Workers Comp Basics Archives - Work Comp Roundup

Top 5 Misconceptions Surrounding Workers Compensation

June 18, 2019 by Rebecca Shafer, J.D.

Everyone has opinions on what workers comp is. Some are correct, but most are misconceptions. The commercials seen on TV about people collecting hundreds of thousands of dollars are not true for the average claim. When looking at the bottom of the screen it indicates that the people on the commercial are actors, not even the real claimants. Most of the marketing material surrounds auto and liability accidents, where pain and suffering are translated into a certain dollar amount. This is not exactly true in workers comp. There is no pain and suffering payment. Insurance companies/TPAs are there to provide reasonable and necessary medical treatment and wage loss. Some states even allow a permanent partial disability payment, or impairment rating, on top of wage loss, but that is it.

Below we discuss the top 5 misconceptions surrounding the mystery world of workers compensation. Not all of these will apply exactly to every jurisdiction but are general. Remember to discuss with the adjuster and counsel any exact questions surrounding certain details regarding.

Workers Compensation is not Welfare

Compensation is not a free payment a worker is entitled. Just because you are injured at work, it does not mean a guaranteed payment or coverage for medical/wage benefits. There are a lot of criteria to meet in order for a claim to be compensable. Even if the claim is compensable, it also does not mean anything can be done. Claimants have to play by the rules and do as they are told by the adjuster. The adjuster must make the effort and take the time to explain to each claimant what the rights are, and what they can and cannot do. The biggest issue is miscommunication between the carrier/TPA and the claimant, so having an open dialogue will end any misconceptions that a claimant may have in regards to what their rights are, and what is covered; if indeed the claim is determined to be compensable.

Nobody gets rich from Workers Compensation

Depending on the jurisdiction, employees give up the right to sue in civil court in exchange for what are essentially no-fault benefits. Workers compensation pays lost wages, medical care, and vocational rehabilitation. Pain and suffering as an additional payment is not available or applicable to a compensation claim. The amount of money a person receives is a percentage of average gross pay. There are typically no increases for inflation, and each state has a maximum limit that a person can get per week as workers comp payments.

Michigan, for example, has a maximum rate of $921 per week (as of 2019). So even grossing $2000 per week as an average weekly wage, that amounts to $921 per week in Michigan. High-wage employees that fall into these criteria are usually not very happy when they find this out, but the rules are the rules. These statutes are set up within the workers’ compensation system, and they have to be followed by all parties. Even if a claim is settled for a certain amount of dollars, it is typically not a retirement jackpot. It may end the exposure for the carrier/TPA, but these claims that settle for very high amounts of money are the result of a very serious, extremely disabling injury. And even those are few and far between.

Workers compensation benefits will be stopped if the worker declines reasonable employment.

If the employer offers up a light duty job, within the injured employee’s medical restrictions, a claimant cannot refuse it and still get paid wage loss benefits. This opens a Pandora ’s Box, because an issue will come up about whether this light duty job is something an injured worker is trained to do or is the job offer seen as an insult to their professional skills, etc. If there is a welder sitting in a chair staring at a clock for a job, then maybe a case could be made that this work is not a benefit to the company. For light-duty jobs, they have to be deemed something that the employer gets a “gain” from performing, and almost all jobs within an employment facility can fall within these parameters. Certainly, if you provide a degrading job that is of no benefit, then you may get into legal trouble. But in all reality, I do not think any employer would take a risk in stopping a compensable case by trying to make a person sit outside and stare into space.

The bottom line is any light duty job, that provides a service to the employer, must be performed if it is offered to the injured worker. If the worker declines, then wage benefits will cease.

Workers comp fraud is extremely low

Actual workers comp fraud is less than 10% of all claims. And that number may even be high; I would go as low as 5% or less. For a case to be deemed as fraudulent, it must meet certain criteria within whatever state statutes are in the jurisdiction. That is hard to meet, and most cases will not even come close to being worth the pursuit of fraud in a legal court case. If a certain worker is claiming to be out of work, and you get surveillance of them outside roofing their house, this may not make the case actual “fraud,” it falls more within the injured worker not following their medical restrictions and going outside of their treatment plan as deemed appropriate by their treating doctor. This will provide the adjuster with the ammo to dispute ongoing benefits, but not exactly to pursue the case as overall fraud.

Workers comp fraud, as a whole, is not a major problem within the worker comp system. Sure there are a lot of people that do not follow their medical restrictions, or they may miss doctor appointments, or ignore physical therapy demands, but this provides only a dispute for ongoing medical benefits, not fraud. There is a difference between the two. If you think you have an actual fraud case, you need to discuss it right away with the carrier/TPA and counsel before taking any such action to pursue official fraud in a legal venue.

The vast majority of workers comp claims are paid and do not go to court

Generally, most comp cases are accepted, the injured worker gets treatment, and eventually goes back to work. The idea that someone stays home and avoids work when they are able to actually work is not the norm. Sure, there are those people out there who try to do what they can to avoid going back to work, but after an independent medical exam (IME) is performed, or after some surveillance discovers them being active out and about running errands, they are quickly flushed out and denied ongoing benefits.

Typically after a denial, and wage loss payments stop, these workers get on the wagon and get their treatment, so they can return to work and have their comp case end. Some will run to plaintiff counsel and try to get what they feel they are entitled to, and they will file for mediations and hearings, but the litigation usually is settled before a case is tried in front of a judge. Doctors can disagree on the causal relation of an injury, and this can speed up the case to go into litigation, but these cases are typically settled within 2-6 months. A low percentage of claims will stay in the litigation system, and go on for months or years, but these cases are usually quite complex and can involve several defendants and several employers, and that contributes to the complexity and the duration of the litigation. For the most part, on the normal workers’ comp claim that gets disputed and goes into litigation, these cases resolve themselves in the early stages of litigation and the files eventually close. But even those cases are not the common ones. The common claims are legit injuries, where benefits are paid and the worker returns back to work at full duty within whatever timeframe is needed depending upon the severity of the injury.

Summary

Everyone may have heard of someone that tried to get away with milking the comp system. Most of these people are caught through a good investigation, and their cases get resolved. The stereotype of work comp being a total pain can be true in some cases, but for the most part, work comp claims are legit, paid, and the worker returns back to work. There are always some exceptions, but if all parties communicate, know what their rights are, and know what they can and cannot do, their claims are resolved as quickly as possible and everyone can move on with their respective lives.

Rebecca Shafer 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:.

Contact: RShafer@ReduceYourWorkersComp.com.

Workers’ Comp Roundup Blog: http://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: WC 101 Tagged With: WC 101, Workers Compensation

What Is Your Workers’ Comp Brand?

January 3, 2019 by Michael B. Stack

Louis Vuitton luggage, a Prada bag, a Tiffany bracelet, even an American Girl doll. These are all items which may have shown up as gifts or you may have asked for as gifts over the course of this past holiday season. And while the quality of those products is high, the quality of the product is not the reason you asked or received that gift.

Branding is Powerful Concept in Work Comp Management

Hello, I’m Michael Stack, CEO of Amaxx, and today I want to talk to you about the importance of branding, how powerful it is. Because the difference in quality between a Louis Vuitton piece of luggage and another maybe generic piece of luggage might not be that different, but the cost is dramatically different. And the reason is for the status that brand brings and the meaning that it brings to have that certain type of brand on that particular product.

Brainstorm Your Workers’ Comp Brand As One of First Steps

When we think about your work comp program … and let’s put this in that context … one of the first things that we do when we’re working with an organization is define that brand for what you stand for. I want to encourage you to take the step, and I want to give you an example of what this might look like.

What you’re going to do is you’re going to do some brainstorming. You’re going to get your team together, senior management, maybe a couple supervisors, your vendor teams, your claims handling team, some various people that are going to be working together with you on this project of reform as you’re starting to take the step.

And ideally what you’ll do is you’ll create some meaning behind this, and likely what we like to do is create an acronym. I want to give you an example. So say you work for the ACME company and you brainstorm and you talk about sort of the culture of what your organization means and what you stand for as a company, and you come up with the ACME IPAR program, the ACME Injury, Prevention and Recovery program.

Create Logo & Awareness of Your Work Comp Brand

You then create a logo around this. We create some branding around this. We create some awareness around this, and so when you’re introducing your work comp program to your company, you say, “This is what we do here at ACME. We have the ACME Injury Prevention and Recovery program, and when you’re hurt as an employee, we’re going to take care of you.”

A tremendous first step, carries a tremendous amount of meaning, particularly when you back that up and meet those expectations in the injury management of employees when they do get hurt.

Again, I’m Michael Stack, CEO of Amaxx. And remember your work today in 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.

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: Workers Comp Basics

What is Excess Workers’ Compensation Insurance?

February 1, 2018 by Michael B. Stack

As the risk manager for your mid-size company, you want to consider self-insurance in the jurisdictions where you are allowed to do so. But your company is mid-size, not a Fortune 500 company. While you have the resources to handle most workers’ compensation claims, you are concerned a catastrophic work comp claim could do serious damage to your company’s current and long-term financial outlook. The solution is the excess workers’ compensation insurance carrier.

What is Excess Workers’ Compensation Insurance?

A workers’ compensation excess insurance policy is written to indemnify the self-insured employer for workers’ compensation claims (and Employers’ Liability claims) exceeding a designated dollar amount. The excess work comp insurance covers all work comp losses up to a specified cap, or it can be unlimited.

For example, you decide your company can afford the cost of paying almost all work comp claims but do not want to be on the hook to pay claims where the total cost exceeds the company’s set $500,000 limit. The way to handle the rare catastrophic work comp claim is to buy excess workers’ compensation insurance. The excess workers’ compensation insurer indemnifies your company only on those claims exceeding $500,000 in total cost.

Layers of Coverage

The excess workers’ compensation insurance carrier may be willing to insure some risk but does not want to have unlimited medical exposure on your work comp claims. They may put a cap on their exposure, for example, $1,000,000 is the most they are willing to pay over and above the $500,000 your company pays on a catastrophic injury claim. You will then need another excess policy over and above the “second layer of coverage” (the self-insurance being the first layer of coverage). The second excess workers’ comp carrier only reimburses your company for claims exceeding $1,500,000 (and is the third layer of coverage).

The first excess workers’ comp insurance carrier may be willing to write all your coverage over and above your cap. If they do agree to take on the unlimited medical exposure on your catastrophic injury claims, the excess workers’ compensation insurer will, in turn, most likely have a policy of reinsurance in with another insurance company.

That is, they will buy another insurance policy from another insurer to cover all their losses over and above a set dollar limit, say $1,500,000 per claim. Or they may cede the other insurance company, i.e., give the other insurance company part of your premium in exchange for the other insurance company’s promise to pay any claims over and above the agreed upon dollar amount.

Benefits of Excess Workers’ Compensation Insurance

Besides the obvious benefit of being reimbursed for catastrophic work comp claims exceeding your self-insurance cap, excess workers’ compensation insurance provides additional benefits to your company.

Most self-insurers are not able to be self-insured without the excess workers’ compensation policy. Self-insurance allows the risk manager more control over the cost of the insurance program, more control over the claims handling, and improves the cash flow by lowering the cost of workers’ comp insurance (by eliminating the profit portion of the premium paid to a first dollar insurance carrier).

Often the excess workers’ compensation insurer offers the self-insured employer additional services and works as a partner with the self-insured. Some of the services offered by the excess work comp insurer may include:

Underwriting guidance
Guidance in meeting the regulatory requirements
Industry-specific loss control services to assist in managing workplace hazards
On-site safety assessments
Best practices for managing work comp claims
Emergency planning and preparation
Catastrophic claim management

What to Look For in Selecting an Excess Workers’ Compensation Insurer

In addition to the services noted above, look for an excess insurer which includes the allocated loss adjustment expenses (the cost of handling the claims) in the definition of loss per claim, not just what is paid to the employee in benefits.

Also, if your company is exposed to longshore and harbor workers claims, Jones Act claims, railroad work comp, coal mine, or migrant and seasonal workers, be sure your excess workers’ comp insurer covers these types of claims. (Some excess policies exclude some or all of them).

You want an excess workers’ comp carrier whose is flexible in their underwriting, that is they will allow your company to set your self-insurance retention cap, and are willing to endorse their policy to eliminate exclusions that might affect your coverage.

Correctly managed, a self-insurance program in conjunction with an excess workers’ comp insurance policy can provide your company with the work comp coverage you need while saving your company part of the cost of workers’ compensation.

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: WC 101

Work Comp 101 – What Are Indemnity Benefits?

September 28, 2017 by Michael B. Stack

Note: The following article is for people new to the workers’ compensation field or as a refresher for those in the field.

Indemnity benefits paid to employees for work related disabilities are generally divided into two types—temporary benefits and permanent benefits. Each of the two types, temporary and permanent, are then divided into two additional categories, total and partial. This gives us four categories—temporary total disability (TTD), temporary partial disability (TPD), permanent total disability (PTD) and permanent partial disability (PPD). A fifth category of indemnity benefits is death benefits which some jurisdictions combine with PTD.

Temporary Total Disability (TTD)

The most common indemnity benefit is TTD. In most jurisdictions the amount paid for TTD is based on the formula of two-thirds multiplied by the average weekly wage (AWW) of the employee. A few jurisdictions will use seventy-five percent or eighty percent of the employee’s net pay after income taxes to compute the AWW.

A waiting period for indemnity benefits exist in all jurisdictions. Most jurisdictions have a four to seven-day waiting period before indemnity benefits will start, but a few states have a three-day waiting period. If the employee is able to return to work without any limitations within the waiting period, no indemnity benefits are paid. If the disability continues beyond the waiting period for a set number of days or weeks, almost all jurisdictions will require the insurer to pay indemnity benefits retroactively to the first lost day (or partial lost day) the injured employee was not paid his normal wage.

A lost day due to a work comp injury can be either a full day lost from work or it can be a partial day missed from work. Most employers find it much easier for payroll purposes to pay the employee for the remainder of the day of the accident. For example—the employee works 8 hours per day and normally gets off work at 4:00 p.m., but gets injured at 2:00 p.m. the employer will go ahead and pay the employee through 4:00 p.m. Therefore, the first lost day from work is the day after the accident. However, if the employer elects to pay the employee only through 2:00 p.m., the work comp adjuster calculates the indemnity benefits due from 2:00 p.m. The employee will have a partial lost day on the day of the accident and a full lost day the following day.

Example of Waiting Period & Lost Days

Examples of the waiting period and lost days are: The injured employee is off work two days due to the work comp injury and returns to work without limitations on the third day—no TTD is paid. The injured employee is off work nine days and returns to work without limitations, with a seven day waiting period, two days of TTD would be paid. The employee is off work 20 days with TTD retroactive to the first day after two weeks off work, the employee is paid 20 days of TTD.

Average Weekly Wage (AWW)

The AWW is determined by the employee’s prior pay history. The jurisdictions vary in the time frame used to calculate the AWW. Most jurisdictions use the previous 52 weeks as a time frame, but some states use the prior 13 weeks or the prior 26 weeks as the time frame. An example using the AWW to calculate the TTD: The employee made $52,000 in the 52 weeks prior to the injury causing the disability. The AWW would be $1,000 with the TTD rate being $666.67 (two-thirds X $1,000).

An employee’s AWW in most jurisdictions includes all compensation, not just the wage or salary. The adjuster should include overtime pay, bonuses, commissions or any other form compensation in determining the AWW. Also, some jurisdictions will include the value of benefits if the employer suspends paying for those benefits during the time the employee is off work.

The amount of TTD has an upper limit cap and a minimum amount. The jurisdictions vary in the dollar amount for the upper limit and the lower limit. A jurisdiction might by statute state the maximum amount of TTD is $800.00 per week and the minimum amount of TTD is $100. 00 per week. An executive making $2,000.00 per week would not receive two thirds of his AWW of $2,000.00, or $1,333.34. The executive’s TTD would be capped at $800.00 per week. A part-time fast food worker making $120.00 would not be limited two-thirds of his AWW, or $80.00. His TTD rate would be the state minimum rate of $100.00.

Temporary Partial Disability (TPD)

During the course of the medical treatment of the injury, the treating physician may determine the employee can return to work but only for a limited amount of time per day. This is when the TPD benefit would come into play on a work comp claim. For example, the injured employee is allowed to return to work for four hours per day and before the injury was working 8 hours per day. The TPD amount would then be calculated by multiplying the AWW by the amount allowed within the jurisdiction by the fraction of the day the employee is unable to work (4 hours divided by 8 hours = one-half). Let’s say the AWW was $900.00 per week prior to the injury. The state statute allows the employee to collect two-thirds of his AWW. The TPD rate would then be $900 X 2/3 X 1/2 = $300. This injured employee on TPD would be collecting half his normal wage or $450 plus his TPD of $300 for a total of $750 per week.

Temporary partial disability is paid until the employee reaches maximum medical improvement (MMI) or is able to return to work full time, whichever occurs first. Some jurisdictions place limits on the number of weeks (or years) an employee can draw TPD.

Permanent Partial Disability (PPD)

When the treating physician determines the employee has reached MMI, the physician will determine the amount of permanent disability, if any, the employee may have suffered due to the injury. The amount of PPD indemnity benefit maybe either a set scheduled amount or it may be percentage of a body part or it can be a percentage of the whole body.

A schedule of injury values is used for the complete lost of a body part in about 40 jurisdictions. Examples of scheduled injuries would be the complete loss of eyesight in one eye or the amputation of one hand. In some jurisdictions the PPD benefit is paid to the employee as a set dollar amount for the complete loss of the body part. For example—the complete loss of the eye is worth $85,000. In other jurisdictions the body part is worth a set number of weeks, for instances, an arm is worth 200 weeks of the TTD rate of $600 per week or $120,000 (200 X $600).

Some jurisdictions will use the schedule for the partial loss of a body part or a partial lost to the body as a whole. The treating physician determines the amount of disability. In many jurisdictions the physician rates the loss of body function using the American Medical Association Guide to the Evaluation of Permanent Impairment. For example—the physician following the AMA Guidelines determines the employee lost 20% of the use of his arm. The employee would receive 20% of the scheduled amount for the value of the total arm. Using the $600 TTD rate, the employee would be paid PPD of $24,000 (200 weeks X 20% = 40 weeks; 40 weeks X $600 = $24,000).

Permanent Total Disability (PTD)

When the treating physician (often in consultation with specialists) determines the employee will never be able to return to work, the employee becomes eligible for PTD benefits. In cases where the employee is rated as 100% disabled to the whole body, PTD is almost automatic.

Determining PTD is less clear cut when it comes to an employee who has suffered severe injuries and is unable to return to work for your company, but who is not classified as 100% disabled. A number of issues will then come into play in determining PTD. The nature and degrees of physical impairment, the educational level of the employee, the age of the employee, and the ability of the employee to be retrained for other suitable work, plus the availability of the other suitable work, are all factors in the determination of PTD.

The amount of PTD varies among the jurisdictions. In some jurisdictions the PTD rate is the same as the TTD rate. In other jurisdictions the PTD rate is lower than the TTD rate and is a percentage of the TTD rate.

PTD benefits are paid until the employee is able to assume work in another field, or until the jurisdiction’s maximum number of benefit weeks is met (in most jurisdictions), or until death (in a few jurisdictions), or until the employee reaches his full social security age (in a few jurisdictions).

Death Benefits

Fortunately, the least common type of indemnity benefit is the death benefit. All jurisdictions provide for the cost of burial, up to a maximum amount. The burial amount varies tremendously among jurisdictions.

A death benefit will be paid to the spouse or to the spouse and dependent children. If there are no dependents, a death benefit in some jurisdictions will be paid to siblings or parents. The maximum amount per week and the minimum amount per week are set by statute in each of the jurisdictions. Most jurisdictions will pay the death benefits to the spouse until she remarries or for a set period of time, with 400 weeks of benefits or 500 weeks of benefits, being the most common time frames.

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

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: 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: WC 101

Workers’ Comp Fundamental Truth – It Doesn’t Have to Be So Hard

July 24, 2017 by Michael B. Stack

There are some things in life that you discover for the first time that you realize you’ve known all along. Hello, my name is Michael Stack. I’m the principal of Amaxx and founder of the Amaxx Workers’ Comp Training Center.

Nutrition Is Surprisingly Complex

A little personal anecdote, that that little message, discovering what you’ve known all along, is very true for myself and for my family. We’ve been doing all this research on nutrition, and we watched the movie Forks Over Knives. We watched the movie What the Health. We watched Fed Up. We also watched Food, Inc., and we bought The China Study book, which is a 400-page book. Very complex. There’s a lot to this idea of nutrition, the type of diet we should be eating, and what it does for our health.

We’re moving towards this whole foods, plant-based diet. We’ve been on it for about a week. I’ll let you know how it goes, but so far, so good. It got me thinking about this complexity, this idea of nutrition, this idea of why is it so hard for us to realize what is the right answer and what is the most healthy option for us for our long-term health. It’s baffling to me. When I think about workers’ compensation, it’s the same thing. The system is extraordinarily complex and baffling as to why it’s so hard to get that proper outcome. Why is it so complex?

Basic Fundamental Truths Will Lead to Success

In nutrition, there’s many layers to it, and in workers’ compensation, there are many layers to that, too, and I don’t see either one of them changing any time soon. When you break it all down, when you look at the fundamental truths of what makes you successful in nutrition, processed artificial chemicals, all that different kind of stuff, we know that that stuff is not good for us. We know the convenience and going through McDonald’s isn’t good for us. You don’t have to read a book or watch a movie to know that truth. Not caring for your injured workers or processing them like a robotic system is not good for their outcome either. You don’t have to go to a lot of national conferences and a lot of trainings to understand that fundamental truth either.

I want to encourage you to get back to basics in understanding in your work comp program what are those elements that you already know will lead you to success, and that fundamental truth that will take you there. Looking at our claims as just a claims number versus an individual person … Jeffrey Thomas, who has two kids and lives in Arizona and likes to fish … will lead you in a better direction. Sure, the complexity is going to always be there, but if you can get back to these basics of what we know makes us successful, we will be well on our way to mastering workers’ compensation, and workers’ compensation costs and outcomes.

Again, I’m Michael Stack with Amaxx. If you’re watching this video and you like the message, I encourage you to go to reduceyourworkerscomp.com and sign up for my free newsletter for a lot more information. Remember, your success in workers’ compensation is defined by your integrity, so be great.

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

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: 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: WC 101

3 Factors In Determining If Employee is Independent Contractor

April 10, 2017 by Michael B. Stack Leave a Comment

A common issue in the compensability of a workers’ compensation claim includes a determination of whether the injured party is an employee or independent contractor. This is important for employer stakeholders to understand as the issue is often subject to litigation.

Important Factors to Consider

The law concerning employee relationships is defined by each state or jurisdiction, which results in differing interpretations. It is important to understand the law in the jurisdiction where the claim arises or could be venued. When in doubt, always consult with an attorney.

Here are some common elements found under state workers’ compensation law to consider:

1) Financial control.

This deals with issues concerning whether the employer has the right of control in the various business aspects of the relationship with the injured party. Careful inquiry and examination must include:

How the person is reimbursed for their time. While the issuance of a 1099 tax form is key, it is not always determinative on the issue.

How the party and employer handle unreimbursed business expenses. In all instances, a true independent contractor are more likely to have unreimbursed expenses than employees.

The investment of the worker’s time. In a true independent contractor relationship, the only investment the person will have is the actual time they spend on work.

2) Behavioral Control

This inquiry involves the understanding on what instructions the employer will give to the person performing work. Key questions that need to be asked include:

When and where to do the work?

What tools or equipment to use?

What workers to hire or to assist with the work?

Where to purchase supplies and services?

What work a specified individual must perform?

What order or sequence to follow?

Issues of “behavioral control” are often central to investigations in construction workers such as siders, roofers and other work that can be considered seasonal. Allowing an “independent contractor” to use company tools can be fatal to an assertion the party was not an employee.

3) Types of Business Relationships

Courts will also examine the nature of agreements—both verbal and written. This includes documents signed between the person and employer. Merely calling someone an “independent contractor” does little to avoid establishing an employee-employer relationship, and thus compensability should an injury arise. Having a written document calling someone an independent contractor can give a false sense of security and shattered hopes of defeating a claim at hearing before a compensation judge or industrial commission.

Written contracts. Courts give little deference to what a person is described as in a written agreement. The devil is always in the details. A potential employer should not forget to memorialize the arrangement in writing. It is still an important piece of evidence.

Insurance agreements and other fringe benefits. An employee-employer relationship can be established if the person in question receives tangible benefits beyond payment for the labor they perform. In many instances, court have declared a person to be an employee for purpose of workers’ compensation based on the payment of other benefits or perks such as pension plans, 401K contributions, vacation pay, sick pay or other forms of PTO.

Tenure of service. The longer a person works an employer, the greater the risk there is for them to become an employee. In order to avoid this situation, the written independent contractor agreement should be for a defined period, or specific to a particular project.

Conclusions

Central to the determination of whether someone is an independent contractor revolves around issues of control. The more control a company has over an individual, the more likely they look like an employee and resulting injuries are compensable. It is important to be aware of these issues to avoid unnecessary costs in your workers’ compensation program.

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

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

Contact: mstack@reduceyourworkerscomp.com.

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

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

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: Common Workers Compensation Mistakes

10 Common Questions Claimants Have When Filing a Worker Comp Claim

March 16, 2017 by Michael B. Stack Leave a Comment

Being in the insurance or risk management field we often forget that the workers that get injured do not know nearly as much as we know about claims. At times, adjusters forget to take the time needed to properly explain what rights injured workers have when these claims occur, and that can lead to a disconnect between the adjuster and the injured worker. This disconnect can make the claim travel down a bumpy road rather than a nice, smooth, streamlined one.

Here are some common questions claimants have when filing a work comp claim. Please note the answers to these questions can vary by jurisdiction, be sure to consult your adjuster or local legal counsel if you have questions.

How do I get paid?

If your case is deemed compensable, you will receive a workers compensation check, probably in the mail or direct deposit, every week or two after the waiting period has subsided. This check is meant to replace your lost wages from work. It will not be 100% of the pay you are accustomed to receiving but rather a percentage of your gross wages based on whatever formula the state of jurisdiction uses.

When will I get paid?

Generally wages are paid after your case has been deemed compensable by the adjuster handling the file. Usually this can range from a period of a week or two to maybe a month or so. Other factors can delay payment, including the investigation of the claim and the gathering of the pertinent medical records.

How much will my work comp check be?

This will depend on your jurisdiction. Typically you will receive anywhere from 66% of your net pay to up to 80%, maybe even more. Fringe benefits that you receive from your employer can also affect the amount of your work comp check. Anything that you are responsible for regarding your personal medical insurance or 401k may still have to be paid by you, the injured worker. Work comp pay is not taxable income, and you will not receive a W2 for work comp wages paid out for whatever year you received benefits.

Can I go to my primary care physician?

This will vary by the jurisdiction, but generally the answer is yes. After a certain period of time, you can go to an appointment with your primary care doc, and usually the first one will be paid for by the insurance carrier that is handling the work comp claim. Whether or not you can continue to treat with your personal doctor is up to your adjuster, and if your personal doctor accepts work comp patients and does proper work comp billing.

Do I have to go to “your” doctor all the time?

Maybe, depending on the jurisdiction and if your adjuster authorizes you to treat with your physician instead of the occupational medicine doctor.

Why is the work comp doctor’s opinion more important or more crediblethan my doctor?

This will depend on what each doctor is saying in their medical reports. Sometimes personal physicians will say one thing with you in the exam room, and meanwhile when they dictate their notes they may mention diagnoses and findings not essentially shared with you personally. The same is true for the occupational doctor. The best way to stay the most informed is to request a copy of your medical records from both doctors, this way you can see all of the information that the adjuster is seeing, in regards to the medical chart.

What if I have two jobs? Do I receive lost wages for both jobs?

Usually yes, but again this will depend on the jurisdiction. You will have to provide your adjuster with a copy of your personnel file and wage records from your second employer, and be sure to tell this other employer than you sustained a work comp injury at your other job and that you may not be able to work your job during your healing period until you are fully released from medical care with no more restrictions.

The light duty job assigned to me pays less than my normal job. Is this legal?

Yes it is legal, but the insurance carrier will be obligated to pay you a “partial” wage. This means that they take the reduced wages you will earn and issue you a supplemental check for the difference. The amount of this check will depend on the jurisdiction the claim is in. If you have questions about how this supplemental check is determined, contact your adjuster and have them walk you through the process.

Why isn’t my adjuster returning my calls?

Adjusters can handle and be responsible for hundreds of files, of which you are one of. These files are all in different stages, and are of varying complexity.

Give your adjuster a day or so to have a chance to return your call. One thing an adjuster hates is someone that calls them every hour. Sadly, the squeaky wheel rarely gets the grease. Be patient, and allow your adjuster the professional courtesy to get to your claim. But, you also have to be persistent. If you have left a few messages and 3-4 days go by without a callback, you can call and ask for their supervisor. Every adjuster has an obligation to return calls to their claimants, no matter how insignificant the question may be. Failure to return calls can be considered “bad faith” on the part of the adjuster, and they or their company can incur penalties or fines if they do indeed fail to return your call within a reasonable timeframe.

Should I consult an attorney?

There is no right or wrong answer to this question. The only person that can answer this question is you. If you will feel more at ease by talking to a legal professional, then by all means do so. Having a phone consultation with an attorney doesn’t mean that you are filing a lawsuit against your employer. If it makes you sleep better at night knowing you talked to an attorney, then by all means do so. Better yet, talk to a few attorneys if you have to.

Summary

These questions are normal questions every claimant will have with their work comp claim. Some people know more about the work comp system than others, but don’t take your fellow coworkers advice about what to do with your claim. Many coworkers that have a vast experience in dealing with work comp situations will not always give you credible or correct advice. Your adjuster is the one handling your claim, and they will be there to walk you through the process.

If you feel that the adjuster did not answer your question good enough, feel free to consult an attorney. You want to make sure you are very involved in how your claim is handled. After all, being injured doesn’t mean that you do not need to know anything about how the process works and what rights you have as an injured worker.

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

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

Contact: mstack@reduceyourworkerscomp.com.

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

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

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: WC 101

How To Guarantee Better Workers’ Comp Outcomes

February 27, 2017 by Michael B. Stack Leave a Comment

Big data. Predictive analytics. Very sophisticated modeling to predict claims outcomes versus a paper and a pen. I’m Michael Stack with Amaxx and today I’m going to be telling you how to guarantee better claim outcomes without spending any additional money and only maybe about 20 to 30 minutes of additional work on your claim.

Now, don’t get me wrong. Big data, predictive analytics, sophisticated claims modeling to predict claims outcomes, incredibly valuable tool and resource that the companies are specializing in this information and then bringing it to the market place give for our industry. But for your employee, Tom Smith, who gets injured today, you’re going to have the most impact and guarantee a better outcome for Tom’s claim with a paper and a pen.

Look at Your Last 5 First Report of Injury

Let me tell you what I mean. What I want you to do is pull out your last five first-reports of injury. Go ahead and pull those out and take a look at them. How well are they completed? How well are they, on a scale from one to ten? What would you get it? Would you give it a one, would you give it three, would you give it a five, would you give it a ten? I’m going to bet that there’s room for improvement in the completion of your first reports of injury. Here’s what I want you to do, is that I want you to realize that how well that first report of injury is completed is a huge determining factor in how well that claim is going to go. I want you to step up your game in the completion of those first reports of injury because it’s going to guarantee for Tom’s claim, who gets injured today, a better outcome for Tom and thereby a better outcome for you in reduced worker’s comp cost.

4 Points To Properly Execute

When you’re taking a look at these first reports, here’s the information that I want you to look at and see if you can have room for improvement here. First point is who’s responsible for completing these? Is it Jane, Jane the low-level employee and Jane just whips through this in three minutes and says, “I don’t know, that was Tom and he fell off a ladder,” and check-check-check and leaves a whole bunch of blank information? Or, is it a highly responsible accountable person, is it you that’s completing this, or is it you that’s holding that person accountable for getting all the information that you need?

Step number two is, is all the basic information right? Do you have the name right, do you have the social security right, do you have the average weekly wage correct, do you have the date of injury correct? This happens so often it is criminal that this basic information is wrong and the amount of litigation a problem that it causes in a claim just because you didn’t get this right, is incredible.

Number three is I want you to look at the mechanism of injury. Do you have information about the mechanism of injury or is it just written, “Tom fell of a ladder and hurt his low back”. Sorry, that’s not really going to help me very much. That’s not going to cut it in the investigation of a claim. The mechanism of injury, was Tom lifting, was he pulling, was he twisting? Was he carrying paint buckets when he was going up that ladder? Was it against the roof, was it against the siding? Was it a big ladder, was it a small ladder? What was it that caused that injury? What was that mechanism of injury? What are those details surrounding that?

Finally, what is the context of the injury. Again, painting that picture of what actually happened. Was Tom inside, was he outside? Was he in the warehouse? Was he lifting up and putting something in the third shelf or was he lifting up and putting it up on the second shelf? What happened? What is that picture making that very crystal clear for what actually happened on that claim? Without good information we can’t make a good decision and the processing of big data, without good data going in you’re not going to get good data going out. Spend that extra 15, 20, even 30 minutes on Tom’s injury, detailing this out, take a look at your first reports of injury, step up our game in getting information ready and you will guarantee yourself better worker’s comp claim outcomes.

Learn More About Reducing Workers’ Comp Costs

Again, I’m Michael Stack with Amaxx and if you’re watching this video somewhere other than reduceyourworkerscomp.com, go ahead and go to that website, sign up for a lot more free information on how to control your worker’s comp costs. To take it one step further, you can go to workers compclub.com/livestreamtraining and sign up for my next live stream training. Again, I’m Michael Stack with Amaxx, remember your success in worker’s compensation is defined by your integrity, so be great!

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

Contact: mstack@reduceyourworkerscomp.com.

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

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

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: Common Workers Compensation Mistakes

Most Common Workers’ Compensation Errors

November 17, 2016 by Michael B. Stack Leave a Comment

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

Common Workers Compensation Errors

Employer Directed Care

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

Failure To Follow Up With Injured Work

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

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

Lack of Workers’ Comp Understanding

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

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

The First Step

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

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

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment.

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: WC 101

Control Workers Comp Losses To Control Premiums

November 16, 2016 by Michael B. Stack Leave a Comment

photo-1459257831348-f0cdd359235f Premiums, being “loss-sensitive” are set according to the volume of losses. When losses are under control and at acceptable levels, the employer’s experience modification factor falls and premiums drop too. Therefore, the key to controlling premiums is controlling losses. Enlightened employers use pre-loss management techniques, such as safety programs, along with post-loss strategies like injury management to control workers’ compensation costs.

Employer Involvement Key To Success

Cost containment essentially comes down to how well a company proactively manages its workers’ compensation programs. The kind of management an employer needs to reduce workers’ compensation costs does not come from turning all control of claims over to the insurance carrier working entirely outside the control of the client/employer. Few managers would pass on to outside managers the responsibility for quality control, human resources or internal auditing. Unfortunately, with workers’ compensation external management is typical. These employers assume the outside firm, i.e., the insurance company to whom they pay premiums, is managing their claims programs responsibly. In fact, there is very little incentive for an insurance company to decrease a client’s losses when premiums are based on the customer’s loss volume. Remember: the key to controlling premiums is controlling losses.

Substantial Savings Should Be Expected

Substantial savings can be realized and should be expected. Recently, a Fortune 500 corporation experienced 30 million dollars in annual losses. The company maintained very little control and allowed an independent adjusting company to make most of the decisions about the way its claims were handled. The company instituted an injury management program and reduced its incurred losses by 84 percent in the first year.

Assess & Measure Performance

An organization should start by gaining a basic understanding of key metrics and performance measures.

Reporting Lag Time

For each claim, determine the number of days from the date of the injury until the claim is reported to the workers’ compensation coordinator within your company. Total the number of days for all claims in the last 12 months and divide by the total number of claims reported. {The average should be under 1 day}.

Annual Cost Per Full Time Equivalent Employee

To establish the annual cost per employee, use the total claim cost over the prior 12 months, divided by the total number of full-time equivalent employees.

Average Claim Duration

To determine the average claim duration, take the total number of days – for all reported claims during the last 12 months – from the date of injury to the date a claim is closed, divided by the total number of claims reported.

The utilization of these measurements will provide your company with insight on how the baseline, as well as how your workers’ compensation cost control efforts are working. Over time all 3 measurements will show improvement. Also, by tracking your workers’ compensation program performance over an extended period of time, you will be able to pin-point areas where performance of your cost control efforts can be improved.

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

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: Workers Comp Basics