker specify in Item 3.C of the Information Page the other states for which coverage is requested. Some agents will approach this by listing every state and territory except North Dakota, Ohio, Washington, Wyoming, Puerto Rico and the US Virgin Islands (the four monopolistic states and two monopolistic territories where the state/territorial governments provide the workers comp coverage). This can result in an accidental oversight where the agent leaves out a state.
A better approach is to insert the following on the Information Page in Item 3.C: “All states and US territories except North Dakota, Ohio, Washington, Wyoming, Puerto Rico and the U.S. Virgin Islands and those states listed in Item 3.A of the Information Page.” While this is the best approach to out of state coverage, some insurers, especially single state insurers or small regional insurers, will object to providing workers comp coverage in other states where they are not licensed to do business.
Most employers think of the workers compensation policy and the workers compensation coverage as one and the same. Actually, the workers comp policy is divided into several sections with Part 1 being the actual workers comp coverage. Part 2 is employer’s liability insurance which covers injuries to employees when workers comp coverage does not apply. Part 3 is Other States Insurance. With this coverage, workers compensation and employers liability insurance is provided for incidental exposure in states not listed in Item 3.A of the Information Page.
It should be noted that Other States Insurance covers only incidental exposures. When the employer starts to have employees in a state on a regular basis, the states needs to be included in those listed in Item 3.A of the Information Page. If your business has employees who occasionally travel out of state, it is a good idea to routinely review your coverage with your insurance agent to confirm that your policy provides for incidental out of state exposures.
Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and 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. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.
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.
©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.
The Saskatchewan WCB recently announced its plan for a modest reduction in the average employer premium for 2012.
The 2012 average premium will be $1.60 per hundred dollars of payroll, down one cent from 2011. According to the Board, stable claim costs and injury frequencies contributed to the WCB’s decision. The proposed 2012 premium is the lowest average premium rate in a decade, and nearly 22 per cent lower than the 10-year high of $2.05 in 2004. (WCxKit)
Premiums for 28,071 employers stay the same or are lower. The average decrease is 5.3 per cent; the range is 1.0 to 21 percent. According to the WCB, 14,115 employers pay higher premium rates next year, as a result of their claims experience. The average increase is 5.1 percent; the range is 1.0 to 17.8 percent.
It is expected Saskatchewan will have the fourth lowest average employer premium in Canada for 2012.
Peter Federko, the WCB’s chief executive officer, said that recent investment market volatility did not impact the decision on rates. A new funding policy directs that only realized gains and losses – that is, gains and losses from the sale of investments – are used to determine the WCB’s funded position.
According to Federko, “As required, the WCB has adopted the new international financial reporting standards. The new policy recognizes this financial statement reporting requirement and brings more stability to our calculations, and that includes calculating our employer premium rates.”
The province has seen an almost 40 percent drop in the workplace injury rate since 2002. (WCxKit)
Officials credit business owners and Saskatchewan’s working men and women for the huge shift towards safer workplaces, adding that, “workplace safety is the surest way for an employer to bring down WCB costs. It’s a management practice with paybacks for everyone: employers, workers, families and neighborhoods all benefit when we go home safely from work.”
Author Robert Elliott, executive vice president, Amaxx Risk 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.
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@ReduceYourWorkersComp.com
Catastrophic injury claims make up less than 1% of all workers compensation claims, but different studies show they entail approximately 20% of all workers comp costs. For the small employer, one catastrophic injury claim can distort the severity factor in the workers comp premium calculations and have a major impact on the workers compensation premiums for years into the future.
Catastrophic injuries are injuries that disable the employee to the extent the employee can never return to work and significantly alters the employee's life in general. Common examples of catastrophic injuries are: (WCxKit)
1. Brain/brain stem injuries.
2. Severe burns over 50 % or more of the body.
3. Spinal cord injuries.
4. Multiple amputations.
5. Multiple trauma.
6. Total vision loss.
7. Occupational lung diseases. (WCxKit)
The eventual cost of a catastrophic injury is very difficult to establish early in the life of the claim. Even the experienced adjuster does not have a crystal ball to determine if the overall cost of the claim is going to be $500,000 or $5 million when establishing the initial reserves on the claim. With catastrophic claims, as additional medical and rehabilitation information becomes available, the reserves are often adjusted by large amounts (6 figures or more) several years into the claim.
To establish the value of the catastrophic injury claim, there are various factors the adjuster considers. While it is the adjuster's responsibility to establish the reserve, the smart risk manager does not leave it all up to the adjuster. It behooves the employer to review the factors that go into reserving to be sure the adjuster is setting the proper reserve and not taking the easy way out by reserving a nice round number like $1 million.
The factors that go into establishing the value of the catastrophic injury claims can be divided into the three areas: indemnity, medical, and claim related expenses. Look for vendors specializing in
Life Care Planning.
Lifetime cost of the indemnity includes:
1. The employee's average weekly wage and weekly indemnity benefit.
2. The time span of the indemnity; does it last for a set number of weeks, (500 weeks), as it does in about half of the states, or does it last a lifetime, or to a set cut off point in the retirement years?
3. The employee's age and projected life span on the actuarial tables.
4. Does the indemnity rate remain the same for permanent total disability as for temporary total disability, or does the compensation rate change?
4. What is the amount of the offset for social security disability?
Medical factors in establishing the value of the claim:
1. The cost of immediate medical care following the injury.
2. The cost of surgical interventions in the first years following the injury.
3. The on-going cost of medical care on an annual basis after the medical status is stabilized.
4. The cost of modifications to the employee's home and current and future vehicles.
5. The cost of institutional medical care.
6. The cost of durable medical equipment (wheelchairs, artificial limbs, hospital beds, oxygen tents, etc.).
Claim handling expenses for catastrophic claims:
1. Nurse case managers.
2. Rehabilitation specialist.
3. Defense attorneys.
4. Actuarial experts. (WCxKit)
The above items impacting the value of the catastrophic claim are not the only factors to consider when establishing the future claim cost. If the insurance company decides to settle the catastrophic workers comp claim, they work with the Centers for Medicare and Medicaid Services (CMS) to obtain approval of the Medicare Set Aside Agreement (MSA). The value of the settlement has to be high enough that the claimant (in theory) never has any future medical cost paid by CMS.
Another factor impacting the value of the catastrophic injury claim is the availability, in some states, of a Subsequent Injury Trust Fund to cover part of the future cost of the claim. Also consider whether or not the insurance company can resolve the claim with a structured settlement and of the future cost of the claim being sold to another insurance company. (WCxKit)
While it is possible to calculate the value of the catastrophic injury claim, keep in mind a catastrophic injury is a major life altering event for the employee. The catastrophic injury impacts almost every area of the employee's life and family. It is a personal tragedy far beyond the financial cost of the claim.
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. Shafer is the author of Workers Compensation Management Program: Reduce Costs 20% to 50%. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.
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@ReduceYourWorkersComp.com.
Stuart Colburn
Stuart Colburn, an attorney for Downs
Stanford recently shared a blog regarding a November 2011 Centers for Disease Control and Prevention (CDC)
report that described prescription painkiller abuse as “a public health epidemic.”
Colburn noted the CDC feels that changing the the way prescription painkillers are prescribed would reduce misuse, abuse and overdose but still allow access to safe, effective treatment.(WCxKit)
Colburn frankly citizens the workers compensation system as contributing to these addictions and indirectly by contributing to lost time and injuries “attributable to decreased alertness and other ill effects of working while abusing prescription drugs.”
Colburn continues, “America's prescription drug abuse (PDA) problem is not nearly as well known as our War on Drugs. No war has been declared and yet American lives are being lost. The statistics are well known. American citizens make up 4 percent of the world's population. Yet, we consume 66 percent of the world's illegal drugs.”
His blog continues to site fascinating drug statistics not only from the CDC but also the U.S. Military, various states and many others. It is well worth a read.
Brian J. Caveney
He concludes that the Patient Protection and Affordable Care Act (PPACA) of 2010 has changed much for the workers compensation industry including The United States Department of Health and Human Services adding eight substances to its Report on Carcinogens.
“Formaldehyde and aristocholic acids are now listed as known human carcinogens, and six other substances-captafol, cobalt-tungsten carbide, inhalable glass wool fibers, onitrotoluene, ridelliine, and styrene-are now considered as reasonably anticipated to be human carcinogens. This brings the total to 240 identified substances in the listings demanding thoughtful approaches to minimize exposure to workers,” Caveney wrote.
He also said the Fukushima Daiichi nuclear power plant in Japan has had great affect on the WC industry. “Readers of Occupational Injuries and Illnesses (LexisNexis) can refer to Chapter 44 for recent updates on the physics of radiation contamination and possible human health effects of exposure,” he wrote.
For WC matters regarding low back claims, Caveney directs readers to the updated Chapter 15 in Occupational Injuries and Illnesses (LexisNexis. And, lastly, he noted 2011 is the 30th anniversary of the identification of the human immunodeficiency virus (HIV). “The infection has transcended its original death sentence upon diagnosis to a chronic disease state when adequately treated with the panoply of various treatment options these days. Once widespread fears of transmission in a host of occupational situations has thankfully now been limited to mostly preventable scenarios. Chapter 46 of Occupational Injuries and Illnesses (LexisNexis) reflects these advances,” he wrote.
To read more, follow the above link to Caveney’s article.
She cites physician Nortin M. Hadler, MD new book
Rethinking Aging: Growing Old and Living Well in an Overtreated Society. “Dr. Hadler continues his no-holds-barred approach, warning that the Baby Boomer Generation and Generations X and Y hold unrealistic notions about defying the aging process with medical technology, thereby making them more susceptible for ‘medicalization and overtreatment,’ “ she wrote.
Kobayashi notes that marketing has become “sophisticated and pervasive in playing off people’s fears about health and longevity. … It’s no secret that Dr. Hadler has had it with insurance companies and even the AMA Guides for that matter. He once argued that attempts to adhere to the AMA Guides to quantify impairment were, in his opinion, ‘an unappealing, if not Orwellian, exercise, and not just for musculoskeletal diseases but for all diseases.’ “(WCxKit)
Read more of Kobayashi’s research and opinion by following the link above. She concludes, “Here, in our world of workers’ compensation, we can’t deny the fact that workers’ compensation medical costs are soaring. Whether you’re an injured worker, attorney, judge, or claims adjuster, we need to make the right choices about medical care, to educate ourselves, and to stop being conditioned into believing that medical treatment can always help/save us.”
Author Rebecca Shafer
, JD, President of Amaxx Risk 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. She is the author of the #1 selling book on cost containment, Manage Your Workers Compensation: Reduce Costs 20-50% www.WCManual.com.
Contact: RShafer@ReduceYourWorkersComp.com.
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
In pure self-insurance, an employer sets aside the money necessary to pay for all future losses. The amount of money necessary is calculated using actuarial information, insurance data, and the “law of large numbers” to
calculate the probability of loss and the cost of expected incurred losses. If the employer does not have the available capital to place in reserve for future losses, self-insurance is not a viable approach to controlling risk.
Self-insurance for workers compensation benefits the employer in several ways, including:
1. Lowering the overall cost of insuring for risk. The portion of the insurance premium that would be the profit for both the broker and the insurance company is retained by the employer. The amount of money set aside for the self-insured risk is used for paying claims and administering the claims management program.
2. Providing better claims management. The claims can be either self-handled or administered by a third party administrator (TPA) where the TPA adjusters follow the directions and suggestions of the self-insured employer. It gives the employer more control over the claims handling situation. (WCxKit)
3. Lower claim cost and claim adjusting expenses. The TPA, especially a local and or regional TPA, can be flexible in designing and pricing the claims administration services.
4. Self-insured employers also have a vested interest in the return-to-work program, ergonomics of the workplace, and having integrated safety programs.
With the benefits of self-insurance, you would think all employers would want to self-insure workers compensation. The barrier most employers run into is the ability to self-insure for catastrophic losses. While many employers can set aside money for routine, day-to-day workers
comp claims, the actuarial determination of the amount of money necessary to set aside for catastrophic losses is more difficult to ascertain. Often the employer can place into reserves the amount of money for one catastrophic loss; but what happens if the employer has multiple catastrophic workers comp claims?
Full self-insurance is seldom possible. For a company to be fully self-insured in a viable manner, they must be able to cover all future losses, even the remote possibility of multiple
catastrophic losses. Often employers elect to either have a self-insured retention or a high deductible, or a combination of the two.
To be “self-insured” but also cover the exposure for catastrophic claims, employers often determine the level of self-insurance they can afford. The company then purchases excess insurance to cover the risk of loss over and above a specific threshold. For instance, with a self-insurance retention, the employer administers and pays all claims under a set dollar amount. For an example, $500,000. When the total cost of the claims exceeds $500,000, the excess insurer reimburses the portion of the claims over $500,000.
Another approach for a self-insured employer unable to set aside the necessary reserves for catastrophic claims, is a large deductible program. In a large deductible program the employer purchases a policy of insurance from an insurance company. The employer is responsible for reimbursing the insurance company for each claim in the policy period up to a dollar limit. The employer will also have a maximum amount of exposure for all claims combined.
To illustrate: the employer reimburses the insurance company the total amount paid on each claim under $500,000 (the large deductible amount), but when the insured pays a total of $2,500,000 (a stop-loss limit) on all claims, the insurance company takes over and pays all further claim costs during the policy period. The allocated loss adjustment expense (the cost of handling the claim) is often included in the claim cost in the large deductible program. (WCxKit)
Self-insurance can be an excellent way to reduce the overall cost of insurance. Properly designed and administered, a self-insurance program can have a significant positive impact for the employer.
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.
Our WC Manual is the BEST: www.WCBook.us
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@ReduceYourWorkersComp.com.
A Sharon, Mass., husband and wife who own insulation companies in Rhode Island and Sharon, respectively, have been cited more than $58,000 in restitution and fines for failing to pay the prevailing wage, misclassifying workers as independent contractors, and record keeping violations, Attorney General Martha Coakley’s Office announced.
“All workers on public construction projects in the Commonwealth deserve to be paid what they are rightfully owed under the law, said Coakley. “Any employer that has a state or municipal contract must abide by the rules, which includes properly classifying their employees in their records.” (WCxKit)
Alexander Shlepakov, age 51, owner of Padi USA, Inc., located in Providence, Rhode Island, has been cited for willfully failing to pay the prevailing wage to 10 employees at seven public works construction projects; willfully misclassifying seven employees as independent contractors; willfully failing to submit true and accurate certified payroll records to the awarding authorities; and failing to keep true and accurate payroll records.
After receiving complaints, investigators from the AG’s Fair Labor Division reviewed Padi’s payroll records and discovered that Shlepakov and his company owe more than $12,700 in wages to the affected employees. Shlepakov and his company must also pay a $12,750 fine to the Commonwealth.
The AG’s Office also cited Shlepakov’s wife, Tatiana Shlepakov, age 37, and her company Elad Industrial Insulation, Inc., located in Sharon, for willfully failing to pay the prevailing wage to two employees on public construction projects; willfully failing to submit true and accurate certified payroll records to awarding authorities; misclassifying two employees as independent contractors and failing to pay timely wages.
Tatiana Shlepakov and her company were cited for failing to pay employees $19,515.15 in wages. They have since paid $18,125.25 directly to one employee. Tatiana Shlepakov and her company are also ordered to pay a $12,250 fine to the Commonwealth.(WCxKit)
The Massachusetts Employee Misclassification Law provides that an individual performing any service shall be considered to be an employee unless: (1) the individual is free from control and direction in connection with the performance of the service, both under his or her contract for the performance of service and in fact; and (2) the service is performed outside the usual course of the business of the employer; and, (3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.
Author Robert Elliott, executive vice president, Amaxx Risk 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.
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@ReduceYourWorkersComp.com.
