Most Common Workers’ Compensation Errors

Companies with exorbitant workers’ compensation costs are doing several things wrong, however, the most common error is not properly managing their programs. Too many companies sit back, assume nothing more can be done and wait for the legislature to introduce problem-solving laws. There certainly are some laws that could be changed, but most companies don’t take advantage of the options already available to them.



Common Workers Compensation Errors


Employer Directed Care


For instance, some states allow the employer to select the doctor who will treat employees injured on the job. These are “employer directed” states. In these states employers enjoy a special opportunity to use physicians experienced in industrial/occupational medicine and also familiar with the employer’s workers’ compensation program. Despite the opportunity, only about 20 percent of employers in these states are using this tool.



Failure To Follow Up With Injured Work


Another common error is failure of companies to follow up on injured workers after they become disabled. The employer assumes the worker’s doctor will give the word when the employee is ready to come back to work. These employers neglect to consider the doctor probably doesn’t know about the employer’s modified duty program or an employee’s job might be changed to accommodate the applicable medical restrictions.


These employers typically neglect to contact the employee, a grave mistake. Without contact, the employee may lose the incentive to return to work and become “psychologically disemployed.” (As typically happens to all of us after a few weeks on vacation). The proper focus, to return the employee to work, is lost.



Lack of Workers’ Comp Understanding


Employers that make the most common errors often don’t know enough about the workers’ compensation system and the options that are available to control their programs.  The lack of understanding makes it relatively easy for employees so inclined to abuse the system.


Example: A company has operations in 15 states with “fee schedules” (a special lower rate physicians must charge for treating employees injured on the job.) for industrial accidents. No one was assigned to make sure medical bills were audited for compliance with the fee schedules in the various states. Result: The company paid out hundreds of thousands of dollars in excess medical fees.



The First Step


Companies need to establish an orderly process beginning in the first moments after an injury. The process must ask and answer such questions as where the employee received treatment, how the employee gets to the doctor, who contacts the employee to make sure medical care is appropriate, when the employee is expected to return to work, and so forth.



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


Author Michael Stack, Principal, COMPClub, 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 of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment.


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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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