How to Gather All Information Necessary for High Quality Claims Management

 

System Creates Repeatable, High Quality Results
A significant improvement in the world of claims management over the years is the implementation of an electronic system for entering and managing claims.  Used by employees of the Carrier/TPA, this is an automated system that assigns risk if certain conditions are present.  These systems allow the claims professional to gather more information in less time, follow up appropriately on responses to high-gain questions, and evaluate the information systematically. 

System Guides the Questions So Nothing is Missed
The person receiving the claim for the Carrier/TPA will have questions that need to be answered.  If the answers are positive for certain criteria, the system will assign the claim a risk number within certain values from the software. The higher the score, the more risk is assigned to the claim. The system will be used initially for 3-point contacts to the injured worker, the employer, and the medical provider.  Positive responses to certain criteria will pop up other questions to ask which ensures the adjuster does not forget anything that can be crucial to the claim.

When the claim arrives at the desk of the adjuster, they already have some risk areas highlighted that can negatively impact the claim.  This streamlines investigation and saves costs as the sooner a problem area can be addressed, the better.   

Adjusters are all under a heavy workload. Claims are in various stages of their lifespan, and some claims will get more attention than others.  This program presents a way for new claims to get the needed attention they require as early as possible.  Like any system, it also takes out a portion of the human factor.  After a while adjusters can get stuck in a rut and a question could be missed or skipped by accident.  The answer to that question could have a huge impact on the outcome of the claim.  This system can prevent those misses, which helps everyone in the end.  In no way does the system replace the need for a qualified adjuster, it does however, make every adjuster better.

Adjusters Can Receive Bonus for Following Best Practices

Bonus incentive can be another positive with the use of this program. Carriers/TPAs often use a bonus system to reward adjusters, and these bonuses revolve around timeliness of their contacts, resolution of their claims, and overall reserve savings by proactive claims handling.  A system that helps the adjuster hone in on what gets them salary bonuses is a nice incentive to ensure they are motivated to follow best practices.


Makes Process Efficient

Claims can also be classified based on their system score.  Medical only claims or minor lost time claims can be routed to the appropriate adjuster, instead of going initially to a senior level adjuster, only to be passed back to the medical only adjuster after contacts have been made.  Many Carrier/TPAs will assign the claim based on what information is listed in the injury report.  This process can be inefficient if the injury report was completed in error.  Time and money can be saved when each adjuster is making the highest and best use of their day.


Outside Vendor Usage Identified Right Away

Outside vendor usage can also be identified right away.  If the system has certain positives, it can trigger assignment to a field nurse case manager right away, instead of weeks after the claim process has begun.  This is another proactive benefit as the earlier a claim can be assigned to a vendor for help the better.  The outside case manager can get involved in the claim at the outset, instead of a month later.  This can equate to large cost savings as this month can include crucial moves within the claim, preventing missed work when a return to work could have been possible.  Another example is when the injured worker needs a medical referral to a specialist. Instead of waiting for the paperwork the case manager can get it at the appointment and send it to the adjuster the same day, instead of when the actual medical reports come in with the bill weeks later.


Summary

Several technological advancements are going on within the claim industry.  As an employer, you should be open to new technology, and trying new things in order to be more proactive in the claim process.  The same can be said for the adjuster.  Oftentimes the adjuster is very set in their ways, and there can be some resistance to the introduction to new techniques and new technology.  These advancements are made to help all parties involved to make the process more streamlined and more effective for the claims profession.


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, Director of Operations, 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

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

The RED FLAGS of Workers Comp Fraud

 

A critical part of controlling workers’ compensation costs is to put into place solid investigation techniques.  No matter how serious or minor a workplace injury, each case needs to be reviewed to identify any fraudulent claims and take appropriate action.
 
When communicating with employees make it clear that the company will:
 
·         Immediately investigate each accident when it occurs to determine the root cause
 
·         Identify corrective measures
 
·         Watch for minor extensions of days out of work and outright fraudulent claims.
 
Review these Red Flags of Fraud and request an investigation if you suspect a claim is illegitimate or exaggerated.
 
Claimant Flags:
 
·         Injury reported late, to an attorney or to the state commission beforereporting it to the employer.
 
·         Fails to attend weekly meetings.
 
·         Is uncooperative, e.g. refuses to try a transitional duty job.
 
·         Is never home when you phone, especially during normal workday hours.
 
·         Has only a postal box rather than a home address.
 
·         Misses doctor appointments.
 
·         Is known to perform seasonal activities, hobbies, or work.
 
·         Has moved out of town or out of state.
 
·         Disputes average weekly wage due to additional income.
 
·         Files for benefits in a state other than the principle location.
 
·         Disputes information supplied by the employer on “First Report of Injury” notice.
 
·         Refuses to cooperate in claim investigation.
 
·         Has an unstable work history.
 
·         Has recently been terminated, demoted, or passed over for promotion.
 
·         Has a prior history of injury management or liability claims.
 
·         Makes excessive demands or is pressing for a quick settlement.
 
·         Carries little or no health insurance.
 
Medical Flags:
 
·         Medical reports are repetitive, indicating continuing, constant pain with conservative medical treatment
 
·         The word “disproportionate” is used in medical reports
 
·         The doctor mentions there is “facial grimacing”
 
·         Positive “Waddell Tests” (test for low back pain) are mentioned
 
Workplace Flags:
 
·         Employer experiencing labor difficulties (i.e., layoffs, strikes, walkouts).
 
·         Tips from fellow workers, friends, or relatives.
 
·         Insurance company wants to settle the claim for a huge amount of money.
 
 
“Things” just don’t ADD UP! Trust your gut, and if something seems off, be sure to check it out.
 
 
Author Michael B. Stack, CPA, Director of Operations, 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
 
©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.


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

Employer Convicted, Fined $500K after Employee Death

 

A major Australian hirer of industrial equipment, Coates Hire Operations Pty Ltd, has been convicted and fined $500,000 after a worker died when an elevating work platform rolled down the tray of a truck, tipped and crushed him, according to Safety in Australia.

 

 

Fine Increased from Original $250,000

 

Victoria’s Court of Appeal recently imposed the fine which was increased from the $250,000 penalty imposed by the County Court in 2010 and subsequently appealed by the Director of Public Prosecutions.

 

The prosecution followed the death of a 44-year-old Cranbourne South man who was crushed at a Coates’ Hire business at Dandenong in February 2007.

 

 

Company Had Two Prior Convictions

 

The Court of Appeal said Coates Hire had two relevant prior convictions and should have been doubly vigilant to ensure no further breaches occurred. It also found the company failed to enforce and disseminate its own safety procedures.

 

In its judgment, the court said the breach equated to a very high degree of culpability. The Court of Appeal affirmed the County Court’s finding that Coates had shown a ‘disregard for the safety of its workers’.

 

 

Disastrous Results of Not Applying Safety Procedures

 

WorkSafe’s Executive Director for Health and Safety, Ian Forsyth, said the case illustrated the disastrous results of having safety policies and procedures but not applying them.

 

“The increase in penalty is welcome, but it does not take away from the fact that a preventable death has occurred. All other employers need to act now to review their own situation, whether or not they use external contractors.

 

Redline Towing and Salvage Pty Ltd, which employed the man who died, was sub-contracted by Coates to pick up and deliver plant on behalf of Coates was convicted and fined $130,000 in 2010.

 

Dandenong Heavy Haulage Pty Ltd was convicted and fined $50,000 in 2010 in relation to the incident. Dandenong Heavy Haulage also transports plant on behalf of Coates.

 

 

Author Michael B. Stack, CPA, Director of Operations, 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.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 


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

How to Measure Your Return to Work Program Success

 

For every day an injured employee is out of work, the cost of the workers’ compensation claim increases. Therefore, it is of critical importance to actively manage your claims using techniques designed to return injured workers to active work status as quickly as medically possible. This is true whether they return to active or modified duty. At the same time, you must be able to track and know exactly how well the return to work process is proceeding.
 
Return to Work (RTW) Ratio

How do you calculate whether injured employees are returning to work within an appropriate time frame or if they are out on comp for weeks at a time? The Return to Work Ratio (RTW) measures the effectiveness of your transitional duty program. The ratio calculates how long it takes employees suffering a lost time injury to return to work in either a transitional duty assignment or full duty. The RTW Ratio calculates total lost days and total claims to show the percentage of employees that have returned to work within the first few days after the injury. The RTW Ratio helps you categorize lost work days to ensure that employees aren’t off work too long.
The RTW Ratio accurately assesses how well your company manages the return to work process. The RTW Ratio allows you to calculate lost days quickly and see at a glance how well you are doing. The graphic visualization is helpful and motivational. Add new injuries to constantly update the ratio calculation to see how well you meet the goal of having 95% of employees returning to work within the first four days after an injury. Then you can take appropriate action as needed to improve your company’s rate of returning workers. You should also tell your broker when your RTW Ratio improves, as insurance carriers will want to know that you have made operational changes that will result in reduced workers’ comp losses.
For more about bringing employees back to work sooner see: http://reduceyourworkerscomp.com//employees-back-to-work-sooner.php
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, Director of Operations, 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.
©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

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

The Role of the Risk Manager in Workers Compensation Cost Containment

 

What is the Role of a Risk Manager?

 

A risk manager is responsible for a broad array of duties as the company sets up a workers’ compensation management program. To reduce costs, the risk manager should closely monitor the implementation of the program. Naturally, the responsibilities depend on the size of the department and amount of assistance that is provided.

 

Tips on What a Risk Manager Should Do:

 

  1. Determine the type of claims administrationarrangement. The risk manager needs to determine whether the type of claims administration you have is the right fit for your company and not take a one-size-fits all approach. The risk manager should perform an individualized assessment of your company’s strengths and needs to determine what arrangement works best for you.

 

  1. Ensure the adjuster-to-claim ratio is appropriatefor adjusters responding to your claims to get your workers back to productive employment faster. The risk manager needs to determine whether the adjuster has too many claims to process yours fast enough to keep your costs down.

 

  1. Consider whether your claims volume requires dedicated staff. The risk manager should assess whether the amount of workers’ compensation claims the company has requires one or more employees whose primary job function is to handle the workers’ compensation claims process.

 

  1. Follow claims administration’s best practicesto better comprehend the adjuster’s role. The risk manager should be up-to-date on the insurance industry’s standards and recommendations in claims handling to assess whether your procedures need to be updated.

 

  1. Make sure claims handling personnel are trained in injury managementconcepts so they can grasp the issues affecting your claims. The risk manager should make sure that personnel are familiar with the expected claims process, forms, medical terms, action plan, and potential issues. As your first-line defense, you want your claims handling personnel informed enough to spot issues that may arise.

 

  1. Visit an adjuster claims handling locationto see how your adjuster handles your files and view their claims operations first hand. There is no substitute for knowing exactly how your claim is being handled in the physical location where it is being processed.

 

  1. Attend associate seminars and meet with other industriesto observe how other organizations address workers’ compensation issues in today’s labor market.

 

  1. Maintain benchmarks for your professionshowing how potential savings generated by an effective injury management program far outweigh the initial costs of staffing.

 

 

 

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, Director of Operations, 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.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 


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

Why Workers Comp Laws Are State, Not Federal

 

Current Debate Regarding Single Federal Work Comp Law

 

There currently is a debate in progress regarding the benefits of eliminating state laws and replacing them with a single federal law. However, no one seems to be discussing why comp laws began as state laws and have remained so. Even the federal government has retained non-uniform laws under those areas it controls.

 

There is not one single federal comp law. There is one for federal employees, one for harbor workers, one for residents of the District of Columbia, one for employees of the District of Columbia, and one for each territory, possession or commonwealth of the United States. The federal government could easily consolidate those laws which it adjudicates, but never has done so.

 

 

Eliminate Different Workers Comp Rates

 

One of the arguments in favor of federalization is the elimination of different comp rates. However, the maximum federal employee weekly comp rate is approximately $1436/wk, with annual cost of living increases. That would NOT come down with federalization, and few, if any, states could survive such increases in comp rates.  (The federal government is able to tolerate such rates because of its draconian adjudication procedures, which no union would tolerate in a state system. Most work comp attorneys have handled one federal comp claim – few have handled two.)

 

 

 

Laws Are State For Local Economic & Political Advantages

 

But why did comp laws start, and remain, as state laws? They started as state laws in the first decade of the 20th century because the needs of comp system were drastically different from state to state. New York’s first law only covered heavy factory and construction work. States in the west often excluded farm and ranch work. Each state was drafting its law to conform to economic reality. New York could not afford to have the families of the seriously disabled on public assistance. Wyoming could not risk bankrupting ranches and farms with comp premiums. (People who owned ranches and farms, at the time, often went through periods of what can only be called medically dangerous malnutrition.)

 

The reasons that comp laws remained state laws are for local economic and political advantages. Insurance laws are generally regulated by states, not the federal government. No governor has EVER willingly lessened that economic control, perhaps the largest control of state financial resources available to a governor.

 

In addition, state comp laws have built in advantages for union negotiations on a yearly basis in the state legislatures.

 

 

Opposition from Unions and Insurance Companies to Federalize

 

When national health care was proposed in 1993, there was a tiny period of time where it was suggested that federal health care eliminate the health care provisions of work comp. Persons on the health care task force, mostly academics, were stunned to see that the opposition to federalizing comp came from unions as much as insurance companies.

 

Other nations with comp laws based on the initial British system, Canada and Australia, have also retained laws by province and territory instead of having one national law.

 

Prognosis for the future? More of the same.

 

 

Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. medsearch7@optonline.net

 

Editor Michael B. Stack, CPA, Director of Operations, 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.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 


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

Is Sedentary Work A High Risk For Work Comp Claims

 

I think the general public would think that a sedentary work position would be less strenuous than a spot where the worker is on their feet all day moving boxes and boxes of product.  For the most part this is true, but there are hazards in any position. It is the type of risk that differs.  One position may suffer more acute-type injuries than the other, but even sedentary work carries the risk of a severe injury.

 

 

  1. Ergonomics is the Culprit

 

It is essential in a heavy-duty job classification that you follow proper lifting technique, by lifting with the legs not the back, and by getting assistance with moving around large, heavy, product. Failure to follow this protocol can lead to certain injury with muscle strains, and even worse spinal injury.

 

Even sedentary work can carry an ergonomic risk.  If you are working for 8-10 hours per day at a cubicle workstation that is not fit for your height, you can expose yourself to repetitive-movement injuries including carpal or cubital tunnel, or epicondylitis.  Other common issues may be back or neck strains, or overall arm fatigue due to not following ergonomic rules.  Adjustable workstations and chairs will lessen this risk, hopefully decreasing injury.

 

 

  1. Ergonomic Diversity

 

This is a new term, basically meaning that ergonomics is not left to just the cubicle alone.  Depending on your profession, it is not uncommon to be working at home or telecommuting during work hours.  Upright work stations can be considered the new rage: standing computer monitor/keyboard desks have allowed workers to get off their seats and up on their feet while toiling away at the laptop for hours on end.  Today the diligent worker is considered one that is spending countless hours on their computer or laptop.  Some people with offices even have treadmills that have a platform to hold up a computer monitor, allowing the worker to actually walk on a treadmill while reviewing documents or checking email.  It is surprisingly more mainstream than you would think.

 

 

  1. Mental Fatigue

 

Sedentary work is not as encompassing as manual heavy labor.  While sitting in a cubicle working, you are not involved in lifting 20lb boxes hour upon hour, but that doesn’t mean you are not working. “Brain labor” is a slang term I have heard of that coins the day to day work of the common office worker.  By working with the brain instead of the brawn, these people are accomplishing their daily tasks hour after hour.  So how can this lead to any sort of injury?  Instead of thinking in the physical aspect, think more about the mental. My favorite example is of the claims worker involved in handling injury claims that are at various stages in their claim life.  A person outside of this work may not think of the mental aspect of the claims professional.  Oftentimes, there are thousands and thousands of dollars on the line, and the pressure is on to make the proper decision on the compensability of said claims. One error can lead to the acceptance or denial of a claim, which can cost your insurance carrier thousands of dollars in leakage, or even worse penalties or bad faith judgments for the denial of a claim that should have been accepted. Some people handle this stress better than others.  No matter how you handle it, the job is stressful.  Add in to that the fact that several higher-level executives may be critiquing your every move, and the pressure is on to perform at the top of your game.  This constant pressure can morph itself into mental fatigue, which can then roll into a blown out stress issue.  I know of many claim workers than have filed work comp claims themselves for stress, and have had to take leaves of absence or even change professions because they just cannot handle it.  Joe and Jane Adjuster indeed have a tough job, and their brain is the muscle involved.

 

 

  1. Compensability with sedentary workers

 

If a sedentary worker files a comp claim that is musculature in nature, it is often assumed it is not work related.  The same could be said for the physical job worker, but one would think that person has a better chance of getting coverage than the sedentary worker.  This may be true, but it will depend on the injury.  Just because a sedentary worker claims to have work related carpal tunnel doesn’t mean it is automatically work related.  The same can be said for the physical worker.  The point here is that no matter what injury is claimed, and no matter what the position may be, it has to be investigated on a case by case basis.  There is no blueprint that says a certain classification of work has more benefit of the doubt than another–there are just too many variables.  No two people are the same, and that fact alone is what skews the statistics.  Genetics, body habitus, prior health issues, and prior injuries all can lead to the complications of a claim investigation.  So don’t be quick to deem a claim compensable or not based on the job title of a worker.  You have to take the time to do a thorough investigation no matter what the worker does for a living.

 

 

Summary

 

Sedentary work carries its own risks and hazards, the same as a heavy-duty job.  It is just different in nature.  Sedentary workers will have less acute injuries and more that are repetitive in nature.  The point again is you have to look at every claim on a case by case basis.  To lessen risk, look to new technology that is evolving in the sedentary workstation.  Breakthroughs have been made to make computer work less strenuous for the worker, and it is worth the investment if it lessens your claim bottom-line and your overall risk ratio.

 

Author Michael B. Stack, CPA, Director of Operations, 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.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 


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

What You Never Told The Comp Board Can Hurt You

 

Employer Files Contain Most Useful Information
 
A comp board, and carrier, can only deal with facts they know. What is not known is dealt with by presumptions, nearly always resolved in favor of a worker. The largest source of useful info is in the employer’s files – where it nearly always remains, silent and drawing no attention to itself.

Facts are totally impersonal and indifferent to whether or not they are invited to work comp hearings. If they are overlooked, ignored, unmentioned or regarded is irrelevant only the employer will pay if those approaches are wrong. A fortuitous discovery yesterday illustrates this.

 
Prior Unemployment Claims Are Common
 
Have you, as an employer, ever had an unemployment claim by a worker with a terminally anti-social attitude? Did you win the bitter, hard fought claim for unemployment benefits? Did you think that was the end of it, only to be faced with a claim for work comp? Many employers have.

But did you notify the comp board and the carrier, with supporting documentation, of the older UI claim and its outcome? If not, your performance has been typical. Few employers do, and few are asked about prior UI claims.

Yesterday, this writer was doing routine research of a 1985 NY comp decision through google. The name of the case, never mind what it was, unexpectedly produced not one, but THREE cases with the same name, one in 1985, but two in the early 1970s, which were not comp decisions, but UI.

The 1985 decision is useful for claims that require a worker’s signed release, especially where the worker refuses to provide one. The case involved a worker who, for undisclosed reasons, simply refused to provide a post-injury IRS return.

Yesterday, the two earlier UI decisions provided the answers. The worker had been, to put it politely, simply impossible to abide. His battles for UI, after being dismissed, did not change that impression. He lost…….and then filed a comp claim.

He won the comp claim, seemingly without much effort, but when the carrier tried to get documentation of post-injury earnings it met with a stone wall of unexplained resistance.

 
You Need To Ask
 
What is disturbing is that the decision strongly points to the fact that even at that point in the proceedings the carrier, the board, and later the court, were unaware of the prior two reported UI decisions. There is an old joke involving a 35 year old, believed to be a mute, who suddenly speaks. When relatives say, “We never knew you could speak”, he answers, “You never asked.”

Had the carrier known of the prior history, the outcome almost certainly would have prevented the claim from being allowed in the first place.

There are many, many claims which fit the above pattern. Wherever there is a claim in which there were prior applications for other benefits, or complaints such as harassment and/or discrimination, inform the board and carrier, and include a copy of any determinations. Do not be mute.

 
Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. medsearch7@optonline.net  

 

Editor Michael B. Stack, CPA, Director of Operations, 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.  

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.


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

Construction Workers, Independent Contractors, and Workers Comp

 

Who Is and Isn’t Covered by Workers Comp in Construction?

 

Employers in the construction industry are often perplexed as to who they should cover with their workers’ compensation insurance policy.  Full-time employees are covered, but what about part-time employees, day laborers, leased employees, borrowed employees and occasional volunteer work by a family member?  In most states all of these types of employees will be covered by the workers’ compensation insurance policy.  However, independent contractors are normally excluded from coverage by the workers’ compensation insurance policy.

 

The issue that arises most often between independent contractors and construction company employers is when the independent contractor does not have workers’ compensation insurance of his/her own and is injured while working for the employer.  When the injury is severe and the independent contractor does not have workers’ compensation coverage, often the independent contractor will try to collect workers’ compensation benefits from the employer’s workers’ compensation insurance company.

 

 

Employers Coverage Denys Claims From Independent Contractors

 

The employer’s workers’ compensation insurer will normally deny the claim as the insurer has not collected any premium for the additional exposure of the independent contractor.  The independent contractor (and his/her attorney) will often turn to the Workers’ Compensation Board/Industrial Commission and ask the governing authority to rule on whether or not there is coverage for the independent contractor.

 

The Board or Commission will normally look closely for any reason where they can classify the independent contractor as an employee of the construction company employer.  If the employer has not complied with all the requirements of hiring the independent contractor as an independent contractor, the Board or Commission will find the injured worker to be an employee.

 

 

Construction Employers Need to Know Law

 

For the construction company employer to protect its self from workers’ compensation claims of independent contractors claiming workers’ compensation benefits, the employer should know the law pertaining to independent contractors in their state.  Many states follow the federal government guidelines outlined in the federal Fair Labor Standards Act (FLSA).  On the federal level, the U.S. Supreme Court has ruled several times that there is not a single issue that makes a worker an independent contractor as opposed to an employee, but a preponderance of all the information surrounding the independent contractor-employer relationship.

 

 

Federal Fair Labor Standards Act

 

Per FLSA, the following issues define whether or not the worker is an independent contractor or an employee:

 

  1. The extent to which the services rendered are an integral part of the principal’s business

 

  1. The permanency of the relationship

 

  1. The amount of the alleged contractor’s investment in the facilities and equipment

 

  1. The nature and degree of control by the principal

 

  1. The alleged contractor’s opportunities for profit or loss

 

  1. The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor

 

  1. The degree of independent business organization and operation

 

Generally put:

 

  • If the construction company employer utilizes only one independent contractor to always perform the same type of work, he may be considered an employee.

 

  • If the independent contractor works for no other company, he may be considered an employee.

 

  • If the construction company controls when, where and how work is performed, the worker will be considered an employee.

 

  • If the worker has no exposure to financial loss on a job, he will be considered an employee.

 

  • If the worker maintains a separate business address, he will most likely be considered an independent contractor

 

  • If the worker has a federal identification number for income tax purposes, and does not use a social security number, he is more likely to be considered an independent contractor

 

 

 

Factors That Do Not Determine Employment Status

 

There are some factors that construction-company employers think should be considered in the determination of employment status, but generally the states do not agree.  The factors that normally do not make a difference include:

 

  • The location of where the work is performed

 

  • The lack of a formal hiring agreement

 

  • The licensing, or lack thereof, the worker

 

  • The frequency or timing of payment

 

 

Tips to Protect Against Contractor Claiming to be Employee

 

Construction companies can protect themselves from an independent contractor claiming to be an employee.  The construction company must mandate the independent contractor provide a copy of a policy of workers’ compensation insurance in the name of the independent contractor.  The construction company should contact the independent contractor’s insurance agent and confirm the workers’ compensation policy is paid up and has not been cancelled.

 

Construction company employers should also have a formal contract with the independent contractor stating:

 

  • The work to be performed will be completed by a definite date, but the independent contractor will determine the days and hours actually worked

 

  • The independent contractor will furnish his/her own materials, equipment and tools

 

  • The independent contractor will complete the agreed to work for the set price, regardless of the number of hours/days needed to complete the job and regardless of whether or not the independent contractor makes a profit.

 

  • The independent contractor will maintain workers’ compensation insurance covering all of the independent contractor’s employees until the agreed work is completed to the satisfaction of the construction company

 

  • The independent contractor will determine the means and methods of how the work is performed

 

  • The independent contractor is free to work for other employers before, during and after the work for the construction company

 

 

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, Director of Operations, 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.

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 


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

5 Ways to Pay Too Much Workers Comp

 

 
Employers who do not manage their workers’ compensation program will pay too much for their workers’ compensation insurance.  There are many ways to control the cost of workers’ compensation, but if you are making any of the 5 following common workers’ compensation program errors, you are paying too much.
 
1.   An Inadequate Return to Work Program
 
Modified duty / transitional duty / light duty are all terms used to describe the process of putting an injured employee back to work before the injured employee is fully capable of returning to his/her regular job.  For example, an employee with a lacerated hand would not be capable of returning to his regular job where two handling lifting is a frequent occurrence.  However, the employee with the lacerated hand is quite capable of answering the phone; checking deliveries, counting inventory, etc., and should be placed back at work on modified duty.
 
The employee benefits from the modified duty program by being able to remain active and by maintaining a higher rate of compensation.  Disability costs paid by the insurer are reduced, lowering the cost of the work comp claim. 
 
Several studies comparing the results of having or not having a Return to Work Program have shown injured employees recover faster when they keep active and do not become deconditioned. This reduces medical cost.  By remaining in better physical condition while recuperating, employee experience a higher level of recovery and a lower level of permanent impairment, resulting in lower indemnity cost.
 
 
2.   An Inadequate Safety Program
 
Two factors that greatly impact the cost of workers’ compensation are frequency and severity of claims, with the frequency of the claims having a greater weight in the calculation of the employer’s insurance premium.  The fastest and easiest way for an employer to reduce the frequency of workers’ compensation claims is through the instigation and continuation of a strong Safety Program.
 
A good Safety Program will include identification of all job hazards for every position within the company, a concerted effort to eliminate or reduce all identified job hazards, safety training to teach employees how to work safe and avoid actions that can cause an injury, and a safety specialist and/or a safety committee to keep safety at the forefront at all times.
 
 
3.   No Medical Management Cost Control
 
With the high cost of medical care, controlling and managing the medical care provided to an injured employee is essential.  There are three good techniques for controlling medical cost:
 
·         The first technique is having a triage nurse or a worksite nurse that evaluates the injury immediately when it occurs and arranges for the injured employee to receive the proper level of medical care, whether it is first aid, an emergency clinic or a skilled specialist.
·         The second medical management cost control technique is having a nurse case manager to become involved in the claim if the injured employee will miss any time from work.  The nurse case manager will coordinate the medical care with all medical providers, facilitate medical treatment, assist the employer and employee in coordinating and complying with return to work options, and arrange rehabilitation services, if needed. 
·         The third technique is to have cost control services in place and ready to use including medical fee schedule reviews, utilization reviews, peer reviews and pharmacy benefit managers.
 
 
4.   No Fraud Prevention Program
 
The failure to prevent fraud can add 10% to 20% to the overall cost of workers’ compensation.  Per the National Insurance Crime Bureau, up to 25% of all workers’ compensation claims contain some element of fraud, whether it is the totally bogus claim or the employee who stays off work a few days longer than necessary. 
 
One of the worst things an employer can do is to turn their head and look the other way when a workers’ compensation claim has an element of fraud.  By ignoring one fraudulent claim, the employer encourages other employees of lower moral standards to also submit their fraudulent claims. 
Every employer should have a fraud prevention program and every employee should know that the employer considers fraud a serious crime and prosecutes it thoroughly. When employees realize that insurance fraud of others hurts them by the way of lower raises and/or bonuses, the employees will be much more inclined to provide information on the employee who is committing insurance fraud through a workers’ compensation claim.
 
 
5.   No Control of the Medical Provider Selection
 
The selection of the medical provider can have a major impact on the cost of medical care.  There is a strong correlation between the states with the highest cost of workers’ compensation and the states that allow the injured employee to select the medical provider.  In the states where the employee selects the medical provider, employees often changed doctors to find a doctor who will keep them off work longer.
 
In the states where the employer is given the right to select the medical provider, the employer should post the list of approved and required medical providers.  When the medical provider knows the employer sent the injured employee to them, they are more inclined to return the employee to work as soon as the employee is medically able to resume their job or is medically able to work a modified duty job.  It is imperative the employer/triage nurse directs the injured employee to the pre-screened and pre-approved required medical providers.
 
It should be noted that in the states where the employee has the right to select their own medical provider, the employer can still post a list of suggested medical provider(s), but cannot (and should not) compel the employee to seek treatment at the recommended medical provider(s).
 
There are numerous other ways to pay too much for workers’ compensation insurance.  The failure to report claims timely to the claims office, the failure to stay in contact with the injured employees, the failure to have a drug testing policy, the failure to stay in contact with the work comp adjuster and nurse case manager, and the selection of the ‘low cost’ carrier for workers’ compensation can all add to the cost of workers’ compensation.  For assistance on controlling what you pay for workers’ compensation, please contact us.

 

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, Director of Operations, 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. ©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.  


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

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