5 Structured Settlement Scenarios You May Not Be Utilizing

A structured settlement creates a ‘win’ for all parties to a workers’ compensation settlement; the employer, the payer, the injured worker, and the attorneys. So when is the right time to use a structured settlement?  Conventional wisdom is that structured settlements should be used as a financial tool when the settlement value reaches an arbitrary number such as $100,000.  This business-as-usual approach has made countless workers’ compensation programs engage in practices that only drive up the cost of doing business and have a negative impact on their bottom line.  Now is the time to reconsider your approach as to the right time to use and consider a structured settlement.

 

 

What is a Structured Settlement?

 

A structured settlement is a valuable piece of a comprehensive claim settlement strategy.  The claimant will receive the full value of their settlement over a period of time via a combination of a one-time lump sum payment paid at the time of settlement, plus annual annuity amounts.  Structured settlements come in various forms and can include the following payment mythologies that meet a desired end.

 

  • Deferred Lump-sum Payments, which include larger than the regular periodic payments via a schedule paid at pre-determined dates;
  • Flexible Settlement Plan, which allow flexibility for claimants requiring various special needs; and
  • Period Certain Annuity, which typically include larger periodic payments that end at a date or age certain.

 

 

5 Structured Settlement Scenarios

 

 

1. Realizing Cost Savings in Low Dollar MSAs

 

Consider the scenario with a forty-six year old employee who is currently a Medicare beneficiary.  He sustains a low back injury, disputes arise in the claim, and litigation occurs.  The matter is ultimately resolved with an MSA allocation of $38,893.

 

Using a structured settlement in this case allows the insurance carrier to realize substantial savings.

 

 

Benefit Cost Guaranteed Yield Expected Yield
 

Cash to Set Up MSA

 

$2,357

 

$2,357

 

$2,357

 

Annual Payment to Replenish MSA Account*

$22,357 $0.00 $36,529
 

TOTAL

 

$24,714

 

$2,357

 

$38,893

 

* Settlement Based on CMS Approval Male, Date of Birth 9/19/1969 Rated Age: 50. $1,141.00 per year beginning 1 year from approvals, payable for 32 years, only if living

 

**Example provided by Ringler

 

 

Proposed Total MSA Amount:

 

$38,893.00
Cost of Seed & Annuity Payments:

 

$24,714.00
Savings Realized using Structured Settlement $14,179.00

 

Using a structured settlement relies on an annuity mechanism that guarantees a rate of return on the money invested via a life insurance program.  In this case, the workers’ compensation insurance carrier does not pay the full allocation amount.  Instead, they pay only $24,714 to fund the full MSA, resulting in savings of $14,179.

 

 

2. Alleviate Injured Worker’s Future Medical Challenges

 

Convincing the injured worker to settle can be a challenge. However, keeping the case open can often be much more problematic due to future medical issues. The insurance carrier’s Utilization Review guidelines must constantly oversee the medical care.  This often results in significant frustration from system friction, red tape, and denials of treatments and medications.

 

A structured settlement for future medical costs, working in partnership with a professional administrator, can give the injured worker the freedom to manage their medical treatment how they wish. The professional administrator sets up a dedicated bank account and gives the injured worker a unique card to use at his pharmacy and doctor’s office. The injured worker never touches the bill, receives discounts from bulk pricing, has freedom of choice, as well as security and peace of mind that his future medical issues will be handled appropriately and timely.

 

 

3. Bridge The Gap In Settlement Negotiations

 

Settlement negotiations often stall due to a difference in opinion on the value of the claim.  A common example is where the claims professional evaluates the settlement at $300,000, while the employee’s attorney, demands $400,000 to settle the claim. The claims professional and the employee’s attorney may be able to bridge the gap with a structured settlement.

 

A structured settlement bridges the gap with the injured employee receiving $400,000 while the insurer pays $300,000 (slightly more or slightly less) to be invested with a life insurance company in an annuity. This is possible with a structured settlement as the amount of the settlement is paid out over time with periodic payments. The injured employee and the employee’s attorney will receive the $400,000 over the time span set in the structured settlement (either the employee’s life time or a specific number of years).

 

 

4. Peace of Mind for Permanent Partial or Permanent Total Disability

 

Anytime an injured worker experiences a permanent partial or permanent total disability it creates an immeasurable impact on their life and that of their family.  In addition to ongoing medical expenses, the loss of the income raises questions about immediate needs, such as modified vehicle replacement and home modifications. There can also be additional concerns about long-term expenses such as college funding for children.  Structured settlements can be used to pay for these and other bills, providing a comfortable lifestyle for the family following a workplace injury.

 

 

5. Eliminate Contingency-Fee Attorney Income Peaks & Valleys

 

Many attorney’s work on a contingency fee basis resulting in significant peaks and valleys in income based on the outcome of their cases.  An attorney who leverages a structured settlement for their fees can set up a deferred compensation plan guaranteed to cover their annual operating budget, and freeing the attorney to focus on current and new cases.

 

 

Conclusions

 

It is rare that an injured worker — or anyone — has the money management skills and discipline to make a large sum of money last a lifetime, especially when there are medical issues to consider. In fact, research shows most people have depleted the entire lump sum after just 5 years. A structured settlement can give a guaranteed, tax free income stream for life.

 

Now is the time to reconsider your approach in how you are using structured settlements. A structured settlement provides the necessary “win” for all parties and can provide significant savings to every workers’ compensation program.

 

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

3 Prongs To Crystal Clear Workers’ Comp Investigation

Incident Injury Report Form Document Concept

Many employers miss a golden opportunity to control the cost of their workers’ compensation claims by failing to take appropriate action to investigate a workers’ compensation claim when it is reported.

 

 

Crystal Clear Employee Report of Incident

 

The employee should be asked to provide a written description of what caused the accident and to offer his/her opinion on how the accident could be prevented in the future.  The employee’s recall immediately after the accident is more complete and will be the more accurate then months or years later.

By having the employee document the accident details and the nature and scope of the injury, the employee is prevented from embellishing the details of the event later if he/she decides to capitalize on the injury by pressing for a higher than justified settlement of the claim.  Also, by having the employee specify exactly what body parts were injured, it limits the employee’s ability to bring in additional body parts at a later time.  For example – the employee fell and hurt his elbow. By having the written description of the injury from the employee, the employee cannot claim months later he/she also hurt her knee in the accident.

If the employee is manufacturing a claim, or even has a legitimate injury, the employee will be reluctant to try to expand the claim when he/she knows she has committed the details of the accident and the extent of the injury to a document that the employer has.

 

 

Witness Report of Incident

 

The written accident report of the employee is made more beneficial when the employer also obtains a written statement from each witness to the event.  The independent witnesses are an excellent source of information about the accident, and the extent of the injury to the injured employee. Beware of the accident that has no witnesses, or only a witness who is a close friend of the employee.

 

The information collected from the employee and the witnesses should be reviewed by either the employee’s supervisor or someone knowledgeable about the work process to verify the information provided is accurate.  The employee’s accident statement and the witness statements should be provided to the workers’ compensation adjuster, along with the First Report of Injury form.

 

If the employer has knowledge of a previous workers’ compensation claim, that information should also be provided to the adjuster.  Any information about accidents or injuries the employee has had in the past should be shared as well.  If the employee is known to participate in strenuous physical activities, sports or hobbies, that should be disclosed to the adjuster as well.

 

 

Adjuster Recorded Statement

 

If the adjuster has any reason to question the claim, the adjuster will often take a recorded statement from the employee.  The adjuster will be particularly interested in deviation of the accident details, or the nature and scope of the injury, from what the employee provided to the employer.  The adjuster in addition to inquiring about the accident details will ask the employee about any prior injury claims, any other accidents (for example – personal automobile accidents) and any prior injuries to the same body part (for example – previous back injury).

 

 

Properly Investigate All Accidents

 

The majority of workers’ compensation claims are valid and the employee deserves the medical care and indemnity benefits specified in the workers’ compensation statutes.  The investigation of the claim identifies those claims that are questionable or fraudulent and should be resisted.  The investigation also limits the ability of the employee of questionable character in exploiting the legitimate workers’ compensation claim.  We strongly recommend you establish the protocol of investigating all accidents.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

 

 

7 Ways to Proactively Reduce Comorbidity Costs

As if managing workers’ compensation claims isn’t challenging enough, we’re increasingly seeing comorbid conditions among injured workers. We know that these health issues can increase the likelihood of workplace injuries and illnesses, and then add to the complexity and costs of managing a claim. The aging workforce means we’ll probably see more multiple comorbidities per claim in the years ahead.

 

Some jurisdiction, such as California, require employers to pay for treatment of a comorbidity if it hampers recovery. Even in states that don’t have that requirement, it still benefits payers to identify and address comorbid conditions that are present or, ideally, try to prevent them in the first place.

 

 

The Stats

 

The rate of claims with comorbid conditions per claim nearly tripled between 2000 and 2009.  These claims are more likely to include lost time and have about two times higher medical costs than comparable claims.

 

Obesity, addiction, mental health and hypertension are those with the greatest impacts on negative outcomes. Obese workers, for example, file two times as many claims as non-obese workers, have medical costs that are seven times higher, and incur an average 13 times more days away from work.

 

Diabetes has one of the lowest impacts on claims among comorbidities; and yet it is associated with increased recovery times, delayed healing, an increase in the likelihood of infections and other complications, and results in increased reserves.

 

When more than one comorbidity is present the increases are staggering.

 

  • 76 percent increase in claims duration.
  • 341 percent increase in total incurred costs.
  • 285 percent increase in temporary total disability days.
  • 147 percent increase in litigation rates
  • 123 percent increase in surgery rates.

 

Pre-Loss Strategies

 

Preventing chronic health conditions is the best way to avoid the challenges of comorbidities in workers’ compensation claims. There are a variety of actions employers are finding to improve the health habits of their employees, many of which are fairly inexpensive.

 

  1. Know your risks. All workplaces are not the same and the health risks facing your employees may be different from those of other organizations. You can assess and make decisions based on that. Health risk assessments are usually available through your insurer or EAP and can determine aggregate information on things such as physical activity, nutrition, weight and family history, without violating individual privacy.

 

  1. Wellness. These encompass a wide variety of activities. They may be formalized programs or just a few simple steps. For example, changing snacks in vending machines from chips and candy to fresh fruit, and sodas to water is one option. Bringing in nutrition and/or diet experts to talk with employees and, if financially feasible, create programs for workers is another idea.

 

Employees with sedentary jobs can be encouraged to move more, whether through gym memberships, group walks during lunch, or access to resources about community activities such as fun runs/walks. Weight management initiatives and smoking cessation programs can be done either onsite or within the local community and can help reduce the risk of a number of comorbidities. Finding internal wellness champions, or other workers who are devoted to the wellness plans can help generate interest among employees.

 

  1. Sit/stand options. The hazards of prolonged sitting are being increasingly recognized and have led some employers to invest in sit/stand workspaces. Employees can also be encouraged to stand more, by giving them the option to stand during meetings.

 

  1. Information. Tidbits to promote healthier habits can be provided via email, newsletters or educational workshops. Working with insurers and third-party administrators, or partnering with local medical facilities can be good sources of such information.

It’s also important to make sure your employees are fully aware of the health resources and programs that are available, such as employee assistance programs or specifics from your health benefits provider. Also, make sure you are taking full advantage of all resources available to you. You could also offer an anonymous ‘ask the expert’ initiative through you company’s intranet or internal newsletters. Someone from your insurer or a local medical professional could respond and the comments made available to your employees through internal communications.

 

Post Loss Strategies

 

The sooner you are aware of comorbidities in a claim the faster you can intervene with appropriate treatment and ensure best outcomes. Such knowledge also helps set realistic expectations for recovery and return to work. Be aware too that some comorbidities — such as depression — might not be present until the claim is in progress. There are several ways to identify comorbidities:

 

  1. Patient intake. Treating physicians and nurse case managers should be instructed to collect and record the injured worker’s health beyond just the occupational injury or illness, to determine if comorbidities are present.

 

  1. Monitor the data. Looking at data continually will signal if a new comorbid condition has developed. That allows earlier treatment of these conditions and may also signal a poor response to the treatment. In some cases, that could actually prevent litigation.

 

  1. Look at the meds. Pharmacy benefit managers should review medications to see if the injured worker is filling those prescribed and also determine if other drugs are being purchased that may interfere with them. Physicians should be instructed to access the prescription drug monitoring program, if one is available. Such information could signal the injured worker is taking medications for an undisclosed comorbidity.

 

 

Conclusion

 

When comorbidities are identified in a claim, all team members should become involved in a coordinated treatment plan. The treating physician, injured worker, claims adjuster, nurse case managers and others should work together to make sure the comorbid conditions are properly treated in conjunction with the occupational injury or illness.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

 

Identify and Realize Medicare Set-Aside Savings Opportunities

The rising costs of workers’ compensation come in many different forms.  One such way members of the claims management team are seeing these increases is in Medicare Set-aside allocations and future medicals.  This issue presents a challenge for all teams and to meet this challenge a MSA service provider should be utilized that employs creative tools to reduce an allocation in a reasonable and ethical manner.  One such mechanism is the use of physician intervention by following up with the employee’s treating physician to confirm the accuracy of all treatments and prescriptions drugs in the allocation.

 

 

Back to the Basics of MSA Allocation Preparation

 

There is a certain art to preparing and writing a MSA allocation.  This includes the threshold matter of ensuring the allocation is reasonable, and will be accepted if it is sent for voluntary review and approval by CMS.

 

When writing an accurate MSA allocation, the person preparing the report will rely on some or all of the following materials and records:

 

  • All medical records for the last two years of treatment related to the WC claim*;
  • A complete claim payment history record from the insurance carrier;
  • A separate pharmacy payment history report;
  • Draft settlement documents, prior settlements, court orders and decisions and other legal documents;
  • A First Report of Injury; and
  • Explanation of accepted, disputed and denied body parts, along with ICD-10 codes.

 

* “Treatment records” consist of all medical records for treatment to the claimed body part or condition even if the employer or carrier did not pay for the treatment.  Also, CMS does not consider an Independent Medical Examination report a “medical record” for purposes of allocation review and approval.

 

 

Cost Drivers in MSA Allocations

 

Medical costs in workers’ compensation claims continue to rise with a large portion of future medical tied to pharmacy costs. A September 2016 NCCI research brief states “for every $100 of medical services paid on claims older than 10 years, approximately $45 to $50 will be for prescription drugs.” This leads to an increased future medical component that must be considered as a part of every settlement.  Members of the claims management team should monitor their files for the following issues:

 

  • Pharmacy savings opportunities: Medications that are prescribed, but never actually filled by the employee, prescribed medications that have been discontinued, and brand name drugs that can be replaced with generics.

 

  • Medical savings opportunities: Ongoing and prolonged treatment by a primary care doctor for injuries that should require a specialist, gaps in a patient’s medical record and treatment recommendations which are no longer considered viable, such as a spinal cord stimulator.

 

 

Physician Intervention – Brand vs. Generic Drugs

 

There are many opportunities for members of the claim management team to reduce the cost of a MSA allocation and promote a culture of settlement.  One such strategy is directly contacting the employee’s treating physician to follow up on medical cost driver red flags and savings opportunities.  As a note of caution, this should be done in conformance with federal and state law and may require the approval of the injured worker.

 

A classic example of when direct physician intervention is appropriate comes after a review of prescription records.  Often the physician prescribes a certain brand name medication versus a therapeutically equivalent generic.  While not always the case, generics are often considerably less expensive and offer the same medicinal attributes as the brand name.

 

An experienced MSA service provider will notice this opportunity by reviewing the “dispense as written” (DAW) codes in medical and pharmacy records.  They will position your file for the cost-saving measure to recommend direct contact with the physician to revise the prescription for the cheaper alternative.  Communication between the parties allows the necessary change to occur.  The cost savings will be realized once that cheaper alternative is filled by the pharmacy and a paper trail is created.  This allows the allocator to document the file and justify the lower prescription drug costs.

 

 

Physician Intervention – Discontinued Medications

 

Another opportunity for MSA cost reduction is to identify and confirm the discontinuation of medications previously prescribed.

 

Medicare Set-asides: A Case Study

 

 

*case study provided by Tower MSA Partners

 

 

The main cost driver in this MSA allocation was the cost of prescription drugs.  In the above example, a review of the pharmacy recorded revealed Amitiza, Pantaprazole, and Meloxicam were prescribed, but had not been filled for an extended period of time. This represented a significant opportunity for savings by directly following up with the treating physician in writing to confirm these prescriptions had been discontinued. This confirmation allowed the prescriptions to be removed from the allocation, resulting in $200,113 in savings.

 

 

Conclusions

 

The ever-increasing price of medicals on workers’ compensation presents a series of challenges for the claims management team.  In order to avoid over-allocating for treatment and prescription medications, leverage a proactive MSA service provider to identify MSA savings opportunities and intervene with the treating physician.  This proactive approach often results in a lower MSA allocation with realized cost savings to the claims management team.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

RIMS 2017: Leverage Michael J. Fox’s Lessons to Prevent Creeping Catastrophic Claims

[photo courtesy https://michaeljfox.org]

Most people wouldn’t think of Parkinson’s Disease as a gift. But for Michael J. Fox, that’s exactly what it is. “It teaches resilience and optimism,” the actor and ‘PD’ advocate said at RIMS 2017 in Philadelphia.

 

Speaking to a packed audience at the closing ceremonies, Fox regaled attendees with stories of his life growing up in Canada, his success in Hollywood, and how he’s used his celebratory status to advance awareness and research into the disease that threatened to end his career more than 25 years ago. His own resolve and the tools he’s developed have allowed him to continue leading a happy and productive life and can serve as lessons for the workers’ compensation industry.

 

 

Fox’s Journey

 

If you asked any of his 4 kids to list 10 factors about ‘Dad,’ Parkinson’s Disease would probably not be among them. “’Annoying’ might be on their lists, but not PD,” he said. Humor is one of the characteristics that help define Fox.

 

“I was playing golf in my 40s and someone asked, ‘what’s your handicap?’ he said. “I said, ‘isn’t it obvious?’”

 

But his self-deprecating, easy going manner about his condition took a while to materialize. Fox was 29 and making the movie ‘Doc Hollywood’ when he woke up one day with a twitching pinky. Attributing it to a hangover after a night out with fellow cast mate Woody Harrelson, Fox was shocked to later learn he had PD, and even more stunned when the neurologist “nonchalantly” told him “you have 10 years left to work.” The powerful impact of those words resonates even now, as Fox teared up on stage as he related the story. But Fox’s decision to live with acceptance instead of resignation led him on a different path.

 

Fox studied up on the disease and soon found a community of people with PD and their advocates. He went on to create the foundation that bears his name to focus on the most immediate need: research dollars. To date, the Michael J. Fox Foundation for Parkinson’s Research has raised more than $750 million.

 

Career-wise, the 55-year-old has acted well beyond the 10 year limit he was given. Describing himself as a ‘happy guy’ Fox has also written three books since his diagnosis, and he and his wife, actress Tracy Pollan are celebrating 29 years of marriage.

 

 

Attitude

 

Michael J. Fox had lots of support when he was diagnosed. He was already a beloved actor in a solid marriage and had lots of friends. But even he admitted that “you need support” to be resilient and optimistic in the face of a potentially devastating health determination.

 

Many injured workers whose claims turn into creeping catastrophics have little or no such support. Those who have been in the depths of despair and managed to regain function and return to work often speak of the encouragement they receive from people trying to help them as a deciding factor. A medical provider who exudes positivity rather than giving up on the patient, or a nurse case manager who is able to convince a patient that he will be able to go fishing again can change the course of recovery.

 

Injured workers generally believe what they are told. Those who are at risk of having their claims deteriorate may either develop a disability mindset or return to productivity and function. A supportive, positive attitude from the entire team — claims adjuster, medical providers, nurse case manager, and employer can help keep a claim on track for a positive outcome.

 

 

Reframing the Focus

 

Injured workers themselves say reframing a negative message makes a huge difference in their own attitudes and, ultimately, their recoveries. Focusing on what the injured worker can do, rather than what he can’t, changes his mindset.

 

Pain is more an experience than a sensation. Injured workers who can eliminate their fear of pain and refocus their attention on what they have rather than what they have lost find their pain levels reduced. It also helps address depression, which can exacerbate the disability mindset.

 

 

Conclusion

 

The vulnerability of an injured person cannot be overstated. Whether it is a high profile, much admired celebrity or a typical employee who has suffered a sudden injury, both need support, encouragement and advocacy to reach the best outcome.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

How To Use Central Index Bureau To Stop Workers’ Comp Fraud

One of the best fraud fighting tools is provided by the Central Index Bureau report, a division of the Insurance Services Office. It is known as a Central Index Bureau report, a CIB report, an ISO, or as a claim index. The terminology varies from insurance company to insurance company. Regardless of the name, the CIB is a basic record of the insurance claims filed by an individual. What makes it effective is it is one of the very few areas where insurance companies share information.

 

Over 90 percent of all insurance companies are members of the ISO Central Index Bureau. Be sure your insurer is a member too. If not, the insurance company may be paying fraudulent claims which will have an adverse impact on workers compensation insurance premiums.

 

 

Information Reported to Central Database On Every Claim

 

When one of the employees files a workers compensation claim, the basic information about the claim and the claimant (employee) is obtained. The CIB report will contain the claimant’s name, social security number, maiden names, aliases or former names if known as well as address, former addresses if known, occupation, and date of birth. The CIB report will include the accident location, the date of the accident and the alleged injuries. It will identify the type of injury whether it is automobile bodily injury, general liability bodily injury, automobile medical payments or PIP, workers compensation, homeowner’s liability, medical malpractice, or a non-occupational disability claim.

 

The report will identify the medical provider by name and address as well as the lawyer’s name and address if the claimant is represented. The report will also contain the adjuster’s name, the name of the insurance company (or third party administrator), the insurance company’s address, and even the adjuster’s phone number. It identifies who the insured is for the insurance company and the insured’s address.

 

 

Protect Yourself From Paying For Prior Injuries

 

Why is all this information reported to the insurance services office on every insurance claim, including property claims? The reason is to protect the insurance company from paying for a prior injury. The claimant’s attorney is not going to tell the insurance adjuster that he has previously represented Mr. Bad Luck on his five previous injuries, two auto accidents, one slip and fall, and two workers compensation claims against five prior insurance companies.

 

 

Example: Employee Sustains Injury Every Deer Hunting Season

 

Take the example of Mr. Bad Luck. When the workers compensation adjuster interviewed Mr. Luck, he stated he was in excellent health, had never had a real injury before, but now he severely injures his back. The adjuster is alert. She electronically files the Central Index Bureau report and receives an electronic report that lists all the information on Mr. Bad Luck, even though his social security number was changed 3 times and his address four times. Suddenly the claimant has selective memory about previous injuries.

 

In one claim file audit of governmental pool‘s workers compensation claims, the auditor notices the adjuster has received 18 hits (prior injury claims) on one unfortunate employee. The employee was employed 17 years with the same city government during each of the 18 workers compensation injuries. Of the 18 injuries, 14 of the injuries occurred in the first two weeks of November in fourteen different years. It turns out the claimant is a deer hunter, and deer season is the last two weeks of November.

 

Fortunately the claimant always made a fairly quick recovery from various strains and sprains and was able to return to work on the first Monday of each December. The claimant is committing fraud by taking a two to four week leave of absence each year paid for by workers compensation. The employer knew this, and the adjuster knew it too. Why they did not prosecute the claimant for fraud is unknown.

 

 

Fraudulent Employees Often Switch Doctors

 

Please note that most adjusters reviewing a case like this will be aggressive about the claim when the claimant is alleging a new injury to a body part that was part of a prior injury claim.

 

Injured employees like Mr. Bad Luck above will often change doctors so that they can tell the doctor they have no previous injuries. The smart adjuster will share the information with the medical providers on the claimant’s prior injury by obtaining and providing the relevant medical records from the prior medical providers. Also, there is something about the claimant knowing the adjuster is aware of prior injury claims causing many claimants, even those represented by an attorney, to make a speedy recovery.

 

 

Central Index Bureau Submission as Standard Best Practice

 

Make sure the use of Central Index Bureau submissions is a standard part of best practices and is included in your account handling instructions.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Know Your Role To Take Control of Work Comp Costs

If you leave the management of the workers compensation claims to chance, the chances are you will not have good results.  To have good results in the control of the workers comp claims, it is important that everyone involved – the workers compensation claim coordinator, the floor or field supervisors, mid-management, medical personnel, legal, senior management and even the employees know what roles and responsibilities are in the management of the workers comp claims.

 

Take Control

 

Start by assigning roles and responsibilities to one or more parties in the process – it is a step that can be taken to get things on track. You do not need to assign ALL roles immediately, just take it one step at a time.

 

The duties of every person involved in the workers comp claim from the claim coordinator to the employee should be defined and written down for each participant.  This includes both the pre-accident responsibilities, as well as, the post injury response.  By knowing what is expected of them, each person will be able to take the appropriate action when an injury occurs.

 

 

 

Claims Coordinator Responsibilities

 

The workers comp claims coordinator, whether a full-time job at a medium-size or large employer, or a part-time job at a smaller employer, is the pivotal person in controlling the workers comp claims.  The claims coordinator can be a part of the risk management department or a part of finance or human resources.  The important thing is the claims coordinator has access to all information necessary to control the claim.

 

  1. Establishing a transitional duty program prior to injuries occurring
  2. Providing all new hires and providing annually to current employees the employee brochure on what to do in case of an accident
  3. Arranging immediate medical care at the required medical provider or at the recommended medical provider
  4. Providing the medical provider with a detailed job description prior to the employee arriving for the initial medical treatment
  5. Interviewing the injured employee to obtain a detailed description of how the injury occurred.
  6. Interviewing the employee’s supervisor to verify the description of the accident and what could have been done to prevent the accident from occurring.
  7. Completing the First Report of Injury and providing it to the claims office on the day of the injury
  8. Contacting the employee immediately following the initial medical treatment for the diagnosis, prognosis and expected period of disability, if any
  9. Arranging for light duty / transitional duty / modified duty for the injured employee
  10. Sending the employee a get well card when the employee will be off work
  11. Maintaining weekly telephone contact with the employee while the employee is treating weekly and telephone contact following each medical visit thereafter.
  12. Facilitating on-going contact with the claims adjuster and the nurse case manager.
  13. Coordinating and completing all necessary paper work related to the claim.

 

 

Post-Accident Responsibilities of the Supervisor

 

The employee’s supervisor has pre-accident responsibilities to ensure all employees work in a safe and prudent manner.

 

  1. Accompanying the injured employee to the required or recommended medical provider.
  2. Providing the medical provider with the Work Ability Form and obtaining the completed form from the medical provider’s office
  3. Submitting the Work Ability Form, the Supervisor’s Report of Accident, the Employee Report of Injury and the Witness Report Form to the workers compensation claims coordinator.
  4. Enforcing compliance with the transitional duty program and verifying the work done by employees on modified duty is in accordance to the medical provider’s limitations.
  5. Training all his/her employees on what to do in case of an injury.

 

 

Employee’s Role and Responsibilities

 

The employee needs to be involved in the control of workers compensation claims.

 

  1. Participate in post-injury response training.
  2. Participate in the return-to-work transitional duty program
  3. Attend all employee weekly meetings/office meetings unless physically unable to get to the work-site
  4. Provide the Work Ability Form to the supervisor or claims coordinator after each doctor’s visit.

 

Management Roles and Responsibilities

 

The Best Practices for Injury Management also applies to middle and senior management. Management should have defined roles and responsibilities.

 

  1. Providing a strong safety program and implementing the necessary risk management practices to keep as many workers comp claims from occurring as possible.
  2. Knowing the monthly and on-going cost of workers compensation.
  3. Communicating to the employees how many additional sales or how much additional production is necessary to cover the cost of workers compensation claims.
  4. Determining the medical providers that will be used
  5. Determining the insurance carrier or the third party administrator.
  6. Tracking and reporting lost work days.

 

In addition to the Best Practices for Injury Management noted above, there are best practices for risk managers, medical directors, in-house medical clinics and in-house legal.  These sample best practices listed here are far from complete.  Contact us to learn more about how to control workers comp cost through Best Practices for Injury Management.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

Two Reasons Employees Do Not File Work Comp Claims

There are times that an employee might not pursue a claim or might not have a claim for a work related injury.  While this is uncommon for employees, it does happen.

 

 

Reason 1 – Excluded People (no coverage)

 

State Requirements

 

If an employer does not meet a state’s requirements for workers comp insurance, the employee might not have a claim. For example, where states require employers with three or more employees to carry workers comp insurance, and the employer only has two employees, the injured employee would not be able to file for workers’ comp.

 

In addition, some states exclude farm laborers, seasonal workers, domestic servants, real estate agents and direct sellers from coverage in their workers comp statutes.  If one of these employees is injured on the job, they have an option to sue their employer if they believe the employer’s actions caused their injuries.

 

Sole Proprietors and Partners

 

Injured employees that are sole proprietors or a partner in a business are not covered for a workers’ comp injury unless they purchased a workers’ comp insurance policy. Most sole proprietors do not carry this insurance.

 

 

Reason 2-Pursuing a Tort Claim (looking for the deepest pocket)

 

Choosing Own Medical Provider and Pursuing Bigger Settlements

 

In states where a workers’ comp insurer has full rights to subrogation recovery, employees will sometimes not pursue the injury claim against the employer because they want to choose their own medical provider.  For example, if the employee is a traveling salesperson injured in an automobile accident where a third party was at fault, the employee may not file a claim where the accident occurred in a state where the employer controls selection of medical providers and the employer/insurer has full subrogation rights. Instead of the employee being treated by the medical provider selected by the employer or the employer’s insurance company, the employee is treated by a medical provider selected by the employee’s attorney. The attorney may recommend a liberal medical provider who will keep the employee coming back for additional treatment for as long as possible. .

 

 

The longer the employee is off work and the higher the medical bills are, the greater the settlement the employee’s attorney can demand from the insurer of the vehicle at fault in the auto accident.  Attorneys representing injured employees often tell their clients that they can get a much bigger settlement through the tort system than they can through workers comp.

 

 

Injury on a Construction Site

 

An injured employee might opt out of filing a workers’ compensation claim where the injury occurred on a construction site. On a large construction project there are often various subcontractors working at the same time. The employee might have been injured due to the negligence of a third party. The employee again will have the choice between pursuing the claim for personal injury against the responsible party or filing a workers’ compensation injury claim. In states where workers comp insurers right of subrogation has been diminished or taken away, the employee’s attorney will often pursue both types of claims simultaneously.

 

 

Delivery People

 

A delivery person who trips and falls on a defective sidewalk belonging to a business where the employee is making a delivery might choose to pursue a tort claim.   While a delivery person has the right to pursue a workers’ comp claim against the employer, the property owner likely has liability insurance. The award that can be collected on the tort claim may surpass what can be collected on a workers’ comp claim.

 

 

Summary

While an employee usually will not opt out of coverage for a workers’ comp claim, it does happen. There are also times when insurance coverage does not apply to the work related injury. It is important for an employer to know when this occurs and to keep in close contact with the employee in case circumstances change.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

3 Indicators Open Work Comp Claims Are Ready to Settle

Spring is in the air—time to do some spring clean.  This should not be limited to your home.  Use it as an opportunity to employ creative settlement strategies and close out those troublesome files and legacy claims that have been collecting dust in your claims department.

 

 

How to Get Started?

 

The first step in the process is to identify cases that are prime for settlement.  This should start with a review of all open files.  Indicators that a workers’ compensation file might be ready for settlement include:

 

  1. Cases where the employee is at, or should be at maximum medical improvement (MMI)/end of healing period. Identification of this factor includes evidence of a healing plateau or continued medical care without improvement of symptomology.

 

  1. Cases where the employee is nearing the end of entitlement for temporary total disability benefits or other wage loss benefits. Most jurisdictions cap the number of weeks an injured worker is entitled to various indemnity benefits.  It is important to review these cases for settlement as it could very well morph into a claim for permanent total disability benefits or costly retraining benefits.

 

  1. Cases where the employee has recently or will become eligible for Social Security Disability and/or Medicare benefits. Entitlement to these benefits drives claims toward the contention the employee is permanently and totally disabled.  These files require an analysis for exposure regarding future medical benefits, including the recommendation for a Medicare Set-aside (MSA).

 

Once you have identified claims ready for settlement, it is important to contact the employee or their attorney regarding settlement.  What do you have to lose?  Nothing!

 

 

Settling Troublesome Cases: Time to Think Outside the Box

 

Settling a workers’ compensation case is like making a sales pitch.  Preparation is key.  This includes thinking of the various alternatives and developing a strategy.  There are also several tools the proactive claims management team has available to kick-start settlement discussions.

 

  • Independent Medical Examinations (IME): Scheduling an IME is a great opportunity to move a case toward settlement.  This can be especially useful for legacy cases where the employee’s treatment has been inconsistent or sporadic.  The findings from an IME can also be used to initiate litigation with the intent of moving the claims file toward settlement.

 

  • Mediation: This is one of the most underutilized tools in workers’ compensation.  Mediation allows for all interested stakeholders to have a voice and role in settling a claim.  It can also be beneficial to understand the concerns of an injured employee and tailor a settlement to suit their needs.

 

  • Structured settlements: This tool can be used effectively in many instances—not just high value settlements.  The employee receives the full value of their settlement, which is paid out over a period of time via an annuity.  There is built-in “savings” when using this tool the insurance carrier receives based on the actual cost of purchasing an annuity contract.  All parties receive “free” advice and services as the broker who prepares the quote and necessary paperwork is paid via commission from the life insurance carrier who initiates the annuity.

 

  • Medicare Set-asides: Failure to settle cases involving Medicare beneficiaries (or those soon to be entitled) is driven mainly by an irrational fear of being reasonable.  This excessive caution can lead to delay and lost settlement opportunities.  Using a service provider to evaluate the risks is helpful.

 

 

Conclusions

 

It is time for spring cleaning in your claims department.  Now is the time to dust off your troublesome files and think about settlement.  This requires interested stakeholders to review their files, engage the other side and use creativity to drive settlements.

 

 

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

RIMS 2017 Conference and Other News Tidbits

RIMS Conference 2017: Disrupt the Status Quo & Join the Risk Revolution

“RIMS Annual Conference is a must do for any level of risk professional. By attending you can increase your knowledge and walk away with better deals on your insurance renewals. The conference is well worth every moment.” – RIMS 2016 Attendee

 

 

RIMS 2017 Live Streaming | Monday, April 24 (RIMS Members Only)

RIMS will be streaming RIMS 2017 live on Monday, April 24 at 8:30 am EDT – just for RIMS members. Watch the General Session and Awards Luncheon. Register now and watch for free.

 

 

Derreck Kayongo To Deliver RIMS 2017 Opening Keynote

Have you ever wondered what happens to that barely used bar of soap in your hotel room? This guy did, and he didn’t like the answer. So Derreck Kayongo talked hotels into donating their used bars of soap instead of throwing them away. His Global Soap Project takes donated, melted, purified and reprocessed hotel soap and redistributes it to vulnerable populations around the world. This successful entrepreneur is a renowned expert in environmental sustainability and global health and is using his knowledge to disrupt the way hotels dispose of their “trash.”

 

 

Broadspire Joins City of Murals w/ Jane Golden at RIMS 2017

Look for Jane Golden of @muralarts in Booth 701 on Monday 4/24.

 

 

Tips to Prevent Prescription Drug Abuse at Home

The National Prescription Drug Take Back Day aims to provide a safe, convenient, and responsible means of disposing of prescription drugs. Prescription drug abuse has reached epidemic proportions across the U.S. According to the National Survey on Drug Use and Health, more than 6 million Americans abuse prescription drugs, and much of the abuse begins at home. In fact, more than 70% of those who illegally use prescription pain relievers obtained them through friends or family, including surreptitiously raiding the home medicine cabinet.

 

 

 

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

 

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

 

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

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