Archives for January 2014

Snow and Ice Injuries Can Cause WC Claim Headaches

January 30, 2014 By JL Risk Management Consultants

WC Claim Headaches From Snow and Ice Injuries

Snow and Ice injuries can cause a large amount of WC claim headaches.

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Last night, the temperature in many parts of the southeast US approached zero degrees with a blanket of ice and snow to make things even colder. Many news reports from Atlanta showed what can happen with just two inches of snow that melted and refroze to greet drivers on their way home.

Black ice can be daunting as the road, parking lot or sidewalk can seem to be melted or clear of any ice. Drivers in the southeast can easily speak to these conditions over the last few days. Colder climes are usually prepared for such ice and snow storms.

Some of the worst injuries that start as innocuous slip and falls can turn out to be very expensive WC claims. One of the most trying injuries for WC claim staffs are the slip and falls in the parking lots. The ingress-and-egress rules are very dissimilar for each state.

Woman Using Laptop WC Claim Headaches On Court Room

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One WC court case can change how adjusters handle these claims. Each state is to its own on these rules and laws. The following are three great resources on preventing ice/snow slip and fall injuries. One even has a payroll envelope stuffer. They are:

Workers Compensation Fund
Zurich
English Government

The most severe injuries that I have seen lately on snow/ice injuries are truckers that slip and fall when getting out of the truck. One claim resulted in four knee operations with the claim ending with a Permanent Total disability rating with lifetime benefits. That one is here in my office as I write this article.

There are many articles on trucking safety on snow/ice. One interesting note is none of the articles such as this one from the American Trucking Association mentions getting in and out of the trucks during icy conditions.

An interesting fact is that heatstroke accounts for the most weather-related injuries and not injuries involving cold weather.

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Insurance Journal – Congrats on Perfect Predictions for 2013

January 30, 2014 By JL Risk Management Consultants

Insurance Journal Predictions Spot On

The Insurance Journal came out with a prediction for 2013 that when now analyzed makes the publication have insurance credibility. Their cyber-risk predictions were spot on.

Vector Of Insurance Journal Books Graphic

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(It is sometimes necessary to veer off from Workers Compensation when something occurs that stands way out from the pack).

Even though their prediction bordered on the obvious, their Editor-In-Chief Andrea Wells’s comment on cyber- risk are chilling. With all the recent headlines on Target, Michaels, Neiman Marcus and other retailers’ data thefts, the article was very accurate in nature.I came across some old publications that I saved over 2012 and 2013 when I upgraded from Windows 7 to 8.1.

I was cleaning out old research documents for the blog when I came across their publication – Looking Ahead to 2013.The next article in the Insurance Journal also predicted very heavy droughts in certain areas such as California. When looking at the article online, I just realized that you can buy the issue or access it if you were a subscriber at the time.That being said, I will not reprint any of the articles in the blog. The link to the publication can be found here.

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Workers Comp Policy – Reading It Worth Time And Effort

January 29, 2014 By JL Risk Management Consultants

Workers Comp Policy Should Be Read In-house

Reading your workers comp policy may not seem really worth your time. After all, is that not your agent’s job?

Graphic Of Insurance Workers Comp Policy Icon On Shield

Actually, it is your or someone in your company’s unique responsibility. Nowhere in any WC policy does it instruct or even advise you that your agent read your policy.Your business has processes in it that only you and your staff know fully. Yes, there are rare agents that may read your policy, but they are not at your business every workday. Many companies have just renewed their workers comp policy on January 1st. Even though your company may not be one of them, it may be a good time to sit down and read it from the front to the back. Other than right after a premium audit, we receive the most calls and emails right after an employer reviews their policy.

Why? Because there is “more under the hood” than the car you purchased and signed without thinking twice. If you do not have time to read the whole policy, at least read the Dec or Declarations page(s).

The Dec page is what differentiates your company from all the other policyholders.

One of the oddest recommendations that I give out in speeches is to read the policy back to front. Your WC or any other type of policy was built from the beginning pages to the end. The employers that read the policies from the back end up with a list of question to ask their agent and/or carrier.

Picture Of Businesswoman Writing Workers Comp Policy Endorsement

Using a highlighter and writing down any questions will put your company light years ahead of many employers. It is also a very low-priced avenue to savings. In other words, read the fine print first for any questions you may have for your agent. If your agent cannot answer those questions, it may be best to check elsewhere to have your questions answered in full.

The real shocker is sometimes the policyholder has never seen their workers comp policy. One has to be issued, so it should be a part of your company’s primary paperwork.

If your company receives any policy endorsements, it is recommended that you read them on receipt and match them up to the section of your policy that is being endorsed for clarification. Most of the time, endorsements mean very little to the policy.

However, there can be endorsements that actually add a premium to the policy. These endorsement scans can be billed to your company immediately. The premiums may be collected at the time of the premium audit. The time to question any endorsed premium increases is when you receive the endorsement.

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Job Alcohol v. Marijuana Debate – A Great Article Readers Question

January 28, 2014 By JL Risk Management Consultants

On The Job Alcohol v. Marijuana Debate

The Job Alcohol v. Marijuana debate usually ends up with an interesting discussion. The job alcohol v. marijuana debate pits the right to privacy against the right to a safe workplace.

Vector Graphic of Job Alcohol v. Marijuana Debate Icon

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A very interesting question popped up on the LinkedIn Work Comp Analysis group concerning marijuana a few days ago. As you probably have heard by now, President Obama had said that marijuana is no more harmful than alcohol. This immediately started a debate of which is worse – alcohol or marijuana.

One important point is the President did not say that pot was safer than alcohol. He basically said that it is no worse than alcohol. He did not say it was safer or more dangerous. Taking his comments one step further, should marijuana ever be excused if detected in a pre-employment or post-accident drug test?

According to most of the literature on marijuana, the most active ingredient THC stores in the body’s fat cells for quite some time after ingestion. This is the main difference which is going to be a tough area for on-the-job decisions on WC claims.

Many years ago, I was adjusting a claim where a roofer fell through an open skylight that was taped off using something similar to the yellow police tape. The claim was denied with the green light to take it to a hearing. Even though the worker was shown to be as high as a kite, the WC court decided to rule for benefits. That was the first denial I ever issued for pot.

My main point in denying the file was the yellow police tape being around the open hole in the roof. The employer decided it was best along with counsel to not appeal the case. They did not want to write bad appellate law if the case was lost on appeal.

Graphic Of Marijuana Leaf Job Alcohol v. Marijuana Debate In White Background

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The one pattern I noticed on the responses to the LinkedIn question was the lack of knowledge concerning marijuana. I wanted to say up front that I am not a marijuana advocate or user. Some of the better sources for marijuana analyses are at these websites:

Drugs.com is one of the better drug interaction websites. Their marijuana info is here.
CNN’s Dr. Gupta wrote an interesting article on marijuana. Check it out here.
From the Centers for Disease Control (CDC), a study on drug levels in suicide victims is here. The only drawback to this study is the disclaimer is as long as the study.
This is actually the Whitehouse’s opinion on marijuana. See it here.

Two states (Washington and Colorado) have actually decriminalized pot. However, I do not think any state will change their views on WC laws as it pertains to weed.

This debate will go on for decades as more states such as California, Hawaii, and others attempt to fully legalize marijuana. We are unlikely to hear the end of the Job Alcohol v. Marijuana debate any time soon.

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Workers Compensation Hard Market Employers – How To Prepare

January 22, 2014 By JL Risk Management Consultants

Workers Compensation Hard Market Preparation and Solutions

Employers need to know how to prepare for a Workers Compensation hard market.

Forex Money Workers Compensation Hard Market for exchange currency bank

Wikimedia Commons – epSos.de

China’s upcoming cash crunch may possibly never occur except there is an upcoming default by a major bank.

I am not a financial doomsday prepper. However, in the world of Workers Comp, if the money markets are tightened, then carriers will have to begin cherry picking out their best risk clients.

The cherry-[picked employers may not necessarily be the ones with extremely bad E-Mods (X-Mods). Many industries such as trucking and construction have headed into the Assigned Risk Pool even though many trucking and construction companies had very low Mods. Two types of hard markets exist. The silent workers compensation hard market can easily cause whole industries to not be underwritten. Insurance carriers exist to make money. The rest of this article covers how to battle the silent hard market.

Hand Illustrating Workers Compensation Icon

If the insurance underwriters think a market is never going to be profitable, they will not even accept employers with a .80 Mod. That situation happened in the mid-1990’s and again right after 9/11. Alternatives exist instead of just going into a risk pool where rates are sometimes 400% more than the regular market. This can ruin an employer’s budget quickly. Many alternatives to a regular policy exist today. Alternatives are (click on the term for definition):

Alternative Market Concerns

An employer needs to basically seek out alternative markets for WC coverage. The reward for such a search can be very significant over a risk pool. However, and mark my words on this one, if your company signs up with a bad alternative line of insurance, you may not have coverage and/or you may be running afoul of the insurance laws in your respective states of operation.

Picture Of Hand Drawing Workers Compensation Hard Market Research

We receive calls, emails, and letters where a company may be in a very tight spot when using alternative insurers. For instance, how many employers ask – Who is going to be handling the claims for us? Over the last five years, we have received in piles of files where a PEO,, Captive, or Self Insurer has failed and need the claims to be run off and settled.

We also receive many inquiries from employers that have incurred a failed carrier. Alternative insurers are not the only coverage providers that fail. See page 7 of the 2013 NCIGA report to see how many bankrupt carriers there are for just one state’s Insurance Guarantee Association.

In the industry, we call this situation- file mercenaries as it is up to us or a company similar to us to get rid of files ASAP. The only drawback is that we are often spending cash out of an employer’s budget for coverage they already had previously purchased from a now defunct company. One of the hallmarks of a defunct alternative insurer or self-insurer is very poor claims handling.

The bottom line is- do not turn blindly to the alternative insurance market. You need to know much more about your WC coverage than signing up for a policy in the regular insurance market. Many reputable PEO’s, Captives, RRG’s and Self Insurance groups exist in today’s marketplace.

China Workers Compensation Hard Market flag raise

Wikimedia Commons – Daderot

One the most prevalent ways for a hard market to occur is possibly a Chinese money market crisis. Yesterday, the preparation needed for a silent hard market was covered in detail. This leaves the hard market that everyone usually mentions in WC circles.The best way to prepare for an employer to prepare for a hard market is by making the company attractive enough to be underwritten by a group of insurers. This does not mean one insurer as the more that competes for your business – the better. The #1 way to be underwritten by companies that are more affordable is to have a low E-Mod – plain and simple.

Many governmental contractors now require that a company have a Mod of 1.0 or less. Federal contractors were a little more lenient in the past on E-Mods that were over 1.0. Those days have long passed. Almost any contractor wants to see the actual E-Mod sheets from the respective rating bureau.

Paper On Board Clip Workers Compensation Hard Market List Vector

The WC system is a time-lagged system. The effective efforts made today will show up in your Mod in two to five years. That cannot be changed whatsoever. One of the best safety lists for WC is here. The list is actually the Schedule Credits. The modifications here are basically an arbitrary amount that is assigned to your company. Check the list for any safety recommendations. These will probably look very familiar.

If you read over your Workers Comp policy and final audit, Scheduled Modification is almost always on the sheets.

As mentioned very often in this blog, the Mod originates from the Total Incurred figures (Paid + Reserves) the claims staff assigns to the file. The Total Incurred is pegged to your upcoming Mod on the Unit Stat date.

A loss run review before the Unit Stat date will also help in reducing your Mod. Very few hard markets have begun overnight. Starting on your Mod now with some type of reduction program will keep your company better prepared for a hard market.

Online claims access is almost essential to any Mod reduction program. A paper loss run is acceptable in some cases. However, by the time you receive the loss run, your claims situation may have appreciably changed since you ordered the loss run. If you can see a review of the claims notes and reserve increases online, then your company can make timely inquiries into your reserves.

Firming Market Workers Compensation Diagram

Your agent/broker and insurer need to understand exactly what you do in your business. The broker is going to shop around your policy. The more your broker knows about your business, the better they can explore different insurance markets.

A list of job descriptions that should be used when an injured employee returns to work can also be used to better inform and educate your broker, insurer, and insurer audit department on your daily business processes.

The old adage – Information is power is the best way to reduce your WC costs. Obtaining the proper information and funneling the proper information to outside parties will help in almost any WC situation.

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China Banking Crisis May Have Effect On US Insurers

January 21, 2014 By JL Risk Management Consultants

The China Banking Crisis and Insurance Markets

The China banking crisis that is supposed to arrive on January 31st may have an effect on US insurers. A few articles over the last three month warned of a possible money crunch in China. An article appeared in some of the fringe economic analysis websites such as this one concerning a January 31st mega default on loans back by a Chinese bank.

Map Of China Banking Crisis In Red Color Flag Graphic

The link in the first paragraph is to a website that looked to be more alarmist than truthful. This article from Forbes on the same China default gave the alarmist website credibility very quickly. This situation may never occur with the world’s largest bank on January 31st. Then again, it is a pending matter.As mentioned in this article on what actually drives insurance carriers’ rates , the rate of investment return will dictate much of the insurance carriers’ premium levels. If any company’s investments are lagging due to low investment rates, the shortcoming is usually balanced with an increase in prices. Insurance carriers are no different.

The other side of the coin is the debt owed by insurers to China. The level of debt owed to China has now reached record levels as of five days ago. Most of the debt is incurred by US banks. One has to think that insurers are in step with debt owed by the major bank.

At some point if China is experiencing bank defaults or reaches its limit of lending to the US, a money-tightening will occur no matter how much the Fed is pumping into the economy. Money scarcity among banks will also cause the insurance marketplace to harden in a very short time.

Beijng China Banking Crisis Forbidden city statue

Wikipedia – CEphoto, Uwe Aranas

If there is enough of a funds scarcity, the insurers will have to begin cherry-picking their client base. The only way for carriers to be able to make up for the lack of funds is to reduce their risk. No one can blame them after the last financial crisis.

Next up – Preparing For A Hard Market – easier than you may think….

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Premium Audit Disputes and Collection Agencies Warning

January 16, 2014 By JL Risk Management Consultants

Premium Audit Disputes Warning

Since the first of the year, a large number of inquiries on premium audit disputes from employers with premium audit disputes.

Graphic Of Warning Sign Premium Audit Disputes Icon

I am not sure if insurance carriers by contract can do this – but a large number of disputed bills are being forwarded to collection agencies for final collection. This seems to be an ever increasing trend.There are a few ways to avoid this situation:

Pay any undisputed part of the bill. One of the conundrums in disputing a WC audit bill is establishing how much your company owes the carrier that is not in dispute. Every Workers Comp policy has a clause in it that requires payment of the undisputed premium.
Just to be safe, it is recommended that you respond to the credit bureau by certified return receipt mail as soon as possible and cc: the carrier’s audit department.
If the carrier’s collection department also sends your company a request for payment, respond to them ASAP in writing with certified return receipt mail regardless of any collection agencies.
Do not use the audit premium dispute process as a way to delay paying a bill that your company actually may owe. This will ruin your relationship with your agent and the carrier.

Picture Human Palm Held Up Premium Audit Disputes Warning

One of the big mistakes concerning premium audit disputes is to let a collection letter from a collection company sit or destroy the letter. If you look at usually the back of the letter – it will say that your company must respond to them – and not the carrier within so many days. If you do not, then you may have admitted that the debt is valid.

I am not a credit and collections expert. I am only warning you to respond to any collection letters timely or you may end up owing a premium dispute debt. Calling the collection agency is basically worthless as you have no documentation to back up anything you have told the collection agency.

We have had two companies call us where they did not respond to the collection agency’s letter. The collection agencies are now saying they are in default of a debt and must pay it. The main reason that this happened in both cases was the employers threw away the collection letters.

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California’s Rating Bureau (WCIRB) Great E-Mod X-Mod Explanation

January 15, 2014 By JL Risk Management Consultants

California’s Rating Bureau (WCIRB)

The WCRIB – California’s Workers Compensation Rating Bureau (similar to NCCI) has written quite a few great plain-language documents on explaining how X-Mods (E-Mods, EMR’s, Mods,etc.) affect employers. One of those can be found by clicking here.

Their X-Mod formula is slightly different from most of the other rating bureaus including NCCI.

The Experience Rating Formula Rating Bureau Emblem from web

The bottom line is that Mods of any type are calculated with the formula:

E-Mod = Actual Losses / Expected Losses

One of the areas that differentiate the CA WC system from most other states is the split points. The NCCI had recently changed the split points. A quick definition is that any loss values under the split points are much more costly than the amount after the split point.

In CA, the split point is 7,000 which is low compared to the recent increased NCCI split points.

According to the WCIRB –

“Actual losses are segregated into actual primary losses and actual excess losses. The first $7,000 of losses for a claim are considered primary losses. Any remaining amount above $7,000 is considered excess losses. Once segregated, the experience rating formula places additional weight on the primary portion. This additional weighting of primary losses places more weight on claim frequency than on severity and limits somewhat the impact of claim severity in the experience rating calculation.”

Picture Businessman Giving Presentation Rating Bureau Explanation

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As with all Mod calculations from any rating bureau, the emphasis is on penalizing employers that have many accidents while not penalizing a safe employer that had one or two very serious accidents.

There was one major change on how small employers are affected by losses. CA no longer provides a small employer credit. See that article here. If your company has less than $38,000 in Total Incurred your company needs to prepare for possibly a higher X-Mod.

Senate Bill 863 may have some effect on your X-Mod. However, it will not affect how the Mod is calculated.

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IRS Advice on Subcontractor vs. Employee Conundrum – National Outlook

January 13, 2014 By JL Risk Management Consultants

IRS Advice on Subcontractor vs. Employee Determination

The IRS advice has been updated on the Subcontractor vs. Employee conundrum. The best way to understand IRS advice in this article is to follow all the links below.

The Internal Revenue Service periodically publishes updates on how an employer should differentiate between employee classifications (employee, subcontractor, statutory employee, etc.). Instead of linking to the article(s), the updates are posted below. This info does not refer to Workers Compensation Classification Codes. That is a very different subject.

Wikimedia Commons – Brisbane City Council

Each state has its own rules and regs on subcontractors and Workers Comp. The info below is a general guide. As I work in 45 different states’ WC laws, I have found the IRS guidance to be accurate when looking at this subject on a national basis.

The link to the info below is here.

Independent Contractor (Self-Employed) or Employee? – IRS Advice

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It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.

Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.

Select the Scenario that Applies to You:

I am an independent contractor or in business for myself if you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center.
I hire or contract with individuals to provide services to my business
If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals providing services are employees or independent contractors. Follow the rest of this page to find out more about this topic and what your responsibilities are.

Determining Whether the Individuals Providing Services are Employees or Independent Contractors

Vector Graphic Of Two Businessman IRS Advice Shake Hand

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services maybe –

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

Form SS-8

If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF) can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status.

Be aware that it can take at least six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8 (PDF).

Employment Tax Obligations

Picture Businesspeople Meeting Around Boardroom Table Businessman Standing IRS Advice Subcontractor vs. Employee

Once a determination is made (whether by the business or by the IRS), the next step is filing the appropriate forms and paying the associated taxes.

Employment Tax Guidelines

There are specific employment tax guidelines that must be followed for certain industries.

Misclassification of Employees

Consequences of Treating an Employee as an Independent Contractor

If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). See Internal Revenue Code section 3509 for more information.

Relief Provisions

If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. See Publication 1976, Section 530 Employment Tax Relief Requirements (PDF) for more information.

Misclassified Workers Can File Social Security Tax Form

Picture Two People Fighting Over Newspaper IRS Advice on Subcontractor vs. Employee

Workers who believe they have been improperly classified as independent contractors by an employer can use Form 8919, Uncollected Social Security and Medicare Tax on Wages to figure and report the employee’s share of uncollected Social Security and Medicare taxes due on their compensation. See the full article Misclassified Workers to File New Social Security Tax Form for more information.

Voluntary Classification Settlement Program

The Voluntary Classification Settlement Program (VCSP) is a new optional program that provides taxpayers with an opportunity to reclassify their workers as employees for future tax periods for employment tax purposes with partial relief from federal employment taxes for eligible taxpayers that agree to prospectively treat their workers (or a class or group of workers) as employees. To participate in this new voluntary program, the taxpayer must meet certain eligibility requirements, apply to participate in the VCSP by filing Form 8952, Application for Voluntary Classification Settlement Program, and enter into a closing agreement with the IRS.

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The above IRS advice may not be perfect for your situation. Always consult with a tax expert or accountant or the advice in this article.

Radium Girls Horrific Injuries Occupational Disease Laws Beginning

January 8, 2014 By JL Risk Management Consultants

The Radium Girls and Occupational Disease Laws

The term Radium Girls represents a defining moment of Occupational disease laws for Workers Compensation. Occupational disease calculations have been the bane of many actuaries and underwriters.

The Incurred But Not Reported (IBNR) injuries are extremely hard to estimate in the area of occupational disease. The WC laws often allow a claim long after an exposure “upon discovery of the disease.”

Picture Of Radium Girls Occupational Disease Laws Black And White Color

Wikipedia – Unknown author

A recent TV show covered the harrowing injuries received by the Radium Girls. In 1917, over 4,000 women were hired to paint watch faces by US Radium. The narrator pointed out most of the women were watch face painters. The soldiers in World War II could see the painted watch faces in the dark. The glow-in-the-dark watch faces were sometimes critical for their survival.

The highly radioactive paint was ingested by the workers as they would sharpen the brush with their lips after each face was painted. Ingesting over 200 small doses of radiation per day resulted in horrible injuries. Most women lost their complete lower jawbone as it would basically separate from their skull.

Googling radium ads around the turn of the century showed that radium was safe and was often used in over the counter medicine. Even though Madam Curie gave out a warning with her discovery, it was oft ignored by the public.

The most striking part of the TV documentary was when one of the women was painting the radium paint or her fingernails and teeth to impress her boyfriend/husband.

Picture Woman with Thermometer in Mouth Suffering from Occupational Disease Laws for Workers Compensation

Six of the women sued US Radium. The pre-trial settlement amount for each woman was $133,000 (today’s dollars) + an annuity of $600 + lifetime medical care. The press covered the events following up to the trial very heavily.

The publicity from the lawsuit became a factor in the establishment of occupational disease laws. The radium paint was used until the mid-1960’s. The radium dial painters never sustained any more occupational diseases as their employers:

Instructed them to never touch the paint along with other precautions
Provided them with protective gear
Proved the disease was 100% preventable

This picture of the Radium Girls at work is chilling. This pic showing the radium paint resulting in radium jaw is almost macabre. There are many sources of reading material on this turn of the century tragedy. Wikipedia has a great list of reading material on this subject.

Workers Comp Self Insured Resolutions Five From 2013 updated for 2014

January 7, 2014 By JL Risk Management Consultants

Workers Comp Self Insured Resolutions – Updated for 2014

Five 2013 Workers Comp self insured resolutions have been updated for 2014.

When talking about Workers Comp premiums, self insureds are often left out in the cold. Self insureds do not pay premiums for Workers Comp.

Two person helping hands Workers Comp Self Insured Resolutions to plant on the ground

Wikimedia Commons – Pacific Southwest Region USFWS

This actually exposes the self insured employer to many more risks besides not budgeting enough funds to cover WC costs. Updates for 2014 are in italics.

Self insured employers may want to adopt these resolutions for 2013 2014. Self insured employers must:

Not think they are outside the regular WC system. Update – Operate its self insurance program very similar to a company that pays WC premiums. If a self insured employer is experiencing thin profit margins due to the current economy, there is just no wiggle-room left for adding funds to their WC budget late in the year. They may not have a Mod, but a Loss Development Factor should be calculated every year. The LDF is very similar to a Mod. The premium-paying companies are not that much different from a large deductible or a self insured program in this area.
(c) stockunlimited
Realize there is a closer fiduciary relationship with their TPA than with an insurance carrier. There is no “buffer” that a Mod and premium supply. The TPA is spending directly out of one of your budgeted accounts. Reading over your TPA contract may produce some surprises. Update – as in most WC policies, the TPA will usually have a clause that says – “We can opt to settle or pay a claim at any time if we feel it is necessary” or something similar. See #6 on how to solve that conundrum.
Understand their TPA expenses. Many self insureds pay attention to only the yearly cost to handle theclaims – usually paid per claim. Has your company considered the bill review, PPO network, rehabilitation nurse, and other TPA costs? If not, you may want to obtain an analysis of those charges. Update- with the economy as it is today, TPA expenses can be a budget-buster. Do you know how much your TPA spent on, for instance, private investigation services over each of the last three years? If not, you need to monitor all expenses very carefully.
Not think they are adjusting the claim. Many of the self insured employers usually have a Risk Management Department. Managing risk and adjusting a WC claim are very different. The TPA was hired for their claims expertise. Monitoring the claim is excellent. Calling every shot on a claim can be a very costly Update – especially if there is a time lag between the adjuster asking for authority to do some task and not receiving it for weeks. This can be very costly at the time of settlement.
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Perform a scheduled reviewed each year Periodically review their TPA’s performance on a random selection of claims. This function goes beyond emailing questions to the adjuster. Medical Only claims should be included in the selection. Festering Medical Only claims are usually the ones that appear out of nowhere.
Bonus – Have a prescribed level of reserves, settlements, bill payments, that must be approved by the employer. This is usually in your TPA contract. If not, you should add it at renewal/bid time. Update – an easy way to handcuff the claims staff is setting the levels too low. This can cost an employer dearly if the adjuster is spending time asking for authority to do everything on a file rather than adjusting and settling the files. Monitoring is much better than trying to adjust the claim from afar – see #4.
Update – Bonus #2 – Use email to contact your TPA claims staff. This is an easy way to document any communication by the TPA or employer. If you do not know your claims staff email addresses, you are running far behind the curve.

There are many more workers comp self insured resolutions than just these seven.

Workers Comp Resolutions Six 2013 Updated For 2014

January 6, 2014 By JL Risk Management Consultants

Workers Comp Resolutions Updated for 2014

Most Workers Comp Resolutions can change each year as do personal resolutions for the New Year. Workers Compensation’s basic underpinnings really do not change that much each year.

Bird swallow flying drinking Workers Comp Resolutions in the river

Wikimedia Commons – sanchezn

Below are the 2013 Workers Comp Premium Saving resolutions with a few updates for 2014. The updates are in italics.

Workers Comp Resolutions Update – Self Insureds will have an update tomorrow.

Have a current copy of their Workers Comp loss run. Having online access is the best and up-to-date way to track your reserves. Paper loss runs are no longer satisfactory. Monitoring any changes in your company’s reserves can avoid a premium disaster in the future. Update – we are seeing more and more loss reserve leakage as employers are not being responsive enough in their reserve reviews if they are waiting on a paper loss run to be mailed to them. Leakage is basically the reserves that your company is charged but never spent by the claims staff.
Have the most current copy of their company’s NCCI or Rating Bureau sheets. Rating bureaus may issue many different revised rating sheets during your company’s policy year. Your company needs to know the current status of your E-Mod (X-Mod) at all times. The Mod may not stay the same as the one your company was originally issued before policy renewal. The worst time to find out a Mod has changed is at premium audit. Update – we are seeing employers that have upwards of 20 E-Mod changes due to corrections, late reporting by the carrier, or state-based changes in a single year.
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Know their policy status. Is your company in or headed into an assigned risk pool? Are there better deals than the policy you are about to renew for another year? Are you changing to a different carrier? Are you expanding into other states? Update – Are there any ownership changes?
Have a copy of the Five Keys to Workers Comp Savings handy. The keys are the same as they were 20 years ago. The keys are still current today. Follow the link for the list. These are proactive tried-and-true ways to reduce your Workers Comp costs on the front-end of an accident.
Understand the premium audit process. There are many employers receiving very large premium audit bills. The premium audit process has very defined rules in every state that must be followed by the carrier, premium auditor, employer, and rating bureau. Disputing an audit without justification is just as detrimental as writing a premium check without the full justification of the amount. There are time limits placed on the carrier and employer on completing the audit process. Update – Filing your premium audit and bill away to work on at a later date can be costly.
Know safety is the crucial element. The least costly accident is the one that never happened in your workplace. Workers’ Comp claims are called a “loss” for a reason. Post-accident savings are tough at best. The important Schedule Debit/Credits also directly result from your safety regimen.
Bonus – if you have any questions, make sure your company knows which entity or
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department to contact. This will save your company a large amount of time and money. Even contacting your agent does not necessarily preserve some of your rights as an insured. Update – we now recommend building a Workers Comp contact sheet – having your agent’s number is not enough if your company wishes to be responsive to your WC situation. Emails are very precious documentation and give the insurance personnel (Claims, underwriting, etc.) time to provide a response.