Over the last several years, many states have confronted the issue of whether illegal aliens are entitled to workers’ compensation benefits.  This emerging topic has resulted in many claim management teams to develop strategies to deal with this complex issue.

Background

Due to concepts of federalism, it is important that claim management teams understand the statutes and case law interpretations in the jurisdiction they are handling the claim.  There are four categories of states when it comes to workers’ compensation benefits entitlement of illegal aliens:

1. Entitlement Codified in Statute: In states such as South Carolina and Texas, the state workers’ compensation act specifically entitles persons who entered the United States illegal the ability to obtain benefits if they suffer a compensable workplace injury.

2. Entitlement via Case Law. An example of this category is the state of Minnesota.  In Correa v. Waymouth Farms, Inc., 664 N.W.2d 324 (Minn. 2003), the Minnesota Supreme Court held that the workers’ compensation statute only refers to an “employee” and the entitlement to benefits is not dependent on “legal” status.  Other states falling into this category have similar thought processes.  No challenge to this interpretation has reached the Supreme Court of the United States.  Most legal experts are of the option that such rationale would ultimately be upheld.

3. Entitlement Granted to only “Employees” of Legal Status. The number of states falling into this category is limited.  One example is the state of Wyoming, where the definition of an “employee” entitled to benefits is limited to the “legally employed…”  The Wyoming Supreme Court upheld this law following a legal challenge.

4. Entitlement Undefined. These are jurisdictions that have not addressed the issue in either statute or case law.  It is assumed that barring any statutory changes similar to those found in Category III, courts in these states would follow the rationale of the Correa case.

Practice Pointers: Essentials for Claim Management Teams

Claims involving persons working in the United States illegally can significantly increase exposure in workers’ compensation matters.  This is mainly due to the ability, or lack thereof, of an injured work to obtain gainful employment based on their disclosed employment status.

• Treat ALL injured workers with respect and dignity. The “face” of the American worker is rapidly changing.  With this change, it is important to treat all claimants how you would want to be treated.  Do not assume that someone is in the United States illegally based on their name, primary language or other ethnic background.

• Know the Law (and interpreting case law). Statutes and case law interpretation change.  If you are not aware of the law’s current status, be sure to consult an attorney.  It is also important to consult an attorney if you are handling a claim in Category I, II or IV jurisdictions.  Once you become aware of someone’s immigration status, it may be difficult or even illegal to have him or her engage in certain return-to-work activities.  These include aspects of job search or engaging the employer to offer that person a light-duty position.

• Be creative. A high percentage of people in the United States illegally have limited English proficiency.  While there is no official language in this country, chances of success depend on literacy and the ability to communicate effectively.  When handing a claim involving an illegal alien, some rehabilitation services you might want to consider include courses in “English as a Second Language,” (ESL) reading courses (even in their native language) and other opportunities that increase this person’s chances of success.

• Engage specialized vocational rehabilitation experts. The diversity of American culture has resulted in a growing number of vocational experts of differing cultural backgrounds.  This includes a greater pool of people who are multilingual and have the ability to communicate with non-English speaking persons.   Engaging companies with a wide variety of professionals will only increase your chances of closing your file and mitigating exposure.

Author Michael Stack, Principal of Amaxx Risk Solutions, Inc. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  As the senior editor of Amaxx’s publishing division, Michael is on the cutting edge of innovation and thought leadership in workers compensation cost containment. http://reduceyourworkerscomp.com/about/.  Contact: mstack@reduceyourworkerscomp.com.

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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.

Trend Favoring The Employer

So far the judicial trend is favoring the employer in defending against injuries and claims involving marijuana use on the job or coming to work under the influence.  Employees terminated or denied employment because of a positive drug test for marijuana have been up held by the courts.

A few of the most noteworthy cases are:

•                 Montana:  Johnson vs. Columbia Falls Aluminum
•                 California: Ross vs. Raging Wire
•                 Michigan: Cassias vs. Wal-Mart
•                 Washington: Roe vs. Teltec Customer Care Management

Some states allowing medical marijuana have had decisions in favor of the employee.  These cases involved issues where the employee sought use of marijuana to recover from a workers compensation injury.  A few of these cases are:

•                 Louisiana: Creole Steel vs. Ricky Stewart
•                 California: Liberty Mutual and Farmers Insurance vs. Cockrell
•                 New Mexico: Ben’s Auto Services vs. Vailpandro

Arizona, Connecticut, Maine and Rhode Island have written protection sections for the employee in their laws.  However there is still question if these protections are legal and constitutional.  At this point in time it seems rulings are unavailable.

Federal Law Should Trump State Law As Marijuana Still Illegal

Federal law should trump state law since Federal Law still has marijuana as an illegal substance. Further laws and rules for commercial drivers, pilots, railroad engineers, and public transportation operators all have adverse penalties for marijuana and other substance abuses.

OSHA general duty clauses require employers to provide a safe place to work.  The employer must provide that work areas are free from hazards that may cause injury, or death. Drug impairment falls into this requirement.

The Department of Justice advised it would continue to enforce these laws yet they have refused to challenge states that have legalized marijuana.  Hence there is a mixed message which leaves room for the courts to interpret according to their thought rather than law.

Eventually it is expected that the employer will have to prove that the injury or death was the sole result of marijuana use.  This may be more complex than a drug test.   While marijuana remains in the system for days after usage, it may not be easy to ascertain actual intoxication at the time of loss.

This will require very detailed investigation as to facts of the loss.  Witnesses will be necessary to testify as to the employee’s actions just prior to the incident.  They will need to be detailed and unimpeachable.  Witness statements, preferably under oath or through depositions will assist in this area.

Extenuating situations or other contributing factors will need to be ruled out.  Such items may be wet floors, unsafe machinery, safety violations, improper instruction, weak direction and control by the supervisor, poor training, little or no experience as well as many more situations.

In the event of an extenuating situation there still could be liability placed on the employer to cover the claim.

Employers Must Take Firm Position Against Weakening Position

The judicial trend favors the employer concerning marijuana use in the workplace. However, it is also apparent that today’s legal and socio-economic trends are going to chip away at this protection until it disappears.  Therefore, employers must take a firm position against any weakening of these present laws and decisions.

With the help of professional persons well versed in this topic employers must develop and implement strong polices against marijuana and other substance abuse on the job.  If allowed, the program should also address off duty restrictions.   Make certain each and every employee is made aware of the program and signs an affidavit accepting compliance and willingness to accept violation punishments stated in the policy.

When a loss occurs that involves abuse of the policy, demand that the claim technicians and handlers investigate thoroughly.  They must be admonished to defend the claim to their maximum allowed by law.  Do not allow any settlements or dispositions that could set an adverse trend against employer rights.  Keep contact with the adjusters as often as necessary until the claim is resolved.

Implement regularly scheduled meetings with employees to cover as constant reminders of the policy and compliance.  Publish general situations where employees were penalized according to policy violation.  Be very careful not to divulge too many specifics.  The publicity notice should be developed by the corporate legal department.

Employees Made Aware of a No Tolerance Program More Likely to Abide by Program

Employees who are made aware of a no tolerance program disciplines are more likely to abide by the program. Work with industry and professional organizations to have legislation that maintains employer defenses and rights in the substance abuse areas. Keep all abuse policy programs current.  Review the standards with legal counsel at least twice a year.

This was the slogan of an old associate I had way back in the day.  I have mentioned it here in this blog many times, in many capacities.  “To trust but verify the truth” is what claims adjusting is all about.  We take the word of the injured worker, but at the same time verify on our own the “extent” of disability.  At times we are shocked.  Other times not.

Verification of a work comp claim has many tentacles of which to explore:  Verification of witness statements, of medical records, of causal relation, of wage records, of injury details, and so on.  Even further is verification of activities outside of work using surveillance, or verification of the injured worker’s status as a Resident of the USA.

Even a simple work comp claim has a lot of details of which to verify.  So in general terms, let us think about a few of the many tasks the adjuster has to verify during a claim:

Verify injury details

This is obvious.  The worker will claim what happened, and how they were injured.  The adjuster then makes that first phone call to the employer, in order to verify the injury details.  This is where it all begins.  Did the worker accurately recall what happened?  Was the worker performing normal job duties at time of injury?

Verify injured worker information

This will include DOB, SS#, tax status, height, weight, tobacco/alcohol use, prior medical history, prior surgical history, prior medication use, prior drug use, current job tasks, other work duties, other employers, other injuries, other car accidents or prior work comp claims, and so on.  This is where the claim is put together and these risk drivers are used to allocate the exposure of the claim.

Verify the causal relation of the mechanism of injury to the injury allegations

Claims people ask the doctor to correlate objective medical information and assemble the puzzle of work-relatedness.  This is where we verify the details of the claim, the mechanism of injury, and injury allegations, and the objective evidence.  A claim is accepted or denied based on this outcome.

Verify activity level against what the worker reports to their doctor

Completed by using onsite surveillance,  we see if the worker is as disabled as they claim to their doctor.  Some are, others are not.  This is where you verify how honest they are and identify any secondary gain issues.

Verify future exposure

During litigation, you want to make sure you look at the whole picture.  Future medical, MSA exposure, RX use, vocational issues, loss of earning capacity, whatever your jurisdiction has to offer to injured workers you have to take in to consideration as exposure.  This then has to be tied in to a monetary value of what the claim is worth, and what settlement value.

Verify ability to work in the USA

This one is a newer one, although not so new.  Many immigrant workers come to the USA in hopes of creating a better life for themselves and their families.  Sadly some are never able to complete a Resident process, or have a proper work visa.  We all know some story of an employer that has an army of illegal immigrants working for them.  When they become injured the employer dumps them aside.  In some jurisdictions, these workers do qualify for work comp medical benefits but no wages.  Some obtain a partial wage and medical, etc.  The key to remember though is to check everyone.  A lot of the SIU/PI firms use a service to verify immigrant status, and many will show the SS# matching to your claimant.  However when you present the same information to the Social Security Administration (SSA), your injured party is nowhere to be found.  This means thousands upon thousands of dollars in work comp pay may have been in error.  Redemptions worth thousands may have all been leakage due to the fact that the adjuster did not verify that a SS# matched up to the worker, confirmed by the SSA.  So verify your indemnity claimants, not only through ISO, and through your SIU firm, but also through the SSA.

Verification of claim details is an integral part of the claims process.  One that every adjuster tackles every day.  But how much verification they really complete is not known.  How much do you think your adjuster verifies?

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  http://reduceyourworkerscomp.com/about/.  Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

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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.

For the most part an adjuster works from day to day.  They work in an office or cubicle, and go about their business.  Recent polls and studies have shown that the adjuster is mostly satisfied with their job.  They feel as if they make a difference, and that their job matters in the global sense.

However I think if I were to pull a series of claims professionals aside and ask them if they are really satisfied, I think the results would be different.  The key question to ask would be “How could you do a better job, and become more involved and more proactive in the claim versus the environment you currently have?”

No carrier is perfect.  When you are dealing with large sums of money and other monetary authority, there are a lot of people that are going to be involved.  These people may or may not have influence on the claim as a whole, but the fact remains that their voice is going to be heard by the adjuster.  That being said, given the claims environment most adjusters are in, how do we make it better?  How do carriers make an impact on the claim, instead of just hitting their audit marks for best practices?

I have dealt with claims professionals for a long time, and over the years I think I have a pretty good idea of what the adjuster would want if given a “perfect world” scenario.  This list is probably a dream, and chances are no carrier would ever allow this to be the standard of how they handle claims.  But, maybe if a few of these items were to happen, who knows what the impact would be on the profession as a whole?  I am only going to go in to a few points here, because this list could be pages and pages long.  Keep an open mind, and imagine the possibilities if……….

The handling adjuster has the freedom to assign whatever vendor they prefer.

This is an easy one.  For example, I know plenty of adjusters that avoid using surveillance because they dislike the vendor they are forced to use.  Adjusters feel the SIU vendor is not aggressive enough, they do not communicate enough, or the results just never seem to be there.  On top of that, most adjusters are only allowed to complete a day or two of surveillance and hope they hit a jackpot.  This is rarely the case, so it sours the entire experience.

But let’s say they have the freedom to use whatever local vendor they wish.  Every claims person knows the SIU team they wish they could use, because at a prior carrier they had great success with them.  But at Carrier ABC, they are forced to use SIU vendor X, who never seems to get the job done.

The adjuster keeps the file from day 1 until the file is over.

Another pet peeve of the adjuster is that once they complete all of the dirty work and investigative tasks, it is then transferred to another adjuster to take it over from there.  I cannot tell you the complaints I hear of an adjuster who set a file up to settle after spending countless hours on it, only to have the file transferred to another adjuster.  The new adjuster then gets to bask in the accolades for a job well done come file settlement.  Sadly the reality is that the new adjuster really just made a few phone calls.

Plus when the file is transferred after a period of time, the claimant gets confused.  This confusion can derail many things, and it probably hurts the claim rather than help it.  Carriers have their reasons for transfer, but I could never see the benefit in moving the file from a qualified experienced lost time adjuster to yet another qualified lost time adjuster.  Why not just keep it where it is?  Adjuster 1 has already established a relationship with all involved parties.  Why start over?

If the adjuster wants to go in the field to perform accident investigations or to complete a recorded statement in person, then let them go do it.

Permitted if geographically possible, if the adjuster wants to go size a claimant up by doing a statement in person, why are they not able to do so?  Details obtained over the phone only go so far.  You really cannot truly investigate all aspects of the claim via the phone.  Do you know what the machine looks like that injured the claimant?  Where were they standing?  How were they operating the machine at the time of the injury?  Without being able to actually see these details, I do not think an investigation is truly completed.

Provide claim assistants to help the adjuster manage their time.

Maybe the most important, I hear from adjusters that they have to spend too much of their time doing clerical work, instead of actually working on their claims.  This can range from coding bills, to processing mileage checks, to completing forms, calculating wages, and so on.  These are all tasks that could be completed by a claims assistant.  This frees up the adjuster to work on the actual claim compiling investigative data, discussing cases with Counsel, and so on.  Even though the positives of providing such a service to the adjuster chart off the paper, carriers are reluctant to provide little if any assistance to the adjusters.  If you ask me, the adjuster has more important things to do instead of sitting on hold with a doctor’s office waiting to talk to a person to request medical records.

I have only scratched the surface here.  In a perfect world, think about how efficient the claims adjuster could be.  How proactive they could be.  How their insight and approach towards claims could differ when given the time and resources to focus on the claim itself.  The possibilities are endless.

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  http://reduceyourworkerscomp.com/about/.  Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

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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.

From time to time I like to share a file I reviewed on this blog.  Not only to point out the good but also the bad.  Most of the time these claims have various red flags, and they seem quite obvious that the claim was not compensable.  Or on the opposite side the claim was very direct, very compensable, and ended up being very high exposure due to normal factors.  Generally it is nothing new to the typical person involved in everyday claim activity.

Always Question Everything – Even The Sure Bet

Even now and then you see a claim that threw a curveball.  The reason why I like to share these types of claims is to remind you that any claim is capable of a surprise.  It serves as a good reminder that every claim deserves and requires an adjuster that pays attention, doesn’t give up, and stays proactive.  The key is to always question everything—even the sure bet.  Chances are your questions will receive normal answers, and the claim will go on to resolution just as you expected it would.  But every now and then, you will hit upon the right question that explodes a claim right open.

Claim Starts Off Fairly Generic

The following is a brief summary of an actual claim.  The name will be changed, and I will not expose the carrier, employer, adjuster, or anything else that is identifiable but remember this is an actual claim.

The claim starts off generic enough:  A worker at a metal shop was adjusting a machine with a pipe and huge Allen wrench, and when pulling down on the adjustment piece with this pipe he felt a pop in his shoulder.  He reported the claim promptly, and was sent for treatment.

This worker is a 10-year employee, and a good one.  At the time of injury he was in his late 30s.  Nothing came up on the ISO background sweep for prior insurance activity.  The adjuster took his recorded statement and it was very normal.  The claimant gave a consistent background of the injury, his treatment, and so on.  He started off in physical therapy, and placed in light duty.  The injury took place in March.

After First Month No Improvement

After 3-4 weeks of physical therapy, he failed to improve.  An MRI was ordered.  It showed nothing really acute and no rotator cuff tearing.  It did show a chondral defect, and some continued inflammation.  The treating orthopedic doctor opined that the mechanism of injury was consistent with the MRI results, given that an axial load was placed on the shoulder and this chondral injury was the “pop” the employee felt at the time of injury.

The doctor recommended continued therapy, and a series of cortisone injections to try to calm the inflammation.  An IME was completed with a respected local shoulder specialist and supported the treating doctor’s recommendations.  The adjuster approved this treatment and it commenced.

It was around this time that the adjuster began to get a little suspicious.  Here we have a guy a couple months deep into this injury, with little improvement.  But, he was still working light duty, he was compliant with treatment, and his attendance was perfect for everything.  But, the adjuster assigned some surveillance anyway just to be sure.  The surveillance came back with some footage of the claimant running some errands with his kids when not working.  Nothing out of the ordinary.  He was not using the injured arm, and he was not doing anything that he should not have been.

9 Months Later No Improvement – Something Can’t Be Right

Fast forward to early September.  Here we are 9 months post injury for a chondral issue in the injured shoulder.  No rotator cuff tears, no other real degenerative issues other than normal wear and tear.  He remains on restrictions, with little overall improvement since the injury happened.  In fact the treating doctor now states that the shoulder is “frozen” which gave way to a diagnosis of adhesive capsulitis.  This is the diagnosis that most adjusters fear.  A frozen shoulder always is a big deal, with a lot of future treatment ahead and likely a surgical issue that will be the next recommendation.

Something just can’t be right.  The adjuster and nurse case manager bring up their concerns to the doctor.  The treater said that the frozen shoulder is due to the fact that the worker had limited mobility for months, and that nothing seems to solve this chondral issue.  They tried therapy, injections, and nothing seemed to get him on the path to resolution.  It is consistent with the mechanism of injury, and everything seems to add up very clearly to the doctor.

Surveillance Is Tried, And Tried Again

The adjuster still is just not buying it.  Something else has to be going on.  Surveillance is tried again, with the same result: nothing.  The adjuster tried different days, weekend days, holidays, all with no result of the employee doing anything incriminating.

This is where most adjusters may give in.  After all, the doctor only wanted to do a Manipulation under Anesthesia, start aggressive therapy, and the doc actually gave a positive prognosis for full recovery.  The adjuster did due diligence on investigation, and struck out.  Claimant attendance was perfect at work and at therapy, and he did everything that the adjuster had him do.

Case Is Blown Open

Here is the difference: the adjuster did not avoid that gut instinct.  Something kept bugging the adjuster, and it just wouldn’t go away.  Rather than give up on surveillance after about 7 or 8 failed days’ worth, this adjuster tried something new—surveillance through the night.  And not just at night, but full 24-hour onsite surveillance.  Would this yield a different result?

Indeed it would.  Turns out this claimant would work his shift at his employer, and then go home.  Surprise to all, he left his house again around 1am and went to another metal shop a few towns away.  He worked there from 2am to about 6am, then would leave and head right to his job at the first employer where the claim was filed.  This claimant never mentioned a second job, and nobody knew he was working it.  The adjuster then went to the second employer and met the employee in the parking lot, where I imagine an interesting conversation took place.

Nothing Can Replace Gut Instinct

This lead to a dispute on the file, and the case was currently heading towards litigation upon my review.  The point to remember here is to not give up and to continually question everything.  Here, the adjuster had tried everything, and 6 months later they were finally able to bust the claim open.  Even on a seemingly compensable case such as this, there is no value or training that can replace gut instinct.

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  http://reduceyourworkerscomp.com/about/.  Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

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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.

Over the last several years, states have taken a proactive approach to penalizing “frivolous” denials of primary liability in workers’ compensation claims. As a result, claims management teams need to take heed and evaluate their best practices.

What Is Required Before I Deny?

The proper legal requirements to deny primary liability in a workers’ compensation claim vary in each jurisdiction. If you are a part of a claim management team that handles claims in multiple states, it is essential to understand the differing requirements. Proper timing and the completion of specific forms may also be part of the process.

General Rules for Issuing a Denial

There are several general rules one should follow and incorporate in their best practices.

• Understand what forms you require, the timelines they need to be completed in and what parties are required to receive these documents. It is also important to make sure paperwork is submitted to the appropriate state agency.

• Every form and document completed should contain only accurate information. This information typically includes the name of the employee, SSNs, injury related information and other pertinent information on how the injury occurred.

• Denials of primary liability usually require a specific legal reason as to why the injury is being denied. A common form of claim penalties occur when a claims professional states things like, “The injury did not take place. Denied.”

• Stating the specific reason for the denial in language easily readable and understandable to a person of average intelligence and education and a clear statement of the facts forming the basis for the denial are also a standard legal requirement.

• Most states require that insurance carriers and TPAs also provide instructions to injured workers on what steps they can take if they disagree with the denial, as well as the availability of rehabilitation benefits, the statute of limitations for filing a workers’ compensation claim, and the address and telephone numbers of the state division responsible for administering workers’ compensation enforcement.

Never disclose Protected Health Information (PHI) unless you receive written permission to do so or are required to do so under law.

Mistakes Happen. Deal With it Without Delay!

Nobody is perfect and mistakes to happen from time to time. However, ignoring the mistake and not correcting the error can be costly. In order to avoid penalty situations, there are ways one can go about properly handling these issues:

• Cooperation with the state agency assessing the penalty is important. While you might not be able to avoid completely a penalty, cooperation can mitigate the situation. State agency employees appreciate a timely return of all phone calls and letters.

• Provide complete and detailed responses when being audited by state agencies regarding potential penalty issues. When an initial claim is received, it is important to conduct a complete investigation and keep detailed information on facts that will serve as a basis for the denial. Obtaining specific names of witnesses or locating medical records is essential.

• Remember the required timelines. Note when and how to pay various indemnity and medical benefits. If problems arise such as the receipt of paystubs when paying temporary partial disability benefits, it is important to document your file as to the dates that phone calls are made, to whom those phone calls were made, and any additional follow-up after the telephone call. If problems arise due to the receipt of mail, fax transmissions or email communications, document those problems and continue to follow up. It is also important to make sure someone is checking your mail when you are out of the office. Make sure payments are sent to the correct recipient and address.

• When in doubt – ask someone in your office or an attorney. The various statutes and rules for workers’ compensation laws are a complex framework filled with forms, deadlines, and payment schedules. Additionally, voluminous case law exists on penalty issues.

Conclusion

All members of the claim management team need to take proactive steps to avoid penalties. While mistakes do happen, taking responsibility for the error and cooperating can help reduce exposure to you and your clients.

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

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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.

Keeping tabs on your financial books is probably the utmost important task for any business owner and/or organization.

In the event you are “loose” so to speak with the books, you can quickly find you and your company or organization in quite a financial pickle. With that said, not only should you be measuring the financial performance of the business you oversee, but also that of your employees and quite frankly yourself.
On way to go about making sure you’re properly self-measuring your performance in the workers compensation arena is by setting a number of benchmarks.

In the event you hit or surpass those benchmarks, things should be in good hands for you. If not, you certainly by all means have some work to do.

Review Your Efforts

 
As part of what should be in an annual “review process” for your business or organization, review your financial numbers and overall work performance. If things are not where they need to be then set a goal by the time your next review arrives to get them there or beyond.

 
Among the benchmarks to look at:

 
• Claim Financial Benchmarks – With this, review the changes in the average claim expense. Use a comparison of the typical expense for medical benefits, indemnity benefits and claim expenses. The data should not be hard to obtain, and it gives you the ability to compare your claim expense with the prior month and quarter, along with the previous year among other time periods;

 
• Average Claim Expenses Within the Industry – One facet you want to key in on is your typical claim cost is representative of others in your business sector. When looking for relative data, keep in mind that a number of bigger TPAs and sizable workers comp insurers have a portion of data available. The National Council on Compensation Insurance (NCCI) does gather payment statistics in the 35-plus/minus states wherein they are active;

 
• Ratio for reserves and payments (three months before closing) to final claim expense – When you compare what the adjuster has compiled for reserves along with claim payments made three months before the claim closing date, with the final figure paid for the claim, you can better determine the accuracy for your large claim reserve. [Exclude the claims closed in less than 180 days]. The ratio of reserves along with the dollars previously paid on the claim, to the final claim cost should be about 1.0. In the event the ratio is below 1.0, the overall claims are under reserved. If the ratio is higher than 1.0, there is on average additional funds sitting in reserves.

Claim Handling Process Benchmarks

 
While there are a variety of options to gauge your claim handling, here are some suggestions for measuring claim-handling performance:

 
• Average bill process time –Here you will have a comparison of days between the date the medical bill, legal services bill or other cost was obtained in the claims office, and the date the payment in fact was processed. This permits you to measure the timeliness of your bill payment process and gauge the progress provided by your staff.

 
• Closing ratios – This is the ratio of files open during each month, quarter or year in comparison to the files closed during the same time frame. The goal here is for a figure of 1.0 or better.

 
• Percentage of closed files with payments higher than $1,000 – This indicator is set to make the claim office honest on the closing ratios. Unfortunately, it is too easy to manipulate closing ratios, so this gives you the claim office close files prematurely when the number of closed claims with payment increases.

 
• Average time to input initial reserve – Even though different claim offices have different standards as to how quickly the initial reserve should be in the computer system, by comparing the present average length of time to a previous month, quarter or year, you can gauge how soon the adjusters are inputting initial reserves.

 
• Files on diary – This involves measuring the files that are being actively worked on the diary. Ideally, the claim office has every file on diary to prevent the files from stagnating.

 
• Files with missed diary – This benchmark can in turn be a list of the files where the diary has not been updated the diary due date has passed, or it can be a percentage of the files for a claim handling due date that has since expired. This provides you with insight into how current the claims office is in when it comes to handling of the claims.

Your company’s claims’ performance should always be of importance to you.
If you are falling behind in this arena, you very well could see your financial books go from black to red in a short amount of time, something no business owner or organization will want.

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 author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:RShafer@ReduceYourWorkersComp.com.

 
Editor Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

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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.

Regardless of the employer’s size and operational locations, the complexity of navigating all aspects of workers compensation can be overwhelming. Your TPA may offer a number of solutions, but are you aware of these services? Are you leveraging them to your advantage? In a large organization a risk manager can feel lost and not know who to contact for a resolution.

A best practice in a TPA service offering is to provide coherent and consistent services that allow the client to understand their options and create a return-to-work and claim resolution program that fits their individual business needs. This is done through a single, accountable, point of contact that is the chief facilitator in understanding and delivering on client expectations.

 
What Does an Effective Model Look Like?

Traditional workers compensation programs have failed to provide the employer clients this single, accountable, point of contact in managing all aspects of workers compensation. The roles this person plays are as follows:

 
• Facilitator

Understanding and delivering on client expectations is key for any successful TPA. Having a facilitator that is a subject matter expert on both the service offerings of the TPA, as well as the client account instructions will deliver the most beneficial outcome. He will act as a matchmaker to give recommendations for the correct mix of services to deliver on client expectations. This creates an informed consumer that is in a position to make effective decisions, as well as create a communication point to continuously monitor client objectives.

The Facilitator also acts as a liaison to the claims and clinical staff at the TPA. Having intimate knowledge and communication with the client, the Facilitator is able to give guidance to their staff of client expectations and outcomes. Their accountability to the client leads to holding their own staff accountable, as well as lends support and guidance to ensure their team is on track for the client deliverable.

 
• Educator

Another element of an effective TPA is one that can provide the necessary education clients need in the adversarial and complex workers’ compensation system. For example, the program must be able to guide and mentor clients on how to deliver resources to claim and clinical teams. This translates into innovative solutions for clients, and meets the challenges in return-to-work programs. It also provides a conduit for building effective programs in the areas of disability and absence issues in the complex matrix of state and federal laws governing these issues.

• Clinical Vocational Expert

The struggling economy and graying of the American workforce has created unique challenges in managing injured workers. While the number of work injuries per capita is declining, current trends demonstrate an increased severity in injuries that occur in our workplace. This is resulting in employees missing more time from work, especially in the older populations. Employers need to investigate and select a TPA that is able to provide guidance to nurse case managers and reviewers so they can meet these challenges.

The clinical vocational expertise adds the consistency across the board in working with medical diagnosis and treatment plans. The field of medicine is complex and ever-changing. It is unrealistic and inappropriate for a claims person to be an expert on medicine. It is appropriate and highly effective when the claims handling expert receives clinical support from the Clinical Vocational Expert.

 
Benefits of a Single Point of Contact

The main challenge risk managers face in today’s complex business environment is the need for simplicity that delivers an effective disability and absence management program. An effective TPA must have a single, accountable and knowledgeable point of contact to drive the return-to-work and claim resolution process. This single point of contact must also draw on experience and expertise to drive innovation in a collaborative manner that includes the employers and brokers, and provide medical and vocational solutions that drive quantifiable results.

 
Conclusions

Due to a changing workforce, employers need to seek innovative ideas that provide practical solutions in a cost-effective manner. Based on these factors, employers need to seek and utilize a TPA that offers tools that can be easily implemented for a more productive workforce.

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

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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.

Running a business in today’s economic world involves various factors that can keep even the best of business men and women awake at night.

 
One of the keys to any successful business operation is making sure that the financial ledger stays in the black and does not dip into the red. If it does the latter, getting it out of there as quickly as possible is crucial.

 
With that in mind, under reserving is a topic that all businesses should be aware of.
To put things in perspective, keep in mind that a workers compensation claim is in fact a legal obligation. In turn, a claim reserve is a prepared estimate for what the workers comp claim will in fact cost.

 
At the point where the adjuster overseeing the workers comp claim places a reserve on the claim file, it then is a definite monetary figure that is set aside to compensate the expense down the road of the workers comp claim.

 
In viewing things through the accounting window, the claim is an incurred liability, this even though it will be paid down the road. At the time the adjuster establishes the reserve, the business is then denied the ability to use a monetary figure that was set aside to compensate the workers comp claim.

When Reserves Go Bad

 
A company’s financial status will change at the point when there are inaccurate reserves.
In cases where you have reserves at too high a level, funds the business could put to use in other avenues of the company prove no longer available. In instances where the reserves turn out to be too small, the business must deal with an under-funded liability, leading to a shortfall over time.

So, what is the worst scenario of the two presented?
In many cases, financial experts will state that being in an under-reserving position is the worst of the two scenarios, with a simple reason being that the self-insured business owner or the insurer itself needs to have reliable reserves in hand to handle their financial responsibilities.

Ratings Can Be Impacted

 
Another reason why this can hurt businesses, especially the insurer itself, is company ratings.

 
The better-known rating firms like A.M. Best, Standard & Poor’s, and Fitch Ratings calculate the monetary stability of insurance companies by gauging their ability to meet their claim responsibilities. If their available surplus falls to an unacceptable level, their financial stability rating falls too.

 
Another thought to keep in mind regarding under reserving is the impact on the calculation of premiums down the road.

 
The reserves for the open claims are a portion of the calculations in establishing the loss experience of the business. In the event a loss experience is under stated due to the fact the reserves are understated, the insurer will be charging inadequate premiums.

 
When this happens, you end up with lower profits for the business.

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

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

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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.

I had lunch with a nurse case manager not too long ago and we were discussing misdiagnosed conditions. She mentioned to me a case she had recently, where a worker struck his head on the frame of his hi-lo he was driving. He was off work a few days, diagnosed with a head contusion, and sent back to work. He later had some difficulty with dizziness and headaches, to which doctors advised it was probably a mild concussion.

Why Would The Adjuster Fight Nurse Case Manager Opinion And Resist A Second Opinion?

Since the nurse had spent more time with the patient than the doctors, she wanted to get a second opinion. The worker’s wife mentioned to her some issues with attention and minor memory issues. These issues were not brought up to the doctor by the patient himself. To her dismay, she had to fight the adjuster a little bit (Adjuster mistake #1) but in the end she sent the worker to an occupational doctor that had some sort of additional qualification in traumatic brain injuries. It turned out after some testing that the diagnosis should have been a mild traumatic brain injury. After some rest, medication changes, and some modified treatment methods the worker was doing a lot better and showing signs of improvement.

On the way home I was thinking about why the adjuster would resist getting anther opinion in a head injury case such as this. Especially with blows to the head, an adjuster should never limit themselves in getting opinions–especially if directed by their own nurse case manager.

Chances are the adjuster did not want to face the fact that this injury may have been more complicated or more severe than they first thought. Chances are also that this adjuster may not have wanted to escalate this claim into being one that required a reserve increase or one that drew more attention to it from their managerial staff at the carrier. Since the adjuster would probably be in trouble for not reserving the claim properly from the get-go and for not keeping an open mind to other complications, you would think it would be worse to just pretend the problem does not exist.

Early Intervention Is Key to Any Head/Brain Injury

In any type of brain injury, early intervention and treatment is key to a successful treatment plan. The worst thing to do is ignore the warnings signs. These could be persistent headaches, dizziness, memory issues, speed of task completions, and so on.

Watch for the Method of Injury

A tip to watch for while evaluating a claim for brain injury involvement is the method of injury itself. Any case where the head was struck by an object should be a red flag, but my conversation with this nurse shows that for some adjusters a head injury can go under the radar.
Watch for Injured Worker Complaints

Even if some diagnostic testing results were to be normal, I would put more emphasis on the injured worker’s complaints themselves. Sure, you have to consider malingering to some extent, but when you weigh the severity of the accident itself against what incentive the worker has for secondary gain, this is hat the job of the adjuster entails.
Don’t Be Afraid To Ask for A Second Opinion

Don’t be afraid to reach out for second opinions early in a claim. Neuropsychological testing, diagnostic testing, and other physician opinions are all going to help you put the pieces of the puzzle together.
Talk With Spouse of Partner of Injured Worker

Another important resource often untapped is conversations with the family or significant other of the worker. They are going to tell if the worker is behaving differently after the injury when compared to their normal behavior before the accident. There is no rule that says you cannot talk to the wife or partner of the injured worker. If you as the adjuster can reach out to them, and even set up an appointment to talk with the worker along with their family early on in the claim, it can provide valuable insight as to any injury side effects
Make Sure Injured Worker Reporting All Symptoms To Their Doctor

Another thing to watch for is the injured party not telling the doctor all of the symptoms he or she has. Sometimes people just want to get back to work, and they could downplay their symptoms in order to just get back to work. They are not helping themselves by doing this, and they could be putting other workers in danger should they have a traumatic brain injury that is undiagnosed and untreated.
So take your time and do a thorough investigation early on with any head injury claims. Look for the warning signs, and do not be afraid to get additional recommendations and a handful of diagnostic tests. Most importantly, listen to the concerns of your nurse case manager. You could stop a potential bad claim from happening in the first place.

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

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/

SUBSCRIBE: Workers Comp Resource Center Newsletter

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