In 1989 the federal law known as the Worker Adjustment and Retraining Notification Act (WARN Act) went into effect. The intent of the WARN Act was to provide employees with time to plan for their future employment with another company when the employer had to do a mass layoff. The WARN Act has in many ways morphed into the Workers Compensation Claims Preplanning Act (that is not a real title), which provides ample time for dishonest employees to plan and execute fraudulent workers comp claims.
The WARN Act requires employers with more than 100 workers to give a 60 day notice before laying off workers. Employers must issue a WARN Act notice if a facility closing or other Reduction in Force (RIF) will cause more than 50 employees to be without a job. The WARN Act also applies to companies that are staggering the layoffs if the employer is laying off more than 500 employees in any 30 day period, or more than one-third of the workforce if the company has less than 500 employees. If the employer does not provide the notice timely, the employer is required to continue the pay and benefits of the layoff workers for 60 days from the date the employees are notified of the layoff. Plus, in some cases the employer can be fined $500 per day per employee for not giving the layoff notice timely. Please consult your labor law attorney for additional information on WARN Act requirements. WCxKit
Statistics show that workers comp claims spike by an average of 50 percent after a plant closing or other mass layoff is announced. This jump in claims always results in a future jump in the employer’s workers compensation premiums, as claim frequency is the primary factor in the calculation of the employer’s workers comp premium.
Unfortunately, there are times when a RIF is necessary due to a slow-down in business, a need to cut costs, a need to change the organizational structure, or a change in the company’s business strategy. However, the employer does not have to pay bogus work comp claims as a cost of doing business. There are numerous actions an employer who is planning a RIF should take prior to the announcement of the RIF. We recommend employers who must RIF employees to take the following actions.
1. Keep intentions to yourself and only communicate with those who need to know. The less time unethical employees have to plan their fraudulent claim or to think about doing so, the lower the number of bogus work comp claims.
2. If it is becoming obvious that the company needs a RIF, do not put it off. The longer you wait, the greater the distortion the rumor mill will create. The long wait provides ample time for unethical employees to not only plan their workers comp claim, but also to share their plans with other employees that would not be considering work comp fraud, until they learn others are going to file bogus workers comp claims.
3. When a RIF is announced, place a strong emphasis on the unemployment compensation benefits the employee will be receiving. Employees who are less anxious about their source of income are less likely to commit work comp fraud if they know they will have another source of income while they look for another job.
4. Learn how your state handles unemployment compensation in conjunction with workers compensation. Some states allow both at the same time, other states allow one or the other, and some states allow an offset (reduction) in workers comp benefits for employees drawing unemployment compensation.
Prepare for all workers compensation claims that may be received
5. Consult with the third party administrator (TPA) or insurer so the TPA can plan to handle the additional workers comp claims quickly so there is no waiting. If there is a delay in beginning claim investigations, the likelihood of properly defending the claim is reduced, evidence is lost and affirmative defenses are less likely. TPAs should handle these claims aggressively and early which requires sufficient staff.
6. If not already done, a "dedicated" or "designated" adjuster assigned to handle the claims for your company is needed. If you expect a large number of new workers comp claims, it is preferable to handle all of them in the same claims office. This way the claims adjusters are familiar with working conditions.
7. If you have been utilizing more than one defense firm, pick the best attorney and pre-arrange for one attorney (best) or one firm (acceptable) to handle all work comp litigation that occur after the announcement of the RIF.
8. If an employer is closing the facility or making a major remodeling, invite the defense attorney(s) to the facility so the defense attorney(s) can familiarize themselves with the facility.
9. Video record the areas/equipment/machinery that would most likely be included in any injury scenario, especially if the plant is to be renovated or demolished.
10. Video record job functions for the medical providers, especially those that would most likely be included in any injury scenario.
11. Make a list of all key personnel, managers and supervisors, including the home address, home phone number and cell phone number, who can testify if necessary.
12. Make sure all personnel records are up to date, especially health insurance records and sick time documentation (for example: the employee who took sick time for the back injury that occurred at home may now claim an aggravation of the pre-existing condition to continue the medical care and to draw indemnity benefits).
13. An exit physical should be considered especially if the employees work in a high decibel area or have been exposed to chemicals or other irritants while on the job. This action should be reviewed with your defense attorney and claims supervisor as to the benefits versus the risk.
14. An exit interview can identify potential future workers comp claims. Provide the employees with a form to complete to list any known medical condition.
15. Do not forget the employees who were already out of work and drawing indemnity benefits before the RIF announcement. Their incentive to return to work has been removed in situations where their department or plant is being closed. Every possible effort should be made to get these people back to work before the RIF.
16. Work with an offsite transitional duty vendor so that employees who are on transitional duty can be employed elsewhere until they are fully recovered and at MMI. Be prepared to place ALL employees who are on transitional duty in a paid position elsewhere. Charitable positions are also an option as is home-based employment.
It is essential that all workers comp claims reported after the announcement of a RIF be completely documented and thoroughly investigated promptly. Once the facility is closed and people and evidence is no longer available, it is much more difficult for the workers comp adjuster to handle the claim properly.
It should be noted that not all workers comp claims that occur after a RIF is announced are fraudulent. There will be legitimate injuries that occur. There also will be employees who have worked through other minor aches and strains who now feel they must report their work-related medical condition. (WCxKit)
When you are planning a large scale RIF, you will have a lot going on. The control and prevention of fraudulent work comp claims is necessary to not lose some or all of the financial benefits the company obtains from a RIF.
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
Every day employers introduce increased risk for worker injury. At any given time, outside or internal forces can create a new hazard for injury. With the injury comes medical cost, lost wages, decreased production, decreased profit margins, more strain on current workforce, and other negative issues.
Below we will discuss a few factors involved in the increased risk of worker injury, and the way to decrease the hazard when these forces are present in your workplace.(WCxKit)
1. New equipment in the workplace:
Your workforce has a span of experience that varies by employee. Some workers are new to your industry, whereas others may have decades of experience. But new equipment is a great equalizer.
When there is hazardous equipment on the work floor unknown to your operators, the risk of serious injury increases dramatically. Your workers are unfamiliar with these machines, and, without proper training, a severe injury may occur.
The way to prevent injury is to take the time to properly train each employee on proper use of the new machine. Make sure they complete the training course and can pass a safety test before operating the equipment. This should decrease your risk, and make your workers safe.
A lot of employers ignore training, letting experienced workers train others. Managers can be surprised that older workers typically do not have the advanced technological experience to know these new machines inside and out, and therefore, without a properly trained workforce, you run the risk of increased worker injury.
2. Benefit reductions:
As the economy continues to struggle, employers are scrambling to find ways to continue to stay above water. Some are experimenting with decreasing fringe benefits made available to employees, or by decreasing the employer contribution which increases employee cost for the same benefit package they may have had for years.
Backlash against this can lead to an increase in workers compensation claims. It is not going to be across the board, but some people may adopt the attitude they want to show the employer what happens when they alter the benefits. This is done by workers who stop caring about their jobs. They do not do safety checks or machine checks before operation. They do not clean up as they used to. They do not work as hard as they once did. The end result is other workers injured by someone else’s carelessness.
3. Demotions within the company:
Similar to what was discussed in item two, workers who are demoted or moved to another job title may hold a grudge. They become upset and want to sabotage their employer through a lackluster work performance, decreased safety awareness, decreased work production, etc. All of these are detrimental to the employer, and another employee may become injured inadvertently by the disgruntled employee’s issue with the employer.
When job titles change or people get moved around to other job duties, watch for an increase in claims. If this happens, employers should talk to employees immediately. Let them know that these moves are not a personal attack and may not be permanent. You need to make those workers feel like they are part of the team again, so they stay on board and on top of their safety protocol.
4. Plant shutdowns/layoff notices:
Probably the most common time a claim count increases is when workers are notified of a potential layoff or worse — an entire plant shut down. Workers with any type of injury feel if they do not report it now they will miss out. Often any worker who has ever had any sort of pain while working is going to come forward to tell you how injured they are, and how they kept working to try and be of some benefit to the employer and keep earning a paycheck.
Not all of these types of last-minute claims are fraudulent. In fact, some long-term employees may have an occupational claim that is compensable. All claims need to be reported to your workers comp carrier so the adjuster can investigate the claims and get them taken care of, whether they are denied or compensable. Any delay can cause an increase in claim cost, especially if said employee is laid off, or terminated when the shop closes down. The sooner the adjusters get the claims, the better your company will be protected.(WCxKit)
In conclusion, several issues can contribute to a spike in an employer's claims count. But with proper communication, thorough training, and a good safety team you should be able to weather the storm and keep your claims count in check.
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.
Our WC Book: http://www.wcmanual.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.
The U.S. Labor Department reported on Thursday continuing unemployment claims surged 172,000 to a record 6.02 million. Initial jobless claims were recorded at 610,000 for the week ending April 11. The four-week moving average was 659,500.
Employers continue to search for ways to cut costs and have targeted employee benefit plans putting many medical plans in jeopardy.
For the employed, the prospect of losing one’s job almost seems imminent which may lead to an increase number of fraudulent workers’ compensation claims.
Employers must emphasize a “back-to-basics” approach to their workers’ compensation claims. One area to focus on is understanding the difference between an illness and an injury. An injury is defined as damage or harm caused to the structure or function of the body caused by an outside agent or force. An illness is defined as a state of poor health.
Employers should review the process used by their claim administrator to register first notice of loss. Does the administrator make a successful (workersxzcompxzkit) attempt to identify the injury as occupationally-related? If there is doubt, what is the procedure to review the first notice to controvert the claim?
Remember, workers’ compensation provides wage replacement (subject to state law) where medical plans do not typically afford this coverage unless a disability occurs.
With a growing number of people unemployed and prospects that the jobless number will continue to increase, employers must rely on the diligence of their claim administrators to verify the accuracy of a reported injury. If the injury is found to be employment-related (as defined by state law or regulation) then the claim should be handled in a judicious manner. If there is doubt or suspicion, than immediate action is required not to make payment on a claim that is not work related.
Michael Ferreira is the President of Safegate Risk Consulting, LLC. He has been in the insurance industry for many years and has expertise in brokerage, underwriting and claims. While in the brokerage industry, he was the client account executive for Walmart. He can be reached at: 917-767-9123.
Try the WC Cost Calculator to show the REAL COST of work comp.
Look at WC 101 for the basics about workers comp.
Workers’ Comp Kit® is a web-based online Assessment, Benchmarking and Cost Containment system for employers. It provides all the materials needed to reduce your costs significantly in 85% less time than if you designed a program from scratch.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
When making cutbacks, employers have to plan for any number of contingencies says noted employment law authority of Wilmington, Delaware Attorney Margaret M. DiBianca. One such contingency that often goes under the radar is the possibility of fraudulent workers' compensation claims. After counsel has given its stamp of approval to the list of employees selected for layoff, employers are best advised to turn next to the ways they can protect themselves from a potential increase in workers' comp claims. Here are three ways to protect your business from abusive workers' comp claims relating to layoffs: 1-Use Exit Interviews to Document the Absence of Injury Conduct an exit interview with each employee who is subject to layoff. Ask the employee to complete an exit questionnaire, which should include a question about whether the employee has suffered a workplace injury and, if so, whether the injury has been reported. Also include a question about the overall safety of the facility and the specific safety of their work environment. Even if that employee never brings a claim, the affirmative statement by many employees attesting to the safety of the workplace can serve as important evidence in any fraudulent workplace claim. Always have the employee sign and date the questionnaire form. 2-Be Kind Kindness goes a long way in every facet of the employment relationship. And it becomes positively crucial when there are cutbacks and layoffs. By shooting straight from the hip when it comes to the reasons for the reduction in staff, employers are much more likely to gain the support of workers rather than get gunned down by a negative and hostile workforce. Employee-assistance and outplacement programs are two common ways that employers can offer their help to employees after a layoff. The bottom line is that employees are less likely to file a fraudulent claim if they believe their employer sincerely cares about their welfare. 3-Consider Offering a Severance Package Many employers are surprised to learn that a "severance package" need not provide for payment of several months of salary and health care. A severance agreement is far more simple. The company agrees to pay the employee and, in return, the employee waives all claims he may have against the employer. This is your best protection against fraudulent workers' comp claims-but only if it is a valid and enforceable contract. To make sure you get what you expect, first consult with legal counsel and have them draft a solid severance agreement for your future use. Many thanks to Guest Contributor, employment law authority, Attorney Margaret DiBianca of Young, Conaway, Stargatt & Taylor, LLP. The firm takes a proactive approach to counseling its clients by trying to prevent problems before they occur during workplace issues such as hiring, firing, promotions and layoffs. Attorney DiBianca can be reached at mdibianca@ycst.com or by phone 302-571-5008. Read more tips at: http://delawareemploymentlawblog.com Try the WC Cost Calculator to show the REAL COST of work comp. Look at WC 101 for the basics about workers comp. Workers' Comp Kit® is a web-based online Assessment, Benchmarking and Cost Containment system for employers. It provides all the materials needed to reduce your costs significantly in 85% less time than if you designed a program from scratch. Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs. ©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact IInfo@WorkersCompKit.com
Attorney Brad Bleakney a leading authority on workers compensation in Illinois, offers several suggestions on how to control unmeritorious workers comp claims that may be precipated during a layoff.
1. Announce the layoff at the latest time possible as allowed under the law to prevent being set up with “exit accidents.”
2. Have laid off employees sign a short statement or release at the time of layoff (usually when they pickup their accrued vacation pay checks) indicating they waive pending or potential claims against the employer.
3. Have employees who are laid off check off and/or initial a statement (or check box) that they have had no unreported work accidents in the past 6-12 months. This provides a strong defense that they did not have any unreported accidents at the time of layoff.
In Illinois, that release can not be effective against a WC claim but it does serve to substantiate the defense. No document portending to settle out a WC case is binding in IL except upon approval with the Illinois Commission per Section 23 of the Act and per a recent case Maxit.
In Maxit, the company was forced to pay twice because they never obtained an approved $1.00 WC settlement contract waiving the WC rights at the time of a general release in the employer’s uninsured motorist claim that settled for $800,000. As a result, the employer later paid an extra $200,000 in the open WC claim because the original release was never approved by the Commission although the employer argued that they thought they were covered by the general release. I suggest making sure the releases were mutually contingent upon approval of the settlement by the Commission.
Brad Bleakney of Bleakney & Troiani in Chicago, IL practices in the areas of work-related injury claims third party litigation for accidental work injuries. He has a background in industry where he helped a Fortune 500 company reduce their workers’ compensation losses significantly. Brad can be reached at: Brad Bleakney, Bleakney & Troiani, 1 North Franklin (2625) Chicago, IL 60606 312-541-0045 or fax 312-541-0041 info@WorkComp-Chicago.com
Try the WC Cost Calculator to show the REAL COST of work comp.
Look at WC 101 for the basics about workers comp.
Workers’ Comp Kit® is a web-based online Assessment, Benchmarking and Cost Containment system for employers. It provides all the materials needed to reduce your costs significantly in 85% less time than if you designed a program from scratch.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
Layoffs are happening all around us, and can greatly impact your workers’ compensation experience. My topic focuses on discouraging a workers comp catastrophe during a reduction in force.
Here are some things you can do to prepare for layoffs. In addition to my suggestions, over the next few days, Attorneys Ted Ronca (NY), Brad Bleakney (IL) and several other attorneys will offer suggestions on ways to reduce exposure to workers’ comp claims during layoffs.
1. Notify your broker and claims administrator. Make a plan, which will be different depending on the laws in your state. Include the human resources department and legal counsel in this planning session.
2. Try to place any workers currently out of work on TTD (temporary total disability benefits) back to work before their positions are eliminated. Once these workers do not have any work to go back to, it can be a long time before you can show they are capable of working, so try to get as many back to work prior to the layoff as possible.
3. Limit severance payments to those employees who actively at work. This may discourage filing workers’ comp claims without merit. This may make the lure of getting a quick workers’ comp settlement less attractive because that is a more tenuous source of income than unemployment benefits.
4. Eliminate disincentives to collect unemployment and workers’ compensation benefits. In previous blogs, we’ve talked about eliminating collateral source benefits, and this is one which is relevant now. In some states, an employee is eligible for unemployment benefits if they are “able to” work, thus, if they are disabled, their unemployment benefits could be jeopardized. Employers should challenge unemployment claims of employees on workers’ compensation if possible in your state.
5. Use outplacement professionals and offer services that can make finding part-time or alternate employment possible. This makes the transition smoother when employees know they will have a source of income.
No one likes to be treated disrespectfully, so consider the human side of this story and take extra effort and planning to make it as painless as possible for the people who have been working for your company for many years.
Try the WC Cost Calculator to show the REAL COST of work comp.
Look at WC 101 for the basics about workers comp.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
Workers’ compensation authority NY, Attorney Theodore Ronca, offers suggestions about layoff planning, and emphasizes whether for a business or an individual, planning is somber but necessary. Following, and often prior to, economic layoffs the dismissed workers will rethink sources of income to tide them over. The first and second sources are unemployment benefits and part time jobs. Many, however, will consider reopening a workers compensation claim or filing a new claim. In any large enough group of workers, this will become a certainty. Therefore, planning for such claims is essential, not optional.
The first rule is to NOT make the first mistake.
Do not assume all new claims after a layoff is announced or known to be coming are unworthy or fraudulent. In fact, whatever their merits, they are a predictable reaction to anxiety. Therefore, focus planning on learning how to identify meritorious claims and seeing that they are paid as quickly as possible. Following that, turn your attention to claims that are not properly part of workers’ compensation. Realize that some valid claims will be uncovered as a result many people — many of whom are part of an aging workforce — now being out of work.
Claims that show signs of being driven by economic need rather than disability may have the following characteristics:
1. The claim is filed following exhaustion of non-injury benefits, such as a UI claim.
2. The reporting of such claim is untimely, anomalous, unusual, or irregular. The claim was never reported or witnessed on the day in which it was alleged to have occurred.
3. Medical evidence begins not when treatment would have been expected but when knowledge of impending economic hardship is received.
4. Inquiries for other sources of income are made prior to filing of the claim but without reference to any injury.
Tip: The above will serve to distinguish claims that should receive special scrutiny but only if an intelligent search is made for relevant contemporaneous documents. Documents, not testimony, are the best evidence.
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.
Try the WC Cost Calculator to show the REAL COST of work comp.
Look at WC 101 for the basics about workers comp.
Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@WorkersCompKit.com
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