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0706 PD: Keys to controlling workers’ compensation

Don Dressler Published on 07 August 2006

What do I need to do to control worker compensation costs?

Handle every new work injury immediately

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1. Immediate medical attention
Take the employee to your designated health provider. Don’t send them; drive them there personally and wait for them. Ask about the injury and planned treatment right then.

2. Immediate employee statement
Take notes about what the employee says happened. Who else saw it? Where? When? Conditions? How? This is your best opportunity to document the extent of the injury; learn what corrective action is needed to improve safety, and stop fraud right now. The employee cannot later change their account of the incident to improve the chances of receiving undeserved benefits. Take photos.

3. Alert the physician to suspicious claims
If there is anything suspicious about the reported incident, call the physician to inform them before he or she sees the patient. An alert report of all suspicious circumstances will avoid wrong conclusions by the first physician.

4. Decide whether to contest the claim
All the facts you need are usually available in the first 24 hours. Your claims adjustor must either deny a claim within a limited time of filing or lose most objections to a claim. Claims filed after termination, which involve fighting or horseplay, where the worked was impaired by alcohol or illegal drugs and other issues, must be taken up at once.

5. Report the injury
Immediately notify your insurer or claims administrator. Prepare carefully the first report of injury, based on your investigation and statements from the employee and any witnesses. Give the claims administrator the tools to do a good job for you.

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Get the employee back to work
1. Without question, returning the employee to work is the single-most positive action you can take to minimize the cost of a claim.

2. Review with the physician the diagnosis and any work restrictions. Can the employee bend, lift, stand, etc.

3. Make a written offer of return to work. You will need to be able to prove what offers you make to injured workers, and if they decline, they will not receive temporary disability, any permanent disability will be minimized and litigation can often be avoided.

Keep in touch with the employee
1. Someone needs to talk directly with the employee on a regular basis or several times a week. Employees who feel abandoned or afraid may turn to an attorney, not share their physical condition with you and become difficult, increasing lost time, extending medical treatment and increasing your costs.

2. Having someone at your company help an injured worker will provide you a 400 percent return on investment for any time and costs you incur. While demonstrating concern and understanding for your employee, help him or her with transportation, necessities (such as shopping) and questions about their workers’ compensation claim.

Manage the claims adjustor

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1. Keep informed about what the adjustor is doing about paying bills, calculation of benefits, issuing denials and documenting offers of modified work.

2. Ask for written status of each open claim every 90 days. Review any loss reports you receive and follow up with any questions.

3. Be prepared to meet personally with the claims adjustor or their supervisor.

What happens next and when?

A. Calendar the key events which govern your workers’ compensation policy, not just your renewal or anniversary date.

First, 120 days (four months) before your anniversary date, discuss your options with a broker or agent you trust (what are your options?). It takes time to prepare a quality application for insurance and then decide which insurers to approach. Waiting until 30 days before renewal severely limits your options.

Second, 120 days (four months) after your anniversary date, have a review of all open and closed claims for the past four years, since these claims will be used to set your experience modification and each year’s claims are used for three years.

B. Review your experience modification. What is your experience modification? Most employers with 10 or more employees have an experience modification. The experience modification compares your business to other similar operations. It measures both small claims (called primary claims, about $5,000 or less in most states) and large claims (called excess claims).

Are your “primary” losses higher than expected? If so, consider:

1. New employee orientation on safety
2. Regular safety workplace inspections
3. Monthly training on safety topics
4. Thorough accident investigations
5. Employee safety incentive programs

Are your “excess” losses higher than expected? If so, consider:

1. Return to work programs and offers
2. Meetings with claims adjustor
3. Participate in all legal steps, including attending any depositions

C. Review your claims for patterns (areas of unsafe practice). Common injuries are strains, sprains, slips and falls and highway accidents. Identify the most common accidents in your operation. Ask for help from your insurer’s safety and loss control staff.

D. Consider how much risk your company is willing to take. You can assume more risk to obtain lower costs with alternative funding arrangements. State law regulates workers’ compensation insurance. Some of the alternatives available in most states include:

•Self-insurance

•Group self-insurance

•Retrospective rating plans

•Large deductible plans

•Small deductible plans

•Captive programs

E. Work with a good insurance broker to explore the best options for you. Many small- to mid-sized employers deal with several different insurance agents or brokers. Does your broker or agent understand all of your needs?

F. The state legislature in most states regularly debates changes to workers’ compensation laws. Workers’ compensation is a statutory system. You need to participate in the political debate on this issue. PD

References omitted due to space but are available upon request.

—From 2004 Employee Management for Production Agriculture Conference Proceedings

Don Dressler, Risk Management Consultant

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