Focus on HR - World Class Worker's Compensation - Part 1
Part One of Two
“I was in the drug store the other day trying to get a cold medication. Not easy! There’s an entire wall of products that you need. You stand there going, ‘Well, this one is quick acting, but this is long lasting.’ Which is more important, the present or the future?”
When it comes to workers’ compensation strategies and practices, the answer is BOTH!
The real cost of workers’ compensation
Visualize for a moment a large iceberg floating in the ocean. Above the water line are the costs paid by workers’ compensation insurance and ultimately your lab:
• Temporary disability payments (modest to generous pay replacement, depending on the state in which you operate);
• Medical coverage;
• Vocational rehabilitation;
• Permanent disability costs; and
• Reserves used to estimate the future cost of temporary disability, medical, vocational rehabilitation and permanent disability costs…and your future workers’ compensation rating.
Below the water line costs, which you pay as well, include:
• Decreased productivity and efficiency;
• Possible drop in employee morale;
• Legal costs;
• Employee temporary replacement and training;
• Possible fines by OSHA;
• Cost of staff time to file reports, conduct investigations, and stay in touch with the injured employee;
• Pressure and possible overtime within the injured employee’s work team;
• Decreased productivity of the injured employee when s/he returns to work;
• Clerical costs associated with processing claims and related reports;
• Staff time to review and analyze claim and reserve reports, and any time to make changes or corrections; and
• Time and cost of any additional follow-on investigation activities.
The simple business premise for your lab should be “World-class workers’ compensation claims management starts before the first claim.”
So where do you start?
There are four key areas in which you should begin your quest to achieve world-class worker’s compensation claims management.
Broker selection. Securing a broker that has an in-depth knowledge of the insurance market and the proven ability to provide exceptional service and value to your lab, to include:
• Knowledge of carriers, local and national trends;
• Financial expertise and, if you are considering or involved in a merger or acquisition, experience in business transactions;
• Knowledge of common injuries, treatments and exposures and possess the ability to effectively direct risk control activities;
• Expertise in claims management, including professional support on problem claims, proactive intervention with the carrier, and strong technical competence;
• Ability to provide or outsource specialized services, such as industrial hygiene, loss control, site-specific audits, and other related services;
• Deliver and explain your Experience Modification data, and be effective in correcting errors, understand pricing mechanics, and help you better educate yourself in all aspects of workers’ compensation
• Possess depth and breadth of expertise throughout the broker’s staff;
• Possess Business Clout measured by size of premium volume with various carriers, established relationships with insurance markets, ability to negotiate rates and resolve gray areas of claims, and mediate problems and establish effective or new relationships; and
• Possess exceptional references and integrity.
So what are insurance carrier expectations of you and your lab?
There are generally a number of factors that influence insurance carriers and their expectations of their clients. Let’s look at those that appear most frequently in the assessment of a client by insurance carriers.
• Prompt attention to employee claims. By doing so, there is a cost reduction correlation as well as the ability to minimize employee relations and litigation problems;
• Single point of contact. By having one person accountable for your claims management, carriers achieve ease of doing business and have the ability to build an ongoing business relationship;
• Experience of your assigned claims person. By having a highly qualified and experienced staff person, the insurance company can expect seamless and problem-free transactions;
• Case load size and practices. Lower case loads equal shorter response time and better follow through;
• Staff turnover and causes. High turnover workplaces historically have greater workplace risks, either in terms of injuries, stress, or poor morale;
• Quality and frequency of reports. Carriers prefer to work with clients in reviewing claims experience and reserves at least quarterly;
• Communication of disability status. Close, cooperative and frequent communication of any significant change in an employee’s condition or potential return to work, with or without modified duty requirements;
• Sophistication and accessibility of technology solutions. Carriers seek paperless transactions via voice or direct e-mail filings;
• Willingness to conduct subrosa (private) investigations and activity checks, where warranted. When there may be a spurious or fraudulent claim, a confidential, private investigation may be necessary to expose a fraudulent claim, resulting in a savings to you and your lab, and the time and energy of the insurance carrier;
• In-house litigation staff. If an employer possesses in-house counsel, there is ease of contact and communication, appropriate legal specialization, proactive litigation support, and greater ‘ownership’ of the case; and
• Early return to work support. Experience has shown that a speedy and successful return to work by an injured employee is the goal of workers’ compensation and is the desire of employers and most employees.
Knowing this, where do you start in your lab?
The first and most important step for you and your lab is new employee selection. Effective and successful employee selection includes the following:
• Well developed and legally sound employment application, and testing and selection processes;
• Complete, accurate and up-to-date Job Descriptions, including Physical Demands and Environmental Factors;
• A pre-employment Functional Capacity examination by a licensed and reputable medical facility specializing in occupational health and industrial medicine;
• A pre-placement substance and alcohol examination; and
• Comprehensive reference and background checks.
Next, let’s move to a well established and communicated internal claims reporting process. At minimum, it should include the following:
• A written policy regarding immediate reporting of any work-related injury;
• Complete, thorough and timely filing of the Report of First Injury or Illness, completed by trained and qualified staff in your lab;
• An internal investigation process well established and conducted by trained and qualified staff; and
• Complete and frequent communication to all employees of the process.
Since you’re not in the medical treatment business, how do you select a reputable medical provider?
There are five key points to use in identifying and selecting a reputable and experienced medical provider that both you and your lab, and your employees will value.
• Select and establish a relationship with a medical practice group that specializes in occupational health and occupational medicine as opposed to a local general practitioner;
• Ensure they are fully aware of your lab operations and types of jobs, and that they have cognizant information, such as Job Descriptions, Physical Demands, Environmental Factors, and even a video of each job;
• Schedule periodic meetings with the medical and clinical support staff at your lab, and include your insurance carrier and broker;
• Develop and coordinate early Return to Work and Modified Duty programs; and
• Coordinate and communicate frequently with your injured employees.
With these few but important program elements, you will no doubt note staff confidence in your ability and interest in their safety and well-being rise.
Hedley Lawson is the Managing Partner of Aligned Growth Partners, LLC, an international business advisory and executive search firm based in Northern California. He can be reached at firstname.lastname@example.org, or you can visit the firm’s web site at www.alignedgrowth.com