Every company wants their workers’ compensation claims settled fairly and for the proper amount, but what is the proper settlement amount and how is it calculated?
While it is difficult to quantify the financial impact of any one step in the handling of a work comp claim, it is a well proven fact that a properly handled claim will have a lower settlement value then a poorly handled claim. The work comp adjuster can and should influence the settlement value of the claim by utilizing the established Best Practices for Workers’ Compensation including (but not limited to):
1. Immediate contact with the employee, employer and physician at the start of the claim.
2. Complete investigation of the accident details.
3. Pursuing a modified duty/light duty return to work program.
4. On-going contact with the employee, employer and medical providers.
5. The integration of medical management and/or rehabilitation.
When the workers’ compensation adjuster completes the investigation, and the investigation reveals the claim is compensable, the adjuster (and sometimes with the adjusters’ supervisor’s assistance) evaluates the value or the financial exposure, taking into consideration the medical issues, the disability issues and the legal issues associated with the claim.
The settlement evaluation reflects what the claim should settle for. The settlement evaluation is a settlement range, not an extreme result. The settlement evaluation should not be based on the possibility of a highly favorable board ruling and it should not be based on the possibility of an unfavorable/adverse trial result. In short, the settlement evaluation should be close to the mid-point or the middle settlement range, not reflective of either end of the settlement range.
Factors to be included in the settlement evaluation for a work comp claim include:
1-Jurisdiction
2-Permanency Ratings
3-Employee’s Wage Rate (with max cap or minimum amount, if applicable)
4-Medical Information
5-Value of Future Medical
6-Value of Future Wage Loss
7-Rehabilitation, if necessary
8-Death/Funeral Benefits
9-Disputed Issues
10-Offsets/Medicare/Other Deductions
11-Pre-existing Conditions where permitted
12-Strengths and Weaknesses of Both Sides in Negotiations
The work comp adjuster reviews all information available to establish the causal relationship of the injury to the medical treatment. The adjuster separates the diagnostic treatment from the actual treatment by the physician. The lost wage information is reviewed and the days missed from work verified by the medical reports. The value of permanency, disfigurement (where permitted) and future medical is established. If the employee is attorney represented and the settlement value is being contested, the cost of legal defense should be considered.
The settlement evaluation factor most difficult to quantify is the jurisdiction. As the jurisdiction can play a critical role in the determination of the settlement value, it is essential for the work comp adjusters to have complete knowledge of their state laws. Any time the adjuster has any doubt about the way their state will handle a work comp issue, they should consult with their supervisor or a trusted defense counsel in regards to the jurisdictional issue. The adjuster should know if the jurisdiction they are in is plaintiff-oriented or if it is more conservative. The adjuster should keep in mind the effect the work comp commission will have on the final result. This will allow the adjuster to properly evaluate how the jurisdiction will impact the settlement evaluation. Resource: http://reduceyourworkerscomp.com/workers-compensation-state-laws-and-regulations.php
The reserve worksheet, whether paper or electronic, is essential in the evaluation process and the place to bring it all together. The reserve worksheet should be completed with as much as information as possible to establish the settlement value. (workersxzcompxzkit)
Upon receipt of the final medical report establishing the employee’s maximum medical improvement and disability rating, if any, the adjuster should verify the reserve worksheet is correct. If the reserve worksheet is not correct, it should be updated. The employee or the employee’s attorney, if represented, should then be contacted to discuss settlement based on the settlement evaluation established through your reserve worksheet.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
Podcast/Webcast: How To Prevent Fraudulent Workers’ Compensation Claims
http://www.workerscompkit.com/gallagher/podcast/Fraudulent_Workers_Compensation_Claims/index.php
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.
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Trinity International Corp., (name changed) a holding corporation for 60+ companies, reduced incurred workers’ compensation losses by 60%; medical costs by approximately 50% and 99% of injured employees returned to work within 10 days. Trinity teaches its divisions to manage claims internally, returning employees to work as soon as medically able.
When Trinity reduced incurred losses by 79% at one location and by 84% at another, people wanted to know what Trinity was doing right. Trinity developed modified jobs for injured employees who cannot return to work at 100% capacity thus avoiding the curse of “psychologically disemployment.”
What is Psychological Disemployment?
The key to modified duty is to limit the duration of time away from the job to the period of time medically necessary. Research shows once a worker goes off on work comp and loses the all-important connection to the workplace, slowly the incentive to return to active, productive employment fads. The injured worker becomes used to staying at home, likes it and may eventually attempt to extend the duration of the absence.
When an employer provides modified duty (adding a cushion, providing a chair) to bring a worker back to work quickly, the worker stays connected to the workplace and co-workers, heals quicker and is in a better “psychological” frame of mind about work. Trinity found most job modifications cost less than $300. It’s a matter of being creative.
Using Documentation to Control Claims
Proper documentation is very important to maintain an organized program of injury management because the program requires constant communication with the employees, the doctors and the insurance company. To facilitate implementation and to avoid duplication of effort, Trinity provides each of its companies with many sample form letters suitable for various situations.
For small companies, this means putting together a set of comprehensive form letters of the required information, especially as it pertains to your state law. In addition to these form letters, Trinity also maintains an Employee Contact Log, so each contact with an employee or a doctor is recorded. Such a document makes it possible to substantiate company action in court or at a hearing.
Coordination of Medical Care
Proper and timely medical care is crucial to ensure the length of disability matches the length of absence. In many cases, Trinity found the original injury claim was legitimate, but the employee’s absence was extended unnecessarily.
To coordinate care, the company encourages constant correspondence and telephone communication with the doctors, physical therapists and chiropractors to ensure treatment is appropriate and provided according to a “treatment plan.” (workersxzcompxzkit)
Medical Provider Cost Containment
Medical cost containment for all workers’ compensation medical costs is aggressively managed to ensure the cost of care is appropriate and the duration and number of treatments are necessary. Trinity implemented these steps.
1. A medical consultant reviews each file.
2. Mandates compliance to a fee schedule.
3. Audits all medical and hospital bills.
4. Uses preselected “company” doctors.
5. Negotiates provider fees.
6. Conducts a precertification utilization review of all hospital admissions.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
Podcast/Webcast: How To Prevent Fraudulent Workers’ Compensation Claims
http://www.workerscompkit.com/gallagher/podcast/Fraudulent_Workers_Compensation_Claims/index.php
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.
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Trinity International Corp. (name changed), a holding corporation for 60 other and various companies, recently reduced incurred workers’ compensation losses by 60%; medical costs by approximately 50% and 99% of injured employees returned to work within 10 days. Trinity teaches its divisions to manage claims internally, returning employees to work as soon as medically able.
Trinity takes charge of each injury so the injured employee goes through an orderly procedure from the time of the injury until the time the employee returns to work. Trinity’s old policy of “no light-duty” jobs was replaced with an active effort to provide modified-duty jobs for injured workers on a temporary basis until they can return to their original jobs at 100% capacity.
Here’s What Trinity Did
1. Introduced its Injury Management Program with a series of day-long seminars.
2. Introduced an Injury Management Program Manual — the “tool kit” for the program — consisting of explanatory material, form letters, sample procedures and policies.
3. Hired qualified employees.
4. Used active claims’ management.
5. Used a quick, post-injury response system.
Screening Qualified Employees
The purpose of pre-employment screening is to sense if applicants are physically and mentally able to perform the functions of the job they apply for, and to ensure each employee is suitable for employment at the company. Trinity ensures a good job match by using these techniques.
1. Pre-employment medical evaluations by off- site or local doctors.
2. Use of detailed employment application forms.
3. Background checks.
4. Credential verifications.
5. Motor vehicle record checks.
6. Drug screening (at the discretion of the company and following state law).
7. Check for prior workers’ compensation claims.
Active Management
Managing all claims actively is a key management responsibility in a company. Managing these claims means making a commitment to take control of the situation and deciding who is in charge of work-related injuries and absences — you or the employee.
In the past, Trinity found in many of its divisions, the employee was actually controlling the situation by, for example, stopping by the plant with a note from the treating doctor stating the employee would be ”out of work” for several months. In most instances, no procedures were in place to verify if an injury actually existed, was the injury work related or the diagnosis valid.
Internal management of claims includes designing and implementing in-house policies, procedures and facility-based documents to be followed and used by each employee every time an injury occurs. The program must be communicated to employees, supervisors, the insurance company or the third-party administrator.
Post-Injury Response
A quick, post injury response system must in place. This is one of the most important aspects of Trinity’s program. Initially, it is the most time consuming because it is a requirement each and every injury be followed up with immediate action.
The program requires the following steps.
1. Immediate reporting of the accident.
2. Transporting the employee to the company doctor.
3. Discussing the employee’s medical condition with the doctor.
4. Providing specific forms to the doctor.
5. Requiring specific information and medical restrictions from the doctor.
6. Returning the employee to the facility to perform a modified-duty job matching the medical restrictions given by the doctor.
Once an injury is reported, Trinity takes all appropriate steps to verify the injury was work related, including investigating the circumstances of the accident and the extent of the injury. Trinity employees know all work-related injuries are taken quite seriously and a full investigation will ensue. In the rare instance when fraud or overpayment is uncovered the company seeks reimbursement and, if possible, prosecutes the overpaid recipient if it appears there was an intent to defraud. (workersxzcompxzkit)
For employees who are currently out of work and being treated by their doctors, Trinity asks them to request medical information directly from their doctors, then a corporate medical consultant contacts the employee’s doctor to discuss the condition and obtain enough information to offer the employee a modified-duty job.
More about Trinity in future editions. Sign up for to recevie our blogs via email.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers’ comp issues.
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Everyone understands the purpose of proper reserves on workers' compensation* insurance claims, is to have money available to pay the claim when needed, but as most claim file audits reflect, there is almost always room for improvement on claim file reserving. As a consultant to employers with high workers comp costs, this is a question I have heard numerous times…. is the insurance company over reserving?
It is often debated whether reserving is an art or a science. The workers' compensation adjuster has to be both an artist and a scientist, both flexible and accurate. To be accurate the adjuster needs to know what the exposure is for wages, permanent disability and medical. To be flexible, the adjuster needs to know when to change the reserves, either up or down.
When the work comp claim is assigned, the adjuster should set the initial reserves within 24 hours of the claim creation. This should included reserves for indemnity, medical and expense. The experienced adjuster should evaluate the nature and extent of injury to set the initial reserves and avoid the use of "formula" reserves where every medical-only claim is assigned the same dollar reserve and every lost-time claim is assigned the same dollar reserve.
The most accurate way for the work comp adjuster to set the initial reserves, as well as subsequent reserves, is through the use of a reserve worksheet, whether electronic or paper. The reserve worksheet should provide breakdowns of the claim cost into the three primary areas:
1. Indemnity Temporary Partial Disability (TPD)
Temporary Total Disability (TTD)
Permanent Partial Disability (PPD)
Permanent Total Disability (PTD)
Rehabilitation/Vocational Expense
Death Benefits
Dependent's Benefits
2. Medical Physicians Hospitals Diagnostic Testing
Specialist
Medication
Transportation Expense
Attendant Care
3. Expenses Medical Reports
Experts Peer Reviews and/or IME's Attorneys Court Cost
Surveillance
Other expenses
During the course of the investigation, the adjuster learns more about the nature and extent of the employee's injury. Once the initial investigation is completed, the adjuster should evaluate the reserves to see if they are appropriate for the injury, and if necessary adjust the reserve set at the time of case creation.
Unfortunately, some adjusters don't revisit the reserves when they complete their investigation. They only notice the reserves when the reserves become inadequate to pay the TTD or the medical bills received; then they raise the reserves a small amount to cover the current expense. This approach to reserving has become known as "stair stepping" because if you place the reserves on a graph, it looks like a set of steps. "Stair stepping" the reserves is not a good approach to reserving.
The best way for the work comp adjuster to set the reserves is for the adjuster to review the most current medical reports, both the treating physician's report and any IME report, and evaluate the value of the claim based on the nature and extent of the injury. With the medical information and the use of the reserve worksheet, the adjuster can calculate the probable ultimate value of the claim. The ultimate value of the claim is the amount for the proper reserve of the claim.
On the more complex lost time claims, there will be a need to adjust the reserves as the information available to the adjuster changes. When the adjuster receives the medical report placing the employee at maximum medical improvement, the adjuster then reevaluates the reserves to see if they are still correct for the file.
Most reserve changes are increases, but there are situations where the reserves should be decreased (not just when the claim is closed). For instance, when the adjuster did the initial reserve at case creation, the employee's fractured tibia was a compound fracture and the adjuster, based on prior experience, set the permanent partial disability (PPD) rating at 25%. The final medical report is received and the treating physician gave the employee a 10% rating. As the adjuster realizes an IME or a peer review could result in a higher rating for the employee, the adjuster accepts the treating physician's rating. Barring jurisdictional practice that would raise the physician's rating, the adjuster would need to lower the PPD reserve.
Note: The PPD reserve should be lowered the same day the adjuster reviews the treating physician's report, not a month or months later when the file is finalized and closed.
Another example of when to lower a reserve is when the TTD reserve was set initially for the employee to be off work for 12 weeks, but the employee convinces the treating physician and the employer to allow him to return to work full time on light duty. Again, the adjuster lowers the reserve on the TTD to reflect the actual status of the claim. (workersxzcompxzkit)
While the debate whether reserving is art or science will continue, the good work comp adjuster is flexible and accurate by adjusting the reserves up or down in a timely way to reflect the known information about the nature and extent of the employee's injury.
*Note: Workers' compensation is one type of property/casualty insurance.
Author Rebecca Shafer, J.D. President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Becki@ReduceYourWorkersComp.com or 860-553-6604.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
While gathering material to write this article I found a wealth of information about workplace injuries documented over the last two or three hundred years. I concluded that, if it were possible to find a history of the world and trace the concept of “workplace” as far back in history as possible, we might find workplace injuries were being sustained in our cave man era. The day the organizer of the hunt had one of his hunter’s shoot himself in the foot with an arrow I’m sure we could label that as a workplace injury.
But since recorded history doesn’t actually go back that far I would like to start the discussion of the ethics of workplace injuries about the turn of the 20th century. If historical documents can be believed it would appear that in America, we went from an agricultural based society to an industrial one at the end of the 1800′s and the beginning of the 1900′s.
This basic economic change magnified the workplace injury concept one thousand fold. Prior to this time workplace injuries occurred one at a time in diverse locations which made counting them statistically difficult, if not impossible. With the advent of a factory setting where hundreds of people were gathered to work together under one roof, workplace injuries became very apparent and the ethical considerations on both the employee and the employer became a critical factor.
In the dictionary I used to look up the word “ethics,” Webster has four (4) basic definitions. First, ethics, a principal of right or good behavior; Second, ethics, a system of moral principals or values; Third, ethics, the study of the general nature of morals and the specific moral choices an individual makes in relating to others; forth, ethics, the rules or standards of conduct governing the members of a profession. These four (4) definitions used singly and incorporated together give us a framework by which to judge the ethical behavior of a number of entities involved in the workplace injury scenario.
Who are these entities that must react ethically to one another? I’m sure employer and employee are two of the first to come to mind. What about the state legislatures? How about the third party administrators and adjusters? How about all of the vendors including doctors, lawyers, investigators, case managers, and vocational rehabilitation professionals?
I would proffer that every entity interacting with a workplace injury and/or the injured worker has an ethical responsibility to the process called “returning the injured worker to gainful employment.” The statement that “workers’ compensation is all about return to work” would seem to be particularly apropos when discussing workplace injury ethics.
We all are aware of the various ways cases are closed. However, the true measure of all closed files is whether or not an injured worker was returned to gainful employment. Lump sum settlements not withstanding, it would appear the entire focus of the workplace injury process is to return the employee to gainful employment with the current employer or an alternative employer, near the injured worker’s place of residence.
The workers’ compensation system in America was designed in the early 1900′s with the express purpose of codifying a standard of ethical behavior between employers and employees, specifically to address the issues of workplace injuries. The workers’ compensation system was designed to redress the quantifiable, ethical abuses perpetrated on the employee by the employer, using the judicial system. The workers’ compensation system was designed to eliminate the need for lawsuits and lawyers.
One only has to open any state statistical date base to receive first hand proof that this element of the workers’ compensation decision certainly is a failure. In many jurisdictions as high as 90% of disputed workers’ compensation claims are being handled by the legal community.
Because of the high incidence of workers ‘ compensation litigation, it would appear that in some measure either the employee or the employer feel the code of ethics surrounding the workers’ compensation laws in their jurisdictions are being compromised or violated. Is this then not the responsibility of the state legislature to define more clearly the code of ethics of both employer and employee when they design the laws that govern the workers’ compensation system?
There is a sad fact that politics runs ramped through the workers’ compensation process and the politics starts in the legislature. A review of legislative decisions, in most jurisdictions, over a long period of time will readily show that, on a cyclical basis, parochial interests are being fostered on either the employer or employee side of the workers’ compensation equation. It is extremely difficult to codify a system of ethical behavior between employer and employee when this behavior is being redefined, on a routine basis, by every State Legislature. It would be nice to blame the legislatures of the various states for all of the workers’ compensation problems however, that is certainly not the intent of this paper. The intent of this paper is to show that the ethical concerns of all participants in the workers’ compensation drama are parochial in the extreme. Use of parochial, in this context, means, “what’s in it for me.”
Having served the workers’ compensation community for the last 35 years, as an expert of both the field of investigations and re-employment, I can testify personally to the prevalence of the “what’s in it for me” attitude displayed by the various entities serving the injured worker. The following statistics gathered form the US Department of Labor, NCCI, Peridime Corporation and Compensa as well as others may shed a little light on the cost of the “what’s in it for me” ethical behavior pattern.
At the time of this writing, there are approximately 5.9 million accidents in the workplace each year for a total cost of $59.6 billion, averaging $10,105 per claim. Three point nine (3.9) million claims are med only, 1.62 million claims are loss time with less than $3,000 paid and 770,000 claims are loss time with greater than $3,000 paid of which 26,000 claims are catastrophic or chronic in nature.
What is particularly interesting in these statistics is that of the 770,000 new lost time claims per year the average cost is over $60,000. These cases represent 13% of all the claims in America today and cost us 80% of the dollars paid. That is, 80% of $59.6 billion are spent on 13% of our workplace injuries. The ethical question is does the “what’s in it for me” attitude make a critical difference in the cost and, if so, how can this be changed and not just changed but measurable change.
As stated at the outset of this discourse, if employers and employees were perceived by on another to be acting in an ethical fashion then all other concerns would be moot. The injured worker would get well as quickly as possible, the employer would accommodate the injured worker in any way possible to facilitate a return to gainful employment, injured worker and defense attorney’s would have to find another line of work because their expertise in this matter would no longer be necessary.
Physicians would focus on the earliest return to work date because that’s what everyone wanted and they could no longer prolong the injury status. Nurse case managers would work around the clock to make sure that the injured worker got the type of treatment needed, as quickly and as economically as possible. The vocational rehabilitation community would focus on return to work at the exclusion of all other aspects of their perceived job duties and the adjuster handling the file could count a case as successful only if the case resolved in an expeditious fashion. And then we would all live “happily ever after.” (workersxzcompxzkit)
The fact that workers’ compensation in America today has become an adversarial process precludes the “live happily ever after” scenario. Employees do malinger, employers do use injuries for their own purposes, physicians don’t return injured workers back to the workplace as quickly as possible and in some cases perform unnecessary procedures. Nurse case managers are not incented, in most instances, to close a case as quickly as possible and our rehabilitation professionals certainly do not focus on reemployment issues to the exclusion of every other way they are able to make money in this process.
All the aforementioned individuals and many more operate in a system that has become know as disability management and, if our statistics are correct, disability management even at it’s “what’s in it for me” worst works effectively 87% of the time. The true abuse of the disability management concept happens monetarily within the 700,000 loss time cases comprising 13% of all case and spend 80% of the workers’ compensation dollar.
Why doesn’t it work, or if it does work, why does it cost so much? What is going on inside the disability management system? Where is its focus and what are its procedures for implementation? These are not only logical questions but they are ethical questions because they focus on how professionals do their job. If it is indeed the professionals function to return the injured worker to gainful employment or to resolve an injury status as quickly as possible, and then they set up a method of payment that, in its very nature, begs for abuse then they are guilty of unethical behavior.
The new millennium must bring with it new methods of operation and new belief systems that reinforce ethical behavior between one another. I submit to you that the new millennium needs a new watchword. In 100 years, we should have grown through the concept of disability management to one with greater insight, one that offers the ability to measure individual entities’ compliance with current ethical standards. This concept is disability intervention. It is no longer possible for us just to manage a file; we now must intervene and bring it to a conclusion.
Disability intervention companies, in the new millennium, will subscribe to a new philosophy and a new code of ethics as related to workplace injuries. Disability intervention entities will place the emphasis on resolution of workplace injuries by subscribing to two basic philosophies. . . flat fee pricing and risk sharing. As we begin to review the practices of our disability management professionals over the next few months and years, society as a whole and the insurance workers’ compensation industry specifically must begin to regard entities that are willing to flat fee price guarantee and risk share with the injured worker, the worker’s representatives, the employer and their representatives as being the only viable source of workplace injury care.
In conclusion, workers’ compensation injury management ethics revolve around three concepts — time, money, and risk. Utilizing new millennium companies that can be measured on how they handle these three criteria will substantially lower workers’ compensation costs. They will also have an enormous impact on the lives of the injured worker’s and their families as they are encouraged and aided in the process of returning to gainful employment. “Workers’ compensation IS all about return to work.” (workersxzcompxzkit)
Author: Gordon R. Butler, BA, MA, CWCP is a national authority/consultant on employability & wage capacity in workers’ comp, liability, PIP and LTD Claims. He can be reached at 321-377-1164 (cell) or email gbutler@gbutlerconsult.com or www.gbutlerconsult.com
“FRAUD PREVENTION” PODCAST click here: http://www.workerscompkit.com/gallagher/mp3
By: Private investigator with 25 years experience.
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.
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
NCCI Study Looks at Benefit Increase Impact
In a new study, NCCI uses a “difference in differences” methodology to analyze the impact of benefit changes Oregon and New Mexico. They found for each $1 of direct benefit increase, there is an added $0.54 average cost due to increased claim durations. The results of this analysis provide support for the utilization effects of statutory changes in indemnity benefits.
For Oregon, the 33% increase in the maximum weekly TTD benefit resulted in a 17.5% impact on utilization. This implies a duration/benefit elasticity of 0.53 (17.5%/33.%).
In New Mexico the 7.6% increase in benefit duration in response to a 17.6% increase in the maximum weekly indemnity benefit translates into a duration/benefit elasticity of 0.43 (7.6%/17.6%).
In terms of TTD indemnity costs, both the Oregon (38%) and New Mexico (33%) studies show approximately 35% of the total cost impact can be attributed to a duration utilization effect.
The focus of this research has been on two event studies where TTD benefits had increased. Some might interpret the findings to also conclude that a decrease in TTD indemnity benefits would result in a utilization impact. However, no such analysis was performed to reach such a conclusion.
Note the difference in differences approach used here captures the portion of the utilization effect attributable to changes in duration only. In other words, this method is not suitable for measuring the impact on the frequency of claims that may arise from a statutory indemnity benefit change. However, there are studies indicating that statutory indemnity benefit changes may affect frequency. (workersxzcompxzkit)
NCCI’s estimate of the utilization impact on claim durations from a change in statutory indemnity benefits reasonably agrees with estimates of prior studies, thereby providing additional support for the inclusion of such utilization impacts in legislative cost analyses. Producing more accurate and responsive cost impacts will reportedly enhance the legislative pricing and ratemaking services offered by NCCI, and it will provide valuable information to aid public policy decision making.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.
TO DOWNLOAD OR LISTEN TO FREE AUDIO PODCAST click here: http://www.workerscompkit.com/gallagher/mp3
By: Anthony Van Gorp, private investigator with 25 years experience.
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.
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Current economic conditions are having an effect on the entire insurance industry. Claims are going up. Not just workers’ comp claims, but all claims, including both valid and invalid or fraudulent claims. Suspected fraudulent claims related to workers’ compensation insurance were up 71%. Some employees are filing claims after or pending employer layoffs not filed at the time of the injury.
These are often valid claims but were not filed perhaps because the employee was worried about the effect it would have on their employer, or they would rather be working than recuperating while receiving workers’ comp benefits. On the other hand, once an employee is laid off, workers’ comp benefits are better than unemployment benefits or no income at all.
Adjusters have a higher number of cases because of downsizing by insurance companies. Not only do adjusters have heavier caseloads, but 40% of their time is spent on administrative duties unrelated to the business of helping move cases toward closure; admin duties required by workers’ comp regulations.
In a recent interview, John A. Mastropietro, Chairman State of Connecticut Workers’ Compensation Commission said, “Insurance companies have downsized in recent years enormously, thereby leaving fewer claims adjusters, who are now handling a greater volume of cases. So there’s a tendency to not move on the part of those making decisions.”
Cases are taking longer because the insurers are trying to cut costs wherever possible, and are therefore taking a harder look at their workers’ comp claims. This also slows down the process, because cases that would just move along are being fought on both sides. More claimants and a more rigorous review process instituted by insurers means more work per case with fewer adjusters to do the work.
Lastly, the economy is causing the extension of cases due to the perception that no jobs are available. Often labor market surveys are conducted showing there are no jobs available for the injured worker or claimant. So, an expensive and previously useful tool available to the case managers and claims adjusters backfires.
It is true jobs are more difficult to come by. Companies are cutting their human resource departments and their advertising budgets, including “open position” advertising.
Another reason human resource departments are not advertising is due to the overwhelming size of the applicant pool. Any job posted online from executive to laborer is bound to receive hundreds if not thousands of applicants. This creates a situation very similar to the adjuster’s — more work for less staff — or “Paralysis through Analysis.” (workersxzcompxzkit)
Too much paperwork and forms for each applicant results in a continuous delay in filling the position. Therefore, many human resource managers are looking for alternative ways to locate the proper fit for their open positions. Personal relationships and peer or other ‘networks’ are often the key to landing an appropriate position in any field.
Information provided by Katrina Paglierani of National Job Finders. www.nationaljobfinders.com/welcome
Author: Rebecca Shafer, J.D. consults for mid-market and national accounts focusing on project management, risk management assessments, data review, benchmarking, and development of Workers’ Compensation and Injury Management Programs. Projects focus on development of training and education programs, document design, evaluation and integration of insurance claims administration and TPA services. Contact her at: RShafer@ReduceYourWorkersComp.com
We are accepting articles* on WC cost containment. Contact us at: 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 workman’s comp issues.
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
What Risk Managers Need to Know About Drug and Alcohol Testing Programs
Drug and Alcohol screening is one of the most common risk management weapons in the arsenal of tools to contain workers comp costs; the goal is to hire employees who are capable of performing the job they are hired to do and to prevent losses where you can.
Among the tools used are drug, alcohol and impairment testing that affect job performance. Medical evaluation programs often include such testing. Pre-employment screening of various types helps employers avoid hiring those who cannot safely perform the functions of the job. And, it also reduces costs because in twelve states, workers' comp insurance premiums are discounted for companies with substance abuse policies and in 15 states presumption of intoxication and/or cause can avoid paying a claim.
In the workers' comp risk management arena there are 4 types of drug and alcohol screening: pre-placement screening, reasonable suspicion or for cause, post accident testing and random testing.
There are several types of polices we recommend employers institute, among these is a Company Medical Policy or Substance Abuse Policy. Like all policies, the terms of the policy will need to be customized to comply with corporate culture considerations and with various state and federal laws. Both the Company Medical Policy and the Substance Abuse Policy can refer to drug and/or alcohol screening.
The policy should include what type of drugs the applicants or employees will be tested. Some model policy requires testing for marijuana and cocaine, but with the increased use of prescription drugs companies may also want to test of amphetamines, opiates and phencyclidine (PCP).
Consider the scope of testing, who will be tested. The prime candidates are safety-sensitive workers, such as those who drive or operate machinery on public roads, employees engaged in hazardous duty or those working with radioactive or explosive materials, medicines or firearms. Essentially, any employee whose job affects health and safety.
It is probably easiest to start a program with new hires rather than existing employees especially if a company does not have an existing program. All prospective employees who have been offered employment are required to take a drug test. If the individual's test results are positive, he will not be considered for employment.
The policy should be communicated to all employees as part of an employee awareness and education program duty at the company. Some states require proof that each employee has been given a copy of the policy, so each employee should sign an acknowledgement that they have received the policy. Educating employees about the severity of the drug and alcohol problem is also important and in some states required.
The type of testing to be done will include considering state law, as well as the cost and facilities needed for testing. For example, hair sample testing is more discreet and easier to collect samples, but is not allowed in some states. It is also more expensive and provides results for a longer duration of time – time that did not affect work performance.
Consider why you want to have a drug testing program. For example, I had a company contact me to begin a drug testing program because they had a fork-lift driver who had repeat accidents, including running off a ramp and running into a warehouse support pole. I suggested that perhaps the accidents were due to eyesight problems, but because the employee wore Grateful Dead t-shirts, the assumption was he was using drugs. In fact, the issue turned out to be eye-sight related.
Disciplinary Guidelines: In most states, there are no limits on the type of discipline imposed. However there are six (6) states and Puerto Rico that limit the type of discipline that an employer may impose on employees who test positive.
Employee Assistance Programs: In some states like Maine and Vermont an employer wishing to conduct workplace drug or alcohol testing must have an EAP. Many other states offering benefits also require at least some form of local EAP resource file to be maintained. (workersxzcompxzkit)
Overall, while implementing a workplace drug and alcohol testing program may seem detailed, especially for multi-state employers, the benefits far outweigh these up-front details. It has been estimated that 38% to 50% of all work comp claims involve a drug or alcohol issue. This being the case, a well-designed drug and alcohol program can help combat this reality and return hard earned dollars to the bottom line.
For the drug test laws in your state visit http://www.reduceyourworkerscomp.com/drug-testing-state-laws.php
Authors: William Judge and Rebecca Shafer William Judge, J.D. is an attorney who, for the past 24 years, has concentrated his practice on legal issues related to substance abuse in the workplace and in our nation's schools. Mr. Judge provides risk management assessments, legal and consulting assistance and develops drug-testing policies for schools, employers and labor/management committees. He is the co-founder of the Center for Intoxication Defense Management, www.dtstatelaws.com that assists employers in defeating work comp claims when the worker was intoxicated. He can be reached at bjudge@lawsinhand.com or 708-334-8010.
Rebecca Shafer, J.D., President Amaxx Risk Solutions, Inc., Ms. Shafer is a graduate of Franklin Pierce Law Center and is licensed to practice law in CT and NH. For 25 years, she has been helping employers reduce workers' compensation costs. Recently she developed Workers Comp Kit, a web-based cost containment program and is the publisher of www.ReduceYourWorkersComp.com, a resource website for employers with workers' compensation problems. She can be reached at RShaferB@ReduceYourWorkersComp.com
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workman's comp issues.
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com 860-786-8286.or
Workers' comp law varies so much from state to state, keeping track is a daunting task. After a bit of research, it appears there are differences in workers' comp law pertaining to indemnity expense. If you are new to the risk management with cases in wage loss states, hopefully you will find this research useful. A useful resource is http://www.reduceyourworkerscomp.com/workers-compensation-state-laws-and-regulations.php States With High Wage Loss Exposure (Indemnity Payments) After a Case Reaches (Maximum Medical Improvement (MMI) Michigan Illinois Pennsylvania Louisiana Maine New Hampshire New York Additional state information will be added as research continues. States Without Wage Loss Exposure (Indemnity Payments) Once A Case Reaches MMI Alabama Arizona Arkansas Colorado Connecticut Florida MIssissippi Missouri New Jersey Tennessee Different "Benefits" In Different States Florida has "impairment benefits" and no wage loss payments. These payments are determined based on the injury, and continue for a specified amount of time. They are not affected by re-employment of the injured worker in any way. The injured worker receives the same impairment benefit, whether working or not. Some states have wage loss exposure limited by the rating of the permanent disability or the percentage of disability. Most of these charts are available on each state Workers' Comp Board website. For a list of state boards: http://www.ic.nc.gov/ncic/pages/wcadmdir.htm#al For example: In the District of Columbia, the length of time an injured worker can receive indemnity payments is based on the injury, injury x = x# of weeks. In Michigan, there is no time limit on indemnity payments for permanent partial disability. In New Hampshire the limit is 262 weeks (including the weeks the injured worker was considered temporarily disabled). In Maine and Louisiana the limit is 10 years or 520 weeks. In New York Permanent Partial Disability cases are eligible for indemnity payment to continue depending on injury from a minimum of 225 weeks to a maximum of 525 weeks. (workersxzcompxzkit) Pennsylvania has a limit of 500 weeks for partial permanent disability indemnity payments. In states where there is a continuance of indemnity, or wage loss, payments required from the employer or insurer, the injured worker has an obligation to actively pursue re-employment and/or to make an effort to obtain work. When an injured worker returns to work, depending on the pay variance, the employer may be obligated to continue to make up the difference between the original wage earned when the employee was injured and the new wage. This also varies by state. But, the insurer can apply to the Workers' Comp board to discontinue payments if they determine the injured worker (workers' comp claimant) is not actively pursuing re-employment. Source of services: One company I found that does this is www.NationalJobFinders.com, and they'll provide a free case analysis before they take the project. Click on the ad on the left side of the blog at http://blog.ReduceYourWorkersComp.com. Give it a try! END OF ARTICLE Please send contributed articles to: 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 workman's comp issues.
©2009 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
Employer Rates: Workplace Safety, RTW and Employer Cost Reduction
The 2010 assessment rates announcement to employers by the Workers’ Compensation Board (WCB) of Nova Scotia offered an opportunity to remind employers of the importance of injury prevention and return to work as a means of reducing the cost of workplace injury insurance especially in tough economic times.
“It’s more important than ever to focus on creating a safety culture in Nova Scotia,” said Nancy MacCready-Williams, CEO. “Safety is good business, and improvements in safety and return-to-work programs translate into lower costs for workplace injury insurance – which means employers can save money. But, more importantly, it means employees stay safe on the job.”
Almost half (46%) of the 18,000 employers covered by the WCB will see their rate go down or stay the same next year. Home support, metal tank manufacturing, framing, and hardware and paint stores are among the industries seeing rate decreases.
Rates will increase for 54% of employers. Second-hand merchandisers, tire shops, shipbuilding, and concrete and cement manufacturing are among the industries seeing significant increases.
A 1,000 fewer people were seriously injured (where they lost time from work) since 2005. Injured workers are returning to work in a safer and timelier manner following their injuries. Many employers are seeing their rates go down because of improvements they are making in safety and return-to-work programs in their workplaces.
“Employers are in an incredible position of influence when it comes to workplace safety. It is important for them to show leadership and to commit to making safety a priority,” said MacCready-Williams. “We know that the greatest cost of injury is not financial at all. We are already seeing signs that the economy will recover, but the 29 people who died at work in Nova Scotia last year are lost to their families forever. That is the real tragedy.”
Again this year, the WCB is issuing surcharges to employers whose claims costs are significantly and consistently higher than their industry peers. Surcharges help to more fairly allocate the costs of Nova Scotia’s workplace injury, and they provide strong encouragement for employers to make improvements in their safety and return-to-work performance. (workersxzcompxzkit)
In 2010, 77 employers – less than 0.5% of employers covered by the WCB – will be surcharged. Of those, 38 will be surcharged for the first time, 18 for the second time, and 21 for the third time. To be surcharged, an employer’s claims costs must be at least three times their industry average for at least four consecutive years.
Surcharges start at up to 20% of the industry rate, and they are cumulative – up to an additional 20% of the industry rate each year. A surcharge is applied after an employer has received two previous warning notices.
Last week, first warning notices were being sent to 175 employers, and 92 employers were to receive their second warning that a surcharge may be applied to their rate if their claims costs do not come down.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-786-8286.
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker about workers’ comp issues.
©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com
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