As every employer knows, worker’s compensation claims can be expensive, even if you successfully defend your case. The best way to win a worker’s compensation case is to never have an employee file a case in the first place! Below are strategies to better manage your worker’s compensation process. Like a sports team, dealing with worker’s compensation claims requires game planning and a solid strategy.
Train Your Team
Selecting and training an interdisciplinary team to help manage the workers’ compensation process is an effective strategy for small and medium-size companies. A team approach allows employers to gain greater control over the prevention and control of employee injuries. In this era of technological connectivity, a virtual team is an acceptable way for this team to meet. In some companies, a safety committee will have the dual purpose of overseeing workers’ compensation risk improvement. Ideally, the team will have interdisciplinary representatives consisting of the following participants:
- Company operations and supervisory representative
- CFO/controller or the insurance coordinator
- Human resource manager
- Risk manager/safety director
- Claim coordinator
- Insurance agent/broker claim consultant
- Insurance carrier claim adjuster
Know the rules of the game
One aspect of workers’ compensation that makes it so challenging is the statutory requirements and administrative rules which vary by state. There are more dissimilarities than similarities between various states on workers’ compensation. Yet, you can rest assured your claim professional will be familiar with these idiosyncrasies and help guide you across the goal line. One constant is that all states require for an employee injury to “arise out and during the course of employment” to be deemed compensable under workers’ compensation.
It is important that your company understand the rules in each state in which your company does business. Some of the major rules to understand include:
- Claim reporting requirements – The requirement for reporting by employees and employers is important. The problem with late reporting is well known and states allow some flexibility on when employees are allowed to report claims but do not restrict employers’ rights to impose rules regarding the timely reporting of injuries and symptoms.
- Waiting periods vs. retroactive periods – Most states have a waiting period provision whereby workers’ compensation indemnity benefits are not paid unless the injured employee is not back at work by the retroactive date. In states with large gaps between waiting periods and retroactive periods, this is an opportunity to seek a win-win by using modified duty return-to-work whenever possible.
- Medical direction: employee vs. employer choice of treating physician – In some states, the employer can select the treating physician for employee injuries, and in other states, the employee is free to choose the medical provider. In some states, employees must choose from medical panels designated by the employer. Some states have limits on the number of times a different doctor, including specialists, can be consulted.
- Medical cost reimbursement – Some states have established a standard fee schedule for the payment of medical providers, whereas other states allow usual and customary charges to apply. With double-digit medical cost inflation rates, states with uniform fee schedules offer an advantage over states allowing usual and customary reimbursements. A medical bill review and repricing for preferred provider networks offered by your workers’ compensation carrier will help with cost containment.
- Impairment ratings – The workers’ compensation system allows for different levels of indemnity benefits to be paid depending on the severity of the injury and the resulting degree of permanent impairment of the body part or multiple parts as determined by treating physicians. Thus, it is important to focus first on prevention and second on prompt return-to-work.
Establish company policies, procedures and protocols
Experienced employers know the importance of establishing rules to maintain control and to ensure fairness. Team rules provide the basis for accepted conduct and allow employers to understand how well their system is being implemented.
Seven common, effective company rules for workers’ compensation include:
- All known or suspected industrial injuries must be reported immediately to first line supervisors.
- First aid and medical treatment must be administered as needed.
- The first line supervisor will follow internal injury reporting procedures before the end of the shift in which the injury occurred so that the workers’ compensation carrier is notified timely.
- A company representative is to accompany injured employees to the medical provider.
- A root cause accident investigation must begin by the end of the shift in which the injury occurred and be completed within 24-48 hours of the incident.
- The company will report the employee injury to their insurance agent/broker and the insurance carrier within two days to begin seeking modified duty return to work.
- Return to work will be accomplished the same day or day following the employee’s release to modified duty.
Understand your opponent
A championship team typically has high caliber offensive and defensive teams. This offensive and defensive strategy also applies to winning at workers’ compensation. For example, focusing on preventing injuries is analogous to a strong offense; whereas focusing on claim management and cost containment is analogous to a strong defense. It is important to understand if your company has a bigger challenge in controlling the frequency of workers’ compensation claims or in managing the severity of these claims. There is no doubt that prevention of claims in the first place is the most effective long-term strategy. However, it will take time to adopt a zero injury culture and to successfully eliminate “at-risk” behaviors to decrease claim frequency. Realistically, most companies will need to concurrently address both frequency and severity reduction strategies.
If your company has a history of recurring but minor injuries or sees a pattern of similar types of serious injuries, a good start could be to focus on injury prevention. Conversely, if your company has few employee injuries, but these injuries turn into costly workers’ compensation claims, then focusing on severity reduction through improved claim management practices is recommended.
Keep your eye on the scoreboard
It is vitally important to monitor the progress your company is making in achieving your goals. One challenge with workers’ compensation is that most of the available metrics are lagging indicators focused on the outcomes of past injuries, including the following examples:
- Average cost per indemnity claim
- Workers’ compensation Experience Modification Rating (EMR)
- OSHA frequency rate, the Total Recordable Incident Rate (TRIR)
- OSHA severity rate, the Days Away, Restricted or Transferred (DART)
Successful coaches of winning teams make adjustments throughout a game. Similarly, it is possible to shift the emphasis from lagging indicators to real-time and leading indicators by establishing key performance indicators to focus on the prevention-based activities that will impact your company’s workers’ compensation performance. One example is considering posting a scoreboard to highlight the number of days your company (or individual departments) has worked without either a recordable injury or a lost time injury.
Other examples of risk performance metrics that can help shift your company’s focus from lagging to leading indicators include:
- Number of safety orientations conducted within the allotted time frame for all new or transfer employees
- Number of jobsite safety inspections completed
- Number of behavioral safety observations completed
- Percentage of daily pre-planning meetings completed and documented
- Percentage of workers’ compensation claims reported to the insurance carrier within two days of injury
- Number of employee injuries successfully accommodated with modified duty return-to-work assignments
Making workers’ compensation management a priority can pay huge dividends for companies. By improving workers’ compensation performance, management can focus on improving operations, including the attention to achieving quality and financial goals. By reducing the number of injuries and the severity of workplace injuries, workplace morale can further improve teamwork and productivity. Committing to a strategic game plan for workers’ compensation management can mean the difference between a winning or losing team.