Three Cools Ways to Improve Your Workers Compensation Program

There are many ways for an injured employee to benefit from an injury. Pension overlap, accrued sick time, and lawsuit payout are just a few ways the crafty employee can remain with your company, receive partial pay (in some cases full pay) and NOT COME BACK TO WORK. The trick is to pay what is required, but not overpay or allow a combination of benefits that remove disincentive to go back to work.

Look at your companys budget on a pie chart – how big of a slice goes to workers compensation? Include that in your presentation to management to put the issue in perspective.

A few minor steps can reduce that cost. You aren’t being heartless – you are running a business. And a business needs employees who work.

Sometimes an employee is genuinely injured and genuinely deserves benefits. We are not in any way suggesting you cheat employees.

What you can do is examine the way those benefits are administered.

You actually hurt an employee by allowing them to stay away from work longer than necessary – so the first step is getting them back to work, even in an altered work capacity.

Coordination Among Many Corporate Departments

Human resources, industrial relations, workers compensation, employee benefits and other internal departments need a “disability czar.” This is an issue that is best to approach with an integrated style, not from completely separate silos.

This is the way to trim needlessly high costs. Your czar spans all the departments looking for overlap and cost-cutting methods.

This solution is simple but effective. Trinity International* (*name changed for privacy), a large diversified company used this approach and managed to cut its workers compensation cost in half in just one year.

Implement Account Servicing Instructions

Managing claims and litigation is nearly impossible without complete and explicit account servicing instructions (ASI).

Also known as account instructions, claim service instructions or account handling instructions, ASI represent the agreement or understanding between the insured and the field adjusters at the insurer’s branch offices that guides the handling of all suits and claims, both litigated and non-litigated.

These instructions are disseminated to all branch offices across the country.

The ASI includes information about how claims are to be handled in every line of insurance including workers compensation, products liability and automobile insurance. (Third-party administrators who provide claims servicing without insurance also use ASI to guide their adjusters.)

After ASI are negotiated, the insured must familiarize all internal claims handling personnel with the provisions of the ASI and provide them with a written copy to ensure they understand the responsibilities for key areas of claims handling.

In addition to containing policyholder information and details about coverage and dissemination of data (loss runs), ASI can also contain other lesser-known guidelines.

For example, the referral of medical reports to a physician consultant for preparation of a letter to set up an independent medical examination (IME), or a requirement saying subrogation can be waived only upon receipt of a written evaluation and agreement by the company.

Put It in Writing

In implementing an aggressive claims and litigation management program, a company is, in effect, “taking control” of its claims, exerting more authority in the handling of claims and becoming much more involved in their claims management.

When a company chooses to become more involved in “managing” as distinguished from “monitoring,” the roles and responsibilities of all parties, including the company and the insurance carriers, must be clearly delineated to avoid overlaps as well as gaps.

In as much as in-house counsel frequently manages litigation and claims, while the risk manager establishes the ASI, the two departments discuss in advance, what to include in the ASI. In-house counsel makes a list of all claims handling problems, then reviews and discusses it with the risk managers for solutions to be incorporated into the ASI.

While a company can actively negotiate for items it believes to be of sufficient importance, the carrier’s approach will normally run counter to the company’s approach. The carrier may seek to define as few issues as possible in writing; sometimes reassuring the company certain key items will be done as a matter of course (i.e., as “standard operating practice”).

The company needs to be aware of this, realizing it is prudent to put as much as possible in writing to avoid future problems and misunderstandings. It is not uncommon for a litigation manager to encounter problems that would not have occurred if “it had been in writing.”

For example, a company may be “assured” it can select the local counsel of its choice. This verbal assurance from the carrier may work adequately until those who made these agreements move to other employers or are no longer involved with the account.

In general, the more risk a company has retained, the more control the insurer will relinquish.

In a guaranteed cost program, for example, the insurer will relinquish almost no control because the exposure and expense are borne by the insurer. In a loss sensitive program, the insurer will negotiate to give a company more control.

In a loss-sensitive program with a very large deductible (e.g., $500,000) most companies can negotiate for a very high level of control close to what they would have if they were self-insured.(WCxKit)

*The name of this company has been changed to protect privacy.

Try these three ideas to “take control” of your workers compensation program. Inclue all departments, specify in account instructions how you want your TPA to work with your company, and put your program in writing.

Coordinate your departments, implement ASI and put it in writing to reduce WC costs. Find out how #WorkersComp.

Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: [email protected] or 860-553-6604.

WC IQ TEST: http://www.workerscompkit.com/intro/

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

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

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