Archives for February 2017

North Carolina State Auditor Says 52,000 Uninsured For Workers Comp

February 23, 2017 By JL Risk Management Consultants

North Carolina State Auditor Audits Industrial Commission

Beth Woods, CPA the present North Carolina State Auditor issued a rather stinging report on the Industrial Commission’s lack of oversight in the area of uninsureds.

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Please note this is not counting the micro-companies that have less than 4 employees. The report pointed out this differentiation. The report is a PDF – you will need Adobe PDF Reader <<follow link. The North Carolina State Auditor report can be found by clicking here.

The reports from her office are very easy to read and do make complete sense. I encourage you to download it and take a few minutes to read it. If you have business interests in or live in North Carolina, the report is critical.

Why? – because the employers that are paying their premiums or providing alternative coverages are basically subsidizing the scofflaws. The Experience Mod system and the insurance rates in North Carolina have to be made up somewhere. One would have to conclude it is the businesses that are operating honestly.

Last week, I wrote an article after my shock of discovering that the estimated number of uninsureds for WC in North Carolina was off by 80%!! I had thought there were 32,000 from the prior North Carolina State Auditor report in 2013.

A home builder magazine interviewed me on what the main issues are today in WC. My #1 concern was businesses that were not insured.

This is verbatim from the Auditor’s report:

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According to the Commission, the Commission and the Government Data Analytics Center (GDAC) decided to develop a system quickly by using readily available data.

They intended to get the first part of a comprehensive tool in place and continually enhance the system. It has now been three and a half years since the Office of the State Auditor first reported the Commission’s lack of complete, accurate, and reliable data necessary to proactively identify noncompliant businesses.

Still, the Commission cannot perform a two-way match of data from the Department of Commerce to the NC Rate Bureau. This would potentially identify businesses or employers that have never had workers’ compensation insurance. While GDAC reports that a two-way match and some additional data sources are tentatively scheduled to be incorporated into NETS in fall 2016, there is no documentation that specifies when these enhancements will occur.

One thing to remember is that there is a response from the audited departments. As I mentioned earlier, it may be a good idea to read the report in full.

Man Calculating North Carolina State Auditor OnTable

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If you follow the link above, I had written an article that points out that the Governor at the time just created another agency.

J&L Risk Management Consultants does help employers that have Workers Comp problems that are insured employers. We have never assisted any company that did not have insurance or alternative coverages.

If you are an employer that does not have Workers Comp insurance in place in North Carolina or elsewhere, please take heed as the data structures are being improved to the point of identifying your business such as West Virginia did 10 years ago.

The situation was hopefully going to change when Staci Meyer was named the new Chairperson of the Industrial Commission. It has not to date.

J&L Risk Management Consultants is not an agency, only a full-service consultancy. However, we can point you the right direction to obtaining some type of coverages for your employees.

The injured employees‘ benefits not being provided was the crux of the North Carolina State Auditor report.

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Safety Incentive Plans – OSHA’s New Posture

February 22, 2017 By JL Risk Management Consultants

OSHA’s Surprising New Posture On Safety Incentive Plans

This article on safety incentive plans was written by our ept Safety Consultant Glen Dulac.

Always remember that a well-crafted safety incentive plan will bring dramatic results in moving your safety program from good to great. Studies show as much as a three to one return on investment, from a good incentive plan.

Graphic of Safety Incentive Plans Dollars

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So, what kind of a tempest in a teapot has OSHA been brewing up to spoil your incentive plan ?

Https://www.osha.gov/recordkeeping/finalrule_faq.html OSHA slipped it into the record-keeping rules, you can find it in the frequently asked questions.

And what does it say?

“ The rule does not prohibit incentive programs. However, EMPLOYERS must not create incentive programs that deter or discourage an employee from reporting an injury or illness. Incentive programs should encourage safe work practices and promote worker participation in safety-related activities.”

Please notice I fully capitalized EMPLOYERS. Hold that thought or read the last sentence of this article now. Let’s boil this down to key tangibles.

Incentive plans are not outlawed, but the wrong kind could get you fined by the OSHA guys. Never discriminate, all employees deserve equal pay, and an incentive is considered pay or compensation. Focus on activity standards, AKA leading indicators.

Examples would be:

Participating on a safety inspection team
Keeping ones work area clean, or
Attending safety training.

Downplay big ticket monetary rewards given for reductions in accident frequency or reduction in experience modification.

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In closing let me stress the following, OSHA has no scientific foundation for its position that monetary incentives lead to underreporting of injuries. There has been no major court case on this topic. Issues on incentives have been published as memos not as final rules.

State OSHA may differ from Federal OSHA. Any discussions about the delicate details of your incentive plan should be discussed in the presence of an attorney, so they will fall under the client-attorney privilege. This makes it very difficult for the OSHA octopus to get its tentacles on said communication.

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WALSH Test For Jurisdiction Appears Again in North Carolina

February 20, 2017 By JL Risk Management Consultants

North Carolina WALSH Test For Jurisdiction

The WALSH test for jurisdiction in Work Comp claims has shown itself in a North Carolina Court of Appeals case. I was taught this very important test when I was an adjuster trainee some time ago for a major carrier.

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I find it amazing that the courts have almost unanimously agreed on the WALSH test for jurisdiction. I first saw an Oklahoma Workers Comp judge use almost the exact acronym when deciding jurisdiction.

Two main articles authored in this website are:

WALSH -Five Tests for Jurisdiction

The Best Test For Multi-jurisdictions

There are many more articles written by me on this subject. Jurisdictions are so very important when attempting to properly adjust a workers comp claim where the employee works, lives, or other conditions which point to more than one state. I was the first one to point out this very great tool in an article.

Worked – Where did the employee work a majority of the time?

Accident – In which State did the accident occur?

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Lived – Where did the employee live most of the time or where is the employee’s true home?

Salaried – Where was the employee paid out of each pay period

Hired – Where was the employee hired from – or from where was the job offer made?

One very important point is to remember that the most important consideration is Worked with Hired being the least. If something works in the Work Comp claims area, I will always attempt to point it out multiple times such as 3 point 24 hour contact.

The North Carolina Court of Appeals applied the same test with a slight different angle. The North Carolina Industrial Commission ruled they had no jurisdiction. The case was then appealed.

The case was MARTHA HOLMES, Employee, Plaintiff v. ASSOCIATED PIPE LINE CONTRACTORS, INC. and others Click on the case to receive a download of the PDF file. If you do not have a PDF reader for your computer, tablet, or phone, please go to Adobe and download the proper reader.

The case seemed to hinge on in which state did the employer and employee finalize the employment contract? A drug test was one of the major factors. If we take a step back and look at the file the WALSH test for jurisdiction showed that Martha Holmes:

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Worked – Texas
Accident – Texas
Lived – North Carolina
Salaried – Texas
Hired – Texas

I will digress and let you read about the case and make your own decisions. The main goal here was to once again mention the almost infallible test for jurisdiction. Please note that I am not drawing any legal conclusions. I was just reiterating the likely path followed by the claims staff.

A tip of the hat to WorkCompCentral for pointing out his interesting case.

If you do not use or want to remember the WALSH test for jurisdictions which has not failed me for 30 years, please feel free to print or save this article or one of the other two articles that I linked to above.

©J&L Risk Management Inc Copyright Notice

Opioids and Marijuana – WCRI Conference – Big Time Discussions

February 16, 2017 By JL Risk Management Consultants

Opioids and Marijuana Discussed @ Upcoming WCRI Conference

The sessions will run consecutively – two interesting topics for Work Comp

Opioids and marijuana will be two of many great topics. WCRI is hosting their annual conference on March 2 -3, 2017. I have attended the last five meetings and will be at this one in Boston. My main challenge in attending will be the high likelihood of Patriot fans. <<<kidding

Wikimedia Commons – United States Fish and Wildlife Service

According to a recent WCRI press release, a session on opioids will be followed by a session on marijuana as it relates to Workers Comp, specifically the control of opioid abuse, and the use of marijuana as it affects the workplace. As you may know, many states have legalized the recreational use of medical marijuana while a few have even legalized its recreational use – Think Colorado.

According to WCRI –

The latest opioid prescribing trends, first-hand accounts of how states are combating the opioid epidemic, and alternatives to opioids will be discussed during two exciting sessions at the Workers Compensation Research Institute’s (WCRI) 33^rd Annual Issues & Research Conference, March 2-3, 2017, at the Westin Copley Place Hotel in Boston, MA.

WCRI’s CEO John Ruser, whom I met last year at the conference made a very poignant point:

The dangers of prescription drug misuse resulting in death and addiction constitute a top public health problem in the United States and the workers’ compensation community,”

The first session discusses WCRI’s latest research on:

Interstate variations and trends in the use of opioids for workplace injuries across 25 states
Features senior policymakers from two states, Massachusetts and Kentucky, who will share initiatives taken by their states to combat the opioid epidemic

Wikimedia Commons – User:Jennifer Martin

The second session will discuss two emerging alternatives to opioids:

Marijuana
Evidence-based non-pharmacological treatments – meditation?
First hand accounts from senior policymakers in Maine and Colorado on what it is like to manage a program treating injured workers with marijuana, which is very new and federally illegal.

The WCRI conference is a leading workers’ compensation forum for policymakers, employers, labor advocates, insurance executives, health care organizations, claims managers, researchers, and others. It is a great two-day program. If you have anything to do with WC data or want to explore a very different and fresh slant on some of the rating bureau data, you may want to consider attending the conference.

For our readers, I will post some of the discussions, but there is so much good data and presentations, I may not do the conference justice. See you in Boston.

©J&L Risk Management Inc Copyright Notice

North Carolina Workers Comp Uninsureds – I Made Terrible Mistake

February 15, 2017 By JL Risk Management Consultants

Too Conservative On North Carolina Workers Comp Uninsureds

The articles which were written on North Carolina Workers Comp uninsureds were to me an overestimation. I had written various articles on my shock and dismay that over 30,000 companies in North Carolina had no workers compensation coverage.

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Some of the articles are listed below:

A recent very astute television reporter for News 9 in Charlotte performed a great job at digging into the real numbers to see the true number of North Carolina Workers Comp uninsureds. I will cover the NC Auditors report next week as I want to analyze it fully.

Beyond surprisingly or astounding – the reporter discovered that 52,000 – yes over 52,000 businesses in North Carolina that should have coverage had none. The reporter referenced the State Auditor’s report for this figure.

I have just sent an email to him to make sure that this count involved businesses with more than three employees. As you may know, coverage is not required in North Carolina if a company has three or less employees.

What do 52,000 uncovered employers cause in the general marketplace in North Carolina?

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The first area would be that the insurance marketplace would be very skewed as far as insurance ratings or E-Mods. This may cause employer with WC insurance to pay more premiums
Insurance agents may be shorted very heavily due to lack of premium that should be paid by these employers.
Ghost policies that will produce a certificate of insurance but not cover the employees would be prevalent in the marketplace
The health insurance marketplace or even North Carolina Medicaid may be absorbing the cost of treating these injuries
The cost of paying for injured workers’ disability (Temporary Total, Permanent Partial, etc.) may be shifted to Unemployment or even welfare.
Treatment facilities may be receiving less than they should to treat an injury or may possibly not be paid at all if they later find out there is no coverage.
These uncovered employers would not strive for a safe workplace as there would be no retribution for having an unsafe workplace of their employees – very important

Couple North Carolina Workers Comp Uninsureds With Accounting At Home

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There are many other concerns and considerations with 52,000 employers not being on the Workers Compensation rolls.

One area that has not been explored is if the employer does not have coverage, then would the injured employee file a liability suit against the employer? This could get interesting – but then again, if they have no workers comp coverage, then there is likely no liability coverages either.

Other states have handled these types of situations such as West Virginia posting signs at workplaces that a certain employer (usually construction) is operating without WC coverage. I actually saw those signs when I was there consulting for clients. They were very noticeable as I had driven by a major construction site.

The new North Carolina Insurance Commissioner Mike Causey may have to act on what I would call a crisis point. One can understand if there are a few thousand, however, 52,000???

We have been in the business of aiding employers cut their work comp costs, however, we have never advocated with going bare as bankruptcy may be the alternative is there is a very large claim against any of the North Carolina Workers Comp uninsureds.

Workers Comp Mentor – Take Ten Seconds with Mr Rogers

February 15, 2017 By JL Risk Management Consultants

Mr. Rogers And Your Workers Comp Mentor

Wikimedia Commons – Bobbyshabangu

Your Workers Comp mentor is someone that you owe a large favor. We sometimes forget how much that special person in our business lives meant to us.

I was actually searching through websites that had given the J&L Risk Management Consultants a bad backlink. In other words, if a website has a link to another website that is not good, that harms the resulting website. I found out that the website and associated vendor had closed down.

The website left behind a video that would say Thanks for being our customers in a special way. The video was from Youtube. I watched it and was amazed. The video was of Mr. Rogers receiving a lifetime achievement award. His acceptance speech was the best one that I have ever seen in many years. You can find the video here – worth a watch. This was award show TV in its finest hour.

We have all had great mentors. My workers comp mentors are very special to me. How about yours? All you have to do is take 10 seconds and think of the people that have helped you in your insurance and/or Workers Comp career. If you watch the video, you will understand more about what I am about to say.

OK, for 10 seconds, close your eyes, stop working, and think of the workers comp mentors that have helped you in career, go ahead, I will keep the time on my watch. Keep thinking and appreciating them.

Two Businessman Workers Comp Mentor Walking By Office Window

Your mentors are lucky to have mentored you and vice-versa.

My two main workers comp mentors are both deceased. Ok, so go ahead and watch the video and then watch the other associated Mr. Rogers videos. The videos are all great.

Thank for thinking of your mentors. They will appreciate that you have been thinking of them more than you know.

Workers Comp Hot Buttons Top 10 Recycled Again

February 9, 2017 By JL Risk Management Consultants

Workers Comp Hot Buttons Recycled Every Few Years – Yawn!

The Top 10 Workers Comp hot buttons never seem to be new. The topics are recycled again and again as newfound topics of the press and in most WC conversations.

If one thinks about it for a few minutes, has there really been a new topic of discussion on Work Comp in the last 20 years? Let us look at the recycled topics aka workers comp hot buttons:

Opioids – this was a major concern now and 15 years ago. The title for it then was Pharmaceutical Management. It is the same topic with a new moniker. People overdoing medications in Workers Comp has been a hot button item for decades.
Fraud – this one is recycled like beverage cans. Employer fraud, employee fraud, provider fraud – the list goes on and on. This topic recycles every few years. News articles are still published as filler on an employee that ran a business while receiving workers comp checks.
Alternative insurance coverages – Captives, PEO’s, Large deductible, small deductible – these will be back in the news as newfound topics within five years – trust me on this one. There are a few viable ways to cut your workers comp costs using the alternative markets.
Senate or House Bill <fill in the blank> – this one seems to be concentrated more in California. A new bill becomes the topic of conversation and is the buzz in the press for weeks to months. Then along comes another one and the last one fades in the rearview mirror.
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An unfair Workers Comp System – a reporter or news organization pulls together a few injured workers that were shorted by the system and tried to make it the slippery slope method – one therefore all are mistreated – even though Workers Comp is still the best delivery method for healing and benefits available.
Workers Comp is Dead – I have forecasted this one myself – however I was talking about more of a warning for the WC community to be flexible as sitting behind your desk and waiting for the other shoe to drop will not cut it nowadays. After the current Presidential election, many so-called pundits said that WC is doomed – not so fast. Flexibility is the key.
Decentralization/Centralization – also known as expansion/retraction. This area is two-fold; one from the carriers/TPA’s and one from vendors. We are in a centralization phase as carriers/TPA’s are buying each other up at an accelerated pace as are the vendors who are absorbing competitors. This phase has happened at least 4 -5 times in my WC career. Tech may sustain a decentralization to a point.
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The Big Safety Push vs. Eliminating Safety/Risk Management – this is the area where companies hemorrhage funds. Employers will all of a sudden push safety very heavily – usually right after a spate of accidents or a visit from OSHA. The other side of the coin is the companies that have eliminated all of their safety or risk management efforts as a way to save short term cash. The bottom line here is eliminating safety and risk management in any organization will always cost more in the long term. I have seen the financials of many companies that back up having a safety department even if it is an outside safety consultant.
The Big Work Comp Tech Push – WC is 10 – 15 years behind even health in most areas of tech. I have jumped down into the proverbial rabbit hole many times to look at tech. I have a very heavy tech background. Tech improvements seem normal to me. However, I am still on the lookout for a decent WC app or any tech outside of medical devices.
Work Comp Gurus – Workers compensation soothsayers come and go once or twice a decade. The blogosphere has many including myself. Look at their backgrounds heavily before you make a decision as to whether they know their subject. This part of the insurance world is too complicated for one person to say they know “the industry.” My twitter handle is @workcompguru. I actually started the name as a happy hour joke, no really as one of my long-time friends would always call me Mister Guru when we discussed WC. The old saying “If I claim to be a wise man, it surely means that I do not know” fits well.

Next week I will cover how to combat these recycled changes in the Workers Comp markets from the workers comp hot buttons.

Workers Comp Assigned Risk Pool – Wait Our Company Mod Is 80

February 8, 2017 By JL Risk Management Consultants

Workers Comp Assigned Risk Pool For Safe Companies?

This workers comp Assigned Risk Pool question is usually from an employer that is totally exasperated at the work comp system. How does such a safe company end up in the workers comp assigned risk pool?

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The Assigned Risk Pool is unfortunately not for unsafe companies that have a high E-Mod or X-Mod. In an associated coverage, tow truck drivers cannot obtain liability insurance as carriers have pulled out of this market. The same situation occurs in the work comp markets.

Your company may be a safe company is what is considered by insurance carriers as a very unsafe type of employer. One has to remember that a Modification Factor (EMod XMod) is how your company compares to similar companies. In a very unsafe industry, you could even have experienced a few accidents and have a lower Mod.

Why? Because your E-Mod is a comparative figure. It is not a standalone measurement whatsoever.

For instance, having two accidents in an administrative assistant based company is going to increase the E-Mod very heavily compared to the same two accidents in a construction company.

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Trucking transportation and temporary agencies are two type of companies which have recently had no or very few carriers willing to write coverage. Staffing agencies (temp to perm) companies have experienced this conundrum in certain states or regions.

A company has to be very careful when venturing into alternative coverages. You may not have the coverage that your state requires to stay in business. Many states such as West Virginia have been very aggressive with uncovered employers.

One very unfortunate development with being in the workers comp assigned risk pool is the sharp increase in premiums.