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Home » Archives for April 2019

Archives for April 2019

Reporting Work Injuries To Your Carrier – Golden Rule

April 23, 2019 By JL Risk Management Consultants

The Golden Rule For Reporting Work Injuries Keeps It Simple

Employers not having a rule for reporting work Injuries to the workers’ compensation carrier has caused many employers to end up paying very large claims on what should have been small ones.  

The Golden Rule for reporting workplace injuries is at the end of this article.

golden rule reporting work injuries painting

Wikimedia Public Use License Norman Rockwell

The decision to write this article was made after I happened upon a popular agent’s website that had these three pieces of advice to lower a company’s workers comp costs.   The words from that article were changed not to violate the copyright and not to point out the exact-reference article. 

  • Train your supervisory employees for reporting working injuries to the carrier (this statement was OK by me). 
  • On-site first aid may be all that is required and not report the incident to the workers’ comp carrier (OK by me except for claims festering).
  • A simple doctor’s office visit may be all that is needed, but no need to report to the carrier – Red Flag Alarm

I am consulting on a few massive claims presently where the carrier was not advised of a claim until weeks or months later.  The claims fill almost 6 – 10 brown folders of information each.   

One of the hallmarks of the claims – the initial lost time adjuster received the dreaded twilight zone phone call from a medical provider after the injury ended up being much more serious than 

The claims should have been (mostly) small claims where all the pieces of the puzzle were in place to have the injured employee treated properly medically and returned to work timely.   

Claims reporting can be equated with the old Fram Oil filter line – “You can pay me now or pay me later.”    

The Six Keys (Secrets) To Saving on Workers Compensation Claims which I wrote in the 1980s has as its #1 Key – Timely First Reports of Injury. The dominoes start to fall if the claim is not reported timely.   The other keys cannot be attained if the Workers’ Comp claims staff receives a stale FROI. The adjuster has no choice but to put up very large reserves on the file.  

The usual results total an approximately 400% increase to those claims.   How do I know?   I tracked over 7,000 public entity files in the 1990s.  As the Director of Risk Management,  I recorded on a spreadsheet the claims that reached my level of authority.  Almost all had the same four characteristics in one form or another.   

I then tracked the same results when I was assigned claims as a consultant.   The claims almost always had the same characteristics.  The only other characteristic from the claims staff side was the adjuster did not make three-point contact and investigate the claim timely even f the FROI was filed timely. 

A Workers; Compensation claim’s loss control ends 48 hours after the claim.  The treating Doctor is in place.  Controlling the medical remains the best method for controlling Worker Comp payouts and reserving on a claim. 

The Golden Rule For Employers Reporting Work Injuries is: 

If an injured employee has to leave the employer ‘s premises or stops work except to receive First Aid, the claim should be reported immediately to the carrier or TPA (Self-Insureds).   

The rule applies even if the employee just leaves for the rest of the day and is expected back the next workday.   The 48-hour clock starts ticking when the employee stops work.   

Please note this is a general rule – certain injuries such as burns or chemical exposures need to be reported even if the employee stays at work.  Consult your state’s rules on these specific situations.   This article does not apply to recording OSHA recordable incidents.   Your carrier or TPA may have certain reporting requirements.

The advent of online claims reporting speeds up the reporting work injuries time clock greatly. 

©J&L Risk Management Inc Copyright Notice

Filed Under: First Report of injury Tagged With: burns, chemical, claim festering, Fram Oil, Golden Rule, puzzle, recordable

Occupational Illness Rates by Industry – Great BLS Data Surprising Results

April 16, 2019 By JL Risk Management Consultants

2017 Bureau of Labor Statistics Occupational Illness Rates by Industry – Surprising

Workers; Compensation Illness by Industry Rates shows which industries had the highest rates of occupational illness.   

Occupational illnesses are defined by the BLS as: 

BLS considers an occupational illness to be any abnormal condition or disorder—other than a case resulting from an instantaneous event or exposure—that is caused by an exposure to factors associated with employment.

Please note this does not include injuries by accident.   The subject becomes convoluted as some states workers’ compensation systems consider some illnesses to be accidents and vice-versa.  For now, let us stick with the BLS definition. 

The table below comes from the BLS’s most recent release.  Yes, the data covers a year in the past.  However, the numbers have such a breadth and depth that lagging behind one year would be expected for such a massive data collection and reporting task.   Compiling and stratifying the data must be quite an enormous undertaking. 

The Occupational Illness by Industry Rates Table

BLS graphic Occupational Illness rate by industry

Copyright US Gov

 

 

The BLS table ranks the Top 20 as:

Top 20 Illness Rates
Light truck and utility vehicle manufacturing (Private industry)233.1
Animal (except poultry) slaughtering (Private industry)199.2
Automobile manufacturing (Private industry)131.8
Police protection (State government)93.7
Farm management services (Private industry)89.6
Glass container manufacturing (Private industry)87.4
Beet sugar manufacturing (Private industry)85.5
Seafood product preparation and packaging (Private industry)83.1
Dried and dehydrated food manufacturing (Private industry)82.0
Amusement and theme parks (Private industry)81.2
Meat processed from carcasses (Private industry)81.1
Correctional institutions (State government)81.0
Nonferrous forging (Private industry)79.9
Ambulance services (Private industry)78.4
Poultry processing (Private industry)77.6
Aircraft manufacturing (Private industry)76.0
Footwear manufacturing (Private industry)70.5
Soil preparation, planting, and cultivating (Private industry)69.6
Motor home manufacturing (Private industry)69.3
Iron foundries (Private industry)68.6
Polish and other sanitation good manufacturing (Private industry)59.2
Ship building and repairing (Private industry)57.9
Metal can manufacturing (Private industry)57.0
Motor vehicle gasoline engine and engine parts manufacturing (Private industry)54.4
Hospitals (Local government)53.8

Please note that I excluded the NAICS numbers.    The formula for figuring out these BLS-calculated rates is: 

  • The incidence rates represent the number of illnesses per 10,000 full-time equivalent workers and were calculated as: (N/EH) x 20,000,000, where  N = number of illnesses  EH = total hours worked by all employees during the calendar year
  • 20,000,000 = base for 10,000 equivalent full-time workers (working 40 hours per week, 50 weeks per year)

The BLS included only higher rate industries. As a statistics person, I would say that is a great cut-off point.  Any industries with less than 500 recordable cases were excluded to remove any skewing by small data sets.   The data sets were categorized using the NAICS system. 

The comparison also excluded farms with fewer than 11 employees. 

Examining The Table

The industries that stood out as ones with surprisingly high illness rates:

  • Glass container manufacturing 
  • Beet sugar manufacturing 
  • Dried and dehydrated food manufacturing
  • Amusement and theme parks 
  • Footwear manufacturing 

I will check with our OSHA Consultant Glen on why those industries have higher rates.   Approximately 10 years ago, I looked at the same information.  As I remember, hospitals were the number one public entity illness exposure.    

Welding is one job task that always seems to cause a higher rate of illness.   

 

©J&L Risk Management Inc Copyright Notice

Filed Under: injury rate Tagged With: BLS, occupational illness, OSHA, skewing

California Dynamex Decision – Another Workers Comp Crisis Recycled?

April 4, 2019 By JL Risk Management Consultants

California Dynamex Decision – Overreaction or Harsh Reality? 

The California Dynamex decision hit the Workers Compensation airwaves and blogosphere over the last few weeks. 

picture of agreement California dynamex decision signing

Public Domain – US DOE

An article by WorkCompCentral noted reactions across the country.  I cannot link to the article as it is behind a paywall. 

Check out this article on the previous recycled crises – no, this one is not counted as a recycled crisis yet.   A great article by Tony Marks in Forbes Magazine covered the case very well – more from a franchising perspective.    

The California Supreme Court retooled the contractor-subcontractor relationship into three points of consideration: (distilled for brevity)

  1. The degree of control by the main contractor
  2. The subcontractor performs work that is not the usual work performed by the contractor 
  3. The subcontractor has a business that is independently established in the same trade from the contractor 
  4. I added in this one as carriers are now including it in their workers’ comp audits – the subcontractor is not integral to the contractor’s existence. 

Bullet point #4 was added by me as this question has been asked of me by a few California companies that have recently gone through the premium audit process. 

The case of  Curry v. Equilon Enterprises, LLC (2018) (CA Court of Appeals) limited the four tests in the area of joint employment.   The link takes you to a search for the case.  

IRS Has Great Tests for Subcontractor vs Employee

The Internal Revenue Service has a great test that still satisfies most of the concerns when deciding on whether a worker is a subcontractor or employee.   The IRS has more worker classifications such as Statutory Employee, Non-StatutoryEmployee, and even a governmental employee. 

Yes, I realize it may not fit every state.   The three tests are:

  • Behavioral Control
  • Financial Control 
  • Relationship of the Parties  – contracts are important 

 A great PDF from the IRS can be found at this link.   The PDF breaks the three elements down even further.    Of course, discussing everything with your tax professional is always recommended by the IRS.   The California Dynamex decision should be a conversation starter. 

One area from the PDF that I had not covered was the test the IRS gives when doing an employee audit.   They are:

  • Consistency test – everyone that has the same job type is paid as a subcontractor 
  • Reasonable basis test –   this one needs to be covered in the same manner as the IRS 

In order to meet the reasonable basis  test, you must have treated the worker as a subcontractor because you reasonably relied on:
     · a court case or ruling to support your position,<<interesting statement
     · a prior IRS audit,
     · a long-standing practice in your industry, OR
     · demonstrate, in some other manner, any other reasonable basis for treating the worker as a subcontractor

Tennessee Says 20 Point Test 

According to Business Insurance Tennessee wants to have a 20 point test that was established by the IRS.   I do not see 20 points in the IRS websites.   The Legislature may be counting even the test subsets as a test.  

Tennessee referring to the IRS test may be seen as a good sign for consistency.   The IRS standard may be the best method for considering whether a subcontractor is not an employee, regardless of the Calfornia Dynamex decision.  

Bottom line – even before the California Dynamex decision, the states and Feds started enforcing the contractor rules more stringently.  

 

©J&L Risk Management Inc Copyright Notice

Filed Under: California Tagged With: Behavioral Control, Dynamex, Forbes Magazine, franchising, retooled

Workers Comp Data Carveouts Move Data To Dangerous Ground

April 4, 2019 By JL Risk Management Consultants

Workers Comp Data Carveouts – Are You Guilty of  Sampling Errors? 

The concept of Workers Comp data carveouts surfaces more now that employers look to enhance their workers’ compensation saving programs.

picture of sampling workers comp data slicing

Wikimedia-DSCF1348

Workers comp data carveouts start when a company, organization, consultant, etc. decide to use oversampling of a small set of data to justify a larger set.   The reverse will work under certain circumstances. 

 For example, and I have seen this happen often – using California data results on any kind of workers comp statistics to think that the same result will occur in another state. 

I often do phone consulting for investment companies that are looking to place the work in the workers’ compensation space.    The investors will want to look at two or three different states and then use the results derived from those states to try to expand their investing across the US. 

I do not use Wikipedia that often as a source.   Two sentences were taken from their page on oversampling/undersampling. 

Both oversampling and undersampling involve introducing a bias to select more samples from one class than from another, to compensate for an imbalance that is either already present in the data, or likely to develop if a purely random sample were taken.

Many articles appear on this website concerning statistical madness.  Sampling errors can be a form of statistical madness.    

The Whole Picture 

Many software packages do allow companies to isolate one state when examining a Mod calculation.  Isolating one state can be Ok to look at just that one state.   The mistake is made when a single state company wishes to expand to other states using the data from their HQ state.   

Workers’ Compensation rating contains too many variables to think that how your company is rated in one state will allow your company to know what would happen data-wise in another state.   Most E-Mod formulas have 33 calculations to arrive at the final number. 

An employer would need to operate in the additional states for a few years before the actual results are known – remember that Workers Comp is a delayed lookback system. 

If an employer is operating in multiple states but looks at one or two of their main operational states as the bellwether for other states, they would be oversampling and undersampling at the same time.    The main operational states would be oversampled and the remaining states would be undersampled to the point of not being sampled at all.  

I left the link above in the Wikipedia statement on bias.   Bias in statistics leads to unnatural and inaccurate results.   I have actually sliced out sections of data as the employer wanted that section to be analyzed.   I did not guarantee the results as being a good forecast.   

Workers Comp data carveouts usually occur when analyzing one state, a year or other data out of any analysis – mainly the Experience Modification Factor or Loss Development Factor (LDF).   One needs to look at the whole picture.   

Bottom line – be very careful when using workers comp data carveouts for decisions.  

 

©J&L Risk Management Inc Copyright Notice

Filed Under: statistics Tagged With: Carveouts, forecast, lookback, oversampling

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James J Moore
Raleigh, NC, United States

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:
• Risk and Insurance Management Society (RIMS)
• Entrepreneur Magazine
• Bloomberg Business News
• WorkCompCentral.com
• Claims Magazine
• Risk & Insurance Magazine
• Insurance Journal
• Workers Compensation.com
• LinkedIn, Twitter, Facebook and other social media sites
• Various trade publications

 

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Recent Posts

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