Tops tips to bulletproof your workers’ compensation program

workers compensation
Is your workers’ compensation program for the birds?

Last week I presented on ways employers can improve their workers’ compensation program at the Arizona Small Business Association’s annual meeting. Here are the key takeaways for Arizona businesses who have workers’ compensation insurance.

Don’t treat employees as subcontractors. Many businesses, especially in the trades like plumbing or roofing, make this costly error. This is a priority fix both for your employment tax obligations and for covering your employees under workers’ compensation. In Arizona, all you need is one full- or part-time employee (as defined by the IRS or an administrative law judge) to need workers’ compensation insurance.

Tighten injury reporting protocols. Rapid report to your carrier makes a huge difference in workers’ compensation costs. Back injuries are 35% more expensive if not reported within the first week, for example.

Do you have the best agent for your business needs? Does the brokerage or agency offer tools like Modmaster to help you reevaluate your experience modification factor and pinpoint what each injury costs? If not, maybe it’s time to find a new agent.

How’s your safety culture? Safety begins at the top. Employees can’t push safety uphill. Beginning each meeting with a safety report and forming a safety committee of line employees will make a big difference in your organization’s culture.

Where do you need safety training? Can your agent or insurer provide training resources? Spending a little money for training will save you lots of money (and administrative costs)  in the long run.

Do you need stronger hiring practices? Spend money pre-hire by using thorough pre-employment physicals, background checks and testing to eliminate undesirable candidates before you hire them.

Do you know who your adjusters are? Ask your carrier for an introduction if you haven’t met them. Skype or phone conferences quarterly can help, or better yet, on-site visits to discuss each loss, will help reduce costs.

Hone in on those claims where employees don’t get better. Work with your carrier to manage these long-term claims. Ask your adjuster to specifically outline their plan of action on the claim.

Do you have a return-to-work program? If not, you run the risk of an employment claim and increase the cost of each of your claims. Never tell an employee, “We can’t take you back until you’re 100%.”

Make your workplace a healthier one! Comorbidities like obesity, diabetes and hypertension drive medical and workers’ compensation costs. There are many vendors that can bring resources to your workplace to help manage health, including your health insurance carrier.

If I can help you improve your workers’ compensation program, call me for a no-obligation consultation today at 602.870.3230.

Risk Avoidance and What the Heck is Wrong With People?

anger management

I rarely go into Circle Ks or convenience stores or places of that ilk because I’d prefer not to get shot (risk avoidance). However, on the way to a volunteer gig the other day and against my better judgment, I stopped in a Circle K near Interstate 17 in Phoenix to buy a pop (or soda, as some call it). As I walked in, I noticed there was a mop bucket full of black water near the register and that my shoes stuck to the floor as I went to get my pop. As I filled my cup, I noticed a sign that said, “Out of straws.”

At the register I said hello to the cashier and asked the young man if he was holding out and if perhaps he did have a straw. He nearly started crying. He said they ran out of straws earlier in the day and he couldn’t get any from neighboring Circle Ks (franchise issues?). He said that people were so irate that they were dumping their entire sodas on the floor, which he had to clean up.

I asked, “Really, it’s like ‘I hereby dump my soda on the floor in protest because you are out of straws?'” Yes, he responded sadly. He said he had given his two-week notice because he just “just couldn’t take it anymore.”

Wow. Not having a straw for a Big Gulp? Not a rage-o-meter offense, in my humble opinion. Which leads me to today’s topic: “What the heck is wrong with people?” That young man, so traumatized by the day’s events that he quit his job, is a human being. He’s someone’s son, he’s a grandchild, and he’s a human being with feelings. Have we swung so low that we’re willing to dump our sugary sodas on the floor and our rage onto a poor cashier in a convenience store?

Don’t get me wrong. I know that everyone, me included, acts badly from time to time. We lose our temper in traffic, we snap at someone who may only be trying to help us, or we hang up in frustration on a customer-support person. However, for people to stoop this low, to “make a statement” that makes no statement other than they desperately need anger management, to me is simply beyond comprehension.

I have nothing deep and philosophical to say about this except it makes me much more aware that my behavior has consequences. It also reminds me that this type of bad behavior means we as risk management professionals will always have jobs.

I am so grateful that I don’t carry useless, non-specific rage over an imaginary victim status. When a store is out of straws, it isn’t a personal affront to me or an assault by the universe to make my life harder. Apparently, though, that rage is present in and acted on by many.  And that, my friends, is exactly why I stay out of convenience stores. That and Milk Duds. But that’s another story.

Cavalcade of Risk #205

There’s a lot of great news and advice from the risk management front in this edition of the Cavalcade of Risk.

new-risk-manager400
Risk management tips

There’s a lot of great news and advice from the risk management front in this edition of the Cavalcade of Risk. Let’s begin by evaluating the risk that your employer-provided health insurance may soon be a thing of the past. InsureBlog’s Nate Ogden evaluates Ezekial Emmanuel’s dire predictions.

When it comes to worker health and safety, Julie Ferguson of Workers’ Comp Insider says that it may be time to shake up the film industry again. According to Ms. Ferguson, it is no more acceptable for film employers to try to play fast and loose with worker lives than it is for coal mining, manufacturing, or any other industry.  In her post Death on a Georgia Railroad Trestle, she talks about how a recent fatality is sparking calls for safety reforms in the Hollywood film community.

Speaking of worker health and safety, did you know you can probably avoid hiring your next workers’ compensation claim? Much of workers compensation cost containment is related to good information, good systems, and proper planning. When it comes to hiring, it can be staggering to think about the amount of liability a company is taking on with each new employee. When you bring on a new employee, you are also bringing on the liability that they can safely perform their job. Michael Stack at Reduce Your Workers’ Comp blog offers us a few tips.

We always look forward to a glimpse at Bob’s Cluttered Desk, and this month Robert Wilson looks at school shooting drills. States are embracing active shooter drills in public schools, conducting sometimes unannounced drills that simulate an active shooter on campus. In some districts teachers are expected to be shot by pellet guns as part of the training. Is this a good idea, or simply a way to traumatize teachers and their students?

How much does your genetic composition affect the risk you will have a chronic condition?  The answer is not as much as you might have thought. Jason Shafrin of The Healthcare Economist investigates.

With today’s college students frequently graduating with loads of debt, Jon Haver of Pay My Student Loans blog, describes why today’s graduates need to consider life insurance now, not in the future.

Finally, at my Insurance Writer blog, I offer the top ten habits new risk managers should avoid to succeed in their new and often challenging positions. I learned many of these mistakes from first-hand experience.

Dennis Wall is our next host. He has chosen his theme and he is asking for posts related to residential mortgages, force-placed insurance, the participants in the mortgage process, the participants in the securitization of mortgages, and related themes.

What Does 2014 Hold for Insurance Rates?

With 2014 rapidly approaching, contact your broker or consultant now to discuss steps you can take to reduce your 2014 commercial premiums.

What can you expect for property and casualty insurance pricing in 2014? Expect some increases, but watch for significant decreases in at least one line of insurance. According to Willis’s recently published Marketplace Realities 2014, new capacity is flooding the market from “as widespread as China and Omaha.” New capital supply offers a more “inviting marketplace,” Willis executives believe. Others insurance experts across the U.S. agree. Here is what to expect in 2014.

Primary and Excess Casualty

Do not expect huge decreases in casualty prices even with “abundant” capacity and “new market entrances,” according to Willis and other experts. With the loss of the federal terrorism backstop looming in December 2014, carriers hesitate to write exposures with large risk concentrations. Underwriters are also avoiding manuscript endorsements, relying more heavily on Insurance Services Office (ISO) language. Standard ISO language has more court decisions behind it, which equates to more predictable loss experience for underwriters to base their rates, many believe. Willis predicts casualty pricing to increase two to 10 percent in 2014.

Auto and Fleet

Auto liability continues to challenge fleet owners nationwide. Experts predict auto liability pricing increases between two to 10 percent. Underwriters are imposing higher retentions on risks with large fleets, heavy trucks or poor loss experience. Carriers like ACE offer auto liability buffer limits, coverage outside the working layer when primary limits do not meet umbrella attachment points.

Workers’ Compensation

There are several emerging issues in workers’ compensation. With the Affordable Care Act expected to bring new insureds into the healthcare system, expect strains on the work comp system. This will put pricing pressure on workers’ compensation premiums. While experts predict that earlier treatment for comorbidities will benefit workers’ compensation experience, we predict this will be a long-term benefit. In the near term, Willis predicts work comp rates will increase from 2.5 to 10 percent. The exception is California, where employer can expect rate increases of up to 20 percent.

Employment Practices Liability (EPL)

Adverse claims experience is placing upward pressure on EPL coverage. Entities domiciled in certain California counties may find themselves unable to obtain coverage, Willis predicts. While overall capacity remains “abundant,” there are no new EPL carriers entering the market. Pricing overall will be flat to a 10 percent increase, with private, nonprofit and smaller employees predicted to face up to 15 percent increases. The Equal Employment Opportunity Commission continues its aggressive enforcement plan despite some staggering trial losses for the EEOC in 2013. There is no time like the present to explore ways to decrease your EPL risks and avoid EEOC scrutiny.

Cyberrisk

When Cyberrisk gets its own page in a white paper discussing rates, you know it is a hot topic among insurers and risk managers. There were more than eight hacking incident per day in the US in 2012 according to the report. With increased security concerns, coverage is now a “must have” for many organizations. Calling the market for stand-alone Cyberrisk “active,” Willis predicts rates will remain competitive. If your firm has had losses, however, Willis predicts slight changes — between -two to five percent overall. There are many new Cyberrisk buyers in the marketplace and pricing for first-time buyers remains competitive. If you outsource your data to cloud vendors, underwriters will review your existing contracts. Your indemnification language will be a critical factor in underwriting your risk.

Directors & Officers (D&O)

Price increases are moderating with pricing expected to be flat to a high of 20 percent for financial services firms. Homeowner and condominium associations as well as educational institutions should expect premium increases. One carrier has indicated a willingness to provide “mega limits” for Side A coverage, which protects executives against claims not indemnified by the corporation. The non-traditional money that is now flooding the insurance industry may lead to downward pressure on D&O pricing in 2014, Willis contends.

Property

We saved the best news for last. With loss ratios hovering between 75 and 85 percent for many property insurers, Willis and other insurance experts predict a big decrease in property insurance pricing. In non-catastrophe exposed risks, expect a 10 to 12.5 percent decrease in pricing. For cat-exposed property, Willis predicts smaller decreases of between five to 10 percent. Any port in a storm, right?

With 2014 rapidly approaching, contact your broker or consultant now to discuss steps you can take to reduce your 2014 commercial premiums.

Defining and Achieving Maximum Medical Improvement in Workers’ Compensation Claims

Achieving Maximum Medical improvement in a workers’ compensation claim may not be easy, but it is one of the most important goals in claims management.

Maximum medical improvement (MMI) is a term used frequently in workers’ compensation claims management. Often, your adjuster will explain that a case is not ready to settle because your employee has not “reached MMI.” What is MMI? From the employer’s viewpoint, achieving MMI is one of the most important goals in a workers’ compensation claim. MMI is the point at which treatment options have been exhausted and, generally speaking, temporary total disability payments can be terminated. MMI may also be referred to as “permanent and stationary.”

Case law varies in defining MMI

Case law in various states defines MMI in a variety of manners. In Ohio, for example, MMI is defined statutorily as “a treatment plateau.” In California, the Division of Workers’ Compensation defines MMI this way: “Your condition is well stabilized and unlikely to change substantially in the next year, with or without medical treatment. Once you reach MMI, a doctor can assess how much, if any, permanent disability resulted from your work injury.” Texas defines MMI statutorily as “the earliest date after which, based on reasonable medical probability, further material recovery from or lasting improvement to an injury can no longer reasonably be anticipated.” MMI will vary depending on the claim’s jurisdiction.

MMI – “As good as it gets”

The common thread of both case law and lengthy discussions attempting to define MMI is this – the employee is at a treatment plateau: his or her medical condition will probably not substantially improve. MMI then, might be described this way: “This person’s medical recovery is as good as it gets.”

Does MMI mean the employee can function at his or her pre-injury status? Not necessarily. Even if the employee has not reached his or her pre-injury status, however, the employee can achieve MMI. Some states such as Texas are very clear in stating that an employee’s recovery need not be equal to or better than the pre-injury state.

Defining MMI may be clearly defined in statute, but getting your doctors to declare an injured employee at MMI is not always straightforward. One way to determine if an employee is MMI is to send a nurse case manager with the employee to the medical provider. The nurse should ask this important question: “Is the employee’s recovery as good as he or she will get?” If the doctor says, “Yes,” then obtain a written opinion to that effect and begin the settlement process.

Lack of cooperation in treatment can be managed

What about the claimant who refuses to cooperate in his or her recovery? All reasonable treatment must have at least been offered to the employee. There are times when further diagnostic testing and evaluation are deemed medically reasonable and necessary. It may later be determined that no further treatment would benefit the claimant, or where further treatment is identified and the claimant refuses the treatment. In that intervening time until the employee refuses treatment, the claimant has, in many states, not reached MMI and the employer still owes benefits. Only when treatment is recommended and refused, or not undertaken within a reasonable time, has an injured worker reached MMI. For example, a consulting surgeon may recommend a back fusion; however, the employee declines surgery. In this case, the claimant has usually reached MMI and your claims administrator can begin to conclude the case.

Pressuring the employee for a quick decision on surgery may push the employee to obtain an operation he or she would otherwise refuse. If may be best to give an employee a few weeks to consider his or her decision to obtain further treatment rather than insist on an immediate answer, even if it means paying a little more in temporary disability.

Chronic pain and MMI

Many injured workers allege chronic pain. Chronic musculoskeletal disorders and diagnoses such as arthritis and fibromyalgia impact workplace injuries. In most cases, if the employee’s pain would be materially improved by participation in a pain clinic or pain program, the injured worker has not reached MMI. A patient with chronic conditions may require continuing treatment to maintain his or her recovery or to avert any further deterioration. However, if further treatment is directed solely to maintenance of the patient’s condition and there is no likelihood of further improvement, the patient is at MMI.

The most difficult situation is when the employee’s symptoms fluctuate dramatically. These employees will complain of “good days” and “bad days.” These types of symptoms are troublesome and often delay MMI; however, fluctuation alone is immaterial to a decision of MMI. When symptoms fluctuate, the time it takes to determine whether the patient is at MMI may increase. However, the underlying reasoning remains the same: if the patient has plateaued or the number of good days is growing, consider the patient MMI and begin the settlement process.

However, before deciding MMI has occurred because the employee has had no continuing substantial improvement, the adjuster must offer all “reasonable treatment.” Reasonable treatment does not include experimental procedures. Reasonable treatment usually means treatment that is based on evidence-based medicine guidelines such as the Official Disability Guidelines. With alternative treatments plentiful, employees may want try therapies with only anecdotal track records of success. Just because there are untried treatments available, this does not make them reasonable. Treatment options should be evaluated on a case-by-case basis. When addressing requests by employees for alternative treatments, solicit the treating physician’s opinion in states where employers can direct medical treatment.

MMI is an often subjective and always an important goal

Reaching MMI is subjective and often a time-consuming and sometimes frustrating process. A great deal of state-specific case law concerning the definition of MMI provides some guidance. If you are in doubt, your claims adjuster or legal counsel should assess the likelihood that your employee’s condition has stabilized to the point of MMI. If so, your adjuster or legal counsel should begin to immediately attempt to settle the claim.