Blog - Work Comp Roundup

Say It In 5 Minutes to Motivate Risk Management Change and Align Resources

September 18, 2018 by Mark Bennett

In the risk space, whether you are operating as a Chief Risk Officer focused on all organizational risk or a Traditional Risk Manager focused on hazard risk, you are working in or designing a risk system that is required to move people and processes to action.

To move people and align resources to action, the most valuable thing a risk leader can do [whether it is a global message on your Enterprise Risk Management initiative or a targeted message on your hazard risk program] is to package the message and “SAY IT IN 5 MINUTES”. Risk initiatives are complex; they involve many stakeholders and processes. For any message to be effective it must successfully negotiate through organizational obstacles, politics and silos. Risk programs will not move forward if the message is not clear and stakeholders cannot understand and connect to the why, how and expectations.

Process More Important Than The End Product

Risk leaders have an incredible opportunity to demonstrate value by committing to putting “the message” into a 5 minute Corporate Risk Video.

By making this commitment, risk leaders will soon learn that going through the process is even more important than the end product. By committing to this “5 MINUTES”, it forces them to listen to and consider the perspective of all stakeholders and it requires capturing a meaningful story that all can see and embrace, one founded in purpose and has value that will be around for many years.

If you can effectively capture the heartbeat and include stakeholders in the process, you will be able to begin driving passion into an organization from the backroom and owners and employees will ultimately drive the risk process.

This exercise will support your culture and this process of being clear & concise will translate into the on-going branding that your risk initiative requires.

5 Steps to 5 Minute Message

Your 5 minutes need to be more than an emotional/feel good story. You will get the most out of it by incorporating the following 5 Steps:

1) Decide what you want your message to do – What action are you looking for? Make the commitment to go past the informative story to one that motivates and drives action.

Put yourself in the seat of every stakeholder and be realistic.

Will they get your message?
Will it motivate them to action?

This is the first test of the value of your risk program. If your program message is built on policies and procedures you put in place and your goal is purely compliance, your audience will see this and likely tune out within the first 30 seconds.

2) Be clear on your identity – Successful companies are driven by a mission which is the reason for existence from the front room (C-Suite) of the organization. This mission describes the purpose and overall intentions. It supports the company vision and serves to communicate the purpose based on core values. Company leaders put time and resources into this because, if done properly, it will be the heartbeat that drives what everyone does.

The problem is that corporate heartbeats (values, vision and mission) do not naturally translate passion into risk initiatives. Before writing the script, make sure that you are clear on the risk program purpose and values and be clear in your mind what this looks like.

What it looks like must come out in your message. Risk Leaders have an opportunity to create a heartbeat and drive passion into an organization. Your 5 minutes will have no value if your message is not founded on values that translate into a vision and mission that gives your program passion and meaning. Safety values, vision and mission are core to your risk system design.

3) Define the why, the how and the expectation – Risk statements typically have a lot of buzz words and unrealistic goals. For example, in the hazard risk area, although “Zero Accidents” is a term many use, it often leaves stakeholders frustrated because the challenge is tossed out without valid support or a plan to meet this goal.

Although your 5 minutes can be packaged to look pretty, if you are not addressing the why, how and expectation in a way that is obtainable, people will not connect and your message will just be another story that does not get a second look and does not drive them to action.

4) Include stakeholders – Best practice risk programs have roles and responsibilities for all parties. This is the opportunity to define all stakeholders’ roles and responsibilities, to get their perspective and include them in the message and the final edit. Saying it in 5 minutes is something stakeholders from each of your 3 Lines of Defense can contribute to and should be able to celebrate and support when it is completed.

5) Match the Video with the Script (your people in action) – This is the risk leader’s opportunity to tell the message in a way it has never been told. Each word is important and the video shots supporting the message are extremely valuable as well as the words and phrases that you emphasize. Scripts break your message into the hook, introduction, your value and message on the why and how and provides the expectation and conclusion. The hook gets their attention and ensures the audience is listening and the conclusion is your call to action.

“Say it in 5 minutes” is all about leadership. You cannot expect to engage and move people and processes to support your plan if your passion and your message are not understood or clear. The time you spend developing your 5 minutes can be one of the most valuable things you can do to impact your program.

Author Mark Bennett, Founder of Risk Innovation Group (RIG), is dedicated to helping large employers face the complexities of risk through innovative Enterprise Risk Management (ERM) practices. ERM programs don’t just help large employers manage business risks more effectively; a well-developed ERM program can protect and create value as well as improve business performance and generate a strong competitive advantage. Contact: m.bennett@riskinnovationgroup.com

Filed Under: Risk Management

3 Workers’ Comp Payroll Deductions Most Often Missed by Employers.

September 17, 2018 by Michael B. Stack

If any of your workers are getting overtime, are those extra dollars included in your workers’ compensation premium calculations? If you answered ‘yes,’ you may be artificially inflating your payroll; i.e., paying higher premiums than is warranted.

Overtime, double time, and severance pay are typically allowed as deductions for workers’ compensation premium calculations. Yet companies large and small often overlook these three points. Knowing what deductions are allowed in your jurisdiction(s) and understanding how to apply them can save payers big dollars — immediately.

Accurate Payroll & Class Codes

Injury management is the area where most workers’ compensation cost-cutting strategies are focused, and with good reason. Reining in workers’ compensation costs through safety efforts, effective return-to-work programs, and best practices in medical management are proven to contain overall costs. But risk management is only part of the equation.

If you’re not reviewing your payroll (remuneration) and class codes for accuracy, you may be missing significant opportunities to quickly and easily reduce workers’ comp costs. Depending on the jurisdiction, there can also be an opportunity for deductions from uniform allowances, to officer excess and gratuities, to employer-provided perks. Ask your premium auditor or audit manager to reveal deductions you are allowed to take and still have an accurate assessment of your risk.

The Big 3

A majority of jurisdictions allow deductions for

Overtime pay
Double time pay
Severance pay

Workers’ compensation premiums are designed to assess risk exposures appropriately. But paying someone double time to work on a Sunday, for example, doesn’t double his risk of injury; nor days paying out a golden parachute to a worker who has left the company. Taking allowable deductions can drastically lower your payroll — and your workers’ compensation premium.*

*Note: Compared to a guaranteed cost structure, employers in a high-deductible program may not be as greatly impacted by payroll deductions due to the significant latitude carriers possess with adjustments and credits/debits in the premium formula.

How to Do it

Getting the most out of allowable deductions is dependent on accurately presenting your payroll. Your workers’ compensation premium is based on your gross payroll (remuneration) including, for example, salaries, commissions, bonuses, vacation, holiday and sick pay.

Overtime and other payments can be excluded. But it’s important to exclude only premium portion greater than the standard rate:

Here’s how to figure your payroll with overtime deductions:

Say your company pays overtime — time-and-a-half — for someone who works on a Saturday and double time for working on Sunday. A worker who makes $10 per hour would get $15 for working on a Saturday and $20 for working on a Sunday. Let’s say he worked 8 hours both days.

To determine accurate payroll, you would deduct the $5-per-hour extra he made on Saturday and the $10-per-hour extra he made on Sunday. To calculate the exclusion:

Saturday 8 Hours x $5 = $40

Sunday 8 Hours x $10 = $80

Total amount excluded from payroll = $120 ($40 for Saturday and $80 for Sunday)

You only need to pay premium on the worker’s regular $10-an-hour rate for the extra hours he worked, not the additional dollars.

Employers need to maintain payroll records that show the regular rate of pay, the overtime earnings, and a summary by type of operation performed, in order to get credit for the overtime excess.

It’s also important to understand that increases in wages are not eligible for exclusion. If you increase a worker’s base wage, that increased amount would need to be included in the payroll.

For severance pay, the calculation is easy. You can exclude these dollars paid to someone who no longer worked at the company to the extent it does not include pay for time worked or accrued vacation.

While these deductions may not seem significant, they can add up quickly and result in major savings.

Conclusion

You want to make sure your employees are properly covered for any work-related injuries they incur. However, you don’t want to pay any more workers’ compensation premium than necessary. Knowing and applying allowed deductions can go a long way to dramatically reducing your workers’ compensation premiums while still paying the appropriate amount.

Michael Stack - Amaxx Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a 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: https://blog.reduceyourworkerscomp.com/

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

Filed Under: Lowering Premiums & Experience Mod

Overcome Financial Fears Which Prevent A Successful Workers’ Comp Settlement

September 13, 2018 by Michael B. Stack

Many injured workers who settle their workers’ compensation claims struggle with how to ensure they’ll have enough money throughout their lives. There are many issues to consider in addition to continuing medical care – paying monthly bills, funding a child’s education, and unexpected expenses that may arise. There may also be concerns about complying with various government programs, such as Medicare and future tax implications.

Partnering with an expert settlement consultant is a must for any injured worker thinking of settling his workers’ compensation claim. There are many issues to consider and personal decisions to be made. A competent, experienced professional who spends time getting to know the injured worker and his loved ones can provide invaluable insight and guidance in the process.

Decisions, Decisions

Many people expecting a large sum of money opt for a large cash windfall over a long-term plan. Sadly, despite their best efforts to preserve it, many of these individuals find the money is soon depleted. Statistics show this happens all too often.

Injured workers who settle their workers’ compensation claims are no different. But those who have the benefit of working with an expert can realize the myriad options involved in a settlement regarding how, when and what amount of money they can collect to meet their specific needs.

As an example, we’ll take a hypothetical case.

John is 57 years old and has been receiving workers’ compensation benefits for 7 years after being severely injured in a work-related accident. John is tired and frustrated with the workers’ compensation system and would like more control over his medical decisions. However, he has significant worries about the settlement amount. He doesn’t know how much would be appropriate to cover his lifetime medical costs and is concerned that he will run out of money too soon. He also has several outstanding debts that must be repaid soon. And he has a family and is worried he won’t have money to address their needs, now and in the future.

Finally, there is the issue of Medicare. He’s been told his medical care would need to be funded through a special fund to ensure Medicare is not forced to pay for treatment that should be covered through workers’ compensation. He doesn’t quite understand that or what his obligations would be.

The Solution

John and injured workers like him could have much improved, empowered lives — if they had an experienced, capable settlement consultant available to help. Such an expert could spend time with John and his family and sort out their various needs:

Money to pay off immediate expenses
Medicare and its requirements
College education funding for his children
Wedding expenses for his eldest daughter and her boyfriend
Funds to eventually help care for his aging parents

What John and many others may not understand are the various legal changes over the years that have made a long-term settlement plan much more appealing. For example, the government allows structured settlement payments to be income tax-free if they are the result of a physical injury, sickness or wrongful death. Congress has established specialized annuity contracts to meet the special needs of injured people, and to address the concern that too many people spend their money quickly. The idea is to incentivize injured workers and their families to take their settlement money in a series of guaranteed future payments.

Contrary to what some may believe, there is also the option to take some of the money upfront, and/or as a future lump sum payment. There are no constraints on how the money is paid. For example, it can be

Monthly
Quarterly
Semi-annually
Annually
Any combination

The amount paid is also adjustable. There could be a set amount for a few years, then increasing payments to handle anticipated future needs. The money can also be paid out over the person’s lifetime, or set up to continue being paid to heirs upon the person’s death.

In the case of ‘John,’ the settlement could be set up to receive money upfront to pay off his debts, then a stream of steady payments and influxes of larger sums at various points in the future to take care of his family’s needs. A competent settlement consultant can also put John in touch with other professionals such as:

Lifetime medical care management.
Lien resolution
Financial planning.
Tax consequences.
Government benefit programs.
Legal issues.
Retirement planning.
Insurance concerns.

Summary

Life is complicated and planning for a lifetime of medical management and financial stewardship from a workers’ compensation settlement is overwhelming and difficult. Working with a settlement consultant who understands the fears, needs, and concerns of the injured worker can both save significant settlement costs and bring peace of mind that lasts a lifetime.

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Settling WC Claims

Educate Stakeholders on Effective Alternatives to Opioids

September 12, 2018 by Michael B. Stack

A combination of ibuprofen and acetaminophen does a better job of relieving acute pain than opioids. Despite clear evidence that the combination of the less dangerous medications provides equal or greater pain relief, many physicians still prescribe opioids for injured workers with pain.

This statement was just one point made in a recent session at the Workers’ Compensation Institute’s Annual Conference in Orlando presented by:

Marcos A. Iglesias, Chief Medical Officer of Broadspire
Mark Pew, senior VP for Product Development & Marketing at Preferred Medical.

The Problem

The opioid epidemic in the U.S. has been well documented in recent years. Researchers say Americans consume more opioids than any other country, regardless of the myriad physical and psychological problems associated with their unnecessary use.

While stakeholders in the workers’ compensation system have made progress in curbing the unnecessary use of opioids in recent years, it will take a concerted effort of educating providers as well as employees about chronic pain, and effective treatment alternatives said Iglesias and Pew.

Findings released by the Society for Internal Medicine on a one-year comparison of patients with chronic low back pain who were treated with either opioids or ibuprofen included:

No difference in function
Those given opioids had statistically worse pain control

Among the side effects of opioids are

Drowsiness
Confusion
Nausea
Constipation
Euphoria
Slowed Breathing

Because opioids repress the respiratory system, using them can result in hypoxia — a condition in which too little oxygen reaches the brain. It can lead to coma, permanent brain damage or death. The drugs can be especially dangerous when combined with other medications, such as benzodiazepines, certain antidepressants, some antibiotics, and sleeping pills.

Expectations

Even in the face of the research and statistics, many providers continue to look to opioids as the gold standard for pain management. One of the biggest problems is the mindset of western medicine and civilizations.

“There is an expectation in the U.S. that we shouldn’t feel pain, we are reducing the supply of opioids, but not limiting the demand,” Pew said. “There needs to be an effort in this country to educate people and change their minds about pain, so they realize opioids are not the answer” added Iglesias.

Eliminating all pain forever is just not realistic for many people. But they can — and do — learn to cope with their pain and live happy, normal, and functional lives.

Education

In addition to realigning expectations, education is key to reducing unnecessary opioid use. Many people may not be aware of the extent of the problem. “One-third of individuals that are taking an opioid do not know they are taking it,” Iglesias explained. “There needs to be more awareness in the population.”

Additional points stated include:

Locus of control. Unlike in some other countries, many people in the U.S. have a passive acceptance of medical treatment and believe somebody or something should take care of the problem. Typically, many think a pill is the answer. However, drugs often mask the problem rather than addressing the root cause.
Employers can take actions to improve the fitness levels of employees. Encouraging more walking, providing healthier foods in vending machines and making all programs free of charge are suggestions to get started.
Self-advocacy. Injured workers and others should be encouraged to take charge and be responsible for their medical care.
Reduce unrealistic expectations. Employers can work with medical providers to create and send a letter to injured workers outlining what to expect after an injury occurs. It can include suggestions on how to manage pain and some options.
Sleep hygiene. Sleep is crucial for recovery from injuries. There are a variety of non-pharmacological recommendations to help people get more and better sleep.
Education on dealing with depression can go a long way in helping injured workers cope with their pain and injuries. They should be encouraged to work with the Employee Assistance Program, if applicable, or given community resources that may be helpful.
Behavioral techniques. Cognitive behavioral therapy (CBT) has been shown to be one of the most effective ways to help people cope with chronic pain. It is short term, skill-based, and typically does not incur a psychiatric diagnosis. Along with CBT, additional behavioral techniques include:
- Mindful meditation.
- Deep breathing skills.
- Increased physical activity.
Focus on function rather than pain. Focusing on pain only makes the level of pain increase. Discuss function rather than pain with an emphasis on progress.
- Iglesias example “you told me you picked up the mail, last time we talked you weren’t able to get off the couch.”

Conclusion

The persistent opioid crisis has taken years to develop and will take a multifaceted effort to reduce and eliminate. An improved focus by employers and payers on the education of opioid alternatives is a positive step toward better treatment and outcomes.

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Medical Cost Containment

September 11th Remembered – Tribute To Marsh And AON

September 11, 2018 by Rebecca Shafer, J.D.

Article republished from a previous post.

Everyone remembers where they were the when they learned the World Trade Center crumbled to the ground. I was scooping ice cream at the Mansfield Center General Store. Having recently retired from the risk management and insurance industry, I had moved back to the area, built a house in Mansfield Center and worked from my home office. I was helping my family restore and run the General Store.

I had an exciting career in risk management and insurance working for two of the best insurance brokers in the industry. BOTH companies had sizeable offices located in the World Trade Center. So, when Bill called and asked me if I was watching TV, did I know a plane flew into the World Trade Center, I was alarmed. Initially I thought he meant it was a small plane, but when I turned on the TV, I could see it was a huge plane and the building was on fire. And then another plane had flown into the other tower.

We Never Knew How 9/11 Could Affect An Entire Industry

Everyone in the risk management field “plans”… we plan for every eventuality, thinking things through. That’s what we do. We help our clients, which are large companies such as The New York Times, Universal Orlando, and USAir, etc. plan how to provide safer workplaces, safer products and safer environments. But we never planned for Sept 11. We never knew how it could affect an entire industry.

AON and Marsh are the two largest insurance brokers in the world and I – with a loyal team of consultants – was responsible for development of the workers’ compensation practices at those companies. Workers’ comp insurance is the largest line of insurance coverage – a huge cost to most employers – and I had found the solution to reduce those costs significantly. Helping a wide-variety of types of organizations was gratifying, and there was a new challenge every day. I had written, published, traveled, and worked hard for 25 years, so I looked forward to scaling back.

When a retirement opportunity presented itself, I left the workforce to enjoy being a mom. My daughter was 17 and Glastonbury High School had not gone well. Against her will, we had moved her to a private school, and she and I were getting reacquainted during the long drive to and from school in Farmington, CT. Life was good.

Many Former Employees Went Back To Work

It wasn’t part of the plan to go back to work, but two weeks after Sept 11, I went back to AON, filling in for Lisa Ehrlich. Lisa was an outsourced risk manager who worked on-site at a company in Stamford, CT. On 9/11, she had gone into the NY office for a meeting and was killed that day. I was honored to be able to help in some small way. Many former employees went back to work in the intervening years to help the brokers rebuilt their practices. Here is a remembrance of my colleagues.

In the 17 years since Sept 11, a new generation has taken over. Some hardly know our industry lost so many that day, key leaders and pioneers in the field of workers’ compensation cost containment. In the intervening years, my nephew, Michael Stack, has taken over a leadership role in my company and become an industry leader in his own right. I am very proud of him for carrying on the legacy and memory of our beloved colleagues lost on that fateful day.

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the co-author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:RShafer@ReduceYourWorkersComp.com.

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

Filed Under: Risk Management

3 Critical And Simple Steps For Workers’ Comp Supervisor Training

September 10, 2018 by Michael B. Stack

Have ever been watching a sports game whether on TV or in person, and you see and feel the momentum shift? The team with the positive momentum can’t seem to do anything wrong. And the team with the negative momentum can’t seem to do anything right.

Hello, my name is Michael Stack, CEO of AMAXX, and this concept of momentum I believe is the most underrated and powerful force in our world today. And if we can harness this power of momentum, and if we can understand it and apply it to our work comp programs, the benefits can be immeasurable.

Positive or Negative Starts At First Reaction from Supervisor

How this plays out is really right at the start of that claim. That interaction between the employee and the supervisor. That’s going to set the tone for how the entire claim is going to go. So, you need to train your supervisors on how to respond accordingly. And the good part is, it’s really not that difficult. There’s a couple of simple steps that they need to do, that they need to take, that they need to have the right mindset in how to respond to those injuries, that can start building that positive momentum in your favor.

Step #1: Demonstrate Care

So let’s talk about hat these couple of simple steps are. First thing the supervisor needs to do is demonstrate care. First thing they need to do is demonstrate care. How are you feeling? I’m sorry you got injured. Is there anything I can do to help? And then listen and problem solve. Again, listen and problem solve. Very simple as far as responding to their injury. Demonstrate care.

Step 2: Set Expectations

Next piece here, set expectations. Set expectations for what’s going to happen, and how this work comp program is going to work for that employee, answering some of these simple questions, like how is the employee going to get paid? Are they going to be able to return to work? How is that all going to work. And then how is the medical treatment going to work? How are they going to get their treatment? What doctor are they going to be able to see? How are they going to get their prescriptions filled? Are they going to have to pay a deductible?

I heard a lot of stories from my cousin that got injured, and that didn’t really go to well for him. So, set those expectations, answer those questions. Really let them know what’s going to happen.

Step 3: Facilitate Medical Care with Injury Triage

And then the final thing is facilitating the medical care. Coordinating and facilitating that medical care. And the best practice here is to really make this very simple for your supervisors, but I’m just going to guess they’re probably not trained as medical professionals. They probably don’t know exactly what to do with a shoulder injury. Leverage a third part injury triage provider. Have that supervisor and that employee call the nurse hotline together. They’ve walked through millions of calls on how to handle that shoulder injury, and they can get to that individual employee to the right treatment in the right time frame.

Very simple steps for your supervisors to follow at the time of injury, that can build that positive momentum for that claim. Again, my name is Michael Stack, CEO of AMAXX. And remember, your work today in workers compensation, it can have a dramatic impact on your company’s bottom line. But it will have a dramatic impact on someone’s life. So, be great.

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Communication with Employees

6 Common Mistakes Made In A Workers’ Comp Premium Audit

September 6, 2018 by Michael B. Stack

An annual premium audit is a great opportunity to review your workers’ comp class codes and included payroll for accuracy. Employers that understand the process and prepare early should, at the very least, have no surprises from the audit. Unfortunately, far too many organizations view the audit as a necessary evil, don’t take the time to understand it, and are later presented with a bill they did not expect and may not even be able to pay.

The best way to face a premium audit is head on. That means knowing what to expect and preparing ahead of time, along with avoiding the most common errors.

The Audit

Insurance carriers conduct premium audits to verify a company’s payroll for the period during which it provided coverage. It occurs after the policy expires to determine the accuracy of the payrolls for that year to see if the premium must be adjusted. If the payroll exceeds the estimated projected payroll, the carrier will send a bill seeking more money. On the other hand, if the payroll is lower than projected, the employer may get money back.

Insurers conduct audits to ensure the premium paid to them accurately reflects the company’s risk. That includes making sure the business and employees are properly classified. It’s imperative to have the proper documents and information ready for the audit.

Here are common errors employers make — and how to avoid them.

Failing to include deductions. Everything in the payroll is not necessarily subject to the workers’ compensation premium. The allowable exclusions vary among states, but several are universal to all jurisdictions, such as

Overtime (premium portion, or the half part of time and half)
Double time (premium portion, or the double part of double time)
Severance pay

Severance pay for someone who has not worked at the organization incurs no risk and, therefore does not need to be included in the workers’ compensation premium calculation. Overtime and double time pay may be excluded — to a certain extent.

For example, if ‘Joe’ makes $10 per hour, but you give him overtime, or time-and-a-half for working weekends, the extra portion of his pay can be excluded. So, if Joe works 8 hours on Saturday at a rate of $15 per hour, the extra $5 per hour, or $40 (8 hours x $5 per hour) can be excluded. The same exclusion applies for double time.

Depending on the jurisdiction, additional deductions may apply.

Officer excess
Uniform allowances
Tips/gratuities
Employer-provided perks
Bonuses

Neglecting to inform the auditor. You will be charged for your $100,000 in overtime, double time and severance if you do not report them to the auditor!

Omitting the necessary paperwork. Once you’ve informed the auditor of the deductions you’ve found, you need to back it up with the proper paperwork. For example, if a portion of your payroll went for severance pay, you will need the proper documentation. Other documents you may need to have at the ready include:

Payroll records
Payroll tax returns
Certificates of insurance
Invoices for contracts that show a breakdown of labor and materials

Forgetting to consider state differences. In addition to the overtime, double time and severance pay exclusions, jurisdictions often have additional deductions. However, they are not the same in every state. A multi-state employer that assumes exclusions in one state apply to another may be sorely mistaken. You can check your state’s Basic Manual, ask your insurance broker, or ask your premium auditor to direct you to the allowable deductions for a particular jurisdiction.

Improperly classifying employees. Your business operation determines what your ‘governing class’ will be; i.e., the classification code in which the bulk of your employees will fall. Employees such as clerical workers who incur little risk may fall into a different category, but only if they NEVER do other work. For example, if ‘Sally’ is an administrative assistant but once or twice a year she is involved with inventory control on the manufacturing floor, she cannot be classified in the clerical class.

Failing to ask questions. If you’re not sure which classification applies to your company or you don’t know what paperwork is required to back up your deductions, ask. Resources are typically available through state insurance bureaus, NCCI, or your broker or insurer.

Conclusion

Premium audits don’t need to be a gut-wrenching ordeal. Document and prepare for the premium audit on an ongoing basis, so you don’t have to spend hours or days getting ready. Asking the right questions, understanding deductions that apply, and gathering the proper documentation will make the process smooth and painless.

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Insurance Issues, Rates, Premiums

Essential Elements of Effective Work Comp Settlement Agreements

September 5, 2018 by Michael B. Stack

The only good file is a closed file! That is the mantra of any seasoned workers’ compensation claims professional. Getting to the state of happiness requires skill, some luck and a lot of exceptional legal drafting when memorializing any settlement agreement. Failure to do this can result in delay and added costs to a workers’ compensation program.

Outlining the Nature of the Dispute

The requirements for workers’ compensation settlement agreements vary in each jurisdiction. Never forget to understand the essential requirements and include them in your settlement agreement. Failure to do so will only cause future problems. A general survey of state workers’ compensation laws note the following basic requirements:

Materials Facts: Any settlement agreement should have a statement of admitted material facts.

Matters in Dispute: The disagreements between the parties should also be stated. It is important to allow the compensation judge or commissioner reviewing the document to know what matters are to be decided by the settlement agreement.

Positions of All Interested Parties: The claims and contentions of each party must be stated in the settlement document. These statements outline what is in

A settlement agreement should also specifically outline what is being settled and how the issues are resolved. The main item in this area is a lump sum or annuity payment to an injured worker and various agreements regarding medical providers and other interested parties. A settlement consultant should be brought in to explain the options and benefits of receiving the money via periodic payments compared to a single lump sum.

If any issues remain in dispute, it is important to detail those matters. Statute or rule also govern payments under a settlement agreement. Failure to make timely payments can result in an assessment of penalties.

Types of Settlement Agreements

The types of settlements available under a workers’ compensation system vary in each jurisdiction. In some instances, the parties are not able to close out future medicals. In other instances, this is the norm.

Full, Final and Complete – Including Future Medicals: Under this type of settlement, all workers’ compensation benefits are forever closed out. If you want something closed out, be sure it is clearly stated in the settlement document.

Full, Final and Complete – Future Medicals Open: This is a settlement where all indemnity benefits (TTD, TPD, PPD, and PTD) are closed out. Medical benefits are typically only closed out through the date of settlement or some other specified period of time. The employee remains eligible for future medical care and treatment provided it is reasonable, necessary and causally related to the work injury.

Partial or “To-date” Settlements: This is a type of settlement where only certain benefits are closed out, or all workers’ compensation claims are resolved through the date of settlement. Again, it is important to specify with precision what benefits are being closed out and through what date of the closure.

A competent workers’ compensation attorney should be part of this conversation.

Never Forget the Basics!

Regardless of jurisdiction, there are several guiding principles to keep in mind:

A workers’ compensation settlement may never really be final. Most workers’ compensation acts allow for rescission of the settlement or for it to be vacated should it be determined there was a mutual mistake of fact, fraud or significant unanticipated change in the employee’s medical condition.

All settlements are presumed to be fair, reasonable and in conformity with the workers’ compensation act. Extra scrutiny can apply in instances where the employee is not represented by an attorney.

A workers’ compensation settlement must be memorialized in writing and approved by a compensation judge or industrial commission. Failing to receive this stamp of approval can render your settlement agreement meaningless.

Conclusions

Like any legal document, a settlement agreement needs to be carefully drafted and written with precision. Failure to do so can cause unnecessary (and unanticipated) future expenses.

“Sloppy, imprecise drafting can lead to legal wrangling. A single word in reciting the terms of a settlement, for example, can bring about intense litigation over interpretation. In drafting settlement agreements, lawyers should, quoting novelist Vladimir Nabokov’s advice to writers, ‘have the precision of a poet,’ leaving out the poet’s creativity, originality or artistic flourishes. Had the lawyers here been more studious and careful in choosing a single word (‘plus’), this case undoubtedly would not have been necessary.” Paluch v. UPS, 2014 Ill. App. LEXIS 283 (Ill. Ct. App. 1st 2014)

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Settling WC Claims

Be The “Maverick” of Your Workers’ Comp Program

September 4, 2018 by Michael B. Stack

Hey there, Michael Stack here, CEO of Amaxx. This past weekend, over the Labor Day Weekend, my family and I spent a couple days in Washington DC, our nation’s capital. Now, our visit happened to coincide with the funeral services for Senator John McCain, to honor his life and his legacy.

Senator McCain Was Maverick of the Senate

Now Senator McCain was known as the maverick of the senates. Now, there were several reasons for that and very specific, instances where he earned that nock name and that reputation. But, the primary reason was, Senator McCain did things differently and took a path often different than the way things had always been done.

Senator McCain earned that reputation, earned that nick name as maverick because he did things differently than the way things had always been done. It earned him a tremendous life and a tremendous and highly respected career. If you look at your organization and worker’s compensation, I want to speak to very specific practices that may be happening within your company, very negative practices.

Do Things Differently Than Have Always Been Done

First one is punishing injured workers for filing claims, punishing injured workers for filing claims. The other side is encouraging injured workers, or encouraging employees not to file a claim at all. You may know in your heart, and of course, there’s tremendous data and research to back this up, that that’s not the right thing to do.

You’re serving up high workers comp cost, you’re serving up poor injured worker outcomes on a silver platter to your organization by doing either one or both of these two practices. But,it;s the way it’s always been done at your organization. I want to encourage today to take inspiration from Senator McCain’s life and legacy to change those practices. Those two very specific practices, to change those practices within your organization because when you do, you’ll be putting your program on the right track. To improve those injured worker outcomes and drastically drive down your worker’s comp cost.

Get on Michael Stack, CEO of Amaxx and remember, your work today and worker’s compensation can have a dramatic impact on your company’s bottom line, but it will have a dramatic impact on someone’s life, so be great.

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Management's Role in Workers Comp

16 Point Checklist To Determine If You Need A Workers’ Comp Claim Audit

August 30, 2018 by Michael B. Stack

Self-insured employers can have a good safety program, an established return-to-work program and knowledgeable nurse case managers, and still pay way too much on their workers’ compensation claims. Ineffective claims management can wipe out most or all of the cost savings achieved through your efforts to control cost. Whether you have your own claims office, or have a third party administrator (TPA) handling your workers’ compensation claims, poor claims handling will always result in higher claims costs.

Need to Know If Following Best Practices

The challenge for the risk manager is to know whether or not the work comp claims are being handled properly. The risk manager can personally be involved in each claim for compliance with the Best Practices for Workers’ Compensation claims guidelines, but that defeats the purpose of having company claims adjusters or a TPA if the risk manager has to direct all the work on the claims.

An alternative approach is to have the claims supervisor or claims manager review each claim file for proper claims handling, but that often results in minimal improvement. The claims supervisor or claims manager has a vested interest in not pointing out what could be construed as their failure to properly manage the claim adjusters.

Determine If You Need An Independent Claims Audit

The best solution to determine the quality of the claims handling is to bring in an independent claims auditor. The independent claims auditor has no conflict of interest when reviewing the claim files and can provide an unbiased evaluation of the quality of your claims handling. Here is a checklist to determine if you need a claims quality audit.

[ ] You have noticed deviations from your Best Practices guidelines

[ ] You have noticed gaps in the investigation of claims

[ ] Information that should have been known during the initial investigation of the claim turns up later in the life of the claim

[ ] The adjusters are not staying current on their diary system

[ ] You have received an inquiry from the Industrial Commission, Work Comp Board, or Insurance Commissioner’s office

[ ] You have received complaint calls from employees or from the employees’ supervisors or managers

[ ] Your claim cost is increasing faster than the rate of inflation

[ ] The average age of your claims is increasing

[ ] Your claims are open longer on average than your industry’ average

[ ] Your loss run contains errors on loss location, injury description, type of claims

[ ] Your claim reserves are being stair-stepped (many reserve changes on one file)

[ ] Your actuary’s recommended reserves differ significantly from the reserve on the files

[ ] You have noticed significant reserve increases right before claim settlement

[ ] You have noticed missed subrogation opportunities

[ ] You have noticed experienced adjusters being replaced with adjuster trainees or significant personnel turnover in the claims office

[ ] The adjusters have high caseloads

A Claim Audit Is Recommended If You Checked One or More Above

If you checked one of the above categories you should consider an independent claim file audit. A claim quality audit is recommended if you have checked two or more of the above categories.

Contact: mstack@reduceyourworkerscomp.com.

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

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

Filed Under: Claim Audits & File Review